8 Jan 2018 - accounting policies. In our opinion, the consolidated and separate financial statements give a true and fai
ACADEMY PRESS PLC LAGOS, NIGERIA REPORT OF THE DIRECTORS, CONSOLIDATED AND SEPARATE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017
ACADEMY PRESS PLC REPORT OF THE DIRECTORS, CONSOLIDTED AND SEPARATE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017 CONTENTS
PAGE
Corporate Information
3
Report of the Directors
4
Corporate governance report
8
Statement of Directors’ Responsibilities
12
Report of the Audit Committee
13
Independent Auditors’ Report
14
Consolidated and Separate Statement of Profit or Loss and Other Comprehensive Income
19
Consolidated and Separate Statement of Financial Position
20
Consolidated and Separate Statement of Changes in Equity 21 Consolidated and Separate Statement of Cash Flows
22
Notes to the Financial Statements
23
Other National Disclosures Value Added Statement
71
Five-year financial Summary - Group
72
Five-year financial Summary – Company
73
ACADEMY PRESS PLC REPORT OF THE DIRECTORS, CONSOLIDATED AND SEPARATE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017 CORPORATE INFORMATION
DIRECTORS
REGISTERED OFFICE
High Chief (Sir) Simeon. O. Oguntimehin, OON Chairman Mr. Wahab. B. Dabiri Mr. Olugbenga Ladipo Babatunde. J. Fashanu Mr. M. Goodman Mr. Lasisi Aderibigbe Mr. Oyewole Olaoye Mrs. F. B. Omo-Eboh Mr. Omosola Sokunbi Mr. Femi Akingbe Mr. Ivor Hutchinson (British) 28/32, Industrial Avenue, Ilupeju Industrial Estate, Ilupeju, Lagos. Tel: 09030001367, 09030001368 & 07014900034 Email: applc@academy press- plc.com www.academypress-plc.com
EXTERNAL AUDITORS
Ernst & Young (Chartered Accountants) 10th & 13th Floors, UBA House 57, Marina, Lagos Nigeria E-mail:
[email protected]
SOLICITORS
Lekan Sofolahan & Co OPIC Plaza, 1st Floor suite 117 Mobolaji Bank – Anthony Way Ikeja Lagos Nigeria
BANKERS
Union Bank of Nigeria Plc First Bank of Nigeria Plc Sterling Bank Nigeria Plc Zenith Bank Plc. Guaranty Trust Bank Plc.
REGISTRAR
Pace Registrars Limited, Knight Frank Building (8th floor), 24, Campbell Street, Lagos. Tel: 01-2635607, 01-7303445,01-2805538 E-mail: Info @ paceregistrars.Com
SECRETARY
Alpha-Genasec Limited, Krestal Laurel Complex (4th Floor), 376,Ikorodu road, Maryland, Ikeja, Lagos Tel: 234(0)8062272121 E-mail:
[email protected]
3
Vice Chairman Managing Director/Chief Executive Officer Non-Executive Non-Executive- Resigned September 2016 Non–Executive Non–Executive Non-executive Executive Non-executive - Appointed 23 June 2016 Non-executive - Appointed September 2016
ACADEMY PRESS PLC REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 MARCH 2017 The directors have pleasure in presenting their report on the affairs of Academy Press Plc (“the Company”) together with its subsidiaries (“the Group”) and the Consolidated and separate audited financial statements of the Group and the Company for the year ended 31 March 2017. LEGAL FORM Academy Press Plc was incorporated in Nigeria as a private limited liability company on 28th July 1964 and by a special resolution became a public limited liability company on 22nd October 1991. The certificate of incorporation number of the Company is RC 3915.The Company offered its shares to the public in November 1994 and these shares were listed on the Nigerian Stock Exchange on 15th June, 1995. PRINCIPAL ACTIVITIES The group carries on its business, as printers of educational and general books, and commercial printing of diaries, labels, calendars, periodicals, annual reports, confidential and other printing. STATE OF AFFAIRS In the opinion of the Directors, the state of the Group’s affairs is satisfactory and there has been no material change since the reporting date, which would affect the financial statements as presented. RESULTS FOR THE YEAR
The Group 2017
2,117,452
2016 Restated N’000 2,047,675
1,842,636
2016 Restated N’000 1,779,794
N’000 Revenue
The Company 2017 N’000
=========
=========
========
=========
Loss before taxation
(387,459)
(93,510)
(353,426)
(34,937)
Taxation
(125,266)
26,187
(133,665)
25,052
-------------
---------------
--------------
-------------
(512,725)
(67,323)
(487,091)
(9,885)
========
=======
Loss after taxation
=======
=======
DIVIDEND The directors have not recommended payment of any dividend in view of the loss sustained by the Company and the need to strengthen its working capital position (2016: Nil). PROPERTY, PLANT AND EQUIPTMENT Information relating to movement in property, plant and equipment is shown in Note 15 to the financial statements. In the opinion of the Directors, the market values of the Group’s properties are not less than the value shown in these financial statements.
DIRECTORS INTEREST IN CONTRACTS None of the Directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 of any disclosable interest in contracts with which the Company is involved as at 31 March 2017.
4
ACADEMY PRESS PLC REPORT OF THE DIRECTORS – Continued FOR THE YEAR ENDED 31 MARCH 2017 DONATIONS The company made a donation and gifts of N160,000 to charitable organization during the year ended 31 March 2017 (2016: N295, 960).
2017
2016
N’000
N’000
100,000 60,000 -------------
50,000 107,360 138,600 --------------
160,000
295,960
=======
=======
Yaba College of Technology – Printing Student Association Lagos State Government Ministry of Education Federal Road Safety Commission - South West Zones
DIRECTORS The names of the Directors at the date of this report and of those who held office during the year are as follows: High Chief (Sir) Simeon. O. Oguntimehin, OON Mr. Wahab. B. Dabiri Mr. Olugbenga Ladipo J. B. Fashanu Mr. M. Goodman Mr. Lasisi Aderibigbe Mr. Oyewole Olaoye Mrs. F. B. Omo-Eboh Mr. Omosola Sokunbi Mr. Femi Akingbe Mr. Ivor Hutchinson (British)
Chairman Vice Chairman Managing Director/Chief Executive Officer Non-Executive Non-Executive Non–Executive Non–Executive Non-executive Executive Non-executive - Appointed 23 June 2016 Non-executive – Appointed September 2016
SHARE HOLDINGS AND SUBSTANTIAL INTEREST IN SHARES The issued and fully paid share capital of the Company as at 31 March 2017 was beneficially owned as follows: Number of Shares Holding Alidan Investment Limited West African Book Publishers Limited Hambleside Limited Others
84,078,546 62,880,000 60,443,208 397,398,246 ---------------------604,800,000 ============
% 13.90 10.40 9.99 65.71 ---------100.00 =====
Nominal Value N 42,039,273 31,440,000 30,221,604 198,699,123 ------------------302,400,000 ===========
% 13.90 10.40 9.99 65.71 ---------100.00 =====
Nominal Value N 42,039,273 31,440,000 30,221,604 198,699,123 ------------------302,400,000 ===========
The issued and fully paid share capital of the Company as at 31 March 2016 was beneficially owned as follows: Number of Shares Holding Alidan Investment Limited West African Book Publishers Limited Hambleside Limited Others
84,078,546 62,880,000 60,443,208 397,398,246 ---------------------604,800,000 ============
5
ACADEMY PRESS PLC REPORT OF THE DIRECTORS – Continued FOR THE YEAR ENDED 31 MARCH 2017
DIRECTORS’ INTERESTS Directors’ interest in the issued share Capital of the Company as recorded in the register of Members and/or as notified by them of the purpose of Section 275 of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and in compliance with the listing requirements of the Nigerian Stock Exchange are as follows: No. of Shares No. of Shares As at 31/03/17 781,440 8,690,653 351,000 1,552,802 6,964,120 2,415,000 147,019 1,200,000 480,000
High Chief (Sir) Simeon.O. Oguntimehin, OON Olugbenga Ladipo Martin Goodman Wahab B. Dabiri Lasisi Aderibigbe Babatunde J. Fashanu Folashade B. Omo- Eboh (Mrs) Ivor Hutchinson Oyewole Olaoye Omosola Sokunbi
As at 31/03/16 781,440 8,690,653 2,521,652 351,000 1,552,802 6,964,120 2,415,000 1,200,000 480,000
EMPLOYMENT AND EMPLOYEES 1. Employment of Physically Challenged Persons It is the Company’s policy that there is no discrimination in considering applications for employment including those from physically challenged persons. All employees whether or not physically challenged are given equal opportunities to develop their expertise and knowledge and to qualify for promotion in furtherance of their careers. The company has two (2) physically challenged person in her employment as at 31 March 2017. 2. Welfare The company is registered with a Health Management Organisation (HMO) – (Clearline International Limited). Staff, Spouse and 4 children choose a primary health care provider, where cases of illness are referred for treatment. The company also provides healthcare facilities for its staff whilst all essential safety regulations are observed in the factories and offices to guarantee maximum protection of employees at work. 3. Training Staff are kept abreast of up-to-date techniques in the industry through various in-house and outside training courses. The company attaches great importance to training and all categories of staff attend courses or seminars as considered necessary by the Company’s management. FINANCIAL COMMITMENTS The directors are of the opinion that all known liabilities and commitments have been taken into account. These liabilities are relevant in assessing the Company’s state of affairs. EVENTS AFTER REPORTING DATE As stated in Note 32, there are no events or transactions that have occurred since the reporting date which would have a material effect on the financial statements as presented. FORMAT OF FINANCIAL STATEMENTS The financial statements of Academy Press Plc have been prepared in accordance with the reporting and presentation requirements of the Companies and Allied matters Act, CAP C20, Laws of the Federation of Nigeria, 2004 and are in compliance with the International Financial Reporting Standards issued by International Accounting Standards Board and the requirements of Financial Reporting Council of Nigeria Act No 6, 2011. The Director considers that the format adopted is the most suitable for the Company.
6
ACADEMY PRESS PLC REPORT OF THE DIRECTORS – Continued FOR THE YEAR ENDED 31 MARCH 2017
AUDITORS Ernst & Young was appointed as the Company’s Auditors on 31 May 2016 and have indicated their willingness to continue in office as Auditors to the Company 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 at the Annual General Meeting empowering the Directors to fix their remuneration.
BY ORDER OF THE BOARD
Joshua O. Adeoye FRC/2014/ICSAN/00000008037 for: Alpha –Genasec Limited COMPANY’S SECRETARY LAGOS, NIGERIA 29th December 2017
7
ACADEMY PRESS PLC CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 31 MARCH 2017 Corporate Governance principles, rules and regulatory requirements of the Nigerian Stock Exchange and Securities and Exchange Commission have indeed been an integral part of the way Academy Press Plc. conducts its business. Good corporate governance is an essential part of the Board. Our Company’s governance structure and practices is in line with applicable local legislation and international best practices including compliance with the Code of Corporate Governance for Public Companies issued by Security and Exchange Commission. The Company has always been guided by a strong conviction of adhering to transparency, accountability, good management practices and integrity through the adoption and monitoring of corporate strategies, goals and procedures to comply with its legal and ethical responsibilities. The company believes that the implementation of global best practices and corporate governance principles would help to achieve commitment and goals to enhance stakeholders’ value. We present in detail, a statement of how the Board conducted its activities in the last financial year. THE BOARD The governance of the Company resides with the Board of Directors who are accountable to shareholders for creating and delivering sustainable value through the management of the Company’s business. The board is responsible for oversight function of long-term strategic planning, policy formulation and assessment of risk that the Company may be exposed to in the ordinary course of business. The board is also responsible for evaluating and directing the implementation of the Company’s internal control procedures including maintaining a sound system of internal control to safeguard shareholders’ investments and the company’s assets. These functions of the board are guided by the provision of Securities and Exchange Commission (SEC) code, the Company and Allied Matters Act, the company’s Articles of Association and other relevant laws and regulations. These oversight functions of the Board of Directors are exercised through its various Committees. COMPOSITION OF THE BOARD The board of Directors of Academy Press Plc. is comprised of experienced people with significant achievements in their respective profession. The board has overall responsibility for ensuring that the Company is appropriately managed and achieves its strategic objectives. The company’s Articles of Association provide that the company’s Board shall consist of not more than 12 Directors. During the year the board comprised of Eleven (11) Directors; Eight (8) non-executives and Three (3) executives. The board Chairman is non- executive, with a mix of executive and non-executive Directors, all bringing high level of competencies and experience, with enviable records of achievement in their respective fields. The board meets regularly to set broad policies for the Company’s business and operations, and ensures that a professional relationship is maintained with the Company’s auditors in order to promote transparency in financial and non- financial reporting. RESPONSIBILITIES OF THE BOARD: The board is responsible for the review of goals, major plans of action, annual budget and business plans with overall strategies setting performance objectives, monitoring implementation and corporate performance and overseeing major capital expenditure in the approved budget. In compliance with International Best Practices, there is a separation of powers between the Chairman and the Managing Director, as they play distinct roles, with responsibilities which should not be domiciled with one individual. The chairman’s main responsibility is to lead and manage the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. He is also responsible for ensuring that Directors receive accurate, timely and clear information to enable the Board take informed decisions and provide advice to promote the success of the Company. The Chairman facilitates the contribution of Directors and promotes effective relationships and open communications between Executive and Non-Executive Directors, both inside and outside the Boardroom. The board ensures that proper accounting records are disclosed with reasonable accuracy at any time and that the financial status of the Company are maintained and also that the financial reporting systems comply with the Companies and Allied Matters Act, CAP C20, LFN 2004 through the establishment of the Board Committees that make recommendations and taking decisions on issues of expenditure that may arise outside the normal meeting schedule of the full Board. The board ratifies duly approved recommendations and decisions of the Board Committees and also make periodic and regular review of actual business performance relative to established objectives. The Board meet at least once in a quarter in each financial year and the Board Committee meet at least twice in each financial year. Decisions are taken at the Board meetings by way of resolutions as provided for in the Company and Allied Matter Act (CAMA) 2014. Detail of attendance by each of the Directors at Board meetings are shown in the table below.
8
ACADEMY PRESS PLC CORPORATE GOVERNANCE REPORT - Continued FOR THE YEAR ENDED 31 MARCH 2017
MEETINGS
1
2
3
4
NAMES
25/4/16
23/6/16
28/10/16
27/2/17
√
√
√
√
MR.WAHAB DABIRI
√
√
√
√
MR.OLUGBENGA LADIPO
√
√
√
√
MR. BABATUNDE FASHANU
√
√
√
√
MR. MARTINS GOODMAN
x
√
AR
AR
MR. IVOR HUTCHINSON
NYA
NYA
√
√
MRS.FOLASHADE OMO-EBOH
√
√
√
√
MR.OYEWOLE OLAOYE
√
√
√
√
MR. OMOSOLA SOKUNBI
√
√
√
√
MR.FEMI AKINGBE
NYA
NYA
√
√
MR.LASIS ADERIBIGBE
√
√
√
√
HIGH CHIEF (SIR)
SIMEON OGUNTIMEHIN
Note: √ - Present; X – Absent with apology; NYA – Not a member of the Board as at this date; AR – Already Resigned In accordance with Section 258 (2) of the Companies and Allied Matters Act, CAP C20, LFN 2004, the record of Directors’ attendance and meetings during the year 2016/2017 is available for inspection at the Annual General Meeting. The meetings of the Board were presided over by the Chairman and the Board met four (4) times during year. Written notices of the Board meetings, along with the agenda, were circulated at least seven days before the meetings. The minutes of the meetings are appropriately recorded and circulated. BOARD COMMITTEES: The Board carries out its oversight functions through the under-listed committees: RISK MANAGEMENT/STRATEGY COMMITTEE The committee has oversight responsibility for operational/strategies development and implementation, emerging sectorial and technological development, review of equipment needs and acquisition, new business concern review and implementation, products prospects and market expansion strategies. It also reviews the risk management structure and monitor the risks on continuous basis. The risk management/strategy committee held two (2) meetings during the year ended 31st March, 2017.Detail of attendance by each of the Members of the Risk Management / Strategic Committee are shown in the table below. MEETINGS
1
2
NAMES
6/2/2017
27/3/17
MR.WAHAB DABIRI
√
√
MR.OLUGBENGA LADIPO
√
√
MR. BABATUNDE FASHANU
√
√
MRS.FOLASHADE OMO-EBOH
√
√
MR. IVOR HUTCHINSON
√
√
MR. OMOSOLA SOKUNBI
√
√
9
ACADEMY PRESS PLC CORPORATE GOVERNANCE REPORT - Continued FOR THE YEAR ENDED 31 MARCH 2017 FINANCE & CONTROL COMMITTEE The Finance and Control Committee is responsible for reviewing of business plan, annual budget and control, financing arrangement, options, capital restructuring, the review of balance sheet, management accounts, credit/debt management and material control. The committee held two (2) meetings during the year ended 31st March, 2017.Detail of attendance by each of the Members of the Finance and Control Committee are shown in the table below. MEETINGS
1
2
NAMES
6/2/2017
27/3/17
MR.OLUGBENGA LADIPO
√
√
MR. BABATUNDE FASHANU
√
√
MRS.FOLASHADE OMO-EBOH
√
√
MR. OMOSOLA SOKUNBI
√
√
MR.FEMI AKINGBE
NYA
√
MR.LASISI ADERIBIGBE
√
√
GOVERNANCE AND REMUNERATION COMMITTEE The committee is made up of three members who are responsible for the development and evaluation of the company’s internal organization and process, identifying qualified senior executives and ensuring that the company’s operating and remuneration policies support the successful recruitment, development and retention of directors and managers. The committee held two (2) meetings in the financial year ended 31st March, 2017. Detail of attendance by each of the Members of the Governance and Remuneration Committee are shown in the table below.
