Vision
To be a world class enterprise that
is passionate about the quality of
life of the general populace and
giving high...
1 2014 ANNUAL REPORT & ACCOUNTS
Contents
Page
• Notice of Annual General Meeting 2
• Directors, Officers and Profession...
2 2014 ANNUAL REPORT & ACCOUNTS
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of...
3 2014 ANNUAL REPORT & ACCOUNTS
Directors, Officers and Professional Advisers
DIRECTORS Alhaji Aliko Dangote (GCON) — ...
4 2014 ANNUAL REPORT & ACCOUNTS
Result at a Glance
2014 2013
N=’000 N=’000
Profit and Loss
Revenue 11,250,54...
5 2014 ANNUAL REPORT & ACCOUNTS
Chairman’s Statement
ellow Shareholders
My Colleagues on the Board
Members of the Au...
6 2014 ANNUAL REPORT & ACCOUNTS
DIVIDEND
In line with our practice of rewarding our shareholders,
the Board has recommende...
6 2014 ANNUAL REPORT & ACCOUNTS
8 2014 ANNUAL REPORT & ACCOUNTS
Report of the Directors
For the year ended 31 December 2014
1. ACCOUNTS
The Dire...
9 2014 ANNUAL REPORT & ACCOUNTS
The Directors are responsible for the preparation of the financial statements wh...
10 2014 ANNUAL REPORT & ACCOUNTS
— In line with the provisions of Section 258(2) of the Companies and Allied Matters Ac...
11 2014 ANNUAL REPORT & ACCOUNTS
Report of the Directors
For the year ended 31 December 2014
14. DONATIONS
No donations...
12 2014 ANNUAL REPORT & ACCOUNTS
National Salt Company of Nigeria Plc is committed to best practice and procedures in corp...
13 2014 ANNUAL REPORT & ACCOUNTS
submission of year 2014 financial statements to nigerian stock exchange
The financial sta...
14 2014 ANNUAL REPORT & ACCOUNTS
Corporate Governance Report
The Committee held four meetings in the year and is responsib...
15 2014 ANNUAL REPORT & ACCOUNTS
Report of the Audit Committee
To the Members of National Salt Company of nig. plc
In acco...
16 2014 ANNUAL REPORT & ACCOUNTS
The Directors of National Salt Company of Nigeria Plc are responsible for the preparation...
Report of the Independent Auditors
to the members of national salt company of nigeria plc
Report on the Financial Statemen...
18 2014 ANNUAL REPORT & ACCOUNTS
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December...
19 2014 ANNUAL REPORT & ACCOUNTS
Statement of Financial Position
As at 31 December 2014
2014 2013
Note N=’000...
20 2014 ANNUAL REPORT & ACCOUNTS
Share Share Revaluation Retained Total
capital premium reserve earnings equit...
21 2014 ANNUAL REPORT & ACCOUNTS
2014 2013
Note N=’000 N=’000
Cash flows from operating activities
Cash receipts ...
22 2014 ANNUAL REPORT & ACCOUNTS
Notes to the Financial Statements
For the year ended 31 December 2014
1. GENERAL INFORM...
23 2014 ANNUAL REPORT & ACCOUNTS
its subsidiaries at fair value through profit or loss in its consolidated and separate fi...
24 2014 ANNUAL REPORT & ACCOUNTS
2.2 New and revised IFRSs in issue but not yet effective
The Company has not appli...
25 2014 ANNUAL REPORT & ACCOUNTS
payments of principal and interest on the principal amount outstanding, are measured
at F...
26 2014 ANNUAL REPORT & ACCOUNTS
 Step 4: Allocate the transaction price to the performance obligations in the cont...
27 2014 ANNUAL REPORT & ACCOUNTS
accordance with IAS 16, instead of IAS 41. The produce growing on bearer plants continues...
28 2014 ANNUAL REPORT & ACCOUNTS
adjusted in a manner consistent with the revaluation of the carrying amount of the asset ...
29 2014 ANNUAL REPORT & ACCOUNTS
3.3 Functional and presentation currency
These financial statements are presented...
30 2014 ANNUAL REPORT & ACCOUNTS
Current income tax is the expected amount of income tax payable on the taxable profit...
31 2014 ANNUAL REPORT & ACCOUNTS
When parts of an item of property, plant and equipment have different useful lives, th...
32 2014 ANNUAL REPORT & ACCOUNTS
Assets held under finance leases are depreciated over their expected useful lives on ...
33 2014 ANNUAL REPORT & ACCOUNTS
tax discount rate that reflects current market assessments of the time value of money and...
34 2014 ANNUAL REPORT & ACCOUNTS
3.13.2 Environmental costs
Costs incurred that result in future economic benefits,...
35 2014 ANNUAL REPORT & ACCOUNTS
Impairment of financial assets
Financial assets, other than those at FVTPL, are ass...
36 2014 ANNUAL REPORT & ACCOUNTS
3.15 Cash and cash equivalents
Cash and cash equivalents consist of cash, highly ...
37 2014 ANNUAL REPORT & ACCOUNTS
The effective interest method is a method of calculating the amortised cost of a fina...
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
NASCON Annual Report 2014
of 72

NASCON Annual Report 2014

NASCON Annual Report 2014
Published on: Mar 3, 2016
Published in: Investor Relations      
Source: www.slideshare.net


Transcripts - NASCON Annual Report 2014

  • 1. Vision To be a world class enterprise that is passionate about the quality of life of the general populace and giving high returns to stakeholders. Mission Touch the lives of people by providing their basic needs.
