Japaul - Proshare

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

Contents

Page

Statement of Directors' reponsibilities in relation to the preparation of the consolidated financial statements

1

Independent auditor's report

2

Consolidated statement of profit or loss and other comprehensive income

6

Consolidated statement of financial position

7

Consolidated statement of changes in equity

8

Consolidated statement of cash flows

10

Notes to the consolidated financial statements

11

Other National Disclosures: Statement of value added

62

Financial summary - Group

63

Financial summary - Company

64

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017 Group Note

2017 N'000

Company 2016 N'000

2017 N'000

2016 N'000

Continuing operations Revenue Direct costs

7. 8.

Gross loss

1,900,966 (2,615,311)

3,078,804 (3,873,352)

191,383 (1,172,035)

649,145 (1,729,784)

(714,345)

(794,548)

(980,652)

(1,080,639)

Other income Administrative expenses

10. 11.

659,977 (8,418,039)

2,952,849 (21,384,827)

214,549 (5,214,673)

295,086 (18,903,850)

Operating loss Net finance costs

12.

(8,472,407) (4,609,188)

(19,226,526) (2,118,271)

(5,980,776) (4,609,141)

(19,689,403) (2,062,591)

Loss before taxation Income tax expense

13.

(13,081,595) (127,152)

(21,344,797) (96,778)

(10,589,917) (54,761)

(21,751,994) (8,639)

(13,208,747)

(21,441,575)

(10,644,678)

(21,760,633)

Loss for the year from continued operations Discontinued operation

31.

Loss for the year Loss for the year attributable to: Owners of the parents Non-controlling interest

28. 28.

Other comprehensive (loss)/gain Items that will not be reclassified subsequently to profit or loss Exchange difference on translation of foreign operations and foreign currency denominated loan balances hedged Items that may be reclassified subsequently to profit or loss Actuarial gian on defined benefit pension plans

-

(568,609)

-

-

(13,208,747)

(22,010,184)

(10,644,678)

(21,760,633)

(13,132,982) (75,765)

(22,010,184) -

(10,644,678) -

(21,760,633) -

(13,208,747)

(22,010,184)

(10,644,678)

(21,760,633)

4,028,270

(570,299)

-

-

63,776

33,598

38,809

2,630 (503,893)

11,810 45,408

2,630 41,439

25.2

19,993

28.

Total other comprehensive gain/(loss)

11,810 4,060,073

Total comprehensive loss for the year

(9,148,674)

(22,514,077)

(10,599,270)

(21,719,194)

Fair value gain on available for sale assets

Total comprehensive loss attributable to: Owners of the parents Non-controlling interest

28.

(9,069,591) (79,083) (9,148,674)

(22,976,244) 462,167 (22,514,077)

(10,599,270) (10,599,270)

(21,719,194) (21,719,194)

Loss per share

14.

(210)

(351)

(170)

(347)

The accompanying notes form an integral part of these consolidated financial statements.

6

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017 Issued share capital N'000

Share premium N'000

3,131,351

16,440,679

(14,038,332)

Changes in equity for 2016: Loss for the year

-

-

(22,010,184)

-

-

Other comprehensive income Actuarial loss on defined benefit pension plans Fair value changes on available for sale assets Exchange loss on foreign operations Total comprehensive loss for the year

-

-

(22,010,184)

63,776 63,776

2,630 2,630

(108,132) (108,132)

(462,167) (462,167)

-

-

-

-

(924,334) -

924,334 -

At 31 December 2016

3,131,351

16,440,679

(36,048,516)

(20,188)

1,182

(2,057,468)

(472,616)

(19,025,576)

At 1 January 2017

3,131,351

16,440,679

(36,048,516)

(20,188)

1,182

(2,057,468)

(472,616)

(19,025,576)


-

-

(13,132,982)

-

-

-

(75,765)

(13,208,747)


-

-

(13,132,982)

19,993 19,993

11,810 11,810

4,031,588 4,031,588

(3,318) (79,083)

19,993 11,810 4,028,270 (9,148,674)

-

-

-

-

-

3,131,351

16,440,679

12,992

1,974,120

Group

At 1 January 2016

Loss sustained N'000

Re-measurement reserve N'000 (83,964)

AFS fair value reserve N'000 (1,448)

Foreign exchange reserve N'000 (1,025,002)

-

Noncontrolling interest N'000

Total equity N'000

(934,783)

3,488,501

-

(22,010,184)

63,776 2,630 (570,299) (22,514,077)

Transactions with owners, recorded directly in equity Effect of discountinued operations Transaction costs for equity issue Dividends paid in the year

-

-

Transactions with owners, recorded directly in equity Effect of discountinued operations Transaction costs for equity issue Dividends paid in the year At 31 December 2017

(49,181,498)

8

(195)

(551,699)

(28,174,250)

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017 Issued share capital N'000

Remeasurement reserve N'000

Loss sustained N'000

3,131,351

16,440,679

(11,776,073)


-

-

(21,760,633)

-

-

-

(21,760,633)


-

-

(21,760,633)

38,809 38,809

2,630 2,630

-

38,809 2,630 (21,719,194)

-

-

-

-

-

At 31 December 2016

3,131,351

16,440,679

(33,536,706)

(33,620)

1,182

(669,668)

(14,666,782)

At 1 January 2017

3,131,351

16,440,679

(33,536,706)

(33,620)

1,182

(669,668)

(14,666,782)


-

-

(10,644,678)

-

-

-

(10,644,678)


-

-

(10,644,678)

33,598 33,598

11,810 11,810

-

33,598 11,810 (10,599,270)

-

-

-

-

-

3,131,351

16,440,679

Company

At 1 January 2016

(72,429)

AFS fair value reserve N'000

Foreign exchange reserve N'000

Share premium N'000

(1,448)

(669,668)

Total equity N'000 7,052,412

Transactions with owners, recorded directly in equity Dividends paid in the year

-

Transactions with owners, recorded directly in equity Issue of share capital Transaction costs for equity issue Dividends paid in the year At 31 December 2017

9

(44,181,384)

(22)

12,992

(669,668)

(25,266,052)

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2017 Group Notes Cash flows from operating activities Cash receipts from customers Payment to suppliers and employees

Company 2017 2016 N'000 N'000

2017 N'000

2016 N'000

2,144,557 (6,792,687)

7,130,100 (4,486,130)

1,998,979 (1,388,890)

1,788,847 (906,960)

Cash generated from operations Payment for employee benefit obligations Current income tax paid

25. 13.

(4,648,130) (50,455) (20,110)

2,643,970 (26,272) (149)

610,089 (24,264) -

881,887 (17,705) -

Net cash (used in)/from operating activities

29.

(4,718,695)

2,617,549

585,825

864,182

15.

(288,686)

(394,858)

(288,411)

(384,654)

12

317,297 908

164,455 511,422 6,053

29,519

287,072

Cash flows from investing activities Purchase of property, plant and equipment Proceed on disposal of property, plant and equipment Proceed on disposal of subsidiary Interest received Net cash from/(used in) investing activities Cash flows from financing activities Restructioning cost capitalised Repayment of term loans Proceeds of finance lease facility obtained Repayment of finance lease facility Interest paid

26. 26. 27. 27. 12

Net cash (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange on foreign operation Cash and cash equivalents at 31 December

23.

128,700 5,978

(277,806)

(249,976)

5,530,000 (3,979,213) 380,887 (201,747) (1,398,180)

3,800,000 (3,469,730) 527,396 (1,681,904)

5,530,000 (3,979,213) 380,887 (201,747) (2,052,339)

3,800,000 (3,469,730) 527,396 (1,681,904)

(824,238)

(322,412)

(824,238)

331,747

(5,513,414) 876,586

2,582,209 (696,890)

(516,219) 287,351

945,953 (658,602)

4,778,375 141,547

(1,008,733) 876,586

(228,868)

287,351

The accompanying notes form an integral part of these consolidated financial statements.

10

9,650 955

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 1.

The Entity

1.1

Legal form Japaul Oil & Maritime Services Plc was incorporated on 29 June 1994 as a private limited liability company and commenced business in January 1997. Japaul Oil is in the business of oil and maritime services. The Company's shares were listed on the Nigerian Stock Exchange (NSE). As at year end, the Company has five subsidiaries, namely: Japaul Shipping & Offshore Services Limited Japaul Mines & Products Limited Japaul Dredging Services Limited Japaul Gulf Electro Mechanical LLC Dubai UAE The Registered office address of the company is Japaul House, Plot 8, Dr. Nurudeen Olowopopo Avenue, Central Business District (CBD), Agidingbi, Ikeja, Lagos, Nigeria.

1.2

Principal activities The principal activities of the group are engaging in oil and maritime services in the upstream segment of the oil and gas industry. The group's scope of operations covers the provision of offshore oilfield vessels, dredging activities in oil fields/locations, quarry services, maritime and logistics, oil flowlines/pipeline construction in swamps.

2.

Basis of preparation

2.1

Statement of compliance The group’s consolidated financial statements for the year ended 31 December 2017 have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the IASB. Additional information required by local regulators has been included where appropriate. The consolidated financial statements comprise of the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cashflows and notes to the consolidated financial statements.

2.2

Basis of measurement The financial statements have been prepared in accordance with the going concern principle under the historical cost convention, except for financial assets (liabilities) which were measured at fair value. The liability for defined benefit obligations is recognized as the present value of the defined benefit obligation less the total of the plan assets, plus unrecognized actuarial gains, less unrecognized past service cost and unrecognized actuarial losses while the plan assets for defined benefit obligations are measured at fair value. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates, it also requires management to exercise its judgment in the process of applying the group’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and therefore the group’s financial statements present the financial position and results fairly.

2.3

Going concern considerations The Group had been making persistent losses over the years and at 31 December 2017, the Group made a loss from continuing operation of N13.13 billion, while the Company made a loss of N10.64 billion,and working capital deficiency of N8.8 billion (2016 : N7.5 billion). The Group shareholders' fund had been eroded to the tune of N27.67 billion, while the Company shareholders' fund was eroded to N25.6 billion. The company sufferred substantial losses from its opertions in the year from curtailed activities, which had raised doubt about its ability to continue as a going concern.

11

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Measures put forward by management are: - One (1) of our vessels is returning to NLNG for continuation of existing contract early in the 2nd quarter of 2018. - Another vessels has been engaged by NNPC for a three (3)-year contract effective March 2018. - A 300-man accommodation barge is being fixed for engagement with ExxonMobil through Checkmate Oil & Gas Ltd. The contract is expected to commence by the 2nd quarter of 2018. - Sustaining and expanding our existing Quarrying business. - Diversification into mechanized mining of solid minerals. - Securing a 15 year contract vessel chartering with NLNG by building a new vessel through a shipyard in South Africa. - Securing major shoreline protection dredging contracts / reclamation works presently at commercial stage. - Sustaining and growing our recent efforts in retail sand mining operations at various sites across the country. - Arranging for private equity investment / funding. Upon due consideration of the uncertainties described above, the Directors have a reasonable expectation that the Group have adequate resources to continue in operation for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis in preparing the financial statements as at 31 December 2017. 2.4

Functional and presentation currency This consolidated financial statements are presented in Naira, which is the Group’s presentational currency. The consolidated financial statements are presented in the currency of the primary economic environment in which the Company operates (its functional currency). For the purpose of the consolidated financial statements, the consolidated results and financial position are expressed in Naira, which is the functional currency of the Company, and the presentational currency for the financial statements.

2.5

Basis of consolidation This consolidated financial statements comprise the financial statements of the company and its subsidiaries as at 31 December, 2017. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the group obtains control, and continues to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using the same accounting policies. All inter-group balances, transactions, dividends, unrealised gains on tranasctions within the Group are eliminated on consolidation. Unrealised losses resulting from inter-group transactions are eliminated, but only to the extent that there is no evidence of impairment. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

2.6 2.6.1

Summary of Standards and Interpretations effective for the first time New and effective standards and interpretations The following represent amendments to International Financial Reporting Standards and interpretations which are effective for annual periods beginning on or after 1 January 2017. These amendments and interpretations have been adopted where applicable in preparing the financial statements.

2.6.1.1 Amendments to IFRS 12 Disclosure of Interests in Other Entities This amendment clarifies the scope of the standard by specifying that the dis-clo-sure re-quire-ments in the standard, except for those in para-graphs B10–B16, apply to an entity’s interests listed in paragraph 5 that are classified as held for sale, as held for distribution or as discontinued operations in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

12

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 2.6.1.2 Amendments to IFRS for SMEs Three amendments are however of larger impact: a The standard now allows an option to use the revaluation model for property, plant and equipment as not allowing this option has been identified as the single biggest impediment to adoption of the IFRS for SMEs in some jurisdictions in which SMEs commonly revalue their property, plant and equipment and/or are required by law to revalue property, plant and equipment; b The main recognition and measurement requirements for deferred income tax have been aligned with current requirements in IAS 12 Income Taxes (in developing the IFRS for SMEs, the IASB had already anticipated finalization of its proposed changes to IAS 12, however, these changes were never finalized); andstatements. c The main recognition and measurement requirements for exploration and evaluation assets have been aligned with IFRS 6 Exploration for and Evaluation of Mineral Resources to ensure that the IFRS for SMEs provides the same relief as full IFRSs for these activities. 2.6.1.3 Amendments to IAS 7 Statement of Cash Flows This amendment is effective for annual periods beginning on or after 1 January 2016. This amendment to IAS7 clarify that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. 2.6.1.4 Amendments to IAS 12 Income Taxes Amends to recog-ni-tion of deferred tax assets for unrealized losses, IAS 12 Income Taxes clarify the following aspects: • Unrealized 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 utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type. 2.7

2.7.1

2.7.2

Standards and interpretations issued/amended but not yet effective. At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations were in issue, but not yet effective: This includes: Amendments effective from annual periods beginning on or after 1 January 2018 Amendments to IFRS 2 Share-based Payment Amends IFRS 2 Share-based Payment to clarify the standard in relation to the accounting for cash settled share-based payment transactions that include a performance condition, the classification of share-based payment transactions with net settlement features, and the accounting for modifications of share-based payment transactions from cash-settled to equity-settled. Amendments to IFRS 4 Insurance Contracts Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4: a) An option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so called overlay approach; b) An optional temporary exemption from applying IFRS 9 for entities whose pre-dom-i-nant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach. The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied. 13

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 2.7.3

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 - Recognize revenue when (or as) the entity satisfies a performance obligation. Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced. Amends IFRS 15 Revenue from Contracts with Customers also clarify three aspects of the standard (identifying performance obligations, principal versus agent considerations, and licensing) and to provide some transition relief for modified contracts and completed contracts.

