smart products nigeria plc management …...smart products nigeria plc notes to the financial...
TRANSCRIPT
SMART PRODUCT NIGERIA PLC
MANAGEMENT ACCOUNTS FOR
THE PERIOD ENDED 3OTHSEPTEMBER, 2016
CONTENTS PAGE
Statement of financial position 1
Statement of comprehensive income 2
Notes to the management accounts 3 - 18
-Page1-
SMART PRODUCTS NIGERIA PLC
STATEMENT OF FINANCIAL POSITION
AS AT 3OTHSEPTEMBER, 2016
Note 30 Sep, 2016 31 Dec, 2015
Assets: N N
Non-current:
Property, plant and equipment 9 3.063,494 2,213,367
Investment property 10 89,239,331 84,928,555
Available for sale financial assets 11.1 1,775,565 1,775,565
94,078,390 88,917,487
--------------- ---------------
Current:
Loans and receivables 12 47,052,735 22,279,863
Cash and cash equivalent 13 718,314 20,153,000
47,771,049 42,432,863
-------------- -------------
Total assets 141,849,439 131,350,350
========= =========
Liabilities
Non-current
Deferred tax liabilities 7.2 18.042.882 18,042,882
18,042,882 18,042,882
------------- --------------
Current:
Trade and other payable 14 10,957,573 10,957,573
Deferred income 15 6,835,237 2,179,524
Current tax payable 7.1 27,228,998 27,228,998
45,021,808 40,366,095
-------------- -------------
Total liabilities 63,064,690 58,408,977
Equity
Issued share capital 16 22,500,000 22,500,000
Share premium 17 1,151,920 1,151,920
Asset revaluation reserve 18 80,647,330 80,647,330
Retained earnings 19 (25,514,501) (31,357,077)
Equity attributable to owners 78,784,749 72,941,373
Total liabilities and equity 141,849,439 131,350,350
========= =========
-Page2-
SMART PRODUCTS NIGERIA PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30THSEPTEMBER 2016
Note 30 Sep, 2016 31 Dec, 2015
N N
Revenue 3 33,210,176 45,190,169
Other income 4 3,773,406 7,665,204
Total revenue 36,983,582 52,855,373
Personnel expenses 5 (5,511,900) (5,971,814)
Other operating expenses 6 (16,268,307) (23,818,746)
Profit before tax 15,203,375 23,064,813
Income tax expenses 7.1 - (8,323,112)
Deferred tax expenses 7.2 - 1,915,763
Profit for the period after tax 19 15,203,375 16,657,464
Other comprehensive income
Appreciation on available for sale financial assets 11.1 - 235,843
Total comprehensive income for the period 15,203,375 16,893,307
======== ========
Earnings per share
Basic profit for the period attributable to
ordinary equity holders 8 0.34 0.37
===== =====
................................................................................. …………………………
Mr. Abiola A. Aderonmu Mr. Amin A. Amzat
Managing Director Chie Finance Officer FRC/2014/NIM/00000007253 FRC/2014/ICAN/00000006914
-Page3-
SMART PRODUCTS NIGERIA PLC
NOTES TO THE FINANCIAL STATEMENTS
1. Corporate information
The company, Smart Product Nigeria Plc (formerly Associated Press Limited) was
incorporated on 11 January, 1966 as a limited liability company and commenced
business as a legal entity immediately. It was converted to a public limited liability
company in 1991. The registered office is located at 373, Agege Motor Road,
Challenge, Mushin, Lagos. The principal activity of the company is the management
and administration of the company’s properties and investments from where it derives
income.
2. Accounting policies
The principal accounting policies adopted in the preparation of these management
accounts are set out below. These policies have been consistently applied to all the
periods presented, unless otherwise stated.
2.1 Basis of preparation
The management accounts have been prepared on an historical cost basis, except for
those available-for-sale financial assets that have been measured at fair value. The
financial statements values are presented in the Nigerian Naira (N), which is the
Company’s presentation currency, unless otherwise indicated.
2.1.1 Statement of compliance
The financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). Additional information required by national
regulations is included where appropriate.
The Company presents its statement of financial position with necessary analysis of
the items presented in the respective notes. An analysis regarding recovery or
settlement within 12 months after the reporting date (current) and more than 12
months after the reporting date (non-current) form an integral part of each of the notes
where applicable.
Financial assets and financial liabilities are offset and the net amount reported in the
statement of financial position only when there is a legally enforceable right to offset
the recognized amount and there is an intention to settle on a net basis, or to realize
the assets and settled the liability simultaneously.