  • 2. 1 2014 ANNUAL REPORT & ACCOUNTS Contents Page • Notice of Annual General Meeting 2 • Directors, Officers and Professional Advisers 3 • Results at a Glance 4 • Chairman’s Statement 5 • Board of Directors 7 • Report of the Directors 8 • Corporate Governance Report 12 • Report of the Audit Committee 15 • Statement of Management’s Responsibilities for the Preparation and Approval of the Financial Statements 16 • Report of the Independent Auditors 17 • Statement of Profit or Loss and Other Comprehensive Income 18 • Statement of Financial Position 19 • Statement of Changes in Equity 20 • Statement of Cash Flows 21 • Notes to the Financial Statements 22 • Statement of Value Added 61 • Five-Year Financial Summary 62 • Data on Claimed/Unclaimed Dividends (as at December 31, 2014) 63 • E-Dividend Mandate 65 • Proxy Form 67
  • 3. 2 2014 ANNUAL REPORT & ACCOUNTS Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of NATIONAL SALT COMPANY OF NIGERIA PLC (NASCON) for the year 2014 will hold at the Agip Recital Hall, Muson Centre, Onikan, Lagos on Wednesday, the 10th day of June, 2015 at 11.00 a.m. prompt to transact the following business: ORDINARY BUSINESS 1. To lay before the members the Audited Financial Statements for the year ended 31st December 2014 along with the reports of the Directors, the report of the independent Auditors and the report of the Audit Committee thereon. 2. To declare a Dividend. 3. To re-elect Directors retiring by rotation and also in accordance with section 249(2) of the Companies and Allied Matters Act approve Mr. Paul Farrer who was appointed as a Director since the last Annual General Meeting. 4. To re-appoint the Auditors. 5. To authorize the Directors to fix the remuneration of the Auditors. 6. To appoint members of the Audit Committee. SPECIAL BUSINESS 7. To determine the remuneration of the Directors for the year ending 31st December 2015. PROXY A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not be a member of the Company. A proxy for an organization may vote on a show of hands and on a poll. For the appointment to be valid, a completed proxy form must be deposited at the registered office of the Company or with the Registrar not later than 48 hours before the time fixed for the meeting. DIVIDEND The Board recommends for the approval of shareholders a payment of 50 kobo dividend per ordinary share of 50 kobo each out of the profits declared in the financial year ended 31st December, 2014 and which will be subject to withholding tax at the appropriate rate. DIVIDEND WARRANTS If approved, the dividend warrants will be posted on Friday the 12th day of June, 2015 to shareholders whose names appear in the Company Register of Members at the close of business on Friday the 22nd day of May 2015. NOTES 1. CLOSURE OF REGISTER AND TRANSFER BOOKS Notice is hereby given that the Register of Members and Transfer Books of the Company will be closed from Monday the 25th Day of May, 2015 to Tuesday the 26th Day of May, 2015. 2. AUDIT COMMITTEE In accordance with Section 359(5) of the Companies and Allied Matters Act CAP C20 LFN 2004, a nomination (in writing) by any member or shareholder for appointment to the Audit Committee should reach the Company Secretary at least 21 days before the Annual General Meeting. The Audit Committee comprises two shareholders and two Directors. BY ORDER OF THE BOARD A. A. SAMUEL Company Secretary/Legal Adviser Dated this 4th day of May, 2015. National Salt Company of Nigeria Plc Dangote Group Union Marble House, 1, Alfred Rewane Road Falomo, Ikoyi, Lagos, Nigeria.
  • 4. 3 2014 ANNUAL REPORT & ACCOUNTS Directors, Officers and Professional Advisers DIRECTORS Alhaji Aliko Dangote (GCON) — Chairman Alhaji Sani Dangote — Director Halima Aliko Dangote — Director Mr. Paul Farrer — Managing Director Mr. Suleiman Olarinde — Director Mr. Olakunle Alake — Director Mr. Knut Ulmvoen — Director Alhaji Abdu Dantata — Director Alhaji M. S. Ladan-Baki — Director COMPANY SECRETARY Adedayo A. Samuel REGISTERED OFFICE Salt City Ijoko-Ota Ogun State REGISTRAR AND TRANSFER OFFICE Meristem Registrars Ltd. 213, Herbert Macaulay Way Adekunle, Yaba Lagos Tel: 01–8920491–2 01–2809250–3 E-mail: info@meristemregistrars.com AUDITORS Akintola Williams Deloitte (Chartered Accountants) 235, Ikorodu Road Ilupeju, Lagos BANKERS Ecobank Plc Access Bank Plc UBA Plc Fidelity Bank Plc Mainstreet Bank Ltd. Sterling Bank Plc Zenith Bank Plc GTBank Plc Jaiz Bank
  • 5. 4 2014 ANNUAL REPORT & ACCOUNTS Result at a Glance 2014 2013 N=’000 N=’000 Profit and Loss Revenue 11,250,544 10,837,261 Profit before taxation 2,856,399 4,038,405 Taxation (989,361) (1,338,863) Profit after taxation transferred to revenue reserve 1,867,038 2,699,542 Proposed final dividend 1,324,719 2,384,495 BALANCE SHEET Share capital 1,324,719 1,324,719 Shareholders’ funds 6,307,306 6,892,626 Per 50 kobo share data (kobo) Earnings 70 102 Dividend 50 90
  • 6. 5 2014 ANNUAL REPORT & ACCOUNTS Chairman’s Statement ellow Shareholders My Colleagues on the Board Members of the Audit Committee Representatives of the SEC, NSE, CAC and other regulators here present Invited guests Gentlemen of the Press Distinguished Ladies and Gentlemen, It is with great pleasure that I welcome you to the 2014 Annual General Meeting of our Company, National Salt Company of Nigeria Plc. I am happy to present to you the Annual Report and Financial Statements for the year ended 31st December, 2014. Beforewereviewthedetailsoflastyear’sperformance, allow me to provide you with a brief overview of the operating environment that influenced our performance in the year under review. 2014 PERFORMANCE The global financial system generally continued to exhibit signs of deep stress with the experience of lower or no growth than in prior years. This condition disrupted Nigeria’s economy and adversely affected the Company’s operations, financial condition and prospects. We continued to face the usual challenges of the Nigerian business environment, Energy in particular and other issues such as poor infrastructures, uncoordinated tax administration, amongst others, which played no mean roles in preventing the manufacturing sector in the country from reaching its full potential and NASCON was no exception. However, your Board and Management have tried as much as possible to overcome these difficulties and are therefore able to present the following results for year 2014 operations. Ladies and Gentlemen, our Company posted a turnover of N=11.2b, reflecting a 4% increase on the 2013 turnover of N=10.8b. We recorded an operating profit before tax of N=2.8b, while our profit after tax was N=1.8b. This performance reflects the impact of the operating environment on our operational costs and our response by way of measures and policies put in place to ensure our continued profitability. We are however committed to the continued growth of the business and we are implementing policies that will ensure your Company remains competitive so as to deliver sustainable returns to all shareholders. NEW PRODUCT LINE As promised at the 2013 Annual General Meeting last year, I am happy to announce to you that our Company has already launched the DANQ Seasoning in year 2014 and it’s heartwarming that the product is acceptable to the market. Efforts are also in top gear to ensure that the other new products, Tomato paste and Vegetable oil are completed as soon as possible and launched for entry into the respective markets. The technical hitches militating against the early completion of the two new projects have been surmounted. You will recall also that at the same Annual General Meeting last year, all shareholders unanimously approved the change of name of the Company from National Salt Company of Nigeria Plc. (a name that only reflects the Company as engaging in a mono product “salt”) to a more appropriate name that would reflect the current investments and new operational status of the Company as a manufacturer of other related consumer and daily need products. I am delighted to inform you that the appropriate authority, the Corporate Affairs Commission has finally approved the registration of the new name ‘NASCON ALLIED INDUSTRIES Plc.” as your new Company name. Alhaji Aliko Dangote (GCON) Chairman F