MEETINGS
1
2
NAMES
6/2/2017
27/3/17
MR.WAHAB DABIRI
√
√
MR.OYEWOLE OLAOYE
√
√
MR.FEMI AKINGBE
√
√
AUDIT COMMITTEE The Committee comprises of six members as shown in the table below. In accordance with Section 359 (5) of the Companies and Allied Matters Act CAP C20, LFN 2004, the above members and Directors were elected and nominated pursuant to Section 359 (4) of the said Act. The meetings of the committee were held three (3) times during the year. The functions of the committee are laid down in Section 359 (6) of the Companies and Allied Matters Act CAP C20, LFN 2004. Detail of attendance by each of the Members of the Audit Committee are shown in the table below.
10
ACADEMY PRESS PLC CORPORATE GOVERNANCE REPORT - Continued FOR THE YEAR ENDED 31 MARCH 2017 AUDIT COMMITTEE - Continued MEETINGS
1
2
3
NAMES
16/6/16
22/11/16
21/2/17
CHIEF S.B. DARANIJO
√
√
√
PASTOR ALBERT EDUN
√
√
√
MR. S.S. ADEBAYO
√
√
√
MR.WAHAB DABIRI
√
√
√
MR. BABATUNDE FASHANU
√
√
√
MR. LASISI ADERIBIGBE
√
√
√
MANAGEMENT TEAM The day-to-day management of the business is the responsibility of the Managing Director who is assisted by the Management Team made up of one (1) Executive Director, two (2) senior managers and Heads of all the Departments in the Company. The management team holds scheduled meetings at least once a month to deliberate on critical issues affecting the day to day running of the Company. SECURITY TRADING POLICY Insider trading and dealing in Company’s shares The board has approved a Security Trading Policy which sets out the guidelines on the purchase and sale of security by Directors, employees and associates. The policy is to assist all Directors and employees to understand the restrictions placed on them as insiders of the company with respect to their securities transactions and to avoid the conduct referred to as ‘insider trading’ during any period as may be specified by the company or the Exchange from time to time. Also, Directors, employees and other insiders wishing to buy, sell or deal in the Company’s securities must obtain approval of the Chairman through the Company Secretary prior to any dealing in the company’s securities. Request for approval must state the volume of securities to be purchased and sold. COMPLAINT MANAGEMENT POLICY In compliance with the Security and Exchange Commission’s Rules relating to the Complaints Management Framework (the ‘Framework’) which requires every listed company to establish a clearly defined complaint management policy to resolve complaints arising from issues covered under the Investment and Securities Act 2007. The Company has developed a Complaint Management Policy endorsed by the Board of Directors. BUSINESS CONDUCT Our business is conducted with integrity and with due regard to the legitimate interest of all stakeholders. In furtherance to this, the Company has adopted policies such as Code of Ethics and Business Conduct, as well as a whistle blowing Policy. Directors and all members of staff are expected to strive to maintain the highest standard of ethical conduct and integrity in all respect of their professional life as contained in the Ethics and Business Code Policy which prescribes the common ethical standard, policies and procedures of the Company. ENVIRONMENTAL POLICY Environmental Policy statement serves to demonstrate the Company’s responsibility to the environment and the pursuit of world – class vision in all aspects of its operations. The Company strives to comply with all present and future environmental laws and regulations and continuously improve the efficiency of its operations to minimize its impact on the environment.
11
ACADEMY PRESS PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED 31 MARCH 2017 The Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the Group at the end of the year and of its profit or loss. The responsibilities include ensuring that the Group: a) b) c)
keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Group and comply with the requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004; establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, and are consistently applied.
The directors accept responsibility for the annual Consolidated and Separate financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards issued by International Accounting Standard Board and the requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, and Financial Reporting Council of Nigeria Act, No 6, 2011. The directors are of the opinion that the Consolidated and Separate financial statements give a true and fair view of the state of the financial affairs of the Group and of its loss for the year ended 31 March 2017. The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for at least twelve months from the date of this consolidated and separate financial statement.
-------------------------------------------------------------------------------High Chief (Sir) Simeon O. Oguntimehin, OON (Chairman) FRC/2013/ICAN/00000003428
----------------------------------------------------------Mr. Olugbenga Ladipo (Managing Director) FRC/2013/ICAN/00000003252
29TH December 2017
12
ACADEMY PRESS PLC REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED 31 MARCH 2017 In accordance with the provisions of Section 359 (6) of the Companies and Allied Maters Act 2004, CAP C20, Laws of the Federation of Nigeria 2004, the members of the Audit Committee of Academy Press Plc (“the Company”) hereby report as follows: i.
We have exercised our statutory functions under Section 359 (6) of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and acknowledge the cooperation of management and staff in the conduct of these responsibilities.
ii.
We are of the opinion that the accounting and reporting policies of the Group are in accordance with legal requirements and agreed ethical practices and that the scope and planning of both the external and internal audits for the year ended 31 March 2017 were satisfactory and reinforce the Group’s internal control systems.
iii.
We have deliberated with the External Auditors, who have confirmed that necessary cooperation was received from management in the course of their statutory audit and we are satisfied with management’s responses to the External Auditor's recommendations on accounting and internal control matters and with the effectiveness of the Group’s system of accounting and internal control.
ALHAJI (CHIEF) SINARI B. DARANIJO JP. CHAIRMAN FRC/2014/ICSAN/00000007262
29TH December 2017
MEMBERS OF AUDIT COMMITTEE ALHAJI (CHIEF) SINARI B. DARANIJO JP PASTOR ALBERT O. EDUN MR. SAMUEL S. ADEBAYO MR. WAHAB B. DABIRI MR. BABATUNDE J. FASHANU MR. LASISI ADERIBIGBE
13
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACADEMY PRESS PLC Report on the Audit of the Consolidated and Separate Financial Statements
Opinion We have audited the consolidated and separate financial statements of Academy Press Plc (the Company) and its subsidiaries (together, the Group) which comprise the consolidated and separate statements of financial position as at 31 March 2017, and the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies. In our opinion, the consolidated and separate financial statements give a true and fair view of the financial position of Academy Press Plc and its subsidiaries as at 31 March 2017, and their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, and the relevant provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and the requirements of the Financial Reporting Council of Nigeria Act No. 6, 2011.
Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and the Company in accordance with International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and other independence requirements applicable to performing the audit of Academy Press Plc. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing the audit of Academy Press Plc. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and separate financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated and separate financial statements.
14
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACADEMY PRESS PLC Report on the Audit of the Consolidated and Separate Financial Statements – Continued Key Audit Matter How the matter was addressed in the audit Impairment of investments in subsidiaries Academy Press PLC owns 63.57% in Academy Press Specialized Our audit procedures included, among other things, an instruction to Print Services Limited (APSPSL) and 65.16% in Lithotec Limited of the statutory auditors of the two subsidiaries to perform an audit on their equities which are non-listed. The investments in the the relevant financial information for the purpose of the consolidated companies are accounted for under the equity method and financial statements of Academy Press Plc. During the year, we considered for impairment during the year due to significant or discussed the risk assessment, audit strategy of the statutory auditor, prolonged decline in value of APSPSL and liquidation of Lithotec as well as any significant developments as at year end. Subsequently Limited. Investment in the subsidiaries is significant to our audit we performed a file review of the component auditor’s working papers. due to the Company’s share of the subsidiaries net income, the Also, we further evaluated management's considerations of the carrying value of the investment, the net liability and judgment impairment indicators of the investment, including Property Plant and applied in determining if a decline in value is significant and Equipment and other assets, in the subsidiaries. In such temporary or prolonged. At 31 March 2017, the Investments in the consideration, the fair value of the non-listed shares of the two subsidiaries amounted to N49.5m and impairment provision subsidiaries is used as a starting point to assess whether any have been made for this. See Notes 2.3.10 and 17 for policies and significant prolonged and other than temporary decline in value exists, balances relating to impairment of investments in subsidiaries. next to a qualitative assessment. We have among other things analyzed the trend in the net liability of APSPSL, and evaluated the results for potential valuation issues for the investment in APSPSL. We also assessed the adequacy of the Company's disclosure in Note 17 Investments in subsidiaries. Impairment of Trade receivables Trade receivable balances were significant to the Company/Group as they represent 56% of current assets and 24% of the consolidated net assets. The collectibility of trade receivables is a key element of Academy Press Plc’s working capital management, which is managed on an ongoing basis by management. Management considers factors such as the age of the balance, location of customers, and existence of disputes, recent historical payment patterns and any other available information concerning the creditworthiness of counterparties. Management uses this information to determine whether an allowance for impairment is required either for a specific transaction or for a customer's balance overall. Given the nature of the businesses and requirements of the customers, the assessment of the collectibility of trade receivables was a key audit matter. See Notes 2.3 and 19 for policies and balances of impairment trade receivable
In assessing the impairment of trade receivables, we have challenged the assumptions used to calculate the trade receivables impairment amount, notably through detailed analyses of ageing of receivables, credit limits of customers, assessment of significant overdue individual trade receivables and assessing specific local risks, combined with legal documentation, where applicable.
15
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACADEMY PRESS PLC Report on the Audit of the Consolidated and Separate Financial Statements – Continued Key Audit Matter How the matter was addressed in the audit Impairment of Property Plant and Equipment (PPE) The Company operates a paper printing production facility, due to the prolonged below-target return on capital employed, under-utilization of the printing plant and equipment, and the fact that the carrying amount of the net assets was higher than the market capitalization of the Company, the Management Board performed the annual impairment test with respect to its production assets amounting to N1.2billion as at 31 March 2017. Based on the outcome of this impairment test, the Company has not recognised an impairment charge. This area was important to our audit due to the size of the production asset carrying value (80% of the Company’s total assets as at 31 March 2017) as well as the judgment involved in the assessment of the recoverability of the invested amounts. This assessment requires the Management and the Board to make assumptions to be used in the underlying cash flow forecasts. The assumptions include expectations for sales and margin developments and overall market and economic conditions which have been disclosed in Note 3 to the consolidated and separate financial statements.
Our audit procedures included, amongst others, evaluating and reviewing the assumptions and methodologies used by the Company, We especially reviewed the assumptions about sales growth rates, developments in raw material and prices, the timing of the forecasted recovery of overall market and economic conditions, the sustainability of the working capital improvement in 2017, the level of the WACC, Furthermore, we focused on the adequacy of the disclosures on the assumptions and the outcome of the impairment test, and on the adequacy of the sensitivity analysis in the financial statements.
Other Information The directors are responsible for the other information. The other information comprises the Directors’ Report, the Audit Committee Report, Corporate Governance Report, Consolidated and Separate Value Added Statements, Group and Company Five-year Financial Summary as required by the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The other information does not include the financial statements and our auditors’ report thereon. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Consolidated and Separate Financial Statements The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards issued by IASB, the provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and in compliance with the Financial Reporting Council of Nigeria Act, No 6, 2011, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
16
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACADEMY PRESS PLC Report on the Audit of the Consolidated and Separate Financial Statements – Continued
Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
17
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACADEMY PRESS PLC Report on the Audit of the Consolidated and Separate Financial Statements – Continued
Report on Other Legal and Regulatory Requirements In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, we confirm that: i) ii) iii)
we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion proper books of account have been kept by the Group in so far as it appears from our examination of those books; and the Group’s and the Company’s consolidated and separate statements of financial position and consolidated and separate statements of profit or loss and other comprehensive income are in agreement with the books of account.
Omolola Alebiosu, FCA FRC/2012/ICAN/00000000145 For: Ernst & Young 8TH January 2018 Lagos, Nigeria.
18
ACADEMY PRESS PLC CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017
NOTES
The Group 2017
2016
The Company 2017
2016
N’000
Restated N’000
N’000
Restated N’000
Revenue
6
2,117,452
2, 047,675
1,842,636
1,779,944
Cost of sales
7
(1,737,545) ------------------
(1,522,455) ------------------
(1,516,933) -----------------
(1,314,029) -----------------
379,907
525,220
325,703
465,915
Gross profit Other income
8
106,075
105,843
57,879
Selling Expenses
9
(62,839)
(86,405)
(61,097)
(79,922)
10
Administrative expenses
58,296
(586,655)
(353,086)
(581,784)
(280,356)
Finance cost
11
(226,661)
(238,782)
(144,805)
(199,700)
Finance income
12
2,714
1,247
2,714
1,247
-------------
-------------
-------------
-------------
(387,459)
(93,510)
(353,426)
(34,937)
(125,266)
26,187
(133,665)
25,052
------------
----------
------------
----------
(512,725)
(67,323)
(487,091)
(9,885)
Actuarial gain/ (loss) on defined benefit plans ; net of tax
16,206
(28,390)
14,250
(27,185)
Taxation
(4,862)
8,517
(4,275)
8,156
---------
-----------
----------
------------
11,344
(19,873)
9,975
(19,029)
---------
-----------
---------
-----------
(501,381)
(87,196)
(477,116)
(28,914)
=======
=======
=======
=======
(480,955)
(46,869)
(487,091)
(9,885)
Loss before taxation Taxation
13.1
Loss after taxation Other comprehensive income: Other comprehensive income not to be reclassified to profit or loss in subsequent periods (net of tax):
Other comprehensive income /(loss) net of tax Total comprehensive (loss) /income for the year; net of tax Total Loss attributable to: Equity holders of the parent Non - controlling interest
(31,770)
(20,454)
-
-
--------------
-------------
--------------
--------------
(512,725)
(72,330)
(487,091)
(9,885)
=======
=======
=======
=======
(469,113) (32,268)
(67,049) (20,147)
(477,116)
(28,914)
-
-
--------------
-------------
--------------
--------------
(501,381)
(87,196)
(477,116)
(28,914)
=======
=======
=======
=======
(0.80)
(0.08)
(0.81)
(0.02)
Total comprehensive Loss attributable to: Equity holders of the parent Non - controlling interest
Basic/Diluted loss per share (N)
14
See notes to the consolidated and separate financial statements.
19
ACADEMY PRESS PLC CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017 Notes
N’000 1,806,019 903 --------------1,806,922
The Group 31-Mar-16 Restated N’000 2,171,119 1,302 112,037 6,493 ---------------2,290,951
31-Mar-15 Restated N’000 2,504,851 1,655 44,296 ---------------2,550,802
31-Mar-17
N’000 1,220,346 903 ---------------1,221,249
The Company 31-Mar-16 Restated N’000 1,537,770 1,181 119,849 22,382 49,550 --------------1,730,732
31-Mar-15 Restated N’000 1,774,992 1,459 54,235 49,550 --------------1,880,236
31-Mar-17
NON-CURRENT ASSETS Property, plant & equipment Intangible assets Deferred tax assets Retirement benefit assets Investment in subsidiaries
15 16 13.4 25 17
CURRENT ASSETS Inventories Trade and other receivables Cash ad short term deposit Asset held for sale
18 19 21 22
381,314 698,342 88,972 ---------------1,168,628 ---------------2,975,550 ========
600,991 683,772 95,358 2,381 ---------------1,382,502 ---------------3,673,453 ========
363,669 865,174 110,016 --------------1,338,859 ---------------3,889,661 ========
307,827 656,177 76,314 ---------------1,040,318 ---------------2,261,567 ========
503,212 546,955 93,454 2,381 ---------------1,146,002 ---------------2,817,745 ========
281,196 721,138 102,450 ---------------1,104,784 ---------------2,985,020 ========
23 23.1.1 23.1.2 23.1.3
302,400 24,511 (81,011) (20,762) -------------225,138 --------------
302,400 24,511 388,101 11,507 -------------726,519 --------------
252,000 25,474 505,551 31,653 -------------814,678 --------------
302,400 24,511 (66,436) --------------260,475 --------------
302,400 24,511 410,680 -------------737,591 --------------
252,000 25,474 489,994 -------------767,468 --------------
NON- CURRENT LIABILITIES Interest-bearing loans and borrowings Retirement benefit obligation Government grant
24 25 26
820,126 31,294 45,774 --------------897,194
663,087 48,146 --------------711,233
478,303 34,222 70,215 --------------582,740
820,126 13,077 45,774 ---------------878,977
411,031 48,146 --------------459,177
613,390 16,912 70,215 --------------700,517
CURRENT LIABILITIES Trade and other payables Retirement benefit obligation Interest-bearing loans and borrowings Income tax payable Government grant
27 25 24 13.2 26
1,183,501 17,683 416,722 199,768 35,544 ----------------1,853,218 ----------------2,750,412 ----------------2,975,550 =========
1,619,200 81,081 315,060 198,291 22,069 --------------2,235,701 ---------------2,946,934 ----------------3,673,453 =========
1,410,159 60,028 760,613 206,436 55,007 --------------2,492,243 ---------------3,074,983 ----------------3,889,661 =========
723,267 11,598 167,861 183,845 35,544 ---------------1,122,115 ---------------2,001,092 ----------------2,261,567 =========
1,189,337 75,524 214,143 178,893 22,069 ---------------1,679,966 ---------------2,139,143 ----------------2,876,734 =========
971,918 59,142 271,444 159,524 55,007 ---------------1,517,035 ---------------2,217,552 ----------------2,985,020 =========
TOTAL ASSET EQUITY Share capital Share premium Retained earnings Non-controlling interest
Total liabilities Total equity & liabilities
The Consolidated and separate audited financial statements was approved by Board of Directors on 13 December 2017 and signed on its behalf by: Signature
Name
FRC. No.
