Mar 31, 2018 - The financial statements of Portland Paints and Products Nigeria Plc ("the ... periods beginning on or af
PORTLAND PAINTS AND PRODUCTS NIG. PLC FINANCIAL STATEMENTS (UNAUDITED) FOR THE PERIOD ENDED 31 MARCH 2018
PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 CONTENTS
PAGE
General information
3
Statement of comprehensive income
4
Statement of financial position
5
Statement of changes in equity
6
Statement of cash flows
7
Notes to the financial statements
8
Other information: Statement of value added
30
2
PORTLAND PAINTS & PRODUCTS NIGERIA PLC GENERAL INFORMATION FOR THE PERIOD ENDED 31 MARCH 2018 BOARD OF DIRECTORS Mr. Larry Ettah Mr. Adedamola Olusunmade Mr. Mukhtar Yakasai Mr. Abdul Bello Engr. Dipo Ashafa Mrs. Adeline Ogunfidodo REGISTERED OFFICE
FACTORY
Sandtex House 105A, Adeniyi Jones avenue, Ikeja. Lagos State. Km 36, Abeokuta – Lagos expressway Ewekoro, Ogun State.
REGISTERED NUMBER
RC76075
FRCN NUMBER
FRC/2012/0000000000221
COMPANY SECRETARY
Mrs. Bolanle Oyekan UAC House 1-5 Odunlami street Marina,Lagos
AUDITORS
PricewaterhouseCoopers Landmark Towers, Plot 5B Water Corporation Road, Victoria Island, Lagos.
REGISTRAR
Africa Prudential Plc 220B, Ikorodu Road Palmgrove, Lagos.
BANKERS
Zenith Bank Plc United Bank for Africa Plc Guaranty Trust Bank Ecobank Nigeria Plc First City Monument Bank Plc
3
- Chairman - MD/CEO - Director - Director - Director - Director
PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated)
Note
3 Months to Mar 2018
3 Months to Mar 2017
N'000
N'000
Revenue
3
624,101
549,499
Cost of Sales
5
(411,590)
(414,348)
212,511
135,151
Gross Profit Other Operating Income
4
32,377
29,463
Selling and distribution expenses
5
(65,135)
(39,766)
Administrative expenses
5
(145,975)
(89,310)
33,778
35,539 3
Profit from Operations Finance Income
6
3,221
Finance Expenses
7
(2,222)
Net Finance Expenses
999
Profit Before Taxation
(22,166) (22,162)
34,777
13,377
(11,129)
(4,281)
23,648
9,096
Profit from Discountinued Operations
-
-
Other Comprehensive Income
-
-
23,648
9,096
3 3
2 2
(Tax expense)/Tax Credit
8
Profit from Continuing Operations
Total Comprehensive Profit Earnings Per Share for Profit Attributable to Owners of The Company During The Year: Basic (Kobo) Diluted (Kobo)
9 9
The notes on pages 8 to 33 form an integral part of these financial statements
4
PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated) Notes
Mar-18 N'000
Dec-17 N'000
ASSETS: Non - current assets: Property, plant and equipment
9
412,800
420,955
Intangible assets
10
93,461
93,945
Prepayments Total non - current assets
12
10,223 516,484
3,245 518,145
Inventories
11
744,301
900,430
Trade and other receivables
12
335,778
406,813
Prepayments Cash and short term deposit
12 13
60,310 299,236
16,307 194,207
Total current assets
1,439,625
1,517,756
Total assets
1,956,109
2,035,902
396,708
396,708
437,923
437,923
91,923 490,110
91,923 466,461
1,416,664
1,393,015
22,056
22,056
22,056
22,056
Current assets:
Equity and liabilities Equity: Issued share capital
16
Share premium Other capital reserve (Revaluation reserve) Retained earnings
16
Equity attributable to owners of the parent Non current liabilities: Deferred tax liabilities
15(a)
Total non current liabilities Current liabilities: Trade and other payables
14
401,580
497,755
Interest bearing loans and borrowings
13
29,017
43,742
13 15(a)
4,071 82,721
7,742 71,592
517,390
620,831
Government grants Income tax payable Total current liabilities Total liabilities Total equity and liabilities
539,446
642,887
1,956,109
2,035,902
The unaudited financial statements on pages 4 to 7 was approved by the board of directors on 17th April,2018 and signed on its behalf by:
Abdulwasiu Taiwo (Finance Manager)
FRC No:FRC/2013/ICAN/00000002588
Olusunmade Adedamola (Managing Director)
FRC No:FRC/2018/IODN/00000018035
Mr Larry E. Ettah (Chairman)
FRC No:FRC/2013/IODN/00000002692
5
PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated) Share Share capital Premium N'000
N'000
1 January 2017
200,000
-
Rights Issue Profit for the Year
196,708 -
437,923.00 -
31 December 2017
396,708
1 January 2018 Profit for the period 31 March 2018
396,708 396,708
Retained earnings
Total equity
N'000
N'000
N'000
91,923
408,292
700,214
-
58,170
634,631 58,170
437,923
91,923
466,462
1,393,015
437,923
91,923 91,923
466,462 23,648 490,110
1,393,015 23,648 1,416,663
437,923
The notes on pages 8 to 30 form an integral part of these financial statements
6
Revaluation Surplus
PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated) June to 3 Months Mar 2018
June to 3 Months Mar 2017
N'000
N'000
Cash flows from operating activities: Cash generated from operations Income Tax paid Net cash (used in) / generated from Operating activities Cash flows from investing activities: Purchase of Property, Plant and Equipment Purchase of intangible assets Proceeds from sales of PPE (Property,Plant and Equipment) Finance income Net cash used in Investing activities
17 15
9 10
124,701 124,701
46,196 46,196
(7,271) (2,189) 3,516 3,221 (2,723)
(21,041) 4,277 3 (16,761)
Cash flows from financing activities: Proceeds from Borrowings Repayments of borrowings Interest paid
(14,725) (2,222)
(20,287) (22,166)
Net cash generated from/ (used in) financing activities
(16,947)
(42,453)
Net increase/(decrease) in cash and cash equivalents
105,031 194,205 299,236
(13,018) 34,408 21,390
Cash and cash equivalents brought forward Cash and cash equivalents
6
13
The notes on pages 8 to 30 form an integral part of these financial statements
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PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 1.0 Corporate Information Portland Paints and Products Nigeria Plc (The Company) was incorporated as a Limited Liability Company on 3 September 1985 and became a Public Company on 24 April 2008. The Company was listed on the floor of the Nigerian Stock Exchange on 9 July 2009. The registered office is located at 105A, Adeniyi Jones Avenue, Ikeja, Lagos in Nigeria. The principal activities of the Company are manufacturing and sale of paints and marketing of sanitary ware. The main products of the Company are Sandtex range of decorative and industrial coatings and Hempel marine & protective coatings for Oil and Gas Sector.
