Apr 29, 2016 - b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and oth
PREMIER PAINTS PLC Lagos, Nigeria REPORT OF THE DIRECTO RS AND UN-A UDITED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2016
PREMIER PAINTS PLC REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2016
CONTENTS DIRECTORS AND OTHER CORPORATE ADVISERS
PAGE 3
REPORT OF THE DIRECTORS
4
CORPORATE GOVERNANCE REPORT
7
STATEMENT OF DIRECTORS‘ RESPONSIBILITIES AUDIT COMMITTEE‘S REPORT
10 11
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
12
STATEMENT OF FINANCIAL POSITION
13
STATEMENT OF CHANGES IN EQUITY
14
STATEMENT OF CASH FLOWS
15
NOTES TO THE FINANCIAL STATEMENTS
16
FIVE-YEAR FINANCIAL SUMMARY
41
PREMIER PAINTS PLC DIRECTORS AND OTHER CORPORATE ADVISERS FOR THE FIRST QUARTER ENDED 31 MARCH 2016
BOARD OF DIRECTORS
Chief Ogooluwa Bankole Mr. Bhadmus Abudu Mr.AdedoyinAdeyinka Mr. Olaleye Adeyinka Mr. Wale Bankole Mr. RotimiArigbede Engineer M.K.O Balogun Dr.BanjiOyegbami Alhaji Rasheed.O Yussuff
Chairman Managing Director Non-Executive Non-Executive Executive Non-Executive Non -Executive Non-Executive Non-Executive
SECRETARIES
Mrs. Fatima Lawal
REGISTERED OFFICE
KM 2, IfoIbogun Road, Ifo, Ogun State
REGISTERED NUMBER
RC49197
AUDITORS
Ernst & Young (Chartered Accountants) 10th and 13th Floors, UBA House 57, Marina Lagos
REGISTRAR
City Securities (Registrars) Limited Primrose Towers 17A, Tinubu Street Lagos
BANKERS
Unity Bank Plc Zenith Bank Plc Wema Bank Plc Skye Bank Plc Access Bank Plc
3
PREMIER PAINTS PLC REPORT OF THE DIRECTORS FOR THE FIRST QUARTER ENDED 31 MARCH 2016 The directors have pleasure in submitting to the members of the Company their report together with the audited financial statements for the year ended 31 December 2015. Principal activity The principal activity of the Company is the production and marketing of different grades of paints such as woodfinishes for the furniture industry, decorative, industrial coatings and auto refinishes. There was no change in the principal activities of the Company during the year. State of affairs In the opinion of the Directors, the state of the Company‘s affairs is satisfactory and there has been no material change sin ce the reporting date. Results for the year
Turnover (Loss)/profit before taxation Income tax credit/ (expense) (Loss)/profit after taxation Other comprehensive income not to be reclassified to profit or loss: Net gain on revaluation of land and buildings Income tax effect Other comprehensive income for the year, net of tax
2016 N‘000
2015 N‘000
106,289 ======= 1,891 (227) ------------1,667
54,378 ======= (9,485) 3,035 ------------(6,450)
----------------------
----------------------
======
======
Total comprehensive income for the year, net of tax
Dividend The directors in submitting to the shareholders the financial statements for the year ended 31 December 2015do not recommend the payment of dividend (2014: Nil). Property, plant and equipme nt (PPE) Information relating to changes in PPE is shown in Note 7 to the financial statements. In the opinion of the Directors, the market value of the Company‘s PPE is not less than the carrying value shown in the financial statements. Acquisition of own shares The company has not purchased any of its own shares during the year (2014: Nil). Directors' interest in shares Pursuant to Sections 275 and 276 of the Companies and Allied Matters Act, CAP C20 Laws of the Federationof Nigeria 2004, the direct and indirect interest of the Directors in the shares of the Company as notified bythem and recorded in the Register is as follows: 2015 2014 Number of shares Number of shares Chief Ogooluwa Bankole 15,548,850 15,548,850 Mr. Wale Bankole 1,500,000 1,500,000
4
PREMIER PAINTS PLC REPORT OF THE DIRECTORS - Continued FOR THE FIRST QUARTER ENDED 31 MARCH 2016
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 C2 0 Laws of the Federation of Nigeria 2004 of any direct or indirect interest in contracts with which the Company is involv ed as at 31 December 2015 (2014: Nil). Analysis of shareholding According to the Register of Members, the following shareholders held more than 5% of the Issued Share Capital of the Company as at reporting date. 2015
2014
Number of
% Holding
shares
Number of
% Holding
shares
Chief A.G.O. Bankole
15,548,850
13%
15,548,850
13%
TGHL Capital Limited
63,000,000
51%
63,000,000
51%
Charitable contributions and donations The company donated Pupils desk to Ifo High School, Ifo during the year ended 31 December 2015of N75,000(2014: N427,000). Employment of disabled persons It is the policy of the Company that there will be no discrimination in considering applications for employ ment including tho se from disabled persons. All employees whether disabled or not are given equal opportunities to develop their experience and knowledge and to qualify for promotion in furtherance of their career. As at 31 December 2015, no disabled person was employed by the Company. Employees’ involvement and training The company is committed to keeping employees fully informed as much as possible regarding the Company‘s performance and progress and in seeking their views whenever practicable on matters which particularly affect them as employees. Management, professional and technical ex pertise are the Company‘s major assets and investments in developing such skills continue. The company‘s expanding skills base has extended the range of training provided and has broadened opportunities for career development within the Company. Incentive schemes designed to meet the circumstances of each individual are implemented wherever appropriate and some of these schemes include bonus. Health, safety and welfare of employees Health and safety regulations are in force within the Company‘s premises and employees are aware of existing regulations. The company provides subsidy to all employees for medical, transportation and housing. Events after the reporting date As stated in Note 21, 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.
5
PREMIER PAINTS PLC REPORT OF THE DIRECTORS - Continued FOR THE FIRST QUARTER ENDED 31 MARCH 2016
Format of financial statements The financial statements of Premier Paints Plc have been prepared in accordance with the reporting and presentation requirement of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Auditors Ernst & Young have expressed their willingness to continue in office as the Company 's auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. A resolution will be proposed at the Annual General Meeting empowering the Directors to fix their remuneration.
BY ORDER OF THE BOARD
Lawal Fatima A. (Mrs) LLB, LLM, BL FRC/2013/NBA/00000003039 Lagos, Nigeria 31 March2016
6
PREMIER PAINTS PLC CORPORATE GOVERNANCE REPORT FOR THE FIRST QUARTER ENDED 31 MARCH 2016
The company is committed to the principle of Corporate Governance and Code of Best Practices. We are committed to full disclosure and transparency in providing information to all stakeholders. As a Company quoted on the Nigerian Stock Exchange we remain focused on our obligations to safe guarding and improving shareholders value. We remain committed to maintaining transparent and best practices in hire with Local regulatory standards as well as International best practices. The corporate governance practices of the Company are designed to ensure accountability of the Board and management to all shareholders. The Board of Directors is currently made up of Nine (9) members. The Board is responsible for controlling and managing the strategic business of the Company and c onstantly reviews and presents a balanced and comprehensive assessment of the Company‘s performance and future prospects. It may exercise all such powers of t he Company as are not by Law or Articles of Association of the Company required to be exercised by the Company in General Meeting: The Board functions either as a full Board or through any of the under listed three (3 ) Committees which are constituted as follows:S/N 1
COMMITTEE Finance & Strategy committee
MEMBERSHIP Mr. Olaleye Adeyinka Engineer M.K.O Balogun Mr. AdedoyinAdeyinka Mr. Rotimi Arigbede Mr. Olawale Bankole Mr. Bhadmus Abudu
STATUS Chairman Member Member Member Member Member
2.
