portland paints - Proshare

PORTLAND PAINTS AND PRODUCTS NIG. PLC

FINANCIAL STATEMENTS (UNAUDITED) FOR THE PERIOD ENDED 30 JUNE 2017

PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017

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

21

2

PORTLAND PAINTS & PRODUCTS NIGERIA PLC GENERAL INFORMATION FOR THE HALF YEAR ENDED 30 JUNE 2017 BOARD OF DIRECTORS Mr. Larry Ettah Mr. Mukhtar Yakasai Mr. Bayo Osibo Mr. Abdul Bello Eng. Dipo Ashafa Mrs. Adeline Ogunfidodo

- Chairman - MD/CEO - Director - Director - Director - Director

REGISTERED OFFICE

Sandtex House 105A, Adeniyi Jones Avenue, Ikeja. Lagos State.

FACTORY

Km 36, Abeokuta – Lagos Expressway Ewekoro, Ogun State.

REGISTERED NUMBER

RC76075

FRCN NUMBER COMPANY SECRETARY

FRC/2012/0000000000221 Bolanle Oyekan (Mrs) UAC House 1-5 Odunlami street Lagos, Nigeria

AUDITORS

PricewaterhouseCoopers Landmark Towers, Plot 5B Water Corporation Road, Victoria Island, Lagos.

REGISTRAR

Africa Prudential Registrars Plc (formerly UBA Registrars Ltd) No. 220B, Ikorodu Road Palmgrove, Lagos.

BANKERS

Zenith Bank Plc United Bank for Africa Plc Skye Bank Plc Ecobank Nigeria Plc First City Monument Bank Plc First Bank Nigeria Plc Wema Bank Nigeria Plc

3

PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

Note Revenue

3

Cost of Sales

5

Gross Profit

3 Mths to Jun 2017

6 Mths to Jun 2017

3 Mths to Jun 2016

6 Mths to Jun 2016

N'000

N'000

N'000

N'000

516,884 (367,141) 149,743

1,066,383 (781,489) 284,894

408,050

808,705

(230,429)

(478,886)

177,621

329,819

Other Operating Income

4

27,874

57,337

11,230

19,025

Selling and distribution expenses

5

(41,240)

(81,004)

(68,794)

(135,233)

Administrative expenses

5

(117,585)

(206,895)

(103,404)

(215,150)

18,792

54,332

16,653

(1,539)

1,029

Profit/(Loss) from Operations Finance Income

7

1,026

Finance Expenses

7

(14,690)

(36,856)

(24,549)

(48,986)

(13,665)

(35,828)

(24,747)

(48,135)

18,505

(8,095)

(49,674)

(3,782)

(4,287)

Net Finance Expenses Profit/(Loss) Before Taxation

5,128

Taxation

8

Total Comprehensive Profit/(Loss)

(1,640)

(5,921)

(198)

851

3,487

12,583

(11,876)

(53,961)

Earnings Per Share for Profit Attributable to Owners of The Company During The period: Basic (Kobo)

9

0.44

2

(3)

(13)

Diluted (Kobo)

9

0.44

2

(3)

(13)

The notes on pages 8 to 22 form an integral part of these financial statements

4

PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) Share capital

Share Premium

N'000

1st January 2016 Profit for the Period 31st December 2016

1st January 2017 Increase in share capital Profit for the period 30 JUNE 2017

200,000 -

Revaluation Surplus

Retained earnings

Total equity

N'000

N'000

N'000

-

91,923

-

-

399,695

691,618

8,597

8,597

200,000

-

91,923

408,292

700,214

200,000

-

91,923

408,292

700,214

196,708

437,923

396,708

6

437,923

-

-

634,631

-

12,583

12,583

420,875

1,347,428

91,923

PORTLAND PAINTS & PRODUCTS PLC STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 6 Mths to Jun 2017 N'000

6 Mths to Jun 2016 N'000

Cash flows from operating activities: 18

Cash generated from operations Income Tax

(392,129) (1,061)

