northern nigeria flour mills plc - nse.com.ng · the directors have pleasure in submitting their...

Northern Nigeria Flour Mills PlcAnnual Report

for the year ended 31 March 2019

Northern Nigeria Flour Mills PlcAnnual Report for the year ended 31 March 2019

Corporate Information

Country of incorporation and domicile Nigeria

Nature of business and principal activities The Company's main business is milling of Wheat, Sorghum, Maize andsimilar grains.

Directors Alhaji (Dr) Aminu Dantata, CON

Gert Jacobus Kriek (South African)

Mr. John G. Coumantaros (American)

Alhaji Rabiu Muhammad Gwarzo, OON

Alhaji Sani Umar

Mr. Paul M. Gbededo

Alhaji Y. Olalekan A. Saliu

Mallam Mahmud Ahmed

Mr. Richard Hedge (British)

Dr. Jibrilla Mohammed

Alhaji Sadiq A. Othman

Company registration number RC. 9409

Registered office 15 Maimalari road,

Bompai Industrial Estate,

Kano.

Postal address P.O.Box 6640

Kano.

Holding company Flour Mills of Nigeria Plc

incorporated in Nigeria

Bankers Access Bank Plc

First Bank of Nigeria LimitedGuaranty Trust Bank PlcSterling Bank PlcUnion Bank of Nigeria PlcZenith Bank Plc

Independent Auditors KPMG Professional Services

KPMG Tower

Bishop Aboyade Cole Street

Victoria Island

Lagos

Ahmed Zakari & Co.

Chartered Accountants

5th Floor African Alliance Building

F.1 Sani Abacha Way

P.O Box 6500, Kano

Company Secretary Theophilus Ogwuche

26, Post Office Road, Kano

Solicitor Messrs J. B. Majiyagbe & Co.

4, Human Rights AvenueP.O.Box 726, Kano.

1


Contents

Page

Report of The Directors 3

Statement of Directors Responsibilities in Relation to the the Financial Statements 9

Audit Committee Report 10

Independent Auditor's Report 11

Statement of Financial Position 15

Statement of Profit or Loss and Other Comprehensive Income 16

Statement of Changes in Equity 17

Statement of Cash Flows 18

Notes to the Financial Statements 19

Other National Disclosures:

Statement of Value Added 70

Five Year Financial Summary 71

2


Report of The Directors

The directors have pleasure in submitting their report on the annual report of Northern Nigeria Flour Mills Plc for the year ended March 31,2019.

1. Legal form

The Company was incorporated as a private limited liability company on 29 October 1971. Its registered office is 15, Maimalari road,Bompai Industrial Estate, Kano. The Company was converted to a public limited liability company in 1978 and its shares are qouted on theNigerian Stock Exchange. It is a subsidiary of Flour Mills of Nigeria Plc, which holds 53.06% of the Company's equity. Flour Mills of Nigeria Plcis incorporated in Nigeria.

2. Principal activities

Northern Nigeria Flour Mills Plc was incorporated in Nigeria with interests in milling of wheat, maize and sorghum. The Company operatesin Kano state, Nigeria. There have been no material changes to the nature of the Company's business from the prior year.

3. Results

The summary of results for the year is as set out below:31-Mar-19 31-Mar-18

N '000 N '000Revenue 4,149,917 2,861,752Operating profit 527,868 348,379Loss before taxation (52,413) (113,187)Loss for the year (31,696) (60,988)Total comprehensive loss for the year (23,978) (65,316)

4. Directors and directors' interests

The names of Directors who are currently in office are detailed on page 1.

Directors DesignationAlhaji (Dr) Aminu Dantata, CON ChaimanMr. John G. Coumantaros (American) Vice ChaimanAlhaji Rabiu Muhammad Gwarzo, OON Vice ChaimanGert Jacobus Kriek (South African) ExecutiveAlhaji Sani Umar Non-executiveMr. Paul M. Gbededo Non-executiveAlhaji Y. Olalekan A. Saliu Non-executiveMallam Mahmud Ahmed Non-executiveMr. Richard Hedge (British) ExecutiveDr. Jibrilla Mohammed Non-executiveAlhaji Sadiq A. Othman Non-executive

In accordance with Section 277 of the Companies and Allied Matters Act, Cap C.20 LFN 2004 none of the directors has notified theCompany of any declarable interests in contracts with the Company during the year.

5. Regulatory matters

The Financial Reporting Council of Nigeria (FRCN) has granted the Company a waiver which allows the Managing Director, Mr. Gert JacobusKriek to sign the Company’s financial statements for the year ended 31 March 2019 without indicating his FRC registration number,pending the conclusion of his registration with the FRCN. The waiver is granted on the condition that the registration requirement shall befulfilled before signing-off the financial statements for the year ending 31 March 2020.

6. Directors interests in shares

The Directors’ interests in the issued share capital of the Company as recorded in the Register of members and/or as notified by them forthe purpose of Section 275 of the Companies and Allied Matters Act,Cap C20 Laws of the Federation of Nigeria, 2004 are as follows:

3



Interests in shares31-Mar-19 31-Mar-18

Director Direct Indirect Direct IndirectAlhaji (Dr) Aminu Dantata, CON 1,216,782 11,661,114 1,216,782 9,894,362Mr. John G. Coumantaros - - - -Alhaji Rabiu Muhammad Gwarzo, OON 609,598 - 609,598 -Gert Jacobus Kriek - - - -Alhaji Sani Umar 237,363 - 237,363 -Mallam Mahmud Ahmed - - - -Dr. Jibrilla Mohammed - - - -Alhaji Y. Olalekan A. Saliu 97,881 - 97,881 -Alhaji Sadiq A. Othman - - - -Mr. Paul M. Gbededo - - - -

- - - -

2,161,624 11,661,114 2,161,624 9,894,362

7. Parent company

The Company's holding company is Flour Mills of Nigeria Plc which holds 53% (2018: 53%) of the company's equity. Flour Mills of NigeriaPlc is incorporated in Nigeria. The ultimate controlling parent is Excelsior Shipping Company Limited, a company registered in Liberia. Thebeneficial owner of Excelsior Shipping Company is a trust established by the late John S. Coumantaros.

8. Substantial Interest in shares

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

31-Mar-19 31-Mar-18Number of

shares% Number of

shares%

Flour Mills of Nigeria Plc. 94,545,159 53.06 94,545,159 53.06Northern Nigeria Investment Limited 12,955,000 7.27 12,955,000 7.27Dantata Investment & Securities Limited 11,661,114 6.54 9,894,362 5.55

9. Directors' Responsibilities

The Directors are responsible for the preparation of financial statements which give a true and fair view in accordance with InternationalFinancial Reporting Standards (IFRSs) and in the manner required by the Companies and Allied Matters Act, Cap C20 Laws of the Federationof Nigeria 2004 and the Financial Reporting Council of Nigeria (FRCN) Act, 2011. In doing so, they ensure that:

proper accounting records are maintained;

applicable accounting standards are complied with;

suitable accounting policies are adopted and consistently applied;

judgments and estimates made are reasonable;

the going concern basis is used, unless it is inappropriate to presume that the Company will continue in business and;

Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets and also prevent and detect

fraud and other irregularities.

4



10. Corporate Governance Report

Introduction

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

Role of Directors

The highlights of the role of directors include: Critical and regular examination of the company’s overall strategy with a view to ensuring that its goals, business plan and

budget are in alignment. Assign respective committees to consider and take appropriate decisions on issues requiring Board attention. Establish well-considered objectives for the company and monitor implementation, reviewing performance and ensure the

deployment of appropriate competencies. Ensure that adequate resources are available to meet the company’s goals and objectives. Oversee Board appraisal, training, succession planning, appointment and remuneration of members.

Frequency and Attendance of Board Meetings

The Board held three (3) meetings during the financial year ended March 31, 2019. The notice for each meeting was in line with theCompany’s Articles of Association and Board papers were provided to directors in advance. In line with provisions of Section 258(2) of theCompanies and Allied Matters Act of Nigeria, Cap C20 Laws of Federation of Nigeria 2004, record of Directors’ attendance at Boardmeetings is available for inspection at the Annual General Meeting.

