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Annual Report- 31 December 2015

Champion Breweries Plc

Annual Report --31 December 2015

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38

- Value Added Statement 39

- Financial Summaries 40

Table of Contents

Directors' Report

Independent Auditor's Report

Statement of Changes in Equity

Statement of Directors’ Responsibilities

Audit Committee's Report

Statement of Financial Position

Statement of Profit or Loss and Other Comprehensive Income

Statement of Cash Flows

Notes to the Financial Statements

Corporate Information

Additional Financial Information



Corporate Information

Date of Incorporation: 31 July 1974

Registration No: RC 13388

Directors: Dr. Elijah Akpan – Chairman

Mr. Sharm Kulkarni (Indian) – Managing Director

Mr. Samson Aigbedo

Mr. Hendrik van Rooijen (Dutch)

Mrs Helen Umanah

Mr. Thompson S.B. Owoka

Alhaji Shuaibu A. Ottan

Mr Marinus Johannes Adrianus Gabriels (Dutch)

Mr. Samuel O. Onukwue

Company Secretary: Mr. Tosan Atle Aiboni

Registered office: Aka Offot, PMB 1106

Uyo

Akwa Ibom State

Nigeria

Independent Auditors: KPMG Professional Services

(Chartered Accountants)

KPMG Tower

Bishop Aboyade Cole Street

Victoria Island Lagos

www.kpmg.com/ng

Registrars: African Prudential Registrars Plc

220B, Ikorodu Road

Palmgrove, Lagos

Nigeria

[email protected]

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http://www.kpmg.com/ng

mailto:[email protected]



Directors’ ReportFor the year ended 31 December 2015

Legal Form and Principal Activity

Operating Results

2015 2014

N’000 N’000

Revenue 3,501,845 3,302,383

Operating profit 206,769 25,511

Profit/(loss) before tax 210,179 (1,071,765)

Taxation 317,242

Profit/(loss) for the year 77,140 (754,523)

Other comprehensive income, net of tax 17,485 (39,422)

Total comprehensive income for the year 94,625 (793,945)

Dividend

The directors did not recommend any dividend during the year (2014: Nil).

Directors and their Interests

The Directors are pleased to present the annual report of Champion Breweries Plc ("the Company") together

with the financial statements and independent auditor's report for the year ended 31 December 2015.

The Company was incorporated in Nigeria as a limited liability company on 31 July 1974 and was later

converted to a public limited liability company on 1 September 1992. The Company's principal activities

continue to be brewing and packaging of Champion Lager Beer as well as provision of contract brewing

services to Nigerian Breweries Plc, a related party within the Heineken group. The Company re-commenced

production and marketing of its non-alcoholic beverage drink- Champ Malta in October 2015.

The following is a summary of the Company’s operating results:

The names of Directors who held office during the year under review as well as their interest in the issued

share capital of the Company as recorded in the Register of Members and/or notified by the Directors in

compliance with Section 275 of the Companies and Allied Matters Act Cap C 20 Laws of the Federation of

Nigeria 2004 were as follows:

Board of Directors

The Directors are responsible for oversight of the business, long-term strategy and objectives, and oversight of

the Company’s risks while evaluating and directing implementation of the Company’s controls and procedures

including, in particular, maintaining a sound system of internal controls to safeguard shareholders’

investments and the Company’s assets.

(133,039)

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2015 2014

Dr. Elijah Akpan (Chairman)** 1,000 -

- 1,000

- -

Mr. Marinus J.A. Gabriels (Dutch) (appointed 11 February 2015)** - -

Mr. Hendrik van Rooijen (Dutch) (appointed 11 February 2015)** - -

- -

Mr. Thompson S.B. Owoka** 500,000 1,000,000

- -

Alhaji Shuaibu A. Ottan** - -

- -

8,110 -

Mr. Samson Aigbedo- (appointed 3 December 2015)**

*Executive Director

** Non-executive Director

Issuance of Ordinary Shares

% 2015 % 2014

N '000 N '000

The Raysun Nigeria Limited 60.7 2,376,539 57.9 2,084,760

Assets Management Nominee 12.3 480,932 13.4 480,960

Akwa Ibom State Government 10.0 391,484 8.5 304,920

Other shareholders. 17.0 665,793 20.2 729,360

100 3,914,748 100 3,600,000

Property, Plant and Equipment

Ordinary shares

Information relating to movement in property, plant and equipment during the year is disclosed in Note 11 of

the financial statements.

In accordance with Section 277 of the Companies and Allied Matters Act of Nigeria, no Director notified the

Company of any declarable interest in any contract in which the Company was involved during the year under

review (2014: Nil).

Mr. Samuel O. Onukwue**

Analysis of Shareholding

As at 31 December, the company's ordinary shares were held as follows:

During the year, the Board of Directors approved the conversion of share deposits made by The Raysun Nigeria Limited and Akwa Ibom State Government amounting to N1.1 billion and N52.9 million respectively to ordinary share capital. This resulted in issuance of 629,496,464 million units of ordinary shares of 50k each at N1.85 through private placement to these shareholders after obtaining regulatory approval in March 2015. As a result of these transactions, the Company's issued share capital increased to N3.9 billion (2014:N3.6 billion) while share premium increased to N9.1 billion (2014: N8.3 billion).

Mr. A.K. Mirchandani (American) (retired 22 October 2015)**

Mrs Helen Umanah- (appointed 3 December 2015)**

Mr. Didier Leleu (French) (retired 3 December 2015)**

Number of Ordinary Shares

Chief Senas J. Ukpanah, OFR (resigned 22 October 2015)**

Mr. Sharm Kulkarni (Indian) (Managing Director)*

3



Donations and sponsorship

2015 2014

N '000 N '000

Scholarship to indigenes of host community 1,200 1,200

Free eye screening for indigenes of host community 720 -

Other donations - 600

1,920 1,800

Corporate Governance

Distribution of Company's Products

Employment and Employees

(b) Employee training and consultation:

The Company intends to continue the fulfilment of its objectives as indicated in its Memorandum and

Articles of Association.

The Directors are committed to ensuring that best practices in corporate governance are observed in all

areas of the Company’s business. The Company’s policies on corporate governance are continually

reviewed with focus on high ethical standards of transparency, integrity, accountability and honesty. The

Board continues to formulate policies aimed at creating a well-positioned Company that is keen on

constantly harmonising the interests of various stakeholders to the business.

(a) Employment of physically-challenged persons

Business Review and Future Development

The Company’s products are sold by distributors within the country. The list of names of such distributors

is available at the Commercial Department of the Company.

Code of Business Conduct

The Company has in place a Code of Business Conduct (CoBC) which provides guidance to all its users

on the importance of high ethical values in sustainable business growth. The CoBC is subscribed to by all

members of the Board of Directors and all employees of the Company. The Company mandates strict

adherence to the Code in the Company’s day-to-day operation.

The Company gave donations and provided sponsorship during the year as follows:

In accordance with Section 38(2) of the Companies and Allied Matters Act, 1990 the Company did not

make any donation or give gifts to any political party, political association or for any political purpose

during the year (2014: Nil).

It is the policy of the Company that there should be no discrimination in considering applications for

employment including those from physically-challenged persons. All employees whether or not disabled

are given equal opportunities to develop their experience and knowledge and to qualify for promotion in

furtherance of their careers. A total of two physically-challenged persons were in employment by the

Company during the year (2014: two)

The Company is committed to keeping employees fully informed as far as possible regarding the

Company’s performance and progress and seeking their views wherever practicable on matters, which

particularly affect them as employees.