2.0 Summary of significant accounting policies 2.1 Basis of preparation The financial statements of Portland Paints and Products Nigeria Plc ("the Company") have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). The financial statements are presented in the functional currency, Nigerian naira (N), rounded to the nearest thousand, and prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.3 2.1.1 Basis of Measurement The financial statements have been prepared on a historical cost basis. The company’s financial statements are presented in naira, which is also the company’s functional currency. Transactions in foreign currency are recognized in naira at the official spot rate at the date of transaction. 2.2 Changes in accounting policy and disclosures (a) New and amended standards adopted by the Company A number of new improvements to IFRSs 2010-2012 and 2011-2013 cycles were effective for the first time for financial reporting periods commencing on or after 1 January 2017.However,none of the amended standards were adopted by the company in the period as they were not applicable in the preparation of the financial statements. (b) New standards, amendments and interpretations not yet adopted The following relevant IFRS and IFRIC interpretations which are effective for the first time for the financial year beginning on or after 1 January 2017 have been adopted by the Company.The company has not elected to early adopt and the impact of new standards that is applicable to the company is still being assessed. Amendments to IAS 12 Income taxes The amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets. The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for the recognition of deferred tax assets. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is not permitted.
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PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Amendments to IAS 7 Cash flow statements In January 2016, the International Accounting Standards Board (IASB) issued an amendment to IAS 7 introducing an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment responds to requests from investors for information that helps them better understand changes in an entity’s debt. The amendment will affect every entity preparing IFRS financial statements. However, the information required should be readily available. Preparers should consider how best to present the additional information to explain the changes in liabilities arising from financing activities. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is not permitted. IFRS 9 Financial instruments IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new rules for hedge accounting. In July 2014, the IASB made further changes to the classification and measurement rules and also introduced a new impairment model. These latest amendments now complete the new financial instruments standard. Following the changes approved by the IASB in July 2014, the Company no longer expects any impact from the new classification, measurement and derecognition rules on the Company’s financial assets and financial liabilities. The new requirements will not have any impact on the Company's financial assets. The new hedging rules align hedge accounting more closely with the Company’s risk management practices. As a general rule it will be easier to apply hedge accounting going forward as the standard introduces a more principles-based approach. The new standard also introduces expanded disclosure requirements and changes in presentation. The new impairment model is an expected credit loss (ECL) model which may result in the earlier recognition of credit losses. The company currently does not have any hedging arrangements and hence would not be affected by the new rules.
IFRS 15: Revenue from contract with customers. This standard is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency in the recognition and presentation of revenue.Revenue is recognized based on the satisfaction of performance obligations,which occurs when control of good or service transfers to a customer. Amendment is not applicable to current year financial statements. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the company. IFRS 16 Leases IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short term and low-value leases. The accounting for lessors will not significantly change.
The standard is effective for annual periods beginning on or after 1 January 2019 and earlier application is not permitted. The Company is assessing the impact of IFRS 16. 2.3 Significant accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Material estimates in the financial statements include the following:
9
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.3.1 Accounts receivable The allowance for doubtful accounts involves management judgment and review of individual receivable balances based on an individual customer’s prior payment record, current economic trends and analysis of historical bad debts of a similar type. Additional information on impaired receivables is included in note 13. 2.3.2 Useful life and residual value of property, plant and equipment and definite life intangible assets. Property, plant and equipment and intangible assets with definite life are depreciated over their useful life. The Company estimates the useful lives of PPE and intangible assets based on the period over which the assets are expected to be available for use. The estimation of the useful lives of plant and machinery are based on technical evaluations carried out on the assets. Estimates could change if expectations differ due to physical wear and tear and technical or commercial obsolescence. It is possible however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the plant and machinery would increase expenses and decrease the value of non-current assets.