S. O. OGUNTIMEHIN (Chairman)
FRC/2013/1CAN/00000003428
OLUGBENGA LADIPO (Managing Director)
FRC/2013/1CAN/0000003252
TAJUDEEN A. LAWAL (Chief Financial Officer)
FRC/2013/1CAN/0000002841
See notes to the consolidated and separate financial statements.
20
ACADEMY PRESS PLC CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY – The Group Share Capital
Retained Earnings
Share Premium N’000
NonControlling Interest N’000
N’000
N’000
N’000
252,000 -
436,795
25,474
21,993
736,262
68,756
-
9,660
78,416
--------------
--------------
---------------
---------------
-----------------
DESCRIPTION
As at 1 April 2014 Adjustment on correction of error As at 1 April 2015 (Restated)
TOTAL
252,000
505,551
25,474
31,653
814,678
Loss for the year
-
(46,869)
-
(20,454)
(67,323)
Other comprehensive(loss)/income; net of tax
-
(20,181)
-
308
(19,873)
Bonus issue expenses
-
-
(963)
-
(963)
50,400
(50,400)
-
-
-
-------------
--------------
-----------
------------
--------------
302,400 -
388,101 (480,955)
24,511 -
11,507 (31,770)
726,519 (512,725)
Bonus issued As at 31 March 2016 (Restated) Loss for the year Other comprehensive income/(loss); net of tax As at 31 March 2017
-
11,843
-
(499)
11,344
--------------
---------------
------------
-------------
--------------
302,400
(81,011)
24,511
(20,762)
225,138
---------------
---------------
------------
-------------
--------------
STATEMENT OF CHANGES IN EQUITY – The Company Share
Retained Earnings
Share Premium
TOTAL
Capital N’000
N’000
N’000
N’000
252,000
446,875
25,474
724,349
-
43,119
-
43,119
--------------
---------------
--------------
--------------
252,000
489,994
25,474
767,468
Loss for the year
-
(9,885)
-
(9,885)
Other comprehensive loss; net of tax
-
(19,029)
-
(19,029)
Bonus issue expenses
-
-
(963)
(963)
DESCRIPTION As at 1 April 2014 Adjustment on correction of error As at 1 April 2015 (Restated)
Bonus issued As at 31 March 2016 (Restated)
50,400
(50,400)
-
-
--------------
--------------
---------------
---------------
302,400
410,680
24,511
737,591
Loss for the year
-
(487,091)
-
(487,091)
Other comprehensive income; net of tax
-
9,975
-
9,975
-------------
--------------
-------------
--------------
302,400
(66,436)
24,511
260,475
--------------
--------------
-------------
-------------
As at 31 March 2017
See notes to the consolidated and separate financial statements.
21
ACADEMY PRESS PLC CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2016 Group Note Cash flows from operating activities: (Loss)/ Profit before taxation Non cash adjustment to reconcile (loss)/profit before tax to net cash flows:
Company
2017 N’000
2016 N’000
2017 N’000
2016 N’000
(387,459)
(93,510)
(353,426)
(34,937)
378,456
364,669
342,699
343,533
399
353
278
278
36,154
177,115
4
2,456
(105,843)
(55,007)
(105,843)
(55,007)
15 Depreciation of property, plant and equipment 16 Amortisation of intangible assets Loss on disposal of PPE Government grant interest Finance cost
11
226,661
238,782
144,805
199,700
Finance income
12
(2,714)
(1,247)
(2,714)
(1,247)
(3,670) -
30,971
(8,588)
23,457 -
-
49,550
141,984
662,126
66,765
478,233
(Increase)/ decrease in Inventories
219,677
(237,322)
195,385
(222,016)
(Increase)/ decrease in trade and other receivables
(14,570)
181,402
(109,222)
174,183
(435,699) -------------
209,041 ------------
(466,070) -------------
217,419 ------------
(88,608)
815,247
(313,142)
647,819
Define benefit charge Impairment of investments subsidiaries Working capital adjustment:
(Decrease)/ increase in trade and other payables
Retirement benefits paid
25.3
(5,735)
(79,023)
(5,629)
(73,554)
Tax paid
13.2
(16,614) -----------
(41,182) ------------
(13,139) -----------
(13,037) -----------
(110,957) =======
695,042 ======
(331,910) ========
561,228 =======
(47,129) -
(213,289)
(22,899)
(114,004)
2,856
-
2,856
2,714 ------------
1,247 -----------
2,714 ----------
1,247 -----------
(44,415) =======
(209,186) =======
(20,185) ========
(109,901) =======
Proceeds/(Repayment) of loans and borrowings
298,877
(186,159)
397,598
(286,025) -
Government grant received
116,946 -
-
116,946
(963)
-
(963)
(226,661) -------------
(238,782) -------------
(144,805) ------------
(199,700) ------------
189,162
(425,904)
369,739
(486,688)
Net cash flows used in operating activities Cash flows from investing activities: Purchase of property, plant and equipment
15
Proceeds from disposal of property, plant and equipment Interest received
12
Net cash flows from investing activities Cash flows from financing activities:
Bonus issue expenses Interest paid
11
Net cash flows from financing activities
22
======
=======
======
=======
33,790
59,952
17,644
(35,361)
13,694
(46,258)
16,757
52,118
47,484
13,694
34,401
16,757
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year See notes to the consolidated and separate financial statements.
23
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 1.
Corporate information The consolidated and separate financial statements of Academy Press Plc and its subsidiaries (collectively, the Group) for the year ended 31 March 2017 were authorised for issue in accordance with the approval of the Board of Directors on 13 December 2017. Academy Press Plc (the Company) is a limited liability company incorporated and domiciled in Nigeria and became public by listing on 22 October 1991. The registered office is located at 28-32, Industrial Avenue, Ilupeju Industrial Estate, Ilupeju, Lagos State in Nigeria. The group is principally engaged in the printing of educational and general books, commercial printing of diaries, labels, calendars, periodicals, annual reports, confidential and other printing works.
2.1
Basis of preparation The consolidated and separate financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as approved by the Financial Reporting Council of Nigeria and in accordance with the provisions of the Companies and Allied Matters Act, CAP C20; Laws of the Federation of Nigeria 2004. Functional and presentation currency The consolidated and separate financial statements have been prepared on a historical cost basis. The consolidated and separate financial statements are presented in Naira, which is the Company’s functional currency and all values are rounded to the nearest thousand (N000), except when otherwise indicated. Composition of financial statements The financial statements comprise: • Consolidated and separate statement of profit or loss and other comprehensive income • Consolidated and separate statement of financial position • Consolidated and separate statement of changes in equity • Consolidated and separate statement of cash flows • Notes to the Consolidated and separate financial statements Current versus non-current classification The group presents assets and liabilities in the Consolidated and separate statement of financial position based on current/non-current classification. An asset is current when it is: • Expected to be realised or intended to be sold or consumed in the normal operating cycle • Held primarily for the purpose of trading • Expected to be realised within twelve months after the reporting period Or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: • It is expected to be settled in the normal operating cycle • It is held primarily for the purpose of trading • It is due to be settled within twelve months after the reporting period Or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2.2
Basis of consolidation The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 March 2017. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has: • Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee • The ability to use its power over the investee to affect its returns.
24
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.2
Basis of consolidation - Continued Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement(s) with the other vote holders of the investee • Rights arising from other contractual arrangements • The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. In the Company the investment in its subsidiaries are accounted for using the cost method.
2.3
Summary of significant accounting policies The following are the significant accounting policies applied by the Group in preparing its financial statements:
2.3.1
Foreign currencies The Group’s consolidated and separate financial statements are presented in Naira, which is also the parent company’s functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation and on disposal of a foreign operation; the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method. i) Transactions and balances Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively). Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date. ii) Foreign Operations On consolidation, the assets and liabilities of foreign operations are translated into Naira at the rate of exchange prevailing at the reporting date and their statement of comprehensive income are translated at exchange rates that approximate the exchange rates at the date of transactions which is often an average rate for the period. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.
25
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3
Summary of significant accounting policies - Continued
2.3.2
Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding returns, trade discounts and taxes. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The specific recognition criteria described below must also be met before revenue is recognised. Sale of goods Revenue from printing jobs is recognised when the significant risks and rewards of ownership of the items have passed to the buyer, usually on delivery of the items. Revenue is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Dividend Revenue is recognised when the Group’s right to receive the payment is established, which is generally when Shareholders approve the dividend. Interest income For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in profit and loss.
2.3.3 Government Assistance Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset. When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments. 2.3.4 Taxes
Current income tax Current income tax and education tax for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income, respectively and not in the profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
26
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3
Summary of significant accounting policies – Continued
Deferred tax- Continued • When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • ifferences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss. 2.3.5 Property, plant and equipment Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit and loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. The straight-line method is used to depreciate the cost less any estimated residual value of the assets over their expected useful lives. Property plant and equipment as follows:
Property, Plant and Equipment Class Leasehold land and Buildings Plant and Machinery Furniture, fittings and equipment Motor Vehicles Private Cars
% Over the remaining lease period 12.5 20 20 25
Depreciation is recognized within “cost of sales, administrative and selling expenses” depending on the utilization of the respective assets. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit and loss when the asset is derecognised. The residual values, useful lives and methods of depreciation of each item of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
27
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3
Summary of significant accounting policies - Continued
2.3.6
Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
2.3.7 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit and loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the profit and loss as the expense category that is consistent with the function of the intangible assets. % 12.5
Intangible Assets
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. The company software is amortised using a straight line method over a period of 12.5 years in which the amortisation expense is recognised in the profit or loss as an expense category. As at 31 March 2017, the group did not have any indefinite intangible assets.
2.3.8
Financial instruments The Group recognises financial assets and financial liabilities on the Group’s statement of financial position when it becomes a party to the contractual provisions of the instrument. The Group determines the classification of its financial assets and liabilities at initial recognition. All financial assets and liabilities are recognised initially at fair value plus directly attributable transaction costs, except for financial assets and liabilities classified as fair value through profit or loss. Financial assets i. Nature and measurement The Group’s financial assets includes Loans and receivables, Trade and other receivables, and Cash and short-term deposits. After initial measurement, the subsequent measurement of financial assets depends on their classification as follows: Financial Assets -Subsequent measurement Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, loans and receivables are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance/interest income in the statement of comprehensive income. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.
28
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3
Summary of significant accounting policies - Continued
2.3.8
Financial instruments - Continued Trade and other receivables Trade receivables are recognised initially at fair value as the invoice amount and subsequently measured at amortised cost. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor and default or delinquency in payments are considered indicators that the trade receivable is impaired. The Group deploys age analysis tools to track the payment pattern of customers. The carrying amount of trade receivable is reduced through the use of an allowance account. When trade receivables are uncollectible, it is written off as bad debts in administrative expenses in profit or loss. Subsequent recoveries of amounts previously written off are included as ‘Bad debt recoveries’ in other income in the statement of comprehensive income. ii. Derecognition of Financial assets The Group derecognizes a financial asset only and only if the Group’s contractual rights to the cash flows from the asset expires or the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. iii.Impairment of financial assets The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio passed the average credit period, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
29
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3 Summary of significant accounting policies - Continued 2.3.8 Financial instruments - Continued If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. Loans and receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is recognised as other income in the profit or loss. Financial liabilities (i) Nature and measurement The company’s financial liabilities include trade payables and interest bearing loans and borrowings. All financial liabilities are recognized initially at fair value plus, in the case of loans and borrowings, directly attributable transaction costs. The subsequent measurement of financial liabilities depends on their classification as follows: Financial Liabilities-Subsequent measurement Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit and loss. Financial Liabilities-Subsequent measurement Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year (or in the normal operating cycle of the business, if longer). If not, they are presented as noncurrent liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest. (ii) Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit and loss. Off-setting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated and separate statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 2.3.9
Inventories Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Costs incurred in bringing each product to its present location and conditions are accounted for as follows: Raw materials: Raw materials which include purchase cost and other costs incurred to bring the materials to their location and condition intended by the management are valued using weighted average cost basis. Work in progress: Cost of work-in-progress includes cost of materials and attributable overheads to the level of completion. Spare parts and consumables: Spare parts and other consumables are valued at weighted average cost after making allowance for slow moving stocks while obsolete and damage items are expensed. The spare parts are generic in nature hence they are classified as inventory and are recognized in the profit or loss as consumed. Goods-in- transit: Goods-in- transit are carried at purchase cost to date.
30
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3 Summary of significant accounting policies - Continued 2.3.10 Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (CGU) fair value less costs to sell and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, or other available fair value indicators. The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s CGU to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing operations, including impairment on inventories, are recognised in profit and loss in those expense categories consistent with the function of the impaired asset For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss. 2.3.11 Cash and cash equivalents Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less from the date of acquisition and restricted cash. For the purpose of the cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts and restricted cash. 2.3.12 Dividend Distributions Dividend distributions payable to equity shareholders is recognised as liability after the reporting date when declared and approved by shareholders at the annual general meeting. 2.3.13 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in profit and loss net of any reimbursement. Provisions are not recognized for future operating losses. Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are only disclosed by way of note and not recognized as liabilities in the consolidated statement of financial position.
31
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3 Summary of significant accounting policies - Continued 2.3.14 Employee Benefits Employee benefits are all forms of benefits given in exchange for services rendered by employees. These are classified as: a) Short-term employee benefits - benefits due to be settled within 12 months after the end of the period in which the employees rendered the related services; b) Post-employment benefits are benefits payable after the completion of employment. Such plans (or funds) may be either defined contribution funds or defined benefit funds. Short-term benefits The cost of all short-term employee benefits, such as salaries, profit sharing arrangements, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognised during the period in which the employee renders the related service. The Group recognises the expected cost of bonuses only when the Group has a present legal or constructive obligation to make such payment and a reliable estimate can be made. During the year the Group companies contributed to employee benefits in the following categories: - remuneration in the form of salaries, wages and bonuses. Post-employment Retirement Benefit Funds (a) Defined contribution scheme In line with statutory provisions of the Pension Reform Act 2014, the Group and its employees contribute to statutory defined contribution pension scheme for its employees. Employees contributions of 8% of their insurable earnings (basic, housing and transport) to the scheme are funded through payroll deductions while the Group’s contributions of 10% are charged to profit or loss. The Funds which is defined contribution plans are independently administered with no obligations on the Group other than the defined contribution as a percentage of employees’ qualifying remunerations. Both employees’ and the group’s share of the contributions are charged as staff cost in the administrative expenses in the profit and loss when the employee renders the service. (b) Defined benefit scheme The Group has a defined benefit gratuity scheme for its employees which is funded under this scheme, a specific amount in accordance with the Benefit Scheme Policy is contributed by the Group and charged to profit or loss account over the service life of the employees. These employees’ entitlements are calculated based on their actual basic salaries, transport and housing at the end of each month and paid to Academy Press Gratuity Trust Fund. Other long-term benefits are recognised when an obligation arises. The Group had no other long-term benefit commitments during the year. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in profit or loss on the earlier of: • The date of the plan amendment or curtailment, and • The date that the Group recognises related restructuring costs Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under ‘cost of sales’, ‘administration expenses’ and ‘selling and distribution expenses’ in the consolidated statement of profit or loss (by function): • Service costs comprising current service costs, past-service costs, gains and losses on curtailments and Non-routine settlements • Net interest expense or income 2.3.15 Segment reporting The Executive Management Team has been identified as the chief operating decision maker who is responsible for allocating resources and assessing performance of the operating segments. The Executive Management Team reviews internal management reports on a monthly basis. These internal reports are prepared on the same basis as the accompanying consolidated and separate financial statements. The segments’ operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to each segment and assess its performance, and for which discrete financial information is available. The identification of operating segments is on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segment and assess its performance. The Group has identified the Chief Executive Officer as the chief operating decision maker.
32
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.3
Summary of significant accounting policies - Continued
2.3.15 Segment reporting - Continued Measurement of segment information The amount reported for each operating segment is based on the measure reported to the chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance. 2.3.16 Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • In the principal market for the asset or liability or • In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities • Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable • Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. 2.3.17 Earnings per share The group presents basic/ 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 group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. 2.4
Correction of prior period errors 1. The Company (i.e. Academy Press Plc ) did not recognise the government grant element of the BOI loan (government loan at below market rate) of N927,613,039 which was obtained from Bank of Industry in February 2014 at 10% Interest rate per annum which is to be repaid over 54 months with initial 6 month interest moratorium in the 2015 /2016 financial statement, Due to the non-recognition of the grant element of the loan, the balance for the interest bearing loans was overstated In addition other income and finance cost were misstated as the effective interest rate was not applied to discount the loan for fair value measurement purposes upon initial recognition. 2. In 2015 & 2016 year-end financial statement, the Company (i.e. Academy Press Plc) & one of its subsidiaries (Academy Press Specialised Print Services Limited (APSPSL) did not determine the present value of their defined benefit obligations, thus not carrying the amount properly in the financial statement for the two years. 3. In 2015 & 2016 audited financial statements, the Company (Academy Press Plc) disclosed bank overdraft as a line item in the statement of financial position. This is being reclassified in both years as the amount should have been included as part of the current interest bearing loans and borrowings in the financial statements.