Net cash generated from Operating activities

(393,190)

64,774 (1,748) 63,026

Cash flows from investing activities: Purchase of Property, Plant and Equipment

10

(12,609)

(30,450)

(47,156)

-

Proceeds from sale of motor vehicle

1,290

5,093

Finance income

1,029

851

Purchase of intangible assets

Net cash provided / (absorbed) by Investing activities

(57,446)

(24,506)

Cash flows from financing activities: Repayments of Borrowings

(30,717)

(50,772)

Interest paid

(36,856)

(48,986)

Proceeds from Right Issue

634,631

-

Net cash provided / (absorbed) by financing activities

567,057

(99,758)

Net increase/(decrease) in cash and cash equivalents

116,421

(61,239)

Cash and cash equivalents brought forward Cash and cash equivalents

7

34,408

161,444

150,829

100,205

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (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. However, the segment liabilities are absorbed by the decorative segment.

(i) Income

Decorative

Marine & Industrial Paints

Portland Bathrooms

Total

Jun-17 N'000

Jun-17 N'000

Jun-17 N'000

Jun-17 N'000

Revenue: Total Revenue Inter-segmental revenue Total Revenue From External Customers

857,236 857,236

208,940 208,940

207 207

1,066,383 1,066,383

Company's Revenue per Statement of Comprehensive Income

857,236

208,940

207

1,066,383

Segment Gross Profit /(loss)

235,634

49,300

-39

284,894

Operating Expenses Depreciation Amortisation Finance Income Finance Expense Other Income Sub-total

254,630 31,698 1,572 (1,029) 36,856 (57,337) 266,390

Company's Profit Before Tax

18,505

Decorative

Marine Paints

Portland Bathrooms

Total

Jun-16 N'000

Jun-16 N'000

Jun-16 N'000

Jun-16 N'000

Revenue: Total Revenue

709,544

145,038

10,723

865,305

Total Revenue From External Customers

709,544

145,038

10,723

865,305

Company's Revenue per Statement of Comprehensive Income

709,544

145,038

10,723

865,305

Segment Gross Profit

274,302

51,823

3,694

329,819

Operating Expenses Depreciation Amortisation Finance Income Finance Expense (Other Income)/Loss Sub-total

318,792 11,854 19,737 (851) 48,986 (19,025) 379,493

Company's Loss Before Tax

(49,674)

The operating segments did not transact with each other and as such there are no transfer prices between operating segments.

8

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (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

Addition to Non-current Assets Reportable Segment Assets Factory Office Property Total Company Assets Reportable Segment Liabilities:

Decorative

Marine Paints

Portland Bathrooms

Total

Jun-17 N'000

Jun-17 N'000

Jun-17 N'000

Jun-17 N'000

12,609 1,462,803 197,621

320,255 -

14,200 -

12,609 1,797,258 197,621

1,673,032

320,255

14,200

2,007,488

Loans and Borrowings (Excluding Leases and Overdrafts) Defined Contribution Pension Scheme Financial Liabilities Deferred Tax Laibilities Other Unallocated and Central Liabilities Total Company Liabilities

Addition to Non-current Assets Reportable Segment Assets Factory Office Property Total Company Assets

103,807 4,148 19,525 9,090 523,490

-

-

103,807 4,148 19,525 9,090 523,490

660,060

-

-

660,060

Decorative

Marine Paints

Portland Bathrooms

Total

31 December 2016 N'000

31 December 2016 N'000

31 December 2016 N'000

31 December 2016 N'000

40,303 1,120,314 213,164

367,395 -

13,143 -

40,303 1,500,852 213,164

1,373,780

367,395

13,143

1,754,319

139,614 7,395 32,246 9,090 865,760

-

-

139,614 7,395 32,246 9,090 865,760

1,054,105

-

-

1,054,105

Reportable Segment Liabilities: Loans and Borrowings (Excluding Leases and Overdrafts) Defined Contribution Pension Scheme Financial Liabilities Deferred Tax Laibilities Other Unallocated and Central Liabilities Total Company Liabilities

Items of Property, Plant and Equipment are directly allocated to the SBU enjoying the economic benefits of the assets.