Senior Executives of the Company are from time to time invited to attend Board meetings and make representations of their business units.

A summary of record of attendance at Board meetings is presented below:Name 17-Jul-18 04-Sep-18 04-Dec-18Alhaji (Dr) Aminu Dantata, CON No No NoMr. John G. Coumantaros Yes Yes YesAlhaji Rabiu Muhammad Gwarzo, OON Yes Yes YesAlhaji Sani Umar Yes Yes YesMr. Paul M. Gbededo Yes Yes YesAlhaji Y. Olalekan A. Saliu Yes Yes YesMallam Mahmud Ahmed Yes Yes YesMr. Richard Hedge Yes Yes YesDr. Jibrilla Mohammed Yes Yes YesAlhaji Sadiq A. Othman Yes Yes Yes

Yes - Present

No - Absent

Statutory Audit Committee

Composition

Pursuant to section 359(3) of the Companies and Allied Matters Act, Cap C20 Laws of Federation of Nigeria 2004, the Company’s AuditCommittee comprising:

Alhaji Bello Umar Gwangwazo (Chairman)

Alhaji Rabiu Muhammad Gwarzo, OON

Alhaji Lawan Sule Garo

Mallam Mahmud Ahmed

Dr. Jibrilla Mohammed

Alhaji Sadiq A. Othman

5



Meetings

Members of the Audit Committee receive regular reports and updates on financial matters and internal control reviews from internalauditors. A summary of record of attendance at Statutory Audit Committee meetings held during the financial year ended 31 March 2019 isshown below:Name 26-Jun-18 30-Jan-18 07-Mar-19Alhaji Rabiu Muhammad Gwarzo, OON Yes Yes YesAlhaji Lawan Sule Garo No Yes YesMallam Mahmud Ahmed Yes Yes YesDr. Jibrilla Mohammed Yes Yes YesAlhaji Sadiq A. Othman Yes Yes YesAlhaji Bello Umar Gwangwazo Yes Yes Yes

Yes- Present

No- Absent

Code of Business Conduct

In demonstration of strong commitment to best practices in corporate governance, integrity and high ethical standards in all aspects of ourbusiness, the Company has a Code of Conduct in place which is consistent with that of the parent company. Apart from being in line withcurrent global trends, the Company's Code of Conduct also aligns with the requirements of regulatory authorities.

Through the provisions of the Code, the Company instills in its Directors and Employees the need to maintain high standard of corporatevalues, transparency, accountability, professionalism and promote good corporate governance.

Whistle Blowing

Under the Company’s whistle blowing policy and procedures, employees and other stakeholders including third parties are encouraged toreport any observed or suspected acts of fraud, corruption or other irregularities, orally or anonymously contact the independent helplineby telephone or online without fear of reprisal or recrimination.

The company guarantees that the identity of the reporting individual or organization shall be accorded utmost protection and the reporttimeously investigated and treated.

The robust system has been embraced by all employees and stakeholders and it is producing good results.

11. Donations and Charitable Gifts

Donations and charitable gifts amounting to N305,000 were made during the year (2018: N70,000):

Donations31-Mar-19

N.Manufacturers association of Nigeria 50,000National Union of Food, Beverage and Tobacco Employees 255,000

305,000

12. Property, plant and equipment

Movements in property, plant and equipment during the year are shown in Note 15 to the financial statements. In the opinion of theDirectors, the market value of the Company's property, plant and equipment is not less than the value shown in the audited financialstatements.

6



13. Human Capital

(a) Employment and Employees

The Company reviews its employment policy in line with the needs of the business. Careful recruiting is undertaken to ensure that potentialhigh performers are attracted and retained.

(b) Employee Developments

Local and Overseas Training and Development Programmes are organized to meet the needs of the Company’s modernization / automationstrategy implementation.

The Company continues to place premium on its Human Capital Development arising from the fact that this would ensure improvedefficiency of the business and maintain strategic advantage over competition.

(c) Equal Employment Opportunity and Diversity

The Company has a policy of providing, wherever possible, the same employment opportunities for disabled people as for others. Ifemployees become disabled every effort is made to ensure their employment continues, with appropriate training where necessary.

Subject to applicable laws we recruit, hire, train, promote, discipline and provide other conditions of employment without regard to aperson’s race, colour, religion, sex, age, national origin, disability or other classifications protected under law. This includes providingreasonable accommodation for members’ disabilities or religious beliefs and practices. As at year end, the Company had no physicallychallenged person in its employment (2018: Nil).

(d) Health, Safety and Environment

The Company appreciates the value of a safe work environment to business success and therefore embarks on periodic assessments toensure compliance and safety. Employees are continuously sensitized and pep talks on safe work procedures precede the commencementof each shift in the operational areas. The Company provides Personal Protective Equipment to employees as required by the nature oftheir jobs and safety officers perform regular monitoring to ensure usage compliance.

(e) HIV/AIDS Policy

HIV/AIDS policy guidelines are in place and employees are encouraged to undertake voluntary counseling and testing (VCT) in order toconfirm their HIV status. Continuous interactions at workshops with known HIV positive individuals are arranged from time to time toeducate staff and eliminate discrimination and stigmatization.

(f) Performance Management/Target Setting

Performance Management/Target Setting is implemented in line with Management resolve to set strategic objectives for effectivemonitoring of performance of the Company and its employees.

14. Events after the reporting period

The directors are not aware of any material event which occurred after the reporting date and up to the date of this report.

There were no significant developments since the balance sheet date which could have had a material effect on the state of affairs of theCompany at 31 March 2019 and the profit for the year ended on that date which have not been adequately provided for or dislcosed in thefinancial statements.

7



15. Independent Joint Auditors

Messrs. KPMG Professional Services and Ahmed Zakari & Co. having satisfied the relevant corporate governance rules on their tenure inoffice have indicated their willingness to continue in office as auditors to the Company. In accordance with Section 357 (2) of theCompanies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria, 2004 therefore, the auditors will be re-appointed at the nextannual general meeting of the Company without any resolution being passed.

BY ORDER OF THE BOARD

Theophilus Ogwuche

Company Secretary

FRC/2019/ICAN/00000019501

26, Post Office road,

Kano, Nigeria.

30 June, 2019

8


Statement of Directors Responsibilities in Relation to the the Financial Statements

The Directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance withInternational Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act Cap C.20 Laws of theFederation of Nigeria, 2004 and the Financial Reporting Council of Nigeria Act, 2011.

The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied MattersAct Cap C.20 Laws of the Federation of Nigeria, 2004 and for such internal control as the directors determine is necessary to enable thepreparation of financial statements that are free from material misstatement whether due to fraud or error.

The Directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe theCompany will not remain a going concern in the year ahead.

Signed on behalf of the Board of Directors By:

Gert Jacobus KriekManaging director

30 June, 2019

Alhaji Y. Olalekan A. SaliuDirectorFRC/2013/ICAN/0000000359530 June, 2019

9


Statement of Financial Position as at March 31, 201931-Mar-19 31-Mar-18

Note(s) N. '000 N. '000

Assets

Non-Current Assets

Property, plant and equipment 15 2,094,232 2,109,691

Deferred taxation 14 112,047 92,216

2,206,279 2,201,907

Current Assets

Inventories 16 2,178,992 2,673,752

Trade and other receivables 17 133,550 459,476

Prepayments 18 26,144 20,253

Investment 19 25,164 5,943

Cash and cash equivalents 20 422,783 556,308

2,786,633 3,715,732

Total Assets 4,992,912 5,917,639

Equity and Liabilities

Equity

Share capital 21 89,100 89,100

Share premium 21 89,521 89,521

Retained earnings 972,091 995,641

1,150,712 1,174,262

Liabilities

Non-Current Liabilities

Borrowings 22 749,070 1,061,702

Retirement benefit obligation 23 95,744 80,945

Long service award 24 24,374 20,235

Deferred income 25 87,688 206,183

956,876 1,369,065

Current Liabilities

Trade and other payables 26 542,929 679,050

Borrowings 22 2,098,923 2,465,130

Deferred income 25 124,179 187,209

Current tax payable 13 21,345 17,818

Dividend payable 27 22,910 24,062

Customer deposits 28 75,038 1,043

2,885,324 3,374,312

Total Liabilities 3,842,200 4,743,377

Total Equity and Liabilities 4,992,912 5,917,639

The annual report and the notes were approved by the Board of directors on the June 30, 2019 and were signed on its behalf by:

Gert Jacobus KriekManaging Director

Alhaji Y. Olalekan A. SaliuDirectorFRC/2013/ICAN/00000003595

Olatunde BalogunChief Financial OfficerFRC/2017/ICAN/00000016938

The accompanying notes and significant accounting policies form an integral part of these financial statements.