33
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.4 Correction of prior period error - Continued 4. In 2015 & 2016, the Company (Academy Press Plc) included in its defined benefit obligation the amount for National Housing Fund payable, thus incorrectly overstating the amount disclosed as employee benefit liability in the financial statements in the two years and subsequently understating Trade and Other payables line items in the 2015 & 2016 financial statements. 5. In 2015 & 2016 audited financial statements, the Company included and disclosed its foreign exchange losses as part of finance expenses, thus overstating the finance expense account and understating administrative expenses. 6. Prior to 2016, the inventory of APSPL a subsidiary of the company was misstated between 2013-2015 with an error in the physical count and account balance resulting from double posting and also an accumulated differences in postings and accounting balance during the periods. 7. There was a reclassification of expenses head in APSPL a subsidiary of the Company from administrative expenses to cost of sales in 2016 relating to salaries and related cost. All these errors have been corrected by restating each of the affected financial statement line items for the prior periods, and these are summarised as follows: The Group The Company Impact on equity (increase/(decrease) in equity)
Deferred Tax assets
2016
2015
Restated
Restated
N’000
N’000
N’000
N’000
44,296
49,370
55,653
42,243
6,493
-
22,382
-
Retirement benefit assets
2016
2015 Restated
Inventories
20,541
-
-
Trade and other receivable
75,723
259,337
4,201
-
(68,519)
(92,761)
(68,519)
(92,761)
68,482
92,761
68,482
92,761 -
Equity Contribution Cash and Cash Equivalent Deferred Tax liabilities Interest bearing loan - Non-current Retirement Benefit Obligation – non-current Government grant – Non-Current Bank Overdraft Trade and other payables
-
(2,992)
-
(16,646)
(282,310)
(19,417)
-
(119,579)
(86,481)
(75,864)
(56,264)
48,146
70,215
48,146
70,215
(75,109)
(156,274)
(70,142)
(50,332)
45,805
262,651
13,593
3,104
Income tax payable
1,265
1,806
2,397
2,938
Retirement Benefit Obligation - Current
81,081
60,028
75,524
59,142
Interest bearing loan -Current
20,102
303,567
17,905
(84,686)
Government grant - Current
22,069
55,007
22,069
55,007
118,182
68,756
67,988
43,119
26,775
9,660
-
-
Retained Earnings Non-Controlling Interest
Impact on statement of profit or loss (increase/(decrease) in profit)
Cost of Sales
The Group
The Company
2016
2015
Restated
Restated
N’000
N’000
2016
2015 Restated
N’000
N’000
10,616
-
-
-
7,810
(19,839)
(791)
(47,910)
Administrative Expenses Other Operating income
2,770
(63,835)
2,770
(63,835)
Finance costs
69,244
102,323
36,123
100,668
Income Tax Expense
(5,894)
(1,806)
5,796
(1,806)
(Loss)/Profit for the year
84,546
16,843
43,898
(12,883)
Impact on earning per shares
Net impact on EPS (kobo)
Group
Company
2016 N’000
2015 N’000
2016 N’000
(25.2) =====
(5.1)
(8.9) ====
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
34
====
2015 N’000 (5.4) ====
2.4 Correction of prior period error - Continued
Tax effect of the error adjusted
Impact on income tax Deferred taxation assets Income tax payable Deferred taxation liabilities
Group 2016 N’000 (1,806) 44,296 1,806 (2,992)
Impact on consolidated and separate statements of cash flows
Net impact on operating activities
(5,894) 49,370 1,265 -
(1,806) 42,243 2,938 -
2015 N’000 5,796 55,653 2,397 -
Group 2016
Company 2016
N’000
N’000
(16,539)
123,766
Net impact on investing activities
(447)
(1,247)
Net impact on financing activities
48,619
(91,685)
---------31,633
----------30,834
=====
=====
Net impact on cash and cash equivalents ` 3.
Company 2016 N’000
2015 N’000
Significant accounting judgements, estimates and assumptions The preparation of the Group’s consolidated and separate financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in future periods. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Judgements In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated and separate financial statements.
Going concern The Group’s management has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated and separate financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Taxes Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 3.
Significant accounting judgements, estimates and assumptions - Continued
Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions, conducted at arm’s length for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes.
Defined Benefit Plans
35
The cost of the defined benefit gratuity plan and the present value of the defined benefit obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Allowance for uncollectible accounts receivable Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the ageing of the receivable balances and historical experience based on the facts and circumstances prevailing as at reporting date. In addition, a large number of minor receivables is grouped into homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when management considers them to be uncollectable.
Re-assessment of useful lives and residual values The Group carries its property plant and equipment at cost in the statement of financial position. The annual review of the useful lives and residual value of PPE result in the use of significant management judgements 4.
Standards issued but not yet effective and Amendments Standards and interpretations issued but not yet effective up to the date of issuance of the Group’s financial statements are disclosed below. The Group is currently assessing the impact that these standards will have on the financial position and performance. The Group intends to adopt these standards, if applicable, when they become effective. 1. IFRS 15 - Revenue from Contracts with customers – 1 January 2018 2. IFRS 9 – Financial instruments – 1 January 2018 3. Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions – 1 January 2018 4. IFRS 16 – Leases – 1 January 2019 5. Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 6. IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration – 1 January 2018 7. Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts - 1 January 2018 8. Amendments to IAS 40: Transfers of Investment Property – 1 January 2018 9. IAS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment - by investment choice – 1January 2018 IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted. The Group plans to adopt the new standard on the required effective date using the full retrospective method. During 2016, the Group performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Group is considering the clarifications issued by the IASB in April 2016 and will monitor any further developments. (a) Sale of goods Contracts with customers in which the sale of equipment is generally expected to be the only performance obligation are not expected to have any impact on the Group’s profit or loss. The Group expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.
36
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 4.
Standards issued but not yet effective and Amendments - Continued In preparing to IFRS 15, the Group is considering the following: (i) Variable consideration Some contracts with customers provide a right of return, trade discounts or volume rebates. Currently, the Group recognises revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. If revenue cannot be reliably measured, the Group defers revenue recognition until the uncertainty is resolved. Such provisions give rise to variable consideration under IFRS 15, and will be required to be estimated at contract inception. IFRS 15 requires the estimated variable consideration to be constrained to prevent over-recognition of revenue. The Group continues to assess individual contracts to determine the estimated variable consideration and related constraint. The Group expects that application of the constraint may result in more revenue being deferred than is under current IFRS. (b) Rendering of services The Group provides printing services to its customers. These services are sold on their own in contracts with the customers. The Group has preliminarily assessed that the services are satisfied over time given that the customer simultaneously receives and consumes the benefits provided by the Group. Consequently, the Group would continue to recognise revenue for these service contracts over time rather than at a point of time. (c) Presentation and disclosure requirements IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in Group’s financial statements. Many of the disclosure requirements in IFRS 15 are completely new. In 2016 the Group developed and started testing of appropriate system, internal controls, policies and procedures necessary to collect and disclose the required information. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date Amendments issued but not yet effective - Continued IFRS 9 Financial Instruments In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group plans to adopt the new standard on the required effective date. During 2016, the Group has performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Group in the future. Overall, the Group expects no significant impact on its balance sheet and equity except for the effect of applying the impairment requirements of IFRS 9. The Group expects a higher loss allowance resulting in a negative impact on equity and will perform a detailed assessment in the future to determine the extent. (a) Classification and measurement The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of IFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value. Quoted equity shares currently held as available-for-sale with gains and losses recorded in OCI will be measured at fair value through profit or loss instead, which will increase volatility in recorded profit or loss. The AFS reserve currently presented as accumulated OCI will be reclassified to opening retained earnings. Debt securities are expected to be measured at fair value through OCI under IFRS 9 as the Group expects not only to hold the assets to collect contractual cash flows but also to sell a significant amount on a relatively frequent basis. The equity shares in non-listed companies are intended to be held for the foreseeable future. The Group expects to apply the option to present fair value changes in OCI, and, therefore, believes the application of IFRS 9 would not have a significant impact. If the Group were not to apply that option, the shares would be held at fair value through profit or loss, which would increase the volatility of recorded profit or loss.
37
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Amendments issued but not yet effective – Continued Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. Thus, the Group expects that these will continue to be measured at amortised cost under IFRS 9. However, the Group will analyse the contractual cash flow characteristics of those instruments in more detail before concluding whether all those instruments meet the criteria for amortised cost measurement under IFRS 9. (b) Impairment IFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime expected losses on all trade receivables. The Group expects a significant impact on its equity due to unsecured nature of its loans and receivables, but it will need to perform a more detailed analysis which considers all reasonable and supportable information, including forward-looking elements to determine the extent of the impact. (c) Hedge accounting The Group believes that all existing hedge relationships that are currently designated in effective hedging relationships will still qualify for hedge accounting under IFRS 9. As IFRS 9 does not change the general principles of how an entity accounts for effective hedges, the Group does not expect a significant impact as a result of applying IFRS 9. The Group will assess possible changes related to the accounting for the time value of options, forward points or the currency basis spread in more detail in the future. IFRS 2 Classification and Measurement of Share-based Payment Transactions Amendments to IFRS 2 The IASB issued amendments to IFRS 2 Share-based Payment that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The amendments are effective for annual periods beginning on or after 1 January 2018, with early application permitted. This amendment will not have any effect on the Group. IFRS 16 - Leases Effective for annual periods beginning on or after 1January 2019. Early application is permitted, but not before an entity applies IFRS 15. The key features of the amendment are: • The new standard requires lessees to account for all leases under a single on-statement of financial position model (subject to certain exemptions) in a similar way to finance leases under IAS 17. • Lessees recognise a liability to pay rentals with a corresponding asset, and recognise interest expense and depreciation separately. • The new standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less). • Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events. • Lessor accounting is substantially the same as today’s lessor accounting, using IAS 17’s dual classification approach. The Group is still assessing the impact of this amendment. Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The Group has not assessed the impact of this standard. IAS 7 Disclosure Initiative – Amendments to IAS 7 The amendments to IAS 7 Statement of Cash Flows are part of the IASB’s Disclosure Initiative and require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. These amendments to some standards have been issued but not yet effective. The Group intends to adopt these standards, if applicable, when they become effective.
38
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS New standards, interpretations and amendments that became effective during the year– Continued IAS 12 Recognition of Deferred Tax Assets for Un- realized Losses – Amendments to IAS 12 The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 January 2017 with early application permitted. If an entity applies the amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group.
New standards, interpretations and amendments that became effective during the year The group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 April 2016. The group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The nature and the effect of these changes are disclosed below. Although these new standards and amendments applied for the first time in 2017, they did not have a material impact on the annual consolidated and separate financial statements of the Group. The nature and the impact of each new standard or amendment is described below: Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrecognised Losses The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount. Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. The Group applied the amendments retrospectively. However, their application has no effect on the Group’s financial position and performance as the Group has no deductible temporary differences or assets that are in the scope of the amendments. IFRS 14 Regulatory Deferral Accounts IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and OCI. The standard requires disclosure of the nature of, and risk associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. Since the Group is an existing IFRS preparer and is not involved in any rate-regulated activities, this standard does not apply. Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation The amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is a part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are applied prospectively and do not have any impact on the Group, given that it has not used a revenuebased method to depreciate its non-current assets. Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of IAS 41 Agriculture. Instead, IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance will apply. The amendments are applied retrospectively and do not have any impact on the Group as it does not have any bearer plants.
39
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS New standards, interpretations and amendments that became effective during the year– Continued Amendments to IAS 27: Equity Method in Separate Financial Statements The amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in their separate financial statements have to apply that change retrospectively. These amendments do not have any impact on the Group’s consolidated financial statements. Annual improvements 2014 – 2016 Cycle These improvements include: Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in IFRS 12 The amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs B10–B16, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Assets (or disposal groups) are generally disposed of either through sale or distribution to the owners. The amendment clarifies that changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment is applied prospectively. IFRS 7 Financial Instruments: Disclosures (i) Servicing contracts The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures need not be provided for any period beginning before the annual period in which the entity first applies the amendments. (ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment is applied retrospectively. IAS 19 Employee Benefits The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment is applied prospectively. IAS 34 Interim Financial Reporting The amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. This amendment is applied retrospectively. These amendments do not have any impact on the Group.
40
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Amendments to IAS 1 Disclosure Initiative The amendments to IAS 1 clarify, rather than significantly change, existing IAS 1 requirements. The amendments clarify: • The materiality requirements in IAS 1 • That specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated • That entities have flexibility as to the order in which they present the notes to financial statements • That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement(s) of profit or loss and OCI. These amendments do not have any impact on the Group. 5.
Segment information For management purposes, the Group is organised into business units based on their products and services. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Executive Management Team reviews internal management reports on at least a quarterly basis. Segment gross profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. However, financing (including finance costs and finance income) income taxes and assets and liabilities are managed on a group basis and are not allocated to operating segments. There are no transfers between the operating segments hence there are no transfer prices set for any transactions that may arise. The segments managers are assessed based on the performance on sales and cost of sales. They do not have control over the assets and liabilities. Segments results are as shown below:
Books
Annual Reports
Diaries
Calendar
Labels
N’000
N’000
N’000
N’000
N’000
Total N’000
1,839,744
231,133
16,844
22,580
7,151
2,117,452
(4,614)
(1,737,545)
----------------
------------------
2017 Revenue Cost of sales Gross Profit
(1,550,791)
(150,966)
(8,598)
(22,576)
----------------
-------------
--------------
----------------
288,953
80,167
8,246
4
2,537
379,907
=======
======
======
=======
=======
=========
1,903,658
101,269
20,021
14,933
7,794
2,047,675
(3,465)
(1,522,455) ------------------
2016 Revenue Cost of sales Gross Profit
(1,411,739)
(78,715)
(16,020)
(12,516)
----------------
-----------------
--------------
----------------
----------------
491,919
22,554
4,001
2,417
4,329
525,220
=======
========
======
=======
=======
=========
Operating assets and liabilities are controlled at group level and information on this is not readily available as they are not decision maker in resource allocation decisions. All revenue are earned within Nigeria.
41
considered by the chief operating
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 6.
Revenue Revenue is made up of: The Group
Books Annual report Diary Calendar Label
7.
2017 N’000
2016 N’000
The Company 2017 N’000
2016 N’000
1,633,429 231,133 212,075 30,865 9,950 ----------------2,117,452 =========
1,847,245 101,269 21,972 14,933 62,256 ----------------2,047,675 =========
1,564,927 231,133 16,844 22,581 7,151 ----------------1,842,636 =========
1,635,927 101,269 20,021 14,933 7,794 ----------------1,779,944 =========
2017 N’000
2016 N’000
The Company 2017 N’000
2016 N’000
1,031,357 193,736 92,548
782,248 217,170 98,036
883,549 163,256 85,673
641,363 201,906 72,811
33,140 17,044 8,110 355,473 6,137 --------------1,737,545 ========
47,873 22,352 9,487 341,121 4,168 ---------------1,522,455 ========
105,843 232 -----------106,075 =======
2,872 55,007 387 30 ----------58,296 ======
105,843 -----------105,843 ======
2,872 55,007 -----------57,879 ======
28,957 2,629 4,998 26,255 ----------62,839 ======
39,034 4,154 4,481 38,736 ------------86,405 =======
27,216 2,629 4,998 26,254 -----------61,097 ======
38,922 907 3,921 36,172 --------------79,922 ========
Cost of sales The Group
Materials consumed Salaries and related staff cost (Note 10.1) Electricity, fuel and water Repairs and maintenance of Plant, machinery and building Vehicle repairs and maintenance Cleaning and waste management Depreciation (Note 10.2) Other production overheads
8.
Other income Bad debts recovered Income on government grant Sales of waste Other miscellaneous income
9.
28,440 38,929 21,812 8,110 9,195 324,724 324,976 6,137 3,037 ------------------------------1,516,933 1,314,029 ======== ========
17,044
Selling expenses Salaries and related staff cost (Note 10.1) Travelling expenses Vehicle repairs and maintenance Advertising and publicity
42
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 10.
Administrative expenses The Group
Rent, rates and insurance Salaries and related staff cost (Note 10.1) Directors’ emoluments Bank charges and commissions Printing and stationery Repairs, maintenance and up-keeps Impairment allowance for receivables Audit fee Legal and other professional fees Vehicle running expenses Depreciation (Note 10.2) Amortisation General administrative expenses Impairment loss on Investment in subsidiary Inventory Write off Loss on Disposal of Property, Plant and Equipment Donations and Subscription Foreign exchange loss Loss on extinguishment of BOI debt (P or L)
10.1.
-
2017 N’000 20,826 162,348 21,500 15,820 14,853 21,809 27,209 7,000 7,838 6,989 22,983 399 47,650 26,269
2016 N’000 21,456 104,084 22,680 8,376 7,055 16,644 26,398 6,350 7,669 8,379 23,548 353 18,819 49,550 3,000
881 86,080 96,201 ------------586,655 =======
2,456 2,003 73,816 ------------353,086 =======
Cost of Sales Selling Expenses Administrative expenses
3,000
742 73,066 96,201 ------------581,784 =======
2,456 1,681 40,695 ------------280,356 =======
2017
2016 Restated N’000 201,906 38,922 99,681 -------------340,509 =======
The Company 2016 Restated N’000 217,170 39,034 104,084 --------------360,288 ========
N’000 193,736 28,957 162,348 -------------385,041 ========
N’000 163,256 27,216 176,525 --------------366,997 ========
Depreciation The Group
The Company 2016 Restated N’000 341,121 23,548 -------------364,669 =======
2017
Cost of Sales Administrative expenses
11.