2.7.4

Amendments to IFRS 9 Financial Instruments A finalized version of IFRS 9 which contains accounting requirements for financial instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas: • Classification and measurement. Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39; however there are differences in the requirements applying to the measurement of an entity's own credit risk. • Impairment. The 2014 version of IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognized. • Hedge accounting. Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and nonfinancial risk exposures. • Derecognition. The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39.

2.7.5

Amendments to IAS 40 Investment Property Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use. The list of examples of evidence in paragraph 57(a) – (d) is now presented as a non-exhaustive list of examples instead of the previous exhaustive list.

2.7.6

Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards Amendments’ resulting from Annual Improvements 2014–2016 Cycle, the amendment deletes the shortterm exemptions in paragraphs E3–E7 of IFRS 1, because they have now served their intended purpose.

2.7.7

Amendments to IAS 28 Investments in Associates and Joint Ventures This amendment Clarifies that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment by investment basis, upon initial recognition.

14

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 2.8 2.8.1

Amendments effective from annual periods beginning on or after 1 January 2019 IFRS 16 'Leases' Effective for an annual periods beginning on or after 1 January 2019 - New standard that introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows applying IAS 7 Statement of Cash Flows; - IFRS 16 contains expanded disclosure requirements for lessees. Lessees will need to apply judgement in deciding upon the information to disclose to meet the objective of providing a basis for users of financial statements to assess the effect that lease; - IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently; - IFRS 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor’s risk exposure, particularly to residual value risk; - IFRS 16 supersedes the following Standards and Interpretations: a) IAS 17 Leases; b) IFRIC 4 Determining whether an Arrangement contains a Lease; c) SIC-15 Operating Leases—Incentives; and d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

2.8.2

New standards, amendments and interpretations issued but without an effective date At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations were in issue, but without an effective: This includes: a Amendments to IFRS 9 Financial Instruments IFRS 9 introduces new requirements for classifying and measuring financial assets, as follows: - Debt instruments meeting both a 'business model' test and a 'cash flow characteristics' test are measured at amortised cost (the use of fair value is optional in some limited circumstances). - Investments in equity instruments can be designated as 'fair value through other comprehensive income' with only dividends being recognized in profit or loss. - All other instruments (including all derivatives) are measured at fair value with changes recognized in the profit or loss. - The concept of 'embedded derivatives' does not apply to financial assets within the scope of the Standard and the entire instrument must be classified and measured in accordance with the above guidelines. Also a revised version of IFRS 9 incorporating requirements for the classification and measurement of financial liabilities, and carrying over the existing derecognition requirements from IAS 39 Financial Instruments: Recognition and Measurement. The revised financial liability provisions maintain the existing amortised cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at fair value through profit or loss in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss.

15

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 b Amendments to IFRS 10 and IAS 28 Consolidated Financial Statements and Investments in Associates and Joint Ventures Amends IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associ-ates 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 recognized 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 a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves. 3.

Summary of significant accounting policies The significant accounting policies set out below have been applied in preparing the financial statements and in , unless otherwise indicated.

3.1

Investments in associates An associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The investment in an associate is initially recognized at cost and adjusted for any impairment losses in subsequent periods in separate financial statements. If the group’s share of losses of an associate exceeds its interest in the associate, the group discontinues recognizing its share of further losses.

3.2

Investment in subsidiaries Investments in subsidiaries are carried at cost. The consolidated financial statements include the financial statements of the holding company and its subsidiaries. A subsidiary is one in which the group has controlling interest and controls the operation/decision making of the subsidiary.

3.3

Intangible assets

3.3.1

Intangible assets acquired separately Intangible assets acquired separately are shown at historical cost less accumulated amortization and impairment losses. Amortization is charged to profit or loss on a straight-line basis over the estimated useful lives of the intangible asset unless such lives are indefinite. These charges are included in other expenses in profit or loss. Intangible assets with an indefinite useful life are tested for impairment annually. Amortization periods and methods are reviewed annually and adjusted if appropriate. Computer software

% 20

3.4

Property, plant and equipment

3.4.1

Initial recognition All property, plant and equipment assets are stated at cost less accumulated depreciation less accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

16

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 3.4.2

Subsequent costs Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

3.4.3

Depreciation of property, plant and equipment Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Land Buildings Furniture and fittings Computer equipment Motor vehicles Office equipment Marine equipment Plant and machinery Survey equipment Heavy duty vehicles

% 2 25 25 25 25 5 10 25 162/3

The assets’ residual values and useful lives are reviewed at the end of each reporting period and adjusted if appropriate. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable value. The group reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. 3.4.4

Derecognition Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, these are included in the income statement under operating income. When revalued assets are sold, the amounts included in the revaluation surplus are transferred to retained earnings.

3.4.5

Reclassification When the use of a property changes from owner-occupier to investment property, the property is remeasured to fair value and reclassified as investment property. Any gain arising on re-measurement is recognized in the income statement to the extent that it reverses a previous impairment loss on the specific property, with any remaining recognized in other comprehensive income and presented in the revaluation reserve in equity. Any loss is recognized immediately in the income statement.

3.5

Discontinued operations and non-current assets held for sale Discontinued operations and non-current assets held for sale are measured at the lower of carrying amount and fair value less costs to sell. Discontinued operations and non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This is the case, when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and the sale is considered to be highly probable. A sale is considered to be highly probable if the appropriate level of management is committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan has been initiated. Furthermore, the asset (or disposal group) has been actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale is expected to qualify for recognition as a completed sale within one-year from the date that it is classified as held for sale.

17

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 3.6

Inventories Inventories are valued at the lower of cost and net realisable value on a first in first out basis. The cost of inventories includes expenditures incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventory and work in progress, cost includes an appropriate share of production overheads based on normal activity levels. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling.

3.7

Impairment of non-financial assets The group assesses annually whether there is any indication that any of its assets have been impaired. If such indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where it is impossible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the smallest cash-generating unit to which the asset is allocated. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount an impairment loss is recognized immediately in profit or loss, unless the asset is carried at a revalued amount, in which case the impairment loss is recognized as revaluation decrease.

3.8

Financial instruments Financial instruments carried in the statement of financial position includes available for sale assets, loans and receivables, cash and cash equivalents and borrowings. Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. The various classifications of financial instruments, their measurement subsequent to initial recognition, reclassifications and derecognition are stated as follows:

3.8.1

Financial assets The group classifies its financial assets into the following categories: at fair value through profit or loss, loans and receivables, held to maturity assets and available for sale assets. The classification is determined by management at initial recognition and depends on the purpose for which the investments were acquired. a) Classification Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified into the ‘financial assets at fair value through profit or loss’ category at inception if acquired principally for the purpose of selling in the short term, if it forms part of a portfolio of financial assets in which there is evidence of short-term profit-taking, or if so designated by management. Derivatives are also classified as held for trading unless they are designated as hedges. Financial assets designated as at fair value through profit or loss at inception are those that are: Held in internal funds to match insurance and investment contracts liabilities that are linked to the changes in fair value of these assets. The designation of these assets to be at fair value through profit or loss eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. Information about these financial assets is provided internally on a fair value basis to the group’s key management personnel. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the group intends to sell in the short term or that it has designated as at fair value through profit or loss or available for sale. Receivables arising from insurance contracts are also classified in this category and are reviewed for impairment as part of the impairment review of loans and receivables.

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JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Held-to-maturity financial assets Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group’s management has the positive intention and ability to hold to maturity, other than: • those that the group upon initial recognition designates as at fair value through profit or loss; • those that the group designates as available for sale; and • those that meet the definition of loans and receivables. Interests on held-to-maturity investments are included in the income statement and are reported as ‘finance income’. In the case of an impairment, it is been reported as a deduction from the carrying value of the investment and recognised in the income statement as ‘Net gains/(losses) on investment securities’. Available-for-sale financial assets Available-for-sale investments are financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. b) Recognition and measurement Regular-way purchases and sales of financial assets are recognized on the trade date – the date on which the group commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus, in the case of all financial assets not carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from them have expired or where they have been transferred and the group has also transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to- maturity financial assets are carried at amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the group’s right to receive payments is established. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in other comprehensive income are included in the income statement as net realised gains on financial assets. Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement. Dividends on available-for-sale equity instruments are recognised in the income statement when the group’s right to receive payments is established; both are included in the investment income line. For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations. This includes listed equity securities and quoted debt instruments on major exchanges. The quoted market price used for financial assets held by the company is the current bid price. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, Industry Company, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. 19

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 For example, a market is inactive when there is a wide bid-offer spread or significant increase in the bidoffer spread or there are few recent transactions. c) Reclassifications Financial assets other than loans and receivables are permitted to be reclassified out of the held-fortrading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories, if the group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively. 3.8.2

Financial liabilities The group's financial liabilities in the statement of financial position includes borrowings and finance lease obligations. These financial liabilities are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. Financial liabilities are included in current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Interest bearing borrowings Interest bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

3.8.3

Impairment of financial assets a) Financial assets carried at amortised cost The group assesses at each end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the group about the following events: • significant financial difficulty of the issuer or debtor; • a breach of contract, such as a default or delinquency in payments; • it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation; • the disappearance of an active market for that financial asset because of financial difficulties; or observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including: - adverse changes in the payment status of issuers or debtors in the group; or - national or local economic conditions that correlate with defaults on the assets in the group. The group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. If the group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

20

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 If there is objective evidence that an impairment loss has been incurred on loans and receivables or heldto-maturity investments carried at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. If a held-to-maturity investment or a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price. For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e., on the basis of the group’s grading process that considers asset type, industry, geographical location, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows of such assets by being indicative of the issuer’s ability to pay all amounts due under the contractual terms of the debt instrument being evaluated. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as improved credit rating), the previously recognized impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement. b) Assets classified as available for sale The group assesses at each date of the statement of financial position whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is an objective evidence of impairment resulting in the recognition of an impairment loss. In this respect, a decline of 20% or more is regarded as significant, and a period of 12 months or longer is considered to be prolonged. If any such quantitative evidence exists for available-for-sale financial assets, the asset is considered for impairment, taking qualitative evidence into account. The cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss) is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. If in a subsequent period the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the income statement. 3.8.4

Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

3.9

Trade and other receivables Trade receivables are amount due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets, if not they are presented as non-current assets. Where the potential impact of discounting future cash receipts over the short credit period is not considered to be material, trade receivables are stated at their original invoiced value. These receivables are reduced by appropriate allowances for estimated irrecoverable amounts.

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Cash and cash equivalents Cash equivalents comprises of short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. An investment with a maturity of three months or less is normally classified as being short-term. For the purpose of presenting the statement of cash flows, cash and cash equivalents are shown net of bank overdrafts.

3.11

Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

3.11.1 As Lessor Finance leases When assets are held subject to a finance lease, the related asset is derecognised and the present value of the lease payments (discounted at the interest rate implicit in the lease) is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method (before tax), which reflects a constant periodic rate of return. Operating leases Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Any balloon payments and rent free periods are taken into account when determining the straightline charge. 3.11.2 As Lessee Finance leases Assets held under finance leases are recognised as assets of the group at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments. The related liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between interest expenses and capital redemption of the liability, Interest is recognised immediately in profit or loss, unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets. Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating leases Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except if another systematic basis is more representative of the time pattern in which economic benefits will flow to the group. Contingent rentals arising under operating leases are recognised in the period in which they are incurred. 3.12

Trade and other payables Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due with one year or less. If not, they are presented as non-current liabilities. Other payables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material.

3.13

Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

22

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability. 3.14

Employee benefits

3.14.1 Defined contribution pension plan The group runs a defined contribution plan. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Under the defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. 3.14.2 Defined benefit pension plan A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The group’s net obligation in respect of defined benefit plan is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value. Any recognized past service costs and fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the group’s obligation and that are denominated in the currency in which the benefit are expected to be paid. The calculation is performed annually by a qualified actuary using the projected credit unit method. The group recognizes all actuarial gains or losses arising from defined benefit plans immediately in other comprehensive income and all expenses related to defined benefit plans in personnel expenses in profit or loss. The group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on settlement or curtailment comprises any resulting change in the fair value of the plan asset, any change in the present value of defined benefit obligation, any related actuarial gains or losses and past services cost that had not previously been recognised.

3.14.3 Termination benefit Termination benefit are recognized as an expense when the group is demonstrably committed without realistic possible withdrawal , to a formal detail plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefit for voluntary redundancies is recognized as expenses if the group has made an offer of voluntary redundancy and it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If the benefits are payable more than 12 months after the reporting date, then they are discounted to their present value. 3.13.4 Short term employee benefits These are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short term cash bonus or profit sharing plans if the group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

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Taxation

3.15.1 Current income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the group’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate. 3.15.2 Deferred income tax Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit (loss), it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the group controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities, where there is an intention to settle the balances on a net basis. The tax effects of carry-forwards of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised. Deferred tax related to fair value re-measurement of available-for-sale investments and cash flow hedges, which are charged or credited directly in other comprehensive income, is also credited or charged directly to other comprehensive income and subsequently recognised in the income statement together with the deferred gain or loss. 3.16

Provisions Provisions are recognized when the group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

3.16.1 Warranty A provision for warranty is recognized when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated possibilities.