-Page 4-
2.2 Summary of significant accounting policies
The following are the significant accounting policies adopted by the Company in
preparing its management accounts:
2.2.1 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses (if any). The cost of property, plant and equipment
includes expenditure incurred during construction, delivery and modification. Other
subsequent expenditure is capitalised only when it increases the future economic
benefits associated with the asset to which it relates. Where a substantial period of
time is required to bring the asset into use, attributable finance costs are capitalised
and included in the cost of the relevant asset. Depreciation is provided on straight line
basis to allocate the cost/revalued amounts less their residual values over the
estimated useful lives of the various classes of assets.
The principal rates used are:
Plant and machinery 10 years
Motor vehicles 4 years
Furniture, fixtures and equipment 10 years
Generator 3 years
Depreciation is charged based on usage in the year of purchase.
The asset’s residual values, useful lives and method of depreciation are reviewed at
each financial year end and adjusted prospectively if appropriate to reflect the relevant
market conditions and expectations, obsolescence and normal wear and tear.
Impairment review is carried out when events or changes in circumstances indicate
that the carrying value may not be recoverable. Impairment losses on non-revalued
assets are recognised in the income statement as an expense, while reversals of
impairment losses are also stated in the income statement.
An item of property, plant and equipment and any significant part initially recognised
is derecognised upon disposal or when no 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 when the asset is derecognised.
2.2.2 Investment properties
Leasehold property
The company has opted to use the carrying cost of its investment property as deemed
cost upon transition to IFRS and subsequently measure it using the cost model.
Investment properties (including borrowing cost attributable to their construction,
acquisition and production) are capitalised and are initially measured at cost;
-Page 5-
subsequently, they are amortised over the remaining leasehold life of the lease
agreement (less any accumulated impairment losses). The company however
discloses the fair value of its investment properties as at the end of the financial period
in compliance with paragraph 79 of IAS 40. The fair value is determined every three
years by external independent valuers who are registered with the Financial Reporting
Council (FRC) of Nigeria. Increase in their carrying amount are credited to
revaluation reserve in shareholder’s equity. Decreases that offset previous increases
of the same properties are charged against revaluation reserve while, all other
decreases are charged to the income statement. Revaluation surplus on disposed
properties are written back to income in line with the provisions of IAS 40. The
company’s investment property is amortised over the remaining life of the lease
agreement. The lease expires by 2052.
2.2.3 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. After
initial recognition, intangible assets are carried at cost less accumulated amortisation
and accumulated impairment losses (if any).
Capitalization of expenditure ceases when the asset is in the condition necessary for it
to be capable of operating in the manner intended by management.
Depreciable amount is allocated on a systematic basis over its useful life using the
straight line basis in which charges for each period are recognised in the profit or loss.
Direct computer software development costs recognised as intangible assets are
amortised on a straight line basis over four years and are carried at cost less any
accumulated amortisation and any accumulated impairment losses.
The useful life of the asset is reviewed at each financial year end. If the expected
useful life is different from the previous estimates, the amortisation period will
change. And if there is a change due to the expected pattern of consumption of the
future economic benefits embodied in the asset, the amortisation period will be
changed to reflect the pattern which will be accounted for as a change in accounting
estimate. However, the company did not have any intangible asset as at 30 September,
2016.
2.2.4 Taxation
a) Current income tax
Current income tax liabilities and assets for the current and prior periods is measured
at the amount expected to be paid to or recovered from the taxation authorities, using
the tax rates and tax laws that have been enacted or substantively enacted at the
reporting date.Current income tax assets and liabilities also include adjustments for
tax expected to be payable or recoverable in respect of previous periods.
b) Deferred tax
Deferred tax is provided using the liability method on 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 and liabilities are
calculated in respect of temporary differences using the balance sheet liability
method. -Page 6-
Deferred tax assets are recorded only to the extent that it is probable that taxable
profit will be available against which the deferred tax asset will be realized or if it can
be offset against existing deferred tax liabilities. 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 utilized. 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 liabilities are recognised for all taxable temporary differences, except
when the deferred tax liability arises from the initial recognition of goodwill or 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.
Deferred tax assets and liabilities are measured at tax rates that are expected to apply
to the period when the asset is realized or the liability is settled, based on tax rates that
have been enacted or substantively enacted at the reporting period. Such assets and
liabilities are not recognised if the temporary difference arises from goodwill or from
initial recognition (other than in a business combination) of other assets and liabilities
in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current income tax liabilities and the
deferred taxes relate to the same taxable entity and the same taxation authority.