2.3.3 Income Tax The Company is subject to income tax under the Nigerian tax legislation.Significant judgement is required in determining the provision for income taxes.There are many transactions and calculations for which the ultimate tax determination is uncertain.
2.3.4 Impairment of intangible assets Externally acquired intangible assets that have indefinite useful lives are initially recognized at cost and are subsequently tested for impairment at each financial year end and stated at their recoverable amount. The impairment loss where the carrying amount is greater than the recoverable amount is charged to the profit or loss or income statement. Management is of the opinion that the trademark is adjudged to have an indefinite life as the ownership had been transferred to the Company in perpetuity and the Company expects to generate cashflows from the use of the asset in perpetuity.
10
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4 Summary of significant accounting policies 2.4.1 Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on tangible assets with finite lives is recognised in the income statement as the expense category that is consistent with the function of the intangible assets. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised. Intangible assets include purchased trade mark and computer software. Trade mark is externally acquired with indefinite useful lives. It is recognized at cost and are subsequently tested for impairment at each financial year end and stated at their recoverable amounts. The impairment loss, where the carrying amount is greater than the future economic benefits, is charged to the income statement. Purchased software with finite useful lives are recognised as assets if there is sufficient certainty that future economic benefits associated with the item will flow to the entity. Amortisation is calculated using the straight-line method over 5 years.
Computer software primarily comprises external costs and other directly attributable costs. Category Trade Mark Computer software
Useful lives Indefinite 5 years
2.4.2 Property Plant and Equipment Land and buildings are initially recognized at cost but subsequently recognized at fair value less cost to sell based on the valuations by the independent valuers less accumulated depreciation and accumulated impairment loss for building. All other property, plant and equipments are initially recognized at historical cost less accumulated depreciation and accumulated impairment loss. Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is available for use. In the case of assets of own construction, cost comprises direct and indirect costs attributable to the construction work, including salaries and wages, materials, components and work performed by subcontractors. Replacement or major inspection costs are capitalised when incurred and if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The depreciation base is determined as cost less any residual value. Depreciation is charged on a straight-line basis over the estimated useful lives of the assets and begins when the assets are available for use. The assets’ residual values, and useful lives and method of depreciation are reviewed and adjusted, if appropriate, at each financial year end and adjusted prospectively, if appropriate. Impairment reviews are performed when there are indicators that the carrying value may not be recoverable. Impairment losses are recognised in the income statement as an expense. On revaluation of property, plant and equipment, the surplus thereon is transferred to the revaluation surplus account in the statement of changes in equity and recognized as other comprehensive income in the comprehensive income statement.
11
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4.3 Assets on lease Finance leases are recognized at amount equal to the fair value of the leased property or if lower the present value of the minimum lease property, each determined at the inception of the lease. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease terms so as to produce a constant periodic rate of interest on the remaining balance of the liability. Category
Useful lives
Long leasehold land
Over the lease period
Freehold buildings
up to 99 years
Heavy Plant and machinery
5-10 years
Furniture, fittings and equipment
3-5years
Motor vehicles
2-4 years
Computer equipments
3-5 years
An item of property and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
2.4.4 Earnings per share Basic earnings are determined by dividing the profit attributable to share holders by the weighted average number of shares on issue during the year. 2.4.5 Diluted Earnings per share Diluted Earnings per share is calculated by dividing the profit attributable to shareholders by the total number of shares (inclusive of diluted shares) 2.4.6 Impairment of non-financial assets Property, plant and equipment and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, or in the case of indefinite life intangibles, then the asset’s (CGU’s) recoverable amount is estimated. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash-generating units (CGUs). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGUs). An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Portland Paints & Products Nigeria Plc evaluates impairment losses for potential reversals when events or circumstances may indicate such consideration is appropriate. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. 2.4.7 Inventories Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows: • Raw materials: Purchase cost on weighted average basis • Goods-In-Transit, Work-in-progress and Finished goods: Goods in transit are valued at invoice price together with other attributable charges. Work-in-progress cost consist of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. The cost of finished goods comprises overheads,suppliers’ invoice prices, and,where appropriate, freight, printing costs and other charges incurred to bring the materials to their location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
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PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4.8 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party. 2.4.8.1 Financial Asset Classification The Company’s financial assets include cash, trade and other receivables, all of which are classified as loans and receivables. This classification is based on the purpose for which the financial assets were acquired. Management determines the classiification of finanancial assets at initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent measurement Subsequent to initial recognition, loans and receivables are measured at ammortised cost using the effective interest rate method.
Derecognition of financial assets A financial asset (or, when applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised when: a) The rights to receive cash flows from the asset have expired or b) The Company retains the right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either: c) The Company has transferred substantially all the risks and rewards of the asset or the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its right to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Impairment of financial assets The Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at ammortised cost For financial assets carried at amortised cost, the Company first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a Company 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. If there is objective evidence that an impairment loss on assets carried at ammortised cost has been incurred, the amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.