Training is carried out at various levels through both in-house and external courses. Management,

professional and technical expertise are the Company’s major assets and investment in developing such

skills continues. The Company’s expanding skills base has extended the range of training provided

and broadened the opportunities for career development within the organisation.

4



Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December

Notes 2015 2014

N '000 N '000

Revenue 5 3,501,845 3,302,383

Cost of sales 8(d) (2,502,147) (2,662,451)

Gross profit 999,698 639,932

Other income 6 52,271 104,130

Selling and distribution expenses 8(d) (255,913) (185,658)

Administrative expenses 8(d) (589,287) (532,893)

Operating profit 206,769 25,511

Finance income 7(a) 41,674 200,351

Finance costs 7(b) - (1,287,645)

Net finance income/(cost) 41,674 (1,087,294)

Profit/(loss) before minimum tax 248,443 (1,061,783)

Minimum tax (38,264) (9,982)

Profit/(loss) before tax 8(a) 210,179 (1,071,765)

Income tax 9(a) (133,039) 317,242


Other comprehensive income

Items that will never be reclassified to profit or loss

Re-measurement of defined benefit liability 21(a) 24,979 (50,432)

Related tax 21(c) (7,494) 11,010

Other comprehensive income, net of tax 17,485 (39,422)

Total comprehensive income 94,625 (793,945)

Earnings/(loss) per share

Basic and diluted earning/(loss) per share (kobo) 10 1 (24)

The notes on pages 13 to 37 are integral parts of these financial statements.

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Statement of Changes in EquityFor the year ended 31 December

Share

capital

Share

premium

Accumulated

loss

Other

reserve

Total

equity

N '000 N '000 N '000 N '000 N '000

Balance as at 1 January 2014 450,000 129,184 (8,889,182) 3,701,612 (4,608,386)

Total comprehensive income

Loss for the year - - (754,523) - (754,523)

Other comprehensive income - - (39,422) - (39,422)

Total comprehensive income - - (793,945) - (793,945)

Transactions with owners of the Company

Contributions by owners

Issuance of ordinary shares (Notes 18 and 19) 3,150,000 8,122,762 - - 11,272,762

Total contribution 3,150,000 8,122,762 - - 11,272,762

Balance at 31 December 2014 3,600,000 8,251,946 (9,683,127) 3,701,612 5,870,431

Balance at 1 January 2015 3,600,000 8,251,946 (9,683,127) 3,701,612 5,870,431

Total comprehensive income for the year

Profit for the year - - 77,140 - 77,140

Other comprehensive income - - 17,485 - 17,485

Total comprehensive income - - 94,625 - 94,625

Transactions with owners of the Company

Contributions by owners

Issuance of ordinary shares (Notes 18 and 19) 314,748 841,833 - - 1,156,581

Total contribution 314,748 841,833 - - 1,156,581

Balance at 31 December 2015 3,914,748 9,093,779 (9,588,502) 3,701,612 7,121,637


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Statement of Cash Flows

For the year ended 31 December

Notes 2015 2014

N '000 N '000

Cash flows from operating activities


Adjustments for:

Finance income 7(a) (41,674) (200,351)

Finance cost 7(b) - 1,287,645

Taxation 9(a) 133,039 (317,242)

Depreciation charge 11 622,428 848,485

Amortisation charge 12 6,878 4,863

Write-off of property, plant and equipment 11 - 24,797

(Gain)/loss on sale of property, plant and equipment (300) (489)

Impairment of inventories 13 51,396 58,349

848,907 951,534

Changes in:

Inventories (47,243) (107,004)

Trade and other receivables (99,649) (46,011)

Prepayments (57,691) (14,741)

703,996 225,389

Employee benefits 9,496 29,762

Cash generated from operating activities 1,348,320 1,038,929

Value added tax paid (61,137) (30,811)

Net cash generated from operating activities 1,287,183 1,008,118

Cash flows from investing activities

Interest received 7(a) 41,674 200,351

Proceeds from sale of property, plant and equipment 300 533

Acquisition of property, plant and equipment 11 (695,701) (478,043)

Net cash utilised in investing activities (653,727) (277,159)

Cash flows from financing activities

Net proceeds from issuance of ordinary shares 18(c) - 11,272,762

Repayment of amounts due to related party 18(c) - (11,586,569)

Net cash generated from financing activities - (313,807)

Net increase in cash and cash equivalents 633,456 417,152

Cash and cash equivalents at 1 January 536,297 119,145

Cash and cash equivalents at 31 December 1,169,753 536,297


* Value added tax paid as shown above has been adjusted from "changes in trade and other payables " on the

statement of cash flows.

Trade and other payables*

12



Notes to the Financial Statements

Page Page

1 Reporting entity 14 20 Other reserve 30

2 Basis of accounting 14 21 Employee benefits 30

3 Significant accounting policies 15 22 Trade and other payables 33

4 New standards and interpretations not

yet adopted 21

23 Related parties 33

24 Financial instruments- financial 34

5 Revenue 22 risk management and fair values

6 Other income 22 25 Contingencies 37

7 Finance income and finance cost 22 26 Segment reporting 37

8 Profit/(loss) before tax 22 27 Subsequent events 37

9 Taxation 24

10 Basic and diluted earnings/(loss) per share 26

11 Property, plant and equipment 27

12 Intangible assets 28

13 Inventories 28

14 Trade and other receivables 28

15 Prepayment 29

16 Cash and cash equivalents 29

17 Deposit for shares 29

18 Share capital 29

19 Share premium 30

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1 Reporting entity

2 Basis of accounting

(a) Functional and presentation currency

(b) Use of estimates and judgments

(c) Measurement of fair values

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period

during which the charge has occurred. Further information about the assumptions made in measuring fair value

is included in Note 26- Financial instruments- financial risk management and fair values.

A number of the Company's accounting policies and disclosures require the determination of fair value for

both financial and non-financial assets and liabilities. When applicable, further information about the

assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Significant valuation issues are reported to the Audit Committee.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as

possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in

the valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

These financial statements are presented in Naira (N), which is the Company’s functional currency. All

financial information presented in Naira has been rounded to the nearest thousand, except when otherwise

Champion Breweries Plc ('the Company’) is domiciled in Nigeria. The Company was incorporated in Nigeria

as a limited liability company on 31 July 1974 and later converted to a public limited liability Company on 1

September 1992. The address of the Company’s registered office is Industrial Layout, Aka Uffot, Uyo, Akwa

Ibom State, Nigeria.

The Company is involved in the brewing and marketing of Champion Lager Beer and Champ Malta. The

Company also provides contract brewing and packaging services to Nigerian Breweries Plc, a related party

within the Heineken group.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of

the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the

fair value hierarchy as the lowest level input that is significant to the entire measurement.

In preparation of these financial statements, management has made judgments, estimates and assumptions that

affect the application of the Company's accounting policy and the reported amounts of assets, liabilities,

income and expenses. Actual result may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing bases. Revisions to estimates are

recognised prospectively.

The financial statements have been prepared in accordance with International Financial Reporting Standards

(IFRS). These financial statements were authorised for issue by the Board of Directors on 11 February 2015.

Judgment

There were no significant judgment made by management in applying accounting policies that could have had

a material effect on the amount and disclosures in financial statement.