2016 N’000 21,456 99,681 21,050 4,695 6,278 11,808 6,891 4,500 6,755 7,575 18,557 278 23,000
Salaries and related Staff Cost The Group 2017
10.2
The Company . 2017 N’000 19,234 176,525 21,050 3,365 4,667 20,918 25,792 5,500 7,734 3,599 17,975 278 31,281 24,307
N’000 355,473 22,983 -----------378,456 =======
2017 N’000 324,724 17,975 -------------342,699 =======
2016 Restated N’000 324,976 18,557 -------------343,533 =======
Finance cost The Group
The Company 2016 Restated N’000 116,542 61,454 3,977 56,809 -------------238,782 =======
2017 N’000 138,351 29,066 1,587 57,657 ------------226,661 ======= 11.1 The commercial notes are unsecured facilities taken from related parties. Interest on finance lease facilities Interest on bank overdraft and other facilities Interest on commercial notes (Note 11.1) Interest on BOI facility
43
2017 N’000 62,924 22,637 1,587 57,657 ------------144,805 =======
2016 Restated N’000 112,121 26,793 3,977 56,809 ------------199,700 =======
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
12.
Finance income
The Group
Interest income on staff loans and advances 13.
2017 N’000
The Company 2016 N’000
2017 N’000
2016 N’000
2,714 =====
1,247 =====
2,714 =====
1,247 =====
Income tax
The group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority. The Group 2017 13.1. Taxation: consolidated profit or loss Current income tax: Current Income tax charge Education tax Deferred tax charge (Note 13.3) Income tax expense reported in profit and loss
The Company 2017
N’000
2016 Restated N’000
N’000
2016 Restated N’000
14,993 3,098 ----------18,091 107,175 -----------125,266 =======
27,549 5,488 ----------33,037 (59,224) -----------(26,187) =======
14,993 3,098 ----------18,091 115,574 -----------133,665 ======
26,918 5,488 ---------32,406 (57,458) -----------(25,052) ======
The income tax rate of 30% was used in line with Section 15 (a) of Companies Income Tax Act, CAP C21, LFN 2004 to compute the current income tax shown above. Education tax charge is at 2% of assessable profits in accordance with Education Tax Act, CAP E 4, LFN 2004. Reconciliation between tax expense and the product of accounting profit multiplied by Nigeria’s domestic tax rate for the years ended 31 March 2017 and 2016 is as follows: The Group 2017
Reconciliation of tax charge
The Company 2017
2016 Restated
N’000 Loss before tax charge Tax at Nigeria statutory income tax of 30% Education tax (2% of assessable profit) Non-deductible expenses
2016 Restated
N’000
N’000
N’000
(387,459)
(93,510)
(353,426)
(34,937)
=======
=======
=======
======
(116,238)
(28,053)
(106,028)
(10,481)
3,098
5,488
3,098
5,488
238,406
80,544
236,595
64,107
Utilisation of previously unrecognised tax credit
-
(84,166)
-
(84,166)
-----------
-----------
------------
------------
Income tax expense reported in the profit or loss
125,266
(26,187)
133,665
(25,052)
======
======
======
======
(32%)
28%
(38%)
72%
Effective tax charge
Non-deductible expenses includes Amortisation, Loss on Investment in subsidiary, Foreign exchange loss, Impairment of receivables and Donations. 13.2.
Income tax: Statement of financial position The Group 2017
At 1 April Charge for the year Withholding Tax credit utilised Tax paid At 31 March
2016
2015
Restated
Restated
2017
The ompany 2016
2015
Restated
Restated
N’000
N’000
N’000
N’000
N’000
N’000
198,291
206,436
177,358
178,893
159,524
126,078
18,091
33,037
48,305
18,091
32,406
47,720
-
-
-
-
-
-
(16,614)
(41,182)
(19,227)
(13,139)
(13,037)
(14,274)
-------------
-------------
-------------
-------------
-------------
-------------
199,768 =======
198,291 =======
206,436 =======
183,845 =======
178,893 =======
159,524 =======
44
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 13.3.
Deferred taxation
Deferred tax (assets) and liabilities The Group 2017
The Company
2016 Restated
2015 Restated
2017
2016 Restated
2015 Restated
N’000
N’000
N’000
N’000
N’000
N’000
(112,037)
(44,296)
(17,122)
(119,849)
(54,235)
(32,434)
Charge for the year
107,175
(59,224)
(30,657)
115,574
(57,458)
(25,136)
Tax during the period recognised in OCI
4,862 ------------
(8,517) -------------
3,483 ------------
4,275 -----------
(8,156) ------------
3,335 ------------
======
(112,037) =======
(44,296) =======
======
(119,849) =======
(54,235) ======
(317,815) 314,537 4,862 (55,764) 46,376 11,621 (3,817) -----------======
(363,127) 315,207 (8,517) (45,123) 47,071 17,043 (74,591) ------------(112,037) =======
(314,375) 317,367 3,483 (57,569) 47,303 18,485 (58,990) -----------(44,296) ======
(312,615) 304,459 4,275 (50,299) 46,376 11,621 (3,817) ----------======
(348,015) 287,155 (8,156) (40,356) 47,071 17,043 (74,591) -----------(119,849) ======
(319,432) 307,440 3,335 (52,376) 47,303 18,485 (58,990) -----------(54,235) ======
At 1 April
The following are the major deferred tax assets/(liabilities recognised by the Company and movement thereon during the year Property, plant and equipment Utilised capital allowances Deferred tax to OCI on retirement benefits Retirement Benefit Obligation Retirement Benefit Assets Interest bearing loans and advances Government grant
14. Loss per share Basic loss per share amounts are calculated by dividing the net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all diluted potential ordinary shares. There were no potentially diluted shares in current year, thus the basic earnings per share and diluted loss per shares are as follows The Group
The Company
2017
2016
2017
2016
N’000
N’000
N’000
N’000
(480,955)
(46,869)
(487,091)
(9,885)
=======
=======
=======
======
604,800
604,800
604,800
=======
=======
=======
========
604,800
604,800
604,800
604,800
=======
=======
=======
=======
Basic loss per share
(80k)
(8k)
(81k)
(2k)
Diluted loss per share
(80k)
(8k)
(81k)
(2k)
Net loss attributable to ordinary equity holders of the parent for basic earnings 14.1.
Basic/Diluted loss per share 604,800
Weighted average number of ordinary shares for basic and diluted earnings per share Weighted average number of ordinary shares
45
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 15.
Property, plant & equipment – The Group
Cost: At 1 April 2015 Additions Disposals Transfer to held for sale At 31 March 2016 Additions Disposals Transfer from Asset Held for sale Transfer At 31 March 2017 Depreciation: At 1 April 2015 Charge for the year Disposals Transfer to held for sale At 31 March 2016 Charge for the year Disposals Transfer from held for sale At 31 March 2017 Net book Value At 31 March 2017 At 31 March 2016 At 31 March 2015
Leasehold Land N’000 87,099 ----------87,099 ------------87,099 =======
Building and Improvement N’000 269,192 91 (1,235) ---------268,048 ------------268,048 ======-
Plant and Machinery N’000 2,908,590 175,203 (20,590) -------------3,063,203 18,983 (3,962) 20,590 324,900 --------------3,423,714 ========
Tools & Spares N’000 12,865 2,497 ----------15,362 93 -------------15,455 =======
Furniture and Equipment N’000 90,535 2,677 ----------93,212 2,573 (34,153) ------------61,632 ======
Motor Vehicle N’000 84,455 (8,914) --------75,541 1,560 ---------77,101 =====
Machinery in Transit N’000 9,272 3,498 (9,272) -------------3,498 23,920 (27,418) ----------======
(324,900) ---------------350 ========
Total N’000 3,925,144 213,289 (183,573) (20,590) ------------3,934,270 47,129 (68,590) 20,590 ---------------3,933,399 ========
7,519 509 ----------8,028 492 ---------8,520 ======
20,080 5,508 ---------25,588 5,506 ---------31,094 ======
1,266,614 338,090 (18,209) --------------1,586,495 355,037 (1,961) 18,209 --------------1,957,780 ========
12,865 311 ----------13,176 648 ----------13,824 ======
78,157 5,630 -----------83,787 4,708 (30,475) -----------58,020 ======
35,058 14,621 (3,602) -----------46,077 12,065 --------58,142 =====
---------------------======
-----------------------======
1,420,293 364,669 (3,602) (18,209) ------------1,763,151 378,456 (32,436) 18,209 ------------2,127,380 ========
78,579 ====== 79,071 ====== 79,580 ======
236,954 ====== 242,460 ====== 249,112 ======
1,465,934 ======== 1,476,708 ======== 1,641,976 ========
1,631 ====== 2,186 ====== 0 ======
3,612 ====== 9,425 ====== 12,378 ======
18,959 ====== 29,464 ====== 49,397 ======
===== 3,498 ===== =====
350 ======= 328,307 ======= 463,136 =======
1,806,019 ======== 2,171,119 ======== 2,504,851 ========
There was no existence and amount of restrictions for title on Property plant & equipment pledged as securities for liabilities during the year
46
Asset under construction N’000 463,136 29,323 (164,152) -----------328,307 (3,507)
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 15.
Property, plant & equipment – The Company
Cost: At 1 April 2015 Additions Disposals Transfer to held for sale At 31 March 2016 Additions Disposals Transfer from Asset Held for sale At 31 March 2017 Depreciation At 1 April 2015 Charge for the year Disposals Transfer to held for sale At 31 March 2016 Charge for the year Transfer to held for sale Disposals At 31 March 2017 Net book Value At 31 March 2017 At 31 March 2016 At 31 March 2015
Leasehold Land N’000 33,474 -----------33,474 ------------33,474 =======
Building N’000 100,877 91 ----------100,968 -----------100,968 =======
Plant and Machinery N’000 2,832,306 111,796 (20,590) --------------2,923,512 18,983 20,590 ---------------2,963,085 ========
7,519 509 ---------8,028 492 -----------8,520 ======
11,883 2,231 ---------14,114 2,229 -
1,229,051 322,811 (18,209) --------------1,533,653 324,936 18,209
---------16,343 =====
24,954 ====== 25,446 ====== 25,955 ======
84,625 ===== 86,854 ===== 88,994 =====
---------81,779 2,356 (33,948) ------------50,187 =======
----------68,964 1,560 ------------70,524 =======
Total N’000 3,124,197 114,004 (8,914) (20,590) --------------3,208,697 22,899 (33,948) 20,590 --------------3,218,238 ========
-------------1,876,798 ========
71,311 3,841 ----------75,152 2,977 (33,944) ----------44,185 =====
29,441 14,141 (3,602) ----------39,980 12,065 ----------52,045 ======
1,349,205 343,533 (3,602) (18,209) --------------1,670,927 342,699 18,209 (33,944) --------------1,997,891 =======
1,086,288 ======== 1,389,859 ======== 1,603,255 ========
6,002 ===== 6,627 ===== 8,351 =====
18,479 ====== 28,984 ====== 48,437 ======
1,220,346 ======== 1,537,770 ======== 1,774,992 ========
There was no existence and amount of restrictions for title on Property plant & equipment pledged as securities for liabilities during the year.
47
Furniture and Equipment N’000 79,662 2,117 -
Motor Vehicle N’000 77,878 (8,914)
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 16.
Intangible Assets 2017
The group 2016
2015
The Company 2017
2016
2015
Restated
Restated
Restated
Restated
Cost:
N’000
N’000
N’000
N’000
At 1 April
6,229
6,229
5,953
2,773
2,773
Additions
-
-
845
-
-
845
Write-off
-
-
(569)
-
-
(569)
------------
-----------
-----------
------------
-----------
-----------
6,229 ======
6,229 =====
6,229 =====
2,773 ======
2,773 =====
2,773 =====
4,927 399 ----------5,326 ======
4,574 353 ---------4,927 =====
4,772 371 (569) ---------4,574 =====
1,592 278
1,314 278
----------1,870 =====
---------1,592 =====
1,667 216 (569) ---------1,314 =====
903 ======
1,302 =====
1,655 =====
903 =====
1,181 =====
1,459 =====
At 31 March Amortisation: At 1April Amortisation charge for the year Write-off At 31 March Net book Value: At 31 March
N’000 2,497
The Intangible asset is in respect of Computer Software with finite useful life of 12.5years and amortized on a straight line basis over these years. 17.
Investment in subsidiaries – The Company Details of the Company’s investments in its subsidiaries at the end of the reporting period are as follows: 2017 N’000 ----------======
Academy Press Specialised Print Services Limited Lithotec Limited
2016 N’000 44,500 5,050 ----------49,550 ======
2015 N’000 44,500 5,050 ----------49,550 ======
The investments in Academy Press Specialised Print Services Limited (formerly known as Academy Press Business Forms Limited) and Lithotec Limited represent 63.57% and 65.16% of the equities respectively. The company investment in Academy Press Specialised Print Services Limited and Lithotec Limited was tested for impairment as at End of 2017. The value in use computation was done using a discount rate of 17.43% (benchmarked to CBN prime lending rate) which is premised on a 3 year projection of income, capital expenditure (CAPEX), continued losses, past experiences and the proposed windup of one the subsidiaries (Lithotec Limited) by the board in prior year due to no operation, The Present Value of the free cashflow was negative therefore no recoverable amount was recognised. 17.1 Allowances for Impairment of subsidiaries
Total N’000
At 1 April 2014
49,550
Charge for the year
-------------
At 1 April 2015
49,550
Charge for the year
------------49,550
At 1 April 2016
(49,550)
Charge for the year
------------At 31 March 2017
=======
48
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 17.1 Allowances for Impairment of subsidiaries - Continued Country of incorporation and Operation & % holding
Academy Press Specialised Print Services Limited Lithotec Limited
17.2.
The Company 2017 ₦’000
Nigeria – 63.57% Nigeria – 65.16%
---------=====
2016 ₦’000 44,500 5,050 ---------49,550 =====
Material partly-owned subsidiaries Financial information of subsidiaries that have material non-controlling interests is provided below:
Summarised statement of profit or loss for 2017: Academy Press Specialised Print Services Limited N’000
Lithotec Limited N’000
274,817
-
Revenue Cost of sales
(220,613)
-
--------------
-------------
Gross profit
54,204
-
Selling Expenses
(1,742)
-
Other Income
232
-
Administrative expenses
(48,648)
(5,773)
Finance cost
(81,856)
-
-----------
------------
(77,810)
(5,773)
111
(4,171)
------------
----------
(77,699)
(9,944)
-
-
(1,956)
-
587
-
------------
------------
(Loss)/Profit before taxation Income tax expense (Loss)/ Profit after taxation Other comprehensive income; net of tax Actuarial Gain/(Loss) Taxation Total comprehensive (Loss) /Profit for the year; net of tax
(79,068))
(9,944)
======
======
Equity holders of the parent
(49,393)
(6,480)
Non - controlling interest
(28,306)
(3,464)
-------------
-----------
49
(77,699)
(9,944)
=======
======
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 17.2.
Material partly-owned subsidiaries - Continued
Summarised statement of profit or loss for 2016 (Restated): Academy Press Specialised Print Services Limited N’000 Revenue Cost of sales Gross profit Selling Expenses
Lithotec Limited N’000
254,121
13,611
(198,565)
(20,479)
----------------
-------------
55,556
(6,868)
-
(324)
Administrative expenses
(55,909)
(12,363)
Finance cost
(35,180)
(3,902)
Other Income
387
30
-----------
------------
Loss before taxation
(35,146)
(23,427)
Income tax expense
(233)
2,157
------------
----------
(35,379)
(21,270)
Loss after taxation Other comprehensive income; net of tax Actuarial Gain/(Loss)
1,205
Taxation
(362)
-
------------
------------
Total comprehensive Loss for the year; net of tax
(34,536)
(21,270)
======
======
Equity holders of Parent
(22,490)
(13,860)
Non - controlling interest
(12,889)
(7,410)
--------------
-------------
(35,379)
(21,270)
=======
=======
Summarised statement of Financial position as at 31 March 2017 Non-Current assets
569,995
15,677
Inventories
71,022
2,465
Cash and short term deposit
12,419
685
Other Current assets
133,985
5,490
Trade and other payables
(590,714)
(41,101)
Interest-bearing loans and borrowings
(249,307)
-
Retirement benefit obligation
(12,766)
(11,535)
Deferred taxation liabilities
(16,342)
-
Income tax payable
Total Equity
(13,192)
(3,862)
--------------
------------
(94,900))
(32,181)
=======
=======
(94,900)
(32,181)
=======
======
Equity holders of the parent
(60,328)
(20,969)
Non - controlling interest
(34,572)
(11,212)
--------------
--------------
(94,900)
(32,181)
========
========
Attributable to :
50
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 17.2.
