northern nigeria flour mills plc - nigerian...

NORTHERN NIGERIA FLOUR MILLS PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016


51 52

FINANCIAL STATEMENTS 31 MARCH 2016

CONTENT PAGE

Corporate information 1

Results at a glance 2

Report of the directors 3

Statement of directors' responsibilities 7

Independent auditors' report 8

Statement of profit or loss and other comprehensive income 9

Statement of financial position 10

Statement of changes in equity 11

Statement of cash flows 12

Notes to the financial statements 13

Other national disclosures 50

Statement of value added Financial summary

1

NORTHERN NIGERIA FLOUR MILLS PLC CORPORATE INFORMAT ION

DIRECTORS: Alhaji (Dr.) Aminu Dantata, OFR Mr. John G. Coumantaros Alhaji Rabiu M. Gwarzo, OON Mr. Gert Kriek Alhaji Sani Umar Malam Mahmud Ahmed Mr. Peter Kradolfer Mr. Paul M. Gbededo Alhaji Y. Olalekan A. Saliu Alhaji Mahmoud Isa-Dutse Chief (Sir) Emmanuel A. Ukpabi Alhaji Garba Aliyu Hungu Dr. Jibrilla Mohammad Alhaji Sadiq A. Usman

-Chairman (US. Citizen) - Vice Chairman -Vice

Chairman (South African) -Managing Director

-Deputy Managing Director (Swiss)

Resigned 23/11/15 Resigned 08/09/15 Resigned 17/10/15 Appointed 17/10/15 Appointed 15/10/15

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REGISTERED OFFICE:

POSTAL ADDRESS:

HOLDING COMPANY:

COMPANY SECRETARY:

JOINT AUDITORS:

REGISTRAR AND TRANSFER OFFICE:

BANKERS:

SOLICITORS:

15, Maimalari Road, Bompai Industrial Estate, Kano

P.O.Box 6640 Kano

E-mail: [email protected]

Flour Mills of Nigeria Plc

Miyetti Nominees Limited 26, Post Office Road Kano Akintola Williams Deloitte Aminu Ibrahim & Co (Chartered Accountants) (Chartered Accountants) 4th Floor Bank of Industry Building City Plaza Plot 256, Zone AO Cadastral Plot 596 Ahmadu Bello Way Off Herbert Macaulay Way Garki, FCT Central Business District Abuja, FCT

Flour Mills Registrars Limited 45, Eric Moore Road Iganmu (BAGCO) Building P.O.Box 341 Apapa Lagos State

Access Bank Plc First Bank of Nigeria Plc Guaranty Trust Bank Plc Sterling Bank Plc Union Bank of Nigeria Plc Zenith Bank Plc

Messrs J. B Majiyagbe & Co. 4, Human Rights Avenue P.O.Box 726 Kano

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NORTHERN NIGERIA FLOUR MILLS PLC RESULTS AT A GLANC E

2016 2015 %

N'000 N'000 Change

Revenue 979,038 10,529,075 (91)

Loss before taxation (233,071) (215,430) 8

Loss for the year (197,240) (199,558) (1)

Total comprehensive loss for the year (175,666) (222,569) (21)Retained earnings 1,072,316 1,301,442 (18)Share capital 89,100 89,100 -Shareholders' fund PER SHARE DATA:

1,250,937 1,480,063 (15)

Based on 178,200,000 (2015:178,200,000) ordinary shares of 50k each: Loss per share (Kobo): - Basic (111) (112) (1)- Diluted (111) (112) (1)Net assets per share (Kobo) - Basic

702 831 (15)

Number of employees 65 221 (71)

Northern Nigeria Flour Mills Pic Financial Statements for the year ended 31 March 20 16Directors' report

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Directors Alhaji (Dr,) Aminu Dantata, CON Mr. John G. Coumantaros Alhaji Rabiu Muhammad Gwarzo, OON Mr. Gert Kriek Chief (Sir) Emmanuel A. Ukpabi (KJW) Alhaji Sani Umar Mr. Paul M. Gbededo Alhaji Y. Olalekan A. Saliu Dr. Mahmoud Isa-Dutse Alhaji Garba Aliyu Hungu Mallam Mahmud Ahmed Mr. Peter Kradolfer Dr. Jibrilla Mohammed Sadiq A. Usman

Designation Non-executive Non-executive Non-executive Executive Non-executive Executive Non-executive Non-executive Non-executive Non-executive Non-executive Non-executive Non-executive Non-executive

as at 31 March 2016 DIRECT INDIRECT

Shareholding Shareholding 1,111,195 9,894,362

609,598 NIL 163,502 NIL 237,363 NIL 97,881 NIL

193,216 NIL

The Directors have the pleasure in submitting to the members of the Northern Nigeria Flour Mills Pic their annual report together with the audited financial statements for the year ended 31 March 2016.

1 Principal activity The Company's main business is milling of wheat and other associated grains.

2 Directors and their interests

As at 31 March 2016, the following directors were in office:

Office Chairman Vice chairman Vice chairman Managing director Resigned 08/09/15

Resigned 23/11/15 Resigned 17/10/15

Appointed 17/10/15 Appointed 15/10/15 In accordance with Section 259 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, Two Directors, Dr. Mahmoud Isa Dutse, Alhaji Garba Aliyu Hungu resigned during the year and were replaced by Dr. Jibrilla Mohammed and Sadiq A. Usman.

3 Directors' shareholding

The 31 March 2016 interests in the issued share capital of the company as recorded in the Register of members and/ or notified by them for the purpose of Section 275 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004 are as follows:

Interests in shares

Names of Directors

Alhaji (Dr,) Aminu Dantata, CON Alhaji Rabiu Muhammad Gwarzo, OON Chief (Sir) Emmanuel A. Ukpabi (KJW) Alhaji Sani Umar Alhaji Y. Olalekan A. Saliu Dr. Mahmoud Isa-Dutse


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4 Holding company

The Company's holding company is Flour Mills of Nigeria Pic which holds 53.06% (2015: 53.06%) of the company's equity. Flour Mills of Nigeria Plc is incorporated in Nigeria.

5 Directors' responsibilities

In accordance with the provision of Sections 334 and 335 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, the Directors are responsible for the preparation of financial statements which give a true and fair view of the financial position of the Company as at 31 March 2016 and the results of its operations, cash flows and changes in equity for the period ended, in compliance with International Financial Reporting Standards (IFRS) and in manner required by the Companies and Allied Matters Act of Nigeria, and the Financial Reporting Council of Nigeria Act, 2011. In doing so, they ensure that:

- proper accounting records are maintained; - applicable accounting statements are followed; - suitable accounting policies are adopted and consistently applied; - judgments and estimates made are reasonable and prudent; - the going concern basis is used, unless it is inappropriate to presume that the Company will continue in - Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets, - Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets, prevent and detect fraud and other irregularities.

6 Corporate governance

The Company is committed to the best practice and procedures in corporate governance. Its business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. This enables the Company and Management to accomplish the N's strategic goals, ensure good growth and corporate stability for the benefit of all stakeholders.

Members of the Board of Directors hold a minimum of four quarterly meetings to approve the Company's business strategy and objectives, decide on policy matters, direct and oversee the company's affairs, progress, performance, operations, finances; and ensure that adequate resources are available to meet the company's goal and objectives. Attendance of Directors at quarterly meetings is very good.

In line with provisions of Section 258(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, record of Directors' attendance at Board meetings is available for inspection at the Annual General Meeting.

Frequency and attendance of Board meetings

The Board held - meetings during the financial year ended 31 March 2016. The notice for each meeting was in line with the Company's Articles of Association and board papers are usually provided to Directors in advance.

A summary of record of attendance at the meetings is presented below:

Audit

Committee

Composition Pursuant to section 359(3) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, the Company has put in place an Audit Committee comprising three Directors and three shareholders as follows:

Mr. J. O. Salami - Chairman Alhaji Rabi'u M. Gwarzo OON Mr. Soares P. Akinola Malam Mahmd Ahmed Dr. Jibrilla Mohammed Alhaji Bashir A. Muhammed


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The functions of the Committee are laid down under section 359 (6) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004.

7 Events after the reporting period

There were no significant developments since the reporting date which could have had a material effect on the state of affairs of the Company at 31 March 2016 and the profit for the year ended on that date which have not been adequately provided for or recognized.

8 Property, plant and equipment

Movements in Property, plant and equipment during the year are shown in Note 13 to the financial statements. In the opinion of the Directors, the market value of the Company's properties is not less than the value shown in the audited financial statements.

9 Human Capital Disabled Persons The Company employs disabled persons who are found to be suitable to particular types of work.