Assumptions and estimation uncertainties.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a

material adjustment in the year ending 31 December 2015 is included in the following note:

Note 22- Measurement of defined benefit obligations: key actuarial assumptions.

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(d) Basis of measurement

Items

Non-derivative financial instruments

Employee benefits

3 Significant accounting policies

(a) Foreign currency transactions

(b) Financial instruments

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three

months or less from the acquisition date that are subject to an insignificant risk of changes in their fair

value, and are used by the Company in the management of its short-term commitments.

(ii) Non-derivative financial liabilities

All financial liabilities are recognised initially on trade date at which the Company becomes a party to the

contractual provisions of the instrument. The Company classifies non-derivative financial liabilities into

the other financial liabilities category. The Company derecognises a financial liability when its contractual

obligations are discharged or cancelled or expire.

The significant accounting policies set out below have been applied consistently to all periods presented in

these financial statements, unless otherwise indicated.

Transactions in foreign currencies are translated to naira at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated to the naira at the

exchange rate at the reporting date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are

translated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on translation are recognised in profit or loss. Non-monetary items

that are measured based on historical cost in a foreign currency are translated at the exchange rate at the

date of the transaction.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset

expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction

in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any

interest in transferred financial assets that is created or retained by the Company is recognised as a

separate asset or liability.

(i) Non-derivative financial assets

The Company's non-derivative financial assets include trade and other receivables and cash and cash

equivalents. The Company initially recognises trade and other receivables on the date that they are

originated. All other financial assets are recognised initially on the trade date at which the Company

becomes a party to the contractual provisions of the instrument.

The financial statements have been prepared on the historical cost basis except for the following items

which have been measured on an alternative basis:

Measurement bases

Initially measured at fair value and subsequently

measured at amortised cost.

Present value of defined benefit obligation.

Trade and other receivables

Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in

an active market. Such assets are recognised initially at fair value plus any directly attributable transaction

costs. Subsequent to initial recognition, trade and other receivables are measured at amortised cost using

the effective interest method, less any impairment losses.

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(c)

(d) Property, plant and equipment

Leasehold land Lease period

15 to 40 years

5 to 30 years

3 to 5 years

- Cars and trucks 5 years

- Forklifts 5 years

Returnable packaging materials:

- Bottles 5 years

- Crates 8 years

Share capital and share premium

Ordinary shares are classified as equity. When new shares are issued, they are recorded in share capital at

their par value. The excess of the issue price over the par value is recorded in the share premium reserve.

All ordinary shares rank equally with regard to the Company's residual assets. Holders of these shares are

entitled to dividends as declared from time to time and are entitled to one vote per share at general

meetings of the Company.

Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from

equity, net of any tax effects.

The Company's non derivative financial liabilities comprise of trade and other payables and deposit for

shares. Such financial liabilities are recognised initially at fair value plus any directly attributable

transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised

cost using the effective interest method.

Financial assets and liabilities are offset and the net amount presented in the statement of financial

position when, and only when, the Company has a legal right to offset the amounts and intends either to

settle on a net basis or to realise the asset and settle the liability simultaneously.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and

adjusted if appropriate.

(iii) Depreciation

Depreciation is calculated to write off the cost of items of property, plant and equipment less their

estimated residual values on a straight-line basis over their estimated useful lives and is generally

recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their

useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease

term. Land and capital work in progress are not depreciated.

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and

accumulated impairment losses. If significant part of an item of property, plant and equipment have

different useful lives, then they are accounted for as separate items (major components) of property, plan

and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated

with the expenditure will flow to the Company.

Plant & machinery

Furniture and fittings:

Motor vehicles:

Buildings

The estimated useful lives of property plant and equipment for current and comparative periods are as

shown below:

16



(e)

(f)

(g)

Allowance is made for obsolete, slow-moving or defective items where appropriate.

The Company considers evidence of impairment for financial assets measured at amortised cost (trade

and other receivables) at both a specific asset and collective level. All individually significant assets are

assessed for specific impairment. Those found not to be specifically impaired are then collectively

assessed for any impairment that has been incurred but not yet identified. Assets that are not individually

significant are collectively assessed for impairment by grouping together assets with similar risk

characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of default, the

timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether

current economic and credit conditions are such that the actual losses are likely to be greater or less than

suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the

difference between its carrying amount and the present value of the estimated future cash flows

discounted at the asset’s original effective interest rate.

Impairment losses are recognised in profit or loss and reflected in an allowance account against trade and

other receivables. Interest on the impaired asset continues to be recognised. When an event occurring

after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in

impairment loss is reversed through profit or loss.

Impairment

(i) Non-derivative financial assets

A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to

determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is

objective evidence of impairment as a result of one or more events that occurred after the initial

recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that

asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor,

restructuring of an amount due to the Company on terms that the Company would not consider otherwise,

indications that a debtor will enter bankruptcy, adverse changes in the payment status of debtors or

economic conditions that correlate with defaults.

Financial assets measured at amortised cost

Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on

the following:

- Raw material, spare parts and non returnable packaging materials- weighted average cost.

- Manufactured finished products and products-in-process - weighted average cost of direct materials,

labour costs and a proportion of production overheads based on normal operating capacity.

Intangible assets

Intangible assets represents computer software with useful live of 3 years and are measured at cost less

accumulated amortisation and any accumulated impairment loss.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in

the specific asset to which it relates.

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values

using straight line method over their estimated useful lives, and is generally recognised in profit or loss.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if

appropriate.

17



(ii) Non-financial assets

(h)

(iii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plan is calculated by estimating the amount

of future benefit that employees have earned in the current and prior periods, discounting that amount

and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually using the projected unit credit

method by Alaxender Forbes Consulting Actuaries Nigeria Limited (FRC/2012/0000000000504). When

the calculation results in a potential asset for the Company, the recognised asset is limited to the present

value of economic benefits available in the form of any future refunds from the plan or reductions in

future contributions to the plan. To calculate the present value of economic benefits, consideration is

given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, return on

plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are

recognised immediately in other comprehensive income. The Company determines the net interest

expense (income) on the net defined benefit liability for the period by applying the discount rate used to

measure the defined benefit obligation at the beginning of the annual period to the then-net defined

benefit liability, taking into account any changes in the net defined benefit liability during the period as a

result of contributions and benefit payments. Net interest expense and other expenses related to defined

benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that

relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The

Company recognises gains and losses on the settlement of a defined benefit plan when the settlement

occurs.

The carrying amounts of the Company’s non-financial assets, other than inventories are reviewed at each

reporting date to determine whether there is any indication of impairment. If any such indication exists,

then the asset’s recoverable amount is estimated. Indefinite-lived intangible assets are tested annually for

impairment. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit

(CGU) exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are

allocated to reduce the carrying amounts of the assets in the CGU (group of CGUs) on a pro rata basis.

Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for

the amount expected to be paid if the Company has a present legal or constructive obligation to pay this

amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Obligations for contributions to defined contribution plans are recognised as an employee benefit

expense in profit or loss in the periods during which related services are rendered by employees.

(ii) Defined contribution plans

In line with the provisions of the Pension Reform Act 2014, the Company has instituted a defined

contribution pension scheme for its permanent staff. Staff contributions to the scheme are funded

through payroll deductions while the Company's contribution is recognised in profit or loss as employee

benefit expense in the periods during which services are rendered by employees. Under this scheme,

employees contribute 8% of their basic salary, transport and housing allowances to a fund on a monthly

basis. The Company's contribution is 10% of each employee's basic salary, transport and housing

allowances to the fund.