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PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4.8.2 Financial liabilities Classification The financial liabilities are at ammortised cost. The classification is based on the purpose for which the financial liabilities were incurred. Management determines the classification of financial liabilities at initial recognition. Subsequent measurement The Company's financial liabilities are recognised initially at fair value and subsequently, measured at ammortised cost using the effective interest rate method. These includes borrowings and trade and other payables. They are classified as current liabilities except for those with maturities greater than 12 months after the reporting period and these are classified as non-current liabilities. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. 2.4.8.3 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 2.4.9 Cash and cash equivalent Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less in the statement of financial position. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdraft. 2.4.10 Taxes •Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date in Nigeria. Current income tax assets and liabilities also include adjustments for tax expected to be payable or recoverable in respect of previous periods. Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the income statement. • Deferred tax Deferred tax is provided using the liability method in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits. No deferred tax is recognised when relating to temporary differences that arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax items are recognised in correlation to the underlying transaction either in profit or loss, other comprehensive income or directly in equity.
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PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4.10 Taxes (continued) • Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax, except: • Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable • Receivables and payables are stated with the amount of sales tax included The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
2.4.11 Government grants Grants for expenditure are netted against the relevant expenditures as and when due and these are recognized in profit or loss in the statement of comprehensive income. Where retention of a government grant is dependent on the Company satisfying certain criteria, it is recognized as deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to the statement of comprehensive income (when related to expenses) or netted against the asset purchased (when specific to an asset). When loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. 2.4.12 Provisions Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.4.13 Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all of its revenue transactions. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Where a buyer has a right of return, the Company defers recognition of revenue until the right to return lapsed. Rendering of services Revenue from painting services is recognised as income from project by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.
15
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 2.4.14 Interest income All financial instruments measured at ammortised cost and interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the income statement. 2.4.15 Borrowing cost Specific Borrowing costs on qualifying assets are capitalized from the date the actual costs on the qualifying asset are incurred. Where such borrowed amount, or part thereof, is invested, the income earned is netted off the borrowing costs capitalised. Where the entity does not specifically borrow funds to construct a qualifying asset, general borrowing costs are capitalized by applying the weighted average cost of the borrowing cost proportionate to the expenditure on the asset.
2.4.16 Foreign currency The Company’s financial statements are presented in naira, which is also the Company’s functional currency. Transactions in the foreign currency are recognized in Naira at the official spot rate at the date of transaction. Monetary assets and liabilities denominated in a foreign currency are translated into Naira at the spot rate of exchange ruling at reporting date. Differences arising on settlement or translation of monetary items are recognised in income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the item (i.e. the translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively). 2.4.17 Segment reporting The reportable segments are identified on the basis of Strategic Business Units (SBU) and the threshold of recognition is a contribution of not less than 10% of the revenue, assets, profits or losses of all the operating segments. Where the board and management is of the opinion that a strategic business unit is important to the growth initiative of the Company such SBU may be reported as a reportable segment even though it is not meeting the threshold of a reportable segment. The Managing Director (CEO) is the Chief Operating Decision Maker (CODM) of the Company whom the segment information is presented to.
2.4.18 Employees' benefits Employees' benefits both legal and constructive which are long and short term in nature are adequately recognized in the income statement. The Company operates a defined contribution pension scheme in line with the Pension Reform Act 2014. The total contribution rate is 18%,where the employees contributes 8% and the Company contributes 10% of basic salary, housing and transport allowances. The Company's contributions are accrued and charged to the income statement as and when the relevant service is provided by employees. The Company has no further payment obligations once the contributions have been paid.
16
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) 3 Segment Information: For management purpose, the Company is organised into Strategic Business Units (SBU) based on products categories and has three reportable segments as follows: - Portland Decorative Paints segment, which manufactures and market various ranges of decorative paints. - Portland Marine Segment, which manufactures and markets various ranges of marine protective paints. - Portland Bathroom segment, which markets and distributes ranges of sanitary ware products. No other segment has been aggregated to form the above reportable operating segments. The chief operating decision maker (CODM) has been identified as the executive management. The Executive Management monitors the operating results of each business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on gross profit or loss and is measured consistently with gross profit or loss in the combined financial statements.
(i) Income
Decorative
Marine & Industrial Paints
Sanitary Wares
Total
Mar-18 N'000
Mar-18 N'000
Mar-18 N'000
Mar-18 N'000
Revenue: Total Revenue Inter-segmental revenue
415,529 -
208,563 -
9 -
624,101 -
Total Revenue From External Customers
415,529
208,563
9
624,101
Company's Revenue per Statement of Comprehensive Income
415,529
208,563
9
624,101
Segment Gross Profit
141,479
71,505
-473
212,511
Operating Expenses Depreciation Amortisation Finance Income Finance Expense Other Income Sub-total
192,804 15,633 2,673 (3,221) 2,222 (32,377) 177,734
Company's Profit Before Tax
34,777
Decorative
Marine Paints
Mar-17 N'000 Revenue: Total Revenue
Mar-17 N'000
444,356
104,936
Sanitary Wares
Total
Mar-17 N'000
3 Months to Mar 2017 N'000 207
549,499
Total Revenue From External Customers
444,356
104,936
207
549,499
Company's Revenue per Statement of Comprehensive Income
444,356
104,936
207
549,499
94,908
12,412
-39
Segment Gross Profit Operating Expenses Depreciation Amortisation Finance Income Finance Expense (Other Income)/Loss Sub-total
107,281 115,202 13,874 (3) 22,166 (29,463) 121,774
Company's Profit Before Tax
13,377
The operating segments did not transact with each other and as such there are no transfer prices between operating segments.