Health, Safety at work and welfare of employees

The Company always ensures that high hygeinic standard of the premises is maintained. Work environment is always kept safe and conducive. In order to ensure prompt attention to its employees, the company operates its own clinic. In addition, the Company has agreement with a number of private hospitals run by qualified medical doctors to whom serious cases are referred to for treatment and/or admission.

Lunch is provided in the staff canteen at heavily subsidized prices for junior and senior staff.

Employees Involvement and Training

The company encourages the formation of Trade Unions. Staff welfare scheme is currently in operation. A well established on-the-job training scheme is in place for all categories of staff.

10 Auditors

The joint auditors Messrs. Akintola Williams Deloitte and Aminu Ibrahim & Co. have indicated their willingness to continue in office as the auditors for the Company in accordance with Section 357(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004. A resoution will be proposed to authorize the Directors to fix their remuneration.

11 Nature of business

Northern Nigeria Flour Mills Plc was incorporated in Nigeria with interests in the manufacturing industry. The Company operates in Kano state, Nigeria. There have been no material changes to the nature of the Company's business from the prior year.

12 Ultimate holding company

The Company's ultimate holding company is Flour Mills of Nigeria Plc which is incorporated in Nigeria.

13 Secretary

The Company secretary is Miyetti Nominees Limited.

Business address: 26, Post Office Road, Kano, Nigeria.


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- Director

14 Date of authorisation for issue of financial sta tements

The financial statements have been authorised for issue by the directors on Thursday, 30 June, 2016. No authority was given to anyone to amend the financial statements after the date of issue.

The financial statements set out on pages 9 to 52, which have been prepared on the going concern basis, were approved by the directors on 28 June 2016 and were signed on its behalf by:

Approval of financial statement

- Director

- Director

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On behalf of the Directors of the Company

Statement of Directors' Responsibilities for the pre paration and approval of the Financial Statements Fo r the year

ended 31 March 2016

The Directors of Northern Nigeria Flour Mills Pic are responsible for the preparation of the financial statements that give a true and fair view of the financial position of the company as at 31 March 2016 and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011.

In preparing the financial statements, the Directors are responsible for: - properly selecting and applying accounting policies; - presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information; - providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to

enable users to understand the impact of particular transactions, other events and conditions on the company's financial position and financial performance; and

- making an assessment of the company's ability to continue as a going concern.

The Directors are responsible for: - designing, implementing and maintaining an effective and sound system of internal controls throughout the

company; - maintaining adequate accounting records that are sufficient to show and explain the company's transactions

and disclose with reasonable accuracy at any time the financial position of the company and which enable them to ensure that the financial statements of the company comply with IFRS;

- maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; - taking such steps as are reasonably available to them to safeguard the assets of company; and - preventing and detecting fraud and other irregularities.

Going Concern: The Directors have made an assessment of the Company's ability to continue 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 March 2016 were approved by directors on 28 June 2016

Alh. Y.O.A. Saliu FRC/2013/ICAN/00000003595 28 June 2016

Alhaji Sani Umar F RC/2014/I0DN/00000008814

28 June 201628


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The accompanying notes on pages 13 to 49 and other national disclosures on pages 50 to 52 form an integral part of these financial statements.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR

THE YEAR ENDED 31 MARCH 2016 Notes 2016 2015

N'000 N'000

Revenue 5 979,038 10,529,075Cost of sales 7 (1,079,755) (10,272,982)Gross (loss)/profit (100,717) 256,093

Other operating income 8 246,552 17,039Other gains or losses 9 (90,330) (77,789)Selling and distribution expenses (11,619) (11,639)Administration expenses 10 (324,366) (463,570)Operating loss (280,480) (279,866)

Investment income 11 47,409 64,436

Loss before tax 13 (233,071) (215,430)Income tax credit 21.1 35,831 15,872

Loss for the year

(197,240) (199,558)

Other comprehensive loss for the year, net of taxes Items that will not be reclassified subsequently to profit or loss:

Remeasurement of defined benefit obligation 26 21,574 (23,011)

Total comprehensive loss for the year

(175,666) (222,569)

Earnings per share (Kobo): - Basic

(111) (112)- Diluted (111) (112)


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Notes 2016 N'000

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016

Assets

Non-current assets

Property, plant and equipment Intangible assets Deferred tax assets

Total non-current assets Current

assets

Inventories Trade and other receivables Cash and bank balances Total current assets Total assets

Equity and Liabilities Capital and

reserves Share capital Share premium Retained earnings Total

equity Non-current liabilities Deferred tax liabilities Retirement benefit obligation Long service awards Total

non-current liabilities Current

liabilities Trade and other payables Provisions Current tax liabilities Total current liabilities

Total liabilities

Total equity and liabilities

The financial statements on pages 9 to 52, were approved by the board of directors on 28 June 2016 and signed on its behalf by:

2015 N'000

Alhaji Y. O. A. Saliu - Director FRC/2013/ICAN/0000 0003595

Alhaji Sani Umar - Deputy Managing Director FRC/2014 /IODN/00000008814

Alhaji Ahmed Murtala Ahmadu - Chief Finance Officer FRC/2016/ICAN/00000014395

The accompanying notes on pages 13 to 49 and other national disclosures on pages 50 to 52 form an integral part of these financial statements.

13 616,533 728,10714 - 1,28921.4 42,124 5,325

658,657 734,721

15 396,133 427,71416 296,451 319,12317 388,519 942,153

1,081,103 1,688,990

1,739,760 2,423,711

18 89,100 89,10019 89,521 89,52120 1,072,316 1,301,442

1,250,937 1,480,063

21.4

22 90,908 293,63823 22,638 50,270

113,546 343,908

24 367,947 530,62325 - 47,12621.3 7,330 21,991 375,277 599,740

488,823 943,648

1,739,760 2,423,711


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STATEMENT OF CHANGES IN EQUITY AT 31 MARCH 2016 Share Share Retained Total capital premium earnings

N'000 N'000 N'000 N'000Balance at 31 March 2014 89,100 89,521 1,595,291 1,773,912

Dividend declared

(71,280) (71,280)Loss for the year - - (199,558) (199,558)Other comprehensive loss for the year - - (23,011) (23,011)

Balance at 31 March 2015 89,100 89,521 1,301,442 1,480,063

Dividend declared

(53,460) (53,460)Loss for the year - - (197,240) (197,240)Other comprehensive income for the year - - 21,574 21,574

Total comprehensive loss for the year

(175,666) (175,666)

Balance at 31 March 2016 89,100 89,521 1,072,316 1,250,937


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Notes 2016 N'000

2015N'000

(197,240) (199,558)

87,230 (17,098) 62,922 84,111 22,097

(47,409)

95,509(2,265)

14,7701,222

(64,436)(469)

(5,387) (155,227)

31,581 (61,439)

(162,676) (203,253) (27,632) (36,799) (47,126) (14,661)

1,157,223126,029

(549,830)8,038

39,980(47,725)

47,126(70,515)

(527,392) 555,099

13 (20,191) 47,409

2,990(135,472)

64,436

27,218 (68,046)

20 (53,460) (71,280)

(53,460) (71,280)

(553,634) 942,153

415,773526,380

17 388,519 942,153

STATEMENT OF CASH FLOWS

AT 31 MARCH 2016

Cash flows from operating activities Loss for the year

Adjustments for: Depreciation and ammortisation Adjustment to depreciation Property, plant and equipment adjustment Provision for bad and doubtful balances Provision no longer required Interest received Gain on asset disposal

Operating cash flows before movements in working capital

Changes in assets and liabilities: Decrease in inventories (Increase)/decrease in trade and other receivables Decrease in trade and other payables (Decrease)/increase in retirement benefits (Decrease)/increase in long service awards Decrease in deferred taxation (Decrease)/increase in provisions Decrease in tax payable

Net cash (used in)/generated by operating activitie s Cash flows

from investing activities Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Interest received

Net cash provided by/(used in) investing activities Cash flows

from financing activities Dividend paid

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

1 General Information

1.1 Legal form

Northern Nigeria Flour Mills Pic was incorporated as a private limited company on 29 October 1971. The Company was converted to a public limited liability company in 1978 and was quoted on the Nigeria Stock Exchange in the same year. The Company's registered office and factory is located at No 15 Maimalari Road, Bompai, Kano. Its present ownership structure is 47% owned by individuals and institutions in Nigeria and 53% owned by Flour Mills Nigeria Plc which is the parent Company and ultimate controlling party.

1.2 Principal activity

The Company's main business is milling of wheat, maize and other associated grains.

1.3 Going concern status

The Directors believe that there is no intention or threat from any source to curtail significantly its line of business in the foreseeable future. Thus, these financial statements are prepared on going concern basis.