Audit & Risk Committee
Mr. Olaleye Adeyinka Alhaji Rasheed O. Yussuff DrBanjiOyegbami
Chairman Member Member
3.
Nominations & Governance Committee
Mr. AdedoyinAdeyinka Mr. Rotimi Arigbede Engineer M.K.O. Balogun Alhaji Rasheed O. Yussuff
Chairman Member Member Member
In addition, a Management Executive Committee headed by the Managing Director meets weekly to address policy implementation and other operational issues.
7
PREMIER PAINTS PLC CORPORATE GOVERNANCE REPORT - Continued FOR THE FIRST QUARTER ENDED 31 MARCH 2016 ATTENDANCE AT BOARD MEETINGS S/N
NAMES
DESIGNATION
1.
Chairman
2.
Chief Ogooluwa Bankole Mr. AdedoyinAdeyinka
MEETING DATE DECEMBER 10, 2015
3.
Mr. Olaleye Adeyinka
4.
Alhaji Rasheed O. Yussuff Mr Rotimi Arigbede
Non- Executive Director Non- Executive Director Non- Executive Director Non- Executive Director Non- Executive Director Non- Executive Director Executive Director Managing Director
X
5. 6. 7. 8. 9.
Engineer M.K.O. Balogun DrBanjiOyegbami Mr. Olawale Bankole Mr. Sarafa Bhadmus Abudu
MEETING DATE MARCH 26,2015
MEETING DATE JULY 28, 2015
MEETING DATE SEPTEMBER 17,2015
FINANCE & STATEGY COMMITTEE This Committee met four (4) times. The Committee meets as the need arises to review and make recommendations to the Board of Directors with respect to the Company‘s Financial and Investment strategies and objectives. The Committee assists the Board in fulfilling its oversight responsibilities with regards to audit and control as well as ens ures that an effective financial and internal control is in place. The Committee also ensures that all financial statements disclosures are accurate and evaluates the performance of both the External and Internal Auditors of the Company. ATTENDANCE AT FINANCE & STRATEGY COMMITTEE S/N NAMES 1. 2. 3. 4. 5. 6.
Mr. Olaleye Adeyinka Engineer M.K.O. Balogun Mr. AdedoyinAdeyinka Mr. Rotimi Arigbede Mr. Olawale Bankole Mr. Bhadmus Abudu
MEETING DATE 20-01-2015 X
8
MEETING DATE 19-03-2015
MEETING DATE 21-07-2015 X X
MEETING DATE 3-12-2015 X
PREMIER PAINTS PLC CORPORATE GOVERNANCE REPORT - Continued FOR THE FIRST QUARTER ENDED 31 MARCH 2016
AUDIT & RISK COMMITTEE OF THE BOARD The Committee held three (3) meetings during the year. Section 359 (6) of the Companies and Allied Matters Act CAP 20 Laws of the Federation of Nigeria 2004 provides for the functions. ATTENDANCE AT THE AUDIT & RISK COMMITTEE OF THE BOARD S/N NAMES MEETING DATE 2015 1. Mr. Olaleye Adeyinka 2. Alhaji Rasheed O. Yussuff 3. Dr.BanjiOyegbami
27-01-
MEETING DATE 03- 2015
26 -
MEETING DATE 14 – 05- 2015
AUDIT COMMITTEE OF THE COMPANY The Audit Committee is statutorily empowered to review the financial process of the Company, its audit system, internal control and management of financial risk and ensuring strict compliance with statutory regulatory and professional replacements. The Comm ittee reviews the performance of the External Auditors to the Company. The Committee is chaired by a shareholder and has two other shareholders and three directors as members. ATTENDANCE AT AUDIT COMMITTEE MEETING S/N NAMES DESIGNATION 1. 2. 3. 4. 5. 6.
Mr. Alex Ojei Alhaji R. Ola Bello Mrs. EfunremiShopeju Mr. Olaleye Adeyinka Alhaji Rasheed O. Yussuff DrBanjiOyegbami
Chairman Member Member Member Member Member
MEETING DATE: 27 – 01- 2015
MEETING DATE26 -03- 2015
MEETING DATE14 – 052015
NOMINATIONS & GOVERNANCE COMMITTEE This Committee met three times. The Committee meets as the need arises to review the composition of the Board and senior management staff. It also makes recommendations relating to Corporate Governance. ATTENDANCE AT NOMINATIONS & GOVERNANCE COMMITTEE S/N NAMES DESIGNATION 1. 2. 3. 4.
Mr. AdedoyinAdeyinka Mr. Rotimi Arigbede Engineer M.K.O. Balogun Alhaji Rasheed O. Yussuff
MEETING DATE 1202- 2015
Chairman Member Member Member
MEETING DATE 28- 07- 2015 X
MEETING DATE 10- 12- 2015
Trading policy The company has complied with the provisions of the Section 14 of the Amended Listing Rules of the Nigerian Stock Exchange by adopting a code of conduct regarding securities transactions by its Directors and all Staff. All Directors and Staff have complied with Listing rules and the Issuer‘s code of conduct regarding securities transactions.
9
PREMIER PAINTS PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE FIRST QUARTER ENDED 31 MARCH 2016
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 Company at the end of the year and of its profit or loss. The responsibilities include ensuring that the company: a) b) c)
keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the company and comply wi th 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 financial statements, which have beenprepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards issuedby the International Accounting Standards Board, Financial Reporting Council of Nigeria Act No 6, 2011 and the provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004. The directors are of the opinion that the financial statements give a true and fair view of thestate of the financial affair s of the Company and of its total comprehensive income for the year ended 31 December 2015. 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 sys tems of internal financial control. Nothing has come to the attention of the directors to indicate that the Company will not remain a going concern for at least twelve months from the date of this statement.