2.2.5 Employee’s retirement benefits
Defined contribution
The Company operates a funded defined contributory scheme with some Pension
Fund Administrators. This is in compliance with the provisions of the Pension Reform
Act, 2004 whereby employer and employees contribute minimum of 10% and 8%
respectively of the employees’ eligible emoluments. Staff contributions to the scheme
are funded through payroll deductions, while the Company’s contribution is charged
to the income statement.
When an employee has rendered service to an entity during a period, the company
recognises the contribution payable to a defined contribution plan in exchange for that
service (a) as a liability (accrued expenses), after deducting any contribution already
paid, (b) as an expense.
2.2.6 Revenue
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. The following specific recognition criteria must also be met before
revenue is recognised for each of the two major income sources available to the
company as follows:- -Page 7-
Rental income
This income is generated from rent paid by tenants on the company’s property and is
being recognised on time basis. Rent received for the period is recognised in the
income statement as turnover for the period while amount relating to the period yet to
expire is deferred and recognised as payable in the statements of financial position.
Investment income
Investment income is generated through dividend from equity investment. This
income is recognised in the statement of comprehensive income as income when the
company’s right to receive the payment is established.
2.2.7 Financial Instruments
i) Financial assets
Initial recognition and measurement
Financial assets within the scope of IAS 39 are classified as financial assets at fair
value through profit or loss, loans and receivables, held-to-maturity investments,
available-for-sale financial assets, as appropriate.
The company’s financial assets include cash and short-term deposits, fixed deposits,
loans and other receivables, quoted equity investment. The company recognises three
classes of financial assets:
a) Available for sale financial investments
b) Held to maturity investment
c) Loans and receivables
All financial assets are recognised initially at fair value plus transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as
follows:
Available for sale financial investments
Equity investments classified as available-for-sale are those that are neither classified
as held for trading nor designated at fair value through profit or loss.
After initial measurement, available-for-sale financial investments are subsequently
measured at fair value with unrealised gains or losses recognised in the available-for-
sale reserve through other comprehensive income until the investment is
derecognised, at which time the cumulative gain or loss is recognised in other
operating income or the investment is determined to be impaired, when the
cumulative loss is reclassified from the available-for sale reserve to the income
statement. -Page 8-
Investments in unquoted equity instruments that do not have an active market and
whose fair value cannot be reliably measured and or derivatives that is linked to and
must be settled by delivery of such unquoted equity instruments are measured at cost.
For a financial asset reclassified out of the available-for-sale category, any previous
gain or loss on that asset that has been recognised in equity is amortised to profit or
loss over the remaining life of the investment using the Effective Interest Rate (EIR).
Any difference between the new amortised cost and the expected cash flows is also
amortised over the remaining life of the asset using the EIR. If the asset is
subsequently determined to be impaired, then the amount recorded in equity is
reclassified to the income statement.
Held –to- maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed
maturities are classified as held-to maturity when the Company has the positive
intention and ability to hold them to maturity. After initial measurement, held-to-
maturity investments are measured at amortised cost using the EIR, less impairment.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is
included in finance income in the income statement. Gains and losses are recognised in the
income statement when the investments are derecognised or impaired, as well as through
the amortisation process.
Included in this classification are Investments in Treasury bills and Bonds issued by
federal government and state government. However, the company did not have any held -
to -maturity investments as at 30 September, 2016.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement, such financial
assets are subsequently measured at amortised cost using the EIR method, less
impairment. Amortised cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is
included in finance income in the income statement. Gains and losses are recognised in the
income statement when the investments are derecognised or impaired, as well as through
the amortisation process.
Included in this classification are personal loans, car loan and mortgage loan given to
employees.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is derecognised when:
The right to receive cash flows from the asset have expired; and -Page 9-
The Company has transferred its rights 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 (a) the Company
has transferred substantially all the risks and rewards of the asset, or (b) 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 rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of 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.