15


Statement of Profit or Loss and Other Comprehensive Income31-Mar-19 31-Mar-18

Note(s) N. '000 N. '000

Revenue 6 4,149,917 2,861,752

Cost of sales 7 (3,569,622) (2,149,621)

Gross profit 580,295 712,131

Other operating income 8 264,912 90,522

Selling and distribution expenses 9 (12,678) (15,860)

(Impairment losses)/reversal on trade receivables (28,060) 9,387

General and administrative expenses 10 (276,601) (447,801)

Operating profit 527,868 348,379

Interest income 11 2,567 27,278

Finance costs 12 (571,933) (479,621)

Loss before minimum tax (41,498) (103,964)

Minimum tax (10,915) (9,223)

Loss before taxation (52,413) (113,187)

Taxation 13 20,717 52,199

Loss for the year (31,696) (60,988)

Other comprehensive income:

Items that will not be reclassified to profit or loss:

Remeasurements on net defined benefit liability 11,350 (6,365)

Income tax relating to items that will not be reclassified (3,632) 2,037

Total items that will not be reclassified to profit or loss 7,718 (4,328)

Other comprehensive income/loss for the year net of taxation 7,718 (4,328)

Total comprehensive loss for the year (23,978) (65,316)

Earnings per share

Basic loss per share (kobo) 29 (18.00) (34.00)

Diluted loss per share (kobo) 29 (18.00) (34.00)


16


Statement of Changes in EquityShare capital Share premium Retained

earningsTotal equity

N. '000 N. '000 N. '000 N. '000

Balance at 1 April 2017 89,100 89,521 1,060,957 1,239,578

Loss for the year - - (60,988) (60,988)Other comprehensive loss - - (4,328) (4,328)

Total comprehensive Loss for the year - - (65,316) (65,316)

Balance at 31 March 2018 89,100 89,521 995,641 1,174,262

Balance at 1 April 2018 89,100 89,521 995,641 1,174,262

Loss for the year - - (31,696) (31,696)Other comprehensive income - - 7,718 7,718

Total comprehensive Loss for the year - - (23,978) (23,978)

Unclaimed dividends written back (Note 27) - - 428 428

Total contributions by and distributions to owners of companyrecognised directly in equity

- - 428 428

Balance at 31 March 2019 89,100 89,521 972,091 1,150,712


17


Statement of Cash Flows31-Mar-19 31-Mar-18

Note(s) N. '000 N. '000

Cash flows from operating activities

Loss before taxation (52,413) (113,187)

Adjustments for:

Depreciation and amortisation 15 189,330 190,363

Gains on disposals of assets - (220)

Loss/(gains) on foreign exchange - (1,605)

Interest received (2,567) (27,278)

Finance costs 571,933 479,621

Provision for long service award 24 3,103 (1,238)

Provision for retirement benefit liabilities 23 27,258 20,100

Write-off of property, plant and equipment 15 10,810 5,196

Minimum tax 10,915 9,223

Changes in working capital:

Inventories 16 418,007 (1,306,334)

Trade and other receivables 331,977 (22,043)

Prepayments (5,891) (3,247)

Investment (19,221) (5,943)

Trade and other payables 4,584 321,044

Deferred income (181,525) 393,392

Customer deposits 74,000 (58,406)

Dividend payable (1,152) (918)

Cash generated from / (used in) operations 1,379,148 (121,480)

Tax paid 13 (10,134) (10,494)

Value added tax paid (142,779) (94,644)

Long service award paid 24 (4,587) (3,093)

Retirement benefit paid 23 (1,108) (38,706)

Net cash generated from/(used in) operating activities 1,220,540 (268,417)

Cash flows from investing activities

Purchase of property, plant and equipment 15 (107,928) (296,317)

Proceeds from disposal of property, plant and equipment - 220

Interest received 2,567 27,278

Net cash used in investing activities (105,361) (268,819)

Cash flows from financing activities

Proceeds from borrowings 22 1,659,016 2,974,690

Interest paid on borrowings 22 (380,241) (401,085)

Repayment of borrowings 22 (2,527,479) (1,950,000)

Finance costs - -

Net cash (used in)/generated from financing activities (1,248,704) 623,605

Total cash movement for the year (133,525) 86,369

Cash at the beginning of the year 556,308 469,939

Total cash at end of the year 20 422,783 556,308


18


Notes to the Financial Statements for the year ended 31 March 2019

1. Corporate information

Northern Nigeria Flour Mills Plc is a public limited liability company incorporated and domiciled in Nigeria.

The annual report for the year ended March 31, 2019 were authorised for issue in accordance with a resolution of the directors on Sunday,June 30, 2019.

1.1 Reporting entity

Northern Nigeria Flour Mills Plc was incorporated in Nigeria as a private limited liability Company on 29 October 1971. The Company wasconverted to a public liability company in 1978 and was quoted on the Nigeria Stock Exchange in the same year. Its registered head office islocated at 15 Maimalari Road, Bompai, Kano. Its present ownership structure is 47% owned by individuals and institutions in Nigeria and53% owned by Flour Mills of Nigeria Plc which is the parent Company and ultimate controlling party is Excelsior Shipping Company Limited,a company registered in Liberia.

1.2 Principal activities

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

1.3 Going concern status

The financial statements have been prepared on a going concern basis. The Directors believe that there is no intention or threat from anysource to curtail significantly the Company's lines of business in the foreseeable future.

1.4 Ownership structure

Name of shareholder No. of sharesheld

% of sharecapital

Flour Mills of Nigeria Plc 94,545,159 53.06Northern Nigeria Investment Limited 12,955,000 7.27Dantata Investment & Securities Limited 11,661,114 6.54Other individuals and institutional shareholders 59,038,727 33.13

178,200,000 100

1.5 Financial period

These financial statements cover the financial year from 1 April 2018 to 31 March 2019, with comparatives for year ended 31 March 2018.

1.6 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the InternationalAccounting Standard Board (IASB) and the requirements of the Companies and Allied Matters Act Cap C.20 Laws of Federation of Nigeria,2004 and the Financial Reporting Council (FRC) of Nigeria Act, 2011.

The financial statements were authorised for issue by the board on 30 June 2019.

1.7 Basis of preparation

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

Financial instruments: Initially measured at fair value and subsequently measured at amortised cost.

Inventories: Lower of cost and net realisable value

Defined benefits obligations: Present value of the defined benefit obligation

19


Notes to the Financial Statements

1. Corporate information (continued)

1.8 Functional and presentation currency

For the purpose of these financial statements, the results and financial position of the Company are expressed in Naira, which is thefunctional currency of the Company, and the presentation currency for the Company financial statements.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

2. Significant accounting policies

The principal accounting policies applied in the preparation of these annual report are set out below.

2.1 Segmental reporting

The Company is involved in the milling of wheat, Sorghum and other local grains. All of the Company's products have similar risks andreturns thus the management does not use any operating segments results to make decisions about resources to be allocated to thesegment and assess its performance. The Company has only one business segment.

2.2 Revenue from contracts with customers

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of thirdparties. The company recognises revenue when it transfers control of a product or service to a customer.

Sale of goods

The Company has initially applied IFRS 15 from 1 April 2018. The Company recognises revenue from the sale and distribution of flour and itsby products. Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer.The Company recognises revenue when it transfers control of products to the customers. The Company sells flour and related products todistributors. For sales of products to the distributors, revenue is recognised when control of the goods has transferred, being when thegoods have been delivered to the distributor's location if the agreement is for the Company to deliver. For distributors that buy on credit, areceivable is recognised by the Company when the goods are delivered to the distributor as this represents the point in time at which theright to consideration becomes unconditional, as only the passage of time is required before payment is due.