18



(v) Termination Benefit

(i) Provisions and contingent liabilities

Provisions

Contingent liabilities

(j) Revenue

(k)

(l) Income tax

(i) Current tax

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax

assets are recognised for unutilised tax losses, unutilised tax credits and deductible temporary

differences to the extent that it is probable that future taxable profits will be available against which they

can be used. Future taxable profits are determined based on business plans.

(iv) Other long-term employee benefits

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in

profit or loss except to the extent that they relate to a business combination, or items recognised directly

in equity or in other comprehensive income.

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year,

using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable

in respect of previous years. Current tax assets and liabilities are offsets only if certain criteria are met.

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer

of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected

to be settled wholly within 12 months of the reporting date, then they are discounted.

The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit

that employees have earned in return for their service in the current and prior periods. That benefit is

discounted to determine its present value. Remeasurements are recognised in profit or loss in the period

in which they arise.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects

current market assessments of the time value of money and the risks specific to the liability. The

unwinding of the discount is recognised as finance cost.

Revenue from the sale of goods and rendering of services is measured at the fair value of the

consideration received or receivable, net of value added tax, returns, trade discounts and volume rebates.

Revenue is recognised when significant risks and rewards of ownership have been transferred to the

customer, recovery of the consideration is probable, the associated costs and possible return of goods

can be estimated reliably, there is no continuing management involvement with the goods, and the

amount of revenue can be measured reliably. If it is probable that discounts will be granted and the

amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales

are recognised.

Finance income comprises interest income on bank deposits.

Finance costs comprise interest expense on borrowings, bank overdrafts and impairment losses

recognised on financial assets (other than trade receivables). Borrowing costs that are not directly

attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or

loss using the effective interest method. Foreign currency gains and losses on financial assets and

financial liabilities are reported on a net basis as either finance income or finance cost depending on

whether foreign currency movements are in a net gain or net loss position. Interest income or expense is

recognised using the effective interest method.

Finance income and finance costs

Contingent liabilities are only disclosed and not recognised as liabilities in the statement of financial

position. If the likelihood of an outflow of resources is remote, the possible obligations is neither a

provision nor a contingent liability and no disclosure is made.

19



(iii) Minimum tax

(m) Earnings per share

(n) Segment reporting

(o) Leases

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax

is not recognised for the following temporary differences:

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when

they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. The

measurement of deferred tax reflects the tax consequences that would follow from the manner in which

the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and

liabilities. For this purpose, the carrying amount of investment property measured at fair value is

presumed to be recovered through sale, and the Company has not rebutted this presumption.

Deferred tax assets and liabilities are offset only if certain criteria are met.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer

probable that the related tax benefit will be realised; such reductions are reversed when the probability

of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each reporting date

and recognised to the extent that it has become probable that future taxable profits will be available

against which they can be utilised.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.

An operating segment is a component of the Company that engages in business activities from which it

may earn revenues and incur expenses, including revenues and expenses that relate to transactions with

any of the Company’s other components. All operating segments’ operating results are reviewed

regularly by the Company's Managing Director to make decision about resources to be allocated to the

segment and assess its performance, and for which discrete financial information is available.

i. the initial recognition of assets or liabilities in a transaction that is not a business combination and that

affects neither accounting nor taxable profit or loss,

ii. differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is

probable that they will not reverse in the foreseeable future, and

iii. temporary differences arising on the initial recognition of goodwill.

Minimum tax payable is calculated using the tax rate applicable based on certain parameters stipulated

in the Nigerian tax law. Any amount by which this minimum amount payable exceeds company income

tax is shown as minimum tax expenses and presented separately in the statement of comprehensive

In determining the amount of current and deferred tax, the Company takes into account the impact of

uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on

estimates and assumptions and may involve a series of judgements about future events. New information

may become available that causes the Company to change its judgement regarding the adequacy of

existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a

determination is made.

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS

is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the

weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the

weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of

all dilutive potential ordinary shares.

Segment results that are reported to the Company's Managing Director include items directly attributable

to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise

mainly corporate assets, office expenses as well as income and deferred tax assets and liabilities.

20



(i) Leased assets

(ii) Lease payments

(p) Statement of cash flows

4 New standards and interpretations not yet adopted

The statement of cash flows is prepared using the indirect method. Changes in statement of financial

position items that have not resulted in cash flows such as translation differences, fair value changes and

other non-cash items have been eliminated for the purpose of preparing the statement. Interest paid is

included in financing activities.

Assets held by the Company under leases which transfer to the Company substantially all of the risks

and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is

measured at an amount equal to the lower of its fair value and the present value of the minimum lease

payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting

policy applicable to that asset.

Assets held under other leases are classified as operating leases and are not recognised in the Company’s

statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the

term of the lease. Lease incentives received are recognised as an integral part of the total lease expense,

over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and

the reduction of the outstanding liability. The finance expense is allocated to each period during the

lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

At inception or on reassessment of an arrangement that contains a lease, the Company separates

payments and other consideration required by the arrangement into those for the lease and those for

other elements on the basis of their relative fair values. If the Company concludes for a finance lease that

it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an

amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments

are made and an imputed finance cost on the liability is recognised using the Company's incremental

borrowing rate.

IFRS 9- Financial Instruments (effective for annual reporting periods beginning on or after 1 January

2018, with early adoption permitted.). IFRS 9, published in July 2014, replaces the existing guidance in

IAS 39 Financial Instruments: Recognition and Measuremen t. IFRS 9 includes revised guidance on the

classification and measurement of financial instruments, including a new expected credit loss model for

calculating impairment on financial assets, and the new general hedge accounting requirements. It also

carries forward the guidance on recognition and depreciation of financial instruments from IAS 39.

IFRS 15 Revenue from Contracts with Customers - (effective for periods beginning 1 January 2017 and

early adoption is permitted). IFRS 15 establishes a comprehensive framework for determining whether,

how much and when revenue is recognised. It replaces existing revenue recognition guidance, including

IAS 18 Revenue , IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes .

The extent of the impact of these standards has not been determined and the Company does not plan to

adopt these standards early.

A number of new standards and amendments to standards are effective for annual periods beginning

after 1 January 2015; however, the Company has not applied the following new or amended applicable

standards in preparing these financial statements:

IAS 1 Disclosure Initiative - (effective for periods beginning 1 January 2016 and early adoption is

permitted). The amendments provide additional guidance on the application of materiality and

aggregation when preparing financial statements.

21



5 Revenue

2015 2014

N’000 N’000

Sale of goods 1,228,834 786,101

Contract brewing and packaging 2,273,011 2,516,282

3,501,845 3,302,383

6 Other income

7 Finance income and finance cost

(a)

(b)

8 Profit/(loss) before tax

(a)

2015 2014

N’000 N’000

Depreciation of property, plant and equipment (Note 11) 622,428 848,485

Amortisation of intangible asset 6,878 4,863

Personnel expenses (Note (8b)) 794,984 672,253

Auditor’s remuneration 9,504 8,800

Management fees 69,649 63,312

Technical service fees - 42,182

Directors’ remuneration (Note 8(c)) 14,005 10,838

Gain on sale of property, plant and equipment (300) (489)

(b) Personnel expenses

(i)

2015 2014

N’000 N’000

Salaries and wages 460,558 490,250

Pension 15,553 15,970

Defined benefit obligation charge (Note 21(a)(i)) 32,909 12,235

Long service awards charge (Note 21(a)(ii)) (2,787) 36,257

Other personnel related expenses 288,751 117,541

794,984 672,253

(ii)

2015 2014

Number Number

Production 106 116

Logistics 18 18

Sales and Marketing 20 21

Administration 27 29

171 184

Other income represents amount earned from the sale of scraps, by-products, sales commissions and

insurance claims.