  • 7. 6 2014 ANNUAL REPORT & ACCOUNTS DIVIDEND In line with our practice of rewarding our shareholders, the Board has recommended for your consideration and approval at this meeting, the payment of a dividend of N=1.32 billion, representing 50 kobo for every 50 kobo ordinary share held. 2015 PROSPECTS I am happy to say that our prospects for 2015 remain excellent and I wish to assure you that our commitment to maintaining our leadership position in the Salt Industry remains the same, regardless of the increasing and stiff competition within the sub-sector. We shall continue to be committed to improving our upward trend, and we will ensure your Company continues to grow and remain competitive so as to deliver increasing dividends to all stakeholders. As said earlier, we have almost completed the installation of our Vegetable Oil Refinery and the Tomato paste packing machines at our site in Ota and we expect that these products will be in the market by year 2015.This is in line with our vision of becoming a frontline food business in Nigeria. THE BOARD Since the last Annual General Meeting, the Board considered and appointed Mr. Paul Farrer as a Director of the Company and equally appointed him as the Managing Director of the Company. Mr. Farrer came with a robust experience in the food distribution industry and his background and proven ability will strengthen the Company and elevate it to a greater height. He was the former Group COO of Food Concepts Plc and a Managing partner of Oakleigh Investments. Please join me in welcoming Mr. Farrer while wishing him a very successful tenure as the Chief Executive of the Company. In accordance with the provisions of CAMA your approval at this meeting is further required for his appointment. In addition, three of our Directors retiring by rotation will offer themselves for re-election during the course of this meeting. APPRECIATION My sincere appreciation goes to our numerous shareholders, employees and other stakeholders for their unflinching support and it is hoped that with the continued commitment of our Board, Management and Staff, the Company will continue to attain greater heights. On your behalf, I thank my colleagues on the Board, the Management and Staff for their exemplary work. We especially appreciate and say thank you to our numerous customers for their confidence in our brands. With the continued trust and confidence in us, we look forward with excitement to a better performance in the years ahead with appreciable returns on investment for all shareholders. Distinguished shareholders, my colleagues on the Board, ladies and gentlemen, I thank you for your presence at this meeting as I look forward to your very active participation. Thank you for your attention and audience. Alhaji Aliko Dangote (GCON) Chairman
  • 8. 6 2014 ANNUAL REPORT & ACCOUNTS
  • 9. 8 2014 ANNUAL REPORT & ACCOUNTS Report of the Directors For the year ended 31 December 2014 1. ACCOUNTS The Directors are pleased to submit their report together with the audited accounts of the Company for the year ended 31st December, 2014. 2. RESULT N=’000 The Company’s profit for the year after taxation was 1,867,038 Proposed final dividend for 2014 1,324,719 3. PRINCIPAL ACTIVITIES The principal activities of the Company during the year include processing of raw salt into refined, edible and industrial salt. 4. LEGAL FORM The Company was incorporated on the 30th April, 1973 as a limited liability company. The shares are currently quoted on the Stock Exchange. 5. DIRECTORS AND DIRECTORS’ INTERESTS 1. The names of Directors who are currently in office are as follows: (a) Alhaji Aliko Dangote (GCON) (b) Alhaji Sani Dangote (c) Halima Aliko Dangote (d) Mr. Olakunle Alake (e) Mr. Knut Ulmvoen (f) Mr. Suleiman Olarinde (g) Alhaji Sada Ladan-Baki (h) Alhaji Abdu Dantata (i) Mr. Paul Farrer (Managing) 2. In accordance with the provisions of Section 259 of the Companies and Allied Matters Act, 1990, one- third of the Directors of the Company who have been longest in office since their last election shall retire from office. In accordance with the provision of this section,AlhajiAbdu Dantata, Mr Knut Ulvmoen,Alhaji Sani Dangote are retiring by rotation and being eligible, offer themselves for re-election. 3. No Director has a service contract not determinable within five years. 4. The Directors’ interests in the issued share capital of the Company as recorded in the register of members and/or as notified by them for the purpose of Section 275 of the Companies and Allied Matters Act, C20 Laws of the Federal Republic of Nigeria 2004, are as follows: DIRECTORS’ SHAREHOLDING Number of 50k Shares held As at As at As at 31 Dec., 2014 31 Dec., 2013 31 Dec., 2012 (a) Alhaji Aliko Dangote (GCON) — 74,004,503 74,004,503 74,004,503 (b) Alhaji Sani Dangote — 36,042,062 36,042,062 42,062 (c) Mr. Olakunle Alake — 4,170,000 4,170,000 4,170,000 (d) Halima Aliko Dangote — — — — (e) Mr. Knut Ulmvoen — — — — (f) Mr. Suleiman Olarinde — — — — (g) Alhaji Sada Ladan-Baki — 1,758,673 1,758,673 279,288 (h) Alhaji Abdu Dantata — 12,000,000 12,000,000 12,000,000 (i) Mr. Paul Farrer (Managing) — — — —
  • 10. 9 2014 ANNUAL REPORT & ACCOUNTS The Directors are responsible for the preparation of the financial statements which give a true and fair view of the state of affairs of the Company and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004. In doing so, they ensure that: — proper accounting records are maintained; — applicable accounting statements are followed; — suitable accounting policies are adopted and consistently applied; — judgments and estimates made are reasonable and prudent; — the going concern basis is used, unless it is inappropriate to presume that the Company will continue in business; — internal control procedures are instituted which as far as is reasonably possible, safeguard the assets and prevent and detect fraud and other irregularities. 7. CORPORATE GOVERNANCE — The Company is committed to the best practice and procedures in corporate governance. Its business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. — Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs of the Company, review its performance, its operations, finance and formulate growth strategy. Attendance at Directors’ meetings is impressive. Report of the Directors For the year ended 31 December 2014 SHARE CAPITAL HISTORY Authorised Nominal Value Issued And Paid-Up Other than by Bonus Bonus Issue Total No. of Shares Amount No. of Shares Amount No. of Shares Amount No. of Shares Amount Year ’000 N=’000 ’000 N=’000 ’000 N=’000 ’000 N=’000 1991 40,000 20,000 14,110 7,055 1992 40,000 20,000 14,110 7,055 1993 40,000 20,000 14,110 7,055 1994 40,000 20,000 14,110 7,055 1995 80,000 40,000 14,110 7,055 1996 80,000 40,000 65,847 32,923 79,957 39,978 1997 200,000 100,000 79,957 39,978 1998 200,000 100,000 79,957 39,978 1999 200,000 100,000 79,957 39,978 2000 200,000 100,000 79,957 39,978 2001 200,000 100,000 79,957 39,978 2002 200,000 100,000 79,957 39,978 2003 200,000 100,000 79,957 39,978 2004 200,000 100,000 79,957 39,978 2005 200,000 100,000 79,957 39,978 2006 4,000,000 2,000,000 79,957 39,978 2007 4,000,000 2,000,000 2,127,909 1,063,954 2,207,865 1,103,932 2008 4,000,000 2,000,000 441,573 220,787 2,649,438 1,324,719 2009 4,000,000 2,000,000 2,649,438 1,324,719 2010 4,000,000 2,000,000 2,649,438 1,324,719 2011 4,000,000 2,000,000 2,649,438 1,324,720 2012 4,000,000 2,000,000 2,649,438 1,324,721 6. DIRECTORS’ RESPONSIBILITIES
  • 11. 10 2014 ANNUAL REPORT & ACCOUNTS — In line with the provisions of Section 258(2) of the Companies and Allied Matters Act, Cap. C20 Laws of the Federation of Nigeria 2004, the record of Directors’ attendance at Board Meetings is available for inspection at the Annual General Meeting. — The remuneration of Executive Directors is fixed and reviewed by a committee of non-Executive Directors. — The Board of Directors consists of 9 members; a Chairman, Managing Director and 7 non-Executive Directors. — Appointment to the Board is made by shareholders at the Annual General Meeting upon retirement. — The Board, from time to time, routinely empowers committees to examine and deliberate on finance and establishment related issues. 8. SUBSTANTIAL INTEREST in shares The Registrar has advised that according to the Register of Members on 31st December 2014, only Dangote Industries Limited with 1,647,763,557 ordinary shares of 50k each held more than 5% of the issued share capital of the Company. 9. FIXED ASSETS Movements in fixed assets during the year are shown in Note 14 to the Accounts. In the opinion of the Directors, the market value of the Company’s properties is not less than the value shown in the Accounts. 10. POST balance sheet EVENTS There were no significant developments since the balance sheet date which could have had a material effect on the state of affairs of the Company as at 31st December, 2014 and the profit for the year ended on that date, which have not been adequately recognized. 11. COMPANY DISTRIBUTORS The Company’s products are distributed by customers across the country. 12. SUPPLIERS The Company obtains its materials at arm’s length basis from overseas and local suppliers. Amongst its main overseas and local suppliers are Salinor as well as Dangote Agrosacks Ltd. 13. ANALYSIS OF SHAREHOLDINGS Analysis of shareholdings as at 31st December, 2014: Range No. of Holders Per cent Units Per cent 1 — 1,000 19,849 57.93 8,008,152 0.30 1,001 — 5,000 6,529 19.06 16,334,590 0.62 5,001 — 10,000 2,443 7.13 17,410,585 0.66 10,001 — 50,000 3965 11.57 85,627,311 3.23 50,001 — 100,000 695 2.03 51,231,920 1.93 100,001 — 500,000 591 1.72 123,568,876 4.66 500,001 — 1,000,000 82 0.24 58,197,552 2.20 1,000,001 — 5,000,000 83 0.24 164,302,231 6.20 5,000,001 — 10,000,000 11 0.03 78,195,642 2.95 10,000,001 and above 13 0.04 2,046,561,519 77.25 Grand Total 34,261 100.00 2,649,438,378 100.00 Report of the Directors For the year ended 31 December 2014
