first aluminium group - First Aluminium Nigeria Plc

FIRST ALUMINIUM NIGERIA PLC NINE MONTHS FINANCIAL REPORT FOR THE PERIOD ENDED 30TH SEPTEMBER 2017

Page1

FIRST ALUMINIUM NIGERIA PLC

Statement of consolidated and Separate Profit or loss and other Comprehensive Income for the period ended 30 September 2017

Group Nine months ended 30 September 2017 Group N'000

Turnover Cost of sales Gross profit Other income Distribution costs Administrative expenses

Note 2 3

7

Operating Profit Finance income Finance costs

5 5

Finance costs - net Profit from continued operation before income tax Income tax extimate Profit after tax from continueing operation Other comprehensive loss net of income tax Fair value loss on Financial assets Acturial gains

8

31 December 2016 Group N'000

Company Nine months ended 30 September 2016 Group N'000

Nine months ended 30 September 2017 Company N'000

31 December 2016 Company N'000

Nine months ended 30 September 2016 Company N'000

5,058,107 (4,381,928) 676,179

9,154,586 (8,106,538) 1,048,048

7,003,717 (6,223,572) 780,145

5,030,336 (4,355,003) 675,333

9,154,586 (8,106,538) 1,048,048

7,003,717 (6,223,572) 780,145

1,141 (33,881) (114,001)

50,231 (71,533) (177,110)

1,716 (113,202) (105,621)

1,141 (33,881) (114,001)

50,231 (71,533) (175,204)

1,716 (113,202) (104,109)

529,438

849,636

563,038

528,592

851,542

564,550

(366,235)

434 (580,357)

(452,359)

(366,235)

434 (580,356)

(452,359)

(366,235)

(579,923)

(452,359)

(366,235)

(579,922)

(452,359)

163,203

269,713

110,679

162,357

271,620

112,191

(52,225)

(106,200)

(35,417)

(51,954)

(106,200)

(35,901)

110,978

163,513

75,262 -

110,403 -

165,420

76,290 -

-

(830) 12,658

(830) 12,658

Total comprehensive after tax profit for the period

110,978

175,341

75,262

110,403

177,248

76,290

Attributable to Equity Holders of the company Non-Controlling Interest

110,978 -

175,341 -

75,262

110,403 -

177,248 -

76,290 -

5.3

7.7

3.6

5.2

7.8

3.6

Earning per 50k share - continuing operations

The statement of significant accounting policies on pages 5-13 and accompanying notes

1

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Statement of Consolidated and Separate Financial Position as at 30 September 2017 Group

Non - Current assets Property, plant and equipment Available for sale financial assets Investment in Subsidiary Deferred tax assets Long term assets Total non - current assets CURRENT ASSETS Inventories Trade and other receivables Cash and cash equivalents

Note

NON-CURRENT LIABILITIES Retirement obligations Deferred tax Liabilities Borrowings Total non-current liabilities Total liabilities

December 2016 N'000

Company Nine months September 2016 N'000

Nine months September 2017 N'000

December 2016 N'000


9 33 10 11 12

6,115,865 2,332 426,947 29,758 6,574,902

5,751,051 2,332 426,947 29,758 6,210,088

5,660,894 3,552 525,478 29,758 6,219,682

5,820,614

5,454,288 2,332 2,500 426,947 5,886,067

5,354,697

2,332 2,500 426,947 6,252,393

13 14 34

2,435,620 1,136,192 141,688

2,188,780 685,542 243,753

1,379,963 787,466 528,039

2,435,620 1,362,576 135,742

2,188,780 927,242 243,740

1,379,963 1,303,746 528,026

3,713,500 10,288,402

3,118,075 9,328,163

2,695,468 8,915,150

3,933,938 10,186,331

3,359,762 9,245,829

3,211,735 9,097,962

(2,244,044) (8,500) (102,761) (2,005,760) (4,361,065)

(2,064,713) (8,500) (58,205) (1,312,833) (3,444,251)

(1,858,369) (8,500) (50,536) (1,201,640) (3,119,045)

(2,244,044) (8,500) (72,192) (1,962,855) (4,287,591)

(2,064,713) (8,500) (27,907) (1,288,819) (3,389,939)

(1,858,369)

(94,105) (433,731) (343,908) (871,744) (5,232,809)

(74,181) (433,731) (431,385) (939,297) (4,383,548)

(96,470) (434,121) (441,449) (972,040) (4,091,085)

(94,105) (389,102) (343,908) (827,115) (5,114,706)

(74,181) (389,102) (431,385) (894,668) (4,284,607)

(927,412) (4,258,169)

5,055,593

4,944,615

4,824,065

5,071,625

4,961,222

4,839,793

1,055,333 1,659,748

1,055,333 1,659,748 4,049,377 (1,940,393)

1,055,333 1,659,748 3,792,658 33,129 (1,469,243)

1,055,333 1,659,748 3,792,658 33,129 (1,579,646)

1,055,333 1,659,748 3,793,488

33,129 (1,741,164)

1,055,333 1,659,748 4,048,547 33,129 (1,852,142)

(1,668,776)

5,055,593

4,944,615

4,824,065

5,071,625

4,961,222

4,839,793

Total assets CURRENT LIABILITIES Borrowings Dividend payable Income tax Trade and other payables Total current liabilities


16

17

20 21 19

Net assets

3,552 2,500 525,478 5,886,227

(8,500)

(20,238) (1,443,650) (3,330,757)

(96,470) (389,493)

(441,449)

CAPITAL AND RESERVES Called up share capital Share premium Other reserves Reserve on acturial valuation Retained earnings SHAREHOLDERS' INTEREST