1.4 Financial period

The financial statements cover the financial period from 1 April 2015 to 31 March 2016 with comparative information for the year ended 31 March 2015.

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Employee Contributions (Amendments to IAS 19)

Amendments to IFRSs Annual improvements To IFRSs 2010-2012 cycle

Amendments to IFRSs Annual Improvements To IFRSs 2011-2013 cycle

1 -Jul-14

1 -Jul-14

NOTESTOTWE ^ENAIiAdfJLOU'FAlTi^Mt S^ lffe cFOR THE YEAR ENDED 31 MARCH 2016

2. Application of new and revised International fin ancial Reporting Standards (IFRS)

2.1 The following revisions to accounting standards and pronouncements were issued and effective at the reporting period

Pronouncement Nature of change Required to be implemented for periods beginning on

__________________________________________________________ or after ___________ The amendments clarify how an entity should account for 1 -Jul-14 contributions made by employees or third parties that are linked to services to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employees. For contributions that are independent of the number of years of service, the entity may recognise the contribution as a reduction of the service cost in the period in which the related service is rendered, or attribute them to employees' period of service either using the plan's contribution formula or a straight-line basis. Whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the

employee's periods of service.

The Annual Improvements to IFRSs 2010-2012 cycle includes a number of amendments to various IFRSs. Amendments to IFRSs include:

• Amendments to IFRS 2 share based payments • Amendments to IFRS 3 Business combinations • Amendments to IFRS 8 Operating Segments • Amendments to IFRS 13 Fair Value measurement • Amendments to IASs 16 and 38 Property Plant and Equipment and Intangible assets • Amendments to IAS 24 Related Party Disclosure

This makes amendments to the following standards: • Amendments to IFRS 3 Business Combination • Amendments to IFRS 13 Fair Value Measurement • Amendments to IAS 40 Investment Property

The directors of the Company have determined that application of these standards and amendments have no significant impact on the financial statements NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDE D 31 MARCH 2016

2.2 Accounting standards and interpretations issued but not yet effective The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.(Earlier application is permitted in some cases)

Required to be


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implemented for

PronouncementNature of changeperiods Amendments to IFRS 9 IFRS 9 Financial Instruments issued in July 2014 is the lASB'S 1 January 2018 Financial Instruments replacement of IAS 39 Financial Instruments: Recognition and

Measurement. The IASB completed its project to replace IAS 39 in phases, adding to the standard as it finalized each phase.

These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) address issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the following points: • The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value.

• A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity.

• When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.

• An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.

IFRS 14 IFRS 14 specifies the accounting for regulatory deferral account 1 January 2016 balances Regulatory that arise from rate-regulated activities. The standard is available only to first-time Deferra l Accoun ts adopters of IFRSs who recognised regulatory deferral account balances under pervious GAAP. IFRS

14 permits eligible first-time adopters of IFRSs to continue their previous GAAP rate- regulated accounting policies, with limited changes and requires separate presentation of regulatory deferral account balances in the statement of financial position and statement of profit or loss and other comprehensive income.

IFRS 15 Revenue This IFRS establishes a single comprehensive model for entities to 1 January 2018 from Contract with use in accounting for revenue arising from contracts with customers. It is intended to Customers supersede the following standards;

• IAS 18 Revenue • IAS 11 Construction Contracts • IFRIC 13 Customer Programmes • IFRIC 15 Agreements for the Construction of Real Estate • IFRIC 18 Transfer of Assets from Customers; and • SIC 31 Revenue Barter Transactions Involving Advertising Services.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDE D 31 MARCH 2016

2.2 Accounting standards and interpretations issued but not yet effective (cont'd) The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.


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Pronouncement Nature of change Required to be implemented for

periods beginning on or

after Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

The amendments provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 13 Business Combination. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 13 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment of cashgenerating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied.

1 January 2016

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

Amendments to IAS 16 clarifying acceptable method of depreciation on1 January 2016 items of property, plant and equipment while IAS 38 clarifying acceptable method for amortization of intangible asset.

Bearer Plants (Amendments to IAS 16 and IAS 41)

The amendments defines bearer plant and require biological assets that1 January 2016 meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. Also, bearer plants can be measured using either cost model or the revaluation models set out in IAS 16.

Equity Method in The amendments to IAS 27 is to permit investments in subsidiaries, joint 1 January 2016 Separate Financial ventures and assocites to be optionally accounted for using the equity Statements

These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) address 1 January 2016 issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the following points:

Sale or Contribution of Assets between an Investor and its A

ssociate or

Jo

in

t Ven

ture

(Amen

d ments

to

method in the separate financial statements. (Amendments to IAS 27)

• The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity IFRS 10 and IAS measures all of its subsidiaries at fair value.

28) • A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity.

• When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.

• An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.




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Pronouncement Nature of change Required to be implemented for periods beginning on or after

Disclosure Initiative The amendment seek to address perceived impediments to 1 January 2016 (Amendments to IAS preparers exercising their judgement in presenting their financial 1) reports by making the following changes:

• clarification that information should not be obscured by aggregating or by providing immaterial information, materiality considerations apply to the all parts of the financial statements, and even when a standard requires a specific disclosure, materiality considerations do apply;

• clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarification that an entity's share of OCI of equity accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss;

• additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in paragraph 114 of IAS 1.

Agriculture: Bearer The amendments defines bearer plant and require biological 1 January 2016 Plants

assets that meet the definition of a bearer plant to be accounted (Amendments to IAS for as property, plant and equipment in accordance with IAS 16, 16 and IAS 41) instead of IAS 41. Also, bearer plants can be measured using

either cost model or the revaluation models set out in IAS 16.

Investment Entities: These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) 1 January 2016 address Applying the issues that have arisen in the context of applying the consolidation exception for Consolidation investment entities by clarifying the following points: Exception (Amendments to IFRS • The exemption from preparing consolidated financial statements for an intermediate 10, IFRS 12 and IAS parent entity is available to a parent entity that is a subsidiary of an investment entity, 28) even if the investment entity measures all of its subsidiaries at fair value.

• A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity.

• When applying the equity method to an associate or a joint venture, a noninvestment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.




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Pronouncement Nature of change

Required to be implemented for periods beginning on or after

Annual The Annual Improvements to IFRSs 2012-2014 cycle includes 1 January 2016 a Improvements 20122014number of amendments to various IFRSs. These amendments to IFRS include: Cycle

□ IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for- distribution accounting is discontinued.

□ IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements.

□ IAS 9 — Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.

The directors of the Company do not anticipate that applications of these standards and amendments will have a significant impact on the financial statements.


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3 Significant accounting policies

3.1 Statement regarding status of compliance with IFR Ss

The Company's financial statements are presented in accordance with, and comply with, International Financial Reporting Standards (IFRS) and International Reporting Interpretations Committee (IFRIC) interpretations issued and effective at the time of preparing these statements.

3.2 Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The significant accounting policies are set out below:

3.3 Revenue recognition

Revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

3.3.1 Sale of goods

Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: - the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; - the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the economic benefits associated with the transaction will flow to the entity; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably.

3.4 Dividend and interest revenue

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably).

Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.


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3.5 Foreign currency translation For the purpose of these financial statements, the results and financial position of the Company are expressed in Naira, which is the functional currency of the Company, and the presentation currency for the financial statements. The functional and presentation currency was determined by the directors.

In preparing the financial statements of the Company, transactions in currencies other than the Company's functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated 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 not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: • exchange differences on foreign currency borrowings relating to assets under construction for future

productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; • exchange differences on transactions entered into in order to hedge certain foreign currency risks; • exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

3.6 Pensions and other post-employment benefits The Company operates a defined contribution based retirement benefit scheme for its staff, in accordance with the Pension Reform Act of 2014 with employee contributing 8% and employer contributing 10% each of the employee's relevant emoluments. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered the service entitling them to the contributions.

The Company also operates a gratuity scheme for its qualified staff. Benefits are related to the employees' length of service and remuneration. The cost of providing gratuity benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Actuarial gains and losses (if any ) are recognised fully in other comprehensive income . Also, past service cost is recognised immediately in profit or loss.

3.7 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

3.7.1 Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in future years and items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantatively enacted by the end of the reporting period.

3.7.2 Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.


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3.7.2 Deferred tax cont'd Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in the statement of comprehensive income, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

3.8 Property, plant and equipment. Land and buildings mainly comprise factories, depots, warehouses and offices. All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which it is incurred.

Depreciation on property, factory buildings, machinery, vehicles, furniture and equipment is calculated on a straight-line basis at rates deemed appropriate to write off the cost of the assets to their residual values over their expected useful lives.