9

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

4

6 Mths to Jun 2017 N'000

Other Operating Income: Government grants Profit on sale of fixed assets Sale of scrap Insurance claim received Income from executed projects Exchange gain Toll Manufacturing Franchisee/Management fee Sundry Income Container Deposit Refund

12,252 545 4,426 3,808 17,853 8,526 8,706 227

Total

56,342

Cost of sales Selling & distribution expenses Adminstrative expenses

6

12,258 4,452 819 655 40 381 421 19,025

781,489 81,004 206,895 1,069,388

478,886 135,233 215,150 829,269

Expenses by nature Change in inventories of finished goods and work in progress

682,567

426,325

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 Legal & Professional Fees Travelling expenses Telephone & Stationery Other expenses

1,572 31,698 172,964 21,590 20,590 19,336 13,557 11,559 5,400 10,000 20,083 15,340 16,803 17,164 4,077 5,086

19,737 36,975 151,729 18,530 10,984 12,496 56,695 8,635 5,400 20,811 16,847 13,041 23,306 3,549 4,208

1,069,388

829,269

Interest received on bank deposits Total Finance costs: Interest on debts and borrowings Total 8 Taxation (i) Current tax on profits for the period: Company income tax Education tax Total current tax (ii) Reconciliation of tax charge: Profit / (Loss) 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 9

6 Mths to Jun 2016 N'000

1,029

851

1,029

851

36,856 36,856

48,986 48,986

5,551 370 5,921

3,782 3,782

18,505

(49,674)

5,551 31,012 (1,550) 2,007 (31,470) 370 5,921

(14,902) 8,294 11,107 (716) 3,782

Earnings per share Basic earnings per share amounts are 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 during the period. The following reflects the income and share data used on the basic earnings per share computations: Net profit / (Loss) attributable to ordinary equity holders

12,583

(51,315)

Weighted average number of ordinary shares for basic earnings per share

793,416

400,000

2

(13)

Basic earnings / (Loss) per share (in kobo)

10

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

10

Property, plant and equipment Cost At 1 January 2016 Additions Transfers / Held for sales Disposal

Land

Factory building

Plant and machinery

Furniture and fittings

Computer Equipments

Motor vehicles

Work-inprogress

Total

N'000

N'000

N'000

N'000

N'000

N'000

N'000

N'000

40,000 -

173,164 -

At 31 December 2016

40,000

173,164

409,428

139,759

At 1 January 2017 Additions Transfers / Held for sales Disposal At 31 December 2016

40,000 40,000

173,164 173,164

409,428 (49) 409,379

139,759 6,882 (121) 146,519

26,841

-

10,251 3,561

229,553 31,029 (6,518)

97,650 13,954 (2,283)

22,957 0

-

13,812

At 1 January 2017 Additions Disposal

-

13,812 1,731

30 JUNE 2017

-

15,543

268,965

117,041

22,957

156,340

-

Depreciation At 1 January 2016 Additions Disposal Transfer At 31 December 2016

395,160 10,704 10,484 (6,920)

254,064 254,064 14,909 (8)

140,779 803 150 (1,973)

109,321 109,321 7,814 (94)

26,841 26,841

26,841 -

22,957 22,957 -

197,609 28,396 (26,290)

10,634 400 (10,634) -

199,716

400

199,716 0 (2,471) 197,245

400 5,727 6,127

167,575 8,631 (25,135) 151,071 151,071 7,059 (1,791)