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JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 3.16.2 Restructuring A provision for restructuring is recognized when the group has approved a formal detail restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for. 3.16.3 Onerous contract Provision for onerous contracts is recognized when the expected benefit to be derived by the group from a contract are lower than the unavoidable costs of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected costs of terminating the contract and the expected net cost of continuing with the contract. 3.17

Equity instruments Equity instruments issued by the group are recorded at the value of proceeds received, net of costs directly attributable to the issue of the instruments. Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax. Where any group purchases the group’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the group’s equity holders. Where such shares are subsequently sold, reissued or otherwise disposed of, any consideration received is included in equity attributable to the group’s equity holders, net of any directly attributable incremental transaction costs and the related income tax effects.

3.18

Compound instruments At the issue date, the fair value of the liability component of a compound instrument is estimated using the market interest rate for a similar non-convertible instrument. This amount is recorded as a liability at amortised cost using the effective interest method until extinguished upon conversion or at the instrument’s redemption date. The equity component is determined as the difference of the amount of the liability component from the fair value of the instrument. This is recognised in equity, net of income tax effects, and is not subsequently remeasured.

3.19

Revenue recognition

3.19.1 Sale of goods or services Revenue from the sale of goods in the ordinary course of business is measured at the fair value of consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when persuasive evidence persists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of consideration is probable, the associated cost and possible return of goods can be estimated reliably, there is no continuing involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discount will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized. 3.19.2 Investment return Investment return includes dividend income, interest and rent receivable, movement in amortized cost on debt securities and other loan and receivables, realized gains and losses, and unrealized gains and losses on fair value of the financial assets. 3.19.3 Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assets carrying amount. 3.19.4 Rental income Rental income is recognized on an accrued basis.

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JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 3.19.5 Realised gains and losses The realised gains or losses on the disposal of an asset is the difference between proceeds received, net of transaction costs and its original or amortised costs as appropriate. 3.20

Foreign currencies

3.20.1 Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of the entities within the group. Monetary items denominated in foreign currencies are retranslated at the exchange rates applying at the reporting date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise except for: • Exchange differences on foreign currency borrowings which are regarded as adjustments to interest costs , where those interest costs qualify for capitalization to assets under construction; • Exchange differences on transactions entered into to hedge foreign currency risks; • Exchange differences on loans to or form a foreign operation for which settlement is neither planned nor likely to occur and therefore forms part of the net investment in the foreign operation, which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment. 3.20.2 Foreign operations The functional currency of the parent Company and the presentation currency of the financial statements is Nigerian Naira. The assets and liabilities of the Group’s foreign operations are translated to Naira using exchange rates at the year end. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly during that year, in which case the exchange rate on transaction date is used. Goodwill acquired in business combinations of foreign operations are treated as assets and liabilities of that operation and translated at the closing rate. Exchange differences are recognised in other comprehensive income and accumulated in a separate category of equity. 3.21

Segment reporting The Group‘s operating segments are organized by the nature of the operations and further by geographic location into geographical regions; local and foreign to highlight the contributions of foreign operations to the Group. Due to the nature of the Group, Japaul Oil’s Executive Committee regularly reviews operating activity on a number of bases, including by geographical region, customer Group and business activity by geographical region. A segment is a distinguishable component of the Group that is engaged in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risk and rewards that are different from those of other segments. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Group‘s operating segments were determined in a manner consistent with the internal reporting provided to the Executive Committee, which represents the chief operating decision-maker, as this is the information CODM uses in order to make decisions about allocating resources and assessing performance. All transactions between business segments are conducted on an arm‘s length basis, with intrasegment revenue and costs being eliminated in Head office. Income and expenses directly associated with each segment are included in determining business segment performance.

26


Critical accounting estimates and judgement The group makes estimate and assumption about the future that affects the reported amounts of assets and liabilities. Estimates and judgment are continually evaluated and based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumption. The effect of a change in an accounting estimate is recognized prospectively by including it in the comprehensive income in the period of the change, if the change affects that period only, or in the period of change and future period, if the change affects both. The estimates and assumptions that have a significant risks of causing material adjustment to the carrying amount of asset and liabilities in the next financial statements are discussed below: a) Defined benefit obligation The present value of defined benefit obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the defined benefit obligation include the discount rate, the group determines the discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimate future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the group considers the interest rates of high- quality corporate bond that are denominated in the currency in which the benefits will be paid, and have terms to maturity approximating the terms of the defined benefit obligation. b) Impairment of available-for-sale equity financial assets The group determines that available-for-sale equity financial assets are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the group evaluates among other factors, the normal volatility in share price, the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flow. Impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology, and financing and operational cash flows. The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases the fair values are estimated from observable data in respect of similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on appropriate assumptions. Where valuation techniques (for example, models) are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of those that sourced them. To the extent practical, models use only observable data; however, areas such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments. c) Impairment of property, plant and equipment and intangible assets Management is required to make judgement concerning the cause, timing and amount of impairment. In the identification of impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate impairment exist. d) Others are: i. Residual values of items of property, plant and equipment; ii. Estimated useful lives of item of property, plant and equipment; iii. Impairment of doubtful receivables.

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Risk management framework The primary objective of the group's risk management framework is to protect their stakeholders from events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities. Management recognises the critical importance of having efficient and effective risk management systems in place. The group has established a risk management function with clear terms of reference from the board of Directors, its committees and the executive management committees. This is supplemented with a clear organizational structure with documented delegated authorities and responsibilities from the board of directors to executive management committees and senior managers. Lastly, the Internal Audit unit provides independent and objective assurance on the robustness of the risk management framework, and the appropriateness and effectiveness. The group's principal significant risks are assessed and mitigated under three broad headings: Strategic risks – This specifically focused on the economic environment, the products offered and market. The strategic risks arised from a group's ability to make appropriate decisions or implement appropriate business plans, strategies, decision making , resource allocation and its inablity to adapt to changes in its business environment. Operational risks – These are risks associated with inadequate or failed internal processes, people and systems, or from external events. Financial risks – Risk associated with the financial operation of the group, including underwriting for appropriate pricing of plans, provider payments, operational expenses, capital management, investments, liquidity and credit. The board of directors approves the group’s risk management policies and meets regularly to approve any commercial, regulatory and organizational requirements of such policies. These policies define the group’s identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of assets, align underwriting to the corporate goals, and specify reporting requirements to meet.

5.1

Strategic risks The following capital management objectives, policies and approach to managing the risks which affect its capital position are adopted by the group. i. To maintain the required level of financial stability thereby providing a degree of security to clients and plan members. ii. To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the requirements of its capital providers and of its shareholders. iii. To retain financial flexibility by maintaining strong liquidity. iv. To align the profile of assets and liabilities taking account of risks inherent in the business and regulatory requirements. v. To maintain financial strength to support new business growth and to satisfy the requirements of the regulators and stakeholders. Approach to capital management The group seeks to optimise the structure and sources of capital to ensure that it consistently maximises returns to the shareholders and customers. The group's approach to managing capital involves managing assets, liabilities and risks in a coordinated way, assessing shortfalls between reported and required capital level on a regular basis. The group's primary source of capital in 2016 is funding from the banks and foreign lenders. There has been no significant changes to its capital structure during the past year from previous years.

28


Operational risks Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the group’s processes, personnel, technology and infrastructure, and from external factors such as provider tariffs, medical costs, premium review for adequacy, prompt premium payments and collections. Others are legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the group’s operations. The group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each unit. This responsibility is supported by the development of operational standards for the management of operational risk in the following areas: • requirments for appropriate segregation of duties, including independent authorisation of transactions. • requirements for the reconciliation and monitoing of transactions. • compliance with regulatory and other legal requirements. • documentataion of controls and procedures. • training and professional development. • ethical and business standards.

5.3

Financial risks The group has exposure to the following risks from financial instruments: • Credit risks • Liquidity risks • Market risks a Credit risks Credit risks arise from a customer payment delays or outright default; inability to fully meet contractual obligations to providers. Exposure to this risk results from financial transactions with a customer. The group has policies in place to mitigate its credit risks. The group’s Enterprise risk management policy sets out the assessment and determination of what constitutes credit risk for the group. Compliance with the policy is monitored and exposures and breaches are reported to the group’s management. The policy is regularly reviewed for pertinence and for changes in the risk environment. Exposure to risk The carrying amount of the group's financial instruments represents the maximum exposure to credit risk. Group 2017 N'000 Financial assets Available for sale assets Trade and other receivables Cash and cash equivalents

Company 2016 N'000

2017 N'000

2016 N'000

26,947 1,863,725 141,547

15,137 2,393,050 876,586

26,947 8,431,327 (228,868)

15,137 17,306,935 287,351

2,032,219

3,284,773

8,229,406

17,609,423

The debtors' age analysis is also evaluated on a regular basis for potential doubtful debts, where this is considered necessary. The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

29

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The group allows an average debtors period of 45 days after invoice date. It is the group's policy to assess debtors for recoverability on an individual basis and to make provision where it is considered necessary. In assessing recoverability the group takes into account any indicators of impairment up until the reporting date. The application of this policy generally results in debts between 46 and 60 days not being provided for unless individual circumstances indicate that a debt is impaired. Whilst 60% of debtors balances over 365 days are provided for. The largest individual debtor corresponds to 51% of the total balance (2016: 21%) . Historically these debtors have always paid balances when due, unless the balance or the quality of goods or services delivered is disputed. No debtors’ balances have been renegotiated during the year or in the prior year. b Liquidity risks Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. The group employs policies and procedures to mitigate the it’s exposure to liquidity risk. c Market risks Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices (price risk). Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The group’s principal transactions are carried out in naira and dollar and its financial assets are primarily denominated in the Naira. Although it has foreign operations. its exposure to foreign exchange risk is minimal as it also has liabilities denominated in foreign currencies to help mitigate risks that may arise. 6.

Capital management In the management of its capital, the group has certain objectives which it intends to achieve, these include: • the safeguarding of the group's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and the provision of an adequate return to shareholders by pricing products and services commensurately with the level of risk. • consistency with others in the industry, the group monitors capital on the basis of the debt-to-capital ratio. This ratio is calculated as net debt ÷ capital: • net debt is calculated as total liabilities (as shown in the statement of financial position) less cash and cash equivalents. Capital comprises all components of equity (i.e. ordinary shares, share premium, retained earnings, and other reserves). The debt-to-capital ratios at 31 December 2017 and at 31 December 2016 were as follows: Group

Company

2017 N'000

2016 N'000

Total liabilities Less: Cash and cash equivalents

56,175,815 141,547

48,973,738 876,586

54,320,231 (228,868)

53,694,793 287,351

Net debt

56,034,268

48,097,152

54,549,099

53,407,442

(27,622,551)

(18,552,960)

(25,266,052)

(14,666,782)

-2.03

-2.59

-2.16

-3.64

Total equity Debt-to-capital ratio

2017 N'000

2016 N'000

The increase in the debt-to-capital ratio during 2017 resulted primarily from the increase in borrowings during the year by the Group.

30


Financial instruments and fair values As explained in Note 3.7, financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items measured at fair value, whether changes in fair value are recognized in the statement of income or comprehensive income. These categories are: fair value through profit or loss; loans and receivables; available for sale assets; and, for liabilities, amortized cost or fair value through profit or loss.

6.1

The fair value of financial assets together with the carrying amounts shown in the statement of financial position are as follows: Financial assets Fair value through profit or Available loss for sale N'000 N'000

Financial liabilities Fair value through Amortised profit or cost loss N'000 N'000

Total carrying amount N'000

Fair value N'000

At 31 December 2017 Assets Available for sale assets Trade and other receivables Cash and cash equivalents

1,863,725 902,346 2,766,072

26,947 26,947

-

-

-

5,753,290 47,416,680 10,968,027

2,393,050 898,531 3,291,581

-

Liabilities Trade and other payables Loans and borrowings Finance lease facility Bank overdrafts

-

26,947 1,863,725 902,346 2,793,018

26,947 1,863,725 902,346 2,793,018

64,137,997

760,799 760,799

5,753,290 47,416,680 10,968,027 760,799 64,898,796

5,753,290 47,416,680 10,968,027 760,799 64,898,796

15,137 15,137

-

-

15,137 2,393,050 898,531 3,306,717

15,137 2,393,050 898,531 3,306,717

-

5,997,890 31,736,414 9,593,102

21,945 21,945

5,997,890 31,736,414 9,593,102 21,945 47,349,351

5,997,890 31,736,414 9,593,102 21,945 47,349,351

At 31 December 2016 Assets Available for sale assets Trade and other receivables Cash and cash equivalents

Liabilities Trade and other payables Loans and borrowings Finance lease facility Bank overdrafts

47,327,406

Due within 1 year N'000 6.2

Due within 1-5 years N'000

Total N'000

Maturity profile of financial liabilities

6.2.1 Group - Maturity profile of financial liabilities 31 December 2017 Bank overdrafts Trade and other payables Finance lease facility Bank term loans

760,799 5,753,290 4,167,850 748,334 11,430,273

31

6,800,177 36,668,346 43,468,523

760,799 5,753,290 10,968,027 37,416,680 54,898,796

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Due within 1 year N'000

Due within 1-5 years N'000

Total N'000

6.2.1 Group - Maturity profile of financial liabilities 31 December 2016 Bank overdrafts Trade and other payables Finance lease facility Bank term loans

21,945 5,997,890 3,645,379 634,728 10,299,942

5,947,723 31,101,686 37,049,409

21,945 5,997,890 9,593,102 31,736,414 47,349,351

4,580,599 4,167,850 748,334 9,496,783

6,800,177 36,668,346 43,468,523

4,580,599 10,968,027 37,416,680 52,965,306

11,097,554 3,645,379 634,728 15,377,661

5,947,723 31,101,686 37,049,409

11,097,554 9,593,102 31,736,414 52,427,070

6.2.2 Company - Maturity profile of financial liabilities 31 December 2017 Trade and other payables Finance lease obligation Bank term loans

31 December 2016 Trade and other payables Finance lease obligation Bank term loans

6.3

Fair valuation methods and assumptions Cash and cash equivalents, trade receivables, trade payable and short term borrowings are assumed to approximate their carrying amounts due to the short-term nature of these financial instruments. The fair value of publicly traded financial instruments is generally based on quoted market prices, with unrealised gains in a separate component of equity at the end of the reporting year.

