annual report and financial statements plc 2019...50 52 independent auditor’s report 53 59 proxy...

ardova plc

Annual Reportand Financial StatementsFOR THE YEAR ENDED 31 DECEMBER, 2019

www.ardovaplc.com

2Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Contents

Corporate information

Origins and key historical milestones

Corporate governance Report

Directors’ Report

Report of the Statutory Audit Committee

Statement of Directors’ responsibilities in Relationto Financial Statements

9

26

41

50

52

Independent Auditor’s Report 53

59

Proxy Form 135

Admission Card 139

Postage 140

CO

NT

EN

TS

ardova plc

Notice of Annual General Meeting

11

Chairman’s Statement 17

Profile of Directors 35

Statement of Profit or Loss and Other Comprehensive Income

58

Statement of Cash flows

60Statement of Changes in Equity

61

Notes to the Financial Statements

65

Statement of Value Added 133

Financial summary 134

E-Dividend Mandate 141

Authority to ElectronicallyReceive Corporate Information 142

4

Statement of FinancialPosition

CEO’s Statement 21

Stations Nationwide

2019 Total Revenue

176,550,766,0002019 Profit After Tax

3,915,140,000

450 +2018

2019

631,471,000

3,915,140,000

Profit A�er Tax

Ardova Plc is a leading

indigenous, integrated

e n e r g y c o m p a n y i n

Nigeria involved in the

marketing of petroleum

products.

The Company operates a

network of 450 retail

outlets spread across

the Country with major

p e t r o l e u m s t o r a g e

instal lations at both

Apapa (Lagos State) and

Onne (Rivers State).

3

ardova plc

2019 AT A GLANCE

Ardova Plc (Formerly Forte Oil Plc)

CorporateInformation

01 ardova plc

Ardova Plc is a leading indigenous, integrated

energy company in Nigeria involved in the

marketing of petroleum products.

450Retail Outlets

The Company operates a network of 450 retail outlets spread across

the Country with major petroleum storage installations at both Apapa

(Lagos State) and Onne (Rivers State). Ardova Plc also provides aircraft

refuelling operations at its Aviation Joint User's hydrants in Ikeja and Joint

Aviation depots in Abuja, Port Harcourt and Kano making the Company a

leading Nigerian provider of aviation fuel for local and international

airlines. The Company also procures and markets Liquefied Petroleum

Gas

ardova plc

ardova plc

ardova plc

The Company manufactures and distributes a wide range of quality

lubricants, which include Super V, Visco 2000, Diesel Motor Oil from its

lubricating oil blending plant at its Apapa terminal in Lagos. Apart from

our range of lubricants, AP is also the sole authorised distributor of the

Texaco branded Havoline Engine Oils and Lubricants for the Nigerian

market.

In addition to its strategic retail and commercial network in Nigeria,

Ardova Plc has embarked on providing clean energy hubs and mini-grids

and renewable energy solutions through its solar brand, which

distributes low cost solar power solutions to domestic customers.

ardova plc

People-First Oriented and Star Service Company

As Ardova Plc, the Company remains committed to the

practice of strong corporate governance and compliance

at all levels, culture of strong ethics and discipline and an

enhanced safety, health and sustainability policies.

Ardova Plc's business philosophy is premised on a people-

first oriented and star service Company, with sound

management in place to deliver a holistic brand vision, via

deep investments in technology and exceptional service

delivery across the energy value chain.

Further to a special resolution passed at the

Extraordinary General Meeting of the Company held on

December 17, 2019, the Corporate Affairs Commission

("the Commission") has approved the change of name of

the Company to ARDOVA PLC.

ardova plc

6Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Corporate Information

Board Of Directors

AbdulWasiu O. SowamiChairman

Olumide AdeosunChief Executive Officer

Moshood Olajide - Executive Director, Finance & Risk Management

Mohammed Aminu UmarNon-Executive Director

Olusola AdeeyoIndependent Non-Executive Director

Oladeinde Nelson-ColeAg. Company Secretary/General Counsel

Aniola Durosinmi-EttiIndependent Non-Executive Director

7Ardova Plc (Formerly Forte Oil Plc)

ardova plc

Registered Office 13, Walter Carrington Crescent, Victoria Island, Lagos, Nigeria

Registrars and Transfer Office Veritas Registrars Limited,Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos

Auditors Deloitte and Touche Civic Towers, Plot GA1, Ozumba Mbadiwe Road, V.I, Lagos

Bankers First Bank of Nigeria Limited, Guaranty Trust Bank Plc,

Union Bank of Nigeria Plc, Zenith International Bank Plc,

Keystone Bank Limited, Stanbic IBTC Bank Plc

ardova plc

8Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Corporate Information

Origins and KeyHistorical Milestones

02

From its incorporation as British

Petroleum (Nigeria) in 1964,

Ardova Plc (AP) has emerged

the leading diversified energy

solutions provider, a publicly

listed and widely renowned

corporation with one of the

fastest growing business

portfolios within the energy

sector.

1964Incorporation

As British Petroleum (Nigeria) 1978

Indigenization:

NNPC acquires 60% stake, with Nigeria public buying 40%

1979Name Change

To African PetroleumLimited (AP)2000

Privatization

NNPC sold to40%the Nigerian public

2005NNPC buys equitystake and increasesinterest by convertingAP debt

2007New Era:

Zenon Petroleum, led by Mr Femi Otedola acquires majorityinterest from NNPC ushering in a new era.

2010-11Rebrand:

To Forte Oil with newmanagement and 3-yearturn-around program2012-15

Transformation program result

Profits up by .Acquired 342%414 mw Thermal IPP Resumed dividend payments, capital re-organization

2016-18New Frontiers

Consolidated growth,build resilience andentrench best practices2019

New Acquisition

Ignite investments andcommodities Ltd concludesacquisition of 74.02% equitystake in Forte Oil Plc’s downstream operations.

2019-20New Frontiers

To Ardova Plc (AP)

ardova plc

10Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Origins and Key History Milestones

Notice of Annual General Meeting

03

NOTICE OF 41ST ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 41st Annual General Meeting of the Members

�

�

Civic Centre, Victoria Island, Ozumba Mbadiwe, Lagos to transact the following business:

ORDINARY BUSINESS

of ARDOVA PLC will hold on the 28th day of August 2020, 10:00a.m at The Panoramic View Hall,

Ÿ “That Article 98 of the Articles of Association of the Company be is hereby amended to read as follows:

“The Quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed shall be “three. A meeting of the Board of Directors may be held by conference call, video call or other digital or electronic means. A Director shall be entitled to participate in a Board.

Meeting by any digital or electronic means and where a Director so participates, he shall be counted for the purpose of determining whether a quorum has been constituted and for determining the outcome of any vote taken at the Meeting.”

SPECIAL BUSINESS

Ÿ To elect/re-elect the members of the Statutory Audit Committee.

Ÿ To re-elect Mr. Aminu Umar to the Board of Directors as a Director whose term expires in accordance with Articles 88 and 89 of the Company’s Articles of Association.

Ÿ To fix the remuneration of the Directors

Ÿ Amendments to the Articles of Association

Ÿ To authorize the Directors to fix the remuneration of the External Auditors for the ensuing year.

Ÿ To consider the Audited Financial Position with the Statement of Profit or Loss and other Comprehensive Income for

the year ended 31st December 2019, the Report of the Directors and the Report of the Auditors and Statutory Audit Committee thereon.

To consider and, if thought fit, pass the following resolution as a special resolution:

12Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Notice of 41st Annual General Meeting

ardova plc

“A Resolution in writing signed (or approved by letter, electronic mail, telegram or telex, or by any other electronic means whatsoever) by all the Directors or (unless either the Directors appointing the Committee or the regulations imposed by the Directors on such Committee shall otherwise direct), by all the members of a Committee for the time being shall be as valid and effectual as if it had been passed at a meeting of the Directors or as the case may be, such Committee duly called and constituted. Such resolution may be contained in one document or electronic transmission, or in several documents or electronic form (email or otherwise), each signed or approved by the Directors or Members of the Committee concerned. For the purpose of this Article, the signature or electronic approval as aforesaid of an alternate Director (if any) entitled to notice of meeting of Directors shall suffice in place of the signature or approval the Director appointing him.

Dated this 17th day of July 2020

b. To consider and if thought fit pass the following as a Special Resolution:

“That the Articles of Association of the Company be and is hereby amended by introducing a new Article 99, which shall read as follows:

c. That subsequent Articles shall be renumbered accordingly.”

FO House, 13 Walter Carrington Crescent

BY ORDER OF THE BOARD

Relevant documents in connection with the Meeting are available to all Shareholders from the date of this notice on the Company’s Website www.ardovaplc.com

NOTES

FRC/2019/00000019918

Lagos. Victoria Island,

Ag. Company Secretary OLADEINDE NELSON - COLE


ardova plc

NOMINATED PROXIES

In view of the above, Members entitled to vote are advised to appoint any of the under listed proxies to attend and vote in their stead:

2. Sir Sunny Nnamdi Nwosu, KSS

PROXY

Attendance at the Annual General Meeting shall be limited to the maximum crowd size stipulated by Lagos State Government for gatherings.

Members of the Company, entitled to attend and vote, are entitled to appoint proxies to attend and vote in their stead. A proxy need not be a member of the Company. A proxy form is provided with this Annual Report and Financial Statement. The Proxy form has been pre-stamped for the use of the shareholders. To be valid for the purpose of the meeting, the form must be completed and deposited at the office of the Registrars, Veritas Registrars Limited., not later than 48 hours before the time appointed for holding the meeting..

1. Mr. AbdulWasiu Sowami

Due to the safety challenges posed by the COVID-19 pandemic, public safety, the Government’s Directive on the restriction of large gatherings and social distancing measures, the Company has under the guidelines issued by the Corporate Affairs Commission (CAC), obtained the approval of the CAC to hold the Annual General Meeting by proxy. Members are hereby informed, that the Annual General Meeting shall only be held by proxy in line with the said guidelines. The proceedings of the meeting shall also be streamed live.

3. Mrs. Adebisi Oluwayemisi Bakare

Each duly completed proxy form shall be counted as one.

Each Member is to appoint a Proxy by ticking the relevant box in the Proxy Form attached hereto to indicate how his/her vote is to be cast for each proposed resolution on the agenda.

For the appointment to be valid, a completed and duly stamped proxy form by the Commissioner of Stamp Duties must be deposited at the office of the Registrar, Veritas Registrars Limited, Plot 89A Ajose Adeogun Street, Victoria Island, Lagos or submitted via their email addresses [email protected] or [email protected], not less than 48 hours before the time fixed for the meeting.

4. Mr. Patrick Ajudua

5. Mr. Boniface Okezie


ardova plc

APPOINTMENT OF MEMBERS OF THE STATUTORY AUDIT COMMITTEE

The Statutory Audit Committee consists of 3 shareholders and 3 Directors in accordance with Section 359(5) of the Companies and Allied Matters Act of 2004. Any member may nominate a shareholder as a member of the Statutory Audit Committee by giving written notice of such nomination to the Secretary of the Company at least 21 days before the Annual General Meeting. Nominees to the Statutory Audit Committee must be compliant with the laws, rules and regulations guiding listed companies in Nigeria. Accordingly, we would, therefore, request that the nominations be accompanied by a copy of the nominee’s curriculum vitae..

RIGHT TO ASK QUESTIONS

Members have a right to ask questions, in writing prior to the meeting, on their observations or concerns arising from the Annual Report and Financial Statement 2019, provided that such questions in writing are submitted no later than 18th August 2020. For ease of submission a dedicated email address, has been created yo [email protected] submissions from shareholders.

UNCLAIMED DIVIDENDS

RE-ELECTION OF DIRECTORS

In accordance with Articles 88 and 89 of the Company’s Articles of Association, the Director retiring by rotation is

The Company notes that some dividend warrants sent to shareholders are yet to be presented for payment and some shareholders are yet to mandate their bank accounts for the payment of e-dividends. Therefore, all shareholders with “unclaimed dividends” should address their claim(s) to the Registrars, Veritas Registrars Limited, Plot 89A Ajose Adeogun Street, Victoria Island, Lagos or to the Company Secretary at the address of the registered office. Members are being urged to avail themselves of the use of the forms provided to update their information, particularly as it relates to the mandate of their dividend(s) and use of the Central Securities Clearing System (CSCS).

The Unclaimed dividend list will be uploaded on the Company’s Website for your attention and www.ardovaplc.com necessary action.

Mr. Aminu Umar, and being eligible, offers himself for re-election.


ardova plc

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The Meeting will be streamed live online to enable Shareholders and other Stakeholders who will not be attending physically to follow the proceedings. The link for the live streaming of the meeting will be made available on the Company’s website at www.ardovaplc.com

E-REPORT

The CAC has approved that the matters under Special Business be tabled at the Annual General Meeting. SPECIAL BUSINESS

VIEWING OF THE PROCEEDINGS OF THE MEETING

CLOSURE OF REGISTER

The Register of Members will be closed from 13th August 2020 for the purpose of updating the Register of Members.

Shareholders who wish to receive only the electronic version of the Company’s Annual Report are please requested to complete the detachable form inserted in the Annual Report and return same to the Registrars.

The Company’s Annual Reports are available online for viewing and downloading from our Website at www.ardovaplc.com www.veritasregistrars.com and the registrars website,


ardova plc

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Chairman’sStatement

04

18Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Chairman’s Statment

Dear valued shareholders, on behalf of the board and

management, I am delighted to share our 2019 Annual

Report, our first since we became Ardova Plc. This

report highlights the significant advancements that

have been made in our company since acquisition of

majority shareholding by Ignite Investment on June 21,

2019. Our three-pronged strategy which focused on

Ÿ Improving operational efficiencies

Ÿ Leveraging existing core assets and

Ÿ Positioning the company to be at the forefront

of renewable energy distribution in Nigeria,

yielded results throughout the year in the face of a

challenging operating environment.

These improvements have yielded

positive impact as we have seen our

P r e m i u m M o t o r S p i r i t ( P M S )

throughput increased by 85% from

48million litres to peak at 105 million

litres in December, which in turn grew

our market share and the throughput

of different white products to our own and partner

service stations. The topline revenue growth shows

improved operating efficiency and a healthier balance

sheet achieved over the year have created a foundation

on which we can continue to build a sustainable energy

company for the future.

Observations of the Macro Economic Environment

In 2019, advanced and emerging markets experienced

slow economic growth caused by rising political tension

in the Middle East and sustained trade wars between

the United States (US) and China. The ripple effect of

this saw global oil prices rise from its 2019 opening price

of $59.4 per barrel to about $67.2 per barrel at year-

end. The Brexit negotiations, which saw the exit of one

British Prime Minister and the election of another also

contributed to the slow pace in global economic growth

The Central Bank of Nigerian sustained its monetary

policy stance primarily to attract foreign investments

and support the local currency. The availability of credit

to private economic players remained restricted for

most of the year, with the Central Bank of Nigeria (CBN)

enforcing strict policies to commercial lenders by

growing the Loan-to-Deposit Ratio (LDR) to 65% in a

bid to stimulate growth in the private sector.

With the prevailing foreign exchange shortages and oil

marketers' restrictions on importing PMS products, the

retail pump price traded at N145 with the NNPC being

the biggest supplier to marketers throughout the year.

As a member of the Major Oil Marketers Association of

Nigeria (MOMAN), we continued to call for a deregulated

downstream sector that will allow for a free-market

framework in which market forces determine PMS pump

prices at attractive margins for all stakeholders.

Within our own shores, 2019 was an election year for

Nigeria, and characteristically foreign investors

exhibited caution in their investment decisions and took

pre-emptive measures as they awaited policy direction

from the new administration. At the federal level, the

election result saw the ruling party return to office, but

economic activities remained challenging with a slight

pick-up in the last quarter of the year.

which by the end of 2019 measured 2.3%, the slowest

in recent times.

2019 Key Business Initiatives At the heart of our reemergence as Ardova Plc is the

drive to improve energy sufficiency in a manner that

positively impacts our customers & their communities,

creates economic opportunity and that we minimize our

impact on the environment. We have encapsulated this

ambition in our mantra to provide "Energy for a Brave

New World", a reflection of a paradigm change from our

historical fossil fuel driven business to becoming a

market leader in cleaner energy and low carbon

solutions for the Nigerian market.

85%PMS throughput increase

ardova plc

As I earlier highlighted, we have repurposed our

business model to improve the operational efficiencies

that will drive us quicker towards our goal of building an

end-to-end energy company with diversified product

offerings. We are also maximizing value from our core

assets which has accelerated our expected growth.

The combination of this increased operational

efficiency and core asset value maximization will enable

us easily adapt to ever changing consumer demand

patterns, and bridge energy sufficiency.

We recognise that building the Ardova Plc we envision

necessitates attracting and retaining the right talent,

so we have adopted a people-first philosophy to ensure

that we have the required talent to support our

executive team in driving and sustaining our

transformation agenda. We also implemented product-

led management structure over the entire value chain

which among other initiatives, helped strengthen

control and oversight in our supply chain and increased

our throughput from 48million litres of PMS to over

95million litres within six months of taking over the

company.

To improve our balance sheet, our core asset

optimization strategy, led to the acquisition of eight

new company-owned (CODO) and dealer-owned &

dealer operated (DODO) stations in 2019. Plans are

currently underway to complete renovations and

rebrand these retail stations. For our LPG business, we

began bulk retail sales with a total of 1 million sales

registered

Our plans to emerge as Nigeria's renewable energy

space are on course, and we have begun channelling

more resources towards leading edge research &

development teams in solar and waste to energy

conversion. In 2019, we conducted a feasibility study

with prospective partners and academia to build a

renewable energy model capable of catering to

Nigerians in rural areas and then extending the solution

to those in the cities. Following the completion of these

feasibility studies, we will roll out proof of concept

solutions to test market fit in 2020.

We are committed to being a business that operates at

the highest standards of sustainability, and creating

social impact through positive contributions to our local

communities, environment, economy and society. With

this focus, we realigned our focus on three strategic

pil lars of Corporate, Social Responsibil ity and

Sustainability (CSRS): Environment, Community and

Workplace.

Looking ahead, we will continue to improve our focus on

silent running of our fuels and lubes business whilst

future-proofing the company and balance sheet. Where

necessary we will leverage synergistic partnerships,

and we expect our investments in cutting edge

technology to yield positive returns in short to medium

term.

By focusing on these areas, we are reinforcing our

commitment to being a catalyst for energy sufficiency

and opening new vistas of opportunities that directly

motivate and positively affect our customers,

communities, stakeholders and investors. These focus

areas are also aligned with the United Nations

Sustainability Developments Goals (SDGs).

By pursuing growth opportunities with the required

funding mix of debt and equity, we intend to create

value without compromising on the company’s liquidity.

In parallel, we will consistently evaluate the operations

and regulatory landscape within the energy value chain

to ensure we are operating compliantly and at the

highest standards, whilst we will continue to pursue

opportunities for organic and inorganic growth across

our businesses.

The board has directed management to assiduously to

increase our network of company owned and operated

liquefied petroleum gas skids to drive distribution of

clean energy. This increase is imperative to achieving

our projected renewable revenue targets in addition to

solar, mini-grids and waste to energy conversion.

A Clearer CSRS Focus

Looking to the Future


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20Annual Reports and Financial Statements - Yr End, 31 Dec, 2019

Despite the current challenges, we are committed to

value creation through the implementation of our

strategy, and I believe that the management team will

aim to achieve the targets we have set for the 2020

Financial Year outlined in the statement by the CEO.

Finally, I would like to thank the members of the board,

management team, employees, distributors, dealers,

transporters, vendors for their year-round continuous

support. I would also like to extend my heartfelt

gratitude to our investors, regulators and customers for

their ongoing trust in the company.

Once again thank you for support of Ardova Plc, we have

only just begun.

Chairman’s Statment

ardova plc

ardova plc

CEO’sStatement

04

22Annual Reports and Financial Statements - Yr End, 31 Dec, 2019CEO’s Staement

As part of our strategy to effectively overhaul our

business operation, we divested from our subsidiary

businesses, which resulted in a cleaner balance sheet

and a stronger core asset base, setting the platform for

growth. We also accrued interest on subsidy claims and

discounted promissory notes to further strengthen the

working capital position. On this backdrop, we delivered

a 31% year-on-year growth in revenue and a 520%

year-on-year growth in profitability.

Energy for a Brave New World

Distinguished Shareholders, It is my pleasure to present

to you our operational and business performance for

the full year ended 31st December 2019. To mark the

start our repositioning agenda, we took deliberate

steps to evaluate our operations, identify gaps and built

on areas of core competence. We further leveraged our

long-standing heritage to transition the business to a

formidable integrated downstream energy company

that will be fully operational and relevant in the coming

years.

Following the approval of shareholders to change the

company name to Ardova Plc, we embarked on a journey

to create an identity that connects our brand purpose

and vision of driving the growth and transformation of

t h e c o n t i n e n t . W o r k i n g w i t h a r e n o w n e d

communication company, we came up with a compelling

narrative that we believe resonates easily with our

consumers. The next few months in 2020 and beyond,

will see a phased rollout of the Ardova identity across

our retail outlets.

In line with the company’s business restructuring drive,

our transformational plan was premised on four key

pillars which include;

Ÿ Engaging with our customers and stakeholders

Ÿ Connecting with our people

In 2019, we focused on retooling our people to align

with the new era of change whilst positioning the

company as an employer of the first choice. Through

tailored-made training and employee engagement

forum, we have made significant progress in this aspect.

Our customers and stakeholders were also not left out

as we focused extensively on ensuring better customer

integration with regulators, marketers, transporters,

and other stakeholders through industry organized

workshops, conferences, and marketers forum. We will

continue to ensure we deepen these relationships as

befits a customer-centric organization.

Ÿ Future-proofing our business.

Building on our rich heritage and areas of strength, our

strategy also focused on enhancing the business’s

profitability position through improved operational

efficiency. Consequently, throughput volume for

premium motor spirit (PMS) increased to over 95million

liters monthly from 48million litres in June 2019,

similarly, market volumes on lubricants, diesel, and

aviation fuel also increased. In a bid to create

sustainable value for our shareholders, the business has

remained keen on full optimization of its core assets

with the ongoing remodeling of service stations to

create clean energy/power hubs and stimulate socio-

economic developments in rural areas. We also

increased our retail footprints and geographical reach

through the acquisition of new retail outlets.

Ÿ Creating value for our shareholders and

Environmental and business sustainability is at the

heart of our business operations as an end-to-end

energy company, and to build a company that will thrive

in the coming years, the need to promote product

diversification with less reliance on hydrocarbons

became a front burner for the business. With the right

31%Year-on-Yearrevenue growth

520%Year-on-Year growth in profitability

ardova plc

partners, we extensively and exhaustively explored this

opportunity to future proof our business. Our mainstay

for clean energy was the expansion of our liquefied

petroleum gas (LPG) business and renewable energy

solutions in the form of solar, waste to energy, and

battery as a service. In the first six months of operation,

we reactivated the LPG business and achieved a 288MT

monthly threshold by year-end 2019. LPG will become a

more material addition to our product portfolio and form

an integral part of our rebalancing our energy portfolio.

The company currently runs four LPG facilities

nationwide and we plan to invest towards increasing

our LPG capabilities and footprint within this space. With

the right mix of renewable and low carbon energy, we

aim to revolutionize our retail stations and value

proposition to the Nigerian market.

The progress achieved so far is attributed to the

transformation of our business model and our drive to

building a financially sustainable and resilient franchise.

2019 Financial Performance

Operating expense (comprising administrative and

distribution expense) growth of 4.5% was below the

headline inflation rate of 11.9% in FY 2019 a testament

to our efficiency drive to reduce cost while maximizing

revenue streams. Consequently, Profit before

Revenue grew by 31.1% y-o-y, to N176.5 billion in FY

2019 (N134.7 billion: FY 2018). The increase was driven

primarily from 31.8% growth in the fuels business which

constitutes 90% of revenue and a 25.7% growth in the

lubricant business constituting 9.8% of total revenue.

tax increased by 352% to N4.6 billion in FY 2019

(N1.0 billion in FY 2018) on the back of divestment

proceeds from the sale of other operating subsidiaries.

Profitability margins pitched in higher at 2.8% and 2.6%

for operating income and profit before tax respectively.

Our capital position remained strong with a well-

optimized balance sheet structure, fol lowing

discontinued operations and subsequent disposal of

assets available for sale. Consequently, Total assets

dipped by 23% year-on-year to N47.02 billion

from N60.73 billion in 2018.

In terms of business segment performance, the fuels

segment grew by 31.8% to N159billion in FY 2019

compared to N120billion in FY 2018. The fuels business

(comprising premium motor spirit, automotive gas oil

and aviation turbine kerosene), contributed 90.2% to

total revenue. Market share within our fuels segment

closed the year at 18.9%, The main driver for this was

improved products supply across our retail outlets and

to all customers.

Shareholders' funds grew by 15.6% y-o-y, to N17.5

billion in FY 2019 (FY2018: N15.1 billion) as a result of a

38% growth in retained earnings. The final dividend

payout for shareholders in 2019 amounted to N1.15

per 50kobo ordinary share.

The company’s working capital position remained

adequate for business operations for the financial year

and the growth in earnings effectively covered the cost

of borrowings. Borrowing cost reduced significantly in a

bid to fully optimize the company’s capital structure.

Similarly, the gearing ratio improved to 34.6% in FY

2019 compared to 136.2% ach ieved in the

corresponding period. Elsewhere our interest cover

printed at 1.8x relative to 1.5x in 2018 reflecting that

our earnings sufficiently cover the cost of borrowing.

Profit after tax also grew by 520% y-o-y to N3.9 billion

from N0.6 billion achieved in the corresponding period.

Adjusting for the one-off items (accrued interest on

PSF receivables and gain on disposal of subsidiaries) in

2019, Profit after tax grew by 122.7% to N1.41billion.

31.8%growth in the fuels business

25.7%growth in the lubricant business


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24Annual Reports and Financial Statements - Yr End, 31 Dec, 2019

Acquisition of Selected Assets

The renewable energy segment (solar home systems)

achieved revenue of N39.1million in FY 2019 compared

to N141million in the corresponding period. This

segment is a key pillar to driving our non-fuel revenue as

we focus on exploring various operating models to

commoditize electrical power and leverage our retail

network for last-mile distribution of low-cost energy for

domestic use. We have also identified opportunities

within the liquified petroleum gas (LPG) space and will

be investing in this business for higher margins in the

coming period. In 2019, our LPG business achieved a

revenue of N17.4million. This is a new business

segment and we intend to fully optimize margins within

this space.

Lubricants and grease segment contributed 9.8% to

total revenue in FY 2019 closing at N17.2billion

from N13.7billion in FY 2018. Our flagship products,

SuperV and Visco 2000 sustained high market demand

during the year. Similarly, the market share on sales in

our lubricant business closed the year at 17.7%.