-

-

984,187 40,303 (35,183) 989,306

989,306 12,609 (2,641) 999,274

527,986 57,176 (33,936) 551,226 551,226 31,513 (1,893) 580,846

Net book Value as at: 30 JUNE 2017

40,000

157,621

140,414

29,478

3,884

40,905

6,127

418,428

At 31 December 2016

40,000

159,352

155,364

30,437

3,884

48,644

400

438,080

Fair Value of land and building The company land and buildings were fair valued as at 31st December 2012 by Obosi Eleh & Co. (Estate Valuer), an accredited independent professional valuer who holds relevant professional qualifications and have recent experience in the location and categories of the properties valued. The fair value measurement is based on its "highest and best use" and its represents the price that would be received to sell the property in an orderly transaction between market participants as at 31 December 2012. Fair value is determined by reference to market-based evidence, based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. Management is of the opinion that the value represents the value as at 31st May 2017. Other items of PPE were carried at cost, duly reviewed for impairment as at 31 May 2017, no impairment provision is deemed necessary. Depreciation amounting to N32m (2016-N37m) charged to income statement, N19.7m (2016-N17m) charged to cost of sales, N10.9m (2016- N11.85) to administrative expenses and N3.7m (2016-N8.4m) to selling and distribution expenses.

11

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

11

Intangible Assets

Trade Mark N'000

Cost At 1 January 2016

At 31 December 2016 At 1 January 2017 Additions - externally acquired during the year 30 JUNE 2017

Computer Software N'000

Total N'000

49,024

197,368

246,392

49,024

197,368

246,392

49,025 -

197,368 47,156

246,393 47,156

49,025

244,524

293,549

Amortization: At 1 January 2016 Charge for the year

-

121,707 75,661

121,707 75,661

At 31 December 2016

-

197,368

197,368

At 1 January 2017 Charge for the year

-

197,368 1,572

197,368 1,572

30 JUNE 2017

-

198,940

198,940

Net Book values at: 30 JUNE 2017

49,025

45,584

94,609

At 31 December 2016

49,024

0

49,025

The Company's intangible asset represents the N49m trade mark purchased from Blue Circle Industries Plc adjudged to have an indefinite life. N197m relates to investment on licence and technical agreement on oracle ERP applications. The oracle ERP application was acquired in 2012 and amortised to income statement until December,2016, the trade mark is carried at cost to be tested annually for impairment.

The trade mark was reviewed for impairment as at 30 June 2017 and at present no impairment is deemed required and there are no contractual commitment that may have impact on the carry value of the trade mark. Following challenges with oracle ERP utilization dating back to implementation phase, management decided to discontinue the use of Oracle ERP and switch over to SAP ERP. The addition of N47m to computer software represents the cost of migration to SAP. Intangible assets amortization charged to income statement amounts to N1.5m (2016-N19.7) included as part of administrative expenses.

12

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

30 June 2017 N'000 12

31 December 2016 N'000

Inventories: Raw Materials Packaging Materials Work in progress Goods In Transist Finished Goods Spare Parts Diesel Stock Impairment

206,645 28,956 6,594 33,262 608,779 12,198 7,649 (99,258)

141,367 20,507 1,539 621,698 13,356 9,031 (90,069)

Total

804,826

717,429

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 N10m (2016: N4m). 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 N434m (Dec 2016: N413m) imported merchandizing products.

13

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated)

30 June 2017 N'000

13 Trade and Other Receivables (i)

31 December 2016 N'000

Trade receivables

533,303

535,173

Less: Provision for impairment of trade receivables - (Note 13iii) Net trade receivables

(181,765) 351,537

(171,765) 363,408

28,786 (16,397) 12,389

37,672 (20,745) 16,927

Other receivables Less: Provision for impairment of other receivables Net other receivables Receivables from related parties Withholding tax receivable VAT receivable Total trade and other receivables (ii) Prepayments Prepayments - Current Prepayments - Non Current portion Total prepayments

51,939 47,797 463,662

3,168 40,526 39,139 463,168

58,486 16,647

39,136 13,402

75,132

52,538

The balance on prepayment represent rent,medical and insurance paid in advance which will be charged against earnings in 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

30 June 2017 N'000 351,537 51,939 47,797 12,389

31 December 2016 N'000 363,408 3,168 40,526 39,139 16,927

463,662

463,168

Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 30 June 2017 were reviewed for impairment test.