In that case, the Company also recognises an associated liability. The transferred asset and
the associated liability are measured on a basis that reflects the rights and obligations that
the Company has retained.
ii) Impairment of financial assets
The company assesses at each reporting date whether there is any objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of
financial assets is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial recognition
of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated
future cash flows of the financial asset or the group 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 amortised cost
For financial assets carried at amortised cost, the company first assesses whether
objective evidence of impairment exists individually for financial assets that are
individually significant, or collectively for financial assets that are not individually
significant. If the company determines that no objective evidence of impairment exists
for an individually assessed financial asset, whether significant or not, it includes the
asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed 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 has been incurred, the amount of the
loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future expected credit losses that have not
yet been incurred). The present value of the estimated future cash flows is discounted at
the financial asset’s original effective interest rate. If a loan has a variable interest rate, the
discount rate for measuring any impairment loss is the current EIR. -Page 10-
The carrying amount of the asset is reduced through the use of an allowance account and
the amount of the loss is recognised in the income statement. Interest income continues to
be accrued on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. The
interest income is recorded as part of investment income in the income statement. Loans
together with the associated allowance are written off when there is no realistic prospect of
future recovery and all collateral has been realised or has been transferred to the Company.
If, in a subsequent year, the amount of the estimated impairment loss increases or
decreases because of an event occurring after the impairment was recognised, the
previously recognised impairment loss is increased or reduced by adjusting the allowance
account. If a future write-off is later recovered, the recovery is recognised in the income
statement.
Available for sale financial investments
For available-for-sale financial investments, the Company assesses at each reporting date
whether there is objective evidence that an investment or a group of investments is
impaired.
In the case of equity investments classified as available-for-sale, objective evidence would
include a significant or prolonged decline in the fair value of the investment below its cost.
‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’
against the period in which the fair value has been below its original cost. When there is
evidence of impairment, the cumulative loss – measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that investment
previously recognised in the income statement – is removed from other comprehensive
income and recognised in the income statement. Impairment losses on equity investments
are not reversed through the income statement; increases in their fair value after
impairment are recognised directly in other comprehensive income.
A threshold of 20% is applied consistently to conclude whether or not the decline in
fair value is significant.
iii) Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair
value through profit or loss, loans and borrowings, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The company determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and, in the case of loans and
borrowings, carried at amortised cost, this includes directly attributable transaction costs.
The company’s financial liabilities include trade and other payables.
Derecognition
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, -Page 11-
Such an exchange or modification is treated as the derecognition of the original liability
and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the income statement.
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the
statement of financial position if, and only if:
There is a currently enforceable legal right to offset the recognised amounts; and
There is an intention to settle on a net basis, or to realise the assets and settle the
liabilities simultaneously
v) Fair value of financial instruments
The fair value of financial instruments that are traded in active markets are determined at
each reporting date by reference to quoted market prices or dealer price quotations.
For financial instruments not traded in an active market, the fair value is determined using
appropriate valuation techniques. Such techniques may include:
Using recent arm’s length market transactions
Reference to the current fair value of another instrument that is substantially the
same
A discounted cash flow analysis or other valuation models.
2.2.8 Cash and cash equivalent
Cash and cash equivalent in the statement of financial position comprise cash at banks and
on hand and short-term deposits with a maturity of three months or less.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash and
short-term deposits as defined above, net of outstanding bank overdrafts (if any).
2.2.9 Provision
A provision is recognised if as a result of past event the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Amounts are recorded based on
management’s best estimate of the amount needed to settle the obligation, which includes,
among other things, management’s experience in similar transactions.
Where the effect of the time value of money is significant, the provision is discounted at a
rate that reflects the estimated timing of payment, if the timing can be reasonably
determined, as well as the risk associated with the liability.
-Page12-
2.2.10 Leasing
(i) Finance Lease
A lease arrangement under which substantially all the risks and rewards incidental to
ownership of the leased item rest with the lease are capitalised at the inception of the lease
at the lower of the fair value of the related item or the present value of the minimum lease
payments.
Lease payments are apportioned between finance charges and a reduction in the lease
liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are expensed to the income statement.
Capitalised leased assets are depreciated over the shorter of the lease term and the
estimated useful life of the asset.
(ii) Operating Lease
Leases where the lessor retains substantially all the risks and rewards of ownership are
classified as operating leases. Lease payments under operating leases are charged on a
straight line basis over the lease term.