For contracts that permit the customer to return an item, revenue is recognised to the extent that it is highly probable that a significantreversal in the amount of cumulative revenue recognised will not occur.Therefore, the amount of revenue recognised is adjusted forexpected returns, which are estimated based on the historical data. In these circumstances, a refund liability and a right to recover returnedgoods asset are recognised.

Rendering of services

For services, depending on the nature, revenue is recognized at a point in time or overtime. IFRS 15 contains specific, and more precise,guidance to be applied in determining whether revenue is recognised over time (often referred to as ‘percentage of completion’ under IAS18) or at a point in time. There are three criteria, each of which would result in recognition over time. These are:

The customer simultaneously receives and consumes the benefits provided by the vendor’s performance as the vendor performs.

The vendor’s performance creates or enhances an asset (for example, work in progress) that is controlled by the customer as work

progresses.

The vendor’s performance creates an asset which does not have an alternative use to the vendor, and the vendor has an

enforceable right to be paid for work completed to date.

IFRS 15 takes the view that the provision of services constitutes the provision of an asset, which is often transferred to the customer andconsumed immediately (for example, cleaning services).However, some services may result in an asset that is not transferred until somepoint in the future. The third criterion may then be relevant.

Advance payments received for goods yet to be delivered and services yet to be rendered by the Company are recognized as customerdeposit liabilities on the statement financial position and revenue is recognised as soon as goods have been delivered or services have beenrendered.

20



2.2 Revenue from contracts with customers (continued)

Revenue recognition under IAS 18 (policy applicable before 1 April 2018)

Revenue represents amount received and receivable from third parties for goods supplied to customers and for services rendered. Revenueis measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business,net of trade discounts, volume rebates, and value added tax.

Sale of goods

Revenue is recognised when the following conditions are met;

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 Company; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

2.3 Property, plant and equipment

Property, plant and equipment are tangible assets which the company holds for its own use or for rental to others and which areexpected to be used for more than one year.

The cost of an item of property, plant and equipment is recognised as an asset 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.

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost includesexpenditure that is directly attributable to the acquisition of the items, including the capitalisation of borrowing costs on qualifying assets.

Expenditure incurred subsequently for major services, additions to or replacements of parts of property, plant and equipment arecapitalised if it is probable that future economic benefits associated with the expenditure will flow to the company and the cost can bemeasured reliably. Day to day servicing costs are included in profit or loss in the year in which they are incurred.

Depreciation of an asset commences when the asset is available for use as intended by management. Depreciation is recognised so as towrite 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 by the company. 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 residualvalues over their expected useful lives.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful lifeLand NilBuildings 50 yearsPlant and machinery 10-25 yearsFurniture and equipment 3-10 yearsMotor vehicles 5 years

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of anychanges in estimate accounted for on a prospective basis.

Engineering spare parts and stand-by equipment are capitalised as property, plant and equipment when the Company expects to use themfor more than one year.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

21



2.3 Property, plant and equipment (continued)

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise fromthe continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Properties in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includesprofessional fees and for qualifying assets borrowing costs capitalised in accordance with the Company's accounting policy. Assets in thecourse of construction are not depreciated until they get to the stage of intended use.

2.4 Financial instruments

Financial instruments held by the company are classified in accordance with the provisions of IFRS 9 Financial Instruments.

Broadly, the classification possibilities, which are adopted by the company ,as applicable, are as follows:

Financial assets which are debt instruments: Amortised cost. (This category applies when the contractual terms of the instrument give rise, on specified dates, to cash flows

that are solely payments of principal and interest on principal, and where the instrument is held under a business model whoseobjective is met by holding the instrument to collect contractual cash flows); or

Financial liabilities: Amortised cost

Note 34 Financial instruments and risk management presents the financial instruments held by the company based on their specificclassifications.

Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because thisbest reflects the way the business is managed and information is provided to directors. The information considered includes:

– the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether the directors'strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financialassets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;– how the performance of the portfolio is evaluated and reported to the directors– the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risksare managed;– how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or thecontractual cash flows collected; and– the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about futuresales activity

Assessment of whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined asconsideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particularperiod of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessingwhether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of theinstrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount ofcontractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

– contingent events that would change the amount or timing of cash flows;

– terms that may adjust the contractual coupon rate, including variable-rate features;

– prepayment and extension features; and

– terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features).

22



2.4 Financial instruments (continued)

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantiallyrepresents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additionalcompensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractualpar amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plusaccrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated asconsistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by thecompany are presented below:

2.4.1 Trade and other receivables

Classification

Trade and other receivables, excluding, when applicable, statutory deductions and prepayments, are classified as financial assetssubsequently measured at amortised cost (note 17).

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely paymentsof principal and interest on the principal outstanding, and the company's business model is to collect the contractual cash flows on tradeand other receivables.

Recognition and measurement

Trade and other receivables are recognised when the company becomes a party to the contractual provisions of the receivables. They aremeasured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest)using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Impairment

The company recognises a loss allowance for expected credit losses on trade and other receivables, excluding statutory deductions andprepayments. The amount of expected credit losses is updated at each reporting date.

The company measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit losses (lifetimeECL), which represents the expected credit losses that will result from all possible default events over the expected life of the receivable.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs,the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includesboth quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessmentand including forward-looking information. The Company assumes that the credit risk on a financial asset has increased significantly if it ismore than 30 days past due.

– the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realisingsecurity (if any is held); or

– the financial asset is more than 90 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument while 12-month ECLsare the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period ifthe expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to creditrisk.

23




Measurement and recognition of expected credit losses

The company makes use of a provision matrix as a practical expedient to the determination of expected credit losses on trade and otherreceivables. The provision matrix is based on historic credit loss experience, adjusted for factors that are specific to the debtors, generaleconomic conditions and an assessment of both the current and forecast direction of conditions at the reporting date, including the timevalue of money, where appropriate.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. thedifference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects toreceive). ECLs are discounted at the effective interest rate of the financial asset.

The customer base is widespread and does not show significantly different loss patterns for different customer segments. The lossallowance is calculated on a collective basis for all trade and other receivables in totality. Details of the provision matrix is presented innote 17.

An impairment gain or loss is recognised in profit or loss with a corresponding adjustment to the carrying amount of trade and otherreceivables, through use of a loss allowance account.

Write off policy

The company writes off a receivable when there is information indicating that the counterparty is in severe financial difficulty and there isno realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.Receivables written off may still be subject to enforcement activities under the company recovery procedures, taking into account legaladvice where appropriate. Any recoveries made are recognised in profit or loss.

The Company expects no significant recovery from the amounts written off. However, financial assets that are written off could still besubject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

2.4.2 Borrowings and loans from related parties


Borrowings and loans from related parties are recognised when the company becomes a party to the contractual provisions of the loan. Theloans are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently 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 therelevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and pointspaid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through theexpected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Interest expense, calculated on the effective interest method, is included in profit or loss in finance costs (note 12.)

Borrowings expose the company to liquidity risk and interest rate risk. Refer to note 34 for details of risk exposure and managementthereof.

2.4.3 Trade and other payables


They are recognised when the company becomes a party to the contractual provisions, and are measured, at initial recognition, at fair valueplus transaction costs, if any.

They are subsequently measured at amortised cost using the effective interest method.

24




The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over therelevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and pointspaid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through theexpected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

If trade and other payables contain a significant financing component, and the effective interest method results in the recognition ofinterest expense, then it is included in profit or loss in finance costs (note 12).

Trade and other payables expose the company to liquidity risk and possibly to interest rate risk. Refer to note 34 for details of risk exposureand management thereof.

2.4.4 Derecognition

Financial assets

The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfersthe financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the company neither transfersnor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises itsretained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks andrewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises acollateralised borrowing for the proceeds received.

Financial liabilities

The company derecognises financial liabilities when, and only when, the company obligations are discharged, cancelled or they expire. Thedifference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only whenthe Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle theliabilities simultaneously.