Material partly-owned subsidiaries - Continued
Summarised statement of profit or loss for 2016 (Restated): Academy Press Specialised Print Services Limited N’000
Lithotec Limited
617,793
15,556
95,276
2,503
Non-Current assets Inventories Cash and short term deposit
N’000
1,805
98
135,592
5,595
Trade and other payables
(443,615)
(24,731)
Interest-bearing loans and borrowings
(348,006)
(4,967)
(9,698)
(11,747)
Other Current assets
Retirement benefit obligation Deferred taxation liabilities
(12,282)
-
Income tax payable
(16,632)
(3,897)
-----------
------------
Total Equity
20,233
(21,469)
======
=======
20,233
(21,469)
======
======
12,862
(13,989)
Attributable to : Equity holders of the parent Non - controlling interest
7,371
(7,480)
---------
-------------
20,233
(21,469)
=====
=======
Academy Press Specialised Print Services Limited N’000
Lithotec Limited
(82,252)
587
Investing
-
-
Financing
96,476
-
------------
-----------
Net increase in cash and cash equivalents
14,224
587
Cash and cash equivalents at 1 April
(1,805)
98
------------
-----------
Summarised Cash Flow information for year ended 31 March 2017
Operating
Cash and cash equivalents at 31 March
N’000
12,419
685
======
=======
Academy Press Specialised Print Services Limited N’000
Lithotec Limited
Operating
(16,756)
15,230
Investing
(99,284)
-
Financing
211,287
(10,199)
-------------
-----------
Summarised Cash Flow information for year ended 31 March 2016
Net increase in cash and cash equivalents Cash and cash equivalents at 1 April Cash and cash equivalents at 31 March
51
N’000
95,247
5,031
(93,442)
(4,933)
------------
-----------
1,805
98
=====
=======
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 18.
Inventories The Group 2017 N’000
2016 N’000
2015 N’000
The Company 2017 N’000
2016 N’000
2015 N’000
Paper
95,733
191,531
174,820
67,570
160,686
109,852
Bindery, Lithographic materials, etc.
30,885
62,766
46,765
28,417
62,207
45,737
Ink and chemicals
30,946
34,045
25,577
19,463
33,297
24,859
Work-in-progress
116,573
23,103
103,928
12,942
11,444
Machinery spare part
105,210
88,288
17,170 91,407
88,448
82,698
87,726
179
2,524
3,337
-
1,628
1,578
1,788 ---------------
198,734 ---------------
4,593 ---------------
---------------
149,754 ---------------
---------------
381,314 ========
600,991 ========
363,669 ========
307,826 ========
503,212 ========
281,196 ========
Consumables Goods-in-transit Total inventories at the lower of cost and net realisable value
-
The cost of inventories recognized as an expense and included in cost of sales within the Group amounted to N45.6 million (2016: N17.7million) in the consolidated and separate financial statements respectively. The cost of inventories recognized as an expense in cost of sales in the Company financial statements respectively includes N43.6million (2016: N3million). The cost of Inventory Write off in the Administrative expense for the Group in the year amounted to N26.269 million (2016:3 million) which is attributable to differences in physical count of inventory and amount initially recorded in the books before inventory count. The cost of Inventory Write off recognised in Administrative expense in the Company’s financial statements amounted to N24.30 million (2016:3 million).. 19.
Trade and other receivables Group 2017
2016 Restated
N’000 Trade receivable Impairment allowance (Note 19.1)
Staff loans and advances Due from related parties (Note 28) Advances and prepayments (Note 20) Other receivables
2015 Restated
N’000
N’000
504,287
454,937
615,255
(59,376) --------------
(33,998) --------------
(63,718)
444,911
420,939
6,627
12,070
-
75,892
51,518
Company 2017
2015 Restated
N’000
N’000
456,589
413,829
561,653
(53,577) -------------
(27,785) -------------
--------------
551,537 11,029
403,012
386,044
9,358
12,070
499,369 11,029
132,954
97,310
80,261
161,765
40,253
24,181
29,800
17,117
22,688
195,241
120,494
115,390
116,697
51,463
26,287
--------------
-------------
--------------
-------------
--------------
-------------
698,342 =======
683,772 =======
865,174 =======
656,177 =======
546,955 =======
721,138 =======
--------------
N’000
2016 Restated
(62,284)
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. The carrying value of these items approximates their fair value. As at 31 March 2017, Group trade receivables of an initial value of N 59.4million (2016: N 34 million) were impaired and fully provided for while Company trade receivables of an initial value of N 53.58million (2016: N 27.79million) were impaired and fully provided for. See Note 19.1 below for the movements in the provision for impairment of receivables for the Company and the Group Other Receivables in the Group and the Company represents amount receivable as Debt Paper borrowings, Debt paper sheet down, Withholding tax receivables and unassessed input value added tax receivables as at year end.
52
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Individually impaired N’000
Collectively impaired N’000
Total N’000
At 1 April 2014
-
71,885
71,885
Charge for the year
-
-
-
Unused amounts reversed
-
(8,167)
(8,167)
19.1 Allowances for Impairment Account – The Group
------------
------------
-------------
At 1 April 2015
-
63,718
63,718
Charge for the year
-
26,398
26,398
Unused amounts reversed
-
(56,118)
(56,118)
------------
-----------33,998
------------33,998
Charge for the year
-
27,209
27,209
Unused amounts reversed
-
(1,831)
(1,831)
-------------
-------------
-------------
-
59,376
59,376
=======
=======
=======
Individually impaired N’000
Collectively impaired N’000
Total N’000
At 1 April 2014
-
67,800
67,800
Charge for the year
-
-
-
At 1 April 2016
At 31 March 2017
19.1 Allowances for Impairment Account – The Company
Unused amounts reversed
-
(5,516)
(5,516)
------------
------------
-------------
At 1 April 2015
-
62,284
62,284
Charge for the year
-
6,891
6,891
Unused amounts reversed
-
(41,390)
(41,390)
------------
-----------27,785
------------27,785
-
25,792
25,792
-------------
-------------
-------------
-
53,577
53,577
=======
=======
=======
At 1 April 2016 Charge for the year At 31 March 2017
19.2 Ageing analysis As at 31 March, the ageing analysis of trade receivables for the Group and the Company are as follows: The Group
Total
>30 days
>60 days
>90 days
N’000
Neither past due nor impaired N’000
N’000
N’000
N’000
31 March 2017
444,911
206,767
32,696
119,607
85,841
31 March 2016
420,939
166,431
21,618
30,456
202,434
31 March 2015
551,537
301,081
22,512
40,649
187,295
53
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 19.2 Ageing analysis – The Company Total
31 March 2017 31 March 2016 31 March 2015
Neither past due nor impaired
N’000
N’000
403,012 386,044 499,369
173,607 146,873 267,051
>30 days N’000
>60 days N’000
>90 days
N’000
26,375 11,131 19,943
119,476 28,738 36,582
83,555 199,302 175,793
20. Advances and prepayments 2017 N’000
The Group 2016 N’000
2015 N’000
2017 N’000
The Company 2016 N’000
2015 N’000
Medical Allowance
2,488
2,470
-
2,206
2,470
-
Service Agreement
192
118
-
192
118
-
3,091
1,540
-
2,992
1,540
-
General Prepayment
33,675
7,545
22,688
17,068
7,544
22,688
Deposit for supplies
12,072 -----------
28,580 ------------
1,493 ------------
7,342 ------------
5,445 ------------
------------
51,518 ======
40,253 ======
24,181 ======
29,800 ======
17,117 ======
22,688 ======
2017
The Group 2016
2015
2017
The Company 2016
2015
N’000
N’000
N’000
N’000
N’000
N’000
Restated
Restated
Restated
Restated
26,839
17,255
24,935
9,689
Insurance
21. Cash and cash equivalents
Bank Cash
Restricted Cash
35,128
22,490
325
-
-
305
-
-
----------
------------
------------
------------
-----------
------------
35,453
26,839
17,255
22,795
24,935
9,689
53,519
68,519
92,761
53,519
68,519
92,761
----------
------------
------------
------------
-----------
------------
88,972
95,358
110,016
76,314
93,454
102,450
======
======
=======
======
======
======
Restricted Cash represent held as security deposit in respect of the Bank of Industry Loan. The Initial loan amount was N927 million and there was an agreement that 10% of this amount should be paid in a Bank of Industry account should in case there is a breach in the loan repayment terms. This amount is available on demand if there is a breach of the current arrangement or agreement with respect to the Bank of Industry loan. The repayment due will be taken out of the restricted cash. 21.1 For the purpose of the statement of cash flow, cash and cash equivalents comprise the following at 31 March: The Group
The Company
2017
2016
2015
2017
2016
2015
N’000
N’000
N’000
N’000
N’000
N’000
Cash and Bank Balances
35,453
26,839
17,255
22,795
24,935
9,689
Bank overdrafts (Note 24)
(41,488)
(81,664)
(156,274)
(41,913)
(76,697)
(50,332)
----------
-----------
-----------
------------
-------------
-------------
(6,035) ======
(54,825) ======
(139,019) =======
(19,118) ======
(51,762) ======
(40,643) =======
Net cash and cash equivalents used in the Statement of Cash Flows
Cash at banks earn interest at floating rates on daily bank deposit rates. The bank overdrafts are unsecured and accrue interest at the prevailing market interest rate from time to time.
54
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 22. Asset Held for Sale 2017
The Group 2016
2015
2017
N’000
N’000
N’000
N’000
Asset Held for sale
The Company 2016
2015
N’000
N’000
-
2,381
-
-
2,381
-
-----
--------------
-----
-----
----------
-----
-
2,381
-
-
2,381
-
===
=======
===
===
=====
===
The company was unable to sell the asset in the current year, thus a transfer was made to Property, Plant and Equipment (Plant and Machinery) as at year end. 23. Share capital Authorised shares: 750,000,000 ordinary shares of 50kobo each. Issued and fully paid shares: 604,800,000 ordinary shares of 50kobo each. At 31 March 2017 23.1.
2017
2016
2015s
N000 375,000 =======
N000 375,000 =======
N000 375,000 =======
302,400 =======
302,400 =======
252,000 =======
Nature and Purpose of Reserves
23.1.1. Share Premium The share premium is excess amount received over and above the par value of the shares. They form part of the non-distributable reserves of the Company which can be used only for the purposes specified under Companies and Allied Matters Act, CAP C20, LFN 2004. 23.1.2. Retained Earnings The group’s retained earnings reserve comprises Group’s retained earnings, net of distribution made to equity holders. 23.1.3. Non-controlling Interest Non-controlling interest comprises amounts due to holders of minority shares in the two subsidiaries companies in the Group. 24. Interest-bearing loans and borrowings 2017
The Group 2016 Restated
2015 Restated
2017
The Company 2016 Restated
2015 Restated
N’000
N’000
N’000
N’000
N’000
N’000
Bank Overdraft
41,488
81,664
156,274
41,913
76,697
50,332
Enterprise Development Company Ltd. (24.1)
30,000
30,000
30,000
30,000
30,000
30,000
Unsecured borrowings at amortised cost
Secured borrowings at amortised cost: HIL (MTL) Loan Stanbic IBTC Bank Plc (24.2) Diamond Bank Plc (24.3)
516,786
-
-
516,786
-
-
8,346
19,086
28,294
8,346
19,086
28,293
456
2,280
4,104
456
2,280
4,104
Bank of Industry Limited (24.4)
390,486
497,111
772,105
390,486
497,111
772,105
Union Bank of Nigeria Plc (24.5)
249,286
345,783
239,250
-
-
-
-
2,223
8,889
-
-
-
----------------
---------------
---------------
---------------
--------------
--------------
New Age Leasing Company Ltd (24.6) Total Interest bearing Borrowings as at 31 March Current portion of Interest bearing loans and borrowings
1,236,848
978,147
1,238,916
987,987
625,174
884,834
========
========
========
========
=======
=======
416,722
315,060
760,613
167,861
214,143
274,988
=======
=======
=======
=======
=======
820,126
663,087
478,303
820,126
411,031
609,846
=======
======
======
======
=======
======
======= Non-Current portion of Interest bearing loans and borrowings
55
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 24. Interest-bearing loans and borrowings - Continued
24.1
Enterprise Development Company Limited
The commercial note facility of N30,000,000 was obtained from a related party-Enterprise Development Company Nigeria Limited towards enhancement of the Company’s working capital with no definite repayment date. The facility was granted at an interest rate of 13% per annum 24.2
Stanbic IBTC Bank Plc
In October, 2014 Stanbic IBTC Bank financed the acquisition of six (6) new motor vehicles with the release of a facility of N30,818,690 repayable over 36 months at the interest rate between 17% to 20%. The facility is secured by personal guarantee of the Managing Director and two Executive Directors of the Company supported by notarized statements of each guarantor’s net-worth. 24.3
Diamond Bank Plc
Diamond Bank Plc part financed the purchase of a sportage 2.OL SLEEK (automatic) car by granting the Company facility of N5,472,000. The facility was granted at interest rate of 23% per annum. The facility is for a period of thirty six (36) months. Agreed security on the facility is legal ownership of the financed vehicle by the Company and the lessor. 24.4
Bank of Industry Limited
The facility was initially obtained from Union Bank for the acquisition of a new 2 –Colour Web and Komori Press and was refinanced by Bank of Industry Limited under the CBN intervention facility programme. The amount of the intervention facility is N558, 000,000 repayable in 5 years inclusive of 1 year moratorium at an annual interest rate of 7%. The facility is secured by the Company, legal mortgage over the company’s factory property and chattel Mortgage over specific production equipment. Also in 2012 the Bank of Industry granted the Company a further long-term loan facility of N837,371,959 for a tenure of 6 years at an interest rate of 10% subject to review from time to time for the acquisition of items of plant and machinery for the expansion of the Company’s printing factory. The loan has a moratorium of one and half (1½) years on principal Repayment beginning from the date of first drawdown. The first draw-down on the loan was made in January, 2013. The debt facility is secured by Bank Guarantee from First Bank of Nigeria Plc and admission of First Bank of Nigeria Plc on pari-pasu basis into Trust Deed held by Union Trustees on behalf of the Company. However in current year the loan was restructured with Bank of Industry with a new repayment plan of 52 months with an Interest rate of 10% with moratorium of 3 month on principal repayments. The benefit of these facilities from the Bank of Industry at a below the market rate of interest has been treated as a government Grant, recognized and measured in accordance with IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance. This benefit of below-market rate of interest has therefore been measured as the difference between the initial carrying value of the loan determined in accordance with IAS 20 and the proceeds received. Using the prevailing market interest rates for an equivalent and similar loan facility from an open market, i.e. a commercial bank 24.5
Union Bank of Nigeria Plc
In 2014, Union Bank of Nigeria Plc financed the purchase of Muller Martins Web Press and Diumuken Machine by granting Academy Press Specialised Print Services Limited facility of N240,000,000 at an interest rate of 20% per annum. The facility is for a period of forty-eight (48) months with eight (8) months moratorium to end in August, 2014. The facility is secured by- Unlimited Guarantee executed by Academy Press Plc supported with Board resolution, Lease Agreement (Special form) Supported with original documents of the leased machines to be stamped for N240million and adequately insured with Union Assurance Company Limited with Union Bank noted as the loss payee.