17
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated)
Production activities in the factory is mainly production of decorative paints. Hence the relevant costs are absorbed by Decorative Business Unit. This accounts for the depreciation on Factory building wholly absorbed by Decorative Business Unit. Other Income is generated from the application of paints in addition to the sales and marketing of paint products. The amounts provided to the chief operating decision maker (CODM) with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segments and the physical location of the assets.
(ii)
Assets & Liabilities
Decorative
Marine Paints
Sanitary Wares
Total
Mar-18 N'000
Mar-18 N'000
Mar-18 N'000
Mar-18 N'000
Addition to Non-current Assets Reportable Segment Assets Factory Office Property
7,271 1,460,995 195,025
279,583 -
13,235 -
7,271 1,753,814 195,025
Total Company Assets Reportable Segment Liabilities:
1,663,291
279,583
13,235
1,956,109
Loans and Borrowings (Excluding Leases and Overdrafts) Defined Contribution Pension Scheme Financial Liabilities Deferred Tax Laibilities Other Unallocated and Central Liabilities
29,017 6,089 3,602 22,054 478,681
-
-
29,017 6,089 3,602 22,054 478,681
Total Company Liabilities
539,444
-
-
539,444
Addition to Non-current Assets Reportable Segment Assets Factory Office Property Total Company Assets
Decorative
Marine Paints
Sanitary Wares
Total
Dec-17
Dec-17
Dec-17
Dec-17
N'000
N'000
N'000
N'000
54,325 1,387,874 213,164
367,395 -
13,143 -
54,325 1,768,413 213,164
1,655,364
367,395
13,143
2,035,902
Reportable Segment Liabilities: Loans and Borrowings (Excluding Leases and Overdrafts) Defined Contribution Pension Scheme Financial Liabilities Deferred Tax Laibilities Other Unallocated and Central Liabilities
43,742 9,595 7,742 22,056 559,752
-
-
43,742 9,595 7,742 22,056 559,752
Total Company Liabilities
642,886
-
-
642,886
Items of Property, Plant and Equipment are directly allocated to the SBU enjoying the economic benefits of the assets.
18
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated) 3 Months to Mar 2018 N'000 4 Other Operating Income: Government grants 3,670 Profit on sale of fixed assets 50 Sale of scrap 275 Discount Received Insurance claim received 1,737 Exchange gain/(loss) 1,940 Sundry Income 24,398 Container Deposit Refund 307 Total 32,377
3 Months to Mar 2017 N'000 6,126 724 4,277 13,358 4,752 227 29,463
Sundry Income is majorly made up of:profit from closed projects (N15.6m);Franchisee fee non refundable deposit (N4.5m) 5a Expense by function Cost of sales 411,590 414,348 Selling & distribution expenses 65,135 39,766 Adminstrative expenses 145,975 89,310 622,700 543,424 5b Expenses by nature Change in inventories of finished goods and work in progress Amortization of intangible assets Depreciation on property, plant and equipment Staff costs Distribution costs Repairs and maintenance Energy Consumption Advert and promotional expenses Commercial Service Fee Auditors' fees Bad debt provision Information technology Rent & rates Bank Charges Legal & Professional Fees Travelling expenses Directors Fees Telephone & Stationery Other expenses
357,747 2,673 26,933 124,976 17,759 17,627 7,280 18,498 6,266 2,700 1,000 11,347 5,325 1,351 3,556 14,143 803 1,177 1,541
414,348 0 20,374 36,840 5,675 12,885 10,759 6,005 6,090 900 5,000 9,445 7,601 750 2,572 1,168 568 1,914 529
622,700
543,424
6 Finance Income: Interest received on bank deposits Total
3,221 3,221
7 Finance costs: Interest on debts and borrowings Total
2,222 2,222
22,166 22,166
10,433 696 11,129 11,129
4,013 268 4,281 4,281
8 Taxation: (i) Current tax on profits for the period: Company income tax Education tax Deferred tax ( Note 15b) Total current tax (ii) Reconciliation of tax charge: Profit before tax Tax at Nigerian's statutory income tax rates (Minimum Tax) Disallowable expenses Disallowable income Balancing charge Tax effect of capital allowance Education tax @2% of assessable profit Deffered Tax Total tax charge for the period
3 3
34,777
13,377
10,433 696 11,129
4,013 31,012 (1,550) 2,007 (31,470) 268 4,280
19
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated)
Property, plant and 9 equipment Cost
Land
Factory building
Plant and machinery
Computer Equipments
Furniture and fittings
Motor vehicles
Work-inprogress
Total
N'000
N'000
N'000
N'000
N'000
N'000
N'000
N'000
173,164 -
409,428 12,270
At 1 January 2017 Additions Write off Transfers / Held for sales Disposal
40,000 -
26,841 1,961
199,716 21,257
-
(24,462)
400 2,372 (400) -
At 31 December 2017
40,000
173,164
417,630
156,103
28,802
196,510
2,372
1,014,581
At 1 January 2018 Additions Transfers / Held for sales Disposal At 31 March 2018
40,000 40,000
173,164 173,164
417,630 6,055 423,685
156,103 1,274 (103) 157,275
28,802 -
196,510 196,510
2,372 (58) 2,313
1,014,581 7,271 (103) 1,021,749
-
13,812 3,462
254,064 29,917 (673)
109,321 15,183 (64)
22,957 2,494 0
151,071 12,657 (20,576) -
-
551,225 63,713 (21,313) -
At 31 December 2017
-
17,274
283,308
124,440
25,451
143,152
-
593,625
At 1 January 2018 Charge for the period Disposal
-
17,274 865
283,308 7,580 (90)
124,440 2,431 720
25,451 645
143,152 3,172 -
-
593,625 14,693 630
At 31 March 2018
-
18,139
290,799
127,591
26,096
146,324
-
608,948
40,000 40,000
155,025 155,890
132,886 134,322
29,684 31,663
2,706 3,351
50,186 53,358
2,313 2,372
412,800 420,956
Depreciation At 1 January 2017 Charge for the Year Disposal Transfer
Net book Value as at: At 31 March 2018 At 31 December 2017
-
-
139,759 16,465
(4,068)
(121)
28,802
989,306 54,325 (400) (28,651)
Fair Value of land and building Land and building held for use in the production or supply of goods and services, or for administrative purposes are stated at cost less any accumulated impairment losses (for land and buildings) and accumulted depreciation (for buildings).Land and building comprise mainly of factories and offices. Depreciation amounting to N14.6m (2017-N64m) has been charged to income statement, N9.6m (2017-N29m) charged to cost of sales, N22.6m (2017- N10m) to administrative expenses and N12.6m (2017-N15m) to selling and distribution expenses.