30 June 2017 N'000

(iii) Allowance for impairment of trade receivables:

31 December 2016 N'000

As at January 1st 2016

171,765

188,444

Additional allowance for receivable impairment

10,000

28,684

181,765

217,128

Un-utilised amounts reversed / (amount written off)

-

Total as at 30 JUNE 2017

181,765

14

(45,363) 171,765

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 14

(i)

Interest bearing loans and borrowings:

30 June 2017

31 December 2016

N'000

N'000

Non-Current Borrowings: Bank loans:

(ii)

Long term liabilities - Note 14(iii)

7,685

43,492

Total Non Current Borrowings

7,685

43,492

Current Borrowings: Overdrafts due within one year

-

-

Bank loans: Long term liabilities due within one year

96,122

96,122

Total Current Borrowings

96,122

96,122

103,807

139,614

Total Loans and Borrowings The movement in Loan and Borrowings represent principal repayment as at 30 June 2017 The bank loans, overdrafts and finance lease borrowings were secured with the followings: Current borrowings:

The bank overdrafts, commercial paper, import finance facility and finance lease were secured with the following: - Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at December 2011, by Ubosi Eleh & Co. estate surveyors - 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%. N13m (2016:N22m) interest on BOI facility was charged to income statement as at 30 June, 2017. 31 Total 30 June December Facility 2017 2016 Lender Repayment Terms

Bank of Industry (BOI) Intervention funds Through Ecobank Nigeria Plc

Bank of Industry (BOI) Intervention Funds Through FCMB Nigeria Plc

N300m

Carrying Value - 28 equal quarterly installments from date of draw down

32,143

39,364

N255m

Carrying Value - 60 equal monthly installments with 12 months moratorium

71,664

100,250

103,807

139,614

Total Long Term Facility Current Portion of Term-Loans Due After One Year

15

(96,122)

(96,122)

7,685

43,492

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) (v) Government grants:

As at January

30 June 2017 N'000 32,239

31 December 2016 N'000 56,755

32,239 (12,252)

56,755 (24,516)

19,994

32,239

12,252 7,742 19,994

24,516 7,730 32,246

Total Government Grant for the period Released to the income statement

Current Non current

Government grants relates to loan granted by Agency of 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 30 June 2017 N'000 20,829

N'000 34,080

Short term deposit Cash & short term deposit

130,000 150,829

34,080

Cash and Cash Equivalents

150,829

34,080

Cash in hand and bank

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits 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.

16

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 15 Trade and Other Payables

Trade payables Other payables Withholding tax payable Customer Deposits Accruals

30 June 2017 N'000 162,967 18,132 4,410 3,311 149,763

31 December 2016 N'000 210,137 9,577 5,127 12,846 93,753

338,584 135,916

331,440 493,905

20,009

20,009

494,508

845,354

Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost Intercompany Payable Dividends payable Total trade and other payables 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.

16 Corporate Tax Liability

30 June 2017 N'000 Balance at Beginning of the year Company Income Tax Education Tax

26,948 852 27,800

19,889 852 20,741

5,551 370

7,860 1,061

33,722

29,662

Current Tax Expense Company Income Tax Education Tax

Payment

31 December 2016 N'000

(1,061)

Income tax payable

(1,861)

32,661

27,800

Total as at 30 JUNE 2017 The analysis of tax payment during the period is as follows: Cash payment

-

Withholding tax credit

1,630

1,061

231

1,061

1,861

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate 30% (2016:30%). Deferred tax

At 1 January Recognised in profit and loss Tax expense Total as at 30 JUNE 2017

17

30 June 2017

31 December 2016

N'000

N'000

9,090

9,090

0 9,090

9,090

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 17 Share capital Authorised