56
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 24. Interest-bearing loans and borrowings - Continued
24.5
Union Bank of Nigeria Plc - Continued
The Bank (Union Bank of Nigeria Plc) equally granted Lithotec Limited a lease facility of N11,250,000 for the acquisition of two colour printing press. The facility is for a tenor of 2 years at an interest rate of 20%. Agreed collateral on the facility is Lease Agreement (Special Form) supported with the original title documents of the machine to be stamped for N11.3million and adequately insured with reputable insurance company preferably Union Assurance Company Limited with Union Bank noted as the first loss payee. 24.6
New Age Leasing Company Limited
In August, 2013 Academy Press Specialised Print Services Limited obtained a lease facility of N20,000,000 from New Age Leasing Company Limited for the purchase of a Press machine, one unit of Toyota Corolla saloon car and one unit of Toyota Hilux Pickup. The facility was granted at an interest rate of 25%. The facility is repayable over 36months. The Group
Nominal Interest Rate
Bank overdraft
Maturity
2017 N’000
2016 N’000
2015 N’000
On demand
41,488
81,664
156,274
=====
======
======
Other borrowing/lenders Commercial notes: Enterprise Development Company Nigeria Limited
13%
Undated
30,000
30,000
HIL (MIL)
17 % and 20%
November 2017
516,786
-
-
Stanbic IBTC Bank Plc
17 % and 20%
November 2017
8,346
19,086
28,294
Diamond Bank Plc
30,000
23%
May, 2017
456
2,280
4,104
7% and 10%
2015/2018
390,486
497,111
772,105
Union Bank of Nigeria Plc
20%
2015/2018
249,286
345,784
239,250
New Age Leasing Company Limited
25%
March 2017
-
2,222
8,889
--------------
------------
------------
1,195,360
896,483
1,082,642
========
========
========
41,913
76,697
Bank of Industry Limited
The Company Bank overdraft
On demand
50,332
Other borrowing/lenders Commercial notes: Enterprise Development Company Nigeria Limited
13%
Undated
30,000
30,000
HIL
17 % and 20%
November 2017
516,786
-
-
Stanbic IBTC Bank Plc
17 % and 20%
November 2017
8,346
19,086
28,294
Diamond Bank Plc Bank of Industry Limited
30,000
23%
May, 2017
456
2,280
4,104
7% and 10%
2018
390,486
497,111
772,105
20%
2018
Union Bank of Nigeria Plc
-
-
-
--------------
------------
------------
946,074
548,477
834,503
========
========
========
25. Retirement benefit obligations The Group operates defined benefit plan retirement scheme for employees under its gratuity scheme. The plan assets of the scheme are funded. The level of benefits provided depends on the member’s length of service and salary at retirement age. In addition, The Group also operates defined contribution pension scheme in conformity with the provisions of the Pension Reform Act 2014. The amounts recognized in the statement of financial position are as follows:
57
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 25. Retirement benefit obligations – Continued The Group 2017 N’000
2016 Restated N’000
(185,880)
(150,410)
154,586 -----------
The Company 2017 2016 Restated N’000 N’000
2015 Restated N’000 (191,898)
(167,663)
156,903
157,676
154,586
156,903
157,676
-----------
-------------
-----------
------------
-------------
(31,294)
6,493
(34,222)
(13,077)
22,382
(16,912)
(17,683)
(81,081)
(60,028)
(11,598)
(75,524)
(59,142)
-----------
-----------
-------------
-----------
------------
-------------
(48,977)
(74,588)
(94,250)
(24,675)
(53,142)
(76,054)
======
======
=======
======
======
======
Non -Current
(31,294)
6,493
(34,222)
(13,077)
22,382
(16,912)
Current
(17,683)
(81,081)
(60,028)
(11,598)
(75,524)
(59,142)
======
======
=======
======
======
======
Post-employment defined benefit gratuity liability Gratuity Planned Asset at fair value
Pension Payables
(134,521)
2015 Restated N’000 (174,588)
Since the gratuity liability is adjusted to consumer price index, the gratuity plan is exposed to Nigeria’s inflation, interest rate risks and changes in the life expectancy for the employees. The liabilities are actuarially determined using the projected income method. The following tables summarise the components of net benefit expense recognised in the profit or loss, actuarial gain/loss in OCI and the amounts recognised in the statement of financial position for the plan. The Group The Company 25.1 Net Benefit Expense recognised in profit or loss 2017 2016 2015 2017 2016 2015 Restated Restated Restated Restated N’000 N’000 N’000 N’000 N’000 N’000 Current service cost
4,068
10,417
10,380
3,636
8,792
7,924
Interest cost on benefit obligation
8,080
23,941
27,757
7,218
22,723
24,687
Interest income on assets
(8,368)
(24,440)
(19,356)
(8,368)
(24,440)
(19,356)
Past service cost
55,948
-
-
52,852
-
-
-----------
-----------
-------------
-----------
------------
-------------
59,728
9,918
18,781
55,338
7,075
13,255
======
======
=======
======
======
======
25.2 Re-measurement gains in other comprehensive income
Actuarial gain/ (loss) arising from: Changes in financial assumptions Actuarial (loss) gain on define benefit assets
26,891 (10,685)
(3,177) (25,213)
7,708 3,901
24,935 (10,685)
(1,972) (25,213)
7,216 3,901
Amount recognised in Other comprehensive income
----------16,206
----------(28,390)
------------11,609
----------14,250
-----------(27,185)
------------11,117
======
======
=======
======
======
======
150,410
191,898 10,417
220,315 10,380
134,521 3,636
174,588 8,792
177,829 7,924
23,941
27,757
52,852
-
-
7,218
22,723
24,687
25.3 Defined Benefit obligation
At 1 April Current Service Cost Past Service Cost Interest Cost Cost Actuarial (gains)/loss from changes in assumptions
4,068 55,948 8,080 (26,891)
3,177
(7,708)
(24,935)
1,972
(7,216)
Benefit Paid
(5,735)
(79,023)
(58,846)
(5,629)
(73,554)
(28,636)
-----------
-----------
-------------
-----------
------------
-------------
At 31 March
185,880
150,410
191,898
167,663
134,521
174,588
======
======
======
======
======
======
58
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 25 Retirement benefit obligation – Continued The principal assumptions used in determining gratuity plan benefit obligations for the company's plan are shown below: The Group The Company 25.4 Changes in Present value of Defined benefit assets 2017 2016 2015 2017 2016 Restated Restated Restated N’000 N’000 N’000 N’000 N’000
2015 Restated N’000
156,903
157,676
134,419
156,903
157,676
134,419
Interest income
8,368
24,440
19,356
8,368
24,440
19,356
Employer Contribution
5,735
79,023
58,846
5,629
73,554
28,636
(5,735)
(79,023)
(58,846)
(5,629)
(73,554)
(28,636)
(10,685)
(25,213)
3,901
(10,685)
(25,213)
3,901
At 1 April
Benefit paid Actuarial gain/(loss)
-----------
-----------
-------------
-----------
------------
-------------
154,586
156,903
157,676
154,586
156,903
157,676
======
======
=======
======
======
======
Quoted equity investment
15,004
23,294
23,294
15,004
23,294
23,294
Unquoted Investment
43,500
43,500
37,500
43,500
43,500
37,500
5,000
5,000
5,000
5,000
5,000
5,000
91,082
85,109
91,882
91,082
85,109
91,882
---------
----------
---------
----------
-----------
-------------
154,586
156,903
157,676
154,586
156,903
157,676
======
=======
======
=======
=======
=======
Disclosure by class of define benefit assets
Investment in Commercial paper Restricted cash(fixed deposit)
25.5 Sensitivity Analysis % Average long term discount rate (p.a)
%
%
%
%
%
16
15.5
12.8
16
15.5
12.8
7
7
7
7
7
7
18-29
-
4.5
4.5
-
4.5
4.5
30-44
-
6
6
-
6
6
45-54
-
-
-
-
-
-
55-60
-
-
-
-
-
-
Average salary increase (p.a)
Withdrawal from service (Age band)
A quantitative sensitivity analysis for significant assumption as at 31 March 2017 is as shown below:
Sensitivity Level Impact on the net defined benefit obligation
Discount Rate +1% -1% Increase Decrease N’000 N’000
+1% Increase N’000
-1% Decrease N’000
127,438
142,667
126,980
142,281
Future Salary Increases
The sensitivity analyses above have been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The valuation results set out above are based on a number of assumptions. The value of the liability could turn out to be overstated or understated, depending on the extent to which actual experience differs from the assumptions adopted. The liability were recalculated to show the effect of: The discount rate assumption on the defined benefit obligation by adding and subtracting 1% to the discount rate The salary increase assumption on the defined benefit obligation by adding and subtracting 1% to the salary increase rate and; The mortality assumption on the defined benefit obligation by adding and subtracting 1 year to the age rating
59
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 25.5 Sensitivity Analysis - Continued Discount Rate +1% Increase %
Sensitivity Level
-1% Decrease %
2017
(5.30)
5.80
2016
(5.30)
5.80
2015
(3.50)
3.80
Salary Increase Rates +1% Increase %
Sensitivity Level
-1% Decrease %
2017
6.10
(5.60)
2016
6.10
(5.60)
2015
4.10
(3.80)
Mortality Rates +1% Increase %
Sensitivity Level
-1% Decrease %
2017
0.10
(0.10)
2016
0.10
(0.10)
2015
0.10
(0.10)
25.6 Maturity Analysis of defined benefit plan Expected Benefit payment for future years are analysed below:
2017 N’000
The Group 2016 N’000
2015 N’000
2017 N’000
The Company 2016 N’000
2015 N’000
Within the next one year
16,848
5,735
73,554
15,798
5,629
73,554
Between 2 to 5 years
30,202
77,257
5,735
30,302
75,286
5,629
171,456
143,264
179,163
152,127
125,188
131,257
More than 5 years
-----------
-----------
-------------
-----------
------------
-------------
218,506
226,256
258,452
198,227
206,103
210,440
======
======
=======
======
======
======
60
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 25.5 Changes in the defined benefit obligation and fair value of plan assets are highlighted below: Retirement benefit cost charged to profit or loss
At 30 April
Service Cost
Remeasurement (gain)/loss in OCI
Net Interest Expense
Subtotal included in Profit or loss
Benefit Paid
Actuarial (gain)/loss in Other comprehensive income
Contribution by employer
At 31 March
GROUP 2017 Defined benefit obligation Fair Value of plan assets Benefit assets/(liabilities) 2016 Defined benefit obligation Fair Value of plan assets Benefit (liabilities)/assets 2015 Defined benefit obligation Fair Value of plan assets Benefit (liabilities)/assets
N’000 (150,410) 156,903 ----------6,493 ======
N’000 (60,016) ---------(60,016) ======
N’000 (8,080) 8,368 -------------288 ======
N’000 (68,096) 8,368 ----------(59,728) ======
N’000 5,735 (5,629) ----------106 ======
N’000 26,891 (10,685) --------16,206 ======
N’000 5,629 -------------5,629 =======
N’000 (185,880) 154,586 -----------(31,294) ======
(191,898) 157,676 ----------(34,22) ======
(10,417) ---------(10,417) ======
(23,941) 24,440 -------------499 ======
(34,358) 24,440 ----------(9,918) ======
79,023 (73,554) ----------5,469 ======
(3,177) (25,213) --------(28,390) ======
0 73,554 -------------73,554 =======
(150,410) 156,903 -----------6,493 ======
(220,315) 134,419 ----------(85,896) ======
(10,380) ---------(10,380) ======
(27,757) 19,356 -------------(8,401) ======
(38,137) 19,356 ----------(18,781) ======
58,846 (28,636) ----------30,210 ======
7,708 3,901 --------11,609 ======
28,636 -------------28,636 =======
(191,898) 157,676 -----------(34,222) ======
61
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
25.5 Changes in the defined benefit obligation and fair value of plan assets are highlighted below: Remeasurement (gain)/loss in OCI
Retirement benefit cost charged to profit or loss
At 30 April
Net Interest Expense
Service Cost
Subtotal included in Profit or loss
Benefit Paid
Actuarial (gain)/loss in Other comprehensive income
Contribution by employer
At 31 March
COMPANY 2017 Defined benefit obligation Fair Value of plan assets Benefit assets/(liabilities) 2016 Defined benefit obligation Fair Value of plan assets Benefit (liabilities)/assets 2015 Defined benefit obligation Fair Value of plan assets Benefit (liabilities)/assets
N’000 (134,521) 156,903 ----------22,382 ======
N’000 (56,488) ----------(56,488) ======
N’000 (7,218) 8,368 ------------1,150 =======
N’000 (63,706) 8,368 ----------(55,338) =======
N’000 5,629 (5,629) ----------=======
N’000 24,935 (10,685) ------------14,250 =======
N’000 5,629 ----------5,629 =======
N’000 (167,663) 154,586 ----------(13,077) =======
(174,588) 157,676 ----------(16,912) ======
(8,792) ----------(8,792) ======
(22,723) 24,440 ------------1,717 =======
(31,515) 24,440 ----------(7,075) =======
73,554 (73,554) ----------=======
(1,972) (25,213) ------------(27,185) =======
73,554 ----------73,554 =======
(134,521) 156,903 ----------22,382 =======
(177,829) 134,419 ----------(43,410) ======
(7,924) ----------(7,924) ======
(24,687) 19,356 ------------(5,331) =======
(32,611) 19,356 ----------(13,255) =======
28,636 (28,636) ----------=======
7,216 3,901 ------------11,117 =======
28,636 ----------28,636 =======
(174,588) 157,676 ----------(16,912) =======
62
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 26. Government grant The Group 2017
At 1 April Addition Release to profit or loss At 31 March Current portion of Government Grant Non-Current portion of Government Grant
2016 Restated
2015 Restated
The Company 2017
2016 Restated
2015 Restated
N’000
N’000
N’000
N’000
N’000
N’000
70,215
125,222
192,861
70,215
125,222
192,861
116,946
-
-
116,946
-
-
(105,843)
(55,007)
(67,639)
(105,843)
(55,007)
(67,639)
-----------
-----------
-----------
-----------
-----------
-----------
81,318
70,215
125,222
81,318
70,215
125,222
======
=====
=====
======
=====
=====
35,544
22,069
55,007
35,544
22,069
55,007
45,774
48,146
70,215
45,774
48,146
70,215
-----------
-----------
-----------
-----------
-----------
-----------
81,318
70,215
125,222
81,318
70,215
125,222
======
======
======
======
======
======
Trade payables (Note 27.1)
289,561
1,009,574
661,804
264,201
848,949
531,261
Other creditors and accruals (Note 27.1)
489,012
329,149
358,416
218,005
180,074
221,652
Due to related (Note 28)
70,611
125,984
175,116
11,900
13,274
9,847
Advances from customers
66,823
8,597
23,915
69,888
4,735
21,737
122,571
122,571
153,888
122,571
122,571
153,888
14,056
5,102
15,794
14,056
4,459
15,151
120,060
12,086
17,433
15,327
9,826
15,277
7,381
5,449
3,105
7,319
5,449
3,105
-----------------
----------------
----------------
---------------
---------------
-------------
1,183,501 =========
1,619,200 ========
1,410,159 ========
723,267 =======
1,189,337 ========
971,918 ======
27. Trade and other payables
Payable on IPP Electricity (Note 27.2) Withholding tax payable Value added tax Housing fund payable
27.1 Other creditors and accruals The carrying amount of trade payables and other creditors and accrual is considered to be in line with their fair value at the reporting date. The average credit period on purchases of goods is 30days (2015:30days). Normally, no interest is charged on Local trade payables 27.2 Payable on IPP Electricity The company has a contractual arrangement with energy companies for the supply of power for the operation of the company through Independent power plant hence the provision of N122.57 million (2016: N122.57 million) stated above represents the expected value of gas due for supply but not consumed which has not been paid as at the reporting date. For explanations on the Group’s credit risk management processes, refer to Note 30. 28. Related party disclosures Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial and operational decisions, or one party controls both. The definition includes key management personnel of the Company. The key management personnel, and persons connected with them, are also considered to be related parties. The definition of key management includes the close members of family of key personnel and any entity over which key management exercise control. The key management personnel have been identified as the executive and non‐executive directors of the Company. Close members of family are those family members who may be expected to influence, or be influenced by that individual in their dealings with the Company.
63
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 28. Related party disclosures - Continued The consolidated and separate financial statements include the financial statements of the Group and the subsidiaries listed in the following table: Principal Activity Name Academy Press Specialised Print Services Limited Lithotec Limited
% equity interest 2016
Printing of business forms, computer stationery and confidential documents Provision of pre-press services of origination and photolithography for printers, publishers, advertising agencies, government agencies and corporate organizations
2016
63.57%
63.57%
65.16%
65.16%
Terms and conditions of transactions with related parties The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2016: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
Transactions with related parties 28.1 The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year. GROUP Sales to related parties
Purchases from related parties
Amount owed by related parties
₦’000 Academy Press Specialised Print Services Limited
2017
-
2016 West Africa Books Publishers Enterprise Development Company Nigeria Limited Richware Ceramics Industrial Limited
Total
Amount owed to related Parties ₦’000
-
-
-
75,892
-
2017
-
-
-
3,019
2016
-
-
-
1,348
2017
-
-
-
65,020
2016
-
-
-
122,130
2017
-
-
-
2,572
2016
-
-
-
2,506
----------
-----------
2017
-
70,611
2016
75,892
125,984
West African Books Publisher is a related party to Academy press as they both operate in the same compound, Also the company is an Investor in the Academy press Plc as they have material interest in shares of 10.40% in eth company shares. The amount receivables include the amount apportioned to the company by Academy Press Plc as a result of shared cost between the two companies. Enterprise Development Company Nigeria limited is a related party, the amount payable to the company by Academy press includes Interest payable on the Commercial Paper of N30 million. The commercial paper were offered at 13% interest per annum. Richware Ceramics Limited is a related party, the amount payable to the company by Academy press includes Interest payable on the Commercial Paper of N3 million. The commercial paper were offered at 13% interest per annum.
64
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 28. Related party disclosures – Company continued COMPANY Sales to related parties
Purchases from related parties ₦’000
Amount owed by related parties
Amount owed to related Parties ₦’000
Academy Press Specialised Print Services Limited
2017
-
-
66,919
660
2016 2017
-
-
50,252
-
Lithotec limited
-
-
27,943
-
2016
-
-
25,640
-
2017
-
-
2,449
-
2016
-
-
4,369
-
2017
-
-
-
8,668
2016
-
-
-
10,768
2017
-
-
-
2,572
2016
-
-
-
2,506
West Africa Books Publishers Enterprise Development Company Nigeria Limited Richware Ceramics Industrial Limited
Total
-------------
------------
2017
97,311
11,900
2016
80,261
13,274
Terms and conditions of transactions with related parties Transactions to and from related parties are made at terms equivalent to those that prevail in arm’s length transactions. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2016: Nil). The average number of persons employed by the Group during the year, including Directors, was as follows: The Group 2017 2016 Technical 173 195 Non-technical 104 104 ----------277 299 === === Directors’ emoluments comprise: The Group 2017 2016 N’000 N’000 Short term employment benefits (Salaries) 14,930 16,480 Post-employment pension and medical benefits Fees paid for meetings attended - Directors 6,570 6,200 ---------------------21,500 22,680 ===== ====== The numbers of the Directors whose gross emoluments are within the bands stated below were:The Group 2017 2016 Number Number N N Up to - 1,000,000 11 10 1,000,001 - 2,000,000 2,000,001 - 3,000,000 1 1 3,000,001 and above 3 3 -----15 14 == ==
65
The Company 2017 156 91 -----247 === The Company 2017 N’000 14,930 6,120 -----------21,050 ===== The Company 2017 Number 7 1 2 ---10 ==
2016 178 87 -----265 === 2016 N’000 15,650 5,400 ------------21,050 ======
2016 Number 6 1 2 --9 ==
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Staff Costs - Salaries and allowances:
Wages, Salaries, allowances and other benefits Pension costs
The Group 2017 N’000
The Company 2016 N’000
2017 N’000
2016 N’000
337,33 22,955 ------------360,288 =======
350784 16,213 ------------366,997 =======
319,694 20,815 --------------340,509 ========
2017 Number
2016 Number
The Company 2017 Number
2016 Number
252 22 3 -----277 ===
252 36 11 ----299 ===
225 20 2 ----247 ===
227 29 9 ----265 ===
366,359 18,682 ------------385,041 =======
The numbers of employees with gross emoluments within the bands stated below were: The Group N N Up to - 1,050,000 1,050,001- 2,050,000 2,050,001 and above
Transactions with key management personnel Compensation of key management personnel of the Company and the Group
Fees Remuneration
The Group 2017 N’000 6,570 14,930 ----------21,500 ======
2016 N’000 6,200 16,480 ----------22,680 =====
The Company 2017 N’000 6,120 14,903 ----------21,050 =====
2016 N’000 5,400 15,650 -----------21,050 =====
The chairman Other directors
The Group 2017 N’000 1,080 20,420 ----------21,500 ======
2016 N’000 1,080 21,600 -----------22,680 ======
The Company 2017 N’000 1,080 19,970 -----------21,050 ======
2016 N’000 1,080 19,970 -----------21,050 ======
29.