22 23 24 24 24

4,048,547

The financial statements and the accompanying notes were approved by the board of Directors on the 26th October 2017 and signed on its behalf by:

E.E IGBINAKENZUA : MD/CEO FRC/2014/ICAN 00000016095

M.O. OKOLO : DIRECTOR FRC/2014/NIM00000007093

FIRST ALUMINIUM GROUP

C.O. IWUNWA : GROUP FINANCE AND TREASURY CONTROLLER FRC/2014/ICAN00000016949

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Statement of Changes in Equity for the period ended 30 September 2017

Group

Share Capital N'000

Share Premium N'000

At January 1 2016 Profit for the period Adjusment on period Other comprehensive loss or profit At December 31 ,2016

1,055,333 -

1,055,333

1,659,748

At January 1 2017

1,055,333

Profit for the period Other comprehensive loss or profit At September 30, 2017

1,055,333

Company

At January 1 2016 Profit for the period Adjusment on period Other comprehensive loss or profit At December 31 ,2016 At January 1 2017 Profit for the period Other comprehensive loss or profit At September 30, 2017

1,659,748 -

Capital Reserve N'000 4,049,852 -

Retained Earnings N'000

Available for Reserve on Acturial sale Financial assets Valuation N'000 N'000

(2,015,655) 163,513

(475) -

4,049,852

(1,852,142)

(830) (1,305)

1,659,748

4,049,852

(1,852,142)

(1,305)

1,659,748

4,049,852

110,978 (1,741,164)

(1,305)

Share Capital N'000 1,055,333 -

Share Premium N'000 1,659,748 -

Capital Reserve N'000 3,793,963 -

1,055,333

1,659,748

3,793,963

1,055,333 1,055,333

1,659,748 1,659,748

3,793,963 3,793,963

Retained Available for Earnings sale Financial assets N'000 N'000 (1,745,066) (475) 165,420 (830) (1,579,646) (1,305) (1,579,646) 110,403 (1,469,243)

(1,305) (1,305)

51,282

Attributable to equity holders of the Company N'000

Total Equity N'000

(30,811) 12,658 33,129

4,800,085 163,513 (30,811) 11,828 4,944,615

4,800,085 163,513 (30,811) 11,828 4,944,615

33,129

4,944,615

4,944,615

33,129

110,978 0 5,055,593

110,978 0 5,055,593

Attributable to equity holders of the Company N'000 51,282 4,814,785 165,420 (30,811) (30,811) 12,658 (830) 33,129 4,948,564 33,129

33,129

4,961,222 110,403 5,071,625

Total Equity N'000 4,814,785 165,420 (30,811) (830) 4,948,564 4,961,222 110,403 5,071,625

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Statement of Cash Flows for the period ended 30 September 2017 Group Nine months ended 30 Septemeber 2017 N'000

31 December 2016 N'000

Company Nine months ended 30 September 2016 N'000

Nine months ended 30 Septemeber 2017 N'000


Nine months ended 30 September 2016 N'000

Note Cash flows from operating activities; Trading Profit Other Income

528,297 1,141

799,405 50,231

110,679 1,716

527,451 1,141

801,312 50,231

112,191 1,716

Adjustment for Depreciation Gratuity, employee benefit charges, Excess gratuity write back Profit on sale of property,plant & equipment

9 20 20

194,095 19,924 743,457

227,171 19,700 (30,811) (41,865) 1,023,831

192,540 96,470 401,405

192,583 19,924 741,099

225,265 19,700 (30,811) (41,865) 1,023,832

191,028 96,470 401,405

Inventories Trade and other Receivables Prepayments Trade and other Payables Deposit for Imports(goods in transit) Cash generated from operating activities

13 14 14 17 13

(246,840) (364,731) (85,918) 692,927 85,360 824,255

364,438 (259,787) (18,477) 719,811 (840,242) 989,574

238,681 144,579 (149,946) 156,468 1,291,165 2,082,352

(246,840) (364,731) (85,918) 692,927 85,360 821,897

364,438 (259,788) (18,477) 719,811 (840,242) 989,574

238,681 144,579 (149,946) 156,468 1,291,165 2,082,352

(7,669) 816,586

(3,302) (57,278) 928,994

35,417 (111,298) 2,006,471

(7,669) 814,228

(3,302) (57,278) 928,994

35,417 (111,298) 2,006,471

(561,009) 2,100 (561,009)

434 (659,314) 49,304 (609,576)

146 (527,087)

(561,009)

146 (526,693)

(526,941)

(561,009)

434 (659,314) 49,304 (609,576)

(366,235)

(580,357) (163,045) 150,000 286,038 (307,364) 12,054 231,699 243,753

(410,554)

(366,235) (87,477) 91,854 (361,858) (108,011) 243,753 135,742

(580,357) (163,045) 150,000 286,038 (307,364) 12,054 231,686 243,740

(410,554) (41,805) (731,225) (1,183,584) 296,340 231,686 528,026

Change in;

Income tax Paid Gratuity Paid Net Cash from operating activities Cash flows from Investing activities Finance Income Acquisition of property plant & equipment 9 Proceeds from disposal of property plant & equipment Net Cash used in investing activities Cash flows from Financing activities Interest Paid 5 Term loan repayment Lease repayment Proceeds from new lease Proceeds from loan and borrowings Net Cash used in Financing activities Net Increase/(Decrease) in Cash & cash equivalent Cash and Cash equivalent 1 January 34 Cash and Cash equivalent 30 September 34

(87,477) 91,854 (361,858) (102,065) 243,753 141,688

(41,805) (730,831) (1,183,190) 296,340 231,699 528,039

(526,547)