Authorised

(i) 30 June 2017 Number

30 June 2017 N'000

31 December 2016 Number

31 December 2016 N'000

Ordinary shares of 50 kobo each

793,415,535

396,708

400,000,000

200,000

Total

793,415,535

396,708

400,000,000

200,000

Issued and Fully Paid

Issued and Fully Paid

Issued and Fully Paid

Issued and Fully Paid

30 June 2017 Number

30 June 2017 N'000

31 December 2016 Number

31 December 2016 N'000

Ordinary shares of 50kobo each at the beginning of the year

400,000,000

200,000

400,000,000

200,000

As at 30 June 2017

793,415,535

396,708

400,000,000

200,000

The increase in share capital is is as a result of the Rights Issue carried out in April 2017

(ii) Nature and purpose of reserves: 31 December 2016 N'000 91,923 91,923

30 June 2017 N'000 91,923 91,923

Other capital reserve (Revaluation Reserve) At 1 January 2017 Revaluation during the year Total as at 30 JUNE 2017 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. (iii) Earnings per share Basic earnings per share amounts are 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 during the period. The following reflects the income and share data used on the basic earnings per share computations: Net profit / (loss) attributable to ordinary equity holders Weighted average number of ordinary shares for basic earnings per share Basic earnings / (loss) per share (in kobo)

12,583

793,416 2

18

(51,315)

400,000 (13)

PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 6 Mths to Jun 2017 N'000

6 Mths to Jun 2016 N'000

18 Reconciliation of net profit to net cash provided by operating activities Profit before tax

18,505

(49,673)

36,856

48,986

Adjustments to reconcile net income to net cash provided by operating activities: Interest payable Finance income

(1,029)

Depreciation Charges

31,698

36,975

(851)

Exchange gain

(17,853)

-

(Profit)/Loss on disposal of fixed assets

(545)

(4,452)

Amortisation of intangible assets

1,572

19,737

50,699

100,395

Changes in assets and liabilities: (Increase)/Decrease in Trade debtors and prepayments Decrease/(Increase) in Inventories

(23,089) (87,397)

(61,833) (24,909)

(Decrease)/Increase in Trade creditors & Accruals

(350,846) (461,332)

100,794 14,052

Net Adjustment

(410,633)

114,447

Net cash provided by operating activities

(392,129)

64,774

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PORTLAND PAINTS & PRODUCTS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2017 (All amounts are in thousands of Naira, unless otherwise stated) 19. 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 UACN Property Dev. Company Plc UAC Foods Ltd (UFL) MDS Logistics Ltd.

Relationship Sister Company Sister Company Sister Company

(b) Purchases of goods and services UAC of Nigeria Plc: Service fee

Principal Shareholder

20

6 Mths to Jun 2017 N'000 4,705 144 4,849

6 Mths to Jun 2016 N'000 6,594 863 701 8,158

6 Mths to Jun 2017 N'000 11,559

6 Mths to Jun 2016 N'000 8,635

PORTLAND PAINTS & PRODUCTS PLC STATEMENT OF VALUE ADDED FOR THE PERIOD ENDED FOR THE HALF YEAR ENDED 30 JUNE 2017

Turnover Non trading items

6 Mths to Jun 2017 N'000 1,066,383 58,366

%

6 Mths to Jun 2016 N'000 808,705 19,876

1,124,749 Bought-in-material and services: - Local - Imported Value added

%

828,581

(643,968) (181,632)

(534,170) (150,663)

299,149

100%

143,747

100%

192,345

64%

115,875

81%

5,921

2%

1,640

1%

36,856

13%

48,986

34%

-

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 /(loss) for the period

0% 51,444 12,583

17% 0% 4%

28,561 (51,315)

20% 0% -36%

299,149

100%

143,747

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 that retained for the future creation of more wealth.

21