Production and distribution capacity of our lubricant

business will be sustained to further improve revenue in

our volume of sales.

Our resolve to improve operational efficiency and

increase volumes and margins on all products, resulted

in aggregate volume growth of 37.4% y-o-y to

1.1billion in FY 2019 from 804.7million in FY 2018.

Further to the approval of the Shareholders at the 40th

Annual General Meeting (AGM) of Ardova Plc held on

September 3, 2019, the Board of Directors of the

Company identified selected downstream assets

Setting the Stage for Future Growth

An independent valuation of the selected assets was

carried out by Dele Olaiya and Associates (Estate

Surveyors and Valuers) for the Company, as well as by

Unigwe & Co. (Estate Surveyors & Valuers) for PESL. The

Company also engaged the services of Vetiva Capital

Management L imited (Vet iva) to provide an

independent fairness opinion on the value of the assets

based on the Valuers’ reports. Vetiva recommended a

fair value of N3billion for the purchase of the selected

assets and upon review, was approved by the Board

including but not limited to plant, machinery, trucks, and

stations, which subject to an independent valuation,

could be acquired from Prudent Energy and Services

Limited (PESL) to improve the operating activities of the

Company

The Company subsequently entered a contract of sale

with PESL for the purchase of the assets, which

included 43 trucks, 12 LPG assets, and 8 retail outlets,

subject the approval of the Securities and Exchange

Commission (SEC). The Company has sought the

approval of SEC, and SEC has taken note of the

acquisition of the assets from PESL by the Company,

subject to disclosure to the shareholders of the

Company at its 41st AGM

We are intentional about building an energy company

designed for the future, and our performance over the

latter half of 2019 shows that moving forward on this

course will set us on the right path to our long-term

goals. We will achieve these goals through diversified

product offerings and improvements in the efficiency of

our core assets

Consequently, in FY 2020 we will focus on five (5) broad

transformation themes; Sustainability, Brand, Core-

Asset Optimisation, People, and Strategic Partnership.

The overarching drivers of this transformational path

are as follows

N17.4million2019 revenue in LPG

CEO’s Staement

ardova plc

In a bid to fully optimize our assets, the focus will be to

increase business efficiency and quality management

by modernization, automation, and digitization.

Specifically, we will maximize value from the forecourt

and backcourts of our retail outlets and identify new

opportunities and non-fuel revenue partnerships to

increase revenue. We will also enhance our fleet and

distribution capabilities and explore options to increase

the fleet portfolio.

Sustainability

Brand

Core Asset Optimization

Our focus on sustainability is premised on diversifying

and evolving our product base, expanding into new

territories, lead thoughts, and shape policies. As a

socially responsible and environmentally aware

organization, we will continue to make investments in

lower carbon fuels and broaden our customer base to

become a dominant player in the energy space. In 2020,

we will focus on a greening pilot of our retail outlets

using renewables energy solutions to create energy

retail stations of the future

We will position the company to become the leading

African energy solutions provider of choice, committed

to delivering superior customer experience. Our official

brand launch is expected to be finalized by the first

quarter of 2020. Corporate artifacts and websites will

also be changed and will be substituted with a

completely new look indicating the new face of the

brand. Rebranding of all our stations will be carried out in

phases throughout 2020 and beyond.

We are building for the future, a people-first oriented

and star service company. We aim to become the

employer of first choice in the energy sector. We will

focus on building world-class talent and develop a

corporate culture that imbibes our shared value of

Growth, Responsibility, Innovation, and Partnership.

Outlook and ConclusionIn the short-to-medium-term, we wil l commit

extensively to strategy execution and investment in

our people, processes, infrastructure, and technology

while constantly appraising their fitness for purpose.

People

On behalf of the Board of Ardova Plc, I express my

profound gratitude to all stakeholders, your support and

continued patronage on this journey is recognized and

appreciated.

Strategic PartnershipThrough strategic partnerships, we will open new vistas

of opportunities and positively impact our customers,

communities, stakeholders, and investors. To drive our

clean energy and low carbon initiatives, we will continue

to foster relationships with right-fit partners and

explore organic and inorganic expansion to achieve our

desired ambition.


ardova plc

ardova plc

CorporateGovernance Report

05

The Board of Ardova Plc (formerly Forte Oil Plc) believes

that the proper application of world-class corporate

governance practice is a key pillar towards achieving

long term value for all our shareholders and

stakeholders.

At Ardova Plc, we believe that sound corporate

governance goes beyond adhering to rules and policies

of the regulators, but also about accountability and

stakeholder engagement at all times. The Board of

Directors during the year under review complied with

the corporate governance requirements as set out in

the report below:

The Board is committed to ensuring that all business

conducted by the company is in compliance with all

applicable laws and regulations, including the

regulations of the Nigerian Stock Exchange, the

Securities and Exchange Commission's Code of

Corporate Governance, Financial Reporting Council of

Nigeria and the Nigerian Code of Corporate

Governance.

The Board of DirectorsThis is the highest decision making body of the

Company. It is responsible for the overall long-term

In this period, the Board was made up of

success and the strategic direction of the Company as

well as providing effective oversight to ensure the

delivery of long term value to shareholders and

stakeholders.

January 1 – 20 June 2019:

All resigned with effect from 20 June, 2019.

The Board’s Composition

June 20 – 31 December, 2019: In this period, the Board was made up of

in keeping with the Nigerian Code of Corporate

Governance. All were appointed with effect from

20 June, 2019.

members,(the chairman

inclusive) 8 2

2 4

Non-ExecutiveDirector

Independent Non-Executive

Directors

Executive Directors

members,(the chairman

inclusive) 6 2

2 2

Non-ExecutiveDirector

Independent Non-Executive

Directors

Executive Directors


ardova plc

The Board met seven (7) times in 2019.

1 Mr. Femi Otedola (con) * Chairman

Mr. Akin Akinfemiwa * Director2

Mr. Julius Omodayo-owotuga *

Director

Mr. Nico Vervelde * Director

Dr. (mrs.) Mairo Mandara * Director

Mrs. Salamatu Suleiman * Director

Mr. Christoper Adeyemi * Director

Mr. Anil Dua * Director

Mr. AbdulWasiu Sowami ** Chairman

Mr. Mohammed Aminu Umar **

Director

Mrs. Aniola Durosinmi-etti **

Director

Mr. Moshood Olajide ** Director

Mr. Olusola Adeeyo **Director

Mr. Olumide Adeosun ** Director

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

3

4

5

6

7

8

9

10

11

12

13

14

NAME POSITION6 Feb

2019

26 Mar

2019

30 April

2019

26 June

2019

2nd Sep

2019

29th Oct

2019

5th Dec

2019S/N

KEY MEANING

***N/A

Present

Absent

Resigned with effect from 20 June, 2019

Appointed with effect from 20 June, 2019

Not a member in the given period

ardova plc

28Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Corporate Governance Report

The Committee held two (2) meetings in year 2019.

NAMES/N 26th March2019

28th Oct2019

1 Mr. Christopher Adeyemi

Dr (Mrs.) Mairo Mandara 2

Mrs. Salamatu Suleiman

Mrs. Aniola Durosinmi-Etti

Mr. Mohammed Aminu Umar

Mr. Olusola Adeeyo

3

4

5

6

N/A

N/A

N/A

N/A

N/A

N/A

The Board implements its oversight function through

Board Committees, with each committee addressing

specific topics based on its charter. The charter of each

committee sets out its composition, agenda, frequency

of meetings and responsibilities.

The Committees of the Board include:

Ÿ Risk Management Committee

The Board Committees

Ÿ Corporate Governance and Remuneration Ÿ Statutory Audit Committee

Each committee meets regularly to discuss matters in

accordance with its charter, in addition to regular

reports provided through the company secretariat on

any significant issue to be considered by the various

committees. Outside of these Board Committees,

other management committees exist namely;

Management Committee , R isk Management

Committee, Credit Risk Committee and Bid Committee.

Corporate Governance and Remuneration Committee

The committee is also responsible for the review of the

company`s governance structure and ensures

compliance with the code of corporate governance. It

also oversees the succession planning process of the

board and the company.

The corporate governance and remuneration

committee's role is to assist the board in fulfilling its

responsibilities in relation to corporate governance and

remuneration.

The committee comprises of one non–executive director two independent non-executive and

directors who oversee the nomination and board

appointment process, board and company-wide

remuneration and human resources issues.


ardova plc

ardova plc

Statutory Audit CommitteeThe Statutory Audit Committee is comprised of six (6)

members; three (3) shareholders' representatives, one

(1) non-executive director and two (2) independent

non-executive directors.

The functions of the committee are set out in section

359 (6) of CAMA 2004. The committee reviews the

company's control policies, management accounting

and reporting systems, internal control and overall

standard of business conduct.

The committee in addition, approves both the audit

plan and internal audit review plan for the year, as well

as the financial statement. The committee also

monitors and reviews key audit matters.

The Statutory Audit Committee held five (5) meetings in the year 2019.

1Mr. Tokunbo Shofolawe- Bakare

Mr. Emmanuel Okoro 2

Mr. Suleman Ahmed

Mrs. Salamatu Suleiman

Mr. Christopher Adeyemi

Mr. Anil Dua

Mr. Olusola Adeeyo


Mrs. Aniola Durosinmi - Etti

Mr. Safiu Okunola

Mrs. Adebisi Oluwayemisi Bakare

Mr. Job Ihejirika Onwughara

3

4

5

6

7

8

9

10

11

12

NAME1st March

2019

26 Mar

2019

29th July

2019

28th Oct

2019S/N

5th Dec

2019

N/A

N/A

N/A

N/A

N/A

N/A

N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A N/A N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A N/A

N/A


N/A

N/A

N/A

The risk management committee assists the board in

fulfilling its oversight responsibilities regarding the

enterprise risk management of the company.

Risk Management Committee

This includes but is not limited to the identification,

assessment, management of risk and adherence to

internal risk management policies and procedures.

The committee is further responsible for development

of an effective risk governance framework and

disclosure process, reviewing of changes in the

economic and business environment and reviewing of

company's compliance with regulations that impact on

its activities.

The Committee held two (2) meetings in the year 2019.

1 Mr. Anil Dua

Dr. (mrs) Mairo Mandara 2

Mr. Akin Akinfemiwa

Mr. Julius Omodayo-owotuga


Mrs. Aniola Durosinmi - Etti

3

4

5

6

NAMES/N

N/A

26th March2019

29th Oct2019

N/A

N/A

N/A

N/A

Mr. Olumide Adeosun

Mr. Moshood Olajide

7

8

N/A

N/A

N/A


ardova plc

ardova plc

The positions of the Chairman of the board and the

Chief Executive Officer of the company are occupied

by different individual persons.

The Chief Executive Officer is fully responsible for the

execution of the company's business strategy and the

day-to-day management of the business, while the

chairman is responsible for ensuring compliance with

the company's strategic goals and that directors

receive accurate and timely information to enable the

Board take informed decisions.

The Chairman also facilitates the contribution of

directors and promotes effective relationships and

open communications between executive and non-

executive directors.

Board Evaluation Report

The governance structure of the company is designed

to ensure that the board discharges its functions and

responsibilities as provided for in the board charters

and in accordance with all legislative and regulatory

standards.

Communication with Stakeholders

The Board is committed to the equitable treatment of

The Board is committed to sustaining regular

interactions with the company's shareholders and

other stakeholders through a well-established

communication and complaint management process.

Separation of the Positions of Chairman and Chief Executive Officer

The annual board assessment is conducted to ensure

the board, committees and individual directors are

e f f e c t i v e a n d p r o d u c t i v e , a n d t o p r o m o t e

opportunities for improvement.

shareholders, protection of their rights and complete

disclosure and transparency at all times by the

management of the company.

To this end, the company has in place, a well-managed

Investor Relations Unit to attend to all enquiries on the

c o m p a n y ' s fi n a n c i a l p e r f o r m a n c e , fi n a n c i a l

statements, corporate actions, strategy and all other

corporate information.

All other related information on the company's

business operations and allied matters can be obtained

by all stakeholders and the public from the company's

website www.ardovaplc.com

Directors RemunerationThe remuneration of directors is governed by the

Company's Policy on Directors. During the year under

review, the Non-Executive Directors and Chairman

each received a prorated annual directors' fee as

stated below:

Amount per Annum (N)

Chairman 800,000,.00

Executive Directors

Non-Executive Directors

Directors

600,000,.00

NIL


Statement of Compliance with the Corporate Governance Code

As a public quoted company, the company is compliant

in its corporate governance practices and operations

regarding the Listing Rules of the Nigerian Stock

Exchange, the directions of the Securities and

Exchange Commission, the Nigerian Code of Corporate

Governance and international best practices.

Ardova Plc affirms its commitment to adhere to the

principles of excellent corporate governance practices.

The company always strives to carry out its business

operations on the principles of integrity and

professionalism through transparent conduct.

Corporate Governance Rating System Certification

Ardova Plc is a Corporate Governance Rating System

(CGRS) certified company.

The Securities Trading Policy is available on the website of the Company. www.ardovaplc.com

To this end, the Company is committed to the support of environmentally sustainable initiatives and investments that will impact the lives of our immediate community and the society as a whole.

The Board of Directors have an approved securities trading policy which prescribes a code of behavior for directors, management of the company, external advisers and other related persons in possession of market sensitive information.

The code prohibits these persons from dealing in the company's securities during closed periods in accordance with the provisions of the Investments and Securities Act Cap 124 Laws of the Federation of Nigeria, 2004 and the Post Listing Rules of the Nigerian Stock Exchange.

All insiders are notified of closed periods via written or electronic communication from the company secretary.

Sustainability ReportArdova Plc firmly believes in the importance of contribution to the creation of a thriving society in Nigeria.

During the period under review, the Company supported and implemented a variety of initiatives in the advancement of the above objectives.

e

Under the policy, no dir ctor or principal officer of the company, or a close family of the director and/or the principal officer of the company who is aware of material non-public information relating to the company may directly or through family members or other persons buy or sell shares of the company or engage in any other action to take advantage of that information during closed periods.

Insider Trading


ardova plc

ardova plc

THE GENERAL MANDATE LETTER


ISSUED IN COMPLIANCE WITH CLAUSE 6 OF THE RULES OF THE NIGERIAN STOCK EXCHANGERELATED PARTIES OR INTERESTED PERSONS

The rationale for the transactions is that they are necessary for the operations of the company, the discharge of legal and contractual obligations currently binding on the company, are of strategic importance to the continued operations of the company, they guarantee the uninterrupted supply of goods and services necessary for the operations of the company as a going concern, are carried out on a transparent basis and are cost effective and performed efficiently.

In order to ensure that its operations are carried out in the most efficient manner possible, the company seeks for the grant of a general mandate in respect of all recurrent transactions entered into with a related party or interested person which are of a revenue or trading nature or are necessary for the company’s day to day operations. These transactions have been assessed to cumulatively exceed 5% of the value of the net tangible assets or issued share capital of the company.

The class of related parties and interested persons with which the company will be transacting include; shareholders, employees and their family members, companies or entities within the company.

Profile of Directors

05

ardova plc

AbdulWasiu O. Sowami Appointed on 20 June, 2019

Olumide AdeosunAppointed on 20 June, 2019

The names of the Directors as at the date of this report and those who held office during the year are as follows:

36Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Profile of Directors

Mr. Sowami is also well-known for his philanthropy. He established the Abdul-Lateef & Sanni Foundation to build schools and provide scholarships to indigent students.

By developing and leveraging on first tier relationships with the leadership of top international trading companies including Glencore, Shell Trading Rotterdam, Vitol and BP Oil International LTD., Mr. Sowami has amassed a combined trading line of over US$100m.

Mr. Sowami is the Founder & Chief Executive Officer of Prudent Energy & Services LTD., a $600m gross-revenue mid to downstream company. He sits on the boards of several companies including Prudent E&P LTD., FES Energy Limited (UAE), Ignite Investment & Commodities Limited, Prudent Gas LTD., and Prudent Effsow Commodities LTD.

Education & Certifications: Mr. Sowami holds an M.Sc. in Corporate Governance from Leeds Beckett University, England and a B.Sc. in Sociology from the University of Maiduguri. He is a member of the Institute of Directors, Nigeria.

AbdulWasiu Sowami (Chairman)

Olumide Adeosun (Chief Executive Officer)

Olumide holds an M.Sc in Mathematics from Royal Holloway College, University of London and graduated from Woodbury University, California with a B.Sc in Architecture

Prior to his appointment as Chief Executive Officer of Ardova Plc, Olumide led the Energy & Power (West Africa) Practice at PwC, where he held various leadership roles including Head of Strategy Consulting for West Africa and Head of Capital Projects and Infrastructure. Notably, he co-led the buy-side advisory of one of the largest acquisition deals in the Nigerian downstream oil and gas sector.

Mr Adeosun is a respected thought leader in the energy sector, with a proven track record of senior leadership and strategic advisory, and has gained over 18 years’ experience in oil and gas finance, renewable energy, power and strategy.

Olumide provided advisory services to multinational clients at PricewaterhouseCoopers (PwC), London and then worked across a range of Finance with BP Plc (formerly British Petroleum). He moved to commercial roles in BP’s supply & trading subsidiary, BP Oil International, where his roles included Vice President, Commercial Development & Operations for BP’s West Africa Trading business.

Moshood OlajideAppointed on 20 June, 2019

ardova plc

Mohammed Aminu UmarAppointed on 20 June, 2019

Very early on his career and prior to joining the Forte Oil PLC team as Chief Financial Officer, he had a stint with Aluko & Oyebode Law Firm where he had the responsibilities for general legal advisory, company secretariat, negotiation of commercial agreements, litigation and arbitration.

Moshood Olajide (Chief Financial Officer)

Education & Certifications: Moshood holds an LL.B from Obafemi Awolowo University and an LL.M Degree from Columbia Law School. He is a member of the Association of Chartered Certified Accountants (ACCA), the Nigerian Bar Association (NBA), the New York County Lawyers’ Association (NYCLA ) and the Chartered Institute of Taxation of Nigeria (CITN).

His responsibilities at Price Waterhouse Cooper (PwC), a multi-disciplinary firm, spanned financial reporting and regulatory services, statutory audits, capital projects, infrastructure deals energy, utility and mining deals advisory and structuring, general tax advisory compliance services; client training services and company secretarial services spanning multiple sectors of the economy and more notably in Oil and Gas.

Due to his versatility and diligent work ethic, Mr. Moshood has experienced rapid growth as a Chartered Accountant and Tax Professional.

Mohammed Aminu Umar (Non-Executive Director)

Mr. Umar started his career as an accountant with the Overseas Agency Nigeria Limited (OAN) and eventually rose to become the Managing Director between 2001 and 2007.

He is Founder and CEO of Sea Transport Services Nig. LTD., one of the leading commercial managers of Tanker vessels in Nigeria. As MD/CEO of the Sea Transport Services Group, Mr. Umar has led the company on a consistent growth trajectory over the last ten (10) years with the business conservatively valued at over $100 million and growing his fleet to a total capacity of 350,000 Metric Tonnes. Mr. Umar is also Founder and Managing Director of Integrated Shipping Services Nig. LTD., the largest indigenous tanker port agency firm in Nigeria for Products, Crude and LNG tankers.

Education & Certifications: Mr. Umar holds a B.Sc. in Accounting from the University of Maiduguri.

Mr. Umar has over 20 years of experience in the oil, gas and energy sector. Over time, he has played a significant role in shaping the maritime industry evidenced by the various roles and capacity he has served in. He currently serves as the President of Nigeria Ship-Owner’s Association (NISA) and is a member of the Ministerial Committee on establishing Nigerian National Fleet, the Ministerial Committee on Nigerian Fleet Implementation Committee Member and the Advisory Council to the Executive Management of Nigerian Maritime Administration and Safety Agency (NIMASA).


Aniola Durosinmi-EttiAppointed on 20 June, 2019

ardova plc

- The Chief Executive’s Program of Lagos Business School and the IESE Business School, in Barcelona Spain.

Throughout her career she embarked upon several educational courses in different fields in pursuit of knowledge to enhance her performance and productivity.

In 1985, she joined the law firm Udo Udoma & Co as an Associate of the firm where she developed extensive experience in various aspects of commercial law including preparation of key international joint venture agreements, syndications and conveyances. In 1988, she moved to Credit Transactions and Investment Company Limited , an Oil Consultancy and Investments Company where she served as a Legal and Administrative Manager. In 1992, she went on to operate her own legal practice under the name of A.I. Durosinmi-Etti & Co. She remained a consultant to Udo Udoma & Belo-Osagie till date.

Aniola is an experienced lawyer called to the Nigerian Bar in 1982. She holds a Master’s degree in Law from the University of Cambridge in England, which she obtained in 1984. Her undergraduate study was at the University of Lagos where she graduated with an LL.B (Second class upper division) in 1981. She was awarded the prize for the best student in Jurisprudence in her graduating class.

In 2002 Aniola joined Linkage Assurance Plc as Legal Adviser & Head of Corporate Services. She successfully piloted the company through landmark transformational phases of growth including an IPO in 2003 and subsequently a secondary offering in 2005. In August 2006, as a reflection of her strong performance and dedication, Aniola was appointed the Acting Managing Director of the company. In this capacity, she steered the company through the challenges of recapitalization and a subsequent merger with Central Insurance Company Ltd. Aniola was appointed the Deputy Managing Director of the company following a successful merger. As part of the new executive management, she ensured a seamless integration and stabilization of the post-merger entity prior to her resignation in 2013.

Aniola served on the board of directors of Stanbic IBTC Pensions Limited, one of Nigeria’s largest pension managers, from 2009-2013. She also served on the board of Mediplan Limited, a health management company, providing healthcare services to corporate organizations and members of the public.

She is an Alumni of The Lagos Business School having undergone

Aniola Durosinmi-Etti (Independent Non-Executive Director)


Olusola AdeeyoAppointed on 20 June, 2019

Education & Certifications: Mr. Adeeyo holds an M.A. in International Relations from North Eastern University, Boston, USA in addition to a B.A. in Political Science from the University of New York, Albany, USA.

He previously served as an independent director and the Chairman of the Corporate Governance and Renumeration Committee of the Central Securities and Clearing Systems PLC. He is the Chairman of AXA Mansard Insurance Plc and sits on the boards of several other reputable companies in Nigeria.

Mr. Adeeyo is a tested, trusted and seasoned professional in the finance, banking and business fields. He is Founder and CEO of Astral Waters Limited, a leader in quality water delivery. He is also the founder of Protea Hotel Oakwood Park Lekki, a 4-Star Hotel which is part of an international hotel brand managed by Protea Hotel Group of South Africa. Previously, he was the Managing Director of Asset & Investment Limited, a financial services company which he founded and managed.

Olusola Adeeyo (Independent Non-Executive Director)

He was also a part of the founding management team/owner group of IBTC Ltd now Stanbic IBTC Bank Plc. Prior to this, he worked in the Treasury Unit at Nigeria International Bank (NIB) a subsidiary of Citibank New York before joining other associates to start IBTC Ltd.


ardova plc

ardova plc

3

4

7

RESIGNED

Femi Otedola (CON) 20 June, 2019

Akin Akinfemiwa

Julius B. Omodayo-Owotuga, FCA, CFA

Christopher Adeyemi

Anil Dua

Mairo Mandara

Nicolaas A. Vervelde

1

2

5

6

The names of the directors who resigned during the year are as follows:

NAMES

20 June, 2019

20 June, 2019

20 June, 2019

20 June, 2019

20 June, 2019

20 June, 2019

6 Salamatu Suleiman 20 June, 2019


Directors’Report

07 ardova plc

The Federal Government of Nigeria (FGN) acquired 60% share capital held originally by BP, for the Nigerian National Petroleum Corporation (NNPC). This step transformed the Company into an entirely Nigerian concern necessitating the subsequent change of name to African Petroleum Plc (AP) in 1979.

The Company was incorporated in 1964 as British Petroleum (BP) Nigeria Limited with the marketing of BP Petroleum Products as the main focus.

2007

1989

Legal Form

In accordance with the provisions of the Companies

and Allied Matters Act Cap C20, Laws of the Federation

of Nigeria, 2004, the Board of Directors of Ardova Plc

("the Company") is pleased to present its report on the

affairs of the Company together with the audited

financial statements and the auditor's report for the

year ended 31st December 2019.

1964

1978

1979

In March 1989, FGN sold of its share-holding to 20%the Nigerian public, thus making AP the first public company privatized under the Privatization and Commercialization Policy. The FGN, under its privatization programme in year 2000 divested its remaining shareholding in AP, thus making AP a 40%privately owned Company, with over 153,000 shareholders.

The Company changed from a private to public company in 1978, when of the shares were sold 40%to Nigerian citizens in compliance with the provisions of the Nigerian Enterprises Promotion Decree of 1977.

In 2007, the Company was acquired by a majority shareholder, Zenon Petroleum and Gas Limited which led to the change of name from AP to Ardova Plc.

In June 2019, Ignite Investments and Commodities Limited became the majority shareholder in the Company after the former majority shareholder disposed off his majority shares in the Company. This led to the change of name from Forte Oil Plc to Ardova Plc.

The Company procures and

markets petroleum products which include Premium

Motor Spirit (PMS), Automotive Gas Oil (AGO), Dual

Purpose Kerosene (DPK), Fuel Oils, Liquefied

Petroleum Gas (LPG) and Aviation Turbine Kerosene

(ATK) amongst others.

Principal Activity

The Company manufactures and distributes a wide

range of lubricants foremost amongst them are the

SUPER V and VISCO 2000 brands and has also

obtained exclusive rights for the distribution of

Chevron's Havoline Motor Oils.

T h e C o m p a n y i s a m a j o r

marketer of refined petroleum

p r o d u c t s w i t h a s t r o n g

presence in the thirty-six (36)States of Nigeria and the

Federal Capital Territory, Abuja.

During the period, the Company divested from its subsidiaries AP Oil and Gas Ghana, Forte Upstream Service Limited and Amperion Power Distribution Company Limited.

Further, the Company develops clean energy hubs and

mini-grids and provides renewable energy solutions

through its solar brand, which distributes low cost solar

power solutions to domestic customers.

2019

ardova plc

36States + FCT

42Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Directors’ Report

The following is a summary of the Company's operating results for the year ended December 31, 2019:

Operating Results:

Dividend :The Board of Directors, pursuant to the powers vested in it by the provisions of section 379 of the

Companies and Allied Matters Act (CAMA) of Nigeria on the 10th of June, 2019 paid an interim dividend of

N1.15 per 50k ordinary share. This is the final dividend for the year ended 31 December, 2019.