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3.8 Cont'd Depreciation is recognised so as to write off the cost or valuation of assets (other than land and properties under construction) less their residual values over their useful lives, using the straight-line method, on the following basis:

Buildings 50 years Plant and machinery 10 - 15 years Mobile plant 10 years Loose tools & workshop equipment 10 years Furniture and fitings 10 years IT equipment 4 years Motor vehicle 5 years Trailers 5 years Pallets 3 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Profits and losses on disposals of fixed assets are determined by comparing proceeds with the carrying amounts. These profits and losses are included within ‘items of a capital nature' in profit or loss.

Properties in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includes professional fees and for qualifying assets borrowing costs capitalised in accordance with the Company's accounting policy.

3.9 Impairment of tangible and intangible assets excl uding goodwill and financial assets. At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease subject to the available surplus in the revaluation

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.10 Inventories Inventories are stated in the financial statements at the lower of cost and net realisable value. Raw Materials which include purchase cost and other costs incurred to bring the materials to their location and condition, are valued at First- In-First-Out (FIFO). Cost of finished goods and work-in-progress include cost of materials used in production, direct labour and factory overheads.

Engineering spare parts and other consumables are valued at standard cost and adjusted to reflect actual cost after making allowance for obsolete and damaged stocks. Engineering spare parts with high value and held for commissioning of a new plant or for infrequent maintenance of plants are capitalised and depreciated over their useful life and the useful life starts when they are put to use. If the estimated useful life of the spare parts from installation exceeds that for the whole plant, depreciation is limited to the remaining life of the plant.


23


3.11 Trade receivables

Trade receivables are initially recognized at fair value and subsequently measured at amortized cost less any allowance for doubtful debts. Allowances are made where there is evidence of a risk of nonpayment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any allowance available and then to profit or loss. Subsequent recoveries of amounts for which a previous allowance was made are credited to the profit or loss. Long-term receivables are discounted where the effect is material. Trade receivables are measured at amortized cost. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

3.12 Trade payables

Trade payables are held at amortised cost which equates to nominal value. Long-term payables are discounted where the effect is material.

3.13 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and highly liquid investments generally with maturities of three months or less from the date of acquisition. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value.

3.14 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

3.15 Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement.

3.15.1 Financial assets

The Company's financial assets are classified as loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.


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3.15.2 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments thal are not quoted in an active market. Loans and receivables include 'trade and other receivables', 'loans to joint ventures' and 'cash and cash equivalents' in the statement of financial position which are measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

3.15.3 Impairment of financial assets Financial assets, other than those at fair value through profit or loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For loans and receivables, objective evidence of impairment could include:

*significant financial difficulty of the issuer or counterparty; or *breach of contract, such as a default or delinquency in interest or principal payments; or *it is becoming probable that the borrower will enter bankruptcy or financial re-organisation; *the disappearance of an active market for that financial asset because of financial difficulties.


25


3.15.3 Impairment of financial assets cont'd For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 90 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

3.15.4 Derecogn ition of f inancial ass ets The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.


26


3.15.4 Derecognition of financial assets cont'd On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

3.16 Financial liabilities and equity instruments

3.16.1 Classification as debt or equity Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

3.16.2 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised as the proceeds received, net of direct issue costs.

Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

3.16.3 Financial liabilities Financial liabilities are classified as 'other financial liabilities'.

3.16.3.1 Other financial liabilities Other financial liabilities (including borrowings and trade and other payables) are initially measured at fair value. Subsequently they are measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

3.16.3.2 Derecognition of financial liabilities The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

3.17 Segment information The Company is involved in the milling of wheat and other associated grains as well as sales of other Golden product products purchased from the Parent Company. There are two business segments and operating results of the segment reported regularly to the Chief Operating Decision Maker ( the Chief Executive Officer) for purposes of resource allocation and performance assessment.


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3.18 Earnings per share

The company presents basic earnings per share(EPS) for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share Diluted earnings per share are computed by dividing adjusted net income available to shareholders of the Company by the weighted average number of common shares outstanding during the year adjusted to include any dilutive potential common shares. Potential dilutive common shares result from stock options and convertible bonds issued by the Company on its own common shares.

4 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company's accounting policies, which are described in note 4, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgements and estimates that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

4.1 Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company, accounting for about 36% of the Company's total assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Company's financial position and performance. The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. Increasing an asset's expected life or it's residual value would result in the reduced depreciation charge in the statement of comprehensive income. The useful lives and residual values of property, plant and equipment are determined by management based on historical experience as well as anticipation of future events and circumstances which may impact their useful lives.

4.2 Provision for gratuity The Company operates an unfunded defined benefit scheme which entitles staff who put in a minimum qualifying working period of five years to gratuity upon leaving the employment of the Company. IAS 19 requires the application of the Projected Unit Credit Method for actuarial valuations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnover etc and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.


28


4.3 Allowance for doubtful receivables Judgment is exercised to make allowance for trade receivables doubtful of recovery by reference to the financial and other circumstances of the debtor in question. Based on objective evidence of impairment, the Company makes a collective impairment allowance for doubtful debt.

4.4 Taxation The Company's tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the of the Company's total tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finally determined until resolution has been reached with the relevant tax authority. Under the Nigerian tax system, selfassessment returns are subjected to a desk review for the determination of tax due for remittance in the relevant year of assessment. This is however not conclusive as field audits are carried out within six years of the end of the relevant year of assessment to determine the adequacy or otherwise of sums remitted under self-assessment thus making tax positions uncertain.

3/31/2016 3/31/2015 N'000 N'000 NORTHERN NIGERIA FLOUR MILLS PLC

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Wheat flour 140,416 7,901,138Semovita 14,669 817,327Wheat offal 18,425 720,974Masaflour 249,711 464,628Germ flour 94,571 - Masavita 419,015 - Corn offal 39,014 38,107 975,821 9,942,174

Sales of other Golden Penny products Golden penny flour confectionery 3,210 558,384Golden penny sugar - 10,154Golden penny rice 7 18,363

5.2

Sales of wheat/maize products

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDE D 31 MARCH 2016 5 Revenue

The following is an analysis of the Company's revenue for the year from continuing operations (excluding other income):

5.1

5.2 586,901 Wheat flour Semovita Wheat offal Masaflour Germ flour Masavita Corn offal

Sales of other Golden Penny | Golden penny flour confection Golden penny sugar Golden penny rice 52 586,901

Segment information

Information reported to the Chief Operating Decision Maker (COMD) for the purpose of resources allocation and assessment of segment performance focuses on the types of goods or services delivered or provided: The Company's reportable segments are milling and sale of wheat/maize products (wheat/maize products segment), and sale of other Golden Penny (GP) products (other Golden Penny (GP) products segment).


30

6.1 Segment revenue and results Segment revenueSegment profit

3/31/2016 3/31/2015 3/31/2016 3/31/2015 N'000 N'000 N'000 N'000


31

Segment loss represent the loss before tax incurred by each segments without allocation of other operating income, other gains and losses, selling and distribution expenses, administrative expenses, investment income and other expenses. This is the measure reported to the Chief Operating Decision Maker for the purpose of resource allocation and assessment of segment performance.

Wheat/maize products 975,821 9,942,174 (100,687) 198,474

Other Golden Penny products 3,217 586,901 (30) 57,619 979,038 10,529,075 (100,717) 256,093Other operating income Other gains or losses Selling and distribution expenses Administration expenses Investment income

246,552 (90,330) (11,619)

(324,366) 47,409

17,039(77,789)(11,639)

(463,570)64,436

Loss before tax (233,071) (215,430)

3/31/2015N'000

32

7.2

7.1

7.27 7.27

5.55 5.55 8.1 The Company suspended the milling of wheat during the year and limits its production activities to milling of maize products. The parent Company (Flour Mills of Nigeria Plc) resolved that for the transition period of three years, the targeted sales of Masavita and Masaflour is 4,166.7metric tonnes/Month i.e. 50,000 metric tonnes per year. Hence, the Parent company decided to be paying NNFM Plc the sum of N5,000 per metric tonne for every metric tonnes that falls short of the target. This payment is to a maximum of 50,000metric tonnes and a maximum sum of N250million over the transition period of three years.

8.2 This represents write back of excess provision made for restructuring cost after all staff who are entitled to the benefits have been paid.