6.4

Fair value measurements recognised in the statement of financial position Financial instruments that are measured subsequent to initial recognition at fair value, are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: for equity securities not listed on an active market and for which observable market data exist that the Group can use in order to estimate the fair value; Level 3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The group maintains quoted investments in Access Bank Plc. valued at N26,947,404 (2016 : N15,136,963) which are categorised as level 1, because the securities are listed on the floor of a recognised Exchange. There are no financial instruments in the level 2 and 3 categories for the year.

7.

Operating Segment The Group has five reportable segments, as described below, which are the Group's strategic business units. The strategic business units offer different service, and are managed separately. For each of the strategic business units, the Group's CEO reviews internal management reports on at least monthly basis. The following summary describes the operations in each of the Group's reportable segments. Segment Vessels' rental Chippings and crushing Dredging Electrical installations and constructions Equipment rental

Description This segment is responsible focus on carrying out Marine and Offshore Operations. This segment carries out Quarry, crushing and haulage services This segment is into dredging and sand mining services This segment is responsible for construction and maintenance of electromechanical This segment rents equipments

The accounting policies of the reportable segments are the same as described in notes 3.21. Information regarding the results of each reportable segment is included below.

32

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 7.

8.1

Direct Costs Vessels' crew salaries and wages and maintenance Chippings and crushing Dredging Electrical installations and constructions Equipment repairs and maintenance Roads Contructions Other direct costs Depreciation (Note 8.1)

Depreciation Owned plant and equipment Leased equipment

Gross loss

738,303 257,613 177,366 259,004 14,017 454,663

1,315,965 406,371 384,764 3,498 968,206

177,366 14,017 -

260,883 384,764 3,498 -

1,900,966

3,078,804

191,383

649,145

352,784 30,421 138,596 199,959 255,579 182,766 35,588 1,419,618

991,080 38,158 160,536 262,546 1,005,716 1,415,316

18,197 138,496 109,336 906,006

621,127 160,536 57,464 890,657

2,615,311

3,873,352

1,172,035

1,729,784

1,142,640 276,978

1,144,276 271,040

629,028 276,978

619,617 271,040

1,419,618

1,415,316

906,006

890,657

(714,345)

Gross loss margin 8.2

Company 2017 2016 N'000 N'000

Revenue The following is an analysis of the Company's and Group's revenue for the year from continuing operations (excluding other incomes).

7.1.1 Categories of revenue: Vessels' rental Chippings and crushing Dredging Electrical installations and constructions Equipment rental Roads Contructions

8.

2016 N'000

-38%

(794,548) -26%

The Company makes use of vessel hire services from Afrikdelta Marine Services Ltd

33

(980,652) -512%

(1,080,639) -166%


Operational segment The group has four reportable segments. These segments engage in the provision of the following services: Dredging, Quarry, Offshore and Construction services and their results for the year as well as the comparative year are reported as follows:

Dredging Services N’000

Offshore Services N’000

Quarry Services N’000

31-Dec-17 Construction Services N’000

Consolidation adjustments N’000

Total N’000

9.1 Statement of profit or loss and other comprehensive income: Revenue: External revenue Inter-segment revenue

191,383 -

738,304 -

712,276 -

259,003 -

-

1,900,966 -

Total Segment revenue

191,383

738,304

712,276

259,003

-

1,900,966

Direct cost Other income Operating (loss)/profit

(483,319) 214,549 (6,278,551)

(1,305,899) 150,910 (4,273,233)

(626,135) 285,787 194,359

(199,958) 8,731 (148,559)

(2,575,611)

(2,615,311) 659,977 (13,081,595)

Reportable segment (loss)/profit before income tax Taxation

(6,278,551) -

(4,273,233) -

194,359 -

(148,559) -

(2,575,611) -

(13,081,595) -

Reportable segment (loss)/profit after income tax

(6,278,551)

(4,273,233)

194,359

(148,559)

(2,575,611)

(13,081,595)

(18,447)

(3,350)

Depreciation and amortisation 9.2 Statement of financial position Operating assets Operating liabilities

(22,783)

(682)

-

(45,262)

15,311,242

18,115,183

3,052,372

8,597,553

(17,074,785)

28,001,565

8,972,599

49,400,061

5,499,943

9,679,314

(17,376,102)

56,175,815

34

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

Dredging Services N’000

Offshore Services N’000

Quarry Services N’000

31-Dec-16 Construction Services N’000

Consolidation adjustments N’000

Total N’000

9.3 Statement of profit or loss and other comprehensive income: Revenue: External revenue Inter-segment revenue

97,808 -

1,606,419 -

1,374,577 -

-

-

3,078,804 -


97,808

1,606,419

1,374,577

-

-

3,078,804

Direct cost Other income Operating loss

(389,058) 162,850 (17,804,318)

(1,955,475) 133,839 (3,128,254)

(1,528,819) 352,560 493,385

-

2,303,600 (905,610)

(3,873,352) 2,952,849 (21,344,797)

Reportable segment loss before income tax Taxation

(18,029,296) (8,639)

(1,173,017) (86,408)

(1,024,871) (1,731)

-

(1,117,613) -

(21,344,797) (96,778)

Reportable segment loss after income tax

(18,029,296)

(1,173,017)

(1,026,602)

-

(1,212,660)

(21,441,575)

(26,769)

(3,453)

(22,690)

-

Depreciation and amortisation 9.4 Statement of financial position Operating assets Operating liabilities

-

(52,913)

7,245,035

36,347,578

3,192,973

4,127,283

(20,964,706)

29,948,163

7,223,747

13,369,095

3,192,502

5,053,978

(837,757)

28,001,565

35


Geographical segment The group operates both within and outside Nigeria and the results based on each geographical location are as follows:

Within Nigeria N’000

31-Dec-17 Outside Consolidation Nigeria adjustments N’000 N’000

Revenue: External revenue Inter-segment revenue

1,641,963 -

259,004 -

-

1,900,968 -

3,078,804 -

-

-

3,078,804 -


1,641,963

259,004

-

1,900,968

3,078,804

-

-

3,078,804

(2,415,352) 654,839 (8,323,848)

(199,959) 5,138 (148,559)

-

(2,615,311) 659,977 (8,472,407)

(3,873,351) 2,952,849 (19,226,527)

-

Reportable segment loss before income tax Taxation

(12,933,036) (127,152)

(148,559) -

-

(13,081,595) (127,152)

(21,344,798) (96,777)

-

-

(17,068,225) (96,777)

Reportable segment loss after income tax

(13,060,188)

(148,559)

-

(13,208,747)

(21,441,575)

-

-

(17,165,002)

Within Nigeria N’000

Total N’000

31-Dec-16 Outside Consolidation Nigeria adjustments N’000 N’000

Total N’000

9.4.1 Statement of profit or loss and other comprehensive income:

Direct cost Other income Operating loss

Depreciation and amortisation 9.4.2 Statement of financial position Operating assets Operating liabilities

(3,873,351) 2,952,849 (19,226,527)

45,261

-

-

-

52,913

-

-

52,913

28,001,565

-

-

28,001,565

29,948,160

-

-

29,948,160

56,175,815

-

-

56,175,815

48,973,741

-

-

48,973,741

36


2016 N'000

2017 N'000

Company 2016 N'000

Other income Rent received from property Provision and accruals no longer required (Note 10.1) Profit on disposal of property, plant and equipment (Note 11.3) Sundry income (Note 10.2)

60,254 348,379

47,560 2,690,559

60,254 9,839

47,560 137,197

15,133 236,211

214,730

2,965 141,491

110,329

659,977

2,952,849

214,549

295,086

10.1 This represents provisions and accrual no longer required after due reconciliation with Vendors. 10.2 Included in the amount was N14 million recognised as insurance claims on Dredger 12 and N118 million income on disposal on Invesment in Emirate Gabbro Quarry. Group

11.

Company 2016 N'000

2017 N'000

2016 N'000

2017 N'000

638,364 47,953 23,901 84,629 12,994 37,085 49,770 21,535 4,480 16,167 187,484 10,000 12,769 120,446 5,562 22,967 45,261

589,444 109,310 100,585 64,273 42,779 56,492 48,012 19,076 4,818 20,434 28,218 12,500 14,209 81,715 5,612 25,257 52,915

280,651 47,953 20,864 40,174 9,407 29,150 45,855 14,124 4,095 11,863 173,328 10,000 12,769 101,331 5,498 16,482 18,447

2,655,431 351,249 4,065,968 4,024

287,276 2,303,600 453,845 966,701 13,279,551 2,813,370 4,835

362,444 4,008,287 1,951

187,470 2,303,600 408,379 129,218 14,996,680 4,657

8,418,039

21,384,827

5,214,673

18,903,850

559,985 46,305 18,895.00 7,021 5,538 620

445,397 77,350 37,539 5,780 18,728 4,650

230,320 32,127 7,486.00 5,676 4,422 620

213,904 62,212 26,813 4,352 15,232 4,550

638,364

589,444

280,651

327,063

Administration expenses Personnel expenses (Note 11.1) Director's remuneration Bank charges Travelling and accommodation Repairs and maintenance Security and cleaning

Insurance Motor running Diesel and electricity Printing and stationery Professional and legal fees Auditors' remuneration Board and AGM expenses Licenses, rates and fees Subscription and donation Entertainment, advertisement and public relations Depreciation and amortisation (Note 11.2) Loss on disposal of property, plant and equipment (Note 11.3) Investment written off (Note 11.4) Bad and uncollectible debt Impairment loss (Note 11.5) Foreign exchange loss Goodwill written off (Note 11.6) Other office expenses

-

327,063 109,310 99,031 39,127 37,732 36,955 36,158 11,661 4,408 17,821 27,448 12,500 14,209 50,428 4,661 18,563 26,771

11.1 Personnel expenses Salaries, wages and allowances Contributions to pension fund scheme (Note 25.1) Defined benefit plan (Note 25.2) Training, recruitment and canteen expenses Medical expenses Other personnel expenses

37

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 11.2 Depreciation and amortisation Depreciation of property, plant and equipment Depreciation of leased assets Amortisation of intangible assets

11.3 Profit/(loss) on sale of property, plant and equipment Proceeds from sale Gross value Accumulated depreciation Carrying amount Profit /(loss) on disposal

2016 N'000

Company 2017 2016 N'000 N'000

45,261 -

49,356 2,458 1,101

18,447 -

23,212 2,458 1,101

45,261

52,915

18,447

26,771

317,297

164,455

9,650

128,700

446,011 (143,847)

963,344 (511,613)

42,867 (36,182)

338,047 (21,877)

302,164

451,731

6,685

316,170

15,133

(287,276)

2,965

(187,470)

78,028 204,941 68,280

674,073 291,217 1,411

9,412 79,820 204,941 68,271

129,218 -

351,249

966,701

362,444

129,218

3,017,399 527,396 1,065,301 4,610,096

439,187 995,793 689,344 2,124,324

3,017,399 527,396 1,065,301 4,610,096

383,432 995,793 689,344 2,068,569

11.4 This represents write off of receivable as a result of disposal of investment on Emirate Gabbro Quarry balance. 11.5 Impairment loss Trade and other receivables (Note 22.1) Inventories' written off Impairment of investment in subsidiary (Note 18) Impairment of property plant and equipment (Note 15) Impairment of Bank Balances (Note 23)

11.6 This represents goodwill written off in the year as a result of disposal on investment on Emirate Gabbro Quarry, Dubai. See Note 32 for details. 12. Finance cost and finance income 12.1 Finance costs Interest expense on bank loans and overdrafts Finance lease interest Operating lease interest 12.2 Finance income Interest income

(908)

Net finance costs

4,609,188

(6,053) 2,118,271

(955) 4,609,141

(5,978) 2,062,591

12.3 Interest income represents income earned on bank deposits while interest expense represents charges paid on trade finance, loans and overdraft facilities utilised during the year.

38


Group 2017 N'000 13.

Company 2016 N'000

2017 N'000

2016 N'000

Taxation

13.1 Tax expense Income tax Education tax Under provision in prior year

Deferred tax (Note 13.4)

13.2 Current income tax liability At 1 January Tax paid Current year charge (Note 13.1) Withholding tax credit notes utilised Under provision in prior years At 31 December

82,629 11,282 53,947

60,978 10,122 -

8,067 46,694

8,639 -

147,858 (20,706)

71,100 25,678

54,761 -

8,639 -

127,152

96,778

54,761

8,639

452,273 (20,110) 93,911 (449,512) 53,947

423,988 (149) 71,100 (42,666) -

194,246 8,067 (240,940) 46,694

130,509

452,273

8,067

228,273 8,639 (42,666) 194,246

The charge for taxation has been computed in accordance with the provisions of the Companies Income Tax Act, CAP C21, LFN 2004 as amended to date and the Education Tax Act, CAP E4, LFN 13.3 Reconciliation of effective tax rate Loss before tax

(13,081,595)

Income tax expense

127,152

Effective tax rate Tax calculated using the domestic corporation tax rate of 30% (31 December 2016 : 30%) Non-deductible expenses Effect of minimum tax Effect of capital allowance Balancing charge Effect of education tax levy Effect of unrelieved loss Effect of Under provision in prior years

96,778

(10,589,917) 54,761

(21,751,994) 8,639

(1%)

-0.5%

(1%)

0%

(3,924,479) 6,388,935 8,067 (2,474,065) 63,464 11,282 53,947

(6,403,439) 11,903,461 10,369 (5,080,262) 800 10,122 (344,273) -

(3,176,975) 5,271,994 8,067 (2,097,984) 2,965 46,694

(6,525,598) 11,616,783 8,639 (5,085,102) 800 (6,883) -

127,152

39

(21,344,797)

96,778

54,761

8,639


Group 2017 N'000

Company 2016 N'000

2017 N'000

2016 N'000

13.4 Deferred tax liability At 1 January Charge in the year (Note 13.1)

978,817 (20,706)

953,139 25,678

909,886 -

909,886 -

At 31 December

958,111

978,817

909,886

909,886

Deferred taxation is computed using the liability method in accordance with IAS 12 on "Income taxes". The deferred tax computation resulted in deferred tax assets which has not been recognised in these consolidated financial statements on account of prudence. Group

14.