Property, plant and equipment:Information relating to changes in property, plants and equipment during the year is given in Note 13 to the

financial statements.

ardova plc

3

4

7

COMPANY

N'000

Profit before income tax 4,654,147

Income tax expense 739,007

Profit after tax

Total Comprehensive income for the period

Retained earnings, at 1 January

Retained earnings, at 31 December

Basic earnings per share

3,915,140

3,915,140

6,418,039

8,829,683

3.00

1

2

5

6


ardova plc

Directors Interests The Directors of the Company who held office during the year together with their direct and

indirect interest in the share capital of the Company were as follows:

1

2

Abdulwasiu O. Sowami

DIRECT HOLDING31/12/19

Olumide Adeosun

Moshood Olajide

Mohammed Aminu Umar

Olusola Adeeyo

Aniola Durosinmi-Etti

Mr. Femi Otedola, Con

Mr. Akin Akinfemiwa

Mr. Julius Omodayo-owotuga

Mr. Nicolaas Vervelde

Mr. Anil Dua

Mrs. Salamatu Sulieman

Dr. Mairo Mandara

Mr. Christopher Adeyemi

INDIRECT HOLDING 31/12/19

DIRECT HOLDING 31/12/18

INDIRECT HOLDING 31/12/18

NIL

NIL

NIL

NIL

NIL

NIL

NIL

24,000

NIL

96,582

NIL

NIL

NIL

NIL

970,666,694

NIL

NIL

NIL

NIL

NIL

7,133,272

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

186,260,357 838,472,441

24,000 NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

96,582

NIL

NIL

NIL

NIL

3

4

5

6

7

8

9

10

11

12

13

14


Ignite Investments and Commodities Limited :

970,666,694 Number of shares

74.06% % Holding

For the purpose of section 277(1) and (3) of

Companies and Allied Matters Act of Nigeria,

(CAMA), all contracts with related parties during the

year were conducted at arm's length. Information

relating to related parties transactions are

contained in Note 33 to the financial statements.

Acquisition of Share:

According to the Register of Members, the

shareholders under-mentioned held more than 5%of the issued share capital of the Company as at 31

December 2019:

Major Shareholding:

Contracts:

The Company did not purchase any of its own shares

during the year.

The Directors did not partake in any share option

scheme during the year under review.

Share Options Scheme:

ardova plc


ardova plc

Share Capital History

AUTHORIZED CAPITAL ISSUED AND FULLY PAID CAPITAL

FROM (N) TO (N) DATE FROM (N) TO (N) CONSIDERATION (N)

06/08/86

DATE

22/06/78

28/08/82

04/08/84

17/07/80

12/07/88

29/07/93

29/07/93

28/11/97

26/11/13

19/02/99

15/11/02

6,000,000

7,500,00

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

144,000,000

5,000,000,000

7,500,000

11,250,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

144,000,000

5,000,000,000

22,500,000

2,000,000,000

28/02/79

17/07/80

24/08/82

10/08/84

16/09/86

03/08/88

24/09/90

10/01/94

28/11/99

13/09/04

25/11/04

30/09/05

28/10/06

20/04/09

20/04/09

6/12/13

6,000,000

7,500,00

11,250,000

22,500,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

216,000,000

234,263,450.50

281,116,141

394,393,919

443,271,555

543,535,383

7,500,000

11,250,000

30,000,000

36,000,000

43,200,000

72,000,000

86,400,000

108,000,000

22,500,000

216,000,000

234,263,450.50

281,116,141

394,393,919

443,271,555

543,535,383

543,535,383

Bonus (1:2)

Bonus (1:1)

Bonus (1:3)

Bonus (1:5)

Bonus (2:3)

Rights Issue

Bonus (1:4)

Rights Issue

Rights Issue

Bonus (1:5)

Placement

Rights Issue

Public Offer

-

-

Underwriting of 2008/2009

Hybrid Offer 546,095,528 543,535,383 11/07/14

15/04/15 546,095,528 655,314,633 Bonus (1:5)


The analysis of the distribution of the shares of the Company at

the end of the 2019 financial year is as follows:

Analysis Of Shareholding

RANGE NO OFHOLDERS

HOLDERS’ %

1

UNITS UNITS %

1,001

5,001

10,001

100,001

500,001

1,000,001

10,000,001

100,000,001

1,000

10,000

100,000

500,000

1,000,000

10,000,000

100.000.000

1,000,000,000

5,000

132,740

3,209

2,541

210

25

18

1

3

23,559

81.78%

1.98%

1.57%

0.12%

0.02%

0.01%

0.00%

0.00%

14.52%

44,358,268

22,305,181

61,634,867

42,260,866

18,433,970

77,966,862

29,400,929

966,105,654

44,162,671

3.38%

1.70%

4.70%

3.24%

1.41%

5.95%

2.24%

73.71%

3.67%

162,304 100.00% 1,310,629.268 100.00%

ardova plc


ardova plc

1

4

5

8

AMOUNT

Donation to Capital Market Correspondence Association of Nigeria 500,000

Donation to National Association of Energy Correspondents Agency 500,000

Donation to Photojournalist Association of Nigeria

Donation to Nigerian Guild of Editors

Donation to Government Of Enugu State

Diesel supply to Maouagwu Community Masha

Diesel supply to Lagos State Motherless Babies Home Lekki

500,000

500,000

3,000,000

282,000

470,000

2

3

6

7

The Company identifies with the aspirations of the community as well as the environment within

which it operates and made charitable donations to the under-listed organizations amounting to

N12, 484,000 during the year under review as follows:

Donations and Charitable Gifts

The details of the borrowings and

maturity dates are stated in Note 25

to the financial statements.

Ÿ Borrowing and Maturity Dates

DISCLOSURES

A r d o v a P l c h a s a s t r u c t u r e d

e n t e r p r i s e r i s k m a n a g e m e n t

framework that puts in place and

u n d e r t a k e s a t h o r o u g h r i s k

assessment of all aspects of the

business. The risk assessment is

based on two criteria, 'Business

Impact' and 'Likelihood of Occurrence'

and for every identified business risk,

m i t i g a t i n g m e a s u r e s a r e

implemented by the Company.

Ÿ Risk Management and Compliance System

The Directors are of the view that an

effective internal audit function

The Directors are responsible for the

total process of risk management as

well as expressing their opinion on

the effectiveness of the process.

The risk management framework of

the Company is integrated into the

day-to-day operat ions of the

company and provides guidelines and

standards for administering the

a c c e p t a n c e a n d o n - g o i n g

management of key risks such as

operational, reputational, financial,

market and compliance risk.

exists in the company and that risk

management control and compliance

systems are operating efficiently and

effectively in all respects.

Ÿ Related Party Transactions The Company has contractual

relationship with related companies

in the ordinary course of business.

The details of the outstanding

amounts arising from the related

party transactions are stated in Note

31 to the financial statements.

ORGANIZATION/BODY

Donation to Five Cowries Art Education Initiatives 6,732,000


By Order Of The Board

Oladeinde Nelson-cole Ag. Company Secretary

FRC/2019/NBA/00000019

918 FO House, 13 Walter

Carrington Crescent Victoria

Island, Lagos.

27 February, 2020

Health, Safety and Welfare of Employees

The Company cons iders hea lth , safety and

environmental issues as important as our core

businesses and assumes the responsibility of providing

a healthy, safe and secure work environment for our

employees and contractors as required by law. Our

objective is to minimize the number of cases of

occupational accidents, illnesses, damage to property

and environmental degradation.

Employment of Physically Challenged Persons

In the event of any employee becoming disabled in the

course of employment, the Company will arrange

appropriate training and facilities upgrade to ensure

the continuous employment of such a person without

subjecting him/her to any disadvantage in his/her

career development.

Our vision is to achieve leadership role in sustainable

health, safety and environment practices through the

establishment and implementation of effective

business management principles that are consistent

with local and international regulations and standards.

As at 31 December 2019, the Company had no disabled

persons in its employment.

The Company is an equal opportunity employer and will

not discriminate on any grounds.

The Company operates a non-discriminatory policy in

the consideration of applications for employment,

including those received from physically challenged

persons.

It is the policy of Ardova Plc to carry out its activities in

a manner that safeguards the health and safety of its

workers and other stakeholders, the protection of the

Company's facilities and the environment and

compl iance with al l regulatory and industry

requirements.

The Company encourages participation of employees

in arriving at decisions in respect of matters affecting

their well-being. To this end, the Company provides

opportunities for employees to deliberate on issues

affecting the Company and employees' interests, with

a view to making inputs to decisions thereon.

Post Year End Events

In accordance with Section 357(2) of the Companies

and Allied Matters Act (Cap C 20) Laws of the

Federation of Nigeria 2014, Messrs. Deloitte & Touche

have indicated their willingness to continue in office as

External Auditors of the Company. A resolution will be

proposed at the Annual General meeting authorising

the Directors to determine their remuneration.

Employee Involvement and Training

All post year end events have been reviewed and

considered for materiality. Appropriate disclosures and

adjustments, where necessary, were also made with

respect to the events.

Auditors Messrs. PKF Professional Services resigned their

appointment as Auditors to the Company during the

year; Messrs. Deloitte & Touch were appointed on 13

November, 2019 by the Directors to fill the vacancy

created in line with Section 357(6); and hold office till

the end of 2019 Annual General Meeting.

The Company places a high premium on the

development of its human capital. Consequently, the

Company sponsored its employees for various training

courses in the year under review.

ardova plc


Report of the Statutory Audit Committee

03 ardova plc

ardova plc

Report of the Statutory Audit Commi�ee

To the Members of Ardova Plc

In accordance with the provision of Sec�on 359(6) of the Companies and Allied Ma�ers Act, Cap C 20, Laws of the Federa�on of Nigeria, 2004; we, the members of the Audit Commi�ee of Ardova Plc, having carried out our statutory func�ons under the Act hereby confirm that the accoun�ng and repor�ng policies of the Company are in accordance with legal requirements and agreed ethical prac�ces.

In our opinion:

1.

The scope and planning of the audit for the year ended 31 December, 2019 were adequat e.

2.

The External Auditor’s findings on Management le�ers and Management’s responses thereto were sa�sfactory.

3.

We have kept under review the effec�veness of the Company’s system of accoun�ng and internal controls.

Dated this 27th day of February 2020.

Olusola Adeeyo

Chairman, Statutory Audit Commi�ee

FRC/2013/NIM/00000001919

S/N

NAME

REPRESENTATION

POSITION

1.

MR. OLUSOLA ADEEYO

INDEPENDENT NON-EXECUTIVE DIRECTOR

CHAIRMAN

2.

MRS. ANIOLA DUROSINMI-ETTI

INDEPENDENT NON-EXECUTIVE DIRECTOR

MEMBER

3.

MR. MOHAMMED AMINU UMAR

NON-EXECUTIVE DIRECTOR

MEMBER

4.

MR. SAFIU OKUNOLA

SHAREHOLDER REPRESENTATIVE

MEMBER

5

MRS. ADEBISI OLUWAYEMISI BAKARE


MEMBER

6.

MR. JOB IHEJIRIKA ONWUGHARA


MEMBER

ARDOVA PLC (Formerly Forte Oil Plc)

Annual Reports and Financial statements For the year ended 31 December 2019

Report of the Statutory Audit Committe 51

ardova plc

Statement of Directors' responsibili�es For the prepara�on and approval of the financial statements

The Directors of Ardova Plc ("the company") are responsible for the prepara�on of the financial statements that give a true and fair view of the financial posi�on of the Company as at 31 December 2019 and the results of its opera�ons, cash flows and changes in the equity for the year ended, in compliance with the Interna�onal Financial Repor�ng Standards (“IFRS”) and in the manner required by the Companies and Allied Ma�er Act of Nigeria and the Financial Repor�ng Council of Nigeria Act, 2011.

In preparing the financial statements, the Directors are responsible for:

•

Properly selec�ng and applying accoun�ng policies

•

Presen�ng informa�on, including accoun�ng policies, in a manner that provides relevant, reliable, comparable and understandable informa�on, and

•

Making an assessment of the Company’s ability to con�nue as a going concern.

The Directors are responsible for:

•

Designing, implemen�ng and maintaining an effec�ve and sound system of internal controls throughout the Company;

•

Maintaining adequate accoun�ng records that are sufficient to s how and explain the Company’s transac�ons and disclose with reasonable accuracy at any �me the financial posi�on of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS;

•

Maintaining statutory accoun�ng records in compliance with legisla�on of Nigeria and IFRS;

•

Taking such steps as are reasonably available to them to safeguard the assets of the Company; and preven�ng and detec�ng fraud and other irregulari�es.

Going Concern:

The Directors have assessed the Company’s ability to con�nue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead.

The financial statements of the Company for the year ended 31 December 2019

were approved by Directors on 28 February, 2020.

On behalf of the Directors of the Company

__________________________

___________________________

Adeosun Olumide

Moshood Olajide

Managing Director/CEO

Execu�ve Director, Finance

FRC/2020/003/00000020356

FRC/2018/MULTI/00000017818



Report of the Statutory Audit Committe 52

Independent Auditor’s Report

04 ardova plc

Independent Auditor’s Report

To the Shareholders of Ardova Plc (formerly Forte Oil Plc) Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of Ardova Plc (“the Company”) which comprise the statement of financial posi�on as at 31 December 2019, the statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows for the year then ended and the notes to the financial statements including a summary of significant accoun�ng policies. In our opinion, the financial statements give a true and fair view of the financial posi�on of Ardova Plc as at 31 December 2019 and the financial performance and statement of cash flows for the year then ended in accordance with the I nterna�onal Financial Repor�ng Standards, the Companies and Allied Ma�ers Act Cap C20 LFN 2004 and the Financial Repor�ng Council of Nigeria Act , 2011. Basis for Opinion We conducted our audit in accordance with Interna�onal Standards on Audi�ng (IS As). Our responsibili�es under those standards are further described in the Auditor’s Responsibili�es for the Audit of the Financial Statements sec�on of our report. We are independent of the Company in accordance with the requirements of the Ins�tute of Chartered Accountants of Nigeria Professional Code of Conduct and Guide for Accountants (ICAN Code) and other independence requirements applicable to performing audits of financial statements in Nigeria. We have fulfilled our other ethical res ponsibili�es in accordance with the ICAN Code and in accordance with other ethical requirements applicable to performing audits in Nigeria. The ICAN Code is consistent with the Interna�onal Ethics Standards Board for Accountants Code of Ethics for Profes sional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Ma�ers The consolidated and separate financial statements of Forte Oil Plc (now Ardova Plc) and its subsidiaries for the year ended 31 December 2018 were audited by another who expressed an unmodified opinion on those statements on 26 March, 2019. Key Audit Ma�er Key audit ma�er is the ma�er that, in our professional judgment, was of most significance in our audit of the financial statements of the current year. This ma�er was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this ma�er.

ardova plc




Other Informa�on The Directors are responsible for the other informa�on. The other informa�on comprises the Directors’ Report and Audit Commi�ee’s Report, which we obtained prior to the date of this auditor’s report. The other informa�on does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other informa�on and we do not express any form of assurance conclusion thereon. In connec�on with our audit of the financial statements , our responsibility is to r ead the other informa�on and, in doing so, consider whether the other informa�on is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Based on the work we have performed on the other informa�on that we obtained prior to the date of this auditor’s report, if we conclude that there is a material misstatement of this other informa�on, we are required to report that fact. We have nothing to report in this regard.

Key Audit Ma�er How the ma�er was addressed in the audit

Revenue Recogni�on Our review of the en�ty business processes, reveals that revenue recogni�on is triggered only when the customers acknowledges receipt of dispatched products from the company. This is done through the use of an electronic device that synchronizes with the company’s financial system applica�on. A manual waybill is also signed in addi�on to this. However, whereas customers signed the manual waybill upon receipt of products; in some cases, the device is not ac�vated, thus making the transac�on process incomplete in the financial system. Consequently, a significant number of delivered products remained in Goods-in-Transit account at year end. Following from the above, we iden�fied significant risks around the completeness and cut-off of revenue balances recorded in the year i.e. revenue earned by the Company within the year may not have been fully recorded due to customers’ omission to electronically confirm product delivery.

In addressing this ma�er, we performed procedures that involved

assessing the design and implementa�on of controls surrounding revenue

recogni�on, tested the opera�ng effec�veness of these controls and

further carried out detailed substan�ve procedures which included the

following:

• Evaluated that the revenue recogni�on policies and methods are

appropriate and applied consistently in compliance with IFRS 15

• Obtained an understanding of the controls put in place by management to iden�fy product deliveries (performance obliga�on) which are yet to be confirmed by the customer;

• Performed test of control to confirm the design, implementa�on and opera�ng effec�veness of the controls around revenue completeness and cut-off across individual product lines.

• In conjunc�on with our specialists, we tested the design, implementa�on and opera�ng effec�veness of the ap plica�ons involved in the revenue recogni�on process and also the integrity of the IT infrastructure.

• Performed substan�ve tests to ensure that revenue earned in the

current year has been completely captured appropriately by

performing the following procedures:

▪ Performed a sales volume reconcilia�on taking into considera�on the

opening and closing inventory ledgers and purchases made in the year

to arrive at expected sales for the year.

We selected samples of sales made in the year and traced to support

documents ensuring that performance obliga�on to customers had

occurred before sales were recorded, and that they were sold at

approved prices.

We selected samples and tested early and late cut-off of sales. We

focused on sales made before period end, sales invoices a�er period

end to ensure they were recorded in the appropriate period.

Based on the procedures followed, we considered the revenue

recogni�on method adopted by the management appropriate.




ardova plc

Responsibili�es of the Directors for the Financial Statements The Directors are responsible for the prepara�on of the financial statements that give a true and fair view in accordance with Interna�onal Financial Repor�ng Standards and the requiremen ts of the Companies and Allied Ma�ers Act CAP C20 LFN 2004, Financial Repor�ng Council Act, 2011 and for such internal control as the Directors determine is necessary to enable the prepara�on of financial statements that are free from material misstatem ent, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to con�nue as a going concern, disclosing, as applicable, ma�ers related to going concern and using the going co ncern basis of accoun�ng unless the Directors either intend to liquidate the Company or to cease opera�ons, or have no realis�c alterna�ve but to do so.

Auditor’s Responsibili�es for the Audit of Financial Statements Our objec�ves are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scep�cism throughout the audit. We also:

• Iden�fy and assess the risks of material misstatement of the financial statements , whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detec�ng a material misstatement resul�ng from fraud is higher than for one resul�ng from error, as fraud may involve collusion, forgery, inten�onal omissions, misrepresenta�ons, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effec�veness of the Company’s internal control.

• Evaluate the appropriateness of accoun�ng policies used and the reasonableness of accoun�ng es�mates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accoun�ng and b ased on the audit evidence obtained, whether a material uncertainty exists rela�ng to events or condi�ons that may cast significant doubt on the Company’s ability to con�nue as a going concern. If we conclude that a material uncertainty exists, we are required to draw a�en�on in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or condi�ons may cause the Company to cease to con�nue as a going concern.

• Evaluate the overall presenta�on, structure and content of the financial statements, including the disclosures, and whether the Company’s financial statements represent the underlying transac�ons and events in a manner that achieves fair presenta�on.

We communicate with the audit commi�ee and the Directors regarding, among other ma�ers, the planned scope and �ming of the audit and significant audit findings, including any significant deficiencies in internal control that we iden�fy during our audit

We also provide the audit commi�ee and Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all rela�onships and other ma�ers that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the ma�ers communicated with the audit commi�ee and/or the Directors, we deter mine those ma�ers that were of most significance in the audit of the financial statements of the current year and are therefore the key audit ma�er . We describe this ma�er in our auditor’s report unless law or regula�on precludes public disclosure about the ma�er or when, in extremely rare circumstances, we determine that a ma�er should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the benefits derivable by the public from such communica�on.




ardova plc

Report on Other Legal and Regulatory Requirements

In accordance with the Sixth Schedule of Companies and Allied Ma�ers Act CAP C20 LFN 2004 we expressly s tate that:

i) We have obtained all the informa�on and explana�on, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii) The Company has kept proper books of account, so far as appears from our examina�on of those books.

iii)

The Company’s financial posi�on and its statement of profit or loss and other comprehensive income are in agreement with the books of account and returns.

Olufemi Abegunde (FRC/2013/ICAN/00000004507)

For: Deloi�e & Touche

Chartered Accountants

Lagos, Nigeria

28 February, 2020




ardova plc

Statement of profit or loss and other comprehensive income

31-Dec-19 31-Dec-18

Notes N’000 N’000

Revenue 7 176,550,766 134,706,306

Cost of sales 7 (165,269,049) (123,376,240)

Gross profit

11,281,717 11,330,066

Other income

8

4,317,155 1,859,809

Distribu�on expenses

9

(2,280,966)

(2,245,688)

Administra�ve expenses

9

(8,393,460)

(7,995,101)

Opera�ng profit

4,924,446

2,949,086

Finance income

10

4,555,095

1,181,038

Finance cost

10

(4,825,394)

(3,101,580)

Net finance cost

(270,299)

(1,920,542)

Profit before income tax

4,654,147

1,028,544

Income tax expense

11

(739,007)

(397,073)

Profit a�er tax

3,915,140

631,471

Other Comprehensive Income:

Items that may be reclassified subsequently to profit or loss

Total other comprehensive income net of taxes

-

-

Total comprehensive income for the period

3,915,140

631,471

Earnings per share

Basic/diluted in (N)

12

3.00

0.48

The accompanying notes and significant accoun�ng policies form an integral part of these financial statements.



Statement of financial posi�onAt 31 December 2019

Note

31-Dec-19

31-Dec-18

N’000

N’000Assets

Non-current assets

Property, plant and equipment

13

11,116,680

8,789,910Right of use assets

14

1,376,470

-

Investment property

15

1,506,546

1,531,995

Intangible assets

16

72,753

143,811Deferred tax assets

17

783,157 577,571

Long term investments (employee benefits) 24 36,735 563,910

Total non-current assets

14,892,341 11,607,197

Current assets Inventories

18

12,834,373

9,528,146Trade and other receivables

19

16,677,971

28,611,871Short term investments (employee benefits)

24

610,302

-Restricted cash

20

19,707

-Cash and cash equivalents

21

1,984,260

1,154,269

32,126,613

39,294,286Assets classified as held for sale

22.1

-

10,296,796

Total current assets

32,126,613

49,591,082

Total assets

47,018,954

61,198,279

Equity

Share capital

23

655,314

655,314Share premium

23

8,071,943

8,071,943Other reserves

23

(5,041)

(7,752)Retained earnings

23

8,829,683

6,418,039

Total equity a�ributable to equity holders of the Company

17,551,899

15,137,544Treasury stock

23

(1,388,574)

(1,388,574)

Total equity

16,163,325

13,748,970

Liabili�es

Non-current liabili�es

Deferred tax liabili�es

17

1,463,956

1,490,741

Loans and borrowings

25

-

634,369Medium term bond

25

2,735,388

5,041,359

Total non-current liabili�es

4,199,344

7,635,015

Current liabili�es

Trade and other payables

26

22,823,177

26,473,273Current income tax liabili�es

11

976,632

296,217Loans and borrowings

25

-

1,437,094Employee benefits

24

262,902

-Medium term bond

25

2,476,801

2,134,164Bank overdra�

21

116,773

9,473,546

Total current liabili�es

26,656,285

39,814,294

Total liabili�es

30,855,629

47,449,309

Total equity and liabili�es 47,018,954 61,198,279

The financial statements were approved by the Board on 28 February 2020 and signed on its behalf by:

________________________ ______________________________Olumide Adeosun Moshood OlajideChief Execu�ve Officer Execu�ve Director, FinanceFRC/2020/003/00000020356 FRC/2018/MULTI/00000017818





ardova plc

Employee benefits 24 - 468,546

Stat

em

en

t o

f ch

ange

s in

eq

uit

y

Shar

e

cap

ital

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e

pre

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tain

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ings

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shar

es

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l e

qu

ity

N

’00

0

N

’00

0

N

’00

0

N

’00

0

N

’00

0

N

’00

0

N

’00

0

Bal

ance

at

1 J

anu

ary

20

19

6

55

,31

4

8

,07

1,9

43

(7,7

52

)

6,4

18

,03

9

1

5,1

37

,54

4

(1

,38

8,5

74

)

13

,74

8,9

70

Ch

ange

s in

eq

uit

y fo

r 2

01

9:

A

dju

stm

ent

2,7

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(2,7

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)

-

P

rofi

t o

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ss f

or

the

year

-

-

-

3

,91

5,1

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3,9

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-

3

,91

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40

D

ivid

end

-

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-

(1

,50

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)

(1,5

00

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-

(1

,50

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Bal

ance

at

31

De

cem

be

r 2

01

9

65

5,3

14

8,0

71

,94

3

(5

,04

1)

8

,82

9,6

83

17

,55

1,8

99

(1,3

88

,57

4)

1

6,1

63

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5

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pre

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N

’00

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N

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N

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N

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N

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N

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0

Bal

ance

at

1 J

anu

ary

20

18

6

55

,31

4

8

,07

1,9

43

(7,7

52

)

5,8

05

,85

9

1

4,5

25

,36

4

(1

,38

8,5

74

)

13

,13

6,7

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ange

s in

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y fo

r 2

01

8:

Effec

t o

f re

tro

spec

�ve

ad

op

�o

n o

f IF

RS

9

-

-

-

(1

9,2

91

)

(19

,29

1)

-

(1

9,2

91

) P

rofi

t o

r lo

ss f

or

the

per

iod

-

-

-

6

31

,47

1

6

31

,47

1

-

6

31

,47

1

Bal

ance

at

31

De

cem

be

r 2

01

8

65

5,3

14

8,0

71

,94

3

(7

,75

2)

6

,41

8,0

39

15

,13

7,5

44

(1,3

88

,57

4)

1

3,7

48

,97

0

The

acco

mp

anyi

ng

no

tes

and

sig

nifi

can

t ac

cou

n�

ng

po

licie

s fo

rm a

n in

tegr

al p

art

of

thes

e fi

nan

cial

sta

tem

ents

.




ardova plc

Statement of cash flows 31-Dec-19 31-Dec-18

Notes N’000 N’000

Cash flows from opera�ng ac�vi�es

Profit for the period 3,915,140 631,471

Adjustment for:

Deprecia�on of property, plant and equipment 13b 2,054,952 1,324,413

Deprecia�on of investment property 15

25,449 25,449

Amor�za�on of intangible asset 16

71,058 72,236

Gain on disposal of subsidiaries 8

(2,674,891) -

(Profit)/Loss on disposal of property, plant and equipment 13

30,067 (6,537)

Finance income

10

(4,555,095)

(1,181,038)

Finance cost on loans and borrowings

10

4,825,394

3,101,580

Current service cost

24

254,680

97,347

Increase in impairment allowance for trade receivables

9

69,436

443,944

Provisions no longer required

(23,055)

77,402

Effect of retrospec�ve adop�on of New standard

-

(19,291)

Income tax expense

11

739,007

397,073

4,732,142

4,964,049

Changes in:

Inventories

18

(3,306,227)

(4,909,760)

Trade and other receivables

19a

9,204,260

4,675,901


26

(3,912,260)

(303,620)

Non trade payables and other creditors

26

(295,696)

83,745

Cash generated from opera�ng ac�vi�es

6,422,219

4,510,315

Employee benefit paid

24

(530,084)

(102,173)

Income taxes paid

(209,058)

(241,852)

Net cash generated from opera�ng ac�vi�es

5,683,077

4,166,290

Cash flows from inves�ng ac�vi�es

Proceeds from sale of property, plant and equipment

13

212,821

32,263

Acquisi�on of property, plant and equipment

13

(816,036)

(371,798)

Acquisi�on of intangibles

-

(19,397)

Acquisi�on of ROU assets

14

(245,542)

-

Proceeds from disposal of subsidiaries

8

12,960,887

-

Interest received

539,103

1,106,542

Net cash generated from inves�ng ac�vi�es

12,651,233

747,611

Cash flows from financing ac�vi�es

Loan repayment

25

(5,438,107)

(10,442,422)

Dividend paid

(1,500,785)

-

Interest paid

10

(1,188,948)

(3,101,580)

Net cash used in financing ac�vi�es

(8,127,840)

(13,544,002)

Net

increase

/

(decrease) in cash and cash equivalents

10,206,470

(8,630,100)

Restricted cash

20

(19,707)

-

Cash and cash equivalents as at 1 January

21

(8,319,276)

310,823

Cash and cash equivalents at 31 December

21

1,867,487

(8,319,277)





ardova plc

ardova p

lc

Operating segment

04 ardova plc

Op

era

�n

g se

gme

nt

The

Co

mp

any

has

fo

ur

rep

ort

able

seg

men

ts, a

s d

escr

ibed

bel

ow

, wh

ich

are

th

e C

om

pan

y's

stra

tegi

c b

usi

nes

s u

nit

s. T

he

stra

tegi

c b

usi

nes

s u

nit

s o

ffer

diff

eren

t p

rod

uct

s, a

nd

are

man

aged

sep

arat

ely.