  • 12. 11 2014 ANNUAL REPORT & ACCOUNTS Report of the Directors For the year ended 31 December 2014 14. DONATIONS No donations were made by the Company in the year under review. 15. HUMAN RESOURCES 1. Employment and Employees The Company has reviewed its employment policy in line with the needs of business. Careful recruiting is now the focus to ensure that potential high performers are attracted and retained. 2. Work Environment The Company continuously strives to improve its operations to ensure a safe working environment. The Company maintains a high standard of hygiene in all its premises through sanitation practices and the regular fumigation exercises have been further strengthened by the installation of pest and rodent control gadgets. Safety and environment workshops have been organized for all employees with a broad focus on good house-keeping to ensure good and safe working environment. 3. Employee Development Local and overseas training and development programmes have been organized to meet the needs of the Company’s modernization and automation strategy implementation. The Company continues to place a premium on its human capital development arising from the fact that this would ensure improved efficiency of the business and maintain strategic advantage over competition. 16. AUDIT COMMITTEE Pursuant to Section 359(3) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria 2004, the Company has put in place an Audit Committee comprising two shareholders and two Directors as follows: Mr. J. S. Ajibola — Shareholder/Chairman Mr. Suleiman Olarinde — Director/Member Mr. Metu Richard Anyanaso — Shareholder/Member Alhaji Abdu Dantata — Director/Member 17. AUDITORS Messrs Akintola Williams Deloitte (Chartered Accountants) have indicated their willingness to continue in office as the Company’s Auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria, 2004. A resolution will be proposed authorizing the Directors to fix their remuneration. BY ORDER OF THE BOARD A. A. Samuel Company Secretary DANGOTE GROUP 1, Alfred Rewane Road, Falomo, Ikoyi, Lagos Nigeria. 4 May, 2015
  • 13. 12 2014 ANNUAL REPORT & ACCOUNTS National Salt Company of Nigeria Plc is committed to best practice and procedures in corporate governance. Overseen by the Board of Directors, corporate governance practices are constantly under review, in line with dynamics of the business environment. The Corporate Governance policies adopted by the Board of Directors are designed to ensure that the Company’s business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. The Board delegates the day-to-day running of the Company’s affairs to the Managing Director/Chief Executive Officer supported in this task by an Executive Management Committee. The Board currently consists of nine (9) members, the Chairman, Managing Director and seven (7) non-Executive Directors. RESPONSIBILITIES OF THE BOARD OF DIRECTORS It is the responsibility of the Board of National Salt Company of Nigeria Plc to: • Ensure that the Company’s operations are conducted in a fair, honest and transparent manner that conforms to high ethical standards. • Ensure integrity of the Company’s financial and internal control policies. • Ensure the accurate, adequate and timely rendition of statutory returns and financial reporting to the regulatory authorities (NSE, CAC, SEC) and shareholders. • Ensure value creation for shareholders, employees and other stakeholders. • Review and approve corporate policies, strategy, annual budget and business plan. • Monitor implementation of policies and the strategic direction of the Company. • Set performance objectives, monitor implementation and corporate performance. • Review and approve all major capital expenditure of the Company. • Ensure that the statutory rights of shareholders are protected at all times. MEETING OF THE BOARD OF DIRECTORS The Board of Directors holds several meetings a year to consider important corporate events and actions such as approval of Corporate Strategy, Annual Corporate Plan, review of internal risk management and control systems review performance and direct the affairs of the Company, its operations, finance and formulate growth strategies. It may however, convene a meeting if the need arises. RECORD OF DIRECTORS’ MEETINGS Attendance at Directors’ meetings is impressive. In line with provisions of Section 258(2) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria 2004, the record of Directors attendance at Board meetings is available for inspection at the Annual General Meeting. Board Meetings and Attendance for the Year 2014 7th Feb. 5th May 19th June 1st August 2th October No. Name 2014 2014 2014 2014 2014 1. Alhaji Aliko Dangote (GCON)      2. Alhaji Abdu Dantata      3. Alhaji Sani Dangote  A  A  4. Mr. Olakunle Alake      5. Mr. Ade Adeniji      6. Alhaji Sada Ladan-Baki  A    7. Mr. Knut Ulvmoen      8. Mr. S. Olarinde    A A 9. Halima Aliko Dangote      Corporate Governance Report
  • 14. 13 2014 ANNUAL REPORT & ACCOUNTS submission of year 2014 financial statements to nigerian stock exchange The financial statements for the year ended 31 December, 2014 were submitted to the Nigerian Stock Exchange on the 13th May, 2015. COMMITTEES OF THE BOARD OF DIRECTORS The Board delegated some of its responsibilities to standing committees that consists of Executive and non-Executive Directors. These are the Establishment and General Purpose and Finance Committees. The Committees report to the Board of Directors on their activities and decisions which are ratified by the full Board, at a meeting. In compliance with the practices of good corporate governance, the Chairman of the Board is not a member of any of these committees. The Finance Committee The Committee is comprised of four (4) Directors, with an independent Director as Chairman. The Committee members are: Mr. Olakunle Alake ­— Chairman Alhaji Abdu Dantata — Member Alhaji M. S. Ladan-Baki — Member Mr. Ade Adeniji — Member Finance Committee Meetings and Attendance 2014 6th February 5th May 4th August 27th October No. Name 2014 2014 2014 2014 1. Mr. Olakunle Alake     2. Alhaji Abdu Dantata     3. Mr. Ade Adeniji     4. Alhaji Sada Ladan-Baki     The Committee held four meetings in the year and is responsible for: • Assessment and monitoring of all risks associated with the operations of the Company. • Development and monitoring of the implementation of Internal Control System by Management. • Assisting the Board in its responsibility relating to the oversight of the Company’s financial credit and risk management policies and procedures. The Establishment Mr. Knut Ulvmoen — Chairman Mr. Suleiman O. Olarinde — Member Mr. Ade Adeniji — Member Halima Aliko Dangote — Member Establishment Committee Meetings and Attendance 2014 6th February 6th May 1st August 28th October 12th December No. Name 2014 2014 2014 2014 2014 1. Mr. Knut Ulvmoen      2. Mr. Suleiman Olarinde     A 3. Mr. Ade Adeniji      4. Halima Aliko Dangote      Corporate Governance Report