The number of full time employees as at 31 December was as follows:

Profit/(loss) before tax is stated after charging/ (crediting) the following amounts which are

analysed by nature:

Finance income represents interest on short term bank deposits. Finance income in 2014 represents

income earned from placement of proceeds of issued ordinary shares in interest-bearing bank

account.

Personnel expenses comprise of:

Finance cost in 2014 represents interest charged on N11.6 billion due to The Raysun Nigeria

Limited (parent company) which was fully repaid in 2014.

22



(iii)

2015 2014

Number Number

- 2

- 3

18 6

25 22

65 48

14 37

7 26

8 13

16 15

5 1

3 4

1 3

1 2

1 1

7 1

171 184

(c) Directors remuneration

2015 2014

N’000 N’000

Directors' fees 725 360

Other remuneration 13,280 10,478

14,005 10,838

Further analysed as follows;

N’000 N’000

Remuneration of non-executive directors 725 360

Remuneration of executive directors 13,280 10,478

14,005 10,838

2015 2014

N’000 N’000

Chairman 200 60

Highest paid director 13,280 10,478

2015 2014

Number Number

N100,000 and below 4 7

N100,001-N200,000 1 -

5 7

Employees of the Company, other than directors, whose duties were wholly or mainly discharged in

Nigeria, received remuneration (excluding pension contributions) in the following ranges:

N 400,001 – N 600,000

N 600,001 – N 800,000

N 800,001 – N 1,000,000

N 1,000,001 – N 1,200,000

N 1,200,001 – N 1,400,000

N 1,400,001 – N 1,600,000

N 1,600,001 – N 1,800,000

N 1,800,001 – N 2,000,000

N 2,000,001 – N 2,500,000

N 2,500,001 – N 3,000,000

N 3,000,001 – N 3,500,000

Directors’ remuneration was as follows:

The directors’ remuneration shown above includes amount paid to:

Other directors received emoluments (excluding pension contributions) within the following ranges:

N 3,500,001 – N 4,000,000

N 4,000,001 – N 4,500,000

N 4,500,001– N 5,000,000

N 5,000,000 – and above

23



(d) Analysis of expenses by nature2015 2014

N’000 N’000

Raw materials and consumables 367,753 310,877

Advertising and promotion 131,412 66,469

Depreciation of property, plant and equipment 622,428 848,485

Amortisation of intangible asset 6,878 4,863

Personnel costs (Note 8(b)) 794,984 672,253

Utilities 608,968 747,949

Repairs and maintenance 473,988 393,256

Management fee 69,649 63,312

Technical service fee - 42,182

Lease rental expenses 10,000 5,000

Audit fee 9,504 8,800

Professional services costs 14,373 13,046

Impairment loss reversal (27,567) (2,882)

IT infrastructure 57,522 38,216

Transportation and accommodation expenses 32,487 4,527

Excise duties 85,359 47,124

Staff training costs 21,365 10,946

Security services costs 27,178 25,173

Others 41,066 81,406

Total cost of sales, marketing, distribution and administrative

expenses 3,347,347 3,381,002

These expenses are further analysed as follows: 2015 2014

N’000 N’000

Cost of sales 2,502,147 2,662,451

Selling and distribution expenses 255,913 185,658

Administrative expenses 589,287 532,893

3,347,347 3,381,002

9 Taxation

(a)

2015 2014

Current tax: N’000 N’000

Income tax - -

Tertiary education tax 16,779 -

16,779 -

Deferred tax expenses

Origination and reversal of temporary differences 116,260 317,242

133,039 317,242

Tax charge for the year has been computed after adjusting for certain items of expenditure and

income, which are not deductible or chargeable for tax purposes, and comprises:

24



(b) Reconciliation of effective tax rate

2015 2014

% N’000 % N’000

Profit/(loss) before tax 210,179 (1,071,765)

30.0 63,054 30 (321,530)

8.0 16,779 - -

(6.0) (12,663) 3 (27,301)

1.6 3,420 - 552

29.7 62,450 - -

- - (3) 31,037

Tax using domestic tax rate

Effect of tertiary education tax

Tax effect of tax incentives

Tax effect of non-deductable expenses Change in recognised deductible temporary differences Others

Total income tax charge 63 133,039 30 (317,242)

- (c) Movement in current tax liability

Balance beginning of the year - -

Charge for the year 16,779 -

- -

Balance end of the year 16,779 -

(d) Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

N’000 N’000 N’000 N’000 N’000 N’000

Property, plant and equipment 104,435 - - (30,097) 104,435 (30,097)

Employee benefits 40,926 25,894 - - 40,926 25,894

Trade and other receivables 43,835 43,835 - - 43,835 43,835

Unutilised tax losses 896,744 1,162,568 - - 896,744 1,162,568

Net 1,085,940 1,232,297 - (30,097) 1,085,940 1,202,200

Net

Payment during the year

Assets Liabilities

25



Amounts of temporary differences recognised in statement of profit or loss and other comprehensive income were as follows:

Property,

plant and

equipment

Employee

benefits

Trade and

other

receivables

Unutilised tax

lossesNet

N’000 N’000 N’000 N’000 N’000

31 December 2014

Recognised in profit and loss 200,583 (3,964) (4,729) 125,352 317,242

Recognised in other comprehensive income - 11,010 - - 11,010

31 December 2015

Recognised in profit and loss (134,532) (15,032) - 265,824 116,260

Recognised in other comprehensive income - (7,494) - - (7,494)

10 Basic and diluted earnings/(loss) per share

2015 2014

Profit/(loss) for the year NGN 77,139,700 (NGN 754,523,000)

Weighted average number of ordinary shares

Issued ordinary shares at January 1 3,116,565,667 900,000,000

Effect of rights issue during the year - 2,216,565,667

Effect of private placement during the year 4,595,654,744 -

Weighted average number of ordinary shares at 31 December 7,712,220,410 3,116,565,667

Basic and diluted earnings/(loss) per share (kobo) 1 (24)

There were no potential dilutive ordinary shares during the year.