Fo

r ea

ch o

f th

e st

rate

gic

bu

sin

ess

un

its,

th

e C

om

pan

y's

CEO

rev

iew

s in

tern

al m

anag

emen

t re

po

rts

on

at

leas

t m

on

thly

bas

is. T

he

follo

win

g su

mm

ary

des

crib

es t

he

op

era�

on

s in

eac

h o

f th

e C

om

pan

y's

rep

ort

able

seg

men

ts.

Segm

en

t

De

scri

p�

on

Fue

ls

This

seg

men

t is

res

po

nsi

ble

fo

r th

e sa

le a

nd

dis

trib

u�

on

of

pet

role

um

pro

du

cts

(wh

ite

pro

du

cts)

an

d A

via�

on

Tu

rbin

e K

ero

sen

e (A

TK)

in r

etai

l ou

tlet

s an

d t

o in

du

stri

al c

ust

om

ers.

Lub

rica

nts

an

d G

reas

es

This

seg

men

t m

anu

fact

ure

s an

d s

ells

lub

rica

nts

an

d g

reas

es.

Sola

r sy

ste

m

This

seg

men

t se

lls s

ola

r sy

stem

.

LPG

an

d C

ylin

de

r Sa

les

This

seg

men

t se

lls L

iqu

efied

Pet

role

um

Gas

an

d c

ylin

der

Sal

es.

As

at 3

1 M

arch

201

9,

the

sub

sid

iari

es

Fort

e U

pst

ream

Ser

vice

s, A

P O

il an

d G

as-

Gh

ana

and

Am

per

ion

Po

wer

Dis

trib

u�

on

Co

mp

any

Lim

ited

, wh

ich

had

bee

n p

revi

ou

sly

clas

sifi

ed a

s h

eld

fo

r sa

le a

t th

e en

d o

f Ju

ne

20

18

, wer

e d

isp

ose

d o

f. D

etai

ls o

f th

e p

rofi

t o

r lo

ss f

rom

dis

po

sal h

as b

een

incl

ud

ed

in N

ote

8.5

The

acco

un

�n

g p

olic

ies

of

the

rep

ort

able

seg

men

ts a

re t

he

sam

e as

des

crib

ed in

no

tes

2 t

o 5

.

Info

rma�

on

reg

ard

ing

the

resu

lts

of

each

rep

ort

able

seg

men

t is

incl

ud

ed b

elo

w:

31

DEC

EMB

ER 2

019

31

DEC

EMB

ER 2

018

Fue

ls

Lub

rica

nts

an

d g

reas

es

Sola

r sy

ste

m

LPG

an

d

Cyl

ind

er

Sale

s

TOTA

L

Fue

ls

Lub

rica

nts

an

d g

reas

es

Sola

r sy

ste

m

LPG

an

d

Cyl

ind

er

Sale

sTO

TAL

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

€

0

.61

€

0.3

9

€

(0

.00

)

(0.0

0)

€

0

.75

€

0.2

5€

0.0

0€

-

Rev

enu

e

15

9,2

45

,19

6

17

,249

,004

39

,097

17

,469

17

6,5

50

,766

12

0,8

44

,44

0

13

,720

,830

14

1,0

36

-1

34

,70

6,3

06

Co

st o

f Sa

les

(15

2,3

87,3

20

)

(12

,822

,179

)

(41

,102

)

(18

,448

)

16

5,2

69

,049

11

2,3

46

,53

6

10

,909

,732

11

9,9

72

-1

23

,37

6,2

40

Gro

ss P

rofi

t /

(lo

ss)

6,8

57,8

76

4,4

26,8

25

(2,0

05)

(97

9)

11

,28

1,7

178

,49

7,9

04

2,8

11

,09

82

1,0

64-

11

,330

,066

Oth

er in

com

e2

,61

8,6

45

1,6

94

,00

63

,02

71

,47

74

,317

,15

51

,394

,91

54

61

,43

63

,458

-1

,859

,80

9D

istr

ibu

�o

n e

xpen

ses

(1,3

85,

33

6)

(89

5,0

27

)(4

05

)(1

98

)(2

,280

,966

)(1

,684

,336

)(5

57

,177

)(4

,175

)-

(2,2

45,6

88)

Ad

min

istr

a�ve

exp

ense

s(5

,09

7,7

36

)(3

,29

3,5

04

)(1

,49

2)

(72

8)

(8,3

93,4

60)

(5,9

96,5

76)

(1,9

83,6

61)

(14

,86

4)-

(7,9

95,1

01)

(3,8

64,4

27)

(2,4

94,5

25)

1,1

305

51

(6,3

57,2

71)

(6,2

85,9

97)

(2,0

79,4

02)

(15

,58

1)-

(8,3

80,9

80)

Op

era

�n

g P

rofi

t2

,993

,44

91

,932

,30

0(8

75

)(4

28

)4

,924

,44

62

,211

,90

77

31

,69

65

,483

-2

,949

,08

6

Net

fin

ance

co

st(1

64

,21

2)

(10

6,0

16

)(4

8)

(23

)(2

70

,29

9)

(1,4

40,

46

7)

(47

6,5

05

)(3

,57

0)-

(1,9

20,

54

2)

Pro

fit

bef

ore

inco

me

tax

2

,829

,23

71

,826

,28

4(9

23

)(4

51

)4

,65

4,1

47

77

1,4

40

25

5,1

91

1,9

13-

1,0

28,5

44

Inco

me

tax

exp

ense

(44

9,2

24

)(2

89

,97

8)

13

16

4(7

39

,007

)(2

97

,81

7)

(98

,518

)(7

38

)-

(39

7,0

73)

Pro

fit

a�er

tax

2

,380

,01

31

,536

,30

6(7

92

)(3

87

)3

,915

,14

04

73

,62

31

56

,67

31

,175

-6

31

,47

1



63Operating Segments

ardova plc



64Operating Segments

ardova plc

Opera�ng Segment (cont’d)

The Company's CEO measures performance based on segment profit before income tax, as included in the internal management reports. Segment profit is used to measure performance as management believes that such informa�on is the most relevant in evalua�ng the results of these segments.

The measurement policies the Company uses for segment repor�ng are the same as those used in its financial statements. There have been no changes from prior years in the measurement methods used to determine

reported segment profit or loss.

Revenue of approximately NGN52 billion are derived from ten external customers. 90% of these revenues are a�ributable to the fuels segment.

The geographical loca�on of the company

opera�ons is Nigeria, opera�ons outside Nigeria are non-existent and do not cons�tute a segment.

There is no disclosure of assets and liabili�es per business segment because the assets and liabili�es of the Company are not directly related to a par�cular business segment.

Notes to the financial statements

05 ardova plc



Notes to the Financial Statement 66

ardova plc


1.

The Company

1.1

General informa�on

The Company was incorporated on 11 December 1964 as Bri�sh Petroleum. It became African Petroleum through the na�onalisa�on policy of the Federal Government of Nigeria in 1979. The Company changed its name to Forte Oil Plc in December 2010 as a result of a restructuring and rebranding exercise. In June. 2019, Ignite Investments and Commodi�es Limited became the majority shareholder in Forte Oil Plc a�er the former majority shareholder disposed off his shares in the Company. The company's name was changed to Ardova Plc in December

2019.

During the period, the Company disposed off its Upstream Services, Power and a por�on of its Fuel segments. The Company disposed AP Oil and Gas Ghana, Forte Upstream Service Limited and Amperion Power Distribu�on Company Limited.

Principal ac�vi�es

The Company engages in the marke�ng of petroleum products, which is divided into fuels, lubricants and greases.

1.2

Statement of compliance

These financial statements have been prepared in accordance with Interna�onal Financial Repor�ng Standard (IFRS) as issued by the Interna�onal Accoun�ng Standard Board (IASB) and in compliance with the Financial Repor�ng Council of Nigeria Act. The financial statements for the year ended 31 December 2019, have been prepared in accordance with Interna�onal Financial Repor�ng Standard (IFRS).

1.3

Composi�on of Financial statements

This financial

statement is presented in Naira, which is the Company's func�onal currency.

Except as indicated in this financial statements, financial informa�on presented in Naira has been rounded to the nearest thousand.

* Statement of profit and loss and other comprehensive income

* Statement of financial posi�on

* Statement of changes in equity

* Statement of cash flows

* Segment informa�on.

The Directors also provided the following addi�onal statements in complian ce with Companies and Allied Ma�ers Act:

* Value added statement * Five-year financial summary 1.4 Financial Period

These financial statements cover the period from 1 January 2019 to 31 December 2019 with comparat ive figures for the financial year from 1 January 2018 to 31 December 2018.


2.0 Adop�on of new and revised IFRS standards

2.1 New and amended IFRS Standards that are effec�ve for the current year, adopted by the Company

2.1.1 Impact of ini�al applica�on of IFRS 16 Leases

IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpreta�ons (IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC 15 ‘Opera�ng Leases-Incen�ves’ and SIC 27 ‘Evalua�ng the Substance of Transac�ons Involving the Legal Form of a Lease’).

The adop�on of this new Standard has resulted in the company recognising a right-of-use asset in connec�on with all former opera�ng leases except for those iden�fied as low-value or having a remaining lease term of less than 12 months and no related lease liability was recognised because future lease payment were made at the incep�on of all the opera�ng lease contract from the date of ini�al applica�on

The new Standard has been applied using the modified retrospec�ve approach; however,

in our case we have no

cumula�ve effect of adop�ng IFRS 16 to be recognised

in equity to the opening balance of retained earnings for the current period. Prior periods have not been restated.

For contracts in place at the date of ini�al applica�on, the Company has elected to apply the defini�on of a lease from IAS 17 and IFRIC 4 and has not applied IFRS 16 to arrangements that were previously not iden�fied as lease under IAS 17 and IFRIC 4.

The Company has elected not to include ini�al direct costs in the measurement of the right-of-use asset for opera�ng leases in existence at the date of ini�al applica�on of IFRS 1 6, being 1 January2019. At this date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued lease payments that existed at the date of transi�on.

Instead of performing an impairment review on the right-of-use assets at the date of ini�al applica�on, the Company has relied on its historic assessment as to whether leases were onerous immediately before the date of ini�al applica�on of IFRS 16.

On transi�on, for leases previously accounted for as opera�ng leases with a remaining lease term of less than 12 months and for leases of low-value assets the Company has applied the op�onal exemp�ons to not recognise right -of-use assets but to account for the lease expense on a straight line basis over the remaining lease term.

The Company has benefited from the use of hindsight for determining the lease term when considering op�ons to extend and terminate leases.

The Company recognises lease payments received under opera�ng leases as income on a straight-line basis over the lease term as part of ‘other income’.

The following is a reconcilia�on of the financial statement line items from IAS 17 to I FRS 16 at 1 January 2019:

31-Dec-19

31-Dec-18

1-Jan-18

N’000

N’000

N’000

Right of use asset

1,376,470

1,934,210

2,701,972

In the current year, the Company did not apply any other amendments to the IFRS Standards and Interpreta�ons issued by the IASB that are effec�ve for an annual period that begins on or a�er 1 January 2019.




ardova plc


2.2 New Standards and interpreta�ons issued but not yet effec�ve.

2.2.1 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

IFRS 17 is effec�ve for annual periods beginning on or a�er January 1, 2021, well a�er the effec�ve date of IFRS 9 Financial Instruments, January 1, 2018. IFRS 9 will cover a majority of an insurer’s investments; therefore, the expected differing effec �ve dates created concerns rela�ng to temporary vola�lity and accoun�ng mismatches in profit or loss. Some companies have also expressed concerns about the need to implement two significant changes in accoun�ng on different dates, which will increase costs and complexity.

In September 2016, the IASB issued amendments to its exis�ng insurance contracts standard, IFRS 4. The amendments introduced two approaches that supplement exis�ng op�ons in the Standard that can be used to address

the temporary vola�lity as a result of the different effec�ve dates of IFRS 9 and the

forthcoming insurance contracts standard.

The amendments:

-

provide a repor�ng en�ty (whose predominant ac�vity is to issue insurance contracts) a temporary exemp�on from applying IFRS 9 un�l the earlier of: a) the applica�on of IFRS 17; or b) January 1, 2021 (to be applied at the repor�ng en�ty level) (referred to as the ‘ temporary exemp�on’); and

-

give en��es issuing insurance contracts the op�on to remove from profit or loss the incremental vola�lity caused by changes in the measurement of specified financial assets upon applica�on of IFRS 9 (referred to as the ‘overlay approach’). This op�on will be in place un�l IFRS 17 comes into effect.

Impact on Ini�al Applica�on

The amendment to the standard might not have any impact on the Company financial statements when it becomes effec�ve in 2021

2.2.2

IFRS 10 and IAS 28 (amendments) Sale or

Contribu�on of Assets between an Investor and its Associate or Joint Venture

The amendments to IFRS 10 and IAS 28 deal with situa�ons where there is a sale or contribu�on of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resul�ng from the loss of control of a subsidiary that does not contain a business in a transac�on with an associate or a joint venture that is accounted for using the equity method, are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resul�ng from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new as sociate or joint venture.

The amendment to the standard might not have any impact on the Company financial statements when it becomes effec�ve in 2021.




ardova plc


2.2.3 Amendments to IFRS 3 Defini�on of a business

The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of ac�vi�es and assets to qualify as a business. To be considered a business an acquired set of ac�vi�es and assets must include, at a minimum, an input and a substan�ve process that together significantly contribute to the ability to create outputs. Addi�onal guidance is provided that helps to determine whether a substan�ve process has been acquired.

The amendments introduce an op�onal concentra�on test that permits a simplified assessment of whether an acquired set of ac�vi�es and assets is not a business. Under the op�onal concentra�on test, the acquired set of ac�vi�es and assets is not a business if substan�ally all of the fair value of the gross assets acquired is concentrated in a single iden�fiable asset or

group of similar assets.

"The amendments are applied prospec�vely to all business combina�ons and asset acquisi�ons for which the

acquisi�on date is on or a�er the first annual repor�ng period beginning on or a�er 1 January 2020, with early applica�on permi�ed."

2.2.4

Conceptual Framework for Financial Repor�ng

Purpose: -

The revised Conceptual Framework for Financial Repor�ng (the Conceptual Framework) is not a standard, and none of the concepts overrides

those in any standard or any requirements in a standard. The

purpose of the Conceptual Framework is to assist the Board in developing standards, to help preparers develop consistent accoun�ng policies if there is no applicable standard in place and to assist all par�es to understand and interpret the standards.

Key provisions: The

IASB issued the Conceptual Framework in March 2018. It sets out a comprehensive set of concepts for financial repor�ng, standard se�ng, and guidance

for preparers in developing consistent accoun�ng policies and assistance to others in their efforts to understand and interpret the standards. The Conceptual Framework includes some new concepts, provides updated definitions and recogni�on criteria for assets and liabili�es and clarifies some important concepts. It is arranged in eight chapters, as follows:

• Chapter 1 –

The objec�ve of financial repor�ng

• Chapter 2 –

Qualita�ve characteris�cs of useful financial informa�on

• Chapter 3 –

Financial statements

and the repor�ng en�ty

• Chapter 4 –

The elements of financial statements

• Chapter 5 –

Recogni�on and derecogni�on

• Chapter 6 –

Measurement

• Chapter 7 –

Presenta�on and disclosure

"• Chapter 8 –

Concepts of capital and capital maintenance.

The Conceptual Framework is accompanied by a Basis for Conclusions."

There are exemp�ons in developing accoun�ng policies for regulatory

account balances for two standards, namely, IFRS 3 Business Combina�ons and for those applying IAS 8 Accoun�ng Policies, Changes in Accoun�ng Es�mates and Errors

For preparers who develop accoun�ng policies based on the Conceptual Framework, it is effec�ve for annual periods beginning on or a�er 1 January 2020.

The changes to the Conceptual Framework may affect the applica�on of IFRS in situa�ons where no standard applies to a par�cular transac�on or event




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2.2.5 Defini�on of Material (Amendments to IAS 1 and IAS 8)

The Interna�onal Accoun�ng Standards Board (IASB) has issued 'Defini�on of Material (Amendments to IAS 1 and IAS 8)' to clarify the defini�on of ‘material’ and to align the defini�on used in the Conceptual Framework and the standards themselves.

Changes and reasoning behind the changes

The changes in Defini�on of Material (Amendments to IAS 1 and IAS 8) all relate to a revised defini�on of 'material' which is quoted below from the final amendments:

The defini�on of material, an important accoun�ng concept in IFRS Standards, helps companies decide whether informa�on should be included in their financial statements. The updated defini�on amends IAS 1 Presenta�on of Financial Statements and IAS 8 Accoun�ng Policies, Changes in Accoun�ng Es�mates and Errors.

The amendments are a response to findings that some companies experienced difficu l�es using

the old defini�on when judging whether informa�on was material for inclusion in the financial statements.

The amendments clarify the defini�on of material and how it should be applied by including in the defini�on guidance that un�l now has featured elsewhere in IFRS Standards. In addi�on, the explana�ons accompanying the defini�on have been improved. Finally, the amendments ensure that the defini�on of material is consistent across all IFRS Standards.

Informa�on is material if omi�ng, missta�ng or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial informa�on about a specific

repor�ng en�ty.

Three new aspects of the new defini�on should especially be noted:

Obscuring. The exis�ng defini�on only focused on omi�ng or missta�ng informa�on, however, the Board concluded that obscuring material informa�on with informa�on that can be omi�ed can have a similar effect. Although the term obscuring is new in the defini�on, it was already part of IAS 1 (IAS 1.30A).

Could reasonably be expected to influence. The exis�ng defini�on referred to 'could inf luence' which the Board felt might be understood as requiring too much informa�on as almost anything ‘could’ influence the decisions of some users even if the possibility is remote.

Primary users. The exis�ng defini�on referred only to 'users' whic h again the Board feared might be understood too broadly as requiring to consider all possible users of financial statements when deciding what informa�on to disclose.

The amendments are effec�ve for annual repor�ng periods beginning on or

a�er 1 January 2020.




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3.0 Summary of significant accoun�ng policies

The accoun�ng policies set out below have been applied consistently to all years presented in these

financial statements, unless otherwise indicated.

3.1 Basis of measurement

This financial statements are prepared on the historical cost basis except as modified by actuarial valua�on of staff gratuity and fair valua�on of financial assets and liabi li�es where applicable. There are other assets and liabili�es measured at amor�sed cost.

3.1.1

Foreign currency transac�ons

Transac�ons in foreign currencies are translated to the respec�ve func�onal currencies of the en��es within the Company.

Monetary items denominated in foreign currencies are re-translated at the exchange rates applying at the repor�ng date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non -monetary items that are measured in terms of historical cost in a foreign currency are n ot re-translated.

Exchange differences are recognised in profit or loss in the year in which

they arise except for:

-

exchange differences on foreign currency borrowings which are regarded as adjustments to interest costs , where those interest costs qualify for capitalisa�on to

assets under construc�on;

-

exchange differences on transac�ons entered into to hedge foreign currency risks; and

-

exchange differences on loans to or from a foreign opera�on for which se�lement is neither planned nor likely to occur and therefore forms part of the net investment in the foreign opera�on, which are recognised ini�ally in other comprehensive income and reclassified from equity to profit or loss on disposal or par�al disposal of the net investment.

Foreign currency gains and losses on financial assets and financial liabili�es are reported on a net basis.

3.1.2

Foreign opera�ons

The func�onal currency of the parent Company and the presenta�on currency of the financial statements is Naira. The assets and liabili�es of the Company's foreign opera�ons are translated to Naira using exchange rates at year end. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly during that year, in which case the exchange rate on transac�on date is used. Goodwill acquired in business combina�ons of a foreign opera�on are treated as assets and liabili�es of that opera�on and transl ated at the closing rate.

Exchange differences are recognised in other comprehensive income and accumulated in a separate category of equity.

On the disposal of a foreign opera�on, the accumulated exchange differences of that opera�on, which is a�ributable to the Company are recognised in profit or loss.




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3.2 Financial assets and financial liabili�es Recogni�on and ini�al measurement

A financial instrument is any contract that gives rise to a financial asset of one en�ty and a financial liability or equity instrument of another en�ty.

Financial assets Ini�al recogni�on and measurement of financial assets

Financial assets are classified, at ini�al recogni�on, as subsequently measured at amor�sed cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classifica�on of financial assets at ini�al recogni�on depends on the financial asset’s contractual cash flow characteris�cs and the Company’s business model for managing them. With the excep� on of trade receivables that do not contain a significant financing component or for which the Company has applied the prac�cal expedient, the Company ini�ally measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transac�on costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the prac�cal expedient are measured at the transac�on price determined under IFRS 15.

In order for a financial asset to be classified and measured at amor�sed cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is

referred to as the SPPI test and is performed at an

instrument level

The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collec�ng contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a �me frame established by regula�on or conven�on in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in three

categories:

•

Financial assets at amor�sed cost (debt instruments)

•

Financial assets designated at fair value through OCI with no recycling of cumula�ve gains and losses upon derecogni�on (equity instruments)

•

Financial assets at fair value through profit or loss (the Company however has no financial instrument in this category)

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteris�cs of the asset.

There are three measurement categories into which the Company classifies its debt instruments:




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3.2 Financial assets and financial liabili�es (cont’d) Amor�sed cost:

Assets that are held for collec�on of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amor�sed cost. A gain or loss on a debt investment that is subsequently measured at amor�sed cost and is not part of a hedging rela�onship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effec�ve interest rat e method.

Fair value through other comprehensive income (FVOCI):

Assets that are held for collec�on of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recogni�on of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumula�ve gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in finance income using the effective interest rate method.

Fair value through profit or loss:

Assets that do not meet the criteria for amor�sed cost or FVOCI are measured at fair value through profit or loss. A gain or loss on

a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging rela�onship is recognised in profit or loss and presented net in the profit or loss statement within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in the interest income.

Other financial assets:

Other financial assets are non-deriva�ve financial assets with fixed or determinable payments that are not quoted in an ac�ve market. They are presented as current assets, except for those maturing later than 12 months a�er the repor�ng date which are presented as non-current assets. These are ini�ally recognized at fair value and subsequently measured at amor�zed co st using the effec�ve interest method, less any impairment losses. These comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets.

Expected credit losses

The Company applies the IFRS 9 simplified approach to measuring expected credit losses ECLs for trade receivables at an amount equal to life�me ECLs. The ECLs on trade receivables are calculated based on actual credit loss experience over the preceding three on the total balance of non-credit impaired trade receivables.

The Company considers a trade receivable to be credit impaired when one or more detrimental events have occurred such as:

significant financial difficulty of the customer; or

it is becoming probable that

the customer will enter bankruptcy or other financial reorganiza�on.

Impairment losses related to trade and other receivables are not presented separately in the income statement but are reported under the heading, administra�ve expenses




ardova plc


3.2 Financial assets and financial liabili�es (cont’d) Business model:

The business model reflects how the Company manages the assets in order to generate cash flows. That

is, whether the Company’s objec�ve is solely to collect the contractual cash flows from the assets or is to collect both the contractual cash flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for trading purposes), then the financial assets are classified as part of ‘other’ business model and measured at fair value through profit or loss (‘FVTPL”). Factors considered by the Company in determining the business model for a Company of asse ts include past experience on how the cash flows for these assets were collected, how the asset’s performance is evaluated and reported to key management personnel, how risks are assessed and managed and how managers are compensated.

Solely

Payment of Principal and Interest (SPPI):

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Company assesses whether the financial instruments’ cash flows represent solel y payments of principal and interest (the ‘SPPI test’). In making this assessment, the Company considers whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only considera�on for the �me value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or vola�lity that are inconsistent with a basic lending arrangement, the related fina ncial asset is classified

and measured at FVTPL.

The Company reclassifies debt investments when and only when its business model for managing those assets changes. The reclassifica�on takes place from the start of the first repor�ng period followin g the change. Such changes are expected to be very infrequent and none occurred during the period.

Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassifica�on of fair value gains and losses to profit or loss. Dividends from such investments con�nue to be recognised in profit or loss as other income when the Company’s right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/ (losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.




ardova plc


3.2 Financial assets and financial liabili�es (cont’d) Derecogni�on A financial asset is derecognised when: The rights to receive cash flows from the asset have expired;

The Company has transferred its rights to receive cash flows from the asset or has assumed an obliga�on 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 substan�ally all the risks and rewards of the asset, or (b) the

Company has neither transferred nor retained substan�ally 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 su bstan�ally 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 con�nuing 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 obliga�ons that the Company has retained.