--------------------------------------Mr. Olawale Bankole Director FRC/2013/NIM/00000002391
--------------------------------------Mr. Bhadmus Abudu Managing Director FRC/2013/ICAN/00000002362 29 April 2016
10
PREMIER PAINTS PLC AUDIT COMMITTEE’S REPORT FOR THE FIRST QUARTER ENDED 31 MARCH 2016 In compliance with the provisions of Section 359 (4) to (5 ) of the Companies and Allied Matters Act CAP C20, Laws of the Federation of Nigeria 2004, the committee considered the Audited Financial statements for the year ended 31 December 2015 together wit h the Manangement Comment Ltters from the Auditors and the Management‘s response thereto as at Metteing held on 30 March 2016. In our Opinion, the scope and planning of the audit were adequate. After due consideration, the Committee accepted the Report of the Auditors that the Financial Statements were in accordance with ethical practice and generally accepted accounting principles and gives a true and fair view of the state of the Company‘s financial affairs. The Committtee reviewed the Management Comment Letter and in response to the Auditors‘ findings in respect of the management matters we and the Auditors are staisfied with the management‘s response thereto. The Committee therefore recommended that the Annual Financial Statement for the year ended 31 December 2015 and Auditors Report thereon be presented for adoption at the Annual General Meeting. Alex Ojei Esq Chairman of Audit Committee FRC/2014/CIIN/00000007170
OTHER MEMBERS OF THE COMMITTEE Alhaji R. Ola Bello Ms. Efunremi Shopeju Alhaji Rasheed O.Yussuff Mr. Olaleye Adeyinka Mr. Olawale Bankole
Member Member Member Member Member
11
PREMIER PAINTS PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FIRST QUARTER ENDED 31 MARCH 2016 31ST MARCH, 2016 Notes Turnover Cost of Sales
N'000
4 5.2
31ST MARCH, 2015 N'000
31ST DECEMBER, 2015 N
106,289 (68,017)
54,378 (33,548)
236,439 (163,556)
38,272
20,830
72,883
(8,010) (23,430)
(7,970) (17,794)
400 (31,595) (72,006)
6,832
(4,934)
(30,719)
(4,941)
(4,551)
(20,521)
(Loss)/profit before taxation
1,891
(9,485)
(50,840)
Taxation (Loss)/profit after taxation
(227) 1,664
3,035 (6,450)
21,343 (29,497)
-
-
-
Gross (loss)/profit Other income Selling & Distribution expenses Administration expenses
5.1 5.4 5.3
Operating (loss)/profit Finance Cost
6
Other Comprehesive Income not to 10 be classified to Profit or Loss Net gain on revaluation of Land & Building Inome Tax effect Other Comprehensive Profit for the Year Net of Tax
80,732 (24,220) 56,512
Total Comprehensive Profit for the Year Net of Tax Profit/(Loss) after Taxation attributable to :Ordinary equity holders Profit/(Loss) after Taxation attributable to :Ordinary equity holders
(Loss)/basic earning per share - kobo
7
12
1,664
(6,450)
27,015 (29,497)
-
-
27,015
0.01
(0.05)
(0.24)
PREMIER PAINTS PLC STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016 31ST MARCH, 2016 31ST DEC,2015 N N
Sch. Ref. Non current assets Property, Plant & Equipment Current assets Inventories Trade Receivables & Other Receivables Prepayment Cash at bank and in hand
8
265,136
269,521
9 10 11 12
33,660 38,688 5,197 5,090 82,635
22,179 35,615 5,278 8,696 71,768
347,771
341,289
Total Assets Equity Share capital Share Premium Capital reserves Revenue reserves
13 13 13 13
61,500 18,206 181,151 (233,320) 27,537
61,500 18,206 181,151 (234,984) 25,873
44,103 48,986 93,089
51,098 48,986 100,084
225,231 1,913 227,145
213,646 1,686 215,332
347,771
341,289
Non current liabilities Long Term Loan (BOI/ Unity) 14 Deffered 17 Retirement benefits and related Obligatins
Current liabilities Borrowings Trade and other Payables Taxation
11 15 6c
Total Equity & Liabilities
Approved by the Board of Directors on 31 March 2016 and signed on its behalf by:
-------------------------------------------Olawale Bankole (Director) FRC/2013/NIM/00000002391
--------------------------------------------------Bhadmus Abudu (Managing Director) FRC/2013/ICAN/00000002362
-
13
-------------------------------------------Mathew Eledan (Head of Finance) FRC/2013/ICAN/00000002332
PREMIER PAINTS PLC STATEMENT OF CHANGES IN EQUITY FOR THE FIRST QUARTER ENDED 31 MARCH 2016
Issued share capital N‘000
Share premium N‘000
Revaluation reserve N‘000
Retained earnings N‘000
Total N‘000
61,500
18,206
124,638
(205,487)
(1,143)
-
-
-
(29,497)
(29,497)
----------61,500 ======
----------18,206 ======
56,513 -------------181,151 =======
------------(234,984) =======
56,513 -----------25,873 ======
61,500
18,206
181,151
(234,984)
25,873
Profit for the year
-
-
-
1,664
1,664
Other comprehensive income
-
-
-
-
-
----------61,500 ======
----------18,206 ======
-----------181,151 =======
------------(233,320) =======
-----------27,537 ======
As at 1 January 2015 Loss for the year Other comprehensive income At 31 December 2015
As at 1 January 2016
At 31 December 2016
14
PREMIER PAINTS PLC STATEMENT OF CASH FLOWS FOR THE FIRST QUARTER ENDED 31 MARCH 2016 STATEMENT OF CASHFLOWS 2016
2015
N'000
N'000
Cash Flows from Operations Activities Cash receipts from customers
105,147
237,633
Payment to suppliers and employees
(105,465)
(210,176)
VAT paid
(1,351)
Income Tax Paid
16
-
(1,801)
Net cash provided by operating activities
17
(1,669)
25,656
-
695
-
(950)
-
(255)
Cash Flow from Investing Activities Proceeds from sale of equipment Payment for purchase of fixed assets
7
Net cash provided by investing activities
Cash Flows from Financing Activities Long Term Loan Renegotiated
13
-
-
Interest paid
4e
(4,929)
(20,521)
Repayment of long term loan
13
(6,995)
(28,394)
Net cash provided by financing activities
(11,923)
(48,915)
Net decrease in cash and cash equivalents
(13,592)
(23,514)
Cash at the beginning of the financial year
(19,563)
3,951
(33,155)
(19,563)
Cash at the end of the financial year
11
15
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2016
1.
CORPORATE INFORMATION Premier Paints Plc is situated at KM 2, Ifo-Ibogun Road, Ifo, Ogun State. The company was incorporated on 24 August 1982 as a private family business. At incorporation, the issued share capital was 100,000 ordinaryshares of 50 kobo each. The company was converted to a public quoted company and the shares were listed on theNigerian Stock Exchange on 7 November 1995. Trans Global Holdings Limited (TGHL), a Nigerian holdingcompany, bought 31 percent of the shares of the Company on 12 March 2012 through a special placement thereby increasing its shareholding from 20% to 51% thus making TGHL the controlling shareholder of the Company. The principal activity of the Company is the production and marketing of different grades of paints such as wood finishes for the furniture industry, decorative, industrial coatings and auto refinishes.
2.1
Basis of preparation The financial statements of Premier Paints Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) , Financial Reporting Council of Nigeria Act No 6, 2011 and the provisions of Companies and Allied Matters act, CAP C20 Laws of the Federation of Nigeria 2004. Additional information required by national regulations is included where appropriate. The financial statements have been prepared on the historical cost basis, except for revalued property, plant and equipment.
Functional and presentation currency These financial statements are presented in Nigerian Naira, which is the Company‘s functional currency. All financial information presented in Naira has been rounded to the nearest thousand unless stat ed otherwise. Significant accounting, estimates and assumptions The preparation of financial statements in conformity with IFRS requires management to make judgements,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets andliabilities, income and expenses and the accompanying disclosures of the contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amo unt of the asset or liability affected in future periods. 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 amount s of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared.