Wheat/maize products 1,739,760 4,934,766Other Golden Penny products - - 1,739,760 4,934,766

Segment liabilities: Wheat/maize products 488,823 3,454,703Other Golden Penny products - - 488,823 3,454,703

3/31/2016 3/31/2015

Cost of sales Cost of Wheat/maize products

N'000 N'000

Raw materials 756,231 8,481,046Production expenses 1,140 1,93

8 Repairs and maintenance 44,330 105,703Factory power 61,874 420,025Rent and rates 2,138 839 Insurance 7,251 2,53

9 Salaries and wages 71,556 140,119Pension 4,271 5,20

7 Gratuity 7,044 45,256Depreciation 69,755 71,033Transportation of raw materials 48,800 284,104Laboratory expenses 216 488 Medical 1,902 3,81Restructuring cost - 37,972 1,076,508 9,600,086

Cost of Golden Penny products: Golden penny flour confectionery 3,240 500,954Golden penny sugar - 10,051Golden penny rice 7 18,277 3,247 529,282

1,079,755 10,129,368

Other operating income Intragroup subsidy (Note 8.1) 201,463 - Sundry income 21,975 14,754Rental income 1,017 1,06

3 Provision no longer required (Note 8.2) 22,097 1,222 246,552 17,039

Segment assets and liabilities

3/31/2016 N'QQQ

Segment assets:

6.2 94,545,, 159 53.06 53.06

3/31/2015N'000

33

9

9.1 The amount is majorly made up group cost allocated to Northern Nigeria Flour Mills by the Parent Company - Flour Mills Nigeria Plc.

12

Gain on asset disposal - 469 Gain on resale of wheat - 9,853Exchange loss (5,099) (82,310)Inventory write off (19,991) (143,614)Provision for obsolete and slow moving stock (28,281) - Other operating expenses (Note 9.1) (36,959) (5,801)

Other gains or losses 3/31/2016 N'000

(90,330) (221,403)

3/31/2016 3/31/2015 N'000 N'000 10 Administration expenses Salaries and wages 80,538 163,187Repairs and maintenance 18,921 21,179Depreciation and amortization 10,851 22,213Bank charges 6,212 28,143Travelling and hotel accommodation 12,514 21,221General expenses 13,117 13,739Corporate publicity 189 627 Directors expenses 19,482 23,579Insurance 5,308 8,773Staff welfare expenses/long service award 15,929 69,429Audit fees 14,500 14,500Pension fund 2,343 7,938Postage, telephone and telegrams 6,162 9,924Staff training and management development - 4,546Rent and rates 105 - Legal and professional fees 14,500 7,279Printing and stationery 1,262 3,450Bad debt written off 12,614 - Bad debt provision 84,111 14,770Industrial training fund 1,502 1,755Donation and subscription 2,782 13,727Medical expenses 551 2,421Restructuring cost - 9,155Penalties and fines 873 2,015 324,366 463,570

Investment income 3/31/2016 3/31/2015 N'000 N'000Interest income 47,409 64,436

47,409 64,436Loss before tax

The loss before tax is arrived at after charging/(crediting): Depreciation and amortization Directors' emoluments 80,606 95,509

Services as Directors 730 730As Managers 25,235 25,056

Auditors' remuneration 14,500 14,500Profit on disposal of fixed assets - (469)Other operating income (246,552) (17,039)

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13.1 Adjustments represent entries passed to correc tly agree the records with assets register after a reconciliation and assets verification exercise.

13.2 Capital work in progress relates to cost of ac quisition and installation of Maize intake cleaning equipment,dry stoner,degerminator 1 kg Masavita pa cker and bag chutes.

13.3 There are no indicators of impairment at the e nd of the reporting period thus, the directors are of the opinion that allowance for impairment is not required. However, in line IAS 16, Paragraph 79(a) which encourages an entity to disclose the amount of property, plant an d equipment that is temporarily idle, the sum of N1 46million in plant and machinery relates to the net book value of the D-Mill plant which is currently idle in the entity's production process.

13.4 No asset of the Company was pledged as securit y for loans during the reporting period.

13 Property, plant and equipment Capital Loose tools & Furniture and IT Motor work -in-

Plant andmachinery N'000

workshop fittings equipment vehicles Trailers Pallets progress Total

N'000 equipment N'000

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

Cost 40,879 37,779 129,389 248,654 2,776 13,912 1,733,520

Balance at 1 April 2014 111,765 1,140,761 7,605 345 - 7,700 - 6,300 103,761 135,472Additions - 17,366 - - - (20,751) - - - (20,751)Disposals - - - 178 - - - - (105,904) - Reclassification - 105,726 - 41,402 37,779 116,338 248,654 9,076 11,769 1,848,241Balance at 31 March 2015 111,765 1,263,853 7,605 - - - - - 20,191 20,191Additions - - - - - (21,177) (11,892) - - (33,069)Disposals - - - - - - - - (18,299) - Reclassification - 18,299 - - (10,473) - - - - (62,922)

Adjustment (Note 13.1) - (52,449) - 41,402 27,306 95,161 236,762 9,076 13,661 1,772,441Balan ce at 31 March 2016 111,765 1,229,703 7,605

Accumulated depreciation

32,559 35,705 101,626 205,743 2,776

1,054,634Balance at 1 April 2014 37,699 631,615 6,911 1,359 2,526 11,010 24,533 1,268 - 85,995Depreciation expense 2,198 43,047 54 - - (18,230) - - - (18,230)Eliminated on disposal - - - - (2,265) - - - - (2,265)Adjustment - - - 33,918 35,966 94,406 230,276 4,044 - 1,120,134Balance at 31 March 2015 39,897 674,662 6,965 1,314 1,460 8,247 18,010 1,890 - 85,941Depreciation expense 2,198 52,768 54 - - (21,177) (11,892) - - (33,069)Eliminated on disposal - - - - (10,473) - - - - (17,098)

Adjustment (Note 13.1) - (6,625) - 35,232 26,953 81,476 236,394 5,934 1,155,908Balance at 31 March 2016 42,095 720,805 7,019 6,170 353 13,685 368 3,142 13,661 616,533

Carrying amount

7,484 1,813 21,932 18,378 5,032 11,769 728,107At 31 March 2016 69,670 508,898 586

At 31 March 2015 71,868 589,191 640


35

16 Trade and other receivables

Trade receivables Trade receivables Allowance for doubtful debts

Other receivables Amount due from related companies (Note 32.3) Other debtors Staff debtors Allowance for other receivables

3/31/2016 3/31/2015N'000 N'000

156,726 224,614(114,226) (41,183)

42,500 183,431

206,659 32,30925,428 43,69823,977 63,279(2,113) (3,594)

296,451 319,123

The cost of inventories recognised as an expense during the year in respect of continuing operations was N756.23 million (2015: N8.481 billion).

The average credit period granted to customers is 90 days. No interest is charged on overdue receivables. The Company has provided fully for all receivables over 365 days, except where recovery is considered probable. The Company does not hold any collateral over these balances.


16 Trade and other receivables (continued)

Before accepting a new customer the Company initially trades with the customer on a cash basis to

3/31/2016 3/31/2015

Intangible assets (Computer software) N'000 N'00

0

Cost At 1 April 38,056 38,056Additions - - At 31 March 38,056 38,056

Accumulated amortization At 1 April 36,767 27,253Charge for the year 1,289 9,51

4 At 31 March 38,056 36,767

Net book value At 31 March - 1,289

Computer softwares relates to acquisition of software licence and anyother development attributable to the preparation of the computer software for its intended use.

costs directly

3/31/2016 3/31/2015

Inventories

N'000 N'000

Raw materials 215,613 153,608Consumables 15,255 33,288Finished goods 23,532 82,588Maintenance spares 170,014 158,230 424,414 427,714Allowance for obsolete/slow moving inventories (28,281) -

------ 396,133 --------- ------ 427,714—


14

15


36

assess the customer's ability and also determine the customer's transaction volumes. This enables a reasonable credit limit to be set. Once these are determined the customer is then allowed to apply for a credit facility from the company through a rigorous process with several levels of approval. Also credit customers provide bank guarantees before being accepted as credit customers of the Company. Credit sales form a small portion of overall sales. The company has pledged no trade receivables during the year.

Of the trade receivables balance at the end of the year, the following Companies made up the largest customer in the Company:

31/3/2016 31/3/2015

No other customer represents more than 5% of the total balance of trade receivables.

There are no trade receivables which are past due at the reporting date for which the Company has not provided as there has not been a significant change in the credit quality and the amounts are still considered recoverable. The Company does not hold any collateral over these balances.