The calculation of basic and diluted earnings per share for the year ended 31 December 2015 was based on the profit for the year of N77.3 million (2014: loss of N754.5

million), attributable to ordinary shareholders and weighted average number of ordinary shares outstanding of 3,736,485,180 (2014: 3,116,565,667) calculated as follows:

26



11 Property, plant and equipment

Land &

Buildings

Plant and

Machinery

Furniture

and Fittings

Motor

vehicles

Returnable

Packaging

Materials

Capital Work

in Progress Total

N'000 N'000 N'000 N'000 N'000 N'000 N'000

Cost

Balance at I January 2014 4,016,004 4,584,435 209,399 288,830 61,235 246,019 9,405,922

Additions - 326,043 8,156 - 21,278 122,566 478,043

Reclassification (372,876) 612,087 157 (239,368) -

Write-offs (14,695) (10,102) - - - (24,797)

Disposals - - - (9,125) - - (9,125)

Balance as at 31 December 2014 3,628,433 5,512,463 217,712 279,705 82,513 129,217 9,850,043

Balance at I January 2015 3,628,433 5,512,463 217,712 279,705 82,513 129,217 9,850,043

Additions 78,608 292,893 28,008 43,914 173,958 78,319 695,701

Reclassification -

Transfers 129,216 (129,216) -

Disposals (2,234) (2,234)

Balance as at 31 December 2015 3,707,041 5,934,572 245,720 321,386 256,471 78,321 10,543,510

Accumulated Depreciation

Balance at I January 2014 434,682 1,436,807 59,163 205,316 30,341 2,166,309

Depreciation charge 154,116 609,091 37,627 32,812 14,839 - 848,485

Disposals - - - (9,081) - - (9,081)

Balance as at 31 December 2014 588,798 2,045,898 96,790 229,047 45,180 - 3,005,713

Balance at I January 2015 588,798 2,045,898 96,790 229,047 45,180 3,005,713

Depreciation charge 145,562 356,898 65,151 31,082 23,735 - 622,428

Disposals - - - (2,234) - - (2,234)

Balance as at 31 December 2015 734,360 2,402,796 161,941 257,895 68,915 - 3,625,906

Carrying amounts

At 31 December 2014 3,039,635 3,466,565 120,922 50,658 37,334 129,217 6,844,330

At 31 December 2015 2,972,681 3,531,776 83,779 63,491 187,555 78,321 6,917,604

(a)

(b)

(c) No borrowing costs were capitalised during the year (2014:Nil)

The Company had no authorised or contractual capital commitments as at the reporting date (2014: Nil).

The Company holds land under a finance lease arrangement. The maximum tenor of the lease arrangements is 99 years in line with the Land Use Act. The lease

amounts were fully paid at the inception of the lease arrangements.

27



12 Intangible assets

2015 2014Cost N'000 N'000

Balance, beginning of the year 11,741 11,741

Additions - -

Balance, end of the year 11,741 11,741

Amortisation

Balance, beginning of the year 4,863 2,851

Amortisation charge 6,878 2,012

Disposal - -

Balance, end of the year 11,741 4,863

Carrying amount

At 31 December 2014 6,878 8,890

At 31 December 2015 - 6,878

13 Inventories

2015 2014

N '000 N '000

Raw materials 47,445 10,700

Finished products 3,406 296

Work-in-progress 40,684 36,671

Packaging materials 13,003 10,901

Engineering spares 233,644 227,353

Other consumables 11,951 68,365

350,133 354,286

14

2015 2014

N '000 N '000

Trade receivables 87,363 46,428

Other receivables 177,735 197,005

Amounts due from related parties (Note(23 (a)) 412,003 334,019

677,101 577,452

Intangible assets represents computer software. The movement on this account during the year was as

follows:

The Company’s exposure to credit risks and impairment losses related to trade and other receivables is

disclosed in Note 24.

The amortisation charge of intangible assets is included in administrative expenses.

The value of raw materials, non-returnable packaging materials, spare parts, changes in finished

products and work-in-progress recognised in cost of sales during the year amounted to N771 million

(2014: N739 million). During the year, impairment of inventory amounted to N51.4 million (2014

N58.3 million). This amount has been adjusted in the 'changes in inventories ' on the statement of cash

flows.


28



15 Prepayments

Prepayments represent advance payment for the supply of spares and other consumables.

16 Cash and cash equivalent

2015 2014

N’000 N’000

Cash 345,594 536,297

Short term deposits 824,159 -

1,169,753 536,297

17 Deposit for shares

2015 2014

N’000 N’000

1,164,569 1,164,569

- -

- par value of issued ordinary shares (Note 18 (a)) (314,748) -

- excess of issue price over par value (Note 19) (849,821) -

- 1,164,569

18 Share capital

2015 2014

N’000 N’000

(a) Authorised share capital

4,500,000 4,500,000

Allotted, called-up and fully paid

The movement in share capital during the year was as follows:

Number of ordinary shares of 50k each 2015 2014

In thousands

At 1 January 7,200,000 900,000

Additional shares issued 629,496 6,300,000

At 31 December 7,829,496 7,200,000

2015 2014

Ordinary shares of 50k each N’000 N’000

Balance as at 1 January 3,600,000 450,000

Issue of ordinary shares through private placement (Note18(b)) 314,748 -

Effect of right issue of ordinary shares (Note18(c)) - 3,150,000

Balance as at 31 December 3,914,748 3,600,000

(b) Conversion of deposit for shares to ordinary share capital

Further information relating to conversion of deposit of shares to ordinary share capital are disclosed in

Notes 18 and 19 to the financial statement.

During the year, the Board of Directors approved the conversion of deposits made for shares by The

Raysun Nigeria Limited amounting to N1.1 billion and Akwa Ibom State Government amounting to

N52.9 million to share capital through private placement of ordinary shares. The Company obtained

regulatory approval in March 2015 for this transaction and a total of 629,496,464 units of ordinary

shares of 50 kobo each at N1.85 were issued to these shareholders.

(9,000,000,000 ordinary shares of 50k each (2014: 9,000,000,000

ordinary shares of 50k each)

The movement on these account was as follows:

Balance as at 1 January

Effect of ordinary share issuance during the year:

Balance as at 31 December

29



(c) Rights issue of ordinary shares.

19 Share premium

The movement in share premium reserve was as follows:

2015 2014

N’000 N’000

8,251,946 129,184

- 8,122,762

849,821 -

Share issue costs (7,988)

9,093,779 8,251,946

20 Other reserve

21 Employee benefits

(a) Long term employee benefit

2015 2014

N’000 N’000

- Defined benefit obligation (Note 21(a)(i)) 89,153 95,098

- Long service award (Note 21(a)(ii)) 44,372 47,923

133,525 143,021

(i) Movement in the present value of the defined benefit obligation

2015 2014

N’000 N’000

Liability as at 1 January 95,098 40,245

Included in profit or loss

Current service cost 12,065

Past service cost 15,810

Interest cost 5,034

32,909

Included in other comprehensive income

Remeasurment loss/(gain)

Actuarial (gain)/loss arising from changes in:

- Economic assumptions (32,227) 42,473

- Statistical data 833 - 313

- Salary increase (4,694) 7,189

- Financial assumptions 11,108 1,083

(24,979) 50,432

Other

Benefits paid by the plan (13,875) (7,814)

Liability as at 31 December 89,153 95,098

12,235

6,929

-

5,306

Present value of:

Effect of private placement of ordinary shares (Note17)

Effect of right issue of ordinary shares (Note18(c))

Balance as at 1 January

Balance as at 31 December

Other reserve represents difference between the carrying amounts and fair values of certain items of

property, plant and equipment as at transition date (1 January 2011). This was created as part of the

Company’s election to apply optional exemptions of deemed cost on transition to IFRS.

In 2014, the Company issued 6,300,000,000 units of ordinary shares of 50k each at N1.85 to its

existing shareholders through rights issue and this resulted in increase of ordinary share capital by

N3.2 billion. The gross and net proceeds from the rights issue of ordinary shares amounted to

N11,600,000,000 and N11,272,762,000 respectively. The excess of issue price over par value

amounting to N8.1 billion was recognised as share premium (Note 20).

The proceeds from the rights issue was used to repay amount of N11,586,596,000 billion due to The

Raysun Nigeria Limited (the parent company) in 2014.