16
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 2.1
Basis of preparation Continued Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the company. Such changes are reflected in the assumptions when they occur. These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimatesarerecognised in the period in which the estimates are revised and in any future periods affected.In particular, information about significant areas of assumption, estimation, uncertainties and critical judgements in applying the accounting policies that have the most significant effect on the amount recognised in the financial statements include the following: Taxes Uncertainties exist with respect to the amount and timing of future taxable income. Given the differences in the interpretation of the underlying principles of taxable income, differences arising between the actual results and the assumptions made could necessitatefuture adjustment to tax income and expenses already recorded. The company establishes provisions based onreasonable estimates. Deferred taxes are recognised for all unused tax losses to the extent that it is probable that taxable profit will beavailable against which the losses can be utilised. Significant management judgement s is required to determine theamount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxableprofits together with future tax planning strategies. Further details of taxes are disclosed in Note 5 and Note 16. Allowance for doubtful accounts The allowance for doubtful accounts involves management judgement and review of individual receivable balances based on an individual customer‘s prior payment record, current economic trends and analysis of historical bad debts of a similar type. Further details of the allowance are disclosed in Note 9. Property, plant and equipme nt Judgments are utilised in determining the depreciation rates, revaluation assumptions and useful lives of these assets at the end of the period. Land and Buildingsis stated based on the revaluation carried out as at 31 December 2015. Further details of property, plant and equipment are disclosed in Note 7.
2.2.1 Standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Company‘s financial statements are listed below. This listing of standards and interpretations issued are those that the Company reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The company intends to adopt these standards when they become effective.
17
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 2.2.1
Standards 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 FinancialInstruments: 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 company plans to adopt the new standard on the required effective date. During 2015, the Company hasperformed 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 Company in the future. Overall, the Company expects no significant impact on its balance sheet and equity except for the effect of applying the impairment requirements of IFRS 9. The company 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 company 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 assetscurrently held at fair value. Quoted equity shares currently held as available-for-sale with gains and lossesrecorded in OCI will be measured at fair value through profit or loss instead, which will increase volatility inrecorded profit or loss. The AFS reserve currently in accumulated OCI will be reclassified to opening retainedearnings. Debt securities are expected to be measured at fair value through OCI under IFRS 9 as the Company 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 company 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 Company 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. Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise tocash flows representing solely payments of principal and interest. Thus, the Company ex pects that these willcontinue to be measured at amortised cost under IFRS 9. However, the Company 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 Company to record expected credit losses on all of its debt securities, loans and tradereceivables, either on a 12-month or lifetime basis. The company expects to apply the simplified approach and record lifetime expected losses on all trade receivables. The Company 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.
IFRS 15 - Reve nue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to 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 principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.
18
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is 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 effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Company given that the Company has not used a revenue based 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. 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 retrospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Company as the Company does not have any bearer plants. Amendments to IAS 1 Disclosure Initiative The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existingIAS 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 j oint 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 are effective for annual periods beginning on or after 1 January 2016, with early adoption per mitted. These amendments are not expected to have any impact on the Company.
2.2.1
Standards issued but not yet effective – Continued Annual improve ments 2012-2014 Cycle These improvements are effective for annual periods beginning on or after 1 January 2016. They include: 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 locate d. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment must be applied prospectively 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 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 must be applied prospectively. However, within the period there are no assets with an intention to dispose within the next twelve months after the reporting period.This amendment will not have any impact on the Company‘s financial statements. IFRS 7 Financial Instruments: Disclosures (i) Servicing contracts 19
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 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 would not need to 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 must be applied retrospectively.This amendment will not have any impact on the Company‘s financial statements. 2.2.2
Annual improve ments 2010 -2012 Cycle IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets Revaluation method – proportionate restatement of accumulated depreciation/amortisation The amendment clarifies that the asset may be revalued by reference to observable data on either the gross or the net carrying amount. The amendment also clarifies that accumulated depreciation/amortisation is the difference between the gross and carrying amounts of the asset. The amendment must be applied retrospectively. The re is no impact of this amendment on the Company. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. IAS 24 Related Party Disclosures The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. Effective from 1 July 2014. The amendment does not have any impact on the Company‘s current financial statements. Annual improve ments 2011-2013 Cycle These improvements are effective from 1 July 2014 and are not expected to have a material impact on the Company. They include: IFRS 13 Fair Value Measurement The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable). IFRS 16 - Leases Effective for annual periods beginning on or after 1January 2019. Early application is permitted,but notbefore 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-balance sheet 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 t wo 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 company is still assessing the impact of this amendment.
IAS 12 – Taxes: Recognition of Deferred Tax Assets for Unrealised Losse s The amendment clarifies the accounting for deferred tax assets for unrealised losses on debt instruments measured at fair value. The amendments clarify: 20
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued • •
The requirements relating to recovery of an asset for more than its carrying amount in a way that e nhances understanding and reduces the risk of an arbitrary estimate of probable future taxable profit was revised The standard clarify that taxable profit excluding tax deductions used for assessing the utilization of deductible temporary differences is di fferent from taxable profit on which income taxes are payable
The amendment is effective for annual periods beginning on or after 1 January 2017. The company is still assessing the impact of this amendment. 2.3
Summary of significant accounting policies The following are the significant accounting policies applied by Premier Paints Plc in preparing its financial statements:
2.3.1
Operating segment An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of its‘ other components. It also includes a component of entity for which discrete financial information is available and whose operating results are regularly reviewed by the company‘s chief operating decision maker .The company is assessed as a single line of business ―paint manufacturing‖ and it operates in one geographical location.
2.3
Summary of significant accounting policies - Continued
2.3.2
Issued share capital and reserves Share issue costs Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of an equityinstrument are deducted from the initial measurement of the equity instruments. Dividend on the Company's ordinary shares Dividends on the Company‘s ordinary shares are recognised in equity in the period in which they are paid or,if earlier, approved by the Company‘s shareholders.