FIRST ALUMINIUM NIGERIA PLC FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES Standards and amendments issued but yet to take effect IFRS Title Nature of change Referen and ce Affecte d Standar d(s) IFRS 9 (2014) (issued Jul 2014)

Financi al Instrum ents

Classification and measurement Financial assets will either be measured - at amortised cost, - fair value through other - comprehensive income (FVTOCI) or - fair value through profit or loss - (FVTPL). Impairment The impairment model is a more ‘forward looking’ model in that a credit event no longer has to occur before credit losses are recognised. For financial assets measured at amortised cost or fair value through other comprehensive income (FVTOCI), an entity will now always recognise (at a minimum) 12 months of expected losses in profit or loss. Lifetime expected losses will be recognised on these assets when there is a significant increase in credit risk after initial recognition. Hedging The new hedge accounting model introduced the following key changes: -Simplified effectiveness testing, including removal of the 80125% highly effective threshold -More items will now qualify for hedge accounting, e.g. pricing components within a non-financial item, and net foreign exchange cash positions -Entities can hedge account more effectively the exposures that give rise to two risk positions (e.g. interest rate risk and foreign exchange risk, or commodity risk and foreign exchange risk) that are managed by separate derivatives over different periods -Less profit or loss volatility when using options, forwards, and foreign currency swaps -New alternatives available for economic hedges of credit risk and ‘own use’ contracts which will reduce profit or loss volatility.

Applicatio Impact on initial n date Application

Annual reporting periods commenci ng on or after 1 January 2018

The first time application of IFRS 9 will have a wide and potentially very significant impact on the accounting for financial instruments. The new impairment requirements are likely to bring significant changes for impairment provisions for trade receivables, loans and other financial assets not measured at fair value through profit or loss. Due to the recent release of this standard, the entity has not yet made a detailed assessment of the impact of this standard.

FIRST ALUMINIUM NIGERIA PLC FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES Standards and amendments issued but yet to take effect IFRS Title Nature of change Application Referen and date ce Affecte d Standar d(s) IFRS 15 Issued in May 2014

Revenue from contract s with custome rs

IFRS 15 contains comprehensive 1 January guidance for accounting for revenue 2018 and will replace existing requirements which are currently set out in a number of Standards and Interpretations. The standard introduces significantly more disclosures about revenue recognition and it is possible that new and/or modified internal processes will be needed in order to obtain the necessary information. The Standard requires revenue recognised by an entity to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is delivered in a five-step model framework: (i) Identify the contract(s) with a customer (ii)Identify the performance obligations in the contract (iii)Determine the transaction price (iv)Allocate the transaction price to the performance obligations in the contract (v)Recognise revenue when (or as) the entity satisfies a

Impact on initial Application

The Board is currently reviewing the impact the standard may have on the preparation and presentation of the financial statements when the standard is adopted. Consideration will be given to the following: (i)At what point in time the company recognises revenue from each contract whether at a single point in time or over a period of time; (ii) whether the contract needs to be ‘unbundled’ into two or more components; (iii)how should contracts which include variable amounts of consideration be dealt with; (iv)what adjustments are required for the effects of the time value of money; (v) what changes will be required to the company’s internal controls and processes.

FIRST ALUMINIUM NIGERIA PLC FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES (f)

Summary of significant accounting policies The principal accounting policies adopted in the preparation of these Consolidated Annual

(g)

Consolidation Subsidiary undertakings, which are those companies in which the holding company, directly All intercompany transactions, balances and unrealised profits and losses on transactions

(h)

Turnover Turnover is recognized when goods are delivered to customers and services completed, and is

(i)

Accounting for contracts The company has not entered into any long term contracts during the last year. Contracts are

(j)

Foreign currency Amounts denominated in foreign currency are translated into the functional currency at the

(k)

Property, plant, equipment and depreciation Property, Plant and Equipment are stated at cost or valuation, less accumulated depreciation Plant and machinery 10% Furniture and equipment 20% Motor vehicles 25% Buildings are depreciated over the unexpired lease period. Leasehold land is not depreciated A gain or loss on disposal is determined by comparing the proceeds with the asset’s carrying Buildings are professionally revalued at approximately 5 yearly intervals on an open market At each statement of financial position date the Group reviews the carrying amounts of its

(l)

Finance leases Leased assets are stated at their fair values and are capitalized on installation, and

(m)

Long term investment Investments in subsidiaries are stated at the lower of cost or the company’s share of their net

(n)

Trade receivables Trade receivables are recognized initially at the transaction price less provision for

(o)

Cash and cash equivalents, derivative financial instruments and other financial instruments Cash at bank and in hand includes short term deposits with a maturity date of three months The group does not undertake any trading activity in derivative financial instruments. Forward contracts are the only derivative financial instrument the group intends to use at Other financial instruments All other financial instruments are recognized at fair value plus transaction costs. Unhedged

(p)

Inventories Inventories are stated at the lower of cost and estimated selling price less costs to complete

(q) (i)

Retirement benefits scheme The Company operates a gratuity scheme and pension fund scheme for the benefit of its employees. Pension Fund Scheme – The Company, in line with the provisions of the Pension Reform Act

(ii)

End of Service Gratuity Scheme (‘EOSB’) - The gratuity scheme is unfunded. Members of staff

FIRST ALUMINIUM NIGERIA PLC FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES Taxation (i) Income tax – Income tax is provided on taxable profits at the current statutory tax rate. (ii) Deferred tax – Provision for deferred taxation is made when income, expenditure or Dividend Dividend distribution to the Company Shareholders is recognised as a liability in the Financial

(r)

(s)

Unclaimed dividends are amounts payable to shareholders in respect of dividends previously (t)

Provisions and contingencies Provisions are recognized when the group has a present obligation as a result of a past event

(u)

Segment information For management purposes the group is organized into two operating segments – aluminium and Operating segments are reported in a manner consistent with internal reporting.