In determining the recoverability of the trade receivable, Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited because of the customer base being large and unrelated and large credit risks are insured against irrecoverability. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

NOTES TO THE FINANCIAL STATEMENTS FOR

THE YEAR ENDED 31 MARCH 2016

3/31/2016 3/31/2015 N'000 N'000

N'000 % N'000 %Company A 27,010 12 41,963 10Company B 12,224 5 26,363 6Company C 10,269 5 18,818 5

31/3/2016 31/3/2015 N'000 N'000 Ageing of past due but not impaired trade receivables

31-60 days - -

61-180 days - - 181-365 days - - Total - -

Ageing of impaired trade receivables 31-60 days 91-180 days 1,829

181-365 days 45,511 1,662Over 365 days 66,886 39,521

Total 114,226 41,183

Movement in the allowance for doubtful debts and other receivables Balance at 1 April 44,777 31,229Amounts recovered during the year - (1,222)Write off (12,549) -

Increase in allowance recognised in profit or loss: Trade receivables 81,998 11,176Employee receivables 2,113 - Intercompany receivables - 3,594Balance at 31 March 116,339 44,777

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2016

37

At the General Meeting of the Company held on 8 September 2015, the shareholders approved the payment of dividend of 30 kobo per share amounting to N53.46 million which was paid to shareholders during the year.

In respect of the current year, the directors propose a dividend of XX kobo per ordinary share of 50 kobo each on the 178,200,000 existing ordinary shares. The proposed dividend amounting to NXX.XX million is subject to approval by shareholders at the Annual General Meeting and deductions of withholding tax at the appropriate rate. Consequently, the proposed dividend has not been included as a liability in these financial statements.

17 Cash and cash equivalents Cash on hand 2,577 3,690 Bank balance 58,801 544,194 Bank deposit 327,141 394,269

Cash and bank balances 388,519 942,153

Cash and cash equivalents comprise cash and bank balance, net of outstanding bank overdrafts. The carrying amount of these assets approximate their fair value.

3/31/2016 3/31/2015 N'000 N'000 18 Share capital

Authorised: 200,000,000 ordinary shares of 50 kobo each 100,000 100,000

Issued and fully paid: 178,200,000 ordinary shares of 50 kobo each 89,100 89,100

19 Share premium

Balance at end of year 89,521 89,521

20 Retained earnings

At 1 April 1,301,442 1,595,291 Dividend declared (53,460) (71,280)Transfer from statement of profit and loss (197,240) (199,558)Other comprehensive income/(loss) 21,574 (23,011)

At 31 March 1,072,316 1,301,442


38

Taxation 21.1 Income tax recognised in profit or loss

3/31/2016 3/31/2015 N'000 N'000Current tax expense in respect of the current year based on minimum tax 7,330 20,549Underprovision of company income tax liabilities in prior year 12

Education tax (2% of assessable profit) - 1,442Underprovision of education tax liabilities in prior year 2,872 - 10,214 21,991

Underprovision of deferred tax liabilities in prior year 16,156 26,011Deferred tax credit recognised in the current year (62,201) (63,874)Total income tax credit recognised in current year A(35,831) (15,872)

21.2 The income tax credit for the year can be reconciled to the accounting loss as per the statement of profit or loss and other comprehensive income as follows: 3/31/2016 3/31/2015 N'000 N'000 Loss before tax (233,071) (215,430)

Tax at the statutory corporation tax rate of 30% (69,921) (64,629)Effect of minimum tax provisions 7,330 20,549Education tax at 2% of assessable profit - 1,442Effect of expenses that are not deductible in determining taxable profit 6,383 4,448Effect of investment allowance 1,339 (3,693)

Adjustments recognised in the current year in relation to the deferred tax of prior years Adjustments recognised in the current year in relation to the company income and

16,156 26,011

education tax of prior year 2,884

Income tax (income)/expense B (35,831) (15,872)

15% 7%

At 1 April Charge for the year Underprovision in prior year Payment during the year At 31 March

Effective Tax rate The tax rate used for the 2016 and 2015 reconciliations above is based on the minimum tax rates applicable to corporate entities in Nigeria under Companies Income Tax Act, CAP C21 LFN 2004 as amended. No income tax was recognised directly in equity. No income tax was recognised in other comprehensive income.

21.3 Current tax liabilities 3/31/2016 3/31/2015

N'000 N'000 21,991 92,506 7,330 21,991 2,884 -

(24,875) (92,506) 7,330 21,991

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH 2016

39


21.4 Deferred tax liabilities The following is the analysis of deferred tax assets presented in the statement of financial position.

3/31/2016 3/31/2015 N'000 N'000Deferred tax liabilities 146,953 135,484 Deferred tax assets (189,077) (140,809) (42,124) (5,325)

The following are the major deferred tax liabilities and assets recognised during the current and prior reporting period.

by the Company and movements thereon

3/31/2016 3/31/2015 N'000 N'000

At 1 April (5,325) 42,400Credit to profit or loss (46,045) (37,863)Charge/(credit) to other comprehensive income (Note 22) 9,246 (9,862)

As 31 March (42,124) (5,325)

Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes: Prior year Recognised in

adjustment Recognised

other

Opening recognised in profit or comprehensive Closing2016 balance in current loss income balance N'000 N'000 N'000 N'000 N'000Deferred tax assets/liabilities

in relation to:

Property, plant and equipment 135,485 30,782 (19,314) - 146,953Provisions (116,117) (14,626) 32,774 9,246 (88,723)Exchange difference (24,693) - - - (24,693)Losses and unutilised capital allowances - - (75,661) - (75,661) (5,325) 16,156 (62,201) 9246 (42,124)2015

Deferred tax assets/liabilities

in relation to:

Property, plant and equipment 122,495 20,037 (7,047) - 135,485Provisions (82,578) 5,974 (29,651) (9,862) (116,117)Exchange difference 2,483 - (27,176) - (24,693)

42,400 26,011 (63,874) (9,862) (5,325)


40

3/31/2016 3/31/2015 N'000 N'000

At 1 April 293,638 262,589Additional provisions recognised 66,612 45,236Payment during the period (214,700) (53,257)Amount recognised in SOCI (Note 27) 4,833 39,070Transfer out (120) -Curtailment (59,355) -

At 31 March 90,908 293,638

The principal assumptions used for the purpose of the actuarial valuations were as follows;

Financial assumptions 2016 2015 % %Discount rate 13 15

Expected rate(s) of salary increases 12 12Average rate of inflation 9 9Demographic assumptions Mortalitiy in service The rates of mortality assumed for employees are the rates published in the A49/52 Ultimate Tables, published jointly by the Institute and Faculty of Actuaries in the UK.

Sample of age Number of

22 Retirement benefit plans

The employees of the Company are members of a Government approved Pension scheme (Pension Reform Act, 2014) which is managed by several private sector service providers. The Company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Company with respect to the retirement benefit plan is to make the specified contributions and remit to the nominated Pension Fund Administrators.

The total expense recognised in the Company's statement of profit or loss and other comprehensive income of N14.06 million (2015:N13.15 million) represents contributions payable to these plans by the Company at rates specified in the rules of the plans. As at 31 March 2016, contributions of N0.871 million (2015: N1.316 million) due in respect of the 2016 reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting period. The Company operates unfunded defined benefit plans for qualifying employees of the Company. Under the plans, the employees are entitled to retirement benefits varying between 1.25% and 2.5% of final salary on attainment of a retirement age of 60. No other post-retirement benefits are provided to these employees. The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2016 by HR Nigeria Limited a firm of Independent Actuarial Consultants. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using

the Projected Unit Credit Method. deaths in year out of 10,000 lives25 730 735 940 1445 26

41

NORTHERN NIGERIA FLOUR MILLS PLC 22 Retirement benef it plans (continued) Withdrawal from service Age Band

less than or Rate

equal to 30 2.5%

31-49 1.5% 40-44 1%

45-50 0.0%

Amounts recognised in the statement of profit or loss and other comprehensive income in respect of these defined benefit schemes are as follows:

3/31/2016 3/31/2015 N'000 N'000

Current service cost 22,654 25,155 Interest on obligation 43,958 20,081 Actuarial losses recognised in the year (Note 26) 4,833 39,070

71,445 84,306

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is

Accrued Liability N'000Base 90,908

Discount rate + 1% 83 541

-1% 99,245

Salary increase + 1% 94,218

-1% 87,904

Mortality experience + 1 year -1 year

90,967 90,855

The amount included in the statement of financial position arising from the Company's obligations in respect of its defined retirement benefit schemes is as follows:

3/31/2016 3/31/2015 N'000 N'000

Present value of defined benefit obligations 90,908 293,638

90,908 293,638 Past service cost not yet recognised in statement of financial position . - -

Liability recognised in the statement of financial position. 90,908 293,638

Movements in the present value of defined benefit obligations were as follows:

At 1 April 293,638 262,589 Service cost 22,654 25,155 Interest cost 43,958 20,081 Payment during the year (214,700) (53,257)Transfer out (120) - Curtailment (59,355) - Actuarial losses (Note 26) 4,833 39,070 At 31 March 90,908 293,638


42


43


23 Long service awards

The Company operates a long service award scheme where employees are rewarded after a specific number of years in service. Employees are entitled to the benefits after being in service for 10, 15, 20, 25, 30 and 35 years. The amounts and items given are based on the number of years in service.