2.3.3
Property, Plant and Equipment Property, plant and equipment are recognised at cost except for Land and Building which are subsequentlyrecognized at fair value based on the valuations by the independent valuers less accumulated depreciation and accumulated impairment loss.Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property, plant or equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing part of an item of property, plant or equipment is recognised in the carrying amount of the itemif it is probable that the future economic benefits embodied within the part will flow to the Company and itscost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the Statement of profit or loss as incurred. Depreciation is charged to profit or loss on a straight-line basis to write down the cost of each asset, totheir residual values over the estimated useful lives of each part of an item of property,plant and equipment. Leasedassets are depreciated over the shorter of the lease term and their useful lives. Depreciation begins when anasset is available for use and ceases at the date that the asset is derecognised. The estimated useful lives for the current and corresponding periods are as follows: Leasehold land Building Plant and machinery Furniture and equipment Motor vehicles
99 years 50 years 10 years 10 years 5 years
Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted 21
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued prospectively if appropriate. An item of property, plant and equipment is derecognised on disposal or when no future economic benefits areexpected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as thedifference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. On revaluation of property, plant and equipment, a revaluation surplus is recorded in OCI and credited to the asset revaluation reserve in equity. However, to the extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit or loss. A revaluation deficit is recognised in the statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve. Upon disposal, any revaluation reserve relating to a particular asset been sold, is transferred to retained earnings. 2.3
Summary of significant accounting policies – Continue d
2.3.4 Earningsper share The company presents basic/ diluted earnings/ (loss) per share data for its equity ordinary shares. Basic earnings/ (loss)per share iscalculated by dividing the profit/ (loss) attributable to ordinary equity holders of the company by the weightedaverage number of ordinary shares outstanding during the year. Diluted earnings/ (loss) per share is calculated by dividing the profit/ (loss) attributable to ordinary equity holders of the Company by the weighted average number of ordinary sharesoutstanding during the year plus the weighted average number of ordinary share that would be issued on conversion of all the dilutive potential ordinary share into ordinary shares. 2.3.5 Impairment of non-financial assets The carrying amounts of the Company‘s non-financial assets, other than inventories are reviewed at each reportingdate to determine whether there is any indication of impairment. If any such indication exists, then the asset‘sor cash generating units‘ (CGUs) recoverable amount is estimated and an impairment loss is recognised if the carrying value of the asset or CGU exceeds its useful life. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash-generating units (CGUs). The recoverable amount is the higher of an asset‘s fair value less costs to sell and value in use (being the present value of the ex pected future cash flows of the relevant asset or CGUs). An impairment loss is recognised for the amount by which the asset‘s carrying amount exceeds its recoverable amount. Premier Paints evaluates impairment losses for potential reversals when events or circumstances may indicate such consideration is appropriate. The increased carrying amount of an asset other than goodwill attributable to a rever sal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.Impairment losses and impairment reversals are recognised in profit or loss. 2.3.6 Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on first-in firstout principle and includes expenditure incurred in acquiring the inventories, production or conversioncosts and other costs incurred in bringing them to their existing location and condition. Net realisable value isthe estimated selling price in the ordinary course of business, less the estimated costs of completion andselling expenses. Finished pr oducts and work-in-progress Finished products and work-in progress are measured at manufacturing cost and takes into account theproduction stage reached. Costs include an appropriate share of direct production overheads based on normal operating capacity. Raw and packaging material Raw and packaging materials are measured at actual cost comprising invoice price, duty, freight, and handlingcharges.
22
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 2.3
Summary of significant accounting policies – Continue d
2.3.7Financial instrume nts A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party. Financial instruments are initially measured at fair value plus , in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs, that are directly attributable to the acquisition or issue of the financial asset or financial liability. A. Financial assets For purposes of subsequent measurement, financial assets are classified into four categories: Financial assets as fair value through profit or loss, loans and receivables, held-to-maturity investment and available for sale assets. The company‘s financial assets include trade and other receivables and cash and bank balances. These financial assets have all been classified as loans and receivables. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the effective interest rate 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 effective interest rate method. The losses arising from impairment are recognised in profit or loss in finance costs for loans and in administrative expenses for receivables. Derecognition of financial assets A financial asset (or, when applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: a) The rights to receive cash flows from the asset have expired or b)The Company retains the right 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:
The Company has transferred substantially all the risks and rewards of the asset or theCompany has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its right to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company‘s continuing involvement in the asset. Impairment of financial assets The Company assesses at each reporting date whether there is any objective evidence that a financial asset or groupof financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‗loss event‘) and that loss event has an impact on the estimated future cash flows of the financial asset or the groupof financial assets that can be reliably estimated.
2.3
Summary of significant accounting policies – Continue d Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.An impairment loss in respect of a financial asset measured at amortised cost is calculated as the differencebetween its 23
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued carrying amount, and the present value of the estimated future cash flows discounted at the originaleffective interest rate. Individually significant financial assets are tested for impairment on an individual basis. All impairment losses for items measured at amortised cost are recognised in the profit or loss.An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairmentloss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss. Financial assets carried at amortised cost For financial assets carried at amortised cost (such as trade receivables), the Company first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed forimpairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset‘s original effective interest rate. B.
Financial liabilities All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: Financial liabilities at amortised cost: The company‘s financial liabilities include loans and borrowings and trade and other payables which are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as though the EIR amortisation process. Financial liabilities are classified as current liabilities if payment is due within 12 months. Otherwise, they are presented as non-current liabilities.
2.3
Summary of significant accounting policies – Continue d 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 a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of profit or loss.
C.
Determination of fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The fair value measurement is based on thepresumption 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 to by the Company. 24
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued The fair value of an asset or a liability is measured using the assumptions that market participants would usewhen 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 generateeconomic benefits by using the asset in its highest and best use or by selling it to another market participantthat would use the asset in its highest and best use. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorisedwithin the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fairvalue measurement as a whole:
D.
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 valuemeasurement 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
Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.3.8 Cash and cash equivalents
Cash and cash equivalents in the Statement of financial position comprise cash at bank and on hand and short-term deposits with original maturity of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
2.3
Summary of significant accounting policies – Continue d
2.3.9Taxes Current income and Education taxes Current income and education taxes assets and liabilities for the current year 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 by the reporting date in Nigeria. Where necessary, current income and education taxes assets and liabilities also include adjustments for tax expected to be payable or recoverable in respect of previous periods. The company income tax is charged on the taxable profit at 30% while the education tax is charged on the assessable profits of the company at the rate of 2%. Assessable profit is defined as adjusted profit less unrelieved losses carried forward before taking into consideration capital allowances, balancing allowance and or balancing charge. Deferred tax Deferred tax is provided using the liability method in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. 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 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, ex cept: 25
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - 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 tran saction, affects neither the accounting profit nor taxable profit or loss. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, 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.
Where 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is n o longer probable that sufficient taxable profit will be available to allow all or part of the deferred income 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 profit 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 to 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 items are recognised in correlation to the underlying transaction either in profit or loss, other comprehensive income or directly in equity.
2.3
Summary of significant accounting policies – Continue d Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax asse ts against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Value adde d tax Expenses and assets are recognised net of the amount of value added tax, except:
when the value added tax incurred on a purchase of assets or goods is not recoverable from the taxation authority, in which case, the value added tax is recognised as part of the cost of acquisition of the asset or as part of the ex pense item, as applicable when receivables and payables are stated with the amount of value added tax included.
The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. 2.3.10Employee bene fits Defined contribution plan A defined contribution plan is a pension plan under which the Company pays fixed contributions into aseparate entity. The company has no legal or constructive obligations to pay further contributions if the funddoes not hold sufficient assets to pay all employees the benefits relating to employees service in the currentand prior period. For defined contribution plans, the Company pays contributions to publicly or privately administered pensionfund administration (PFA) on a mandatory basis in line with Pension Act. The company has no furtherpayment obligations once the contributions have been paid. The company operates a defined contribution pension scheme in line with the Pension Reform Act 2015. The employees and the Company contribute 8% and 10% of basic salary, housing and transport allowances respectively. The Company's contributions are accrued and charged to the Statement of profit or loss as and when the relevant service is provided by employees. The company has no further payment obligations once the contributions have been paid. Termination be nefits Termination benefits are recognised as an expense and a liability when the Company is demonstrably committed, withoutrealistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normalretirement date. Termination benefits for voluntary redundancies are recognised if the Company has made 26
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued anoffer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number ofacceptances can be estimated reliably. Short term benefits Short-term employee benefit obligations are measured on an undiscounted basis and ar e expensed as the relatedservice is provided. 2.3.11 Re venue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined ter ms of payment and ex cluding tax, duties, returns, customer discounts and other customer related discounts. The company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all of its revenue arrangements. 2.3
Summary of significant accounting policies – Continue d Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods, recovery of the consideration is probable, the associated costs and possible return of products can be estimated reliably, and there is no continuing management involvement with the products. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as reduction of revenue as the sales are recognised.