Commitments and contingencies
Deed of Guaranty in favour of Energy Company Nigeria Limited (Note a) Guaranty and Indemnity in favour of United Bank For Africa Plc on LPO finance facility granted to West African Book Publishers Limited (Note b) Guaranty and indemnity in favour of First Bank of Nigeria Plc on LPO finance facility granted to West African Book Publishers Limited. Guaranty and Indemnity in favour of Union Bank of Nigeria Plc on credit facility granted to Academy Press Specialised Print Services Limited (Note c)
66
2017 N’000
2016 N’000
-
50,000
250,000
250,000
250,000
250,000
250,000
260,000
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 29. Commitments and contingencies – Continued a) The balance of Energy Company Nigeria limited is as a result of termination of contract and since the contract is no more in operation, it gives rise to the nil balance as at March, 2017. b) The guarantee granted to West Africa Book Publishers limited by United Bank of Nigeria and First Bank in respect of working capital finance was not utilized as at March 2017. c) The balance of guaranty and indemnity in favour of Union Bank of Nigeria on credit facility granted to our subsidiary (Academy Press Specialised Print Services Limited) represents the cross guarantee given by Academy Press Plc for a term loan of 340million in September 2015 for the purchase of ultra-modern equipment. The difference of ₦96million was paid during the financial year which bring the balance as at 31st March, 2017 to ₦250million. 29.1 Financial commitments There were no financial commitments not provided for as at 31st March, 2017 (2016 - Nil) 30.
Financial risk management objectives and policies
The group’s principal financial liabilities, comprise loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The group has loan and other receivables, trade and other receivables, and cash and short-term deposits that arise directly from its operations. The group is exposed to market risk, credit risk and liquidity risk. The group’s senior management oversees the management of these risks. The group’s risk management is governed by the Board, through the Board Financial, Risk and Audit committee The board of directors reviews and agrees policies for managing each of these risks, which are summarised below. 30.1 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include: current loans and borrowings, deposits, available-for-sale investments. 30.1.1 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s short-term debt obligations with floating interest rates. The Group manages its interest rate risk by having a predominant portfolio of fixed rate loans and borrowings. The Group’s policy is to keep take floating rate borrowings only under exceptional circumstances, where the risks are thoroughly considered and approved. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the Group’s only loan stock. With all other variables held constant, the Group’s profit before tax will be affected as follows: Increase / decrease in basis points 2017
+1.50 -1.50 +1.50 -1.50
2016
Effect on profit before tax N’000 (12,000) 12,000 (15,000) 15,000
30.1.2 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries. Management has set up a policy requiring the Group to manage their foreign currency risk against their functional currency. The Group is required to manage its entire foreign currency risk exposure with the Group finance. To manage their foreign currency risk arising from future commercial transactions and recognized assets and liabilities, companies in the Group ensure that significant transaction are contracted in the Group's functional currency. Foreign currency risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the group’s functional currency. The group is mostly affected by changes in USD rate than any other foreign currency.
67
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 30.
Financial risk management objectives and policies - Continued
30.1.2 Foreign currency risk - Continued The table below shows the sensitivity analysis of the Group’s profit before tax based on changes in USD rate: Change in USD rate 2017
+5% -5%
Effect on profit before tax N’000 (65,580) 65,580
2016
+5% -5%
(85,293) 85,293
30.2 Credit risk Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The group and the company’s maximum exposure to credit risk taking into account the guarantees granted and letters of credit as at year end are shown as follow: The Group The Company 2017 2016 2017 2016 N’000 N’000 N’000 N’000 Trade receivables Cash and short term deposit
444,911 88,972 --------------533,883 --------------
420,939 95,394 --------------516,333 ---------------
403,012 76,314 --------------479,326 ---------------
386,044 93,491 --------------479,535 ----------------
30.2.1 Trade receivables Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Customer’s credit ratings determine the proportion of sales invoice that is required in advance of delivery. The requirement for impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The Group does not hold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several sectors and industries 30.2.2 Financial instruments and cash deposits Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Group’s Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure to make payments. 30.2.3 Due from related parties Credit risks from related parties’ transaction are considered very low. This is because they are settled or offset against other transactions that can occur in the future.
68
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 30.
Financial risk management objectives and policies - Continued
30.3
Liquidity risk The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases. The group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders. Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. Recent times have proven the credit markets situation could be such that it is difficult to generate capital to finance long-term growth of the Company. The group has a clear focus on financing long-term growth and to re-finance maturing debt obligation. Financing strategies are under continuous evaluation.
The table below shows the maturity analysis and has been prepared on an undiscounted cash flow. The Group As at 31 March 2017
Interest bearing borrowings Trade and other payables
Carrying amount 1,236,848 1,049,156 --------------2,286,004 ========
Contractual cash flows 1,536,795 1,049,156 --------------2,585,951 ========
As at 31 March 2016 Interest bearing borrowings Trade and other payables
On demand
3-12 months
1-5 Years
N’000
Less than 3 months N’000
N’000
N’000
41,488 -----------41,488 ======
------------========
533,818 1,049,156 ---------------1,582,974 =======
961,489 ------------961,489 =====
On demand
3-12 months
1-5 Years
N’000
Less than 3 months N’000
N’000
N’000
978,147 1,594,183 --------------2,572,330 ========
1,079,092 1,594,183 --------------2,673,275 ========
81,664 -----------81,664 =======
------------=======
242,721 1,594,183 ---------------1,836,904 ========
754,707 ------------754,707 =======
Carrying amount N’000
Contractual cash flows N’000
On demand
3-12 months
1-5 Years
N’000
Less than 3 months N’000
N’000
N’000
987,987 690,003 --------------1,677,990 ========
1,188,553 690,003 --------------1,878,556 ========
41,913 -----------41,913 ======
------------=======
284,532 690,003 ---------------974,535 ========
862,108 ------------862,108 =======
On demand
Less than 3 months N’000 ------------======
3-12 months
1-5 Years
N’000 144,001 1,166,896 ---------------1,310,897 ========
N’000 671,054 ------------671,054 =======
The Company As at 31 March 2017
Interest bearing borrowings Trade and other payables
As at 31 March 2016 Interest bearing borrowings Trade and other payables
625,174 1,166,896 --------------1,792,070 ========
885,197 1,166,896 --------------2,052,093 ========
N’000 70,142 -----------70,142 =======
Excluded from Trade and other Payables are Withholding tax payable and Value Added Tax Payables.
69
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 30.
Financial risk management objectives and policies - Continued
30.4 Fair values Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financial instruments that are carried in the financial statements. The Group The Group Carrying value Fair Value 31 Mar 2017 31 Mar 2016 31 Mar 2015 31 Mar 2017 31 Mar 2016 31 Mar 2015 Financial assets ₦’000 ₦’000 ₦’000 ₦ ₦’000 ₦’000 ₦’000 Trade and other receivables 698,342 683,772 865,174 698,342 683,772 865,174 Cash and bank 88,972 95,358 110,016 88,972 95,358 110,016 -----------------------------------------------------------------975,190 975,190 Total 787,314 779,130 787,314 779,130 ======= ======= ======= ======= ======= ======= Financial liabilities Interest-bearing loans and borrowings Trade and other payables Total Financial assets Trade and other receivables Cash and bank Total Financial liabilities Interest-bearing loans and borrowings Trade and other payables Total
1,238,916
1,044,762
1,236,848 1,179,846 -------------2,416,694 ========
978,147 1,610,683 -------------2,588,830 ========
1,410,159 -------------2,649,075 ========
1,034,397 1,179,846 -------------2,214,243 ========
821,257 1,610,683 -------------2,431,940 ========
1,410,159 -------------2,454,921 ========
656,177 76,314 -----------732,491 =======
546,955 93,454 -----------640,409 =======
712,138 102,450 ------------814,588 =======
656,177 76,314 ----------787,314 =======
546,955 93,454 ----------779,130 =======
712,138 102,450 -----------975,190 =======
987,987 719,386 -------------1,707,373 ========
625,174 1,181,181 -------------1,806,355 ========
884,834 971,918 -------------1,856,752 ========
827,034 719,386 -------------1,546,420 =======
526,486 1,181,181 -------------1,707,667 =======
741,906 971,918 -------------1,713,824 ========
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: ► Cash and short-term deposits, trade receivables, trade payables and other current liabilities are states at their carrying amounts largely due to the shortterm maturities of these instruments. ► Long-term fixed-rate borrowings are evaluated by the Group based on parameters such as interest rates, individual creditworthiness of the customer and the risk characteristics of the financed project. The fair value of the loans and borrowing are determined based on the market related rate at the reporting date. The fair values of the Group’s interest-bearing borrowings and loans are determined by using the DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data. The fair valuation of interest bearing loans and borrowing is classified as level 3 fair value hierarchy. The fair value is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risks and remaining maturity.
70
ACADEMY PRESS PLC NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 31. Capital management Capital includes equity attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2016 and 2016. The group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents. The Group’s capital structure and debt-equity ratio is shown below: Group
Company 2017 N’000 690,003
Trade and other payables
2017 N’000 1,049,156
2016 N’000 1,594,183
Interest bearing borrowings
1,236,848
978,147
987,987
625,174
(88,972)
(95,358)
(76,314)
(93,454)
----------------2,197,032
----------------2,476,972
----------------1,601,676
======== 197,571 ======== 1112%
======== 672,547 ======== 400%
======== 251,601 ======== 637%
----------------1,698,616 =======
Less: cash and cash equivalents Net debt Equity Debt to equity ratio
32.
2016 N’000 1,166,896
689,155 ======== 246%
Events after the reporting period
No event or transaction has occurred since the reporting date which would have a material effect upon these financial statements at that date or which would need to be mentioned in the financial statements in order to make them not misleading.
71
ACADEMY PRESS PLC VALUE ADDED STATEMENT FOR THE YEAR ENDED 31 MARCH 2017
The Group 2017 Turnover Cost of services- Local
Other Operating income Value added
The Company 2016
2017
2016
N’000
N’000
N’000
N’000
2,117,452
2,047,675
1,842,636
1,779,944
(1,620,429)
(1,235,389)
(1,447,126)
(988,740)
------------------
-------------------
------------------
------------------
497,023
812,286
395,510
791,204
106,075
58,296
105,843
57,879
--------------
-------------
----------------
----------------
603,098
870,582
501,353
849,083
=======
=======
========
========
Applied as follows: To employees:
%
%
%
%
-Wages, salaries and other benefits To providers of capital:
385,041
64
360,288
41
366,997
73
340,509
40
-Interest To pay government: as company taxes
226,661
37
238,782
27
144,805
29
199,700
24
18,091
3
33,578
4
18,091
4
32,947
4
Depreciation
378,056
63
364,669
42
342,699
68
343,533
40
Amortisation
399
-
353
-
278
-
278
-
107,175
18
(54,758)
(6)
115,574
23
(52,203)
(6)
(512,725)
(85)
(72,330)
(8)
(487,091)
(97)
(15,681)
(2)
------------603,098 =======
----100 ===
------------870,582 ========
-------100 ===
--------------501,353 ========
----100 ===
--------------849,083 ========
-------100 ====
To provide for replacement of assets and expansion of business:
Deferred taxation Retained profit /(loss)
The value added represents the wealth created through the use of the Company's assets by its own and its employees’ efforts. This statement shows the allocation of wealth amongst employees, capital providers, government and that retained for future creation of wealth.
72
ACADEMY PRESS PLC FIVE -YEAR FINANCIAL SUMMARY - GROUP FOR THE YEAR ENDED 31 MARCH
31-Mar-17 NON-CURRENT ASSETS Property, plant & equipment Intangible assets Deferred taxation assets
31-Mar-15 Restated N’000 2,504,851 1,655
31-Mar-14
31-Mar-13
N’000 1,806,019 903
31-Mar-16 Restated N’000 2,171,119 1,302
N’000 2,671,322 1,181
N’000 1,444,836 1,541
-
112,037
44,296
-
-
-
6,498
-
-
-
(684,590) --------------1,122,332
(853,199) --------------1,437,752
(1,153,384) ----------------1,397,418
(730,837) ----------------1,941,666
573,247 --------------2,019,624
Interest bearing loans and advances
(820,126)
(663,087)
(478,303)
(1,031,819)
(1,113,599)
Retirement Benefit Obligation Government grant
(31,294) (45,774) -------------225,138 =======
(48,146) -------------726,519 =======
(34,222) (70,215) -------------814,678 =======
(108,841) -------------801,006 =======
(153,225) -------------752,800 =======
302,400 24,511 (81,166) ----------245,745 (20,607) ------------225,138 =======
302,400 24,511 387,946 ------------714,857 11,662 -------------726,519 =======
252,000 25,474 505,551 ----------783,025 31,653 -------------814,678 =======
252,000 25,474 483,726 ----------761,200 39,806 -------------801,006 =======
252,000 25,474 421,900 ----------699,374 53,426 -------------752,800 =======
31-Dec-17 N’000 2,117,452 ======== (387,459) (125,266) ------------(512,725) =======
31-Dec-16 N’000 2,047,675 ======== (93,510) 26,187 ------------(67,323) ========
31-Dec-15 N’000 2,310,125 ======== 8,969 (15,842) ------------(8,679) ======
31-Dec-14 N’000 2,347,106 ======== 82,624 7,649 -----------90,273 ======
31-Dec-13 N’000 2,285,529 ======== 83,381 (28,329) -------------55,052 ======
(480,955) (31,770)
(47,024) (20,299)
1,295 (9,974)
78,541 11,732
43,858 11,194
======
======
(40,320) =======
(40,320 ======
(37,800) =======
(N 0.80) (N 0.80)
(N 0.08) (N 0.08)
(N 0.003) (N 0.003)
N0.18 N0.15
N0.11 N0.9
Employee benefit assets Net current (liabilities)/assets
Financed by: Share capital Share premium Retained earnings Attributable to equity holders of the parent No -controlling interest Total Shareholders' equity
Revenue (Loss)/ Profit before taxation Income tax (Loss)/ Profit after taxation Attributable to Equity holders of the parent Non - controlling interest Declared dividend Per share: Basic (Loss) / Earnings per share Diluted (Loss) / Earnings per share
73
ACADEMY PRESS PLC FIVE -YEAR FINANCIAL SUMMARY - COMPANY FOR THE YEAR ENDED 31 MARCH
31-Mar-17
31-Mar-15 Restated N’000 1,774,992 1,459
31-Mar-14 Restated N’000 2,006,361 830
31-Mar-13
N’000 1,220,346 903
31-Mar-16 Restated N’000 1,537,770 1,181
(81,797) ----------------1,139,452
119,849 22,282 49,550 (533,964) ----------------1,196,768
54,235 49,550 (412,251) ----------------1,467,985
49,550 (460,746) ----------------1,595,995
49,550 603,586 --------------1,841,238
Interest bearing loans and advances
(820,126)
(411,031)
(613,390)
(813,682)
(1,113,599)
Retirement Benefit Obligation Government grant
(13,077) (45,774) -------------260,475 =======
(48,146) ------------737,591 =======
(16,912) (70,215) -------------767,468 =======
(44,882) -------------737,431 =======
(72,579) -------------655,060 =======
302,400 24,511 (66,436) ------------260,475 =======
302,400 24,511 410,680 -------------737,591 =======
252,000 25,474 489,994 --------------767,468 =======
252,000 25,474 459,957 -------------737,431 =======
252,000 25,474 377,586 --------------655,060 ========
31-Dec-17 N’000 1,842,636 ========= (353,426) (133,665) ------------(487,091) ========
31-Dec-16 N’000 1,779,944 ========= (34,937) 25,052 ------------(9,885) ======
31-Dec-15 N’000 2,063,632 ========= 36,939 (22,584) ------------14,355 =======
31-Dec-14 N’000 2,078,615 ========= 130,026 (7,476) -----------122,550 ======
31-Dec-13 N’000 2,025,609 ========= 113,126 (26,917) -------------86,209 =======
======
======
(40,320) =======
(40,320 ======
(37,800) =======
(N 0.81) (N 0.81)
(N 0.02) (N 0.02)
N 0.03 N 0.03
N0.24 N0.20
N0.17 N0.14
NON-CURRENT ASSETS Property, plant & equipment Intangible assets Deferred taxation assets Employee benefit assets Investment in subsidiaries Net current (liabilities)/ assets
Financed by: Share capital Share premium Retained earnings Total Shareholders' equity
Revenue (Loss)/ Profit before taxation Income tax (Loss)/ Profit after taxation Declared dividend Per share: Basic Earnings /(Loss)per share Diluted Earnings /(Loss)per share
74
N’000 1,187,247 855