The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2016 by HR Nigeria Limited a firm of Independent Actuarial Consultants. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

3/31/2016 3/31/2015 N'000 N'000

At 1 April 50,270 10,290 Additional provisions recognised 10,997 56,328 Payment during the year (2,976) (10,151) Actual gain recognised in SOCI (Note 26) (35,653) (6,197) At 31 March 22,638 50,270

Amounts recognised in the statement of profit or loss and other comprehensive income in respect of these defined benefit schemes are as follows:

3/31/2016 3/31/2015 N'000 N'000

Current service cost 3,780 4,416 Interest on obligation 7,217 7,420 Additional provision in respect of prior period - 44,492 Actuarial (gains)/losses recognised in the year (Note 26) (35,653) (6,197) (24,656) 50,131

The amount included in the statement of financial position arising from the Company's obligations in respect of its defined benefit schemes is as follows:

3/31/2016 3/31/2015 N'000 N'000

Present value of defined benefit obligations 22,638 50,270

22,638 50,270 Past service cost not yet recognised in statement of financial position. - - Liability recognised in the statement of financial position. 22,638 50,270

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Base

AccruedLiability

N'00022,638

Discount rate + 1% 21,404 -1% 24,004 + 1% 23,949Salary increase -1% 21,437 + 1% 22,723Inflation increase -1% 22,557

Age rated up by 1 year 22,550Mortality experience Age rated

down by 1 year 22,718


44

3/31/2016 3/31/2015 N'000 N'00

0 54,156 61,92424,171 33,27937,073 51,70352,672 200,2021,905 21,881

729 - 197,241 161,634

367,947 530,623

NOTES TO THE FINANCIAL STATEMENTS

24 Trade and other payables

Trade payables Sundry creditors Accruals Advances from customers Value added tax payable Withholding taxes Amount due to related company (Note 32.4)

FOR THE YEAR ENDED 31 MARCH 2016

The average credit period on purchases is 58 days. No interest is charged on trade payables. The Company have financial risk management policies in place to ensure that all payables are paid within a reasonable time of the credit time frame.

In prior year, the Board approved a staff restructuring plan with the aim of reducing the employee headcount that is right for the current operations of the company. A provision of N47.1 million was made to take care of the severance payments to exiting staff out of which N25 million crystalised after the exercise.

Deferred taxation on OCI items have been computed using the rate of 30% in accordance with the Companies Income Tax Act of Nigeria.


3/31/2016 3/31/2015 N'000 N'000

25 Provisions 3/31/2016 Opening

balanceN'000

Additional provision

N'000

Write back N'000

Provision utilised N'000

Closingbalance

N'000

Restructuring cost 47,126 - (22,097) (25,029) -

3/31/2015 Opening

balanceN'000

Additional provision

N'000

Write back N'000

Provision utilised N'000

Closingbalance

N'000

Restructuring cost

47,126

47,126

47,126

47,126

26 Other comprehensive income (OCI) 3/31/2016

5 N'000

3/31/201

N'000 Actuarial loss on employee retirement benefit liability 4,833 39,070Actuarial gain on employee long service awards liability (35,653) (6,197)Deferred tax on actuarial gains and losses 9,246 (9,862) (21,574) ___ 23,011


45

27 Earnings per share

28 Capital risk management The Company manages its capital to ensure that it is able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company's overall strategy remains unchanged from 2015.

The capital structure of the Company consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in relevant notes in the financial statements. The Company is not subject to any externally imposed capital requirements.

The management of the Company reviews the capital structure on a frequent basis to ensure that gearing is within acceptable limit.

The gearing ratio at the end of the reporting period is calculated as follows:

From continuing operations Net loss attributable to equity holders of the company

Adjustments to exclude loss for the period from discontinued operations (197,240) (199,558)

Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations Effect of dilutive potential ordinary shares: Interest on convertible loan notes (net of tax)

(197,240) (199,558)

Earnings from continuing operations for the purpose of diluted earnings per share excluding discontinued operations (197,240) (199,558)

Based on 178,200,000 (2015:178,200,000) ordinary shares of 50k each:

Basic (kobo) (111) (112)Diluted (kobo) (111) (112)


46



30 Risk management Risk management roles and responsibilities are assigned to stakeholders in the company at three levels: The board, executive and line managers.

The Board oversight is performed by the Board of Directors through Board Risk and Ethics Committee.

Financial instruments 29 Categories of financial instruments Loans and Non-financial

3/31/2016 receivables assets Total N'000 N'000 Assets

Cash and cash equivalents 388,519 - 388,519Trade and other receivables 296,451 - 296,451Inventories - 396,133 396,133Intangible assets - - - Property, plant and equipment - 616,533 616,533Deferred tax - 42,124 42,124 684,970 1,054,790 1,739,760

Amortised Non-financial

cost liabilities Total

N'000 N'000 N'000 Liabilities

Trade and other payables 251,397 116,550 367,947Provisions - - - Current tax liabilities - 7,330 7,33

0 Long service awards - 22,638 22,638Retirement benefit obligation - 90,908 90,908 251,397 237,426 488,823

Loans and Non-financial

3/31/2015 advances assets Total

N'000 N'000 Assets

Cash and cash equivalents 942,153 - 942,153Trade and other receivables 319,123 - 319,123Inventories - 427,714 427,714Intangible assets - 1,289 1,28

9 Property, plant and equipment - 728,107 728,107Deferred tax 5,325 5,32

5 1,261,276 1,162,435 2,423,711

Amortised Non-financial

cost liabilities Total

N'000 N'000 N'000 Liabilities

Trade and other payables 223,558 307,065 530,623Provisions 47,126 - 47,126Current tax liabilities - 21,991 21,991Long service awards - 50,270 50,270Retirement benefit obligation - 293,638 293,638 270,684 672,964 943,648


47

3/31/2016 3/31/2015 N'000 N'000

Naira strengthens by 3% against USD 5 33Naira strengthens by 3% against Euro - 1Naira strengthens by 3% against GBP - 10

Naira strengthens by 3% against USD (5) (33)Naira strengthens by 3% against Euro - (1)Naira strengthens by 3% against GBP - (10)

The second level is performed by the Executive Management Committee (EXCOM).

The third level is performed by all line managers under EXCOM and their direct reports. They are required to comply with all risk policies and procedures and to manage risk exposures that arise from daily operations.

The Internal Audit Department provides an independent assurance of the risk frame work. They assess compliance with established controls and recommendations for improvement in processes are escalated to relevant management, Audit Committee and Board of Directors.

The Company monitors and manages financial risks relating to its operations through internal risk report which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk ), credit risk and liquidity risk.

30.1 Market risk The Company's activities expose it primarily to financial risks of changes in foreign currency exchange rates . Market risk exposures are measured using sensitivity analysis. There has been no change to the Company's exposure to market risks or the manner in which these risks are managed and measured.

30.1.1 Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company is mainly exposed to USD, EURO and GBP.

The following table details the Company's sensitivity to a 3%, increase and decrease in Naira against USD, GBP and EUR currencies. Management believes that a 3% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analyses below include outstanding balances of USD, GBP and EUR denominated assets and liabilities. A positive number indicates an increase in profit where Naira strengthens by 3% against the USD, GBP and EURO. For a 3% weakening of Naira against the USD, GBP, and EUR, there would be an equal and opposite impact on profit, and the balances below

would be negative.


48

42,500 183,431 253,951 135,692 385,942 938,463 682,393 1,257,586

Parastatals/Government Corporates SMEs

3/31/2016N'000

42,500

3/31/2015N'000

183,431

42,500 183,431


30.2 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Company uses other publicly available financial information and its own trading records to rate its major customers. The Company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the executive committee periodically.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased.

The carrying value of the Company's financial assets represents its maximum exposure to credit risk. The maximum exposure to credit risk at the reporting date was:

3/31/2016 3/31/2015 N'000 N'000

Trade receivables Other receivables Bank deposits

The maximum exposure to credit risk for trade receivables at the reporting date by type of receivable was:

30.2.1 Collateral held as security and other credit enhancements

The company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

30.3 Liquidity risk management

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company's short-, medium- and long-term funding and liquidity management requirements. The Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.


49

NOTES TO THE FINANCIAL STATEMENTS FOR THE

YEAR ENDED 31 MARCH 2016

30.4 Maturity analysis of financial liabilities

The following tables details the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the balance sheet date. The contractual maturity is based on the earliest date on which the entities may be required to pay.