2.4.5 Impairment: Policy applicable before 1 April 2018

Non-derivative financial assets

Financial assets not classified as at fair value through profit or loss are assessed at each reporting date to determine whether there isobjective evidence of impairment. This includes:- default or delinquency by a debtor;- restructuring of an amount due to the Company on terms that the Company would not consider otherwise;- indications that a debtor or issuer will enter bankruptcy;-adverse changes in the payment status of borrowers;- the disappearance of an active market for a security because of financial difficulties; or- observable data indicating that there is a measurable decrease in the expected cash flows from a Company of financial assets.

The Company considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significantassets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that hasbeen incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment.Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Company uses historical information on the timing of recoveries and the amount of loss incurred,and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser thansuggested by historical trends.

25




An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cashflows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account.When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If theamount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairmentwas recognised, then the previously recognised impairment loss is reversed through profit or loss.

Impairment losses are reversed when an increase in the financial asset's recoverable amount can be related objectively to an eventoccurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that theimpairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss withinoperating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveriesof amounts previously written off are credited against operating expenses.

2.5 Taxation

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent thatthe tax arises from:

a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or a business combination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the sameor a different period, directly in equity.

The tax currently payable is based on taxable or assessable profit for the period in accordance with the Company Income Tax Act, CAP C21,LFN 2004 and Education Tax Act, CAP E4, LFN 2004. The Company’s liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date.

Current tax

The current tax is based on taxable and assesssable profit for the year and any adjustment in respect of previous years. Taxable profit differsfrom profit as reported in the statement of profit or loss because of items of income or expense that are taxable or deductible in futureyears and items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the end of the reporting period.

The Company is subject to the Companies Income Tax Act (CITA). Total amount of tax payable under CITA is determined based on the higherof two components namely Company Income Tax (based on taxable income (or loss) for the year); and Minimum tax (determined based onthe sum of (i) the highest of; 0.25% of revenue of N500,000, 0.5% of gross profit, 0.25% of paid up share capital and 0.5% of net assets; and(ii) 0.125% of revenue in excess of N500,000). Taxes based on taxable profit for the period are treated as income tax in line with IAS 12;whereas Minimum tax which is based on gross amount is outside the scope of IAS 12 and therefore, are not presented as part of income taxexpense in profit or loss.

Where the minimum tax charge is higher than the Company Income Tax (CIT), a hybrid tax situation exists. In this situation, the CIT isrecognized in the income tax expense line in the profit or loss and the excess amount is presented above the income tax line as minimumtax.

Deferred tax assets and liabilities

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities

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

26



2.5 Taxation (continued)

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 theasset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Themeasurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Companyexpects, 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 profit or loss, except when they relate to items that are recognised in other comprehensiveincome or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly inequity respectively.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority.

2.6 Leases

Arrangement that contains a lease

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

At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other considerationrequired by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Companyconcludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at anamount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed financecost on the liability is recognised using the Company's incremental borrowing rate.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as anoperating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basisis more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arisingunder operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregatebenefit of incentives is recognised as a reduction of rental expense on a straight line basis except where another systematic basis is morerepresentative of the time pattern in which economic benefits from the leased assets are consumed.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income arerecognised in investment income in the Company financial statement.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leasedproperty or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in thestatement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocatedto each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amountsrecognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

27



2.7 Inventories

Inventories are measured at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labourcosts and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable valuerepresents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

The Company's Inventories consist of raw materials, consumables, finished goods and spare parts.

The basis of costing of different Inventories type are as follows:

Raw and packaging materials: Purchase cost including transportation and other incidental cost on a First In First Out (FIFO) basis.

Goods in transit: Purchase cost incurred to date

Finished products: Purchase cost of direct materials, labour and a reasonable allocation of overheads based on normal operating capacityon a weighted average basis.

Engineering spares and other consumables: Weighted average cost.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the periodthe write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value,are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the relatedrevenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as anexpense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increasein net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which thereversal occurs.

2.8 Impairment of tangible and intangible assets excluding goodwill, inventories, deferred tax assets and financial assets

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

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 flowsare discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money andthe 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 theasset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss,unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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

2.9 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

28



2.9 Share capital and equity (continued)

The Company has only one class of shares, ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they arerecorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve. Theuse of the share premium account is governed by S.120(3) of CAMA. All ordinary shares rank equally with regard to the Company's residualassets. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at generalmeetings of the Company.

Incremental cost directly attributable to the issue of Ordinary shares are recognised as deduction from equity

2.10 Employee benefits

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid ascash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by theemployee and the obligation can be estimated reliably.

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave andsick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and arenot discounted.

Defined contribution plans

The Company operate a defined contribution based retirement benefit scheme for its staff, in accordance with the Pension Reform Act of2014 with employee contributing 8% and the employer contributing 10% each of the employee’s relevant emoluments (basic salaries,housing and transport allowances). Payments to defined contribution retirement benefit plans are recognised as an expense whenemployees have rendered the service entitling them to the contributions. Employees contributions are deducted through payroll. The fundsare managed by several independent fund managers approved by the Pension Commission. The Company's only obligation is the monthlycontributions to the fund.

Defined benefits

The Company also operates a defined benefit gratuity scheme for its qualified staff. Benefits are related to the employees' length of serviceand remuneration. The gratuity obligation is determined using the Projected Unit Credit Method, with actuarial valuations being carried outat the end of each reporting period by an independent actuary. All actuarial gains and losses are recognised immediately through othercomprehensive income.

The benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on Federal Government ofNigeria issued bonds that have maturity dates approximate to the term of the company's defined benefits obligation. Defined benefit costsare categorised as follows:

Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) Net interest expense Remeasurement (actuarial gains and losses)

The service cost and net interest expense are charged to the profit or loss while the gains and loss due to remeasurement are charged toother comprehensive income.

Although the scheme is not funded the Company ensures that adequate arrangements are in place to meet its obligations under thescheme.

Long service award

The Company operates long service award for its qualified staff. The benefits are graduated depending on the employees number of yearsin service to the company. The Company's obligation in respect of the scheme is the amount of future benefits that employees have earnedin return for their service in the current and prior periods. The benefit is discounted to determine its present value. The discount rate is theyield at the reporting date on Federal Government of Nigeria issued bonds that have maturity dates approximate to the term of theCompany's defined benefits obligation. The obligation is determined by an independent actuary at each reporting period.

29



2.10 Employee benefits (continued)

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gainor loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a definedbenefit plan when the settlement occurs. Gains or losses due to remeasurement of long service awards are recognised in profit or loss.

Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when theCompany recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, thenthey are discounted.

2.11 Provisions and contingencies

Provisions are recognised when: the company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure discounted at a pre-tax rate expected to be required to settle theobligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision ismeasured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shallbe recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. Thereimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of theprovision.

Provisions are not recognised for future operating losses.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arisesfrom past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will berequired to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities areonly disclosed and not recognised as liabilities in the statement of financial position. If the likelihood of an outflow of resources is remote,the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

2.12 Government grants

Government grants are recognised when there is reasonable assurance that: the company will comply with the conditions attaching to them; and the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the related costs that they are intended tocompensate.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of givingimmediate financial support to the entity with no future related costs is recognised as income of the period in which it becomes receivable.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses therelated costs for which the grants are intended to compensate.

Where a loan is received from government at below market interest rate, the difference between the fair value of the loan and the amountreceived is recognised as a government grant (deferred income) amortised to the profit or loss over the term of theloan on a systematic basis.

30



2.13 Investment income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established by approval ofdividend at the annual general meeting of the investee (provided that it is probable that the economic benefits will flow to the Companyand the amount 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 bemeasured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to thatasset’s net carrying amount on initial recognition.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income from theordinary business of the company is recognised as revenue, while rental income from activities other than the ordinary business arerecognised as other operating income.

2.14 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during theperiod, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and theweighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinaryshares.