Company

2017 N'000

2016 N'000

2017 N'000

2016 N'000

(13,132,982)

(22,010,184)

(10,644,678)

(21,760,633)

Number of issued shares

6,262,702

6,262,702

6,262,702

6,262,702

Weighted average number of issued shares

6,262,702

6,262,702

6,262,702

6,262,702

Loss per share Loss after taxation

Loss per share (kobo)

(210)

(351)

(170)

(347)

Loss per share (basic) have been computed for each year on the loss after tax attributable to ordinary shareholders and divided by the weighted average number of issued and fully paid up to N0.50k ordinary share during the year.

40

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 15. Property, plant and equipment 15.1 The Group The movement on this account during the year was as follows:

Costs: At 1 January 2016 Adjustment Additions Reclassified Transfer Disposal Translation difference

Land N'000

Buildings N'000

Plant and machinery N'000

6,308,423

858,539

4,339,882

272,757 (300,000) (842,816)

(105,920) 172,471

120 (390,872) (793,372)

Equipment, fixtures and fittings N'000 82,832

Auto trucks and equipment N'000

Motor vehicles N'000

Marine equipment N'000

1,383,201

262,363

15,943,130

2,115 37,287

(272,472) (564,788)

8,995 17,744 14,598

(802) 17,325

Leasehold improvement N'000 233,881 (166,837) (67,044)

Capital work in progress N'000

Total N'000

4,039,565

33,451,816

(36,107) 383,628 (136,884)

(36,909) 394,858 17,744 (963,344) (2,163,223)

At 31 December 2016

5,438,364

925,090

3,155,758

122,234

545,941

303,700

15,959,653

-

4,250,202

30,700,942

At 1 January 2017

5,438,364

925,090

3,155,758

122,234

545,941

303,700

15,959,653

-

4,250,202

30,700,942

-

-

(240,629) -

(83,753) (2,925) 7,654

-

269,488 (4,313,305) (1,445) -

5,438,364

925,090

3,014,736

129,416

305,312

224,676

20,230,091

-

204,940

30,472,625

-

217,210

2,386,663

70,124

1,187,641

241,347

4,311,307

183,752

-

8,598,044

(116,706) (67,046)

-

Additions Reclassified Written off Transfer Disposal Translation difference At 31 December 2017 Accumulated depreciation and impairment: At 1 January 2016

18,568 (159,590) -

Charge for the year Reclassified Disposals Transfer Translation difference

16,683 116,706 -

17,169 (2,059) (54,811)

At 31 December 2016

133,389

177,509

At 1 January 2017

133,389

177,509

16,684 -

17,178 -

At 31 December 2017

150,073

194,687

2,328,712

121,308

305,312

221,092

Carrying amount: At 31 December 2016

5,304,975

747,581

1,006,847

15,318

-

At 31 December 2017

5,288,291

730,403

686,024

8,108

-

Depreciation charge for the year Impairment charge for the year Adjustment Disposals Transfer Translation difference

322,406 734 (239,138) (321,754)

630 6,552

4,313,305 (42,867) -

9,510 1,414 25,868

(272,475) (369,225)

9,321 2,437 14,876 26,321

-

1,193,631 (511,613) 14,876 (923,162)

2,148,911

106,916

545,941

294,302

4,964,808

-

-

8,371,776

2,148,911

106,916

545,941

294,302

4,964,808

-

-

8,371,776

(240,629) -

9,321 (83,753) 1,222

-

204,940 -

5,780,690

-

204,940

9,306,814

9,398

10,994,845

-

4,250,202

22,329,166

3,584

14,449,401

-

-

21,165,811

287,466 (107,665) -

9,510 (341) 5,223

-

818,542 (2,526) (162,515)

288,686 (1,445) (83,753) (446,011) 14,206

852,064 (36,182) -

951,594 204,940 (341) (143,847) (83,753) 6,445

a. Depreciation charge of N1,142,639,724.8 (December 2016 : N1,144,275,772) for the Vessels and other equipments are included in direct cost in the statement of profit or loss and comprehensive income for the Group in line with the provisions of IFRS. b. Depreciation charge of N45,261,408 (December 2016 N49,355,698) is included in administrative expenses in the statement of profit or loss and other comprehensive. c. Marine equipments, survey equipments, land and buildings were pledged as collateral securities for various loans obtained by the Group. d. There were no capital borrowing costs related to the acquisition of Plant and equipment during the year (Dec 2016 : Nil). e. Capital work in progress refers to as capital expenditure incurred on items of property, plant and equipment which are however not ready for use and such are not depreciated. f. Impairment charge of N204,940,827(December 2016: NIL) is included in administrative expenses in the statement of profit or loss and other comprehensive income. 41


15.2 Company

The movement on this account during the year was as follows:

Land N'000

Buildings N'000

Plant and machinery N'000

Equipment, fixtures and fittings N'000

Motor vehicles N'000


Capital work in progress N'000

Total N'000

4,964,849

824,028

385,922

62,697

109,356

11,051,688

3,866,574

21,265,114

(105,920) -

(38,047)

1,026 -

17,744 -

Costs: At 1 January 2016 Adjustments Additions Reclassified Transfer Disposal

105,920 (300,000)

(802) -

383,628 -

(802) 384,654 17,744 (338,047)

At 31 December 2016

4,770,769

718,108

347,875

63,723

127,100

11,050,886

4,250,202

21,328,663

At 1 January 2017

4,770,769

718,108

347,875

63,723

127,100

11,050,886

4,250,202

21,328,663

-

-

18,568 -

355 -

4,770,769

718,108

366,443

64,078

53,387

15,321,324

204,940

21,499,049 -

At 1 January 2016

-

131,355

273,793

47,580

100,170

3,112,852

-

3,665,750

Charge for the year Reclassified Disposals Transfer

-

13,036 -

41,457 734 (21,877) -

7,232 1,414 -

7,997 379 14,876

At 31 December 2016

-

144,391

294,107

56,226

123,422

3,683,430

-

4,301,576

At 1 January 2017

-

144,391

56,226

123,422

3,683,430

-

4,301,576

Depreciation charge for the year Impairment charge for the year Disposals Transfer

-

13,039 -

17,554 -

5,786 -

3,678 (73,713)

At 31 December 2017

-

157,430

17,554

62,012

53,387

4,254,668

204,940

5,044,098


4,770,769

573,717

53,768

7,497

3,678

7,367,456

4,250,202

17,027,087

At 31 December 2017

4,770,769

560,678

348,889

2,066

-

11,066,656

-

16,454,951

Transfer Additions Reclassified Written off Disposal At 31 December 2017

(73,713) -

4,313,305 (42,867)

269,488 (4,313,305) (1,445) -

(73,713) 288,411 (1,445) (42,867)

Accumulated depreciation and impairment:

573,105 (2,527) -

607,420 (36,182) -

-

204,940 -

642,827 (21,877) 14,876

647,477 204,940 (36,182) (73,713)

a. Depreciation charge of N629,028,270 (December 2016: N619,616,403) for the Vessels and other equipments are included in direct cost in the statement of profit or loss and comprehensive income for the Company in line with the provisions of IFRS. b. Depreciation charge of N18,447,107.93(December 2016: N23,212,268) is included in administrative expenses in the statement of profit or loss and other comprehensive income. c. Marine equipments, survey equipments, land and buildings were pledged as collateral securities for various loans obtained by the company. d. There were no capital borrowing costs related to the acquisition of Plant and equipment during the year (Dec 2016: Nil). e. Capital work in progress refers to as capital expenditure incurred on items of property, plant and equipment which are however not ready for use and such are not depreciated. f. Impairment charge of N204,940,827(December 2016: NIL) is included in administrative expenses in the statement of profit or loss and other comprehensive income.

42


Assets under finance lease

The movement on this account during the year was as follows:


Group Motor vehicles N'000

Total N'000


Company Motor vehicles N'000

Total N'000

At 1 January 2016 Transfer

5,539,590 -

21,235 (21,235)

5,560,825 (21,235)

5,539,590 -

17,738 (17,738)

5,557,328 (17,738)

31 December 2016

5,539,590

-

5,539,590

5,539,590

-

5,539,590

At 1 January 2017 Transfer

5,539,590 -

-

5,539,590 -

5,539,590 -

-

5,539,590 -

31 December 2017

5,539,590

-

5,539,590

5,539,590

-

5,539,590

At 1 January 2016 Charge for the year Transfer

1,044,838 271,040 -

14,866 2,458 (17,324)

1,059,704 273,498 (17,324)

1,044,838 271,040 -

12,418 2,458 (14,876)

1,057,256 273,498 (14,876)

31 December 2016

1,315,878

-

1,315,878

1,315,878

-

1,315,878

At 1 January 2017 Charge for the year Transfer

1,315,878 276,978 -

-

1,315,878 276,978 -

1,315,878 276,978 -

-

1,315,878 276,978 -

31 December 2017

1,592,856

-

1,592,856

1,592,856

-

1,592,856

Costs:

Accumulated depreciation:


4,223,712

-

4,223,712

4,223,712

-

4,223,712

At 31 December 2017

3,946,734

-

3,946,734

3,946,734

-

3,946,734

a. Transfers represents motor vehicle advances under finance lease fully settled now recognised as own asset. b. Depreciation charge of N276,978,380 (2016 : N271,040,290) for the Vessels and other equipments are included in direct cost in the statement of profit or loss and comprehensive income for the Group in line with the provisions of IFRS.

c. Depreciation charge of Nil (2016 : Nil) is included in administrative expenses in the statement of profit or loss and other comprehensive.

43


2016 N'000

Company 2017 2016 N'000 N'000

Intangible assets Cost: At 31 December

14,382

14,382

14,382

14,382

Amortisation and impairment losses: At 1 January Amortised for the year

14,382 -

13,281 1,101

14,382 -

13,281 1,101

At 31 December

14,382

14,382

14,382

14,382

-

-

Carrying amount: At 31 December

-

-

a. Intangible assets represent computer software used by the group. The software is not internally generated but rather purchased computer softwares. b. The amortisation of intangible asset recognised in administrative expenses in the statement of profit or loss and other comprehensive income for the Group was NIL (December 2016 : N1,101,000L) while the Company NIL (December 2016 : N1,101,000).

Group Held by % voting (Units) power In thousand 18. Subsidiaries Information 18.a Investment in subsidiaries Investment in subsidiaries comprise: Japaul Shipping & Offshore Services Ltd (Note 18.1) Japaul Mine & Products Ltd (Note 18.2) Japaul Dredging Services Ltd (Note 18.3) Japaul Gulf Electromechanical (Note 18.4)

100% 100% 100% 49%

100% 100% 100% 49%

Impairment on investment in subisidiary

2017 N'000

Company 2016 N'000

2017 N'000

2016 N'000

-

-

25,000 5,000 10,000 79,820

25,000 5,000 10,000 79,820

-

-

119,820 (79,820)

119,820 -

-

-

40,000

119,820

18.b Subsidiary undertakings All shares in subsidiary undertakings are ordinary shares. Subsidiary Japaul Shipping & Offshore Services Limited Japaul Mine & Products Ltd Japaul Dredging Services Ltd Japaul Gulf Electromechanical LLC, Dubai, U.A.E.

Principal activity Marine and offshore services Quarry, crushing and haulage Dredging and sand mining services Construction and maintenance of electromechanical

Country of incorporation

Nigeria Nigeria Nigeria Dubai, U.A.E.

Percentage held 100% 100% 100%

Statutory year end 31 December 31 December 31 December

49%

31 December

18.1 Japaul Shipping & Offshore Services Limited Japaul Shipping And Offshore Services Limited is an indigenous company, Incorporated in 2012 under the Nigerian Companies and Allied Matters Decree of 1990. The company was formed from the Offshore and Marine Division of Japaul Oil and Maritime Services Plc to be a self-sustained company with the focus on carrying out Marine and Offshore Operations. 18.2 Japaul Mines & Products Limited Japaul Mines & Products Limited is a company incorporated in June 2007. It is domiciled in Nigeria and its principal operations are provision of quarry services, crushing and haulage of materials for construction companies and other end users of crushed granite. It is a wholly owned subsidiary of Japaul Oil & Maritime Services Plc. 18.3 Japaul Dredging Services Japaul Dredging Services Limited is formerly a division of Japaul Oil & Maritime Services Plc but became a company incorporated in May 2011. It is domiciled in Nigeria and its principal operations are provision of dredging services to the oil majors, equipment fabrications, sand mining and reclamation activities. It is a wholly owned subsidiary of Japaul Oil & Maritime Services Plc. 18.4 Japaul Gulf Electromechanical LLC Japaul Gulf Electromechanical LLC is a company incorporated in 2008. It is domiciled in United Arab Emirates and its principal operations are procurement, construction and maintenance of electromechanical systems suitable for super structures. Japaul Oil & Maritime Services Plc owns 49% of its share capital, but the entity has been consolidated as a subsidiary based on establishment of control by the parent company. Japaul Gulf Electromechanical LLC invested AED50,000,000 (N2,282,000,000) in Emirates Gabbro Quarry LLC.