20
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated)
10 Intangible Assets
Trade Mark N'000
Computer Software N'000
Total N'000
Cost At 1 January 2017 Additions
49,025 -
197,368 51,276
246,393 51,276
At 31 December 2017
49,025
248,644
297,669
At 1 January 2018 Additions - externally acquired during the period
49,025 -
248,644 2,189
297,669 2,189
At 31 March 2018
49,025
250,833
299,858
At 1 January 2017 Charge for the year At 31 December 2017
-
197,368 6,356 203,724
197,368 6,356 203,724
At 1 January 2018 Charge for the period
-
203,724 2,673
203,724 2,673
At 31 March 2018
-
206,397
206,397
At 31 March 2018
49,025
44,436
93,461
At 31 December 2017
49,025
44,920
93,945
Amortization:
Net Book values at:
The Company's Intangible asset represents the N49million trade mark purchased from Blue Circle Industries Plc adjudged to have an indefinite life. The trade mark is carried at cost to be tested annually for impairment. The trade mark was reviewed for impairment as at 31 March,2018 and at present no impairment is deemed required and there are no contractual commitment that may have impact on the carrying value of the trade mark. Intangible assets amortization charged to income statement amounts to N2.6m (2017-N6.4m) has been included as part of administrative expenses.
21
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated)
Mar-18 N'000
Dec-17 N'000
11 Inventories: Raw Materials Packaging Materials Work in progress Finished Goods Spare Parts Diesel Stock Impairment
223,745 23,510 5,776 545,900 14,488 844 (69,961)
299,514 32,170 6,974 607,633 15,008 4,093 (64,961)
Total
744,301
900,430
Quarter end stock count was conducted across all Company's stock holding locations. The quantity counted was valued using Weighted Average Costing model as per the Company's policy and agreed as stated herein. The amount of write-down on inventories to net realizable value recognised as an expense is N69.9m (2017: N64.9m). This represents impairment for slow moving, obsolete and damaged inventories. All inventory with the exception of finished goods are stated at cost. Finished goods are stated at their net realisable values.
The value of finished goods include N104m (Dec 2017: N395m) imported merchandizing products.
22
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated)
12 Trade and Other Receivables (i) Trade receivables Less: Provision for impairment of trade receivables - (Note 13iii) Net trade receivables Other receivables Less: Provision for impairment of other receivables Net other receivables Receivables from related parties (note 18a) Withholding tax receivable VAT receivable Total trade and other receivables (ii) Prepayments Prepayments - Current Prepayments - Non Current portion Total prepayments
Mar-18 N'000 357,813
Dec-17 N'000 433,810
(177,905) 179,908
(176,905) 256,905
73,251 73,251
14,545 14,545
13,171 8,616 60,832 335,778
13,171 66,990 55,202 406,812
60,310 10,223
16,307 3,245
70,533
19,552
The balance on prepayment represent rent,medical,education and insurance paid in advance which will be charged against earnings in the periods it relates.
The fair values of trade and other receivables classified as loans and receivables are as follows:
Trade receivables Receivables from related parties (Note 18d) Withholding tax receivable VAT receivable Other receivables Total
Mar-18 N'000 179,908 13,171 8,616 60,832 73,251
Dec-17 N'000 256,906 13,171 66,990 55,202 14,545
335,778
406,813
Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 31 March, 2018 were reviewed for impairment test.