  • 15. 14 2014 ANNUAL REPORT & ACCOUNTS Corporate Governance Report The Committee held four meetings in the year and is responsible for: • Reviewing of the policy framework for employees’ and remuneration issues. • Making recommendation to the Board on all new Board appointments. Apart from the Board Standing Committees, the Audit Committee also plays an important role in the Company. The Audit Committee TheAudit Committee is made up of four (4) members, two representatives of Shareholders and two (2) members of the Board of Directors. Members of the Audit Committee are elected annually at General Meetings. The Committee in compliance to the requirement of corporate governance practice is chaired by a representative of the Shareholders. Audit Committee Meetings and Attendance 2014 5th February 7th May 6th August 12th December No. Name 2014 2014 2014 2014 1. Mr. J. S. Ajibola     2. Mr. Richard Metu     3. Alhaji Abdu Dantata     4. Mr. Suleiman Olarinde     The Committee met four times within the year. Members of the Committee are: Mr. J. S. Ajibola — Chairman/Shareholder Representative Mr. Metu Richard Anyanaso — Shareholder Representative Alhaji Abdu Dantata — Director Mr. Suleiman O. Olarinde — Director The Committee is responsible for: • Ensuring the independence and objectivity of the Audit. • Reviewing the adequacy and effectiveness of NASCON Plc’s internal control policies prior to endorsement by the Board. • Directing and supervising investigations into matters within its scope, such as evaluation of the effectiveness of NASCON PLC internal controls, business partner and client misconduct of interest. In addition to the above stated responsibilities, the Committee carries out all such other functions as stipulated by the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria. Insider Trading Policy In accordance with Section 14 of the Nigerian Stock Exchange Amended Listing Rules, the Board has put in place a Security Trading Policy which applies to all Directors and Employees and also to those who may at any time possess, any insider or material information about the Company. The Security Trading Policy as endorsed by the Board is in substantial conformity with the standard set out in Section 14 of the Amended Listing Rules. Accordingly, it is hereby confirmed that, after specific inquiries of all the Directors of the Company, they have all confirmed their compliance with the Policy in the period before the Company results were announced for the 2014 financial year. There is no case of non-compliance with the Policy. Furthermore, the compliance of the Company Directors with the Listing rules and the anti-insider trading policy will continue to be disclosed in the Company’s quarterly and other financial reports.
  • 16. 15 2014 ANNUAL REPORT & ACCOUNTS Report of the Audit Committee To the Members of National Salt Company of nig. plc In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act, 1990, we have examined the Auditors’ report for the year ended 31st December 2014. We have obtained all the information and explanations we required. In our opinion, the Auditors’ report is consistent with our review of the scope and planning of the Audit. We are also satisfied that the accounting and reporting policies of the Company are in accordance with legal requirements and agreed ethical practices. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied with Management’s response therein. Mr. J. S. Ajibola Chairman, Audit Committee Members of the Committee Alhaji Suleiman Olarinde Alhaji Abdu Dantata Mr. Metu Richard Ayanaso
  • 17. 16 2014 ANNUAL REPORT & ACCOUNTS The Directors of National Salt Company of Nigeria Plc are responsible for the preparation of the financial statements that give a true and fair view of the financial position of the Company as at 31 December 2014, and the results of its operations, cash flows and changes in equity for the period ended, in compliance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act. In preparing the consolidated financial statements, the Directors are responsible for: • properly selecting and applying accounting policies; • presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and • making an assessment of the Company’s ability to continue as a going concern. The Directors are responsible for: • designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; • maintaining adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS; • maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; • taking such steps as are reasonably available to them to safeguard the assets of the Company; and preventing and detecting fraud and other irregularities. Going Concern The Directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead. The financial statements of the Company for the year ended 31 December 2014 were approved by Directors on 30th April, 2015. On behalf of the Directors _________________________ _________________________ Olakunle Alake Tunde Iwamofe Director Chief Financial Officer FRC/2013/ICAN/00000002214 FRC/2013/ICAN/00000002247 _________________________ Aliko Dangote, GCON Chairman FRC/2013/IODN/00000001766 Statement of Management’s Responsibilities for the Preparation and Approval of the Financial Statements For the year ended 31 December 2014
  • 18. Report of the Independent Auditors to the members of national salt company of nigeria plc Report on the Financial Statements We have audited the accompanying financial statements of National Salt Company of Nigeria Plc, (“the Company”) which comprise the statements of financial position as at 31 December 2014, the statements of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory information. Directors’ Responsibility for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act, CAP C20, LFN 2004, the Financial Reporting Council of Nigeria Act, 2011, the International Financial Reporting Standards and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these 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 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 auditors’ judgment, 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 controls 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 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 audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of National Salt Company of Nigeria Plc, as at 31 December 2014 and of its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards, the Companies and Allied Matters Act CAP C20 LFN 2004 and the Financial Reporting Council of Nigeria Act, 2011. Other Reporting Responsibilities In accordance with the Sixth Schedule of Companies and Allied Matters Act CAP C20 LFN 2004 we expressly state that: (i) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit. (ii) The Company has kept proper books of account, so far as appears from our examination of those books. (iii) The Company’s statements of financial position and its statements of profit or loss and other comprehensive income are in agreement with the books of account and returns. Uche Urobu, FCA – FRC/2013/ICAN/00000000871 for: Akintola Williams Deloitte Chartered Accountants Lagos, Nigeria 30 April, 2015
  • 19. 18 2014 ANNUAL REPORT & ACCOUNTS Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2014 2014 2013 Note N=’000 N=’000 Continuing operations Revenue 5 11,250,544 10,837,261 Cost of sales 6 (7,464,783) (6,244,155) Gross profit 3,785,761 4,593,106 Investment income 7 30,227 230,136 Other income 8 102,877 228,341 Distribution expenses (123,720) (71,432) Administrative expenses 9 (923,520) (933,429) Finance cost 10 (15,226) (8,317) Profit before tax 11 2,856,399 4,038,405 Income tax expense 12 (989,361) (1,338,863) Profit for the year 1,867,038 2,699,542 Other comprehensive income, net of income tax — — Total comprehensive income for the year 1,867,038 2,699,542 Earnings per share From continuing operations — — Basic and diluted (kobo per share) 70 102
  • 20. 19 2014 ANNUAL REPORT & ACCOUNTS Statement of Financial Position As at 31 December 2014 2014 2013 Note N=’000 N=’000 Assets Non-current assets Property, plant and equipment 14 6,683,479 5,749,055 Intangible assets and goodwill 15 234,993 — Other assets 16 14,545 — Total non-current assets 6,933,017 5,749,055 Current assets Inventories 17 1,471,568 815,483 Trade and other receivables 18 724,183 1,119,395 Other assets 16 46,749 753,560 Cash and bank balances 19 887,751 1,192,879 Due from related parties 28.1 2,492,617 1,800,795 Total current assets 5,622,868 5,682,112 Total assets 12,555,885 11,431,167 Equity and liabilities Capital and reserves Share capital 20 1,324,719 1,324,719 Share premium 21 434,037 434,037 Retained earnings 22 4,548,550 5,133,870 Total equity 6,307,306 6,892,626 Non-current liabilities Borrowings 23 38,570 38,570 Retirement benefit obligation 24 327,986 340,373 Deferred tax liabilities 12 535,908 352,882 Total non-current liabilities 902,464 731,825 Current liabilities Bank overdraft 19 5,236 5,236 Trade and other payables 25 2,023,915 1,247,559 Due to related parties 28.2 2,563,112 1,390,593 Current tax liabilities 12 753,852 1,163,328 Total current liabilities 5,346,115 3,806,716 Total liabilities 6,248,579 4,538,541 Total equity and liabilities 12,555,885 11,431,167 These financial statements were approved by the Board of Directors and authorised for issue on 30 April 2015 and signed on its behalf by: _____________________ _____________________ Olakunle Alake Tunde Iwamofe Director Chief Financial Officer FRC/2013/ICAN/00000002214 FRC/2013/ICAN/00000002247 _________________________ Aliko Dangote, GCON Chairman FRC/2013/IODN/00000001766 The accompanying notes on pages 22 to 60 and non-IFRS statements on pages 61 to 61 form part of these financial statements.