44


Condensed financial statements of consolidated entities The consolidated results of the consolidated entities of Japaul Oil & Maritime Plc are shown in Note 10.5.1. The Japaul Oil & Maritime Group in the condensed results includes the results of the underlisted entities: - Japaul Shipping & Offshore Services Ltd - Japaul Mine & Products Ltd - Japaul Dredging Services Ltd - Japaul Gulf Electromechanical

18.5.1a Condensed result of consolidated entities-2017 Summarised consolidated financial position ParentJapaul Oil & Maritime Plc N'000

Japaul Shipping & Offshore Services Ltd N'000

Japaul Dredging Services Ltd N'000

Assets Property, plant and equipment Assets under finance lease Intangible assets Investment in subsidiaries Investment in associates Available for sale financial assets Inventories Trade and other receivables Cash and bank balances Total assets

16,454,951 3,946,734 40,000 5,300 26,947 34,000 8,462,546 83,701 29,054,179

-

3,389,893 962,683 9,669 4,362,245

9,986 14 10,000

1,318,217 9,945 1,721,879 2,331 3,052,372

2,750 5,461,711 14,733 2,823,137 295,224 8,597,555

21,165,811 3,946,734 5,501,711 5,300 26,947 58,678 13,980,231 390,939 45,076,351

(5,501,711) (5,300) (12,079,182) 511,407 (17,074,786)

21,165,811 3,946,734 26,947 58,678 1,901,049 902,346 28,001,565

Liabilities Defined contribution pension plan Finance lease facility Loans and borrowings Deferred income tax liability Bank overdrafts Trade and other payables Defined benefit plan Current income tax liability Total liabilities

79,697 10,968,027 37,416,680 909,886 312,569 4,582,701 42,604 8,067 54,320,231

-

14,741 48,225 3,899,243 16,579 73,645 4,052,433

-

19,150 5,418,470 13,526 48,797 5,499,943

448,230 9,231,086 9,679,316

113,588 10,968,027 37,416,680 958,111 760,799 23,131,500 72,709 130,509 73,551,923

(17,376,108) (17,376,108)

113,588 10,968,027 37,416,680 958,111 760,799 5,755,392 72,709 130,509 56,175,815

Net (liabilities)/assets

(25,266,052)

-

309,812

10,000

(2,447,571)

(1,081,761)

(28,475,572)

Equity Share capital Deposit for shares Share premium Net loss sustained Remeasurement reserve AFS fair value reserve Foreign exchange reserve Non-controlling interest Total equity

3,131,351 16,440,679 (44,181,384) (22) 12,992 (669,668) (25,266,052)

-

25,000 305,192 (20,380) 309,812

10,000 10,000

5,000 (2,472,778) 20,207 (2,447,571)

186,749 244,400 (1,512,910) (1,081,761)

3,358,100 16,440,679 (46,104,570) (195) 12,992 (2,182,578) (28,475,572)

31 December 2017

45

Japaul Mines & Products Ltd N'000

Japaul Gulf Electro Mechemical N'000

Total N'000

Elimination N'000

301,322 (226,749) (3,076,928) 4,156,698 (551,699) 301,322

Japaul Oil & Maritime Service Plc Group N'000

(28,174,250) 3,131,351 16,440,679 (49,181,498) (195) 12,992 1,974,120 (551,699) (28,174,250)

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Condensed result of consolidated entities-2017

31 December 2017 Summarised statement profit or loss and other comprehensive income Revenue Direct cost Gross (loss)/profit Other income Administrative expenses Operating (loss)/ profit Net finance (costs)/income (Loss)/profit before taxation Income tax expense (Loss)/profit for the year 31 December 2017 Summarised statement of cash flows Net cash from operating activities Net cash from investing activities Net cash used in financing activities Net cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange on foreign operation Cash and cash equivalents at the end of the year


ParentJapaul Oil & Maritime Plc N'000

191,383 (1,172,035) (980,652) 214,549 (5,214,673) (5,980,776) (4,609,141) (10,589,917) (54,761) (10,644,678)

585,825 (277,806) (824,238) (516,219) 287,351 (228,868)

-

-




Total N'000

Elimination N'000

738,304 (617,182) 121,122

-

712,276 (626,135) 86,141

259,003 (199,959) 59,044

1,900,966 (2,615,311) (714,345)

150,911 (233,973) 38,060 75 38,135 (21,334) 16,801

-

277,213 (168,872) 194,482 (122) 194,360 (51,057) 143,303

5,138 (212,741) (148,559) (148,559) (148,559)

647,811 (5,830,259) (5,896,793) (4,609,188) (10,505,981) (127,152) (10,633,133)

12,166 (2,587,780) (2,575,614) (2,575,614) (2,575,614)

659,977 (8,418,039) (8,472,407) (4,609,188) (13,081,595) (127,152) (13,208,747)

14 14

(120,105) 60,500 (122) (59,727) 62,059 2,332

(153,006) (153,006) (153,006)

306,640 (217,505) (824,360) (735,225) 365,362 (369,863)

(5,025,323) 247,024 122 (4,778,177) 511,216 4,778,375 511,414

(4,718,683) 29,519 (824,238) (5,513,402) 876,578 4,778,375 141,551

(6,074) (199) (6,273) 15,938 9,665

46

-


1,900,966 (2,615,311) (714,345)

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 18.5.1b Condensed result of consolidated entities-2016 Summarised consolidated financial position





31 December 2016 Assets Property, plant and equipment Assets under finance lease Intangible assets Investment in subsidiaries Investment in associates Available for sale financial assets Inventories Trade and other receivables Cash and bank balances Total assets

17,027,087 4,223,712 119,820 5,300 15,137 17,328,315 308,640 39,028,011

3,637,269 901,210 15,939 4,554,418

9,986 14 10,000

1,661,892 42,339 1,426,212 62,529 3,192,972

2,918 4,124,365 4,127,283

-

22,329,166 4,223,712 4,244,185 5,300 15,137 42,339 19,665,723 387,122 50,912,684

(4,244,185) (5,300) (17,226,446) 511,409 (20,964,522)

22,329,166 4,223,712 15,137 42,339 2,439,277 898,531 29,948,162

Liabilities Defined benefit pension plan Finance lease facility Loans and borrowings Deferred income tax liability Bank overdrafts Trade and other payables Defined contribution plan Current income tax liability Total liabilities

80,410 9,593,102 31,736,414 909,886 21,289 11,099,306 60,140 194,246 53,694,793

4,245 68,931 3,912,215 9,377 239,449 4,234,217

-

25,313 471 5,741,006 12,060 18,578 5,797,428

185 5,053,793 5,053,978

-

-

109,968 9,593,102 31,736,414 978,817 21,945 25,806,320 81,577 452,273 68,780,416

(19,806,677) (19,806,677)

109,968 9,593,102 31,736,414 978,817 21,945 5,999,643 81,577 452,273 48,973,739

-

(17,867,732)

(1,157,845)

(19,025,577)

-

3,330,139 16,440,679 (35,321,512) (20,188) 1,182 (2,298,034) (17,867,734)

(198,788) (727,005) 240,566 (472,615) (1,157,842)

3,131,351 16,440,679 (36,048,517) (20,188) 1,182 (2,057,468) (472,615) (19,025,576)



(14,666,782)

320,201

10,000

(2,604,456)

(926,695)

Equity Share capital Deposit for shares Share premium Net loss sustained Remeasurement reserve AFS fair value reserve Foreign exchange reserve Non-controlling interest Total equity

3,131,351 16,440,679 (33,536,706) (33,620) 1,182 (669,668) (14,666,782)

25,000 288,392 6,807 320,199

10,000 10,000

5,000 (2,616,081) 6,625 (2,604,456)

158,788 542,883 (1,628,366) (926,695)

47

Electro Gabrro Quarries N'000

Total N'000

Elimination N'000








Electro Gabrro Quarries N'000

Total N'000

Elimination N'000

Japaul Oil & Maritime Group N'000

31 December 2016 Summarised statement profit or loss and other comprehensive income Revenue 649,145 1,055,082 1,374,577 3,078,804 3,078,804 Cost of sales (1,729,784) (614,749) (1,528,819) (3,873,352) (3,873,352) The Group had been making persistent losses over the years (1,080,639) and at 31 December 440,333 2017, the Group - made a (154,242) loss from continuing operation of N13.37 billion, (794,548) while the Company- made a loss(794,548) of N22.01 billio Other income Administrative expenses Operating(loss)/profit Net finance (costs)/income (Loss)/profit before taxation Income tax expense (Loss)/profit for the year 31 December 2016 Summarised statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange on foreign operation Cash and cash equivalents at the end of the year

295,086 (18,903,850) (19,689,403) (2,062,591) (21,751,994) (8,639) (21,760,633)

1,603 (222,602) 219,334 75 219,409 (86,408) 133,001

-

352,560 (1,167,435) (969,117) (55,755) (1,024,872) (1,730) (1,026,602)

864,182 (249,976) 331,747 945,953 (658,602) 287,351

(148,905) (619) (149,524) 165,387 15,863

-

285,771 29,664 (55,755) 259,680 (197,621) 62,059

14 14

48

-

120 120 (120) -

-

5,942 5,942 (5,942) -

649,249 (20,293,887) (20,439,186) (2,118,271) (22,557,457) (96,777) (22,654,234)

2,303,600 (1,090,940) 1,212,660 1,212,660 1,212,660

2,952,849 (21,384,827) (19,226,526) (2,118,271) (21,344,797) (96,777) (21,441,574)

1,001,048 (214,869) 275,992 1,062,171 (696,884) 365,287

1,616,501 501,941 (598,404) 1,520,038 (57,200) (951,539) 511,299

2,617,549 287,072 (322,412) 2,582,209 (754,084) (951,539) 876,586

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group

19.

Investment in associates Japaul Infrastructure Limited (Note 19.1) Japaul Energy Limited (Note 19.2)

Japaul Infrastructure Limited At 1 January Share of loss in associate At 31 December Japaul Energy Limited At 1 January Share of loss in associate At 31 December

Company 2017 2016 N'000 N'000

2017 N'000

2016 N'000

-

-

1,000 4,300

1,000 4,300

-

-

5,300

5,300

1,000 (1,000)

1,000 (1,000)

1,000 -

1,000 -

-

-

1,000

1,000

4,300 (4,300)

4,300 (4,300)

4,300 -

4,300 -

-

-

4,300

4,300

19.1 Japaul Infrastructure Limited Japaul Infrastructures Limited is a company incorporated in July 2012. It is domiciled in Nigeria and its principal operations is road and building construction. It is an associate of Japaul Oil & Maritime Services Plc as the company has 10% of its shareholding and controls its finance and operational policies therefore has significant influence in it. 19.2 Japaul Energy Limited Japaul Energy Limited is a company incorporated in April 2011. It is domiciled in Nigeria and its principal operations are downstream operations of petroleum products and allied products. It is an associate of Japaul Oil & Maritime Services Plc as the company has 43% of its shareholding and therefore has significant influence in it. 19.3 Associates undertakings Summarised financial information of the Group's principal associates are as follows:

Total assets N'000

Total liabilities N'000

Gross profit/(loss) N'000

Profit/(loss) before tax N'000

10,021 3,511,887

801,686 3,891,764

119,944 396,446

16,540 (377,507)

81,271 2,784,896

889,477 3,168,612

109,790 216,130

21,687 (610,985)

31 December 2017 Japaul Infrastructure Limited Japaul Energy Limited 31 December 2016 Japaul Infrastructure Limited Japaul Energy Limited

49


Company 2016 N'000

2017 N'000

2016 N'000

Available for sale assets Access Bank Plc (Note 20.1)

26,947

15,137

26,947

15,137

26,947

15,137

26,947

15,137

Ordinary shares (2,578,699 units) fair value Fair value gains/(loss) (Note 28.6)

15,137 11,810

12,507 2,630

15,137 11,810

12,507 2,630

Market value at year end

26,947

15,137

26,947

15,137

58,678

42,339

34,000

-

58,678

42,339

34,000

-

20.1 Access Bank Plc

21.

Inventories Quarry/Aggregates

a.

Inventories to the value of N58,678,045 (Dec 2016 : N42,339,488) are carried at net realisable value.

b.

During the year, NIL (2016 : N697,588,456) of inventory was sold and recognised as direct costs in the statement of profit or loss and other comprehensive income (Note 8). Group 2017 N'000

22.

Trade and other receivables Trade receivables Receivables from related parties (Note 30) Prepayments Staff debtors Withholding tax recoverable Other debit balances

Company 2016 N'000

2017 N'000

2016 N'000

1,418,418 1,319,467 37,324 17,850 136,246 793,580

1,002,032 1,250,967 46,227 11,202 1,239,866 193,684

394,599 8,508,807 31,219 7,066 193,684

386,631 16,376,858 21,380 6,055 1,007,124 193,684

3,722,885 (1,821,836)

3,743,978 (1,304,701)

9,135,375 (672,829)

17,991,732 (663,417)

1,901,049

2,439,277

8,462,546

17,328,315

At 1 January Translation difference Write off Write back in the year Charge in the year (Note 11.5)

1,304,701 793,433 (16,912) (337,414) 78,028

1,614,173 (733,783) (249,762) 674,073

663,417 9,412

534,199 129,218

At 31 December

1,821,836

1,304,701

672,829

663,417

Impairment allowance (Note 22.1)

22.1 Impairment allowance movement:

50


23.

Cash and bank balances Cash in hand Cash at banks Impairment on dormant current accounts (Note 23.1.c)

23.1a Bank overdrafts (Note 23.1b) Cash and cash equivalents in the statement of cash flows

Company

2017 N'000

2016 N'000

2017 N'000

2016 N'000

3,616 967,295

2,052 897,890

2,996 148,976

1,957 306,683

970,911

899,942

151,972

308,640

(68,565) 902,346 (760,799)

(1,411) 898,531 (21,945)

(68,271) 83,701 (312,569)

308,640 (21,289)

141,547

876,586

(228,868)

287,351

23.1b This represents the overdrawn current account balances with Access Bank of Nigeria Plc. These facilities have an average interest rate of 21% and are secured by an 'all asset debenture'. 23.1c Impairment on dormant current accounts At 1 January Write back in the year Charge in the year (Note 11.5) At 31 December

1,411 (1,126) 68,280

1,411

68,271

68,565

1,411

68,271

Group

24.