0-3 months Total

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values.

3/31/2016 Trade payables 54,156 54,156 54,156 54,156

3/31/2015 Trade payables 61,924 61,924 61,924 61,924

31 Fair value of financial instruments


50


32 Related party transactions

Flour Mills of Nigeria Plc: This is the ultimate parent company which owns 53% of NNFM Plc. The company entered into various transactions with the related party ranging from purchase of goods and services, to expenses incurred on behalf of each other.

Flour Mills Registrars Limited, Golden Transport Company Limited, Nigerian Eagle Flour Mills Limited, Golden Pasta Company Limited, Niger Mills Company Limited, Portharcourt Flour Mills Limited and Northern Bag Manufacturing Company Limited are sister companies in the Flour Mills of Nigeria Plc Group. The company entered into various transactions with the related parties ranging from purchases and sales of goods and services, to expenses incurred on behalf of each other.

N'000 N'000 Purchase of goods/services Flour Mills of Nigeria Pic 283,067 6,872,498 Golden Transport Company Limited - 619,032 Premier Feed Mills 18,519 - Golden Sugar - 4,415 Bagco (MORPACK) 26,442 6,502 Northern Bag Manufacturing Company Limited 30,272

358,300 157,613 7,660,060

Sale of goods Flour Mills of Nigeria Plc 288,602 2,500,778Golden pasta - 71,724 Premier Feed Mills 14,506 - Eastern Premier Feed Mills 75,858 - Niger Biscuit

378,966 10,461

2,582,963

Amount due from related companies Flour Mills of Nigeria Plc 183,635 20,801 Nigeria Eagle Flour Mills Limited 34 - Premier Feed Co. Ltd 13,428 1,947 Portharcourt Flour Mills Limited 9,562

206,659 9,561

32,309

Amount due to related companies Flour Mills of Nigeria Plc 153,499 97,385 Golden Transport Company Limited 5,913 4,154 Apapa Bulk Terminal Limited 23,761 23,762 Golden Shipping Company Limited 14,043 14,043 Maiduguri Flour Mill Plc 25

197.24F

22,290 161,634'

32.1

The following transactions were carried out with related parties during the year:

32.2

32.3

32.4

3/31/2016 3/31/2015

The related party transactions were carried out on commercial terms and conditions.


51


32.5 Compensation of key management personnel The remuneration of directors and other members of key management personnel during the year was as follows:


52

N'000 N'000 Short-term benefits 4,832 18,593 4,832 18,593

The remuneration of directors during the year was as follows: Short-term benefits 25,235 25,056

Other information on directors emoluments: Fees:

25,235 25,056

- Chairman 100 100 - Other Directors 630 630

Salaries, allowances and expenses:

730 730

- Executive Directors 9,149 5,400 - Other Directors 16,086 54,370

25,965 60,500

Highest Paid Director

Number of Directors whose emoluments were within the following ranges:

16,086 16,086

Number Number

1 - 5,000,000 9 8 5,000,001 - 20,000,000 2 3 20,000,000 and above - -

11 11

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

Employees renumeration at higher ratesThe numbers of employees in receipt of emoluments (excluding allowances) within the following

rangeswere: 2015 2014 N N Number Number 1 - 1,000,000 50 154 1,000,001 - 2,000,000 9 40 2,000,001 - 3,000,000 4 1 3,000,001 - Above 2 5

Staff Average number of persons employed in the financial year and the related staff cost were as follows: Senior Management 2 6 Junior Management 7 12 Senior Staff 27 68 Junior Staff 29 114 65 200

Staff Cost relating to the above: N'000 N'000

Salaries,wages and allowances 165,752 375,652

32.6

32.7

The remuneration of executive management team excluding directors during the year was as follows: 3/31/2016 3/31/2015


53

Number of shares

3/31/2016 3/31/2015 Percentage holding (%)

3/31/2016 3/31/2015


33 Guarantees and other financial commitments

(a) Financial commitments

The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the company's state of affairs have been taken into consideration in the preparation of the Company's financial statements.

(b) Capital commitments

There were no capital commitments entered into by the Company as at 31 March 2016 (2015: Nil).

34 Major shareholders

According to the Register of Members, the following shareholders of the Company held more than 5% of the issued share capital of the Company.


54

Shareholders

Flour Mills of Nigeria Pic 94,545, Segment assets and liabilities Northern Nigeria Investment Limited 12,955, Dantata Investment & Securities Limited 9,894, Segment assets:

Wheat/maize products Other Golden Penny products

Segment liabilities: Wheat/maize products Other Golden Penny products

Cost of sales Cost of Wheat/maize products Raw materials Production expenses Repairs and maintenance Factory power Rent and rates Insurance Salaries and wages Pension Gratuity Depreciation Transportation of raw materials Laboratory expenses Medical Restructuring cost

Cost of Golden Penny products: Golden penny flour confectionery Golden penny sugar Golden penny rice

Other operating income Intragroup subsidy (Note 8.1) Sundry income Rental income Provision no longer required (Note 8.2)

6.2 94,545,,159 53.06 53.06 7.27 7.27 5.55 5.55

None of the directors has notified the company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20, LFN 2004 of any declarable interest in contracts in which the Company is involved at 31 March 2016.

35 Events after the reporting date

The Directors are of the opinion that there were no events after the reporting date which could have had a material effect on the financial statements of the Company that had not been adequately provided for or disclosed in the Company's financial statements.

36 Contigent liabilities

The Company has no contingent liability arising from pending or ongoing litigation at the year end.


55

OTHER NATIONAL DISCLOSURES


56

"Value added" represents the additional wealth which the company has been able to create by its own and its employee's efforts. The statement shows allocation of that wealth to employees,government, provider of finance and shareholders and the retained for future creation of wealth.

STATEMENT OF VALUE ADDED 3/31/2016

N'000 % 3/31/2015

N'000 %

Revenue Investment income Other operating income

979,038 47,409

246,552

10,529,075 64,436 17,039

1,272,999 10,610,550

Cost of materials and services employed to generate these earnings:

- Local - Imported (1,259,712)

(7,541,937) (2,812,882)

VALUE ADDED 13,287 100 255,731 100

Which was applied as follows:

To pay employees Wages, salaries and other benefits

165,752 1,247 375,652 147

To pay providers of capital Finance cost

To pay Government Income tax

10,214 77 21,991 9

To provide for the maintenance of assets Depreciation and amortization Deferred taxation Profit or loss account

80,606 (46,045)

(197,240)

607 (347)

(1,484)

95,509 (37,863)

(199,558)

37(15)(78)

13,287 100 255,731 100


57

Loss per share are based on loss after taxation and the weighted average number of fully paid ordinary shares at the end of each financial year

FINANCIAL SUMMARY Non IFRS statement 3/31/2016 3/31/2015 3/31/2014 3/31/2013 3/31/2012 N'000 N'000 N'000 N'000 N'000

Assets/Liabilities

Property,plant and equipment 616,533 728,107 678,886 837,389 730,774Intangible assets - 1,289 10,803 20,317 27,583Deferred tax assets 42,124 5,325 - - 11,084Net current assets 705,826 1,089,250 1,399,502 1,146,228 955,139

1,364,483 1,823,971 2,089,191 2,003,934 1,724,580

Retirement benefit obligation (90,908) (293,638) (262,589) (356,946) (365,956)Long service awards (22,638) (50,270) (10,290) (14,620) (5,479)Deferred tax liabilities - - (42,400) (26,651) -

1,250,937 1,480,063 1,773,912 1,605,717 1,353,145

Capital and reserves

Share capital 89,100 89,100 89,100 89,100 89,100Share premium 89,521 89,521 89,521 89,521 89,521Retained earnings 1,072,316 1,301,442 1,595,291 1,427,096 1,174,524

1,250,937 1,480,063 1,773,912 1,605,717 1,353,145

Revenue and profit Revenue 979,038 10,529,075 13,509,406 11,701,741 12,674,555(Loss)/profit before taxation (233,071) (215,430) 341,800 330,377 30,824(Loss)/profit after taxation Other comprehensive

(197,240) (199,558) 233,545 225,145 (21,776)

income/(loss) net of taxes 21,574 (23,011) 5,930 27,427 (113,940)

Per share data: (kobo) (Loss)/earnings per share (kobo) -Basic (111) (112) 131 126 (12) -Diluted (111) (112) 131 126 (12) Net asset per share (kobo) -Basic 702 611 785 643 536 -Diluted 702 611 785 643 536

Dividend per share (kobo) - 50 40 85 -


58

end of each financial year

Net asset per share are based on net assets and the number of issued and fully paid ordinary shares at the

northern nigeria flour mills plc - nigerian...

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