Con�nuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of considera�on that the Company could be required to repay.

Financial liabili�es

Ini�al recogni�on and measurement

The Company has classified all financial liabili�es within the scope of IFRS 9 under loans and borrowings and other financial liabili�es as appropriate. The Company determines the classifica�on of its financial liabili�es at ini�al recogni�on.

All financial liabili�es are recognised ini�ally at fair value and, in the case of loans and borrowings and other financial liabili�es, net of directly a�ributable transac�on costs.

Subsequent measurement

The measurement of financial liabili�es depends on their classifica�on as described below:


A�er ini�al recogni�on, interest-bearing loans and borrowings are subsequently measured at amor�sed cost using the Effec�ve Interest Rate (EIR) method. Gains and losses are recognised in the income statement when the liabili�es are derecognised as well as through the EIR amor�sa�on process.

Amor�sed cost is calculated by taking into account any discount or premium on acquisi�on and fees or costs that are an integral part of the EIR. The EIR amor�sa�on is included as finance costs in the income statement.




ardova plc


3.2 Financial assets and financial liabili�es (cont’d)

Derecogni�on

A financial liability is derecognised when the obliga�on under the liability is discharged or cancelled, or expires. When an exis�ng financial liability is replaced by another from the same lender on substan�ally different terms, or the terms of an exis�ng liability are substan�ally modified, such an exchange or modifica�on is treated as the derecogni�on of the original liability and the recogni�on of a new liability. The difference in the respec�ve carrying amounts is recognised in th e income statement.

Offse�ng of financial instruments

Financial assets and financial liabili�es are offset and the net amount is reported in the statement of financial posi�on if there is a currently enforceable legal right to offset the reco gnised amounts and there is an inten�on to se�le on a net basis, or to realise the assets and se�le the liabili�es simultaneously.

3.2.1 Trade and other receivables

Trade receivables are stated at their original invoiced value , as the interest that would be recognised from discoun�ng future cash receipts over the short credit year is not considered to be material. Trade receivables are reduced by appropriate allowances for es�mated irrecoverable amounts. Interest on overdue trade receivables is recognised as it accrues.

Trade and other receivables are recognised ini�ally at their transac�on price and subsequently measured at amor�zed cost less loss allowances.

3.2.2

Cash and cash equivalents

Cash equivalents comprise short-term, highly liquid investments that are readily conver�ble into known amounts of cash and which are subject to an insignificant risk of changes in value. An investment with a maturity of three months or less is normally classified as being short-term.

3.2.3

Non-deriva�ve financial liabili�es

Bank overdra�s that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

3.2.4


Trade payables are stated at their original invoiced value, as the interest that would be recognised from discoun�ng future cash payments over the short payment year is not considered to be material.

3.2.5


3.2.5a

Interest-bearing borrowings

Interest-bearing borrowings are stated at amor�sed cost using the effec�ve interest method. The effec�ve interest method is a method of calcula�ng the amor�sed cost of a financial liability and of alloca�ng interest expense over the relevant year. The effec�ve interest rate is the rate that exactly discounts es�mated future cash payments through the expected life of t he financial liability.




ardova plc


3.2 Financial assets and financial liabili�es (cont’d)

3.2.5b Debt instruments

Financial instruments issued by the Company are qualified as debt instruments if there is a contractual obliga�on to deliver cash or another financial asset to the holder of the instrument. The same applies if the Company is required to exchange financial assets or financial liabili�es with another en�ty under condi�ons that are poten�ally unfavourable to the Company.

Issues of bonds are recorded at their ini�al fair value which normally reflects the proceeds received, net of direct issue costs less any repayments. Subsequently these are stated at amor�sed cost, using the effec�ve interest method. Any difference between the proceeds a�er direct issue costs and the redemp�on value is recognised over the term of the borrowing in the income statement using the effec�ve interest method.

3.2.6

Compound instruments

At the issue date, the fair value of the liability component of a compound instrument is es�mated using the market interest rate for a similar non -conver�ble instrument. This amount is recorded as a liability at amor�sed cost using the effec�ve interest method un�l ex�nguished upon conversion or at the instrument’s redemp�on date.

The equity component is determined as the difference of the amount of the liability component from the fair value of the instrument. This is recognised in equity, net of income tax effects, and is not subsequently remeasured.

3.2.7

Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company's balance sheet. On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

3.3.1

Share capital

Ordinary shares are classified as equity. Incremental costs directly a�ributable to the issue of ordinary shares and share op�ons are recognised as a deduc�on from equity, net of any tax effects and costs directly a�ributable to the

issue of the instrument.

3.3.2

Dividend distribu�on

Dividend distribu�on to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the year in which the dividends are approved by the Company’s shareholders.

Dividends which remained unclaimed for a year exceeding twelve (12) years from the date of declara�on and which are no longer ac�onable by shareholders in accordance with Sec�on 385 of Companies and Allied Ma�ers Act of Nigeria, are wri�en back to retained earnings.




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3.4 Property, plant and equipment

3.4.1 Recogni�on and measurement

Items of property, plant and equipment are measured at cost less accumulated deprecia�on and accumulated impairment losses, if any.

Cost includes expenditure that is directly a�ributable to the acquisi�on of the asset. Items of property, plant and equipment under construc�on are disclosed as capital work-in-progress. The cost of construc�on

recognised

includes the cost of materials and direct labour, any other costs directly

a�ributable to bringing the assets to a working condi�on for the intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses

on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss.

3.4.2

Reclassifica�on of investment property

When the use of a property changes from owner-occupied to investment property, the property is transferred to investment proper�e s at its carrying amount.

3.4.3

Subsequent costs

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.

3.4.4

Deprecia�on

Deprecia�on is calculated over the depreciable amount, which is the cost of an asset, or other amount subs�tuted for cost, less its residual value.

Deprecia�on is recognized in profit or loss on a straight -line basis over the es�mated useful life of each part of an item of property, plant and equipment which reflects the expected pa�ern of consump�on of the future economic benefits embodied in the asset.

Leased assets are depreciated over the shorter of the lease term and their useful life unless it is reasonably certain that the Company will obtain ownership by the end of the lease term in which case the assets are depreciated over the useful life.




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3.4.4 Deprecia�on (cont’d) The es�mated useful lives for the current and compara�ve year are as follows: Land Over lease year Buildings 25 years Building improvements 5 years

Plant, equipment and tanks

5-20 years

Furniture and fi�ngs

4 years

Computer equipment

3 years

Motor vehicles

5-8years

Deprecia�on methods, useful life and residual values are reviewed at each financial year end and adjusted, if appropriate. Capital work-in-progress is not depreciated. The a�ributable cost of each asset is transferred to the relevant asset category immediately the asset is available for use a nd depreciated accordingly.

3.5 Investment property

Investment proper�es are measured at cost less accumulated deprecia�on and accumulated impairment losses, if any. Cost includes expenditure that is directly a�ributable to the acquisi�on of the property. Investment proper�es under construc�on are disclosed as capital work -in-progress. The cost of construc�on

recognised includes the cost of materials and direct labour, any other costs directly a�ributable to bringing the property to a condi�on of commercial lease to third par�es.

Land held for an undefined future use is recognised as investment property.

Property that is being constructed or developed for future use as investment property is recognised as investment property.

Deprecia�on is calculated over the depreciable amount, which is the cost of a property, or other amount subs�tuted for cost, less its residual value. Deprecia�on is recognised on a straight -

line basis over the useful life of the investment property.

The es�mated useful lives for the current and compara�ve year are as follows:

Land

Over lease year

Buildings

25 years

The criteria used by the Company to dis�nguish investment property from owner occupied property are as follows:

-

The property must not be ac�vely used for the running of the core business ac�vity of the Company that is, produc�on and marketing of petroleum products.

-

The property generates cash flows which have no direct connec�on with core business ac�vity of the Company.

-

The property is held primarily

for rental income genera�on and/or value apprecia�on.




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3.6.0 Intangible assets

3.6.1 Intangible assets acquired separately

Intangible assets acquired separately are shown at historical cost less accumulated amor�sa�on and impairment losses.

Amor�sa�on is charged to profit or loss on a straight-line basis over the es�mated useful lives of the intangible assets unless such lives are indefinite. These charges are included in other expenses in profit or loss.

Intangible assets with an indefinite useful life are tested for impairment annually. Other intangible assets are amor�sed from the date

they are available for use. The es�mated useful live for the current and compara�ve year is:

So�ware costs -

3

to 8 years

Amor�sa�on years and methods are reviewed annually and

adjusted if appropriate.

3.6.2

Intangible assets generated internally

Expenditures on research or on the research phase of an internal project are recognised as an expense when incurred. The intangible assets arising from the development phase of an internal project are recognised if, and only if, the following condi�ons apply:

-

it is technically feasible to complete the asset for use by the Company;

-

the Company has the inten�on of comple�ng the asset

for either use or resale;

-

the Company has the ability to either use or sell the asset;

-

it is possible to es�mate how the asset will generate income;

-

the Company has adequate financial, technical and other resources to develop and use the asset; and

-

the expenditure incurred to develop the asset is measurable.

If no intangible asset can be recognised based on the above, then development costs are recognised in profit and loss in the year in

which they are incurred.

3.6.3

Intangible assets recognised in a business combina�on

Intangible assets acquired in a business combina�on and recognised separately from goodwill are ini�ally recognised at their fair value at the acquisi�on date.

3.6.4

Subsequent expenditure

Subsequent expenditure on so�ware assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.




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3.6.5 Amor�sa�on

Amor�sa�on is calculated over the cost of the asset, or other amount subs�tuted for cost, less its residual value.

Amor�sa�on is recognised in profit or loss on a straight - line basis over the es�mated useful lives of intangible assets from the date

that they are available for use, since this must closely reflect the

expected pa�ern of consump�on of the future economic benefits embodied in the asset. The es�mated useful life for the current

and compara�ve year is:

Computer so�ware:

3 to 8 years

Amor�sa�on methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

3.7

Leases

Policy applicable from 1 January 2019

At incep�on of a contract, the Company assesses whether a contract is, or contains, a lease. A contract

is, or contains, a lease if the contract conveys the right to control the use of an iden�fied asset for a period

in exchange for considera�on. To assess whether a contract c onveys the right to control the use of an iden�fied asset, the Company assesses whether:

�

the contract involves the use of an iden�fied asset –

this may be specified explicitly or implicitly, and should be physically dis�nct or represent substan�ally all of the capacity of a physically dis�nct asset. If the supplier has a substan�ve subs�tu�on right, then the asset is not iden�fied;

�

the Company has the right to obtain substan�ally all of the economic benefits from use of the asset throughout the period of use; and

�

the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

�

the Company has the right to operate the asset; or

�

the Company designed the asset in a way that predetermines how and for what purpose it will be used.

This policy is applied to contracts entered into, or changed, on or a�er 1 January 2019.

At incep�on or on reassessment of a contract that contains a lease component, the Company allocates the considera�on in the contract to each lease component on the basis of their rela�ve stand -alone prices. However, for the leases of retail sta�on (property) in which it is a lessee, the Company has elected not to separate non-lease

components and account for the lease and non-lease components as a single lease component.




ardova plc


3.7 Leases

(cont’d)

Policy applicable before 1 January 2019

For contracts entered into before 1 January 2019, the Company determined whether the arrangement was or contained a lease based on the assessment of whether:

� fulfilment of the arrangement was dependent on the use of a specific asset or assets; and � the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use

the asset if one of the following was met:

� the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output;

� the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or

� facts and circumstances indicated that it was rem ote that other par�es would take more than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.

As a lessee

The Company recognises a

right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is ini�ally measured at cost, which comprises the ini�al amount of the lease liability adjusted for any lease payments made at or before the commencement dat e, plus any ini�al direct costs incurred and an es�mate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incen�ves received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The es�mated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addi�on, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is ini�ally measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;

variable lease payments that depend on an index or a rate, ini�ally measured using the index or rate as at the commencement date;

amounts expected to be payable under a residual value guarantee; and

the exercise price under a purchase op�on that the Company is reasonably certain to exerc ise, lease payments in an op�onal renewal period if the Company is reasonably certain to exercise an extension op�on, and penal�es for early termina�on of a lease unless the Company is reasonably certain not to terminate early.




ardova plc


3.7 Leases (cont’d) As a lessee (cont’d)

The lease liability is measured at amor�sed cost using the effec�ve interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s es�mate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termina�on op�on.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-use assets and lease liabili�es for short-term leases of property that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight -line basis over the lease term.

Under IAS 17

In the compara�ve period, as a lessee the Company classified leases that transfe r substan�ally all of the risks and rewards of ownership as finance leases. When this was the case, the leased assets were measured ini�ally at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments were the payments over the lease term that the lessee was required to make, excluding any con�ngent rent.

Subsequently, the assets were accounted for in accordance with the accoun�ng policy applicable to that asset.

Assets held under other leases were classified as prepayment and were not recognised in the Company’s statement

of financial posi�on. Payments made under opera�ng leases were recognised in profit or loss on a straight-line basis over the term of the lease. Lease incen�ves received were recognised as an integral part of the total lease expense, over the term of the lease.




ardova plc


3.7 Leases (cont’d) As a lessor

When the Company acts as a lessor, it determines at lease incep�on whether each lease is a finance lease or an opera�ng lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers substan�ally all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an opera�ng lease. As part of this assessment, the Company considers certain indicators such as whether the lease

is for the major part of the economic

life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classifica�on of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short -term lease to which the Company applies the exemp�on described above, then it classifies the sub-lease as an opera�ng lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS 15 to allocate the considera�on in the contract.

The Company recognises lease payments received under opera�ng leases as income on a str aight-

line basis over the lease term as part of ‘other income’.

The accoun�ng policies applicable to the Company as a lessor in the compara�ve period were not different from IFRS 16. However, when the Company was an intermediate lessor the sub -leases were classified with reference

to the underlying asset.

3.8

Borrowing costs

Borrowing costs that are directly a�ributable to the acquisi�on, construc�on or produc�on of a qualifying asset are capitalised as part of the cost of that

asset. Other borrowing costs are expensed in the year in which they are incurred.




ardova plc


3.9 Taxa�on

Income tax for the year is based on the taxable income for the year. Taxable income differs from

profit as reported in the statement of comprehensive income for the year as there are some items which may never be taxable or deduc�ble for tax and other items which may be deduc�ble o r taxable in other years.

The Company offsets the tax assets arising from withholding tax credits and current tax liabili�es if, and only if, the en�ty has a legally enforceable right to set -off the recognised amounts, and it intends to either se�le on a net basis, or to realise the asset and se�le the liability simultaneously. The tax asset is reviewed at each repor�ng date and wri�en down to the extent that it is no longer probable that future economic benefit would not be realised.

Deferred tax is the future tax consequences of temporary difference s between the carrying amounts and tax bases of assets and liabili�es shown on the statement of financial posi�on. Deferred tax assets and liabili�es are not recognised if they arise in the following situa�ons: the ini�al recogni�on of goodwill; or the ini�al recogni�on of assets and liabili�es that affect neither accoun�ng nor taxable profit. The amount of deferred tax provided is based on the expected manner of recovery or se�lement of the carrying amount of assets and liabili�es, using tax rates enacted or substan�ally enacted at the statement of financial posi�on date.

The Company does not recognise deferred tax liabili�es, or deferred tax assets, on temporary differences associated with investments in subsidiaries, joint v entures and associates where the parent Company is able to control the �ming of the reversal of the temporary differences and it is not considered probable that the temporary differences will reverse in the foreseeable future. It is the Company's policy to reinvest undistributed profits arising in Company companies.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be u�lised.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deduc�ble 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 the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of exis�ng temporary differences, are

considered, based on the business plans approved by the board for the Company.

Deferred tax assets are reviewed at each repor�ng date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such re duc�ons are reversed when the probability of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each repor�ng date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substan�vely enacted at the repor�ng date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the repor�ng date, to recover or se�le the carrying amount of it s assets and liabili�es.

Deferred tax assets and liabili�es are offset only if certain criteria are met.




ardova plc


3.10 Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of deregulated inventories -

AGO, ATK, LPFO is based on the weighted average cost principle, and includes expenditure

incurred in acquiring the inventories, produc�on or conversion costs and other costs incurred in bringing them to their exis�ng loca�on and condi�on. The cost of regulated inventories -

PMS and DPK is also

based on the weighted average cost principle. In the case of manufactured inventories and work in progress, cost includes an appropriate share of produc�on overheads based on n ormal opera�ng capacity.

Packaging Materials, Solar inverters, Lubricants, and Greases are valued based on Weighted Average Cost. Inventories -in-transit are valued based on purchase cost incurred to date.

Perpetual inventory system where cost of sales and ending inventory is updated con�nuously is in use.

Net realisable value is the es�mated selling price in the ordinary course of business, less the es�mated costs of comple�on and selling expenses.

The produc�on costs comprise direct materials, direct labour and an appropriate propor�on of manufacturing fixed and variable overheads.

Allowance is made for obsolete, slow moving or defec�ve items where appropriate.

Spare parts and consumables

Spare parts, which are expected to be fully u�lized in produc�on within the next opera�ng cycle and other consumables,

are valued at weighted average cost.

3.11 Impairment

3.11.1

Impairment of financial assets

The Company recognises an allowance for Expected Credit Losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approxima�on of

the original effec�ve interest rate. The expected cash flows will

include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

ECLs are recognised in two stages. For credit expos ures for which there has not been a significant increase in credit risk since ini�al recogni�on, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since ini�al recogni�on, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespec�ve of the �ming of the default (a life�me ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calcula�ng ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on life�me ECLs at each repor�ng date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.




ardova plc


3.11

Impairment

3.11.1

Impairment of financial assets

(cont’d)

The Company considers a financial asset in default when contractual payments are 60 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external informa�on indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is wri�en off when there is no reasonable expecta�on of recovering th e contractual cash flows.

3.11.2 Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each repor�ng date to determine whether there is any indica�on of impairment. If any such indica�on exists, then the asset’s recoverable amount is es�mated. For intangible assets that have indefinite useful lives or that are not yet available for use, the r ecoverable amount is es�mated each year at the same �me.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the es�mated future cash flows are discounted t o their present value using a pre-tax discount rate that reflects current market assessments of the �me value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior years are assessed at each repor�ng date for any indica�ons that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the es�mates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of deprecia�on or amor�za�on, if no impairment loss had been recognised.

3.12

Employee benefits

The Company operates both defined contribu�on plans and defined benefit plans.

3.12.1

Defined benefit plan

A defined benefit plan is a post-employment benefit plan other than a defined contribu�on plan. The Company’s net obliga�on in respect of defined benefit post-re�rement plans is calculated separately for each plan by es�ma�ng the amount of future benefit that employees have earned in return for their service in the current and prior years; that benefit is discounted to determine its present value and any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the repor�ng date on government bonds that have maturity dates approxima�ng the terms of the Company’s obliga�ons and that are denominated in the same currency in which the benefits are expected to be paid.




ardova plc


3.12.1 Defined benefit plan (cont’d)

A qualified actuary using the projected unit credit method performs the calcula�on annually . When the calcula�on results in a benefit to the Company, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reduc�ons in future contribu�ons to the plan. In o rder to calculate the present value of economic benefits, considera�on is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realisable during the life of the plan, or on se�lement of the plan liabili�es.

When the benefits of a plan are improved, the por�on of the increased benefit related to past service by employees is recognised in profit or loss on a straight-line basis over the average year un�l the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

3.12.2

Defined contribu�on plan

A defined contribu�on plan is a post-employment benefit plan under which an en�ty pays fixed

contribu�ons into a separate en�ty and will have no legal or construc�ve obliga�on to pay further amounts. Obliga�ons for contribu�ons to defined contribu�on pension plans are recognised as an employee benefit expense in profit

or loss in the year during which services are rendered by employees.

In rela�on to the defined contribu�on plan, the Company has in place

the Pension fund scheme.

3.12.3

Pension fund scheme

In accordance with the revised provisions of the Pension Reform Act, 2014, the Company has ins�tuted a Contributory Pension Scheme for its employees, where both the employees and the Company contribute 8% and 10% respec�vely of the employee's emoluments (basic salary, housing and transport allowances).

The Company’s contribu�on under the scheme is charged to the profit and loss account while employee contribu�ons are funded through payroll deduc�ons.

3.12.4

Terminal benefit

Termina�on benefits are recognised as an expense when the Company is commi�ed demonstrably, without realis�c possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal re�rement date, or to provide termina�on benefits as a result of an offer made to encourage voluntary redundancy. Termina�on benefits for voluntary redundancies are recognised as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be es�mated reliably. I f benefits are payable more than 12 months a�er the repor�ng year, then they are discounte d to their present value.

3.12.5

Short term benefits -

Profit-sharing

and bonus plans

This recognises a liability and an expense for bonuses and profit sharing, based on a formula that takes into considera�on the profit a�ributable to Ardova's shareholders a�er certain adjustments. It

recognises a provision where contractually obliged or where there is a past prac�ce that has created a construc�ve obliga�on.




ardova plc


3.13

Provision,

con�ngencies and decommissioning costs

3.13.1

Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or construc�ve obliga�on that can be es�mated reliably, and it is probable that an ou�low of economic benefits will be required to se�le the obliga�on.

Provisions for environmental restora�on, restructuring costs and legal claims are recognised when: the Company has a present legal or construc�ve obliga�on as a result of past events; it is probable that an ou�l ow of resources will be required to se�le the obliga�on; and the amount has been reliably es�mated. Restructuring provisions comprise lease termina�on penal�es and employee termina�on payments. Provisions are not recognised for future opera�ng losses.

Where there are a number of similar obliga�ons, the likelihood that an ou�low will be required in se�lement is determined by considering the class of obliga�ons as a whole. A provision is recognised even if the likelihood of an ou�low with respect to any one item included in the same class of obliga�ons may be small.

Provisions are measured at the present value of the expenditures expected to be required to se�le the obliga�on using a pre-tax rate that reflects current market assessments of the �me value of money and the risks specific to the obliga�on. The increase in the provision due to passage of �me is recognised as interest expense.

3.13.2

Con�ngent liabili�es

Con�ngent liabili�es are possible obliga�ons whose existence will only be confirmed by future events not wholly within the control of the Company. Con�ngent liabili�es are not recognised in the financial statements but are disclosed. However if the possibility of an ou�low of economic resources is considered remote, such con�ngent

liabili�es are recognised in the financial statements.

3.13.3

Con�ngent assets

Con�ngent assets are possible assets that arise from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the en�ty. Con�ngent

assets are only disclosed when an inflow of economic benefit is probable. Asset is recognised when the realisa�on of income is virtually certain, in which case the related asset is no more con�ngent.

3.13.5

Decommissioning costs

Liabili�es for decommissioning costs are recognised when the Company has an obliga�on to dismantle and remove a facility or an item

of property, plant or equipment and to restore the site on which it is located, and when a reliable es�mate of the liability can be made. Where an obliga�on exists for a new facility such as a retail outlet, this will be on construc�on. An obliga�on f or decommissioning may also crystalize during the year of opera�on of a facility through a change in legisla�on or through a decision to terminate opera�ons. The amount recognised is the present value of the es�mated future expenditure determined in accordance with local condi�ons and requirements. A corresponding item of property, plant and equipment of an amount equivalent to the provision is also recognised. This is subsequently depreciated as part of the asset.




ardova plc


3.14

Models used for impairment test, valua�ons, actuarial results

The new impairment requirements in IFRS 9 are based on an expected credit loss model and replaces the IAS 39 incurred loss model. The expected credit loss model applies to debt instruments (such as bank deposits, loans, debt securi�es and trade receivables) recorded at amor�sed cost or at fair value through other comprehensive income, plus lease receivables, contract assets and loan commitments and financial guarantee contracts that are not measured at fair value through profit or loss. The

guiding principle of the expected credit loss model is to reflect the general pa�ern of deteriora�on or improvement in the credit quality of financial instruments.

In line with the requirements of IFRS 9, the Company recognize losses on all receivables including receivables

that are not past due. I.e.

it is no longer necessary for a credit event to have occurred before credit losses are recognized. The Company calculates expected credit losses on trade receivables using a provision matrix based on historical, current and forecasted credit condi�ons. All receivables are computed based on different customer a�ributes and different historical loss pa�erns.

The Company's trade receivables by their nature do not include a significant financing component, they are

measured at transac�on price and do not have a contractual interest rate. Thus the Effec�ve Interest Rate (EIR) would be zero (0). As a result of this, the discoun�ng of cash shor�alls when measuring our ECL would not be required. The following approach is adopted by the Company in determining the expected credit loss on all receivables. In line with the requirements of IFRS

9, all receivables have an ECL provision, including

receivables that are not past due.

Default based on our internal ra�ng system is considered a�er 60days. All receivables are categorized based on the ageing of the receivables, associated risk ra�ng and the impairment allowance rela�ve to the risk class as analysed

below. All receivables with credit balances have no associated risk. Also, receivables that are not

past due have a risk ra�ng of 1. In determining historical default rate, we considered internal ra�ng over a prior period of three years for the trade receivables and compared with the ra�ng as at repor�ng date. This was used to determine if there had been a significant increase in credit risk (SICR).

"The Company considers forward-looking informa�on using reasonable and supportable forecasts of future economic condi�ons that is available without undue cost or effort. We considered infla�on rate and GDP growth rate as the macro-economic factors that influence the default rate. The historical default rate is adjusted with the forecasts of future economic condi�on to arrive at a credit loss rate.

The expected credit loss is calculated by applying the credit loss rate to the receivables balance at the repor�ng period. Es�mates for our ECL computa�on reflect cashflows expected from collaterals ( i.e.

transporters freight costs) and other credit enhancements that are part of the credit terms. These collaterals are recognized alongside the receivables being tested for impairment."

Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each repor�ng date to determine whether there is any indica�on of impairment. If any such

indica�on exists, then the asset’s recoverable amount is es�mated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is es�mated each financial year at the same �me.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the es�mated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the �me value of money and the risks specific to the asset.




ardova plc


3.15

Revenue from contract with customers

Revenue from sale of petroleum products, Avia�on Turbine Kerosene, lubricants and greases, and solar panel

Revenue arises mainly from the sale of petroleum products (white products), Avia�on Turbine Kerosene

(ATK), lubricants and greases, and solar panel.

To determine whether to recognise revenue, the Company follows a 5-step process:

1.

Iden�fying the contract with a customer 2.

Iden�fying the performance obliga�ons

3.

Determining the transac�on price 4.

Alloca�ng the transac�on price to the

performance obliga�ons

5.

Recognising revenue when/as performance obliga�on(s) are sa�sfied.

The transac�on price for a contract excludes any amounts collected on behalf of third par�es. Customers obtain control of products when the products are delivered to and have been accepted and revenue is recognised at that point in �me. Invoices are usually payable within 30days.