2.15 Borrowing costs

Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds. These include interestexpenses calculated using the effective interest rate method, finance charges in respect of finance leases and exchange differences arisingfrom foreign currency borrowings. Where a range of debt instruments is used to borrow funds, or where the financing activities arecoordinated centrally, a weighted average capitalisation rate is applied.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarilytake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as theassets are substantially ready for their intended use or sale. The Company defines a qualifying asset as an asset that takes more than a yearto prepare for its intended use. Capitalisation is suspended during extended periods in which active development is interrupted.Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deductedfrom the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

2.16 Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in Naira, by applying to the foreign currency amount the spot exchange ratebetween the functional currency and the foreign currency at the date of the transaction.

Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailingon the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreigncurrencies are translated at the rates prevailing at that date. Non-monetary items that are measured based on historical cost in foreigncurrency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreigncurrency are translated using the exchange rates at the date when the fair value was determined.

At the end of the reporting period: foreign currency monetary items are translated using the closing rate; non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at

the date of the transaction; and

31



2.16 Translation of foreign currencies (continued) non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date

when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at whichthey were translated on initial recognition during the period or in previous annual report are recognised in profit or loss in the period inwhich they arise.

Cash flows arising from transactions in a foreign currency are recorded in Naira by applying to the foreign currency amount the exchangerate between the Naira and the foreign currency at the date of the cash flow.

2.17 Statement of cash flows

The Company applies the indirect method for preparation of the statement of cash flows. Changes in statement of financial position itemsthat have not resulted in cash flows such as translation differences, fair value changes and other non-cash items have been adjusted for thepurpose of preparing the statement. Dividends paid to ordinary shareholders are included in financing activities. Interest paid is alsoincluded in financing activities while finance and dividend income is included in investing activities.

3 Significant judgements and sources of estimation uncertainty

The preparation of annual report in conformity with IFRS requires Directors, from time to time, to make judgements, estimates andassumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses.

These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable underthe circumstances. 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 periodin which the estimates are revised and in any future periods affected.

The following are the areas of estimation uncertainties and critical judgements, that the directors have made in the process of applying theCompany’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

Deferred tax

The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductibletemporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires thecompany to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based onforecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows andtaxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the end ofthe reporting period could be impacted.

Allowance for credit losses

The Company periodically assesses its trade and other receivables for probability of credit losses. Management considers several factorsincluding past credit record, current financial position and credibility of management. Judgment is exercised in determining the allowancesmade for credit losses.

Impairment allowance are made for receivables that have been outstanding for 365 days, in respect of which there is no firm commitmentto pay by the customer

Furthermore all balances are reviewed for evidence of impairment and provided against once recovery is doubtful. These assessments aresubjective and involve a significant element of judgment by management on the ultimate recoverability of amounts receivable.

Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company, accounting for about 61% of theCompany’s total assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation arecritical to the Company’s financial position and performance.

32



3. Significant judgements and sources of estimation uncertainty (continued)

The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expectedresidual value at the end of its life. Increasing an asset’s expected life or its residual value would result in the reduced depreciation charge inprofit or loss.

The Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There were nochanges in the useful lives of Property, plant and equipment in the current year.

Contigencies

Judgements and assumptions are made about the likelihood and magnitude of an outflow of resources with respect to ongoing litigationand claims and regulatory audits.

Valuation of financial liabilities

As at the end of the reporting period, the Company was granted some government assisted loans at below market rates. In accordance withIAS 20, the government grant which is the difference between the proceeds of the loans and their fair value should be accounted for. Basedon IFRS 9, all financial liabilities should be initially recognized at fair value. In computing the fair value of these loans, the imputed interestrate used in discounting the cash flows associated with the loans is based on management judgement of best estimate of its borrowing costat the time the loans were granted.

Provision for gratuity

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

Provision for long service award

A provision for Long term service award is granted at first to employees that have spent a minimum of ten years in service and for everymultiple five years an employee remains in service. IAS19 requires the application of the Projected Unit Credit Method for actuarialvaluations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnoveretc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

Taxation

The Company’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Company’stotal tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finallydetermined until resolution has been reached with the relevant tax authority.

Impairment of property, plant and equipment

Determining whether an item of property, plat and equipment is impaired requires an estimation of the recoverable amount of the cashgenerating units to which the item has been allocated. The value in use calculations requires directors to estimate the future cashflowsexpected to arise from the cash generating unit and use a suitable discount rate to calculate the present value. The determination of theexpected future cashflows requires judgement to be made by management. Where the actual future cashflows are less than expected, animpairment loss may arise.

Measurement of fair value

Several assets and liabilities of the company are either measured at fair value or disclosure is made of their fair values.

A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financialassets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notesspecific to that asset or liability.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values arecategorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices).

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

33



3. Significant judgements and sources of estimation uncertainty (continued)

In some cases, if the inputs used to measure the fair value of an asset or a liability is categorised in different levels of the fair valuehierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level inputthat is significant to the entire measurement

Further information about the basis of determination of fair values is included in Note 34.

Further information about the assumptions made in measuring fair value is included in the note on Financial information and riskmanagement (Note 34).

34



4. Changes in accounting policy

The annual report have been prepared in accordance with International Financial Reporting Standards on a basis consistent with the prioryear except for the adoption of the following new or revised standards.

Application of IFRS 9 Financial Instruments

In the current year, the company has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequentialamendments to other IFRSs. IFRS 9 replaces IAS 39 Financial Instruments and introduces new requirements for 1) the classification andmeasurement of financial assets and financial liabilities, 2) impairment for financial assets and 3) general hedge accounting. Details of thesenew requirements as well as their impact on the company's financial statements are described below.

As a result of the adoption of IFRS 9, the Company has adopted consequential amendments to IAS 1 Presentation of Financial Statements,which require impairment of financial assets to be presented in a separate line item in the statement of profit or loss and OCI. Previously,the Company’s approach was to include the impairment of financial assets in administrative expenses. The Company had no additionalimpairment loss in the year due to transition from IAS 39, from ‘administrative expenses’ to ‘impairment loss on financial assets in thestatement of profit or loss and OCI for the year ended 31 March 2019.

Additionally, the Company has adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures that are applied todisclosures about 2018, but have not been generally applied to comparative information

For an explanation of how the Company classifies and measures financial instruments under IFRS 9, see Note 2.4.

Classification and measurement of financial assets

The date of initial application (i.e. the date on which the company has assessed its existing financial assets and financial liabilities in terms ofthe requirements of IFRS 9) is April 1, 2018. Accordingly, the company has applied the requirements of IFRS 9 to instruments that have notbeen derecognised as at April 1, 2018 and has not applied the requirements to instruments that have already been derecognised as at April1, 2018. Comparatives in relation to instruments that have not been derecognised as at April 1, 2018 have not been restated. Instead,cumulative adjustments to retained earnings have been recognised in retained earnings as at April 1, 2018.

All recognised financial assets that are within the scope of IFRS 9 are required to be subsequently measured at amortised cost or fair valueon the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financialassets.

The measurement requirements are summarised below:

Debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractualcash flows that are solely payments of principal and interest on the principal amount outstanding, are subsequently measured at amortisedcost.

Debt investments that are held within a business model whose objective is both to collect the contractual cash flows and to sell the debtinstruments, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding,are subsequently measured at fair value through other comprehensive income.

The directors reviewed and assessed the company's existing financial assets as at April 1, 2018 based on the facts and circumstances thatexisted at that date and concluded that the initial application of IFRS 9 has had no significant impact on the company's financial assets asregards to their classification and measurement:

Debt instruments

Debt instruments classified as held-to-maturity and loans and receivables under IAS 39 that were measured at amortised cost continue tobe measured at amortised cost under IFRS 9 as they are held within a business model to collect contractual cash flows and these cash flowsconsist solely of payments of principal and interest on the principal amount outstanding.

35



4. Changes in accounting policy (continued)

Effect of adopting IFRS 9

The effect of adopting IFRS 9 on the carrying amounts of financial assets at 1 April 2018 relates solely to the new impairment requirements.