(v)

New and amended IFRS standards adopted by the Group during the year. The Group adopted

(w)

IFRS standards and interpretations in issue not yet adopted International Accounting

The Group is assessing the impact of these standards and interpretations or amendments that IFRS 14 Regulatory Deferral Accounts IFRS 14 permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for ‘regulatory deferral account Note: Entities which are eligible to apply IFRS 14 are not required to do so, and so can chose to Amendments to IAS 7 Statement of Cash Flows To clarify that entities shall provide disclosures that enable users of financial statements to IFRS 15 Revenue from Contracts with Customers IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers. The five steps in the model are as follows: Identify the contract with the customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contracts Recognise revenue when (or as) the entity satisfies a performance obligation. Guidance is provided on topics such as the point in which revenue is recognised, accounting for New disclosures about revenue are also introduced. Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) Amends IAS 19 Employee Benefits to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of In addition, it permits a practical expedient if the amount of the contributions is independent of Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) Amends IFRS 11 Joint Arrangements to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to:

-

apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11 disclose the information required The amendments apply both to the initial acquisition of an interest in joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held Annual Improvements 2012-2014 Cycle makes amendments to the following standards: IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements IAS 9 — Clarify that the high quality corporate bonds used in estimating the discount rate for postemployment benefits should be denominated in the same currency as the benefits to be paid IAS 34 — Clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference

FIRST ALUMINIUM (NIGERIA) LIMITED FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES IFRIC 21 Levies Provides guidance on when to recognise a liability for a levy imposed by a government, both for The Interpretation identifies the obligating event for the recognition of a liability as the activity The liability is recognised progressively if the obligating event occurs over a period of time. If an obligation is triggered on reaching a minimum threshold, the liability is recognised when that minimum threshold is reached. Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) Amends IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures (2011) to address issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the following points: The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value. A subsidiary that provides services related to the parent’s investment activities should not be consolidated if the subsidiary itself is an investment entity. When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries. An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12. Disclosure Initiative (Amendments to IAS 1) Amends IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgement in presenting their financial reports by making the following changes: clarification that information should not be obscured by aggregating or by providing immaterial information, materiality considerations apply to the all parts of the financial statements, and even when a standard requires a specific disclosure, materiality considerations do apply; clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarification that an entity’s share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 Amends IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets to: clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated add guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.

FIRST ALUMINIUM (NIGERIA) LIMITED FOR THE PERIOD 30 SEPTEMBER 2017 SIGNIFICANT ACCOUNTING POLICIES

Equity Method in Separate Financial Statements (Amendments to IAS 27) Amends IAS 27 Separate Financial Statements to permit investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements. Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Amends IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows: require full recognition in the investor’s financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations) require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors’ interests in that associate or joint venture. These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in an subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves. Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) Amends IAS 16 Property, Plant and Equipment and IAS 41 Agriculture to: include ‘bearer plants’ within the scope of IAS 16 rather than IAS 41, allowing such assets to be accounted for a property, plant and equipment and measured after initial recognition on a cost or revaluation basis in accordance with IAS 16 introduce a definition of ‘bearer plants’ as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. This will have no relevance to First Aluminium (as currently structured). Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) Amends IAS 12 Income Taxes to clarify the following aspects: Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use. The carrying amount of an asset does not limit the estimation of probable future taxable profits. Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences. An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

IFRS 16 Leases Specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

Page 16

Notes to the Financial Statements for the period ended 30 September 2017 1 THE GROUP First Aluminium Nigeria Plc was incorporated on 20th August 1960 as Alcan Aluminium of Nigeria Limited, a subsidiary of Alcan Aluminium Company of Canada, one of the world's foremost international aluminium companies. The name of the company was changed to First Aluminium Company (Nigeria) Limited when it became a subsidiary of Alucon Holdings SA, a wholly owned subsidiary within the Inlaks Group, based in Monte Carlo. On 10 May 1991, the company changed its name to First Aluminium Company (Nigeria) Plc and on 23rd July 1992, to First Aluminium Nigeria Plc. It became a quoted company on 5 November 1992. The company has a Rolling Mill and is engaged in the manufacture of aluminium coils, sheets and circles which represent the raw materials of the Nigerian aluminium industry. A continuous sheet painting line was commissioned in November 1992 to service the painted aluminium products market. The product from this painting line is branded Colortek. The company also has a Packaging Division which manufactures tubes for the toothpaste, pharmaceutical, cosmetics and engineering industries in Nigeria from laminate plastics and from aluminium. Aluminium City Limited was incorporated on 21 September 1995 as a wholly-owned subsidiary of First Aluminium Nigeria Plc and commenced business on 1 February 1996. It was engaged in the purchase and sale of aluminium products, building components and accessory items and maintained a strong commercial relationship with First Aluminium Nigeria Plc. During 2010 the Company ceased trading. Its assets less liabilities were transfered to the Rolling Mill division at no profit. All retained employees transferred to the rolling mill and their service was treated as continuous within the group.