2.3.12Expenses Interest expense Interest expenses are recognised as they accrue in profit or loss, using the effective interest method. 2.3.13Leases 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. Company as a lessee Operating lease payment Operating lease is a lease that does not substantially transfer all risks and rewards incidental to ownership to the Company. Payments and lease incentives under operating leases are recognised in profit or loss on a straight-line basis over the term of thelease. Lease incentives received are recognised as an integral part of the total lease expense, overthe term of the lease. Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Company, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.Operating lease payments are recognised as an operating expense in the Statement of profit or loss on a straight-line basis over the lease term.
2.3.14Financialinstrument’s risk management, objectives and policies The company deploys a number of financial instruments (financial assets and financial liabilities) in carrying out its activities. The key financial liabilities of the company comprise bank borrowings and trade payables which are deployed purposely to finance the company‘s operations and to provide liquidity to support the Company‘s operations. 27
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued The financial assets of the Company include trade and other receivables and cash equivalents also necessarily required for the operations of the Company.
2.3
Summary of significant accounting policies – Continue d The principal risks that Premier Paints Plc is exposed to as a result of holding the above financial instruments include credit, liquidity and market risks. The senior management of the Company oversees the management of these risks through the establishment of adequate risk management framework with appropriate approval process, internal control and authority limits. Thus, the Company‘s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with those policies. The Board of Directors which is responsible for the overall risk management of the Company reviews and agrees policies for managing each of these risks inherent in its involvement in financial instruments as summarised below: Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails tomeet its contractual obligations, and arises principally from the Company‘s receivables from customers. Managementhas assessed the risk exposure and is taking action to mitigate the higher than usual risks. Intensified and continuousfocus is being given in the areas of customers (managing trade receivable s). Holding of cash at banks also exposes the Company to credit risk. Concentrations of credit risk are indicated in the notes below and the maximum exposure is also provided thereafter. Trade and other receivables The company‘s management has credit policies in place and the exposure to credit risk is monitored on an ongoingbasis. Under the credit policies, all customers requiring credit over a certain amount are reviewed and new customersare analysed individually for creditworthiness before the Company‘s standard pay ment and delivery terms andconditions are offered. Purchase limits are established for each customer and these limits are reviewed regularly. Customers that fail to meet the Company‘s benchmark creditworthiness may transact with the Company only on a cashbasis.Outstanding customer receivables are regularly monitored. At 31 December 2015, the Company had 12 customers (2014: 12 customers) that owed the Company more than N1m each and accounted for approximately 58% (2014: 22%) of all receivables owing. There were no customers (2014: 0 customers) with balances greater than N10m. The requirement for impairment is analysed at each reporting date on an individual basis for major clients. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note9. The company does not hold collateral as security. Premier Paints Plc evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. Cash and cash equivalents The company limits its exposure to credit risk by only investing available cash balance in liquid securities andonly with counterparties that have a good credit standing.
28
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 2.3
Summary of significant accounting policies – Continue d Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with itsfinancial liabilities that are settled by delivering cash or another financial asset. The company‘s approach to managingliquidity 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‘sreputation. Recent times have proven the credit markets situation could be such that it is difficult to generate capital tofinance long-term growth of the Company. The company is currently negotiating with the financial institution to refinance its loans. Financing strategies are under continuous evaluation. The company‘s liabilities are more than its assets, this creates a funding gap. Consequently the Company brought in astrategic investor (TGHL) to meet this gap.TGHL being a strategic Investor helps in closing the funding gap of the company by getting more contracts and sourcing for Key customer based on their brand and business network‖ . This is aside the plan to raise more funds to serve both as working Capital and for expansion by way of new equity. The table below summarises the maturity profile of the Company‘s financial liabilities:
Year ended 31/12/15 Interest-bearing loans and borrowings Trade and other payables
Year ended 31/12/14 Interest-bearing loans and borrowings Trade and other payables
On demand N’000
Less than 3 months N’000
3 to 12 months N’000
1 to 5 years N’000
> 5 years
Total
N’000
N’000
31,700 ----------31,700 ======
125,581 125,708 ---------251,289 ======
28,022 ---------======
59,565 ---------======
-------=====
125,581 157,408 -----------282,989 =======
On demand N’000
Less than 3 months N’000
3 to 12 months N’000
1 to 5 years N’000
> 5 years
Total
N’000
N’000
31,700 ---------31,700 ======
5,963 91,097 ----------97,060 ======
25,883 ---------25,883 ======
76,257 ----------76,257 ======
-------=====
108,103 122,797 -----------230,900 =======
Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rate sand equity prices will affect the Company‘s income or the value of its financial instruments. The objective of marketrisk management is to manage and control market risk exposures within acceptable parameters, whilst optimising thereturn on risk. 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 company is not exposed to interest rate risk as all loans and borrowings are at fixed interest rates.
2.3
Summary of significant accounting policies – Continue d
29
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued Capital manageme nt Capital includes equity attributable to the equity holders of the Company. The primary objective of the Company‘s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholders‘ value. In order to achieve this overall objective, the Company is committed to carrying out a private placement to the major shareholders. The company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2015 (2014: Nil).
Loan obligation (Note 13) Trade and other payables (Note 14) Less:cashand bank balances (Note 11) Net debt Equity Capital and Net debt Gearing ratio
3.
2014 N‘000 107,491 133,038 (3,970) ------------236,559 =======
25,873 282,321 91%
(1,143) 235,416 100%
236,439 =======
365,378 =======
Revenue Sales
6.
2015 N‘000 107,337 157,407 (8,696) -----------256,048 =======
Basic/ diluted(loss)/earnings per share Basic (loss)/earningsper share iscalculated by dividing the (loss)/profit attributable to ordinary equity holders of the Company by the weightedaverage number of ordinary shares outstanding during the year. Diluted (loss)/earningsper share is calculated by dividing the (loss)/profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary sharesoutstanding during the year plus the weighted average number of ordinary share that would be issued on conversion of all the dilutive potential ordinary share into ordinary shares. The following reflects the income and share data used in the basic/ diluted (loss)/profit per share computations:
Net (loss)/profit attributable to ordinary equity holders
Weighted average number of ordinary shares for basic (loss)/profit per share Basic (loss)/earnings per share (kobo) Diluted (loss)/earnings per share (kobo) 30
2015 N‘000
2014 N‘000
(29,497) =====
8,091 =====
Number ‗000
Number ‗000
123,000 =======
123,000 =======
(24k)
7k
(24k)
7k
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued There were no other transactions affecting the shareholdings that may lead to the dilution of equity. There are no dilutive instruments in issue.
31
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 7.