Financial assets Originalclassificationunder IAS 39

Newclassificationunder IFRS 9

Originalcarrying

amount underIAS 39

Newcarrying

amount underIFRS 9

N. '000 N. '000Trade and other receivables Loans and

receivablesAmortised cost 252,453 252,453

Cash and cash equivalents Loans andreceivables

Amortised cost 556,308 556,308

Total financial assets 808,761 808,761

Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss modelunder IAS 39. The expected credit loss model requires the company to account for expected credit losses and changes in those expectedcredit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is nolonger necessary for a credit event to have occurred before credit losses are recognised.

Specifically, IFRS 9 requires the company to recognise a loss allowance for expected credit losses on debt investments subsequentlymeasured at amortised cost or at fair value through other comprehensive income, lease receivables, contract assets and loan commitmentsand financial guarantee contracts to which the impairment requirements of IFRS 9 apply. In particular, IFRS 9 requires the company tomeasure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on thatfinancial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset. On the other hand, if the credit risk on a financial instrument has not increased significantly since initial recognition(except for a purchased or originated credit-impaired financial asset), the company is required to measure the loss allowance for thatfinancial instrument at an amount equal to 12 months expected credit losses. IFRS 9 also provides a simplified approach for measuring theloss allowance at an amount equal to lifetime expected credit losses for trade receivables, contract assets and lease receivables in certaincircumstances.

As at April 1, 2018, the directors reviewed and assessed the company's existing financial assets, amounts due from customers forimpairment using reasonable and supportable information that was available without undue cost or effort in accordance with therequirements of IFRS 9 to determine the credit risk of the respective items at the date they were initially recognised, and compared that tothe credit risk as at April 1, 2017 and April 1, 2018.The result of the assessment is as follows:

N. '000

Loss allowance at 31 March 2018 under IAS 39Trade and other receivables (169,322)Loan receivables -

Total loss allowance at 31 March under IAS 39 (169,322)

Additional impairment recognised at 1 April 2018 on:Trade and other receivables -Loan receivables -Cash and cash equivalents -

Total additional impairment recognised -

Total loss allowance at 1 April 2018 under IFRS 9 (169,322)

36




Classification and measurement of financial liabilities

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities. The adoption of IFRS9 has not had a significant effect on the Company's accounting policies related to financial liabilities.

Financial liabilities Originalclassificationunder IAS 39

Newclassificationunder IFRS 9

Originalcarrying

amount underIAS 39

Newcarrying

amount underIFRS 9

N. '000 N. '000Borrowings Other financial

liabilitiesOther financialliabilities

2,847,993 2,847,993

Trade and other payables Other financialliabilities

Other financialliabilities

416,920 416,920

Total financial liabilities 3,264,913 3,264,913

Reconciliation of the reclassifications and remeasurements of financial assets as a result of adopting IFRS9

The following table presents a summary of the financial assets as at April 1, 2018. The table reconciles the movement of financial assetsfrom their IAS 39 measurement categories and into their new IFRS 9 measurement categories.

Newmeasurement

category: IFRS 9

Amortised cost Re-measurement

changes -Adjustment to

equity

Changeattributable to:

Previously Loans and receivables:Trade and other receivables 556,308 556,308 No changeCash and cash equivalents 252,453 252,453 No change

808,761 808,761

Transition

Changes in accounting policies resulting from the adoption of IFRS 9 have been applied as described below:

The Company has used an exemption not to restate comparative information for prior periods with respect to classification andmeasurement (including impairment) requirements. Differences in the carrying amounts of financial assets and financial liabilities resultingfrom the adoption of IFRS 9 are recognised in retained earnings and reserves as at 1 April 2018. Accordingly, the information presented for2018 does not generally reflect the requirements of IFRS 9, but rather those of IAS 39.

The determination of the business model within which a financial asset is held have been made on the basis of the facts and circumstancesthat existed at the date of initial application.

Application of IFRS 15 Revenue from contracts with customers

In the current year, the company has applied IFRS 15 Revenue from Contracts with Customers (as revised in April 2016) and the relatedconsequential amendments to other IFRSs. IFRS 15 replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer LoyaltyProgrammes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue -Barter Transactions Involving Advertising Services.

37




IFRS 15 introduces a 5-step approach to revenue recognition. Far more prescriptive guidance has been added in IFRS 15 to deal with specificscenarios. Details of these new requirements as well as their impact on the company financial statements are described below. Refer to therevenue accounting policy for additional details.

The company has applied IFRS 15 with an initial date of application of April 1, 2018 in accordance with the cumulative effect method, byrecognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at April 1, 2018. Thecomparative information has therefore not been restated.

38



5. New Standards and Interpretations

5.1 Standards and interpretations effective and adopted in the current year

In the current year, the company has adopted the following standards and interpretations that are effective for the current financial yearand that are relevant to its operations:

Foreign Currency Transactions and Advance Consideration - IFRIC 22

The interpretation applies to circumstances when an entity has either paid or received an amount of consideration in advance and in aforeign currency, resulting in a non-monetary asset or liability being recognised. The specific issue addressed by the interpretation is how todetermine the date of the transaction for the purposes of determining the exchange rate to use on the initial recognition of the relatedasset, expense or income when the non-monetary asset or liability is derecognised. The interpretation specifies that the date of thetransaction, for purposes of determining the exchange rate to apply, is the date on which the entity initially recognises the non-monetaryasset or liability.

The effective date of the interpretation is for years beginning on or after January 1, 2018.

The company has adopted the interpretation for the first time in the 2019 annual report.

The impact of the interpretation is not material.

IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurements of financial assets. IFRS 9 wassubsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and forderecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 wasissued in July 2014 mainly to include a)impairment requirements for financial assets and b) limited amendments to the classification andmeasurement requirements by introducing a "fair value through other comprehensive income" (FVTOCI) measurement category for certainsimple debt instruments.

Key requirements of IFRS 9: All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are

required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within abusiness model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solelypayments of principal and interest on the outstanding principal are generally measured at amortised cost at the end ofsubsequent reporting periods. Debt instruments that are held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on outstanding principal, are measured atFVTOCI. All other debt and equity investments are measured at fair value at the end of subsequent reporting periods. Inaddition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equityinvestment (that is not held for trading) in other comprehensive income with only dividend income generally recognised inprofit or loss.

With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that theamount of change in the fair value of the financial liability that is attributable to changes in the credit risk of the liability ispresented in other comprehensive income, unless the recognition of the effect of the changes of the liability's credit risk inother comprehensive income would create or enlarge an accounting mismatch in profit or loss. Under IAS 39, the entire amountof the change in fair value of a financial liability designated as at fair value through profit or loss is presented in profit or loss.

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred creditloss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes inthose expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. It is therefore nolonger necessary for a credit event to have occurred before credit losses are recognised.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available inIAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting,specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been replaced with the principal ofan "economic relationship". Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosurerequirements about an entity's risk management activities have also been introduced.

39



5. New Standards and Interpretations (continued)

The effective date of the standard is for years beginning on or after January 1, 2018.

The company has adopted the standard for the first time in the 2019 annual report.

The adoption of this standard has not had a material impact on the results of the company, but has resulted in more disclosure than wouldhave previously been provided in the annual report.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction contracts; IAS 18 Revenue; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for theconstruction of Real Estate; IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving AdvertisingServices.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entityrecognises revenue in accordance with that core principle by applying the following steps:

Identify the contract(s) with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognise revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 also includes extensive new disclosure requirements.


The company has adopted the standard for the first time in the 2019 annual report.

The impact of the standard is not material.

40




5.2 Standards and interpretations not yet effective

The company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory forthe company’s accounting periods beginning on or after April 1, 2019 or later periods:

Plan Amendment, Curtailment or Settlement - Amendments to IAS 19

The amendment deals with the determination of past service cost and gains or losses on settlement, when a plan is amended, curtailed orsettled ("the event"). Specifically, when determining the past service cost or gain or loss on settlement, the net defined benefit liability(asset) shall be remeasured using the current fair value of plan assets and current actuarial assumptions reflecting the benefits offeredunder the plan and plan assets both before and after the event. The effect of the asset ceiling shall not be considered in this exercise. Theeffect of the asset ceiling shall be determined after the event.