Mar-18 N'000
(iii) Allowance for impairment of trade receivables: As at January 1st 2018 Additional allowance for receivable impairment
Dec-17 N'000
176,905
171,765
1,000
23,000
Un-utilised amounts reversed / (amount written off)
177,905 0
194,765 (17,860)
Total as at 31 March,2018
177,905
176,905
23
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of naira, unless otherwise stated) 13 Interest bearing loans and borrowings: Mar-18 N'000
Dec-17 N'000
(i) Non-Current Borrowings: Bank loans: Long term liabilities - Note 14(iii)
-
Total Non Current Borrowings
-
(ii) Current Borrowings: Bank loans: Long term liabilities due within one year
29,017
Total Current Borrowings
0
43,742
29,017
43,742
Total Loans and Borrowings 29,017 The movement in Loan and Borrowings represent principal repayment as at 31 March 2018
43,742
Current borrowings: The bank loan is secured with the followings: - Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at August 2016, by Steve Akhigbemidu & Co Estate Surveyors &Valuers - Execution of trust receipts by the borrower. - Ownership of assets financed - Promissory note of the Company for principal and interest - Sales collection agreement (iii) Long term borrowings Non current liabilities The secured loan is a Central Bank of Nigeria (CBN) intervention fund through Bank of Industry (BOI). The applicable interest rate is 6% per annum subject to review by the BOI from time to time in line with the prevailing market conditions. The loan is repayable in instalments at various dates between January 2011 to 2018. After bifurcation of the government grant, in the form of a low interest rate loan, the loan bears an effective current interest rate of 22%. N3.6m (2017:N6m) interest on BOI facility was charged to income statement as at 31 March,2018 Total Facility
Repayment Terms
Bank of Industry (BOI) Intervention funds Through Ecobank Nigeria Plc
N300m
Carrying Value 28 equal quarterly installments from date of draw down
Bank of Industry (BOI) Intervention Funds Through FCMB Nigeria Plc
N255m
Lender
Total Long Term Facility Current Portion of Term-Loans Due After One Year
Carrying Value 60 equal monthly installments with 12 months moratorium
Mar-18
-
0
29,017
43,742
29,017
43,742
(29,017)
(43,742)
-
24
Dec-17
0
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) (v) Government grants:
As at January 01 2018 Total Government Grant for the period Released to the income statement
Current Non current At 31 March 2018
Mar-18 N'000 7,742
Dec-17 N'000 32,239
7,742 (3,670)
32,239 (24,504)
4,071
7,742
4,071 4,071
7,742 0 7,742
Government grants relates to loan granted by an Agency of the Nigeria Government (Central Bank of Nigeria) with 6% interest rate which is below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. There are no unfulfilled conditions or contigencies attached to these grants. (iv) Cash & Cash Equivalent: For the purpose of the statement of cash flow, cash and cash equivalents comprise the following as at 31 March 2018 N'000 N'000 Cash in hand and bank 179,236 74,207 Treasury Bills 120,000 120,000.00 Cash & short term deposit 299,236 194,207 Cash and Cash Equivalents
299,236
194,207
Cash at bank earns interest at floating rates based on daily bank deposit rates. Treasury bills are made for varying periods of between one month and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.
25
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) 14 Trade and Other Payables
Trade payables Other payables Withholding tax payable Customer Deposits Accruals Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost Intercompany Payable Dividends payable Total trade and other payables
Mar-18 N'000 91,270 20,090 3,177 (12,606) 189,293 291,224 90,347 20,009 401,580
Dec-17 N'000 227,150 17,558 2,705 (10,882) 129,706 366,237 111,509 20,009 497,755
Terms and conditions of the above financial and non-financial liabilities.
Trade payables are non-interest bearing and normally settled on 30 day term Other payables and accruals are non-interest bearing and have an average term of 90 days.Dividend payable represents the total unclaimed dividend as at 31 March 2018,the company has not declared dividend since 2012 financial year. 15(a) Corporate Tax Liability Mar-18 N'000 Balance at Beginning of the year Company Income Tax Education Tax Current Tax Expense Company Income Tax Education Tax
65,806 5,787 71,593
26,739 1,061 27,800
10,433 696
46,947 5,787
82,721
80,535
-
(8,942)
82,721
71,593
-
1,061 7,881 8,942
Payment Income tax payable
Dec-17 N'000
At 31 March 2018 The analysis of tax payment during the period is as follows: Cash payment Withholding tax credit
Deferred taxes are calculated on all temporary differences using the liability method and an effective tax 15(b) rate 30% (2017:30%). Deferred tax Mar-18 N'000
Dec-17 N'000
At 1 January 2018
22,054
22,054
Recognised in profit and loss Tax expense At 31 March 2018
(0) 22,054
22,054
Deferred income tax assets/(liabilities): Total deferred tax assets b/f
Mar-18 N'000 73,512.38
Dec-17 N'000 -
Property, plant and equipment
-
318,752.17
Provisions
-
(241,866.13)
Post employment benefit obligation
-
(3,373.66)
Unrealised exchange gain
Total deferred tax assets Defferred Tax balance:
73,512 N'000
Deferred Tax b/f Deferred tax movt on B/S method
22,054 -
Expected bal to carry forward
22,054
26
73,512 N'000 9,093 12,961 22,054
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) 16 Share capital Authorised (i) Mar-18 Number'000
Authorised Mar-18 N'000
Dec-17 Number'000
Dec-17 N'000
Ordinary shares of 50 kobo each
1,000,000
500,000
1,000,000
500,000
Total
1,000,000
500,000
1,000,000
500,000
Issued and Fully Paid