  • 21. 20 2014 ANNUAL REPORT & ACCOUNTS Share Share Revaluation Retained Total capital premium reserve earnings equity N=’000 N=’000 N=’000 N=’000 N=’000 Balance at 1 January 2013 1,324,719 434,037 — 4,818,823 6,577,579 Profit for the year — — — 2,699,542 2,699,542 Other comprehensive income for the year (net of tax) — — — — — Total comprehensive income — — — 2,699,542 2,699,542 Payment of dividends — — — (2,384,495) (2,384,495) Balance at 31 December 2013 1,324,719 434,037 — 5,133,870 6,892,626 Profit for the year — — — 1,867,038 1,867,038 Other comprehensive income for the year (net of tax) — — — — — Total comprehensive income — — — 1,867,038 1,867,038 Other adjustment — — — (67,863) (67,863) Payment of dividends — — — (2,384,495) (2,384,495) Balance at 31 December 2014 1,324,719 434,037 — 4,548,550 6,307,306 Statement of Changes in Equity For the year ended 31 December 2014
  • 22. 21 2014 ANNUAL REPORT & ACCOUNTS 2014 2013 Note N=’000 N=’000 Cash flows from operating activities Cash receipts from customers 11,748,633 11,003,505 Cash paid to suppliers and employees (6,321,873) (7,681,561) 5,426,760 3,321,944 Value added tax paid (1,403) 12,357 Tax paid (1,215,812) (1,452,402) Net cash provided by operating activities 26 4,209,545 1,881,899 Cash flows from investing activities Purchase of intangible asset 15 (281,429) — Purchase of property, plant and equipment 14 (1,888,350) (2,594,791) Proceeds from sale of property, plant and equipment 24,600 2,365 Interest received 7 30,227 230,136 Net cash provided by investing activities (2,114,952) (2,362,290) Cash flows from financing activities Dividend paid 22.2 (2,384,495) (2,384,495) Interest paid (15,226) (8,317) Net cash provided by financing activities (2,399,721) (2,392,812) Net increase/(decrease) in cash and cash equivalents (305,128) (2,873,203) Cash and cash equivalents at 1 January 1,187,643 4,060,846 Cash and cash equivalents at 31 December 19 882,515 1,187,643 Statement of Cash Flows For the year ended 31 December 2014
  • 23. 22 2014 ANNUAL REPORT & ACCOUNTS Notes to the Financial Statements For the year ended 31 December 2014 1. GENERAL INFORMATION National Salt Company of Nigeria Plc. (Now NASCON INDUSTRIES Plc.) was incorporated in Nigeria as a limited liability company on 30 April 1973. It was fully privatized in April, 1992 and became listed on the Nigerian Stock Exchange on 20 October, 1992. At a general meeting held on 29 September 2006, the shareholders approved the acquisition of the assets, liabilities and business undertakings of Dangote Salt Limited and the issue and allotment of additional NASCON PLC shares as the purchase consideration. The major shareholder of the Company is Dangote Industries Limited that owns about 62.19% of the issued share capital, while the remaining 37.81% is held by the Nigerian public. The ultimate controlling party is Dangote Industries Limited. The registered address of the Company is located at 15b Ikosi Road, Oregun, Ojota, Lagos. 1.1 The principal activity The principal activity of the Company is the refining and sale of edible, refined, bulk and industrial salt as well as seasoning. The Company’s products are sold through distributors across the country. 1.2 Financial period These financial statements cover the financial year from 1 January 2014 to 31 December 2014 with comparatives for year ended 31 December 2013. 1.3 Going concern status The Company has consistently turned in profits since 2007. The Directors believe that there is no intention or threat from any party to curtail significantly its line of business in the foreseeable future. Thus, these financial statements are prepared on a going concern basis. 1.4 Operating environment Emerging markets such as Nigeria are subject to different risks than more developed markets, including economic, political, social, and legislative risks. As it has happened in the past, actual or perceived financial problems or an increase in the perceived risks associated with investing in emerging economies could adversely affect the investment climate in Nigeria and the country’s economy in general. The global financial system continues to exhibit signs of deep stress and many economies around the world are experiencing lesser or no growth than in prior years. These conditions could slow or disrupt Nigeria’s economy, adversely affecting the Company’s access to capital and cost of capital for the Company and more generally, its business, results of operation, financial condition and prospects. 2. Application of new and revised International Financial Reporting Standards (IFRSs) 2.1 New and revised IFRSs/IFRICs affecting amounts reported and/or disclosures in this financial statements In the current year, the Company has applied a number of new and revised IFRSs issued by the InternationalAccounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2014. Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure
  • 24. 23 2014 ANNUAL REPORT & ACCOUNTS its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to:  Obtain funds from one or more investors for the purpose of providing them with professional investment management services.  Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both.  Measure and evaluate performance of substantially all of its investments on a fair value basis. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. The Directors of the Company do not anticipate that the investment entities amendments will have any effect on the Group’s consolidated financial statements as the Company is not an investment entity. Amendments to IAS 32 offsetting financial assets and financial liabilities The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of currently has a legally enforceable right of set-off. The Directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Company’s financial statements as the Company does not have any financial assets and financial liabilities that qualify for offset. Amendments to IAS 36 recoverable amount disclosures for non-financial assets The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements. The amendments require retrospective application. Amendments to IAS 39 novation of derivatives and continuation of hedge accounting The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendments require retrospective application. IFRIC 21 levies IFRIC 21 addresses the issue of when to recognise a liability to pay a levy. The interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period. IFRIC 21 requires retrospective application. Notes to the Financial Statements For the year ended 31 December 2014
  • 25. 24 2014 ANNUAL REPORT & ACCOUNTS 2.2 New and revised IFRSs in issue but not yet effective The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective: IFRS 9 Financial Instruments5 IFRS 15 Revenue from Contracts with Customers4 Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations3 Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation3 Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants3 Amendments to IAS 19 Defined Benefit Plans: Employee Contributions1 Amendments to IFRSs Annual Improvements to IFRSs 2010–2012 Cycle2 Amendments to IFRSs Annual Improvements to IFRSs 2011–2013 Cycle1 1 Effective for annual periods beginning on or after 1 July 2014, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions. Earlier application is permitted. 3 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted. 4 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted. 5 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. IFRS 9 financial instruments IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include (a) impairment requirements for financial assets and (b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments. Key requirements of IFRS 9  all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely Notes to the Financial Statements For the year ended 31 December 2014