3.15.1

Rental income

Rental income from investment property is recognised as revenue on a straight -line basis over the term of the lease. Lease incen�ves granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from other property is recognised as other income.

3.15.2 Throughput income

Throughput income represents fees earned from the use of the Company's storage facili�es by third par�es on one hand and the Nigerian Na�onal Petroleum Corpora�on product discharge into these storage facili�es. These are recognised as other income.

3.16 Finance, dividend income and finance cost.

3.16.1 Finance and dividend income

Finance income comprises interest income on funds invested, credit bank balances, reimbursement of any foreign loss and /or interest from Petroleum Product Pricing Regulatory Agency (PPPRA). Interest income is recognised using the effec�ve interest method. When a loan and receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the es�mated future cashflow discounted at the original effec�ve interest rate of the instrument, and con�nues unwinding the discount as interest income. Interest income on impaired loan and receivables recognised using the original effec�ve interest rate. Dividend income is recognised in pr ofit or loss on the date that the Company's right to receive payment is established.

3.16.2

Finance cost

Finance costs comprises interest expense on borrowings.

Borrowing costs that are not directly a�ributable to the acquisi�on, construc�on or produc�on of a qualifying asset are recognised in profit or loss using the effec�ve interest method.




ardova plc


3.17 Earnings per share The Company presents basic/diluted earnings per share data for its ordinary shares.

Basic earnings per share is calculated by dividing the profit or loss a�ributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held.

Diluted earnings per share adjusts the figures used in the determina�on of Basic earnings per share to take into account the weighted average number of addi�onal shares that would have been outstanding assuming the conversion of all dilu�ve poten�al ordinary shares.

3.18

Segment repor�ng

An opera�ng segment is a component of the Company that engages in business ac�vi�es from which it may earn revenues and incur expenses. Segment results that are report ed to the Company's CEO (the chief opera�ng decision maker) include items directly a�ributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of head office expenses, and tax assets and liabili�es.

3.19

Petroleum subsidies

Petroleum Products Pricing Regulatory Agency (PPPRA) subsidises the cost of importa�on of certain refined petroleum products whose prices are regulated in the Nigerian market. The subsidies

are recognised when there is reasonable assurance that they will be recovered and the Company has complied with the condi�ons a�ached to receiving the subsidy. The subsidies are recognised as a reduc�on to the landing cost of the subsidised petroleum product.

3.20


The fair value of trade and other receivables is es�mated as the present value of the future cash flows, and discounted at market rates of interest at the repor�ng date. For trade and other receivab les with a remaining life of less than one year, the no�onal amount is deemed t o reflect the fair value.

Fair value which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,

discounted at market rates of interest at the repor�ng date. For trade and other creditors with a remaining life of less than one year, the no�onal amount is deemed to reflect the fair value.

3.21

Effec�ve interest method

The effec�ve interest method is a method of calcula�ng the amor�sed cost of a financial instrument and of alloca�ng interest income or expense over the relevant year. The effec�ve interest rate is the rate that exactly discounts es�mated future cash rece ipts or payments (including all fees on points paid or received that form an integral part of the effec�ve interest rate, transac�on costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a sho rter year. Income and expense is recognised on an effec�ve interest basis for debt instruments other than those financial instruments “at fair value through profit or loss”.




ardova plc


3.22 Offse�ng financial assets and liabili�es

Financial assets and liabili�es are offset and the net amount presented in the statement of financial posi�on when, and only when, the Company has a legal right to offset the amounts and intends either to se�le on a net basis or to realise the asset and se�le the liability simultaneously.

3.23 Repurchase and reissue of share capital (Treasury shares)

When share capital recognised as equity is repurchased, the amount of the considera�on paid,

which includes directly a�ributable costs, net of any tax effects, is recognised as deduc�on from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own shares. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resul�ng surplus or deficit on the transac�on is presented in share premium.

3.24 Statement of cash flows

The statement of cash flows is prepared using the indirect method. Changes in items in the statement of financial posi�on that have not resulted in cash flows have been eliminated for the purpose of preparing the statement. Dividends paid to ordinary shareholders are included in financing ac�vi�es. Finance cost is also included in financing ac�vi�es while finance income received is included in inves�ng ac�vi�es.

3.25

Related par�es

Related par�es include the holding Company and other Company en��es. Directors, their close fa mily members and any employee who is able to exert a significant influence on the opera�ng policies of the Company, are also considered to be related par�es. Key management personnel are also regarded as related par�es. Key management personnel are those persons having authority and responsibility for planning, direc�ng and controlling the ac�vi�es of the en�ty, directly or indirectly, including any director (whether execu�ve or otherwise) of that en�ty.

3.26

Customers security deposits

Customers’ security deposits relate to the amounts that dealers have paid to the Company

at the onset of their agreements. These deposits are short term in nature and are repayable to the dealers at the end of the agreements or upon termina�on subject to the clauses within the agreement.

3.27

Event occurring a�er the balance sheet date

The value of asset and liabili�es at the balance sheet date are adjusted if there is evidence that subsequent adjus�ng event warrant a modifica�on of these values. These adjustment are made up to the date of approval of the financial statements by the Board of Directors.

Other non-adjus�ng event are disclosed in the notes.




ardova plc


4.0

Cri�cal accoun�ng judgement and key sources of es�ma�ng uncertainty

In the applica�on of the Company's accoun�ng policies, which are described in Note 3, The Directors

are required to make judgements, es�mates and assump�ons about the carrying amounts of assets and liabili�es that are not readily apparent from other sources. The es�mates and associated assump�ons are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these es�mates. The es�mated underlying assump�ons are reviewed on an ongoing basis. Revisions to accoun�ng es�mates are revised and the revision affects only that year or in the year of the revision and the future years if the revision affects both cur rent and future years.

4.1 Cri�cal judgement in applying accoun�ng policies

The following are the cri�cal judgements, apart from those involving es�ma�on (which are dealt with separately below) that the Directors have made in the process of appl ying the Company's accoun�ng policies and that have a significant effect on the amounts recognised in the financial statements.

4.1.1 In making its judgement, management considered the detailed criteria for the recogni�on of revenue

set out in IFRS 15 and, in par�cular, whether the en�ty had transferred control of the goods to the customer. Following the detailed quan�fica�on of the en�ty’s liability in respect of rec�fica�on work, and the agreed limita�on on the customer’s ability to require further work or to require replacement of the goods, the directors are sa�sfied that the significant risks and rewards have been transferred and that recogni�on of the revenue in the current year is appropriate, in conjunc�on with recogni�on of an appropriate provision for the rec�fica�on costs .

4.2 Key sources of es�ma�ng uncertainty

The key assump�ons concerning the future and other key sources of es�ma�ng uncertainty at the repor�ng date that have a significant risk of causing

a material adjustment to the carrying amounts of

assets and liabili�es within the next financial year are discussed below:

4.2.1

Recoverability of assets carrying amount

The Company

assesses its property plant and equipment for possible impairment if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least at every repor�ng date. Such indicators include changes

in the, Company’s business plans, changes in commodity prices, evidence of physical damage and, for oil and gas proper�es, significant downward revisions of es�mated recoverable volumes or increases in es�mated fu ture development expenditure.

The assessment for impairment entails comparing the carrying value of the cash-genera�ng unit with its recoverable amount, that is, value in use. Value in use is usually determined on the basis of discounted es�mated future net cash flows. Determina�on as to whether and how much an asset is impaired involves management es�mates on highly uncertain ma�ers such as future commodity prices, the impaired involves management es�mates on highly uncertain ma�ers such as future commodity prices, the effects of infla�on on opera�ng expenses, discount rates, produc�on profiles and the outlook for regional market supply-and-demand condi�ons for crude oil, natural gas and refined products.

The Company

makes es�mates and assump�ons concerning the future. The resul�ng accoun�ng es�mates will, by defini�on, seldom equal the related actual results. Such es�mates and assump�ons are con�nually evaluated and are based on historical experience and other factors, including expecta�ons of future events that are believed to be reasonable under the circumstances.




ardova plc


Use of es�mates and judgements

(cont’d)

4.2.2

Con�ngencies

By their nature, con�ngencies will only be resolved when one or more uncertain future e vents occur or fail to occur. The assessment of the existence, and poten�al quantum, of con�ngencies inherently involves the exercise of significant judgement and the use of es�mates regarding the outcome of future events.

4.2.3

Es�mated useful lives and residual values of intangible assets and property, plant and equipment

The Company’s management determines the es�mated useful lives and related deprecia�on charge for

its items of property, plant and equipment on an annual basis. The Company has carried out a review of the residual values and useful lives of property, plant and equipment as at 30 June 2019 and that has not highlighted any requirement for an adjustment to the residual lives and remaining useful lives of the assets for the current or future periods.

4.2.4

Recoverability of financial assets

The Company

reviews all financial assets at least annually and when there is any indica�on that the asset might be impaired. Loss allowance for trade receivables is measured at an amount equal to twelve months ECL. The expected credit losses on trade receivables are es�mated using a provision matrix by reference to past default experience of the debtor and analysis of the debtor’s current financial posi�on, adjusted for factors that are specific to the debtors, general economic condi�ons of the industry in which the debtors operate and an assessment of both the current as well as the forecast direc�on of condi�ons at the repor�ng date. The Company

has recognised a loss allowance of 100% against all receivables over

365 days past due, because historical experience has indicated that these receivables are generally not recoverable. There has been no change in the es�ma�on techniques or significant assump�ons m ade during the current repor�ng year. The Company writes off a trade receivable when there is informa�on indica�ng that the debtor is in severe financial difficulty and there is no realis�c prospect of recovery, e.g. when the debtor has been placed under liquida�on or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, except where there is adequate security. None of the trade receivables that have been wri�en off are subject to enforcement ac�vi�es. T rade receivables are considered to be past due when they exceed the credit period granted.

4.2.5 Fair value hierarchy

Where the fair value of financial assets and financial liabili�es recorded in the statement of financial posi�on cannot be derived from ac�ve markets, their fair value is determined using valua�on techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgme nt is required in establishing fair values. The judgments include considera�ons of inputs such as liquidity risk, credit risk and vola�lity. Changes in assump�ons about these factors could affect the reported fair value of financial instruments

4.2.6

Provisions for employee benefits

The actuarial techniques used to assess the value of the defined benefit plans involve financial assump�ons (discount rate, rate of return on assets, medical costs trend rate) and demographic assump�ons (salary

increase rate, employee turnover rate, etc.). The Company uses the assistance of an

external independent actuary in the assessment of these assump�ons. For more details refer to Note 24.




ardova plc


5. Determina�on of fair values

A number of Company's accoun�ng policies and disclosures require the determina�on of fair value, both for financial and non-financial

assets and liabili�es. Fair value is the price that would be received to sell

an asset or paid to transfer a liability in an orderly transac�on between market par�cipants at the measurement date, regardless of whether that price is directly observable or es�mated using another valua�on technique. In es�ma�ng the fair value of an asset or a li ability, the Company takes into account the characteris�cs of the asset or liability that market par�cipants would take into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in this and separate financial statements is determined for measurement and / or disclosures purposes based on the following methods.

When applicable, further informa�on about the assump�ons made in determining fair values is disclosed in the notes specific to that asset or liability.

6. Financial risk management

Overview

Our risk management objec�ve is to ensure sustainable business growth with stability by promo�ng a pro-ac�ve approach in iden�fying, evalua�ng, mi�ga�ng and repor�ng risks associated with the business. In order to achieve these objec�ve, we have established a structured and disciplined approach to Risk Management, including the development of the Risk Matrix, in order to guide decisions of the Company on risk related issues. The Company has a risk management system embedded in our day to day business ac�vi�es which guides our business opera�ons and is being followed in a consistent and systema�c manner to increase value to our shareholders. Our Enterprise Risk Management framework focuses on enterprise wide risk of the Company with the objec�ve to protect and enhance each en�ty’s value and by extension the Company’s value.

Risk Management framework

The Board of Directors sets our overall risk appe�te, approve the risk management strategy and is ul�mately responsible for the effec�veness of the risk management process and system of internal control within the Company.

Specific objec�ves of the Company’s Risk Management framework are:

-

To ensure that all the current and future material risk exposures of the Company are iden�fied, assessed, quan�fied, appropriately mi�gated and managed.

-

To establish a framework for the Company's risk management process and to ensure Company-wide implementa�on.

-

To ensure systema�c and uniform assessment of risks related wit h the Company’s opera�ons.

-

To reduce opera�onal surprises and losses.

-

To enable compliance with appropriate regula�ons, wherever applicable, through the adop�on of best prac�ces.

-

To assure business growth with financial stability.

The Board oversees risk management through the following Commi�ees:




ardova plc


6. Financial risk management (cont’d) Board Risk Management Commi�ee

The Board Risk Management Commi�ee is responsible for developing and monitoring the Company’s risk management policies which are established to iden�fy and analyse the risks faced by the Company, to set appropriate risk limit and controls, monitor risks and adherence to risk limits. The Commi�ee ensures that risk management policies are integrated into the Company’s culture. The Commi�ee also reviews quarterly risk management reports and direct appropriate ac�ons to be taken by senior management. The commi�ee reports quarterly to the Board of Directors on its various act ivi�es.

Statutory Audit Commi�ee

The Audit Commi�ee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in rela�on to the risks faced by the Company.

Corporate Governance and Remunera�on Commi�ee

The Corporate Governance and Remunera�on Commi�ee assists the Board in fulfilling its responsibili�es in rela�on to Corporate Governance & remunera�on ma�ers. It ensures the Company meets all legal and regulatory requirements for business opera�ons, thus protec�ng the Company from incurring opera�onal and reputa�onal liabili�es that can affect the achievement of our goals and objec�ves.

Risk Management Commi�ee

The Risk Management Commi�ee is a Management Commi�ee of the Company which evaluates the risks inherent within the business and ensures that they are captured appropriately within the business risk profile. The commi�ee monitors residual risk exposures and provides assurance as to adequacy

of controls implemented to manage risks to the agreed level of appe�te. The commi�ee meets monthly, however risk reports are provided quarterly to the Board Risk Commi�ee. Principal risk events are however escalated immediately.

Credit Risk Management Commi�ee

The Credit Risk Management Commi�ee is a Sub-Commi�ee of the Risk Management Commi�ee that assesses the credit risk of the Company. The Commi�ee reviews and approves credit request in line with the Company’s credit policy.

The commi�ee also meets at least monthly to review payment performance of credit customers, the adequacy of Bank Guarantees, credit limits of customers and also take appropriate ac�ons to ensure zero tolerance for bad debts.




ardova plc


6. Financial risk management (cont’d)

Risk Management Structure & Governance

Risk Management Governance Structure

External Audit

Internal Audit

Third line of Defence

Risk Management Committee CEO

First line of Defence

1st Line: Primary Risk

Responsibility

* Operational management manages

the Company’s risks by implementing and maintaining effective

internal control

procedures on a day-to-day basis.

2nd Line: Challenge and Risk

Control.

* The Risk Management department collaborates with operational

management to develop and monitor processes and controls to mitigate identified risks.

* They facilitate risk assessment sessions, develop risk management

programs and alert management to emerging issues and changing risk

scenarios.

3rd Line: Assurance

* Independent

assurance of the

effectiveness of the risk management process

and methodology

Credit Risk Management Committee

Risk Management Department Internal Audit

Second line of Defence

Board/Board Risk Management Committee

Management Team

Functional/Departmental Risk Champions

First line of Defence

FO Plc Management Committees including –Risk Management & Credit Management




ardova plc


6. Financial risk management (cont’d) Risk Profile

In the course of our daily opera�ons, we are exposed to various risks. The Company has a risk management func�on that manages these risks with various repor�ng done as required. We have categorised the risks into the following:

Opera�onal Risk

HSE Risk

Financial Risk

Credit risk

Liquidity risk

Market risk

Capital risk management

Reputa�onal Risk

Strategic Risk

Opera�onal Risk

Opera�onal risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes and controls, personnel, technology and infrastructure, and from external factors other than credit, market and liquidi ty risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Opera�onal risks arise from all of the Company’s opera�ons.

The Company’s objec�ve is to manage opera�onal risk

to

be within its risk appe�te thus ensuring that the overall control processes and procedures do not restrict ini�a�ve and crea�vity. The primary responsibility for the development and implementa�on of controls to address opera�onal risk is assigned

to senior management within each business unit. This responsibility is supported by the development of overall Company standards for the management of opera�onal risk in the following areas:

-

Requirements for appropriate segrega�on of du�es, including the independent authoriza�on of transac�ons/processes.

-

Requirements for the reconcilia�on and monitoring of transac�ons.

-

Compliance with regulatory and other legal requirements.

-

Documenta�on of controls and procedures.

-

Requirements for the yearly assessment of opera�onal risks faced, and the adequacy of controls and procedures to address the risks iden�fied.

-

Requirements for the repor�ng of opera�onal losses a nd proposed remedial ac�on.

-

Development of con�ngency

plans.

-

Training and professional development.

-

Ethical and business standards.

-

Risk mi�ga�on approach such as adequate insurance cover on the assets of the Company.




ardova plc


6. Financial risk management (cont’d) Opera�onal Risk (cont’d)

The Opera�onal risk of the Company is iden�fied and monitored through risk management review of opera�onal processes and procedures across departments with the use of Risk Management tool k it such as Risk registers, Control Self-

Assessments, Top 20 Risk of the business and Key Risk Indicators

Review.

Compliance with the Company's opera�ng standards is also supported by a programme of yearly reviews undertaken by Business Assurance & Compliance (BAC). The results of BAC's reviews are discussed with the management of the business unit while the summaries are submi�ed to the Audit Commi�ee and Execu�ve Management of the Company.

HSE Risk

The Company is commi�ed to managing a Health, Safety & Environmental system that promotes a safe working environment for all employees, contractors, customers and visitors to our sites. At the Company, Health and Safety has equal importance with all other business ac�vi�es.

It is the policy of the Company to carry out its ac�vi�es in a manner that guarantees health and safety of its workers and other stakeholders, the protec�on of the Company’s facili�es and the environment and compliance with all regulatory and industry requirements. We consider health, safety and environmental issues as important as our core businesses and assume the responsibility of providing healthy, safe and secure work environment for our workers as required by law.

Our objec�ve is to minimize the number of cases of occupa�onal accidents, illnesses, damage to property and environmental degrada�on. 45 incidents were reported by various staff from different departments at different loca�ons 2019 while 49 incide nts were reported in 2018

Financial Risk

The Company’s overall risk management focuses on the unpredictability of financial markets and the adverse effect on the Company’s financial and opera�onal performance. The Company has a risk management func�on that manages the financial risks rela�ng to the Company’s opera�ons under the policies approved by the Board of Directors.

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

Credit Risk

Liquidity Risk

Market Risk

Foreign Exchange Risk

Currency Risk

Interest Rate Risk

Other Market Risk




ardova plc


6. Financial risk management (cont’d) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obliga�ons resul�ng in financial loss to the Company. The Company has a policy of only dealing with creditworthy customers as a means of mi�ga�ng the risk of financial loss from defaults. We also secure our credits with Bank Guarantees from Company selected Banks.

The Company uses other publicly available financial informa�on and its own trading records to evaluate its major customers using the Credit Applica�on. All credits are administered in line with the company’s Credit policy.

Warning signs for default are promptly iden�fied based on our Credit Management & Repor�ng tools. Mi�ga�ng ac�ons such as reduced credit term, aggressive cash collec�on and downw ard review of credit limits are highlighted and implemented for high-risk customers based on approval by Execu�ve Management and Management Credit Commi�ee.


The Company has established a credit policy under which each new customer is analysed individually for creditworthiness. Credit limit is established for each customer, which represents the maximum exposure to the customer. These limits are reviewed annually by management credit commi�ee based on customer’s performance and credit worthiness. Customers that fail to meet the Company’s credit criteria may transact with the Company on a cash-and-carry basis or provide a Bank Guarantee.

Our exposure to credit risk for trade and other receivables and related i mpairment losses at the repor�ng date is as disclosed in note 19.

Allowance for impairment losses

The Company establishes an allowance for impairment that represents its es�mate of expected credit losses in respect of trade and other receivables. Please refer to Note 27

for the ageing of trade and other receivables and related impairment allowances for the Company at the repor�ng date. The historical provision rates are updated with current and forward looking informa�on

The model used for impairment is explained in note 4.14 above

Investments

The Company ac�vely monitors the credit ra�ng of companies and only invest in liquid securi�es with companies with high credit ra�ngs. The Company does not

expect any counterparty to fail to meet its obliga�ons.

Guarantees

The Company’s policy is to provide financial guarantees only to related par�es a�er a careful review of the underlying transac�on. Where the underlying transac�on does not meet the Company’s risk appe�te, such transac�ons are exited.




ardova plc


6. Financial risk management (cont’d) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in mee�ng the obliga�ons associated with its financial liabili�es that are se�led 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 liabili�es when due, under both normal and stressed condi�ons, without incurring unacceptable and avoidable losses or risking damage to the Company’s reputa�on. Cash flow projec�on is performed by the treasury unit of the Company to an�cipate the cash & liquidity requirements of the Company.

The Company has a clear focus on ensuring sufficient access to capital to finance growth and to refinance maturing debt obliga�ons. As part of the liquidity management process, the Company has various credit arrangements with some banks and related par�es which can be u�lised to meet its liquidity requirements.

The Company manages its liquidity process by:

-

Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met.

-

Monitoring balance sheet liquidity ra�os against internal requirements.

-

Managing the concentra�on and debt profile.

-

Usage of overdra� facility to meet liquidity needs.

Lastly, the Company ensures that it has sufficient cash on demand to meet expected opera�onal expenses for a year of 365 days, including the servicing of financial obliga�ons; this excludes the poten�al impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objec�ve of market risk management is to manage and control market risk exposures within acceptable parameters, while op�mizing the return.

Foreign Exchange Risk

The foreign exchange (FX) risk management policy shall be considered in all FX transac�ons. This policy provides guidelines on how foreign exchange risk is managed. The sources of FX risk include Imports of all petroleum products for sale e.g.

PMS, AGO, Base Oil and ATK, FX denominated opera�ng expenses, Receivables denominated in currency other than the base currency.




ardova plc


6.

Financial risk management (cont’d)

Currency Risk

The currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in foreign exchange rates.

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than its func�onal currency. The Company is exposed primarily to US Dollars (USD), Euro (E), and Pound Sterling (GBP).

The Company monitors the movement in currency rates on an ongoing basis to mi�gate the risk that the movements in the exchange rates may adversely affect the Company's income or value of their financial instruments.

The Company is allowed to hedge currency exposure within the tolerable limit by bank and must be approved by Risk Management Commi�ee. The Company does not hedge for specula�ve reasons.

Interest on borrowings is denominated in the currency of the borrower. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying opera�ons of the Company, primarily Naira. This provides an economic hedge without deriva�ves being entered into and therefore hedge accoun�ng is not applied in these circumstances.

Sensi�vity analysis

A change in the exchange rate either posi�vely or nega�vely by 200 basis points would have increased/ (decreased) equity and profit or loss by the amount stated below. This analysis is based on foreign currency exchange rate variances that the company considered to be reasonably possib le at the end of the repor�ng year, the analysis assumes that all other variables, in par�cular interest rates remain.

A weakening of the Naira against the currencies at 31 December 2019 would have increased/ (decreased) equity and profit or loss by the amount shown below:

Year end

Increase / decrease in foreign exchange rate

N'000

31-Dec-19

+-2%

4,300

31-Dec-18

+-2%

5,372

Interest Rate Risk

The Company is exposed to interest rate risk because the Company borrows funds at fixed interest rates and also u�lizes overdra� facili�es from Banks. This risk is managed by the Company by maintaining an appropriate mix between short and long term borrowings. The risk is also managed by the Company by constantly nego�a�ng with the banks to ensure that interest rates are consistent with the monetary policy rates as defined by the

Central Bank of Nigeria.

At the repor�ng date, the average interest rate

profile of the Company's interest -bearing financial interest was:

Overdra�

15.0%

Note 23 highlights the borrowings for the repor�ng year.




ardova plc




6. Financial risk management (cont’d) Sensi�vity Analysis

A change in the interest rate either posi�vely or nega�vely by 200 basis points would have increased/ (decreased) equity and profit or loss by the amount stated below. This analysis is based on interest bearing debt obliga�ons at the relevant repor�ng dates while holding all other variables constant.

Increase / decrease in interest rate

Year end N'000

31-Dec-19 +-2%

553,205

31-Dec-18 +-2%

352,211

Other market Risk

Forte Oil Plc monitors the mix of debt and equity securi�es in its investment por�olio based on market indices. Material investments within the por�olio are managed on an individual basis and all buy and sell decisions are recommended by Risk Management Commi�ee and approved by the Execu�ve Commi�ee.

Management is assisted by external advisors in this regard. In accordance with this strategy, certain investments are designated at fair value through profit or loss because their perfor mance is ac�vely monitored and they are managed on a fair value basis. The company does not enter into commodity contracts other than to meet the expected usage and sale requirements; such contracts are not se�led net.

Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence at all �mes and to sustain future development and growth of the business. The Board of Directors monitors capital on the basis of the gearing ra�o, which the company defines as total liabili�es (non-current liabili�es and current liabili�es) over total assets (non-current assets and current assets).

The Company manages its capital structure to achieve capital efficiency, maximise flexibility and give the appropriate level of access to debt markets at a�rac�ve cost levels. Also, The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital posi�on.

The debt to capital ra�o at the end of the repor�ng year was as follows:

Dec-19

Dec-18

N’000

N’000

Total liabili�es

30,855,629

47,449,309

Total assets

47,018,954

61,198,279

Gearing ra�o as at:

66%

78%

The Company manages its capital to ensure that it will be able to con�nue as a going concern while maximizing its returns to all stakeholders

There were no changes in the company's approach to capital management during the year.


ardova plc




31-Dec-19 31-Dec-18

N’000 N’000

7. Revenue & Cost of Sales

7.1 Revenue Fuels 159,245,196 120,844,440

Lubricants and greases 17,249,004 13,720,830

Solar system 39,097 141,036

Liquefied Petroleum Gas (LPG) and Cylinder Sales

17,469 -

176,550,766 134,706,306

7.2. Cost of Sales

Fuels

152,387,320

112,346,536

Lubricants and greases

12,822,179

10,909,732

Solar system

41,102

119,972

Liquefied Petroleum Gas (LPG) and Cylinder Sales

18,448

-

165,269,049

123,376,240

`

31-Dec-19

31-Dec-18

N’000

N’000

8.