Page 17

Notes to the Financial Statements for the period ended 30th September 2017

2 SEGMENT INFORMATION The analyses of turnover is follows: Group Nine months ended 30 Septemeber 2017 N'000






Turnover by business Sector; Aluminium Coils and Sheets Packaging Products Total Turnover

3,777,617 1,280,490 5,058,107

7,873,102 1,281,484 9,154,586

6,077,028 926,689 7,003,717

3,749,846 1,280,490 5,030,336

7,873,102 1,281,484 9,154,586

6,077,028 926,689 7,003,717

3 ANALYSIS OF COST OF SALES Group Nine months ended 30 Septemeber 2017 N'000

Material Cost Energy Cost Factory Labour Packaging Material Fcatory Depreciation Technical Service Cost Fcatory Insurance Cost Repairs and Maintenance Cost Receivable Impairment Security Expenses Communication/Travel Cost Other Costs

3,293,042 140,859 350,407 41,509 191,340 95,812 12,492 68,276 5,100 12,992 11,902 158,197 4,381,928


6,640,476 201,493 521,669 49,313 254,984 181,745 23,499 109,830 914 30,063 19,506 73,046 8,106,538


5,101,321 145,078 387,137 28,978 191,028 137,466 16,409 75,857 20,548 21,500 16,795 81,455 6,223,572


3,269,046 140,386 349,607 41,509 190,164 95,812 12,492 68,276 5,100 12,592 11,822 158,197 4,355,003


6,640,476 201,493 521,669 49,313 254,984 181,745 23,499 109,830 914 30,063 19,506 73,046 8,106,538


5,101,321 145,078 387,137 28,978 191,028 137,466 16,409 75,857 20,548 21,500 16,795 81,455 6,223,572

Page 18

Notes to the Financial Statements for the period ended 30 September 2017 4 OTHER INCOME

Group Nine months ended 30 Septemeber 2017 N'000 1,141 1,141

Profit on disposal of property, plant and equipment Sales of skids sales scrap Other

31 December 2016 N'000 41,865 3,288 4,580 498 50,231

Company Nine months Nine months ended 30 ended 30 September Septemeber 2016 2017 N'000 N'000 260 146 1,141 1,310 1,716 1,141

Group Nine months ended 30 Septemeber 2017 N'000

31 December 2016 N'000 41,865 3,288 4,580 498 50,231

Nine months ended 30 September 2016 N'000 260

146 608 1,014

Company

Nine months ended 30 31 September December 2016 2016 N'000 N'000




5 FINANCE INCOME AND COSTS Interest expense on bank borrowings repayable within 5 years Net foreign exchange gains on financing activities

366,235 -

580,357 -

452,505 -

366,235

580,357 -

263,172

Finance costs Finance income - interest income on short term deposits Net finance costs

366,235 366,235

580,357 434 579,923

452,505 146 452,359

366,235 366,235

580,357 434 579,923

263,172

315,587 50,648 366,235

511,438 68,485 579,923

410,554 41,805 452,359

315,587 50,648 366,235

511,438 68,485 579,923

232,698 30,214 262,912

Interest expense is analysed as follows; On Bank loans and overdraft within one year on leases

Group

6 PROFIT BEFORE TAXATION Note Profit/(Loss) before taxation is stated after charging: Depreciation of Property plant & equipment Auditors' remuneration

9


194,095 -

7 ANALYSIS OF ADMINISTRATIVE EXPENSES

260 262,912

Company


227,171

195,064

11,000

9,045


192,583 -

Group Nine months ended 30 Septemeber 2017 N'000

0



225,265

193,552

11,000

9,045

Company





Central Personnel Costs

36,294

24,262

31,856

36,294

24,262

31,856

Central Directors Costs

11,876

12,979

3,062

11,876

12,979

3,062

32,949

-

-

32,949

-

9,495

11,000

9,045

9,495

11,000

9,045

Legal and professional

17,264

38,856

28,059

17,264

38,856

28,059

Travels

11,226

15,881

6,377

11,226

15,881

6,377

2,926

4,728

3,559

2,926

4,728

3,559

837

2,148

802

837

2,148

802

Annual subscriptions

1,161

3,060

2,874

1,161

3,060

2,874

Printing/stationery

5,393

4,911

3,671

5,393

4,911

3,671

Communication

1,543

1,778

1,849

1,543

1,778

1,849

Vehicle Running

3,801

3,075

2,327

3,801

3,075

2,327

Insurance of Central Assets

1,434

2,105

1,578

1,434

2,105

2,578

196

499

376

196

499

376

Security expenses

2,625

3,421

2,687

2,625

3,421

2,687

Repairs/Maintenance

1,283

2,131

1,464

1,283

2,131

1,464

Depreciation of Central Assets

2,313

4,731

3,511

2,313

2,825

1,999

4,334 114,001

8,596 177,110

2,524 105,621

4,334 114,001

8,596 175,204

2,524 105,109

Bank Charges Audit fees

Medical expenses Advert/publicity

Electricity and Power

All other (non significant costs)


Page 19

Notes to the Financial Statements for the period ended 30 September 2017

8 INCOME TAX EXPENSE Based on the profit for the Period as adjusted for tax at 30% (Subsidiary Coy - Minimum tax) Prior year under provision Education tax at 2% Capital gains tax Deferred tax asset Deferred Tax charge

2017 GROUP N'000 30 September 48,961 3,264 52,225

2016 GROUP N'000 31 December 7,669 98,531 106,200

2017 COMPANY N'000 30 September 48,707 3,247 51,954

2016 COMPANY N'000 31 December 7,669 98,531 106,200

The balances on the tax accounts are analyzed as follows: CURRENT INCOME TAX LIABILITIES At the beginning Charge for the year Tax paid during the year Balance At 30 September 2017

58,205 52,225 (7,669) 102,761

58,205 58,205

27,907 51,954 (7,669) 72,192

The tax rate used for period ended 30 September 2017 and year ended 31 December 2016 is the corporate tax rate of 30% and 2% (for tertiary education tax) payable by corporate entities in Nigeria on taxable profits. Under the tax law in the country for the period and year ended respectively