  • 26. 25 2014 ANNUAL REPORT & ACCOUNTS payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.  In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.  The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced. The Directors of the Company anticipate that the application of IFRS 9 in the future may have a material impact on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until the Group undertakes a detailed review. IFRS 15 revenue from contracts with customers In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:  Step 1: Identify the contract(s) with a customer.  Step 2: Identify the performance obligations in the contract.  Step 3: Determine the transaction price. Notes to the Financial Statements For the year ended 31 December 2014
  • 27. 26 2014 ANNUAL REPORT & ACCOUNTS  Step 4: Allocate the transaction price to the performance obligations in the contract.  Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15. The Directors of the Company do not anticipate that the application of IFRS 15 will have a material impact on the Group’s consolidated financial statements. Amendments to IFRS 11 accounting for acquisitions of interests in joint operations The amendments to IFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in IFRS 3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment testing of a cash-generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations. The amendments to IFRS 11 apply prospectively for annual periods beginning on or after 1 January 2016. The Directors of the Company do not anticipate that the application of these amendments to IFRS 11 will have a material impact on the Group’s consolidated financial statements. Amendments to IAS 16 and IAS 38 clarification of acceptable methods of depreciation and amortisation The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: (a) when the intangible asset is expressed as a measure of revenue; or (b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after 1 January 2016. Currently, the Group uses the straight-line method for depreciation and amortisation for its property, plant and equipment, and intangible assets respectively. The Directors of the Company believe that the straight-line method is the most appropriate method to reflect the consumption of economic benefits inherent in the respective assets and accordingly, the Directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 38 will have a material impact on the Group’s consolidated financial statements. Amendments to IAS 16 and IAS 41 agriculture: bearer plants The amendments to IAS 16 and IAS 41 define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in Notes to the Financial Statements For the year ended 31 December 2014
  • 28. 27 2014 ANNUAL REPORT & ACCOUNTS accordance with IAS 16, instead of IAS 41. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41. The Directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 41 will have a material impact on the Group’s consolidated financial statements as the Group is not engaged in agricultural activities. Amendments to IAS 19 defined benefit plans: employee contributions The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, the entity may either recognise the contributions as a reduction in the service cost in the period in which the related service is rendered, or to attribute them to the employees’ periods of service using the projected unit credit method; whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service. The Directors of the Company do not anticipate that the application of these amendments to IAS 19 will have a significant impact on the Group’s consolidated financial statements. Annual improvements to IFRSs 2010–2012 cycle The Annual Improvements to IFRSs 2010-2012 Cycle include a number of amendments to various IFRSs, which are summarised below. The amendments to IFRS 2 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii) add definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’. The amendments to IFRS 2 are effective for share-based payment transactions for which the grant date is on or after 1 July 2014. The amendments to IFRS 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non- financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit or loss. The amendments to IFRS 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014. The amendments to IFRS 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker. The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short- term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective. The amendments to IAS 16 and IAS 38 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is Notes to the Financial Statements For the year ended 31 December 2014
  • 29. 28 2014 ANNUAL REPORT & ACCOUNTS adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. The amendments to IAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s consolidated financial statements. Annual improvements to IFRSs 2011-2013 cycle TheAnnual Improvements to IFRSs 2011-2013 Cycle include a number of amendments to various IFRSs, which are summarised below. The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The amendments to IFRS 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32. The amendments to IAS 40 clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: (a) the property meets the definition of investment property in terms of IAS 40; and (b) the transaction meets the definition of a business combination under IFRS 3. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s consolidated financial statements. 3. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied 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. 3.1 Statement of compliance The financial statements are prepared in accordance with, and comply with, International Financial Reporting Standards (IFRS) and International Reporting Interpretations Committee (IFRIC) interpretations issued and effective at the time of preparing these financial statements. 3.2 Basis of preparation The financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets. Notes to the Financial Statements For the year ended 31 December 2014
  • 30. 29 2014 ANNUAL REPORT & ACCOUNTS 3.3 Functional and presentation currency These financial statements are presented in Naira, which is the Company’s functional currency. All financial information presented in Naira has been rounded to the nearest thousand. 3.4 Revenue recognition Revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, after deducting discounts, customer returns, VAT, volume rebates and other similar allowance. Sales are stated at their invoiced amount which is net of value added taxes and discounts. Sale of goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the Company; and The costs incurred or to be incurred in respect of the transaction can be measured reliably. Specifically, revenue from the sale of goods is recognised when goods are delivered (or collected, if sold under self-collection terms) and legal title is passed. 3.5 Interest income Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. 3.6 Employee benefits 3.6.1 Retirement benefit costs Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. The entity was operating a defined benefit for its permanent Nigerian staff, the benefits under which are related to employees’ length of service and final remuneration. However, the Board resolved to eliminate the scheme effective January, 2013. 3.7 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statements of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Notes to the Financial Statements For the year ended 31 December 2014
  • 31. 30 2014 ANNUAL REPORT & ACCOUNTS Current income tax is the expected amount of income tax payable on the taxable profit for the year determined in accordance with the Companies Income Tax Act (CITA) using statutory tax rates at the reporting sheet date. Education tax is assessed at 2% of the assessable profits. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the 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. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised in profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are recognised in other comprehensive income or directly in equity respectively. Where current tax and deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. 3.8 Property, plant and equipment 3.8.1 Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Fixed assets under construction are disclosed as capital work-in-progress. The cost of construction recognised includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets. Purchased software that is integral to the functionality of the related equipment is capitalized as part of the equipment. Notes to the Financial Statements For the year ended 31 December 2014