Other income

Investment property rental income

275,182

233,113

Throughput income (Note 8.1)

537,360

466,362

Foreign exchange gain (Note 8.2)

-

113,688

Sundry income (Note 8.3)

328,727

198,530

Provisions no longer required

23,054

77,402

Dividend received

-

270,000

Freight income (Note 8.4)

404,090

494,177

Gain on disposal of property, plant and equipment

9,997

6,537

Foreign exchange loss

12,435

-

Gain on disposal of subsidiary (Note 8.5)

2,674,891

-

Net Income from crude li�ing contract (Note 8.6)

51,419

-

4,317,155

1,859,809

8.1

This represents throughput income earned on storage of products for the Pipeline and Petroleum Marke�ng Company (PPMC) and other petroleum marketers in Apapa ta nk farm during the year.

8.2

This represents transac�onal gains of foreign exchange earned from sale of dollar inflows.

8.3

This represents income from sales of

scrap and empty packaging materials.

8.4

This represents income earned on 141 trucks owned by Ardova Plc managed by various logis�c companies


ardova plc


8.5 During the period ended 30 June 2019, Ardova Plc disposed its subsidiaries, Amperion Power Distribu�on Company Limited (Amperion), Forte Upstream Services Limited (FUS) and AP Oil and Gas Ghana, the disposal of Amperion and FUS resulted in a gain of N1.55 billion and N1.23 billion respec�vely, totalling N2.78 billion. The disposal of AP Oil and Gas Ghana resulted in a loss of N108 million resul�ng in a net gain of N2.67 billion as presented below:

FUS APOG

Amperion Total

N’000 N’000

N’000 N’000

Considera�on

1,242,849 28,838

11,700,000 12,971,687

Total value of Investment in Subsidiary

(10,000) (1,094,961)

(10,149,926) (11,254,887)

Provision for Diminu�on

in value of

investment

-

958,091

-

958,091

Gain/(Loss) on disposal

1,232,849

(108,032)

1,550,074

2,674,891

8.6

This represents net income from crude oil li�ing

contract executed with the Nigerian Na�onal Petroleum Corpora�on (NNPC) to li� out of the total crude alloca�on.

9a.

Expenses by nature

31-Dec-19

31-Dec-18

N’000

N’000

9a.1

Selling, distribu�on expenses

Fuels -

freight

2,005,260

2,007,396

Lubes -

freight

270,464

232,038

Commissions

5,242

6,254

2,280,966

2,245,688

9a.2

Administra�ve Expenses

Personnel expenses (Note 9a.2.1)

2,402,697

1,890,182

Deprecia�on and amor�sa�on

2,151,459

1,422,098

Bank charge

169,056

164,764

Transport and travel costs

439,560

308,519

Repairs and maintenance

613,628

876,060

Safety security and quality control

240,419

190,091

Insurance

210,149

205,436

Internet and communica�on

108,532

165,254

U�li�es

116,664

96,524

Professional and legal fees

341,721

362,676

Audit fees

34,125

34,125

Board and AGM expenses

96,755

87,592

Licenses, rates and fees

141,994

152,251

Public rela�ons, promo�ons and adver�sement

176,922

70,734

Rent and leases

227,676

1,064,006

Bad and uncollec�ble debt

9,357

13,384

Impairment charge

69,436

443,944

Shrinkage and product losses

265,220

276,433

Loss on disposal of property, plant and equipment

40,064

422

Prin�ng and sta�onery expenses

15,479

17,120

Director fees

950

3,850

Other expenses

521,597

149,636

8,393,460

7,995,101




ardova plc

Notes to the financial statements 31-Dec-19 31-Dec-18 N’000 N’000

9a.2.1 Personnel expenses Salaries, wages and allowances 1,195,287 1,097,228

Contribu�ons to pension fund scheme 77,349 75,930

Gratuity and redundancy cost 611,257 97,851

Performance Bonus - 130,000

Training, recruitment and canteen expenses 109,611 101,001

Medical expenses 43,602 47,638

Contract Manpower 344,473

307,295

Other personnel expenses 21,118

33,239

2,402,697 1,890,182

31-Dec-19 31-Dec-18

9b.

Expenses by func�on

N’000

N’000

Cost of sales (Note 7.2)

165,269,049

123,376,240

Selling, distribu�on expenses (Note 9a.1)

2,280,966

2,245,688

Administra�ve expenses (Note 9a.2)

8,393,460

7,995,101

175,943,475

133,617,029

10. Finance income and finance cost

Finance income

Interest income on bank deposits (Note 10.1)

185,604

194,551

Other interest income (Note 10.2)

4,369,491

986,487

Total Finance income

4,555,095

1,181,038

31-Dec-19

31-Dec-18

N’000

N’000

Finance costs

Interest on medium term bond

(1,258,646)

(1,591,484)

Interest expense on

bank loans and overdra�s (Note 10.1)

(1,981,728)

(1,510,096)

Discoun�ng of promissory notes

(1,585,020)

-

Total Finance cost

(4,825,394)

(3,101,580)

Net finance costs

(270,299)

(1,920,542)

10.1.

Interest income represents income earned on bank deposits while interest expense represents charges paid on trade finance, loans and overdra� facili�es u�lised during the period.

10.2.

Other interest income.

31-Dec-19

31-Dec-18

N’000

N’000

Interest and foreign exchange differen�als on subsidy

3,947,483

-

Interest on loan and receivables

158,648

940,694

Interest income on bank credit balances and other interest income

263,360

45,793

4,369,491

986,487




ardova plc


11. Taxa�on

31-Dec-19 31-Dec-18

a) Income tax expense N’000 N’000

Income tax 904,224 241,252

Educa�on tax 66,819 52,543

Over provision in prior year - (932)

Nigerian Police Trust Fund 184

Capital Gain 151 -

971,378 292,863

Deferred tax (credit)/charge (232,371)

104,210

Total income tax expense

739,007

397,073

b)

Effec�ve tax rate

Profit

for the year

3,915,140

631,471

Profit before tax

4,654,147

1,028,544

Income tax reported in the statement of profit or loss

739,007

397,073

Total income tax

739,007

397,073

Profit before tax

4,654,147

1,028,544

Effec�ve tax rates

16%

39%

c)

Effec�ve tax rate reconcilia�on

The income tax charge for the year can be reconciled to the accoun�ng profit as follows:

Profit before taxes

4,654,147

1,028,544

Income tax expense at 30%

1,396,244

308,563

Effect of income exempt from taxa�on

(972,616)

(214,543)

Effect of expenses not deduc�ble for taxa�on

551,491

688,491

Effect of capital allowance

(616,202)

(525,427)

Effect of balancing charge

27,526

8,270

Loss effect

-

(265,354)

Capital gains tax

151

-

Educa�on tax

66,819

52,543

Overprovision

-

(932)

Minimum tax

904,224

241,252

The Nigerian Police Trust Fund

184

-

Deferred tax

(232,371)

104,210

Total income tax expense

739,007

397,073




ardova plc


11. Taxa�on (cont’d)

c) Effec�ve tax rate reconcilia�on (cont’d)

The company income tax computa�on for the year ended 31 December 2019 was based on the provisions of the Company Income Tax Act Cap C21 LFN 2004 and Finance act 2020.

Educa�on tax was computed at the rate of 2% of assessable profit in accordance with the provisions of

the Act.

31-Dec-19 31-Dec-18

N’000 N’000

c)

Movement in current tax liability balance

Liability as at 1 January

296,217

245,206

Income tax for the period

971,378

292,863

Payments during the year

(209,058)

(241,852)

Withholding tax u�lised

(81,905)

-

976,632

296,217

12.

Earnings per share

Profit a�ributable to ordinary shareholders


3,915,140

631,471


3,915,140

631,471

Weighted average number of ordinary shares

Issued ordinary shares at 1 January *

1,310,629

1,310,629

Treasury shares

(5,599)

(5,599)

Weighted average number of ordinary shares

1,305,030

1,305,030

Basic/diluted earnings per share in (N)

3.00

0.48

The Company's basic earnings per share of N3.00

kobo (December 2018 : N0.48 kobo) is based on the profit a�ributable to ordinary shareholders of N3,915,140,000 (December 2018 : N631,471,000) on the 1,305,030,180 (December 2018 : 1,305,030,180) ordinary shares of 50 kobo each, being the weighted average number of ordinary shares in issue during the current and same period of the preceding year.

Dilu�ve instruments

There were no dilu�ve instruments in the books of the Company as at the year ended 31 December

2019.




ardova plc

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ARDOVA PLC(Formerly Forte Oil Plc)

Annual Reports and Financial statementsFor the year ended 31 December 2019


ardova plc


31-Dec-19

N’000

14 Right of use assets

Lease property

Cost

Balance at 1 January 2,701,972

Balance at 31 December 2018

1,939,502

Addi�on 245,542


2,185,044

Deprecia�on

Charge for the period

808,574


808,574

Carrying amount

At 31 December 2019

1,376,470

(a)

Addi�ons to right of use assets during year were N245,542,000

(b)

Deprecia�on charge of N808, 574,000

is included in administra�ve expenses in the statement of profit or loss and other comprehensive income.

(c)

The Company has leases for some of its retail outlet. With the excep�on of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and no lease liability was recognised because the full lease payment for the leased periods was made to the lessor at the contract incep�on.

Each lease generally imposes a restric�on that, unless there is a contractual right for the Company to sublet the asset to another party, the right-of-use asset can only be used by the Company.

Some leases contain where the lessee is desirous of renewing the lease, a wri�en no�ce to that effect shall be sent to the lessor who when sa�sfied shall accede to the renewal with the liberty to call for a revised lease payment and other condi�ons to meet the exigencies of the material. The Company is prohibited from selling the underlying leased assets. It is also stated that the Company must keep those proper�es in a good state of repair and ret urn the proper�es in their original condi�on at the end of the lease.

(d)

No impairment charge on lease property during the year.




ardova plc


14 Right of use assets (cont’d)

(e) Right-of use asset

No of right-of use assets

Leased Range of remaining

term

Average remaining lease term

Leased Property 89 5 - 25 years 15years

31-Dec-19

(f) Amount recognised in profit or loss

N’000

Short term lease 192,255

Low value lease 1,134

193,389

`

15. Investment property

Cost


2,235,584


2,235,584

Deprecia�on

Balance at 1 January

678,140

Charge for the year

25,449


703,589

Charge for the year

25,449


729,038

Carrying amount

At 31

December 2018

1,531,995

At 31

December 2019

1,506,546

(a)

Investment property comprises of a number of commercial proper�es that are leased to third par�es. The lease year ranges between 1 -

5 years. Investment proper�es are carried at cost/deemed

cost. The carrying amount of investment property is separated between lease hold land and buildings. Lease hold land is amor�sed over the lease year while building is depreciated on a straight line basis over the es�mated useful life at 4% per annum.

(b)

During the year

ended 31 December 2019 the Company recognised N275, 182,000

(2018:

N233, 113,000) as rental income in statement of profit or loss.




ardova plc


15. Investment property (cont’d)

(c) Deprecia�on charge of N25, 499,000 (2018: N25, 499,000) is included in administra�ve expenses in the statement of profit or loss and other comprehensive income.

(d) The fair value of the investment proper�es as at 30 June 2018 was N5 , 736,560,000. The fair valua�on was carried out by Jide Taiwo & Co. (FRC2012/NIESV/000000254); Ismail & Partners (FRC/2012/NIESV/00000000245) and Dele Olaiya & Associates (FRC/2013/NIESV/00000002773).

These valua�ons indicate upward movement in the market values of these proper�es compa red to their carrying amounts, hence no indica�on of impairment for all investment proper�es.

Directors are of the view that the fair value of these proper�es as at 31st December, 2019 are not materially different from the values obtained at 30th June , 2018 and have therefore not recognised any impairment charge during the period.

(e)

No impairment charge on investment proper�es during the year.

16.

Intangible assets

31-Dec-19

N’000

Cost


1,014,969

Acquisi�ons

19,397


1,034,366

Addi�on

-


1,034,366

Amor�sa�on


818,319

Charge for the year

72,236


890,555

Charge for the year

71,058


961,613

Carrying amounts


143,811


72,753

(a)

These relate to purchased so�wares.

(b)

The amor�sa�on charge on intangible assets of N71, 058,000

(December 2018:

N72, 236,000) is included in administra�ve expenses in the statement of profit or loss.

(c)

No impairment charge on intangible assets during the year.




ardova plc

No

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232,

371

--

(680

,799

)




ardova plc


31-Dec-19 31-Dec-18

18. Inventories N’000 N’000

White products 7,078,251 5,762,913

Raw materials 3,820,907 1,924,552

Packaging materials 109,363 90,383

Semi-finished goods of lubricants 102,786 118,631

Finished goods of lubricants 1,296,653 1,318,366

Inventory -Solar System 65,025 123,850

Consumables (Note 18.2) 361,388 189,451

12,834,373 9,528,146

18.1 During the year, N165, 269,049,000

(31 December 2018:

N123, 376,240,000) of inventory was sold and

recognised as cost of sales in the statement of profit or loss.

18.2 Consumables include spare parts for retail outlets, equipment maintenance and sta�onery for office use.

31-Dec-19

31-Dec-18

N’000

N’000

19.

Trade receivables

Trade receivables (Note 19.1)

4,451,848

3,293,720

Impairment allowance (Note 19.6)

(1,198,244)

(1,141,893)

3,253,604

2,151,827

19.

Other receivables

Petroleum Support Fund receivable (Note 19.2) 6,230,423

8,719,609

Notes receivable (Note 19.3)

640,082

4,628,897

Advance payment to suppliers

5,524,009

1,802,033

Interest receivable

85,525

17,016

Withholding tax recoverable

44,580

88,834

Other receivables (Note 19.4)

828,728

9,007,265

13,353,347

24,263,654

Impairment allowance (Note 19.6)

(1,154,610)

(1,151,212)

12,198,737

23,112,442

Prepayments

Prepayments

995,927

2,975,098

Prepaid staff expenses

229,703

372,504

1,225,630

3,347,602

Trade and other receivables Notes (a+b)

16,677,971

28,611,871




ardova plc


19.1 The Company carries out periodic review and financial assessment of customers before products are supplied on credit. Credit customers are categorised according to the determined default risk ra�ng. High risk customers are required to provide bank guarantees for credit sales. The Credit Commi�ee assesses the status of all credit customers periodically. See Note 4.2.4 (Impairment) and Note 6 (Financial Risk Management).

19.2 This balance relates to outstanding subsidy receivable from Petroleum Products Pricing Regulatory Agency (PPPRA) which represents interest on delayed payments and foreign exchange differen�al claims under the PSF scheme recoverable from PPPRA on PMS imported by Forte Oil Plc. The foreign exchange differen�al represents differences between the rate used by PPPRA in pricing Premium Motor Spirit (PMS) and the actual rates the foreign exchange in respect of these products importa�on were purchased. Promissory notes was issued to the oil marketers

as part se�lement of these outstanding in December, 2018 and July, 2019. The

balance of N7.9bn is expected to be se�led with a one year promissory note.

19.3 This is one of the promissory notes received from the Federal Government as a part of the outstanding subsidy.

19.4 Other receivables

31-Dec-19

31-Dec-18

N’000

N’000

BSG Resources Ltd

-

7,466,467

Amperion Power Distribu�on Company Ltd

-

681,341

Geregu Power Plc

-

13,245

AP Oil and Gas Ghana Ltd

-

61,493

Zenon Petroleum and Gas Limited

-

16,847

Other debtors

828,728

767,872

828,728

9,007,265

19.5

Impairment allowance

At 1 January

2,293,105

1,829,870

Effect of retrospec�ve adop�on of New standard (IFRS 9)

-

19,291

Increase during the year

69,436

443,944

Allowance no longer required

(9,687)

-

2,352,854

2,293,105

19.6

Impairment allowance

Trade Receivables

1,198,244

1,141,893

Other Receivables

1,154,610

1,151,212

2,352,854

2,293,105

20

Restricted cash*

31-Dec-19

31-Dec-18

N’000

N’000

19,707

-

This represents cash set aside and held with the bank in conformity with the bond agreement.

It is used solely for the repayment

of the bond liability and not for any opera�onal needs.




ardova plc

Notes to the financial statements 31-Dec-19 31-Dec-18

21 Cash and cash equivalents N’000 N’000 Bank balances 1,376,867 299,638 Short-term deposits (Note 20.1) 607,393 854,631

Cash and bank balances 1,984,260 1,154,269

Bank overdra�s used for cash management purposes (Note 20.2) (116,773) (9,473,546)

Cash and cash equivalents in the statement of cash flows

1,867,487 (8,319,277)

21.1 Bank balances and short term deposits with banks represent placements with banks for period between 0 -

180 days. Included in these are unclaimed dividends amoun�ng to N607, 391,099

(December

2018:

N627, 305,356) held in a separate bank account in accordance with the guidelines of the Security and

Exchange Commission (SEC). The unclaimed dividend deposit is restricted for use by the Company.

21.2 This represents the overdrawn current account balances with four Nigerian banks. These facili�es have an average interest rate of 18%.

22

Discon�nued opera�ons and disposal Companies

held for sale.

The asset and liabili�es of the Company’s

Fuel, Produc�on

Chemicals and Power Genera�on segments, AP Oil and Gas, Ghana, Forte Upstream Services Limited and Amperion Power Distribu�on Company Limited were presented as held for sale at 30 June 2018, following the approval by the Board and shareholders at the 39th Annual General Mee�ng held on 23 May 2018 and approval by the Securi�es and Exchange Commission ('SEC') to sell the en��es. Analysis of the result of en��es classified as discon�nued opera�ons are as shown

below:




ardova plc

Notes

to the financial statements

22.1.

Assets and Liabili�es of disposal Companies

held for sale

Assets and liabili�es of disposal Companies held for sale comprise the assets and liabili�es of FUS, APOG and Amperion as at 31 March 2019.

At the repor�ng date, 31 March 2019, these subsidiaries have been disposed and the assets and liabili�es derecognized.

FUS

APOG

Amperion

Total

Carrying values of

31-Mar-19

31-Mar-19

31-Mar-19

31-Mar-19

N’000

N’000

N’000

N’000

Assets

Net book value of property, plant and equipment

265,498

77,927

51,042,468

51,385,893

Intangible assets

8,584

-

754

9,338

Deferred tax asset

11,295

128,452

4,535,442

4,675,189

Inventory

535,224

2,205

727,585

1,265,014


1,300,923

777,929

36,026,875

38,105,727

Cash and cash equivalents

111,354

(66,414)

3,790,855

3,835,795

Long term employee benefits

26,298

-

483

26,781

Total assets held for sale

2,259,176

920,099

96,124,462

99,303,737

Liabili�es


(484,877)

(1,003,429)

(25,101,888)

(26,590,194) Current income tax liabili�es

(165,684)

10

(516,517)

(682,191) Bank overdra�

-

-

-

- Loans and borrowings

(33)

-

(7,539,940)

(7,539,973) Deferred Tax liabili�es

(80,081)

-

-

(80,081)

Total liabili�es held for sale

(730,675)

(1,003,419)

(33,158,345)

(34,892,439) Net Assets/(Liabili�es) directly

associated with disposal Company

1,528,501

(83,320)

62,966,117

64,411,298

Subsidiaries classified as held for sale.

31-Dec-19

31-Dec-18

N’000

N’000

Equity: Forte Upstream Services Limited

-

10,000

AP Oil and Gas Ghana Limited -

670,011 Amperion Power Distribu�on Company Limited -

10,149,926

Irredeemable Preference Shares: Cummula�ve Conver�ble Preference Shares in AP Oil and Gas Ghana Ltd

- 424,950

- 11,254,887 Impairment allowance - (958,091)

- 10,296,796




ardova plc




22.3. Sale of AP Oil and Gas GhanaDuring the period under review, the Company signed a Sale and Purchase Agreement (SPA) to dispose 100% shares in AP Oil and Gas Ghana to Cobalt Interna�onal Services Limited. The transac�on was concluded in March 2019. As a result of the sale the Company lost control of AP Oil and Gas Ghana and have derecognized all assets and liabili�es. A gain on disposal of N112 million, has been recognized in this financial statements (under profit a�er tax for the period from discon�nued opera�ons).

22.4. Sale of Forte Upstream Services Limited

During the period under review, the Company signed a Sale and Purchase Agreement (SPA) to dispose 100% shares in Forte Upstream Services Limited to Gbonka Oil and Gas Limited. The transac�on was concluded in March 2019. As a result of the sale the Company

lost control of Forte Upstream Services Limited and have

derecognized all assets and liabili�es. A loss on disposal of N286 million, has been recognized in this financial statements (under profit a�er tax for the period from discon�nued opera�ons).

22.5.

Sale of Amperion Power Distribu�on Company Limited

During the period under review, the Company

signed a Sale and Purchase Agreement (SPA) to dispose its shares in Amperion Power Distribu�on Company Limited to Calvados Global Services Limited. The transac�on was concluded in March 2019. As a result of the sale the Company

lost control of Forte Upstream Services

Limited and have derecognized all assets and liabili�es. A loss on disposal of N1.4 billion has been recognized

in these financial statements

(under profit a�er tax for the period from discon�nued opera�ons).

FUS

APOG

Amperion

Total

Considera�on

1,242,849

28,838

11,700,000

12,971,687

Net liability/ (asset)

(1,528,499)

83,321

(62,966,117)

(64,411,295)

NCI

-

-

49,882,501

49,882,501

(Loss)/Gain on Disposal

(285,650)

112,159

(1,383,616)

(1,557,107)

31-Dec-19

31-Dec-18

22.6.

Results of discon�nued opera�ons

N’000

N’000

Revenue

12,670,947

39,820,598

Cost of sales

(7,512,944)

(25,113,445)

Gross profit

5,158,003

14,707,153

Other income

1,606

16,131

Administra�ve and distribu�on expenses

(570,683)

(6,412,238)

Opera�ng profit

4,588,926

8,311,046

Net finance cost

(191,474)

(1,775,173)

Profit before tax from discon�nued opera�ons

4,397,452

6,535,873

Income tax

(104,781)

1,447,062

Profit a�er tax from discon�nued opera�ons

4,292,671

7,982,935

Loss on sale of discon�nued opera�on

(1,557,108)

-

Profit a�er tax for the period from discon�nued opera�ons

2,735,563

7,982,935


ardova plc



Notes to the financial statements 31-Dec-19 31-Dec-18 N’000 N’000

23. Share capital and reserves Ordinary shares

a) Authorised ordinary shares: 4,000,000,000 ordinary shares of 50k each 2,000,000 2,000,000

b)

Issued and fully paid ordinary shares of 50k each

1,310,629,267 ordinary share of 50k each

655,314

655,314

31-Dec-19 31-Dec-18

Units Units

c)

Shares outstanding

Issued ordinary shares at 1 January

1,310,629

1,310,629

Treasury shares

(5,599)

(5,599)

Number of ordinary shares

1,305,030

1,305,030

*These are in thousand units.

31-Dec-19

31-Dec-18

N’000

N’000

d)

Share premium

8,071,943

8,071,943

e)

Other reserves

Other reserves represent the carried forward, other comprehensive income and expenses plus current period other comprehensive income a�ributable to shareholders.

f)

Retained earnings

Retained earnings represent the carried forward recognised income net of expenses plus current year

income a�ributable

to shareholders.

31-Dec-19

31-Dec-18

N’000

N’000


6,418,039

5,805,859

Adjustment

(2,711)

-

Profit for the year

3,915,140

631,471

Effect of retrospec�ve adop�on of IFRS 9

-

(19,291)

Dividend paid

(1,500,785)

-

8,829,683

6,418,039

g)

Treasury stocks

This represents 5,599,087 units (at the market value of N248 as at the date of the transfer) of the company's exis�ng shares transferred

to Forte Oil Plc to enable the Company recover the dividend and interest received on unpaid shares in 2009 by a shareholder. These shares were seized by the company on the ruling of the Security and Exchange Commission (SEC). The shareholders at the 37th

Annual General Mee�ng held on the 26th of April, 2016 approved the re-issue of these shares to exis�ng shareholders of the company on a pari passu basis at the market price of N300 per share.


ardova plc




24. Long term employee benefits

The Company operates a funded long term employees plan (gratuity) for qualifying employees of the Company. Under the plan, the employees are en�tled to a lump sum benefits on a�ainment of a re�rement age or on disengagement a�er contribu�ng a specific number of years in service. No other post -re�rement benefits are provided to these employees. The most recent actuarial valua�ons of the present value of the defined benefit obliga�on were carried out as at 31 December 2019 by KMC Actuarial Service. The present value of the defined benefit obliga�on, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method with actuarial valua�on being carried out at the end of each repor�ng period.

The company has taken the decision to wind up the gratuity scheme as at 31 December 2019 but con�nue with the defined contribu�on plan for its staff. As a result, the total balance of the employee benefit liability as at 31 December 2019 will be distributed to the qualified beneficiaries of the program accordingly based on the company policy on gratuity computa�on.

Furthermore, there will be no more gratuity expenses and accrual in the financial statements of the subsequent years. Hence, the sensi�vity analysis of the impact of changes in economic assump�ons on the assump�ons is no longer necessary.

The movement in the present value of the other long-term

employee benefits was as follows:

31-Dec-19

31-Dec-18

N’000

N’000

Gratuity liability at 1 January

468,546

473,372

Current service costs

328,735

97,347

Transfer of employee service cost

9,072

-

Provision no longer required

(13,368)

-

Payment during the year

(530,084)

(102,173)

Gratuity liability

at 31 December

262,902

468,546

Investments (Employee Benefits)

Planned asset/investment

at 1 January

563,910

489,414

Actual return on planned assets

83,127

74,496

647,037

563,910

Current por�on

610,302

-

Non-current por�on

36,735

563,910

647,037

563,910

Expense recognised in comprehensive income

Current service costs

328,735

97,347

Return on planned assets

(83,127)

(74,496)

Charged to profit or loss

245,608

22,851


ardova plc




24. Long term employee benefits (cont’d)

(a) Long term employee benefit expense is recognised in administra�ve expenses in the statement of profit or loss.

(b) The actuary valua�on report was signed by Miller Kingsley (FRC/2013/NAS/00000002392) of KMC Actuarial Services a fellow of Society of Actuaries, USA.

(c) The planned asset/investment is held by four fund managers: Meristem Wealth Management Limited; FSDH Asset Management Limited, Cardinal Stone Partners, and Afrinvest Asset Management.

The assets are placed in Treasury bills, Bonds with quoted market price in the ac�ve Nigerian bond market and Fixed deposits are placements with financial ins�tu�ons and do not have quoted prices.

The plan typically exposes the Company to actuarial risks such as; assets vola�lity, interest rate risk, life expectancy, salary risk, changes in corporate yields

and infla�on risk.

Asset vola�lity

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Currently the plan has a rela�vely balanced investment in Government Securi�es and money market instruments. Due to the long-

term nature of the plan liabili�es, the board of the pension fund considers it appropriate that a

reasonable por�on of the plan assets should be invested in equity securi�es

and in real estate to leverage the return generated by the fund.