30



(ii) Movement in the present value of long service awards

2015 2014

N’000 N’000

47,923 22,582

5,855 2,558

6,941 2,559

Remeasurment loss/(gain)

Actuarial (gain)/loss arising from:

- Change in economic assumptions (13,965) 23,532

- Financial assumptions (233) 4,694

- Salary increase (156) 857

- Demographic assumptions (1,229) 2,057

(2,787) 36,257

(764) (10,916)

44,372 47,923

(b)

2015 2014 2015 2014 2015 2014

N’000 N’000 N’000 N’000 N’000 N’000

Defined benefit obligation 26,327 9,788 6,582 2,447 32,909 12,235

Long service awards (2,230) 29,006 (557) 7,251 (2,787) 36,257

Pension 12,442 12,776 3,111 3,194 15,553 15,970

36,540 51,570 9,135 12,892 45,675 64,462

(c) Actuarial (gain)/losses recognised in other comprehensive income are analysed as follows:

Before tax Tax After tax

Before

tax Tax After tax

N’000 N’000 N’000 N’000 N’000 N’000

Defined benefit obligation (24,979) 7,494 (17,485) 50,432 (11,010) 39,422

Actuarial loss/(gain) (24,979) 7,494 (17,485) 50,432 (11,010) 39,422

Actuarial assumptions

Principal financial actuarial assumptions at the reporting date (expressed as weighted averages):

2015 2014

Average discount rate (p.a.) 11% 13%

Average pay increase (p.a.) 13% 20%

Average rate of inflation (p.a.) 9% 8%

These assumptions depicts managements estimate of the likely future experience of the Company.

Due to unavailability of published reliable demographic data in Nigeria, the demographic assumptions

regarding future mortality are based on the rates on A1949/52 tables published jointly by the Institute

and Faculty of Actuaries in the UK.

2015

Administrative Cost of sales

The expense is recognised in the following line items in the statement of comprehensive income:

Total

2014

Payments

Other

Liability as at 31 December

Liability as at 1 January

Current service cost

Included in profit or loss

Interest cost

31



(d) Sensitivity analysis

Defined benefit

obligation

Long service

award

N’000 N’000

Discount rate +1% 8,054 2,854

-1% (9,275) (3,194)

Salary increase +1% (5,737) (2,269)

-1% 5,191 2,051

Mortality rate +1% 40 174

-1% (40) (156)

(e) Short term employee benefits

2015 2014

N’000 N’000

Obligation as at 1 January - 2,033

Charge for the year 15,553 15,970

Payments (15,553) (18,003)

Liability as at 31 December included in trade and other payables - -

Sensitivity to each actuarial assumption was determined while other assumptions were held

constant. There has not been a change from the sensitivity approach adopted in prior years.

Although the analysis does not take account of the full distribution of cash flows expected under

the plan, it does provide an approximation of the sensitivity of the assumptions shown.

Balance on the pension payable account represents the amount due to the Pension Fund

Administrators which is yet to be remitted at the year end. The movement on this account during

the year was as follows:

It is assumed that all employees covered by the defined end of service benefit scheme would

retire as follows:

-Junior staff 55 years

-Senior staff 60 years

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions

holding other assumptions constant would have affected the defined benefit obligation by the

amounts shown below.

32



22 Trade and other payables

2015 2014

N’000 N’000

Trade payables 303,499 139,051

Other payables and accrued expense 1,669,008 1,606,682

Amounts due to related parties (Note 23(a)) 1,084,712 668,627

3,057,219 2,414,360

23 Related parties

(a) Parent company and other related entities

2015 2014 2015 2014

N’000 N’000 N’000 N’000

Amount due from related parties

Contract Packaging:

-Nigerian Breweries 2,273,011 2,516,282 411,076 333,092

Other transactions:

-Superbrew - - 927 927

2,273,011 2,516,282 412,003 334,019

2015 2014 2015 2014

N’000 N’000 N’000 N’000

Amount due to related parties

Royalties and Technical Fees:*

-Montgomery Ventures Incorporated - (42,182) (273,018) (273,018)

Management fee:

-The Raysun Nigeria Limited (69,649) (63,312) (69,649) (63,312)

Purchases:

-Nigerian Breweries Plc (625,003) - (398,045) -

-The Raysun Nigeria Limited - 10,033,663 (344,000) (332,297)

(694,652) 9,928,169 (1,084,712) (668,627)

Deposit for shares:

-The Raysun Nigeria Limited - - - (1,111,594)

-Akwa Ibom State Government - - - (52,975)

- - - (1,164,569)

*Management fee relates to agreement between the Company and Montgomery Ventures Incorporated

which was approved by the National Office for Technology Acquisition and Promotion.

The Company’s exposure to liquidity risk related to trade and other payables is disclosed in Note 21.

Transaction value Balance due to

Balance due fromTransaction value

The Company's parent company is The Raysun Nigeria Limited which owns approximately 60.9% of the

Company's equity as at reporting date. Heineken N.V. is the ultimate parent company of Champion

Breweries Plc.

The Company had transactions with its parent and other entities who are related to the Company by

virtue of being members of the Heineken Group. The transaction value and amounts due from /(to)

related parties by the nature of the transaction are shown below:

33



(b) Key management personnel

2015 2014

N’000 N’000

Short-term employee benefits 45,086 28,661

Post-employment benefits 17,046 10,287

62,132 38,948

24 Financial instruments- financial risk management and fair values

Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

- credit risk

- liquidity risk

- market risk

Risk management framework

(a) Credit risk

The Company's Risk Management Committee oversees how management monitors compliance with

the Company's risk management policies and procedures, and reviews the adequacy of the risk

management framework in relation to the risks faced by the Company.

Internal audit undertakes both regular and ad hoc reviews of risk management controls and

procedures, the results of which are reported to the Audit Committee.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial

instrument fails to meet its contractual obligations, and arises principally from the Company’s

receivables from customers and related parties.

The Company's financial assets comprise trade and other receivables and cash and cash equivalent as

indicated on the statement of financial position. The carrying amount of these financial assets

represents maximum credit exposure of the Company.

In addition to their salaries, the Company also provides non-cash benefits to executive officers, and

contributes to a post-employment defined benefit plan on their behalf. In accordance with the terms of

the plan, executive officers retire at age 55 and are entitled to receive post employment benefits.

Key management personnel compensation comprised:

This note presents information about the Company’s exposure to each of the above risks, the

Company’s objectives, policies and processes for measuring and managing risk, and the Company’s

management of capital.

The Risk Management Committee is responsible for developing and monitoring the Company's risk

management policies which are established to identify and analyse the risks faced by the Company, to

set appropriate risk limit and controls, and monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market

conditions and the Company's activities.

34




2015 2014N’000 N’000

Gross trade receivables 205,912 192,544

Impairment (118,549) (146,116)

87,363 46,428

412,003 334,019

Other receivable 177,735 197,005

677,101 577,452

Impairment losses

Gross Impairment Gross Impairment

2015 2015 2014 2014

N’000 N’000 N’000 N’000

0-30 days 87,363 - 46,428 -

30-90 days - - - -

91-180 days - - 80 (80)

More than 180 days 118,549 (118,549) 146,036 (146,036)

205,912 (118,549) 192,544 (146,116)

2015 2014

N’000 N’000

Balance at 1 January (146,116) (148,998)

Impairment loss reversal 27,567 2,882

Balance at 31 December (118,549) (146,116)

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Company considers that it is not exposed to significant concentration risk in relation to trade receivables

because over 90% of the Company's customers are concentrated in the South-South geographical region of

Nigeria. However, credit risk can arise in the event of non-performance of a counterparty. Credit limits are

established for each customer and reviewed on quarterly basis. Customers that fail to meet the Company’s

benchmark creditworthiness may transact with the Company only on a cash-and-carry basis.