Property, plant and equipme nt
Cost/revalued amount: As at 1 January 2014 Additions Disposals At 31 December 2014 Additions Disposals Transfer Revaluation At 31 December 2015
Accumulated Depreciation: As at 1 January 2014 Charge for the year Disposal At 31 December 2014 Charge for the year Disposals Transfer At 31 December 2015 Carrying Amount: At 31 December 2015 At 31 December 2014
Land
Building
Plant & Machinery
Motor Vehicles
N'000 20,500 ---------20,500 (4,556) 17,056 ---------33,000 ----------
N'000 195,177 ----------195,177 (34,854) 63,677 ----------224,000 -----------
N'000 37,540 352 ---------37,892 ---------37,892 ----------
4,100 228 --------4,328 228 (4,556) -----------------
20,912 6,971 ---------27,883 6,971 (34,854) -------------------
33,000 ===== 16,172 =====
224,000 ====== 167,294 ======
32
N'000 25,225 3,417 (1,025) ---------27,617 950 (7,775) ---------20,792 ----------
Furniture & Equipment N'000 13,095 1,114 --------14,209 --------14,209 ---------
Total N'000 291,537 4,883 (1,025) ----------295,395 950 (7,775) (39,410) 80,733 ----------329,893 -----------
26,836 3,760 ---------30,596 3,747 ---------34,343 ----------
15,992 3,015 (495) ---------18,512 2,863 (6,051) ---------15,324 ----------
9,577 545 --------10,122 582 --------10,704 ---------
77,417 14,519 (495) ---------91,441 14,391 (6,051) (39,410) ---------60,371 ----------
3,549 ===== 7,296 ======
5,468 ===== 9,105 =====
3,505 ===== 4,087 =====
269,522 ======= 203,954 =======
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 7. Property, plant and equipment – Continued The transfer relates to the accumulated depreciation as at the revaluation date that was eliminated against the gross carrying amount of the revalued asset. All land held by the Company are under Finance lease arrangements. The maximum tenor of the lease arrangements is 99 years. The lease amounts were fully paid at the inception of the lease arrangements. The company‘s Land and Buildingswere revaluedat N257,000,000 as at 31 December 2015.The valuation was carried out by Messrs Jide Taiwo (Estate Surveyors and valuers). The basis of the valuation was the current open market capital value as a going concern. This is defined as the net worth of the company in the hands of an assumed purchaser (s) who intends to acquire the company assets in their present state and location. The net surplus on revaluation of N80,732,821 was taken to the revaluation reserve through other comprehensive income.The fair va lue disclosure has been made on Note 23. Subsequent revaluation will be performed with sufficient regularity. If Land and Buildings were measured using the cost model, the carrying amount would be as follows: 2015 N‘000 LAND Cost 1,000 Accumulated Depreciation (717) --------Net Carrying Amount 283 ===== BUILDING Cost 129,669 Accumulated Depreciation (72,615) -----------Net Carrying Amount 57,054
===== =====
2014 N‘000 1,000 (702) --------298 ==== 129,669 (70,022) ----------59,647
Fair value measurement disclosures for revalued Land and Building are provided in Note 23.
8.
2014 N‘000
15,130 814 8,925 ---------24,869 (2,689) ----------22,180 ======
21,243 1,834 18,784 ----------41,861 (2,689) ----------39,172 ======
2,689 --------2,689 =====
2,689 ---------2,689 =====
Inventories Raw materials Work- in -progress Finished goods Less: provision for obsolete stocks (Note 8.1)
8.1
2015 N‘000
Provision for obsolete stocks See below for the movements in the provision for obsolete stocks As at 1 January At 31 December
33
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued
9.
2014
N‘000
N‘000
45,592 (9,977) ----------35,615 4,885 ----------40,500 ======
46,671 (7,895) ----------38,776 2,518 -----------41,294 ======
Trade and other receivables Trade receivables Less: impairment of doubtful receivables Other receivables (Note 9.1)
9.1
2015
Other receivables Advance to supplier Withholding Tax Staff debtors
4,117 768 ----------4,885 ====== =====
120 1,977 421 ----------2,518
As at 31 December 2015, trade receivables of an initial value of N2,482,179(2014: N2,837,985) were impaired and fully provided for. See below for the movements in the provision for impairment of receivables . Individually Collectively impaired impaired Total N‘000 N‘000 N‘000 As at 1 January 2015 Charge for the year Utilised during the year At 31 December 2015 As at 1 January 2014 Charge for the year Utilised during the year At 31 December 2014
(400)
7,895 2,482 ---------9,977 =====
(400) -------====
7,895 2,482 ---------9,977 =====
9,458 2,837 (4,400) ---------7,895 =====
-------====
9,458 2,837 (4,400) ---------7,895 =====
As at 31 December, the ageing analysis of trade receivables is as follows:
Total
Neither past due nor impaired >30 days
Past due but not impaired 30–60 days
61–120 days
>120 days
2015
40,500
18,494
7,964
9,616
4,426
2014
41,294
23,890
10,073
4,119
3,212
2015 N‘000 10.
Prepayments
34
2014 N‘000
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued Prepaid expenses
11.
391 ====
592 ===
Cash and cash equivalents Cash at banks Cash on hand
8,685 3,878 11 92 ------------------Cash and bank balances 8,696 3,970 ===== ===== The Company‘s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 2.3.14. For the purpose of the statement of cash flows, cash and cash equivalents comprise the followingat 31 December: 2015 2014 N‘000 N‘000 Cash equivalents Bank overdrafts (Note 13.2) Cash and cash equivalents
12.
Issued share capital and share premium
12.1
Issued share capital Authorised shares: 125,000,000 ordinary shares of 50kobo each Issued and fully paid: 123,000,000ordinary shares of 50kobo each
12.2
8,696 (28,259) ---------(19,563) =====
3,970 (19) ---------3,951 =====
125,000
125,000
=======
=======
61,500
61,500 ======
======
Share premium The share premium represents the value of cash paid above the par value of the share. There was no movement in the account during. 2015 2014 N‘000 N‘000 At 1 January At 31 December
12.3
18,206 ----------18,206 ======
18,206 ----------18,206 ======
124,638 56,513 -----------181,151 ======
124,638 ------------124,638 ======
Revaluation reserve At 1January Additions
2015 N‘000 13.
Interest bearing loans and borrowings Non-current portion 35
2014 N‘000
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued BOI/ Unity Bank loan (Note 13.1)
51,098----------51,098 ======
75,645 -----------75,645 ======
27,980 28,259 -----------56,239 ======
31,827 19 -----------31,846 ======
51,098 27,980 ----------79,078 ======
75,645 31,827 ----------107,472 ======
Current portion BOI/ Unity Bank loan (Note 13.1) Bank overdrafts (Note 13.2)
13.1
BOI/ Unity Bank loan Non-current Current
The movement in the present value of interest bearings loans and borrowings was as follows:
As at 1 January Additions during the year Repayments At 31 December Bank of Industry Unity Bank Plc
2015 N‘000
2014 N‘000
107,472 (28,394) -----------79,078 ======
61,538 66,213 (20,279) ------------107,472 ======
28,218 51,273 ----------79,078 ======
41,259 66,213 ----------107,472 =======
The Bank of Industry/Unity Bank loan of N100,000,000 at 5% interest rate was approved on 20 October 2010 and it is expected to be repaid within seven years from date of drawdown, with 6 months moratorium on principal and interest. The quarterly repayment is N3,846,153. The repayment of the loan (principal and interest) is made from the bank overdraft facility. Unity Bank on 1 December 2014 also approved an additional loan of N66,213,791 at 20% interest rate to the Company. The loan is expected to be repaid within five years from the date of drawdown. The monthly repayment is N1,049,644. The repayment of the loan (principal and interest) is made from the overdrawn accounts.