27,907 27,907

Page 20 FIRST ALUMINIUM NIGERIA PLC FOR THE YEAR ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS 9 Property, plant and equipment - GROUP LEASEHOLD

PLANT

FURNITURE

MOTOR

LAND AND

AND

AND

VEHICLES

BUILDINGS

MACHINERY

EQUIPMENT

N'000

N'000

N'000

CONSTRUCTION WORK IN

TOTAL

PROGRESS N'000

N'000

N'000

COST OR VALUATION At 1 January 2016

4,328,146

264,619

122,055

Additions

4,816,167 -

18,805

4,747

8,800

Disposals

-

(88,293)

-

(8,700)

Reclassificstion

-

626,962

9,530,987 659,314 (96,993) -

At 31 December 2016

4,816,167

4,258,658

269,366

122,155

626,962

10,093,308

At 1 January 2017

4,816,167

122,155

626,962

10,093,308

549,693

561,009

4,258,658

269,366

Additions

-

10,130

1,186

-

Disposals

-

(2,100)

-

-

Reclassificstion

-

At 30 September 2107

(2,100)

4,816,167

4,266,688

270,552

122,155

1,176,655

10,652,217

At 1 January 2016

373,638

3,465,277

253,569

112,156

-

4,204,640

Charge for the year

54,338

163,673

5,778

3,382

-

227,171

-

(1,261)

-

(89,554)

DEPRECIATION

Disposals

(88,293)

At 31 December 2016

427,976

3,540,657

259,347

114,277

-

4,342,257

At 1 January 2017

427,976

3,540,657

259,347

114,277

-

4,342,257

Charge for the year

48,324

127,454

15,769

2,548

476,300

3,668,111

275,116

116,825

4,388,191

718,001

10,019

7,878

626,962

5,751,051

4,339,867

598,577

(4,564)

5,330

1,176,655

6,115,865

194,095

Disposals At 30 September 2017

-

4,536,352

CARRYING AMOUNT At 31 December 2016 At 30 September 2017 FIRST ALUMINIUM NIGERIA PLC FOR THE YEAR ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS Property plant and equipment - COMPANY

COST OR VALUATION At 1 January 2016

LEASEHOLD

PLANT

FURNITURE

MOTOR

LAND AND

AND

AND

VEHICLES

BUILDINGS

MACHINERY

EQUIPMENT

CONSTRUCTION WORK IN

TOTAL

PROGRESS

N'000

N'000

N'000

N'000

4,490,851

4,249,770

253,760

100,178

Additions

-

18,805

4,747

8,800

Disposals

-

(88,293)

-

(8,700)

Reclassificstion

-

-

-

-

N'000

N'000 -

626,962

9,094,559 659,314 (96,993)

-

At 31 December 2016

4,490,851

4,180,282

258,507

100,278

626,962

9,656,880

At 1 January 2017

4,490,851

100,278

626,962

9,656,880

549,693

561,009

4,180,282

258,507

Additions

10,130

1,186

Disposals

(2,100)

(2,100)

Reclassificstion At 30 September 2107

4,490,851

4,188,312

259,693

100,278

1,176,655

10,215,789

At 1 January 2016

355,944

3,378,243

243,165

89,529

-

4,066,881

Charge for the year

52,432

163,673

5,778

3,382

-

225,265

-

(1,261)

-

(89,554)

DEPRECIATION

Disposals

(88,293)

At 31 December 2016

408,376

3,453,623

248,943

91,650

-

4,202,592

At 1 January 2017

408,376

3,453,623

248,943

91,650

-

4,202,592

Charge for the year

48,324

125,942

15,769

2,548

456,700

3,579,565

264,712

94,198

At 31 December 2016

4,082,475

726,659

9,564

8,628

626,962

5,454,288


4,034,151

608,747

(5,019)

6,080

1,176,655

5,820,614

192,583

Disposals At 30 September 2017

-

4,395,175

CARRYING AMOUNT

a) The principal plant and equipment aassets are depreciated over their useful life as determined by the plant engineers and certified by the unit head. In many cases this means that old assets that have been fully depreciated are 're-lifed' since the company still uses them and continues to do so. b) Expenditure subsequent to 1 Jan 2011 has been capitalised only when it is probable that it will give rise to future economic benefits in excess of the originally assesed standard of performance or when it significantly extends the useful life of an asset. FIRST ALUMINIUM NIGERIA PLC FOR THE YEAR ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS

c) Leasehold land and buildings were last revalued in October 2009 by Jide Taiwo & Co, a professional firm of Estate Surveyors and Valuers on the basis of open market capital values. The assets are reflected in this financial statement at that valuation. Assets other than Leasehold land and buildings are stated at cost. Costs accumulated under construction work in progress are not depreciated until the completion and use of the assets. Following the revaluation of Land and Building in 2009, the depreciation policy of the Company on Land and Building was changed such that the asset will be depreciated over the unexpired lease period. d) The company was unable to revalue its assets since 2009 in line with its accounting policy of every five years 2017

2016

Group

Group

N'000 Long leasehold


4,400,364

N'000 4,400,364

Page 21

Notes to the Financial Statements for the period ended 30 September 2017 10

Investment in Subsidiaries; First Aluminium Nigeria Plc has a wholly -owned subsidiary, Aluminium City Limited, which was incorporated on 21 September 1995. It commenced business on 1 February 1996 and is engaged in the purchase and sale of aluminium products, building components and accessories. Trading ceased in 2010 where upon its assetsless liabilities were transferred to Rolling Mill at book value. Initial investment is stated at book value 30 September 2017 - N2.5m (31 December 2016 N2.5m)


Page 22

Notes to the Financial Statements for the period ended 30 Septemeber 2017

Group Nine months ended 30

11 DEFERRED TAX ASSETS

Balance 1 January

Nine months ended 30

Nine months ended 30

31

Septemeber

December

September

Septemeber

December

September

2017 N'000

2016 N'000

2016 N'000

2017 N'000

2016 N'000

2016 N'000

426,947

Provision from Comprehensive Income

Balance 30 September

31

Company Nine months ended 30

426,947

525,478

452,794

(98,531)

426,947

72,684

426,947

525,478

426,947

525,478 (98,531) 426,947

452,794 72,684 525,478

The deferred taxation arises due to the tax written down values of the assets being in excess of the net book value of such assets and the provision for gratuity liability which become allowable for tax purposes when paid.