30 Sep, 2016 31 Dec,2015
3. Turnover N N
Rental income 33,202,554 45,183,403
Dividend received 7,622 6,766
33,210,176 45,190,169
======== ========
4. Other income
Service charge reimbursement 2,694,744 3,287,194
Interest on bank deposit - 95,846
Interest on commercial paper 1,078,662 4,282,164
3,773,406 7,685,204
======= ========
5. Personnel expenses
Pension contribution 377,586 414,190
Staff welfare and medical (National Health Insurance Scheme) 83,625 358,000
Directors fees and allowances 1,968,750 2,400,000
Salaries and wages 13,081,939 2,799,624
5,511,900 5,971,814
======= =======
6. Other operating expenses
Depreciation on property, plant and equipment 1,629,873 3,588,400
Amortisation of investment properties 2, 588,724 3,118,601
Annual general meeting expenses 1,633,716 2,688,688
Other professional fees 1,286,250 1,440,000
Entertainment 298,884 376,850
Security service 1,183,410 2,029,300
Vehicle running and maintenance 2,274,750 1,350,000
Repairs and maintenance 405,564 747,350
Travelling 798,264 1,073,250
Printing and stationary 189,414 709,405 -Page13-
Sep, 2016 Dec, 2015
N N Waste disposal/cleaning 722,727 1,471,780
Insurance – motor vehicles 22,500 30,000
Generator running 989,865 791,690
Audit fee 562,500 750,000
Registrars 273,138 240,256
Land use charge 357,297 404,935
Electricity 403,950 429,940
Insurance – building 209,580 279,443
Financial Reporting Council due 150,000 200,000
Loss on financial assets available for sale - 1,026,670
Listing and filing fees 13,890 311,261
Bank charges 59,901 59,687
Impairment on available for sale financial assets - 173,740 -
Website/card and fuel 214,410 527,500
16,268,307 23,818,746
======== ========
7.
7.1 Statement of financial position
Income tax
Balance at 1 January 27,228,998 20,906,563
Statements of comprehensive income - 8,323,112
27,228,998 29,229,675
Payment during the year - (2,000,677)
At 30 September/December 27,228,998 27,228,998
======== ========
7.2 Deferred tax
At 1 January 18,042,882 19,958,645
Movement during the period - (1,915,763)
At 30 September/December 18,042,882 18,042,882 ============ ============
7.3 The company income tax was based on the provision of the Company Income Tax Act
(Cap.60 LFN 1993) and the education tax Act 1993 as amended to date. The income
tax expense for the year ended can be reconciled to the accounting profit as follows:-
8. Earnings per share
Basic earnings per share amounts is calculated by dividing the net profit for the year
attributable to ordinary shareholders by the weighted average number of ordinary
shares outstanding at the reporting date. The following reflects the income and share
data used in the basic earnings per share computations.
30 Sep, 2016 31 Dec, 2015
N N
Net profit attributable to ordinary shareholders
for basic earnings 15,203,375 16,893,307
Weighted average number of ordinary shares 45,000,000 45,000,000
Basic earnings per ordinary share 0.34 0.37 ========= ==========
-Page 14-
9. Property, plant and equipments
Furniture Motor Generator
Fixtures & Vehicles
equipment Total
N N N N
Cost valuation
As at 1st January, 2016 5,479,004 12,162,000 3,019,050 20,660,054
Additions - - 2,480,000 2,480,000
As at 30th
September, 2016 5,479,004 12,162,000 5,499,050 23,140,054
======== ======== ======== =========
As at 1st January, 2016 5,039,362 10,388,375 3,018,950 18,446,687
Charge for the year 329,724 886,812 413,337 1,629,873
As at 30th
September, 2016 5,369,086 11,275,187 3,432,287 20,076,560
======== ======== ======== ==========
Carrying amount
At 30th
September, 2016 109,918 886,813 2,066,763 3,063,494
======= ======= ======= =========
At 31st December, 2015 439,642 1,773,625 100 2,213,367
======= ======== ======== =========
10. Investment property
Leasehold building 30 Sep, 2016 Dec, 2015
N N
1st January 115,388,251 110,491,601
Additions during the year 6,899,500 4,896,650
30 September, 2016 122,287,751 115,388,251
========= ==========
Amortisation
1st January 30,459,696 27,341,095
Charge during the year 2,588,724 3,118,601
30 September, 33,048,420 30,459,696
======== ========
Carrying amount as at 30 September 89,239,331 84,928,555
======== ========
The leasehold investment property is located at KM12, Agege Motor Road, Mushin,
Lagos and is being amortised over the remaining term of the lease. The lease term will
expire in 2052.
11. Financial assets
Available for sale financial assets (11.1) 1,775,565 1,775,565
Loans and other receivables (12) 45,201,995 22,279,863
46,982,560 24,055,428
======== ========
11.1 Available for sale financial assets
Listed securities
Dangote Flour Mills Plc (Tiger Brands) 5,673 22,841
Unilever Plc 1,339,928 1,109,120
First Bank of Nigeria Plc 260,707 406,560 -Page 15-
30 Sep, 2016 Dec, 2015
N N
PZ 68,105 63,070
Ecobank Plc 101,152 111,870
Total available for sale financial asset 1,775,565 111,870
======= =======
Impairment allowance
Impairment charge for the year - (173,740)
Appreciation - 235,844
- 62,104
At 30 September 1,775,565 1,775,565
======= ========
11.2 Available for sale financial assets
The fair value of the quoted equity shares is determined by reference to published
price on the Nigeria Stock Exchange.