13.
Interest bearing loans and borrowings – Continue d
13.2 Bank overdrafts Bank overdrafts represent overdrawn balance on current accounts The account is also used to fund the repayment of the term loan (principal and interest). The Bank overdrafts are not secured and it attracts an average interest rate of 24% (2014:24%). 2015 N‘000
36
2014 N‘000
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 14.
Trade and other payables Trade payable Other payables Final staff entitlement Accruals Sundry payable (Note 14.1) Staff pension payable PAYE payable VAT payable
14.1
23,304 7,146 15,816 35,672 31,700 18,460 9,712 15,597 ------------157,407 =======
27,669 74 17,258 24,651 31,700 13,137 8,308 10,241 ------------133,038 =======
Sundry payable This represents deposit for shares made by Shoreline Energy International Limited in 2008 that was meant to be refunded as the transaction did not work out. The amount is repayable on demand. Terms and conditions: Trade payables are non-interest bearing and are normally settled on 90 days terms. Other payables are non-interest bearing and have an average term of 3 months.
15.
Related party transactions
Parent Company – Trans Global Holding Limited (TGHL) Trans Global Holding Limited a Company incorporated in the Federal Republic of Nigeria holds 51% of the Company‘s shares. There was no transactionconducted with the Company during the year (2014: Nil). 2015 N‘000
2014 N‘000
2,827 660 (1,801) ---------1,686 =====
1,716 1,801 (690) --------2,827 =====
16. Taxation 16.1C urrent tax payable As at 1 January Charge for the year Payments during the year At 31 December
37
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 2015 N‘000
2014 N‘000
46,769
44,985
(22,003) 24,220 ----------48,986 ======
1,784 ----------46,769 ======
45,221 (2,993) (807) (16,655) 24,220 -----------48,986 ======
49,944 (2,368) (807) ----------46,769 ======
(Loss)/ profit after taxation Adjustment for: Depreciation of Property, plant and equipment Gainon disposal of Property plant and Equipment Interest paid
(29,497)
8,091
14,391 1,029 20,521 ---------6,444 ----------
14,519 130 17,203 ----------39,943 -----------
Decrease/(Increase) in inventories Decreaseintrade and other receivables Decrease in prepayments Increase/(decrease)in trade and other payables (Decrease)/increasein income taxation (Decrease)/ increasein deferred taxation
16,992 794 201 24,369 (1,141) (22,003) ---------19,212 ----------25,656 ======
(15,422) 1,805 418 (16,735) 1,111 1,784 -----------(27,039) -----------12,904 ======
16.2 Deferred tax liability As at 1 January Tax (credit)/ expense during the year recognised in profit or loss Tax expense during the year recognised in OCI At 31December Deferred tax relates to the following: Accelerated depreciation for tax purposes Impairment of trade receivables Allowance for inventories Unrelieved losses Deferred tax on revaluation
17.
Operating activities
Net cash flow from operating activities
38
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued 20.
Litigation and claims There are no litigations and claims against the Company as at 31 December 2015 (2014: Nil). Hence, no provision was made in the financial statements for contingent liabilities in respect of any claim.
21.
Events after the reporting date The directors are of the opinion that there are no events after the reporting date that could have material effect on the Company‘s financial statements that had not been adequately provided or disclosed in these financial statements.
22.
Capital commitments There were no capital commitments as at 31 December 2015 (2014: Nil).
23.
Fair value measurement The following table provides the fair value measurement hierarchy of the Company‘s liabilities. Fair value measurement hierarchy for liabilities as at 31 December 2015:
Date of valuation
Total N'000
Fair value measurement using Quoted prices Significant in active observable Significant markets (Level inputs unobservable 1) (Level 2) inputs (Level 3) N'000 N'000 N'000
Land & Building
31 December 2015
257,000
257,000
Liabilities for which fair values are disclosed Interest bearing l oans and borrowings
31 December 2015
101,005
-
101,005
-
Interest bearing loans and borrowings
31 December 2014
77,362
-
77,362
-
Assets measured at fair value
23.
Fair value measurement - Continued Set out below, is a comparison by class of the carrying amounts and fair value of theCompany‘s financial instruments, other than those with carrying amounts are reasonable approximations of fair values: Carrying amount 2015 N’000 Financial liabilities Interest bearing loans and borrowings
107,337 ======
2014 N’000
107,491 ======
Fair value 2015 N’000
101,005 ======
2014 N’000
77,362 ======
T he management assessed that cash equivalents, trade receivables, trade payables, bank overdrafts and other
current liabilities approximates their carrying amounts largely due to short -term maturities of these instruments.
39
PREMIER PAINTS PLC NOTES TO THE FINANCIAL STATEMENTS - Continued The fair value of the financial assets and liabilities is included at the amount at which the instrument couldbe 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:
Fair values of Land and building were determined using the market comparable method. This means that valuations performed by the valuers are based on active market prices, significantly adjusted for differences in the nature, location or condition of the specific property. As at the revaluation dates, the fair values of the Land and Building is based on valuations performed by accredited independent valuers who have valuation experiences for similar items. Significant unobservable valuation input: Price per square metre:N1,076 Significant increases/(decreases) in estimated price per square metre in isolation would result in a significantly higher (lower) fair value.
The fair values of the Company‘s interest-bearing borrowings and loans are determined by using the DCFmethod using discount rate that reflects the issuer‘s borrowing rate as at the end of the reporting period.
40
PREMIER PAINTS PLC FIVE-YEAR FINANCIAL SUMMARY 2015 N'000 Statement of financial position Assets and liabilities: Property, plant and equipment Deferred tax liability Net current liabilities Interest bearing loans and Borrowings (non-current)
Shareholders‘ fund Issued share capital Share premium Revaluationreserve Retained earnings
Turnover (Loss)/profit before taxation Taxation (Loss)/profit after taxation Basic (loss)/earnings per share (kobo)(24k) Diluted(loss)/earnings per share (kobo)(24k)
2014 = '000 N
31 DECEMBER 2013 N'000
2012 N'000
2011 N'000
269,522 (48,986) (143,565)
203,954 (46,769) (82,683)
214,120 (44,985) (136,061)
223,654 (40,899) (109,321)
232,254 (54,386) (101,751)
(51,098) ---------25,873 ======
(75,645) ---------(1,143) =====
(42,308) ---------(9,234) =====
(61,538) ---------11,896 =====
(76,205) ----------(88) =====
61,500 18,206 181,151 (234,984) -----------25,873 ======
61,500 18,206 124,638 (205,487) ---------(1,143) ======
61,500 18,206 124,638 (213,578) ----------(9,234) ======
61,500 18,206 124,638 (192,448) ----------11,896 ======
37,500 124,638 (162,226) -------------(88) =======
236,439 -------------
365,378 -------------
279,977 -------------
257,886 -------------
182,740 -------------
(50,839) 21,343 ----------(29,497) =====
11,676 (3,585) ---------8,091 =====
(16,002) (5,128) ----------(21,130) ======
(43,035) 12,813 ----------(30,222) =====
(64,792) 3,455 ----------(61,337) =====
7k ===
(17k) ====
(25k) ====
(82k) ====
====
7k ===
(17k) ====
(31k) ====
(82k) ====
====
41