25.

25.1

-

Company

2017 N'000

2016 N'000

2017 N'000

3,044,588 304,606 1,041,881 986,359 298,472 2,102 77,384

3,164,670 121,144 1,854,820 454,662 339,563 1,752 63,031

2,198,144 1,413,344 786,894 104,833 2,102 77,384

1,075,283 9,012,102 779,842 167,295 1,752 63,032

5,755,392

5,999,642

4,582,701

11,099,306

113,588 72,709

81,577 109,968

79,697 42,604

60,140 80,410

186,297

191,545

122,301

140,550

Movement in defined contribution pension plan: At 1 January Deductions (Note 11.1) Remittances

81,577 46,305 (14,294)

40,715 62,828 (21,966)

60,140 32,127 (12,570)

33,625 43,532 (17,017)

At 31 December

113,588

81,577

79,697

60,140

Trade and other payables Trade payables Payables to related parties (Note 30) Other payables Payment received on account of projects Withholding tax, VAT, PAYE, etc. Accruals Advance rent received

Long term employee benefits Defined contribution pension plan (Note 25.1) Defined benefit plan (Note 25.2)

51

2016 N'000

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 25.2

Movement in defined benefit plan: At 1 January Charged during the year (Note 11.1) Payment during the year Re-measurement loss

2016 N'000

Company 2017 2016 N'000 N'000

109,968 18,895 (36,161) (19,993)

140,511 37,539 (4,306) (63,776)

80,410 7,486 (11,694) (33,598)

93,094 26,813 (688) (38,809)

At 31 December

72,709

109,968

42,604

80,410

Present value of defined benefit obligation

72,709

109,968

42,604

80,410

25.2a Analysis: At 1 January Current service cost Interest costs Actuarial gain recognised Benefit paid

109,968 10,155 8,740 (19,993) (36,161)

140,511 23,565 13,974 (63,776) (4,306)

80,410 3,455 4,031 (33,598) (11,694)

93,094 16,592 10,221 (38,809) (688)

At 31 December

72,709

109,968

42,604

80,410

10,155 8,740

23,565 13,974

3,455 4,031

16,592 10,221

18,895

37,539

7,486

26,813

25.2b The amount recognised in the statement of profit or loss and other comprehensive income is as follows: Current service costs Interest costs

The principal actuarial assumptions used were: Discount rate Inflation rate Future salary increases

14% 12% 12%

16% 13% 12%

14% 12% 12%

16% 13% 12%

Assumptions regarding future mortality experiences are set based on actuarial advices, published statistics and experience in each territory.

52


Loans and borrowings This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group's exposure to interest rate, foreign currency and liquidity risks, see note 5. Group 2017 N'000 Bank term loans (Note 26.1)

26.1.

Bank term loans: Diamond Bank Plc (Note 26.1.1) Access Bank Plc (Note 26.1.2)

2016 N'000

Company 2017 2016 N'000 N'000

47,416,680

31,736,414

37,416,680

31,736,414

33,253,368 14,163,312 47,416,680

21,642,422 10,093,992 31,736,414

33,253,368 14,163,312 47,416,680

21,642,422 10,093,992 31,736,414

26.1.1 Diamond Bank Plc Facility represents US$70,000,000 term loan secured from Diamond Bank Plc on 20 November 2013 for a period of 5 years with a 90 days moratorium on principal plus interest, to finance acquisition of 3 vessels and 2 tug boats under vessel lease agreement with Marine Delivery Pte Limited, Singapore the transaction was facilitated by Nationwide Equipment Company of Jacksonville, Florida U.S.A.; and to pay down on Guaranty Trust Bank's existing vessel finance facility of US$25 million. The interest on the facility is offsore interest plus 3% per annum. The facility was secured by legal or commercial mortgage on the 5 vessels/boats being financed, legal mortgage on Japaul's jetty, land and buildings. However, a balance of US$66,478,405.35 was restructured in line with the Company's new cashflow 10 years tenor representing the outstsnding 2.5 years of previous 5 years tenor plus 7.5 years at interest rate of 10% per annum. On 24 April 2014, Japaul Oil obtained additional US$9,000,000 term loan from Diamond Bank Plc for a period of 10 years with a 90 days moratorium, to finance acquisition a vessel and exercise right of first refusal under lease agreement with Marine Delivery Pte Limited Singapore. The facility was legal or commercial mortgage on the 5 vessels/boats being financed, legal mortgage on Japaul's jetty and Japaul property. 26.1.2 Access Bank Plc Facility represents US$20,000,000 term loan secured from Access Bank Plc on 20 February 2014 for a period of 5 years with 12 months moratorium, to finance acquisition of 2 dredges. The interest on the facility is 9% per annum. The facility was secured by legal mortgage on the 2 dredges being financed, and legal mortgage on Japaul's jetty, land and building. Furthermore, the was restructured into a new term loan of USD$20 million of 7 years tenor with 6 months moratorium at 10.5% interest rate. Group Company 2017 2016 2017 2016 N'000 N'000 N'000 N'000 26.1.3 Movement in bank term loans At 1 January 31,736,414 17,862,264 31,736,414 17,862,264 Restructioning cost capitalised 3,800,000 5,530,000 3,800,000 5,530,000 Exchange difference 2,421,804 10,976,805 2,421,804 10,976,805 Effective interest adjustment 2,928,192 1,346,558 2,928,192 1,346,558 Repayments during the year (3,469,730) (3,979,213) (3,469,730) (3,979,213) At 31 December 26.1.4 Analysed of bank term loans Current portion Non-current

27. 27.1

Finance lease facilities Marine Delivery Pte Ltd Singapore (Note 27.1)

37,416,680

31,736,414

37,416,680

31,736,414

748,334 36,668,346 37,416,680

634,728 31,101,686 31,736,414

748,334 36,668,346 37,416,680

634,728 31,101,686 31,736,414

10,968,027

9,593,102

10,968,027

9,593,102

Marine Delivery Pte Ltd Singapore Facility relates to finance lease secured from Marine Delivery Pte Limited Singapore, for a period 8 years, for acquisition of vessel. The interest on the lease facility is 9.62% per annum. The facility is secured by the vessel being leased.

53

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 27.2

27.3

28. 28.1.

28.2.

28.3.

Movement in finance lease facilities At 1 January Obtained during the year Repayment during the year Exchange difference At 31 December

Company 2016 N'000

2017 N'000

2016 N'000

9,593,102 527,396 847,529 10,968,027

6,011,483 380,887 (201,747) 3,402,479 9,593,102

9,593,102 527,396 847,529 10,968,027

6,011,483 380,887 (201,747) 3,402,479 9,593,102

4,167,850 6,800,177 10,968,027

3,645,379 5,947,723 9,593,102

4,167,850 6,800,177 10,968,027

3,645,379 5,947,723 9,593,102

Share capital and reserves Ordinary shares Authorised: 7,000,000,000 ordinary shares of 50k each

3,500,000

3,500,000

3,500,000

3,500,000

Issued and fully paid: 6,262,701,716 ordinary shares of 50k each At 31 December

3,131,350

3,131,350

3,131,350

3,131,350

16,440,679

16,440,679

16,440,679

16,440,679

Analysed of finance lease facilities Current portion Non-current

Share premium At 31 December

28.4.

Loss sustained Loss sustained represent the carried forward recognised loss net of expenses plus current year loss attributable to shareholders.

28.5.

Remeasurement reserve Remeasurment reserves represent the carried forward recognised other comprehensive income actuarian gain/(loss) and expenses plus current year attributable to shareholders.

28.6.

AFS fair value reserve AFS fair value reserves represent the carried forward recognised other comprehensive income fair value gain/(loss) and expenses plus current year attributable to shareholders.

28.7.

Foreign currency translation reserve This represents net exchange difference arising from translation of foreign operations and foreign currency denominated loan balances hedged. Group

28.8.

Company

2017 N'000

2016 N'000

Non-controlling interest At 1 January Loss for the year Exchange loss on foreign operations

(472,616) (75,765) (3,318)

At 31 December

(551,699)

54

2017 N'000

2016 N'000

(934,783) 462,167

-

-

(472,616)

-

-


29. Reconciliation of net cash from operating activities Net loss after tax Adjustments to reconcile net loss to net cash provided by operating activities: Finance costs Finance income Depreciation of property, plant and equipment Depreciation of leased assets Amortisation of intangible assets Adjustment to property, plant and equipment Property, plant and equipment Inventories written off Impairment loss on trade and other receivables Impairment of investment in subsidiary (Note 18) Impairment of property plant and equipment (Note 15) Inventories written off Goodwill written off Long term employee benefits charged

2016 N'000

2017 N'000

2016 N'000

(13,208,747)

(22,010,184)

(10,644,678)

(21,760,633)

4,610,096 (908) 951,594 276,978 (341)

2,124,324 (6,053) 1,193,631 273,498 1,101 (36,909) 424,311 291,217 2,813,370 100,367

4,610,096 (955) 647,477 276,978 1,445 9,412 79,820 204,941 39,613

2,068,569 (5,978) 642,827 273,498 1,101 (802) 129,218 70,345

(259,386) 204,941 65,200

(Profit)/loss on disposal of property, plant and equipment Foreign exchange loss Changes in assets and liabilities: Increase in inventories Decrease/(ncrease) in trade and other receivables (Decrease)/increase in trade and other payables Increase in curent income tax liability Increase in deferred tax liability Total adjustments Cash flows from operating activities

55

Company

2017 N'000

(15,133) 3,269,333

287,276 13,279,551

(2,965) 3,269,333

187,470 14,996,680

(16,339) 21,093 (294,716) (301,654) (20,706)

1,446,118 2,339,153 71,100 25,678

(34,000) 8,856,357 (6,540,870) (186,179) -

(5,106,057) 9,359,305 8,639 -

8,490,052

24,627,733

11,230,503

22,624,815

(4,718,695)

2,617,549

585,825

864,182


Related party transactions/balances During the year, the Group had significant business dealings with other companies that have common directors with the Company and those that are mebers of the Group. Details of these are described below: Group

30.1

2016 N'000

230,964

230,964

3,566,688 4,768,136 -

11,375,215 4,827,662 -

230,964

230,964

8,334,824

16,202,877

882,556 205,946

814,056 205,946

173,981

173,981

1,088,502

1,020,002

173,981

173,981

1,319,466

1,250,966

8,508,805

16,376,858

Amount due from related companies:

30.1.1 Amount due from subsidiary companies Japaul Shipping & Offshore Services Ltd Japaul Mines & Products Limited Emirates Gabbro Quarry LLC, U.A.E.

30.1.2 Amount due from associate companies Japaul Infrastructure Limited Japaul Energy Limited

Total amount due from related companies 30.2 Amount due to related companies: 30.2.1 Amount due to subsidiary companies Japaul Shipping & Offshore Services Ltd Japaul Mines & Products Limited

30.2.2 Amount due to associate companies Japaul Infrastructure Limited Japaul Energy Limited

Total amount due to related companies 30.3

2017 N'000

Company 2016 N'000

2017 N'000

-

-

847,836 463,668

8,475,581 434,682

-

-

1,311,504

8,910,263

182,766 121,840

121,144

101,840

101,840

304,606

121,144

101,840

101,840

304,606

121,144

1,413,344

9,012,103

Analysis of related party transactions Name

Nature of transaction

Japal Offshore & Shipping Ltd Japaul Mines & Products Ltd Japaul Energy Ltd

Intercompany receivables Intercompany receivables Intercompany receivables

56

2017 N'000 2,718,852 4,304,468 72,141

2016 N'000 2,899,634 4,392,980 72,141

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 31. Discontinued operation On October 6, 2016, the group entered into a sale agreement to dispose of Emirates Gabbro Quarries LLC Dubai, which carried parts of the group’s quarry services, crushing and haulage of materials for constrcution companies activities. The disposal was effected in order to generate cash flow towards reducing the Group's indebtedness to third parties in respect of its operations in Emirates Gabbro Quarries LLC Dubai and Japaul Gulf Electromechanical LLC and any sums remaining after settling thirdparty creditors be repartriated to Nigeria. The disposal was completed on December 30, 2016, on which date control of Emirates Gabbro Quarries LLC Dubai passed to the acquirer.

The profit for the year from the discountinued operation is analysed as follows: Group 2017 N'000 -

2016 N'000 (574,900) (3,381,979) (3,956,879)

Revenue Cost of sales

-

145,273 (555,192)

Gross loss Administrative expenses

-

(409,919) (164,981)

Loss before taxation Income tax expense

-

(574,900) -

Loss the year (attributable to the owners of the company)

-

(574,900)

Loss for the year Loss on disposal

The result of the quarry services, crushing and haulage of materials for constrcution companies operations for the period from 1 January, 2016 to 31 December, 2016 are as follows:

In the year 2016,Emirates Gabbro Quarries LLC Dubai, contributed (December 2016: N117,345,000) to the group's net operating cashflows, paid (December 2016:N186,082,000) in respect of investing activities and paid (December 2016: N60,515,000) in respect of financing activities. The carrying amount of the assets and liabilities of Emirates Gabbro Quarries LLC Dubai,at the date of disposal are disclosed in Note 32 to the financial statements.