Issued and Fully Paid
Issued and Fully Paid
Issued and Fully Paid
Mar-18 Number'000
Mar-18 N'000
Dec-17 Number'000
Dec-17 N'000
Ordinary shares of 50kobo each at the beginning of the year
400,000
200,000
Rights Issue
393,416
196,708
As at 31 March 2018
793,416
396,708
400,000 -
200,000 -
400,000
200,000
(ii) Nature and purpose of reserves: Mar-18 N'000 91,923 91,923
Other capital reserve (Revaluation Reserve) At 1 January 2018 Revaluation during the year As at 31 March 2018
Dec-17 N'000 91,923 91,923
Asset revaluation reserve: The asset revaluation reserve is used to record increases in the fair value of property, plant and equipment and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity. The revaluation was carried out on land and building in December 2010 and 2012 by Ubosi Eleh & Co., a professional firm of Chartered Surveyors on an open market basis.However due to change in company policy, no further revaluation was recognized into the account for the year under review. (iii) Earnings per share Basic earnings per share is calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding ( inclusive of diluted shares) during the period. The following reflects the income and share data used on the basic and diluted earnings per share computations: Mar-18 N'000
Dec-17 N'000
Net profit attributable to ordinary equity holders
23,648
9,096
Weighted average number of ordinary shares for basic earnings per share
793,416
400,000
3
2
Basic earnings per share (in kobo) Weighted average number of ordinary shares for diluted earnings per share Diluted earnings per share (in kobo)
882,828 2.68
2
27
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) 3 Months to Mar 2018 N'000
3 Months to Mar 2017 N'000
17 Reconciliation of net profit to net cash provided by operating activities Profit before tax
34,777
Adjustments to reconcile net income to net cash provided by operating activities: Interest payable Finance income Depreciation Charges WHT Credit notes utilized Exchange gain
Amortization of government grant (Profit) on disposal of fixed assets Amortisation of intangible assets
3 Months to Mar 2018 N'000 2,222 (3,221) 15,633 (3,670) (50) 2,673
13,337 3 Months to Mar 2017 N'000 22,166 (3) 20,374 (7,933) (724) -
13,587
33,879
(Increase)/Decrease in Trade debtors and prepayments Decrease/(Increase) in Inventories
20,054 156,129
85,649 (104,504)
(Decrease)/Increase in Trade creditors & Accruals
(99,845)
17,835
76,337
(1,020)
89,924
32,859
124,701
46,196
Changes in assets and liabilities:
Net Adjustment Net cash provided by operating activities
28
PORTLAND PAINTS & PRODUCTS NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 (All amounts are in thousands of Naira, unless otherwise stated) 18
Related party transactions The parent, ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies that are related to Portland Paints & Products Nigeria Plc through common share holdings and directorship. The following transactions were carried out with related parties:
(a) Sales of goods and services
Relationship
3 Months to Mar 2018 N'000 -
Dec-17 N'000 10,210
UACN Property Dev. Company Plc
Sister Company
UAC Foods Ltd
Sister Company
-
-
GCL
Sister Company
-
2,961 13,171
0
3 Months to Mar 2018 N'000
(b) Purchases of goods and services
UAC of Nigeria Plc: Service fee UAC of Nigeria Plc: Interest on Working Capital Finance Facility
Principal Shareholder Principal Shareholder
MDS Logistics Ltd.
Sister Company
UAC Foods Ltd
Sister Company
22,307
-
-
-
-
-
-
6,266
22,307
UAC of Nigeria Plc: Working Capital Finance Loan UAC Foods Ltd: Working Capital Finance Loan UAC of Nigeria Plc: Bills settled on behalf of Portland Paints
(d) Intercompany payable:
UAC of Nigeria Plc UAC Foods Ltd (UFL): Working Capital Finance Facility CAP GCL
UACN Property Dev. Company Plc MDS Logistics Limited GCL UAC Foods Ltd
-
-
-
83,488 83,488
89202 89,202 N'000
89,754
Sister Company
-
Sister Company Sister Company
89,754
(e) Intercompany receivable:
34 111,509 N'000
0
All trading balances will be settled in cash. There were no provisions for doubtful related party receivables as at 31 March,2018 (N2017:Nil) and no charges to the income statement in respect of related party receivables. All related party transactions were carried out on commercial terms and conditions (See also disclosures in Note 14).
29
111,475 -
N'000 Sister Company Sister Company Sister Company Sister Company
Dec-17 N'000
-
N'000 Principal Shareholder
N'000
6,266
3 Months to Mar 2018 N'000
(c) Other transactions with related parties
Dec-17
10,210 2,961 13,171
PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF VALUE ADDED FOR THE YEAR ENDED FOR THE PERIOD ENDED 31 MARCH 2018
Turnover Non trading items
3 Months to Mar 2018 N'000 624,101 35,598
Bought-in-material and services: - Local - Imported Value added
3 Months to Mar 2017 N'000 549,499 29,467
%
659,699
578,966
(372,915) (105,181)
(384,314) (108,396)
%
181,603
100%
86,256
100%
128,971
64%
36,840
43%
11,129
8%
4,281
5%
2,222
6%
22,166
26%
-
0%
-
0%
Applied as follows:Salaries and labour related expenses To pay Government: Corporate tax To pay provider of capital: Interest charges To pay shareholders as dividend To provide for replacement of assets dividend to shareholders and development of business - Depreciation - Deferred tax - Profit for the period
0% 15,633 23,648
10% 3% 9%
13,874 9,096
16% 0% 11%
181,603
100%
86,256
100%
Value added represents the additional wealth which the company has been able to create by its own and its employees' efforts. This statement shows the allocation of that wealth to employees, providers of capital, government and the portion retained for the future creation of more wealth.
30