The Company further considers that the concentration of credit risk with respect to trade receivables is limited

on the bases that the Company grants a credit period of 2 to 3 weeks to selected customers, which mitigates

the risk of default by customers.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect

of trade and other receivables, which is a specific loss component that relates to individually significant

exposures.

Amounts due from related parties

As at the reporting date, the aging of trade receivables based on the most recent transaction date was:

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

35



(b) Liquidity risk

Note Carrying Contractual 6 months 6 to 12

amount cash flows or less months

N’000 N’000 N’000 N’000

31-Dec-15

Trade and other payables 22 3,057,219 3,057,219 3,057,219 -

3,057,219 3,057,219 3,057,219 -

31-Dec-14

Trade and other payables 22 2,414,360 2,414,360 2,414,360 -

Deposit for shares 17 1,164,569 1,164,569 - 1,164,569

3,578,929 3,578,929 2,414,360 1,164,569

(c) Market risk

The impairment loss as at reporting date relates to trade receivables which in the Company's assessment

will not be recoverable from the customers mainly due to their economic circumstances. With respect to

other receivables and amounts due from related parties, the Company believes that these unimpaired

receivables are collectible based on historical payment behaviour and analyses of the underlying counter

party’s credit ratings.

Based on historical default rates, the Company believes that, apart from the above, no additional

impairment allowance is required in respect of trade and other receivables. The impairment loss is

included in administrative expenses.

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with

its financial liabilities that are settled by delivering cash or another financial asset. The Company’s

approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity

to meet its liabilities when due, under both normal and stressed conditions, without incurring

unacceptable losses or risking damage to the Company’s reputation.

The Company has an appropriate liquidity risk management framework for addressing its short, medium

and long term liquidity requirements and makes monthly cash flow projections which assists in

monitoring cash flow requirements and optimising cash return on investments.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or

at significantly different amounts.

The following are the contractual maturities of financial liabilities:

Non-derivative financial liabilities

Non-derivative financial liabilities

Market risk is the risk that changes in market prices such as foreign exchange rate will effect the

Company's income or the value of its holdings of financial instruments. The objective of market risk

management is to manage and control market risk exposures within acceptable parameters while

optimising the return. The Company manages market risk by keeping cost low through various cost

optimisation programmes and also by regular monitoring of market developments.

Capital management

The Company considers equity contribution from shareholders as its capital.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a

going concern in order to provide returns for the shareholders and to maintain an optimal capital structure.

36



2015 2014

N’000 N’000


Total equity 7,121,637 5,870,431

Return on capital 1% -13%

2015 2014

N’000 N’000

Total liabilities 3,207,523 3,721,950

Less: cash and cash equivalents (1,169,753) (536,297)

Net debt 2,037,770 3,185,653

Total equity 7,121,637 5,870,431

Adjusted net debt to equity ratio 1:3.5 1:1.84

Accounting classification and fair values

25 Contingencies

(a) Pending litigation and claims

(b) Financial commitments

26 Segment reporting

27 Subsequent events

The Directors are of the opinion that all known liabilities and commitments, which are relevant in

assessing the financial position of the Company, have been taken into consideration in the preparation of

these financial statements.

The Company is a defendant in various law-suits that have arisen in the normal course of business. The

contingent liabilities in respect of pending litigation at year end amounted to N345.3 million. (2014:N472

million ). In the opinion of the directors and based on independent legal advice, the Company’s liability is

not likely to be significant, thus no provision has been made in these financial statements.

There were no significant subsequent events which could have had a material effect on financial position

of the Company as at 31 December 2015 and its financial performance for the year then ended that have

not been adequately provided for or disclosed in these financial statements.

In order to maintain an appropriate capital structure, during the year, the Company increased its ordinary

share capital to N3,915 million (2014: N3,600 million) by converting deposit for shares into ordinary

share capital through private placement. In addition, the Company ensures appropriate capital

management by monitoring returns on capital and net debt to equity ratio.

The Company's return on capital as at the end of the reporting period was as follows:

Furthermore, the Company's adjusted net debt to equity ratio at the end of the reporting period was as

follows:

The fair values of financial assets and liabilities are not significantly different from the carrying amounts

shown in the statement of financial position.

Nigeria is the Company's primary geographical segment as the Company's revenue is entirely earned from

sales of similar product in Nigeria. Additionally, none of the Company's customers accounts for more than

ten percent of the Company's total revenue. Accordingly, no further business or geographical segment

information is reported.

37

Additional Financial Information



Value Added StatementFor the year ended 31 December

2015 2014

N'000 % N'000 %

Revenue 3,501,845 3,302,383

Bought-in-materials and services (1,778,539) (1,607,926)

1,723,306 1,694,457

Other income 52,271 104,131

Value generated by operating activities 1,775,577 100 1,798,588 100

Distribution of Value Added

To Government

85,359 5 47,124 3

38,264 2 9,982 1

133,039 7 (317,242) (18)

To Employees:

Personal expenses 794,984 45 672,253 37

To Providers of Finance:

- Finance cost - - 1,287,645 72

Retained in the Business:

To maintain and replace

- property, plant and equipment 622,428 35 848,485 47

- intangible asset 6,878 1 4,863 0

To augment reserves 94,625 5 (793,945) (44)

Value added 1,775,577 100 1,798,588 100

- Excise duties

- Minimum tax

- Taxation

39



Financial Summary

Statement of comprehensive income 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec

2015 2014 2013 2012 2011

N'000 N'000 N'000 N'000 N'000

Revenue 3,501,845 3,302,383 2,233,259 1,785,345 1,791,109

Profit/(loss) from operating activities 206,769 25,511 (543,902) (1,222,013) (1,251,538)

Profit/(loss) before taxation 248,443 (1,061,783) (1,730,432) (1,928,865) (1,770,001)

Profit/(loss) for the year 77,140 (754,523) (1,178,025) (1,336,690) (1,193,780)

Comprehensive loss for the year 94,625 (793,945) (1,178,386) (1,337,505) (1,193,780)

Ratios

1 (24) (127) (149) (133)

Net liabilities per share (kobo) (91) (188) (508) (381) (232)

Statement of financial position 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec

2015 2014 2013 2012 2011

N'000 N'000 N'000 N'000 N'000

Property, plant and equipment 6,917,604 6,844,330 7,239,613 5,657,055 6,362,871

Intangible asset - 6,878 11,741 - -

Deferred tax assets 1,085,940 1,202,200 873,948 321,386 -

Net current liabilities (748,382) (2,039,956) (12,670,861) (9,345,446) (8,144,702)

Employee benefits (133,525) (143,021) (62,827) (62,995) (39,556)

Deferred tax liabilities - - - - (271,108)

Net liabilities 7,121,637 5,870,431 (4,608,386) (3,430,000) (2,092,495)

Funds Employed

Share capital 3,914,748 3,600,000 450,000 450,000 450,000

Share premium 9,093,779 8,251,946 129,184 129,184 129,184

Other reserves 3,701,612 3,701,612 3,701,612 3,701,612 3,701,612

Accumulated loss (9,588,502) (9,683,127) (8,889,182) (7,710,796) (6,373,291)

7,121,637 5,870,431 (4,608,386) (3,430,000) (2,092,495)

Basic and diluted profit/(loss) per share

40

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