Interest Rate Risk

A decrease in the bond interest rate will increase the plan liability; however, this will be par�ally offset by an increase in the return on the plan’s debt investments.

Life Expectancy

The present value of the defined benefit plan liability is calculated by reference to the best es�mate of the mortality of plan par�cipants during their employment.

An increase in the life expectancy of the plan par�cipants will increase the plan’s liability.

Salary Risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan par�cipants. As such, an increase in the salary of the plan par�cipants will increase

the plan’s liability.

Changes in bond yields

A decrease in corporate bonds yield will increase plans liabili�es.

Infla�on Risk

The majority of the plan's assets are either unaffected by fixed interest bonds or loosely correlated with equi�es infla�on, meaning that an increase in infla�on will also increase deficit.

There are two categories of employees in Forte Oil Plc; first category are those on direct long term contract with the company, while the second category are Associates on secondment to Forte from other companies. Only the former are covered by

this long-term

benefit.

In es�ma�ng the present value of the defined benefit obliga�on, certain assump�ons on financial environment, a�ri�on rates of withdrawal from service and death of staff likely to be experienced were made. The significant actuarial assump�ons used are summarized as follows:


ardova plc

ARDOVA PLC(Formerly Forte Oil Plc)

Annual Reports and Financial statementsFor the year ended 31 December 2019


24. Long term employee benefits (cont’d)

a) Discount rate/average rate of return on assets 13% per annum b) Average rate of salary increase 12% per annum c) Inflation rate 12% per annum

d)

Mortality rate

A67/70 English Life Tables

The weighted average liability dura�on of the Plan is 12.61 years. The average weighted dura�on of the

longest Nigerian bond as at the valua�on date, 31st December 2019, is the 14.8% 26-April-2049 bond with a weighted average dura�on of 7.46 years and with a gross redemp�on yield of about 12.89% as at 31st December 2019.

Maturity profile of Defined Benefit Obliga�ons

Age Band (in years)

Number of Employees

Annual Gross Pay

(NGN)

Accrued Liability

26-30

12

58,395,989

9,843,134

31-35

29

243,632,746

56,210,757

36-40

32

225,422,906

97,921,248

41-45

19

161,654,295

65,087,245

46-50

7

132,001,885

33,840,109

Total

99

821,107,821

262,902,493

Past Service (in years)

Number of Employees

Annual

Gross Pay (NGN)

Accrued Liability

0-5

12

575,290,345

85,185,426

6-10

29

245,817,476

177,717,067

Above 10

-

-

-

Total

99

821,107,821

262,902,493


ardova plc




25 Loans and borrowings

This note provides informa�on about the contractual terms of the Company’s interest -bearing loans and borrowings, which are measured at amor�sed cost.

31-Dec-19 31-Dec-18 N’000 N’000 Non-current

Term loans

- 634,369

Medium term bond (25.2)

2,735,388 5,041,359

2,735,388 5,675,728

Current


Term loans

-

861,278

Import finance facili�es (note 23.2)

-

575,816

-

1,437,094

Medium term bond (23.1)

2,476,801

2,134,164

5,212,189

9,246,986

31-Dec-19

31-Dec-18

25.1

Loan movement

N’000

N’000

At 1 January

9,246,986

10,769,357

Interest cost for the year

2,592,258

1,699,415

Repayment

(6,627,055)

(3,221,786)

At 31 December

5,212,189

9,246,986

25.2

In December 2016, The Company issued N9billion unsecured corporate bond for a 5-year

tenor and at a coupon and effec�ve interest rate of 17.5% and 19.43% respec�vely.

The net proceeds were used to refinance exis�ng commercial bank loan obliga�ons and to immediately finance the company’s retails outlet expansion strategy.

The restric�on to the bonds issued are as follows but not limited to below:-

a

give prior no�ce to the Trustees of any proposed redemp�on and, if it shall have given No�ce to the Bondholders of its inten�on to redeem any Bonds, duly proceed to redeem such Bonds accordingly.

b

not (and ensure that none of its Subsidiaries shall) without the consent of the Bondholders and Trustees:

bi

incur any Indebtedness above the sum of Five Billion

Naira (N5,000,000,000);

bii

dispose any of its assets above the sum of Five Billion Naira (N5,000,000,000);


ardova plc




25 Loans and borrowings

25.2 (cont’d)

c give to the Trustees and Bondholders a No�ce prior to the acquisi�on of any company/business/assets where the cost of such acquisi�on when aggregated with the cost of any other acquisi�on of any company/business/assets by the Issuer during the financial year of the proposed acquisi�on, exceeds the total sum of Five Billion Naira (N5,000,000,000).

Borrowings

are ini�ally measured at fair value, net of transac�on costs incurred. Borrowings are subsequently measured at amor�sed cost. Any differences between the proceeds (net of transac�on costs) and the redemp�on value is recognised in the statement of pro fit or loss over the year of the borrowings using the effec�ve interest method. The carrying values of borrowings approximate their fair value.

25.3

Import finance facili�es represents short term borrowings obtained to fund le�ers of credits fo r petroleum product importa�on. These facili�es are secured with the product financed, the Petroleum Subsidy Fund receivable on them if applicable and any sinking fund of the company.

31-Dec-19

31-Dec-18

N’000

N’000

26. Trade and other payables

Current trade and other payablesTrade payable

NNPC accounts payable

4,361,957

6,495,513

Trade creditors

4,171,287

2,850,689

Petroleum Equalisa�on Fund (PEF) payable (Note 25.1)

2,402,599

2,234,526

Inventory accruals (Note 25.2)

5,673,520

8,770,024

Customer deposits for products

3,037,319

2,657,270

19,646,682

23,008,022

Non-trade payables and other creditors (Note 25.3) 3,176,495

3,465,250

Total Trade and other payables

22,823,177

26,473,272

26.1

This balance relates to bridging allowance net of bridging claims due to Petroleum Equalisa�on Fund (PEF). Bridging claims, raised against the Federal Government of Nigeria, are costs incurred in transpor�ng white products (excluding deregulated products) from specific PPMC dep ots to approved areas. Bridging allowances are compulsory contribu�ons on each litre of white product li�ed, to assist the Federal Government defray costs arising from bridging claims. Bridging claims are usually set off against bridging allowances to establish the net amount due to, or from the PEF, an organ of the Federal Government of Nigeria responsible for managing the process.


ardova plc




26.2 Inventory accrual accounts includes liability accrued for product and associated costs. This account holds accruals for value of goods received pending receipt of supplier's invoices.

26.3 This consists of unclaimed dividends, statutory payables such as; withholding tax liabili�es, VAT, PAYE, NSITF, and other payables such as; transporters freight account, rents received in advance and security deposits.

31-Dec-19 31-Dec-18 Non-trade payables and other creditors N’000 N’000

Unclaimed dividend

605,811 621,443

Statutory payables (VAT, WHT etc.)

486,534 285,318

Other payables

1,715,438 2,182,836

Security deposits

368,712 375,653

3,176,495 3,465,250


ardova plc




Company 31-Dec-19 31-Dec-18 N’000 N’000

27. Financial instruments Credit risk Exposure to credit risk The carrying amount of financial assets

represents the maximum credit exposure. The maximum exposure to credit risk at the repor�ng date was:

Trade and receivables (Note 19)

16,677,971 28,611,871

Cash and cash equivalents (Note 20)

1,867,487 (8,319,277)

18,545,458 20,292,594

Forex exposure

Bank balances denominated in other currencies

554,297

292,828

Trade and other receivables denominated in other currencies

-

1,520,280

Liabili�es dominated in other currencies

-

(594,360)

554,297

1,218,748

Gross

Impairment

Gross

Impairment

31-Dec-19

31-Dec-19

31-Dec-18

31-Dec-18

N'000

N'000

N'000

N'000

Trade Receivables

The aging of loans and receivables at the

repor�ng date was:

0-2 months

2,799,840

2,819

925,869

11,065

2-3 months

152,203

5,299

65,215

1,943

3-6 months

20,142

851

36,950

2,477

6-12 months

50,682

37,700

49,606

724

More than 12 months

1,428,981

1,151,55

2,216,080

1,125,684

4,451,848

1,198,244

3,293,720

1,141,893


ardova plc




27. Financial instruments (cont’d)

Gross Impairment Gross Impairment 31-Dec-19 31-Dec-19 31-Dec-18 31-Dec-18 N'000 N'000 N'000 N'000 Other Receivables

The aging of loans and receivables at the

repor�ng date was: 0-2 months 5,998,584 - 2,031,888 - 2-3 months 61,458 - 659,112 -

3-6 months

256,269 -

1,092,782 -

6-12 months

39,471 10,933

462,393 -

More than 12 months

6,952,985 1,143,678

20,017,479 1,151,212

13,308,767 1,154,611

24,263,654 1,151,212

Gross

Impairment

Gross

Impairment

31-Dec-19

31-Dec-19

31-Dec-18

31-Dec-18

N'000

N'000

N'000

N'000

The Company

Analysis of financial assets impaired.

Trade receivables

4,451,849

1,198,244

3,293,718

1,141,893

PSF Receivables

516,713

516,713

516,713

516,713

Advances to contractors

540,000

540,000

549,686

549,686

Other Receivables

67,338

67,338

66,260

66,260

Receivables from Property customers

15,709

15,709

15,709

15,709

Receivables from former employees

14,850

14,850

2,844

2,844

5,606,459

2,352,854

4,444,930

2,293,105

The average credit year on sales of goods is 60 days. Specific impairment is made for trade receivables that are past due and doub�ul of recovery based on the probability of default. Receivables not specifically impaired are impaired collec�vely using the historical probability of default over the last three repor�ng years. Trade receivables are considered to be past due when they exceed the credit year granted.


ardova plc



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20

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as

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N

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-

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4,5

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nes

N

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2017

-

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575,

816

575,

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4,5

73,4

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7,9

97,8

92

9,2

46,9

86


ardova plc



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the

imp

act

of n

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g ag

reem

ents

.

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rryi

ng

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ntr

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al

6 m

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re t

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ou

nt

cash

flo

ws

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less

6-12

mo

nth

s

1-2

year

s

2-5

year

s

5 ye

ars

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

N’0

00

31 D

ece

mb

er

201

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-

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116,

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28,5

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able

s

26,4

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9,4

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-

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no

t ex

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ted

th

at t

he

cash

flo

ws

incl

ud

ed in

th

e m

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rity

an

alys

is c

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ld o

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r si

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can

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at s

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ifica

ntl

y d

iffer

ent

amo

un

ts.


ardova plc




28. Con�ngencies

a) Guarantees The Company did not have any guarantees as at 31 December 2019.

b) Pending li�ga�on and claims

The Company is engaged in lawsuits that have arisen in the normal course of business. The con�ngent liabili�es in respect of pending li�ga�on and claims amounted to N511 Million at 31 December 2019 (31 December 2018:

N116 Million). In the opinion of the directors, and based

on independent legal advice, the Company is not expected to suffer any material loss arising from these claims. Thus, no provision has been made in these consolidated financial statements.

c)

Financial commitments

The Directors are of the opinion that all known liabili�es and commitments, which are relevant in assessing the state of affairs of

the Company, have been taken into considera�on in the

prepara�on of this financial statements.

29. Transac�ons with key management personnel

Loan to directors

No loan to directors was issued during the year ended 31 December 2019.

2019

2018

Directors

Chairman

Directors

Chairman

N’000

N’000

N’000

N’000

Directors emoluments

Fee

750

200

3,000

850

Allowances

61,382

11,111

62,855

11,375

62,132

11,311

65,855

12,225

There were eight (8)

Directors on the Company’s Board up to June 20, 2019 and subsequent to that date a new set of six (6) Directors currently sit on the Company’s Board as at 31 December 2019.

Execu�ve Directors are not en�tled

to and do not get paid directors fees.

Company

2019

2018

1.

Chief Execu�ve Officer

Olumide Adeosun

Akin Akinfemiwa

2.

Execu�ve Director -

Finance and Risk Management

Moshood Olajide

Julius Omodayo-Owotuga

The Company has 153 employees as at 31 December 2019 and 161 as at December

2018.


ardova plc




30. Transac�ons with key management personnel (cont’d)

Transac�ons with key management personnel

Key management of the Company are the execu�ve members of Ardova Plc. Key management personnel remunera�on includes the following expenses:

Company

31-Dec-19 31-Dec-18

N’000 N’000

Key management personnel compensa�on comprised:

Short-term employee benefits:

-

Salaries including allowances 169,272

139,933

169,272 139,933

Post-employment benefits:

-

Defined contribu�on to compulsory pension fund scheme

11,410

10,193

Defined benefit gratuity scheme

15,428

13,786

196,110

163,912

The Company

31-Dec-19

31-Dec-18

Range

Number

Number

Below N1,000,000

-

11

N1,000,001 -

N2,000,000

-

5

N2,000,001 -

N3,000,000

26

18

N3,000,001 -

N4,000,000

19

38

N4,000,001 -

N5,000,000

31

12

N5,000,001 -

N6,000,000

37

26

N6,000,001 -

N7,000,000

10

16

N7,000,001 -

N8,000,000

11

9

N8,000,001 -

N9,000,000

3

8

N9,000,001 -

N10,000,000

5

3

N10,000,001 and above

11

15

Total

153

161

*These are annual emoluments


ardova plc



No

tes

to t

he

fin

an

cia

l sta

tem

en

ts

ela

ted

par

ty t

ran

sac�

on

s

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at

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em

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ear

31

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31

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a�er

th

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g d

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that

co

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hav

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ad a

ny

mat

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l eff

ect

on

th

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of

affai

rs o

f th

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pan

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at

31 D

ecem

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on

th

e p

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r th

e ye

ar e

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hat

dat

e th

at h

ave

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tak

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to a

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unt

s in

th

ese

fin

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tate

men

ts.

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or

year

co

rre

spo

nd

ing

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s

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tain

pri

or

year

bal

ance

s h

ave

been

rec

lass

ified

to

en

sure

pro

per

dis

clo

sure

an

d u

nif

orm

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wit

h c

urr

ent

year

’s

pre

sen

ta�

on

. Th

ese

recl

assi

fica

�o

ns

hav

e n

o

net

eff

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on

thes

e fi

nan

cial

sta

tem

ents

.

31

. R

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an

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ou

tsta

nd

ing

as a

t 3

1 D

ece

mb

er

31-D

ec-

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N’0

00

-

7,4

66.4

67

681,

341

13,2

45

(22

6,88

0)

AP

61,4

92

16,8

47

8,0

12,5

129

32

.

At

31

un

�l3

1

9 an

d

33.


ardova plc



Statement of value added

The Company

31-Dec-19 31-Dec-18

N'000 % N'000 %

Turnover 176,550,766 134,706,306

Other income 4,317,155 1,859,809

Finance income 4,555,095 1,181,038

185,423,016 137,747,153

Bought in materials and services:

-

Local

(171,389,319)

(121,828,431)

-

Imported

-

(8,476,318)

Value added

14,033,697

100

7,323,221

100

APPLIED AS FOLLOWS:

To pay employees:

Salaries, wages and other staff costs

2,402,697

18

1,890,182

25

To pay Government:

Taxa�on

971,378

7

292,073

4

To pay providers of capital:

Interest on borrowings

4,825,394

34

3,101,580

42

Retained in the business

Deferred taxa�on

(232,371)

(2)

104,201

1

Deprecia�on and amor�sa�on

2,151,459

15

1,422,098

19

Profit transferred to reserves

3,915,140

28

631,471

9

14,033,697

100

7,442,404

100

Value added represents the addi�onal wealth which the Company has been able to create/erode by its own and its employees' efforts. This statement shows the alloca�on of that wealth among the employees, government, providers of capital and that retained for the future crea�on of more wealth.


ardova plc

Financial summary

2019 2018 2017 2016 2015 N’000 N’000 N’000 N’000 N’000

Funds employed

Share capital 655,314 655,314 655,314 655,314 546,095

Share premium 8,071,943 8,071,943 8,071,943 8,071,943 8,181,162

Other reserves (5,041) (7,752) (7,752) (7,752) (7,752)

Retained earnings

8,829,683 6,418,039

5,805,859 4,543,801

5,691,196

Total equity a�ributable to equity holders of the Company

17,551,899

15,137,544

14,525,364

13,263,306

14,410,701

Treasury stock

(1,388,574)

(1,388,574)

(1,388,574)

(1,388,574)

(1,388,574)

Total equity

16,163,325

13,748,970

13,136,790

11,874,732

13,022,127

Current liabili�es

26,656,285

39,814,294

38,232,417

49,892,291

49,341,673

Non-current liabili�es

4,199,344

7,635,015

10,748,422

11,691,972

3,377,160

47,018,954

61,198,279

62,117,629

73,458,995

65,740,960

Assets employed

Non-current assets

14,892,341

11,607,197

22,654,311

22,171,280

22,846,995

Current assets

32,126,613

49,591,082

39,463,318

51,287,715

42,893,965

47,018,954

61,198,279

62,117,629

73,458,995

65,740,960

2019

2018

2017

2016

2015

N’000

N’000

N’000

N’000

N’000

Revenue

176,550,766

134,706,306

86,176,010

131,613,962

108,853,855

Opera�ng profit

4,924,446

2,949,086

2,587,372

6,707,897

5,780,627

Profit before income tax

4,654,147

1,028,544

1,895,670

5,442,482

5,831,755

Profit a�er tax

3,915,140

631,471

1,262,058

3,235,829

4,794,578

Basic & diluted earnings per share in (N)

3.00

0.48

0.97

2.48

4.39




ardova plc

�

PROXY FORM

41st Annual General Meeting of the Members ro be held at The Panoramic View Hall,

Civic Centre, Victoria Island, Ozumba Mbadiwe, Lagos, on the 28th day of August 2020, 10:00a.m

I/We…………………………………………………........................

being a member/members of Ardova Plc

hereby appoint (please tick one out of

the underlisted nominated proxies):

Ÿ Mr. AbdulWasiu Sowami; or

as my/our proxy to attend and vote for

me/us and on my/our behalf at the

Annual Genera l Meet ing of the

Company to be held on August 28th,

2020 and at any adjournment thereof.

Ÿ Sir Sunny Nnamdi Nwosu, KSS;

or

Ÿ Mrs . Adeb is i O luwayemis i

Bakare; or

Ÿ Mr. Boniface Okezie

Ÿ Mr. Patrick Ajudua; or

Signature of Shareholder……………………….....

Dated this …….........day of ………………. 2020.

Name of Shareholder………..…………………..........

NUMBER OF SHARES HELD

RESOLUTIONS FOR AGAINST

To consider and approve the Audited Financial

Position with the Statement of Profit or Loss

and other Comprehensive Income for the year

ended 31st December 2019, the Report of

the Directors and the Report of the Auditors

and Statutory Audit Committee thereon

To re-elect Mr. Mohammed Aminu Umar to the

Board of Directors as a Director whose term

expires in accordance with Articles 88 and 89

of the Company’s Articles of Association.

To author ize the Directors to fix the

remuneration of the External Auditors

To elect/re-elect the members of the

Statutory Audit Committee

To fix the remuneration of the Directors

Ardova Plc (Formerly Forte Oil Plc) 135

ardova plc

I/We…………………………………………………........................

being a member/members of Ardova Plc

hereby appoint (please tick one out of

the underlisted nominated proxies):

Dated this …….........day of ………………. 2020.



Ÿ Mrs. Adebisi Oluwayemisi Bakare; or


as my/our proxy to attend and vote for

me/us and on my/our behalf at the

Annual Genera l Meet ing of the



Ÿ Sir Sunny Nnamdi Nwosu, KSS; or





To consider and if thought fit, pass the

following resolutions as special resolutions of

the Company:

Ÿ That Art ic le 98 of the Art ic les of

Association of the Company be is hereby

amended to read as follows:Ÿ “The Quorum necessary for the transaction of the

business of the Directors may be fixed by the

Directors and unless so fixed shall be “three. A

meeting of the Board of Directors may be held by

conference call, video call or other digital or electronic

means. A Director shall be entitled to participate in a

Board Meeting by any digital or electronic means and

where a Director so participates, he shall be counted

for the purpose of determining whether a quorum has

been constituted and for determining the outcome of

any vote taken at the Meeting.”

Annual Reports and Financial Statements - Yr End, 31 Dec, 2019Proxy Form 136

ardova plc

I/We…………………………………………………........................

being a member/members of Ardova

Plc hereby appoint (please tick one out

of the underlisted nominated proxies):



Ÿ Sir Sunny Nnamdi Nwosu, KSS; or

Ÿ Mrs. Adebisi Oluwayemisi Bakare; or


as my/our proxy to attend and vote

for me/us and on my/our behalf at the

Annual General Meeting of the



Dated this …….........day of ………………. 2020.





Ÿ “A Resolution in writing signed (or approved by

letter, electronic mail, telegram or telex, or by any

other electronic means whatsoever) by all the

Directors or (unless either the Directors appointing

the Committee or the regulations imposed by the

Directors on such Committee shall otherwise direct),

by all the members of a Committee for the time being

shall be as valid and effectual as if it had been passed

at a meeting of the Directors or as the case may be,

such Committee duly called and constituted. Such

resolution may be contained in one document or

electronic transmission, or in several documents or

electronic form (email or otherwise), each signed or

approved by the Directors or Members of the

Committee concerned. For the purpose of this Article,

the signature or electronic approval as aforesaid of an

alternate Director (if any) entitled to notice of

meeting of Directors shall suffice in place of the

signature or approval the Director appointing him.”

Ÿ That the Articles of Association of the

Company be and is hereby amended by

introducing a new Article 99, which shall

read as follows:

Ÿ T h a t s u b s e q u e n t A r t i c l e s s h a l l b e

renumbered accordingly.

* Please indicate with an “X” in the appropriate box how you wish your votes to be cast on the

resolutions set above. Unless otherwise instructed, the proxy will vote or abstain from voting at his

discretion.


ardova plc

To be valid, this proxy form should be duly stamped by the Commissioner of Stamp Duties and signed before posting it to

reach the address overleaf not later than 48 hours before the time for holding this meeting.

Please note that no action should be taken on the proxy form if the member is attending the meeting.

NOTE:

Ÿ In view of the health and safety measures in place by the Government and the Health

Annual General Meeting exercise their right to vote despite not being physically

present at the meeting.

Authorities including restricting the number of persons at a gathering, this Proxy

Ÿ Members may appoint a Proxy of their choice from the following persons: (a) Mr.

Form has been prepared to enable Shareholders entitled to attend and vote at the

arrangements at its cost, for the stamping of the duly completed and signed proxy

Ÿ In line with the Corporate Affairs Commission Guidelines, the Company has made

AbdulWasiu Sowami, (b) Sir Sunny Nnamdi Nwosu (KSS), (c) Mrs. Adebisi

Ÿ If the Shareholder is a Corporation, this form must be executed under its Common

Seal or under the hand of some officers or an Attorney duly authorized.

Oluwayemisi Bakare, (d) Mr. Patrick Ajudua, (e) Mr. Boniface Okezie.

gain entrance to the meeting.

Ÿ The Proxy must produce the Admission Card sent with the Notice of the meeting to

forms submitted to the Company’s Registrars within the stipulated time.


ardova plc

Ÿ The shareholder or his proxy must produce the admission card to gain entrance to the Annual General Meeting.

Please admit *-------------------------------------------------------------------------* to the 41st Annual General Meeting

A member (shareholder) who is unable to attend an Annual General Meeting is allowed by law to vote by proxy and the

above proxy form has been prepared to vote in case you cannot personally attend the meeting. The names of five

nominated proxies, who are shareholders of the Company have been entered on the form to ensure that someone will at

the meeting act as your proxy.

Signature of person attending

Ÿ The name of the shareholder must be written in BLOCK LETTERS on the form marked (*). Please stamp and sign the

proxy form if you are not attending the meeting and post it so as to reach the address shown overleaf not later than

August 21, 2020. If executed by a corporation, the proxy form should be sealed with a common seal.

IF YOU ARE UNABLE ATTEND THE MEETING

Lagos on the 28th day of August 2020, 10:00a.m .

of the members of Ardova Plc holding at The Panoramic View Hall, Civic Centre, Victoria Island, Ozumba Mbadiwe,

NUMBER OF SHARES HELD …………..............................................................

ADMISSION CARD

IMPORTANT

Ÿ Shareholders or their proxies are requested to sign the admission card before attending the meeting.

______________________________


ardova plc

COMPANY’S REGISTRAR

PLOT 89 A, AJOSE ADEOGUNVICTORIA ISLAND LAGOS,

LAGOS STATE.

AFFIX YOUR STAMP HERE

VERITAS REGISTRARS


ardova plc

E-DIVIDEND MANDATE

Veritas RegistrarsPlot 89 A, Ajose Adeosun StreetVictoria Island, Lagoswww.veritasregistrars.com

Email: [email protected]

Tel: +234 1-2784167, +234 1-2784168

Dear Sir,

I/we hereby request that all dividend(s) due to me/us from my/our holding in Ardova Plc be paid directlyto my/our Bank named below

Annual Reports and Financial Statements - Yr End, 31 Dec, 2019E-Dividend Mandate 141

ardova plc

In line with the developments in electronic communications to circumvent the usual issue of late receipt of corporate

information, we would like to introduce to our shareholders the electronic delivery of corporate information such as

annual reports and financial statements, proxy form etc.

Regards,

Ag. Company Secretary and General Counsel

Signature: ……………………………………………………………………………………………...

With this service, as an alternative to receiving paper copies of corporate information and materials, you can elect to

receive an electronic copy thereof via an email the will provide an electronic link to the corporate information and/or

receive a compact disk of the corporate information by post.

Telephone Number: ………………………………………………………………………………….

Date: ……………………………………………………………………………………………………

AUTHORITY TO ELECTRONICALLY

OLADEINDE NELSON-COLE

13 Walter Carrington Crescent

Victoria Island

information of the Company electronically.

Ardova Plc hereby authorise(s) the Company and agree to receive all future corporate

CSCS Clearing House Number: ……………………………………………………………………

Postal Address: ………………………………………………………………………………………..

If you so elect, kindly complete the authority to electronically receive information attached below and return to the

Company Secretariat at the Head Office a No. 13, Walter Carrington Crescent, Victoria Island, Lagos.

FRC/2019/NBA/00000019918.........................................................................................................................................

Lagos

I/We ……………………………………………………………………………………………………. being a member/members of

RECEIVE CORPORATE INFORMATION

Email(s): ………………………………………………………………………………………………...

CSCS Account Number: ……………………………………………………………………………


ardova plc

annual report and financial statements plc 2019...50 52 independent auditor’s report 53 59 proxy...

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