  • 32. 31 2014 ANNUAL REPORT & ACCOUNTS When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in the statement of comprehensive income. 3.8.2 Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred. 3.8.3 Depreciation Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment which reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term in which case the assets are depreciated over the useful life. The estimated useful lives for the current and comparative periods are as follows:  Buildings — 50 years (2%)  Plant and Machinery — 15 years (6.67%)  Motor Vehicles — 4 years (25%)  Computer Equipment — 3 years (33.3%)  Tools and Equipment — 4 years (25%)  Furniture and Equipment — 5 years (20%) Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate. Capital work-in-progress is not depreciated. The attributable cost of each asset is transferred to the relevant asset category immediately the asset is available for use and depreciated accordingly. Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is recognised so as to write off the cost of assets (other than properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Notes to the Financial Statements For the year ended 31 December 2014
  • 33. 32 2014 ANNUAL REPORT & ACCOUNTS Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. 3.9 Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Where there are no agreed lease terms, rent payable is recognised as incurred. 3.10 Intangible assets Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Derecognition of intangible assets An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. 3.11 Impairment of tangible and intangible assets excluding goodwill At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- Notes to the Financial Statements For the year ended 31 December 2014
  • 34. 33 2014 ANNUAL REPORT & ACCOUNTS tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash- generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. 3.12 Inventories Inventories are stated at the lower of cost and net realisable value. Cost of engineering spares and consumable stock is determined on a weighted average basis. Cost of other stock (raw materials, packaging materials, work-in-progress and finished goods) is determined on the basis of standard costs adjusted for variances. Standard costs are periodically reviewed to approximate actual costs. Goods in transit are valued at the invoice price. Cost of inventory includes purchase cost, conversion cost (materials, labour and overhead) and other costs incurred to bring inventory to its present location and condition. Finished goods, which include direct labour and factory overheads, are valued at standard cost adjusted at year-end on an actual cost basis. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories by the method most appropriate to the particular class of inventory, with the majority being valued on an average cost basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. 3.13 Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation (when the time value of money is material). The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. 3.13.1 Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Notes to the Financial Statements For the year ended 31 December 2014
  • 35. 34 2014 ANNUAL REPORT & ACCOUNTS 3.13.2 Environmental costs Costs incurred that result in future economic benefits, such as extending useful lives, increasing capacity or safety, and those costs incurred to mitigate or prevent future environmental contamination are capitalized. When the Company’s management determine that it is probable that a liability for environmental costs exists and that its resolution will result in an outflow of resources, an estimate of the future remediation cost is recorded as a provision without contingent insurance recoveries being offset (only virtually certain insurance recoveries are recognized as an asset on the statement of financial position). When we do not have a reliable reversal time schedule or when the effect of the passage of time is not significant, the provision is calculated based on undiscounted cash flows. Environmental costs, which are not included above, are expensed as incurred. 3.14 Financial instruments Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular purchases or sales of financial assets are recognised and derecognized on a trade date basis. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. The Company’s financial assets comprise loans and receivables. Effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Notes to the Financial Statements For the year ended 31 December 2014
  • 36. 35 2014 ANNUAL REPORT & ACCOUNTS Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered impaired when there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For all categories of financial assets, objective evidence of impairment could include:  significant financial difficulty of the issuer or counterparty; or  breach of contract, such as a default or delinquency in interest or principal payments; or  it is becoming probable that the owner will enter bankruptcy or financial re-organisation; or  the disappearance of an active market for that financial asset because of financial difficulties. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 days, as well as observable changes in national or local economic conditions that correlate with a default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. Derecognition of financial assets The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. Notes to the Financial Statements For the year ended 31 December 2014
  • 37. 36 2014 ANNUAL REPORT & ACCOUNTS 3.15 Cash and cash equivalents Cash and cash equivalents consist of cash, highly liquid investments and cash equivalents which are not subject to significant changes in value and with an original maturity date of generally less than three months from the time of purchase. 3.16 Financial liabilities and equity instruments issued by the Company Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects. Financial liabilities Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ (FVTPL) or other liabilities. Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if:  it has been acquired principally for the purpose of repurchasing it in the near term or on initial recognition;  it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short term profit taking;  it is a derivative that is not designated and effective as a hedging instrument. A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided on that basis; or it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the other gains and losses’ line item. Other financial liabilities Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method. Notes to the Financial Statements For the year ended 31 December 2014
  • 38. 37 2014 ANNUAL REPORT & ACCOUNTS The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly estimates future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate), a shorter period, to the net carrying amount on initial recognition. Derecognition of financial liabilities The Company derecognises financial liabilities when, and only when the Company’s obligations are discharged, cancelled, or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid, and payable is recognised in profit or loss. 3.17 Earnings per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held, if any. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, if any, for the effects of all dilutive potential ordinary shares. 3.18 Foreign currency transactions and translation Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in Naira, which is the Company’s functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit or loss and other comprehensive income. Non-monetary assets and liabilities in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the transaction date and are not restated. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency at foreign exchange rates prevailing at the dates the fair value was determined and are not restated. 3.19 Borrowing costs Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Notes to the Financial Statements For the year ended 31 December 2014

Related Documents