12 LONG TERM ASSETS This amount represents withholding tax (WHT) credit from the Federal Inland Revenue Service (FIRS). This is the value of tax certificates received from customers who deducted WHT from the subsidiary Company's invoices and remitted to FIRS.

Group

13 INVENTORIES

Nine months ended 30 Septemeber 2017 N'000 Raw materials

Goods in transit -/Deposit for import Stores materials Total

2016 N'000




623,024

391,401

291,344

623,024

391,401

33,330

31,188

388,711

33,330

31,188

38,711

279,497

201,240

408,470

279,497

201,240

408,470

1,185,183

1,270,543

298,158

1,185,183

1,270,543

298,158

2,121,034

1,894,372

1,386,683

2,121,034

1,894,372

1,036,683

Work in progress Finished goods


Company Nine months ended 30 September

291,344

314,586

294,408

343,280

314,586

294,408

343,280

2,435,620

2,188,780

1,729,963

2,435,620

2,188,780

1,379,963

307,616

73,833

196,993

302,826

73,833

196,993

14 TRADE AND OTHER RECEIVABLES TRADE RECEIVABLES Trade receivables under 90 days Provision for doubtful Receivables

(20,578)

Net Trade Receivables

-

287,038

73,833

Supplier Credit

359,289

397,157

Other debtors

287,038

97,644

20,314

(20,578)

-

20,314

217,307

282,248

73,833

217,307

11,671

248,153

248,153

527,951

-

347,100

397,157

44,814

282,248

91,191

OTHER RECEIVABLES Amount due from subsidiary (note 15)

Prepayments

Total Trade and other receivables

448,104

202,827

116,909

110,384

202,827

116,909

110,384

849,154

611,710

166,869

1,080,328

853,410

1,086,439

1,136,192

685,543

384,176

1,362,576

927,243

1,303,746

3,189

3,188

Trade Receivables are all under 120 days except that which is provided is over 120 days Age analysis of provision for doubtful Receivables over 120 days 30 - 45 days

-

-

-

45 - 60 days

-

-

-

60 - 90 days

-

-

-

-

60 - 90 days

-

-

-

-

90 - 120 days

-

-

-

-

3,189

3,188

-

120 days & Above


-

Page 23

Notes to the Financial Statements for the period ended 30 September 2017 Nine months ended 30 Septemeber 2017 N'000 16 SHORT TERM BORROWINGS Bank overdraft Bank Import Finance facility Obligations under finance leases (note 19)

455,040 1,789,004 2,244,044

17 TRADE AND OTHER PAYABLES Nine months ended 30 Septemeber 2017 N'000 Trade payables Customers' deposits Amount owed to Material suppliers Other creditors and accruals

803,874 61,114 301,715 839,057 2,005,760

Group Year End 31 December 2016 N'000 100,305 1,795,874 168,534 2,064,713

Group Year End 31 December 2016 N'000 257,652 399,342 194,714 461,125 1,312,833

Nine months ended 30 September 2016 N'000 324,737 1,533,632 441,449 2,299,818

Nine months ended 30 September 2016 N'000 184,335 178,125 105,144 734,036 1,201,640

Nine months ended 30 Septemeber 2017 N'000 455,040 1,789,004 2,244,044

Nine months ended 30 Septemeber 2017 N'000 770,412 61,114 292,272 839,057 1,962,855

Company Year End 31 December 2016 N'000 100,305 1,795,874 168,534 2,064,713

Company Year End 31 December 2016 N'000 255,459 385,708 194,714 452,937 1,288,818

Nine months ended 30 September 2016 N'000 324,737 1,533,632 441,449 2,299,818

Nine months ended 30 September 2016 N'000 184,335 178,125 61,072 1,020,118 1,443,650

The directors consider that the carrying amount of trade and other payables approximates to their fair value

Nine months ended 30 Septemeber 2017 N'000 19 BORROWINGS DUE AFTER MORE THAN ONE YEAR Obligations under Finance leases Commercial Paper At 30 September 2017

343,908 343,908

Group Year End 31 December 2016 N'000 189,885 241,500 431,385


Nine months ended 30 September 2016 N'000 320,232 320,232

Nine months ended 30 Septemeber 2017 N'000 343,908 343,908

Company Year End 31 December 2016 N'000 189,885 241,500 431,385

Nine months ended 30 September 2016 N'000 320,232 320,232

Nine months ended 30 Septemeber 20 RETIREMENT OBLIGATIONS Net liability recognized in the statement of financial Current service cost position – Interest cost Benefit Paid by Company Amount recognized in other comprehensive income Charged for the period Net liability recognized in the statement of financial position (ii)

2017 N'000

Group Company Year End Nine months Nine monthsYear End Nine months ended 30 ended 30 ended 30 31 31 December September Septemeber December September 2016 2016 2017 2016 2016 N'000 N'000 N'000 N'000 N'000