57


Disposal of Subsidiary As referred to in note 31 to the consolidated financial statements,on October 6, 2016, the group disposed its quarry services, crushing and haulage of materials for constrcution companies operations at the time of disposal of the subsidiary, Emirates Gabbro Quarries LLC Dubai. Details of disposals are as follows: Group 2017 N'000

2016 N'000

Non-current assets Property, plant and equipment

-

1,902,635

Current assets Cash and bank balances Total current assets

-

438 438

Current liabilities Bank overdrafts Trade and other payables Total current liabilities

-

9,573 582,505 592,078

Net current liabilities

-

(591,640)

Net assets

-

1,310,995

Net assets derecognised thus: Attributable goodwill(Note 32.2) Net assets derecognised

-

2,813,370 1,310,995

-

4,124,365

-

511,422 230,964 742,386

-

742,386

Consideration received: Cash Deferred consideration Total consideration (Note 32.1) 32.1 AED9,000,[email protected]

58

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 32.2 Attributable goodwill Cost of share

AED'000 50,000

2016 N'000

-

82.4873

Naira equivalent

-

4,124,365

Translation gain

-

1,439,365

Japaul Gulf Electromechanical Holdings at 100%

-

1,310,995

Goodwill written off

-

2,813,370

Consideration received Net assets derecognised Non controlling interest derecognised

-

742,386 (4,124,365) -

Cummulative exchange differences in respect of the net assets of subsidiary from equity on loss of control of subsidiary

-

Loss on disposal

-

(3,381,979)

-

2,813,370 568,609

-

3,381,979

32.3. Loss on disposal

-

The loss on disposal is reported as parts of the loss for the year from discountinued operations in the statemnet of profit or loss and other comprehensive income. 32.4 Analysed as follows: Goodwill written off Losses without goodwill written off Total loss on disposal

59

JAPAUL OIL & MARITIME SERVICES PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group 2017 N'000 33. Information regarding directors and employees 33.1 Directors' emoluments comprise: Fees: - Chairman - Other Directors Other emoluments as executives

Chairman Highest paid director

33.2 Employees Average number of persons employed during the year: Management Administration Others

2016 N'000

Company 2017 2016 N'000 N'000

4,125 43,828 47,953

3,000 17,275 89,035 109,310

4,125 43,838 47,963

3,000 17,275 89,035 109,310

21,261

3,000 76,068

Number

Number

Number

Number

18 77 123

17 70 93

13 50 50

12 45 55

218

180

113

112

168 22 8 6 4 10

126 25 6 8 4 11

80 16 5 5 2 5

75 18 3 7 2 7

218

180

113

112

3,000 76,068

33.3 The number of employees with gross emoluments within the following bands were: N 1,000,001 2,000,001 3,000,001 4,000,001 5,000,001 6,000,001

N - 2,000,000 - 3,000,000 - 4,000,000 - 5,000,000 - 6,000,000 and above

33.4 Employees' costs: Salaries, wages and allowances Contributions to pension fund scheme Defined benefit pension plan Training, recruitment and canteen expenses Medical expenses Other personnel expenses

60

N'000

N'000

N'000

N'000

559,985 46,305 18,895 7,021 5,538 620

445,397 77,350 37,539 5,780 18,728 4,650

230,320 32,127 7,486 5,676 4,422 620

213,904 62,212 26,813 4,352 15,232 4,550

638,364

589,444

280,651

327,063


Events after statement of financial position date No event or transaction has occurred since the reporting date, which would have had a material effect on the consolidated financial statements as at that date or which needs to be mentioned in the financial statement in the interests of fair presentation of the Group's financial position as at the reporting date or its result for the year then ended.

35.

Contingent liabilities There were no contingent liabilities at 31 December 2017 (31 December 2016 : N702,570,482) in respect of legal claims made against the group. The Board of Directors are of the opinion that the liabilities will not crystallise, and therefore no provision is made in these consolidated financial statements.

36.

Comparative figures Certain comparative figures in these financial statements have been restated to give a more meaningful comparison.

61

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

Other National Disclosures

JAPAUL OIL & MARITIME SERVICES PLC CONSOLIDATED STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 DECEMBER 2017 The Group 31-Dec-17 N’000 Turnover Other income Bought-in-material and services: - Local - Imported Value eroded

The Company

31-Dec-16 N’000

%

31-Dec-17 N’000

%

31-Dec-16 N’000

%

1,900,966 660,885

3,078,804 2,958,902

191,383 215,504

649,145 301,064

2,561,851

6,037,706

406,887

950,209

(9,090,649) (6,528,798)

(23,769,114) (17,731,408)

(100)

(100)

(5,181,602) (4,774,715)

(100)

(19,389,145) (18,438,936)

%

(100)

Applied as follows:To pay employees: - Salaries, wages and other staff costs

638,364

10

589,444

3

280,651

6

327,063

To pay Government: - Corporate income tax

147,858

2

71,100

0

54,761

1

8,639

4,610,096

71

2,124,324

12

4,610,096

97

2,068,569

11

951,594 276,978 (20,706) (13,132,982) (6,528,798)

15 4 (201) (101)

1,193,631 273,498 1,101 25,678 (22,010,184) (17,731,408)

7 2 0 0 (124) (100)

647,477 276,978 (10,644,678) (4,774,715)

14 6 (223) (100)

642,827 273,498 1,101 (21,760,633) (18,438,936)

3 1 (118) (100)

To pay providers of capital: - Interest on borrowings To provide for replacement of assets dividend to shareholders and development of business: - Depreciation of property, plant and equipment - Depreciation of assets under finance lease - Amortisation of intangible assets - Deferred tax on property, plant and equipment - Loss for the year Value eroded

2

-

Value eroded represents the additional wealth which the Group has been able to use by its own and its employees effort. The statements shows the allocation of that wealth among the employees, capital providers, Government and that retained for creation of more wealth.

62

JAPAUL OIL & MARITIME SERVICES PLC FINANCIAL SUMMARY - GROUP 31 DECEMBER

2017 N'000

2016 N'000

2015 N'000

2014 N'000

2013 N'000

21,165,811 3,946,734 26,947 25,139,492

22,329,166 4,223,712 15,137 26,568,015

24,853,772 4,501,121 1,101 12,507 29,368,501

25,828,866 4,571,922 3,388 17,019 30,421,195

18,475,710 9,996,083 6,264 24,756 28,502,813

58,678 1,901,049 902,346 2,862,073

42,339 2,439,277 898,531 3,380,147

333,557 3,575,923 611,637 4,521,117

451,458 6,503,717 1,014,283 7,969,458

239,814 5,341,203 4,692,772 10,273,789

Current liabilities Bank overdrafts Trade and other payables Loans and borrowings Finance lease facility Defined contribution pension plan Current income tax liability Total current liabilities

760,799 5,755,392 748,334 4,167,850 113,588 130,509 11,676,472

21,945 5,999,642 634,728 3,645,379 81,577 452,273 10,835,544

1,308,527 3,660,490 412,996 2,258,472 40,715 423,988 8,105,188

337,847 2,905,244 3,939,027 1,343,908 45,886 432,550 9,004,462

278,839 3,241,629 2,479,475 36,988 448,408 6,485,339

Net current (liabilities)/assets

(8,814,399)

(7,455,397)

(3,584,071)

(1,035,004)

3,788,450

Non-current liabilities Defined benefit plan Finance lease facility Loans and borrowings Deferred income tax liability Total non-current liabilities

72,709 6,800,177 36,668,346 958,111 44,499,343

109,968 5,947,723 31,101,686 978,817 38,138,194

140,511 3,753,011 17,449,268 953,139 22,295,929

105,083 3,533,487 12,391,816 929,411 16,959,797

94,542 6,693,828 9,321,925 909,886 17,020,181


(28,174,250)

(19,025,576)

3,488,501

12,426,394

15,271,082

Equity Share capital Share premium Loss sustained Re-measurement reserve AFS fair value reserve Foreign exchange reserve Non-controlling interest Total equity

3,131,351 16,440,679 (49,181,498) (195) 12,992 1,974,120 (551,699) (28,174,250)

3,131,351 16,440,679 (36,048,516) (20,188) 1,182 (2,057,468) (472,616) (19,025,576)

3,131,351 16,440,679 (14,038,332) (83,964) (1,448) (1,025,002) (934,783) 3,488,501

3,131,351 16,440,679 (6,384,375) (55,558) 3,065 (156,952) (551,816) 12,426,394

3,131,351 16,440,679 (3,645,641) (57,900) 10,802 5,030 (613,239) 15,271,082

1,900,966

3,078,804

10,572,215

10,572,215

13,029,924

(714,345) 659,977 (8,418,039) (8,472,407) (4,609,188) (13,081,595) (127,152) (13,208,747)

(794,548) 2,952,849 (21,384,827) (19,226,526) (2,118,271) (21,344,797) (96,778) (21,441,575)

2,230,584 89,764 (6,362,851) (4,042,503) (3,856,553) (7,899,056) (137,867) (8,036,923)

4,198,326 200,002 (3,500,998) 897,330 (3,155,691) (2,258,361) (325,815) (2,584,176)

5,906,766 323,993 (4,150,149) 2,080,610 (1,611,336) (9,000) 460,274 (220,529) 239,745

Per share data: (Loss)/earnings

(210)

(351)

(122)

(41)


(450)

(304)

56

198

Statement of financial position Assets Non-current assets Property, plant and equipment Assets under finance lease Intangible assets Investment in associates Available for sale financial assets Total non-current assets Current assets Inventories Trade and other receivables Cash and bank balances Total current assets Liabilities

Statement of profit or loss and other comprehensive income Turnover Gross (loss)/profit Other income Administrative expenses Operating (loss)/profit Net finance costs Share of loss of associate (Loss)/profit before taxation Income tax expense (Loss)/profit for the year

4 244

(Loss)/earnings per share are based on (loss)/profit after tax attributable to ordinary shareholders divided by the issued and fully paid ordinary shares at the end of each financial year. Net (liabilities)/assets per share are based on net (liabilities)/assets divided by the issued and fully paid ordinary shares at the end of each financial year. 63

JAPAUL OIL & MARITIME SERVICES PLC FINANCIAL SUMMARY - COMPANY 31 DECEMBER

2017 N'000

2016 N'000

2015 N'000

2014 N'000

2013 N'000

16,454,951 3,946,734 40,000 5,300 26,947 20,473,932

17,027,087 4,223,712 119,820 5,300 15,137 21,391,056

17,599,364 4,500,072 1,101 119,820 5,300 12,507 22,238,164

17,850,493 4,570,172 3,388 119,820 5,300 17,019 22,566,192

11,578,336 9,984,478 6,264 94,820 9,000 24,756 21,697,654

34,000 8,462,546 83,701 8,580,247

17,328,315 308,640 17,636,955

12,351,476 432,792 12,784,268

120,836 14,623,211 878,107 15,622,154

13,412,622 4,296,635 17,709,257

Current liabilities Bank overdrafts Trade and other payables Current portion of long term borrowings Defined contribution pension plan Current income tax liability Total current liabilities

312,569 4,582,701 748,334 79,697 8,067 5,731,368

21,289 11,099,306 634,728 60,140 194,246 12,009,709

1,091,394 1,740,001 412,996 33,625 228,273 3,506,289

193,316 1,414,534 3,937,585 36,024 308,308 5,889,767

2,703,704 1,952,773 17,059 349,433 5,022,969

Net current assets

2,848,879

5,627,246

9,277,979

9,732,387

12,686,288

42,604 10,968,027 36,668,346 909,886 48,588,863

80,410 9,593,102 31,101,686 909,886 41,685,084

93,094 6,011,483 17,449,268 909,886 24,463,731

75,798 4,877,395 12,391,816 909,886 18,254,895

94,542 6,693,828 9,321,926 909,886 17,020,182


(25,266,052)

(14,666,782)

7,052,412

14,043,684

17,363,760

Equity Share capital Share premium Loss sustained Remeasurement reserve AFS fair value reserve Foreign exchange reserve Total equity

3,131,351 16,440,679 (44,181,384) (22) 12,992 (669,668) (25,266,052)

3,131,351 16,440,679 (33,536,706) (33,620) 1,182 (669,668) (14,666,782)

3,131,351 16,440,679 (11,776,073) (72,429) (1,448) (669,668) 7,052,412

3,131,351 16,440,679 (4,806,185) (55,558) 3,065 (669,668) 14,043,684

3,131,351 16,440,679 (2,161,172) (57,900) 10,802 17,363,760

5,434,086

7,338,911

8,031,756 3,440,988 242,254 (2,074,979) 1,608,263 (1,447,639) 160,624 (121,816)

Statement of financial position Assets Non-current assets Property, plant and equipment Assets under finance lease Intangible assets Investment in subsidiaries Investment in associates Available for sale financial assets Total non-current assets Current assets Inventories Trade and other receivables Cash and bank balances Total current assets Liabilities

Non-current liabilities Defined benefit pension plan Finance lease facility Long term borrowings Deferred income tax liability Total non-current liabilities

Statement of profit or loss and other comprehensive income Turnover

191,383

649,145

Gross (loss)/profit Other income Administrative expenses Operating (loss)/profit Net finance costs (Loss)/profit before taxation Income tax expense

(980,652) 214,549 (5,214,673) (5,980,776) (4,609,141) (10,589,917) (54,761)

(1,080,639) 295,086 (18,903,850) (19,689,403) (2,062,591) (21,751,994) (8,639)

1,835,143 88,005 (5,034,623) (3,111,475) (3,815,746) (6,927,221) (42,666)

3,433,578 197,938 (3,001,025) 630,491 (3,152,181) (2,521,690) (182,048)

(Loss)/profit for the year

(10,644,678)

(21,760,633)

(6,969,887)

(2,703,738)

38,808

Per share data: Basic (loss)/earnings

(170)

(347)

(111)

(43)

1


(403)

(234)

113

224

277

(Loss)/earnings per share are based on (loss)/profit after tax attributable to ordinary shareholders divided by the issued and fully paid ordinary shares at the end of each financial year. Net (liabilities)/ assets per share are based on net (liabilities)/ assets divided by the issued and fully paid ordinary shares at the end of each financial year. 64