In the case of equity investments classified as available-for-sale, objective evidence
would include a significant or prolonged decline in the fair value of the investment
below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires
judgment. In making this judgment, the company evaluates, among other factors, the
duration or extent to which the fair value of an investment is less than its cost.
Based on these criteria, there was no impairment of available-for-sale investment —
quoted equity securities.
Determination of fair value and fair values hierarchy
The Company used the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: Other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly; and
Level 3: Techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
Financial assets and liabilities measured using a valuation technique based on
assumptions that are supported by prices from observable current market transactions
are assets and liabilities for which pricing is obtained via pricing services, but where
prices have not been determined in an active market, financial assets with fair values
based on broker quotes, investments in private equity funds with fair values obtained
via fund managers and assets that are valued using the Company’s own models
whereby the majority of assumptions are market observable.
-Page 16-
Non market observable inputs means that fair values are determined, in whole or in
part, using a valuation technique (model) based on assumptions that are neither
supported by prices from observable current market transactions in the same
instrument, nor are they based on available market data. The main asset classes in this
category are unlisted equity investments and debt instruments. Valuation techniques
are used to the extent that observable inputs are not available, thereby allowing for
situations in which there is little, if any, market activity for the asset or liability at the
measurement date. However, the fair value measurement objective remains the same,
that is, an exit price from the perspective of the Company.
Therefore, unobservable inputs reflect the Company’s own assumptions about the
assumptions that market participants would use in pricing the asset or liability
(including assumptions about risk). These inputs are developed based on the best
information available, which might include the Company’s own data.
The following table shows an analysis of financial instruments recorded at fair value
by level of the fair value hierarchy:
11.2 Available for sale financial assets Level 1 Total fair
Value
N N
Equity securities 30 September, 2016 1,775,565 1,775,565
======= =======
31 December, 2015 1,775,565 1,775,565
======== =======
30 Sep, 2016 31 Dec, 2015
N N
12. Loans and receivables
Rent receivable 1,845,780 1,845,780
Sundry debtors 33,566,955 20,434,083
Deposit 11,640,000 -
47,052,735 22,279,863
------------- ----------------
Current 47,052,735 22,279,863
Non-current - -
47,052,735 22,279,863
======== ========
13. Cash and cash equivalents - current
Cash and bank balance 718,314 20,153,000
====== ========
14. Financial liability
14.1 Trade and other payables- current
Dividend payable 2,322,000 2,322,000
Statutory deduction 3,399,357 3,399,357
Accruals 5,236,216 5,236,216 -Page 17-
30 Sep, 2016 31 Dec, 2015
N N
Others payable - -
Unclaimed dividend - -
10,957,573 10,957,573
======== ========
15. Deferred income
Current 6,835,237 2,179,524
Non-current - -
6,835,237 2,179,524
======== ========
Deferred incomes are unexpired rent received from tenants of the company’s
leasehold investment property.
16. Share capital
Authorised
50,000,000 ordinary shares of N0.50 each 25,000,000 25,000,000
======== ========
Issued and fully paid
45,000,000 ordinary shares of N0.50 each 22,500,000 22,500,000
======== ========
17. Share premium
At 30 September 1,151,920 1,151,920
======= =======
18. Asset revaluation reserve
At 1 January 80,647,330 80,411,486
Transfer from statement of other comprehensive income - 235,844
At 30 September/31 December 80,647,330 80,647,330
======== ========
Of this opening balance of asset revaluation reserves, N70,866,857 represents the
appreciation in the value of the leasehold land and buildings which arose from the
revaluation of the assets done in April, 1999 by Jagun Dosumu and Company, whilst
the balance of N3,979,851 is in respect of excess revaluation on the buildings prior to
April, 1999. The transfer of N235,843 from statement of other comprehensive
income represent the appreciation in the market value of available for sale financial
assets as at 31 December, 2015
19. Retained earnings
At 1 January (31,357,876) (39,015,340)
Retained profit for the year 15,203,375 16,657,464
Dividend paid/payable 9,360,000 (9,000,000)
A s at 30 September (25,514,501) (31,357,876)
========= =========