74,181 19,924 94,105

124,417 6,415 13,285 (57,278) (12,658)

87,452 -

74,181 19,924

124,417 6,415 13,285 (57,278) (12,658)

87,452 -

74,181

87,452

94,105

74,181

87,452

The Company operates an unfunded defined benefit plan for all qualifying management staff. The most recent actuarial valuations of the present value of the retirement gratuity obligation were End of service benefit Under IFRS the Gratuity scheme in FAN is considered a Defined Benefit scheme since the company is obliged to pay a sum of money when an employee leaves or reaches the mandatory retirement age of 55. In recent years the gratuity to all junior and senior staff was paid paid out in cash so our liability principally represents our obligation to management. Under GAAP the liability is an up-to-date calculation in the balance sheet but reflects only the historic value of the employee's retirement obligation and it quantifies what would be paid to every employee if they left immediately. Under IFRS we have to calculate what the net present value of the liability is assuming everyboby works until 55. This involves estimating future wage inflation, but a rate at which cash could be invested so as to grow to maturity on each employee's 55th birthday. The valuation of the retirement obligations was undertaken by independent actuaries as at 31 December 2016. Demographic Assumption Due to lack of availability of published reliable data in Nigeria the rates of mortality assumed for the employeees are the rate published in the A67/70 Ultimate Tables pulished jointly by the Institue and faculty of Actuaries in the UK. Withdrawal from service data is taken from published data of large Nigerian employers Actuarial Assumptiosn Discount rate Salary Increases Mortality assumptions Withdrawal assumptiosn

31 March 2017 16.5% 5% A 1967 - 70 tables 2% pa for under 30, 1.5% pa for ages 31-39 1% pa for ages 40-44 none for age 45 or over

The principal assumption used to calculate the scheme's libilities include

Base case Salary increase +1% Discount % -1%

2017 Change % 3.9% 3.4%

2016 Change % 3.9% 3.4%

since we have less than 39 employees in the scheme, we have not applied the demographics to the calculation of the deferred obligation. If the demographics were to be applied, it would serve to reduce the liability but would accelerate the date on which benefit were to be paid.

Page 24


Notes to the Financial Statements for the period ended 30 September 2017 Nine months

21 DEFERRED TAX LIABILITIES

ended 30 Septemebr

Group year ended

Nine months

31

September

ended 30

December 2017 N'000 Balance 1 January

2016 N'000

433,731

Tax on loss on available for sale Financial asset At 30 September 2017

433,731

Nine months ended 30 Septemebr 2017 N'000

Group year ended 31 December 2016 N'000

2016 N'000

389,102

(390) 433,731

31 December

2017 N'000

434,121

-

Company year ended

389,102


389,492 (390) 389,102

Company year ended 31 December 2016 N'000

22 CALLED UP SHARE CAPITAL Authorised: 4,000,000,000 (period ended 30 September 2017: 4,000,000,000) ordinary shares of 50k each 2,000,000

2,000,000

2,000,000

2,000,000

At 1 January 2017

1,055,333

1,055,333

1,055,333

1,055,333


1,055,333

1,055,333

1,055,333

1,055,333

Issued and fully paid: 2,110,359,242 (Period ended 30 June 2017: 2,110,359,242) ordinary shares of 50k each

23 SHARE PREMIUM On ordinary shares issued above the par value.

Nine months ended 30 Septemebr 2017 N'000

At 1 January 2017 At 30 September 2017

Group

Nine months

Company

year ended 31 December 2016 N'000

ended 30 September

year ended 31 December 2016 N'000

2017 N'000

1,659,748

1,659,748

1,659,748

1,659,748

1,659,748

1,659,748

1,659,748

1,659,748


Page 25

Notes to the Financial Statements for the period ended 30 September 2017 24 OTHER RESERVES - GROUP

At 1 January 2017

Available for

Capital

sale investments

Reserve

N'000

N'000

N'000

4,049,852

4,048,547

(1,305)

Net of tax revaluation

OTHER RESERVES - COMPANY

At 1 January 2017 Net of tax revaluation

N'000

4,049,852 Capital

Total

sale investments

Reserve

N'000

N'000

N'000

3,793,963

3,792,658

-


(1,741,164) Retained Earnings N'000 (1,579,646)

-

(1,305)

110,978

4,048,547

Available for

(1,305)

(1,852,142)

-

(1,305)

Profit for the period At 30 September 2017

Retained Earnings

-

Profit for the period At 30 September 2017

Total

3,793,963

110,403 3,792,658

(1,469,243)

Page 26


Notes to the Financial Statements for the period ended 30 September 2017

33 AVAILABLE FOR SALE FINANCIAL ASSETS The investment represents the market value of shares in First City Monument Bank ('FCMB') which is listed on the Nigerian Stock Exchange and denominated in Naira.

Nine months ended 30 September 2017 N'000 Beginning of the year

Company Year Ended 31 December 2016 N'000

Nine months Nine September 2016 N'000

2,332

3,552

3,552

2,332

3,552

-

(1,220)

-

-

(1,220)

-

2,332

2,332

3,552

2,332

3,552

(Loss) transferred to equity End of year

Group Year Ended Nine months Nine months Nine ended 30 31 September September December 2016 2016 2017 N'000 N'000 N'000

2,332

3,552

34 CASH AND SHORT TERM DEPOSITS

Nine months ended 30 September 2017 N'000 Cash at bank and in hand

141,688

Group year ended Nine months Nine months ended 30 ended 30 31 September September December 2016 2016 2017 N'000 N'000 N'000 243,753

528,039

135,742

Company year ended 31 December 2016 N'000 243,740

Nine months ended 30 September 2016 N'000 528,039