The amendment also specifies that when determining current service costs and net interest on the defined benefit liability (asset) in aperiod in which an amendment, curtailment or settlement occurs, to apply inputs at the beginning of the reporting period for the currentservice cost and interest up to the date of the event, and to apply inputs as at the date of the event to determine current service costs andinterest for the remainder of the period.

The effective date of the amendment is for years beginning on or after January 1, 2019.

It is unlikely that the amendment will have a material impact on the company's annual report.

Disclosure Initiative — Definition of Material (Amendments to IAS 1 and IAS 8)

The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now hasfeatured elsewhere in IFRS Standards. In addition, the explanations accompanying the definition have been improved. Finally, theamendments ensure that the definition of material is consistent across all IFRS Standards.

Under the new definition, information is material if omitting, misstating or obscuring it could reasonably be expected to influence thedecisions that the primary users of general purpose financial statements make on the basis of those financial statements, which providefinancial information about a specific reporting entity.



Amendments to References to Conceptual Framework in IFRS Standards

This document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC22, and SIC-32. Not all amendments, however update those pronouncements with regard to references to and quotes from the frameworkso that they refer to the revised Conceptual Framework. This was done to support transition to the revised Conceptual Framework forcompanies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction.



Amendments to IAS 12 Income Taxes: Annual Improvements to IFRS 2015 - 2017 cycle

The amendment specifies that the income tax consequences on dividends are recognised in profit or loss, other comprehensive income orequity according to where the entity originally recognised the events or transactions which generated the distributable reserves.



41




Amendments to IAS 23 Borrowing Costs: Annual Improvements to IFRS 2015 - 2017 cycle

The amendment specifies that when determining the weighted average borrowing rate for purposes of capitalising borrowing costs, thecalculation excludes borrowings which have been made specifically for the purposes of obtaining a qualifying asset, but only untilsubstantially all the activities necessary to prepare the asset for its intended use or sale are complete.



Uncertainty over Income Tax Treatments - IFRIC 23

The interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over incometax treatments. Specifically, if it is probable that the tax authorities will accept the uncertain tax treatment, then all tax related items aremeasured according to the planned tax treatment. If it is not probable that the tax authorities will accept the uncertain tax treatment, thenthe tax related items are measured on the basis of probabilities to reflect the uncertainty. Changes in facts and circumstances are requiredto be treated as changes in estimates and applied prospectively.

The effective date of the interpretation is for years beginning on or after January 1, 2019.

The company has adopted the interpretation for the first time in the 2020 annual report.

It is unlikely that the interpretation will have a material impact on the company's annual report.

IFRS 16 Leases

IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee accounting model. The main changes arisingfrom the issue of IFRS 16 which are likely to impact the company are as follows:

Company as lessee: Lessees are required to recognise a right-of-use asset and a lease liability for all leases, except short term leases or leases where

the underlying asset has a low value, which are expensed on a straight line or other systematic basis. The cost of the right-of-use asset includes, where appropriate, the initial amount of the lease liability; lease payments made

prior to commencement of the lease less incentives received; initial direct costs of the lessee; and an estimate for any provisionfor dismantling, restoration and removal related to the underlying asset.

The lease liability takes into consideration, where appropriate, fixed and variable lease payments; residual value guarantees tobe made by the lessee; exercise price of purchase options; and payments of penalties for terminating the lease.

The right-of-use asset is subsequently measured on the cost model at cost less accumulated depreciation and impairment andadjusted for any re-measurement of the lease liability. However, right-of-use assets are measured at fair value when they meetthe definition of investment property and all other investment property is accounted for on the fair value model. If a right-of-use asset relates to a class of property, plant and equipment which is measured on the revaluation model, then that right-of-useasset may be measured on the revaluation model.

The lease liability is subsequently increased by interest, reduced by lease payments and re-measured for reassessments ormodifications.

Re-measurements of lease liabilities are affected against right-of-use assets, unless the assets have been reduced to nil, in whichcase further adjustments are recognised in profit or loss.

The lease liability is re-measured by discounting revised payments at a revised rate when there is a change in the lease term or achange in the assessment of an option to purchase the underlying asset.

The lease liability is re-measured by discounting revised lease payments at the original discount rate when there is a change inthe amounts expected to be paid in a residual value guarantee or when there is a change in future payments because of achange in index or rate used to determine those payments.

Certain lease modifications are accounted for as separate leases. When lease modifications which decrease the scope of thelease are not required to be accounted for as separate leases, then the lessee re-measures the lease liability by decreasing thecarrying amount of the right of lease asset to reflect the full or partial termination of the lease. Any gain or loss relating to thefull or partial termination of the lease is recognised in profit or loss. For all other lease modifications which are not required tobe accounted for as separate leases, the lessee re-measures the lease liability by making a corresponding adjustment to theright-of-use asset.

42



5. New Standards and Interpretations (continued) Right-of-use assets and lease liabilities should be presented separately from other assets and liabilities. If not, then the line item

in which they are included must be disclosed. This does not apply to right-of-use assets meeting the definition of investmentproperty which must be presented within investment property. IFRS 16 contains different disclosure requirements compared toIAS 17 leases.

Company as lessor: Accounting for leases by lessors remains similar to the provisions of IAS 17 in that leases are classified as either finance leases or

operating leases. Lease classification is reassessed only if there has been a modification. A modification is required to be accounted for as a separate lease if it both increases the scope of the lease by adding the right

to use one or more underlying assets; and the increase in consideration is commensurate to the stand alone price of theincrease in scope.

If a finance lease is modified, and the modification would not qualify as a separate lease, but the lease would have been anoperating lease if the modification was in effect from inception, then the modification is accounted for as a separate lease. Inaddition, the carrying amount of the underlying asset shall be measured as the net investment in the lease immediately beforethe effective date of the modification. IFRS 9 is applied to all other modifications not required to be treated as a separate lease.

Modifications to operating leases are required to be accounted for as new leases from the effective date of the modification.Changes have also been made to the disclosure requirements of leases in the lessor's financial statements.

Sale and leaseback transactions: In the event of a sale and leaseback transaction, the requirements of IFRS 15 are applied to consider whether a performance

obligation is satisfied to determine whether the transfer of the asset is accounted for as the sale of an asset. If the transfer meets the requirements to be recognised as a sale, the seller-lessee must measure the new right-of-use asset at

the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The buyer-lessor accountsfor the purchase by applying applicable standards and for the lease by applying IFRS 16

If the fair value of consideration for the sale is not equal to the fair value of the asset, then IFRS 16 requires adjustments to bemade to the sale proceeds. When the transfer of the asset is not a sale, then the seller-lessee continues to recognise thetransferred asset and recognises a financial liability equal to the transfer proceeds. The buyer-lessor recognises a financial assetequal to the transfer proceeds.


The company expects to adopt the standard for the first time in the 2020 annual report.

It is unlikely that the standard will have a material impact on the company's annual report.

43


Notes to the Financial Statements31-Mar-19 31-Mar-18

N. '000 N. '000

6. Revenue

Revenue from contracts with customersSale of goods 3,379,151 2,071,442Rendering of services - contract milling fees 770,766 790,310

4,149,917 2,861,752

7. Cost of sales (by nature)Raw materials consumed 2,869,104 1,668,841Allowance for obsolete inventory 179,839 12,000Manufacturing - Employee costs 165,619 122,040Depreciation 178,994 178,329Petrol, gas and oil 138,181 138,466Factory rents and rates 4,803 2,522Repairs and maintenance 27,938 20,892Insurance 3,496 3,741Other production expenses 1,648 2,790

3,569,622 2,149,621

8. Other operating income

Other rental income 1,800 1,800Income from sale of scraps 81,587 14,795Government grants 181,525 72,102Profit on disposal of property, plant and equipment - 220Profit on exchange differences - 1,605

264,912 90,522

9. Selling and distribution expenses (analysed by nature)

Employee cost 6,468 7,517Advertisement 76 97Selling expenses 6,134 8,246

12,678 15,860

10. General and administrative expenses (analysed by nature)

Auditors remuneration 18,900 18,000

Bank charges 2,675 1,360

Consulting and professional fees 10,282 22,838

Depreciation 10,336 12,034

Donations 305 70

Employee costs 89,180 101,864

Directors' emoluments 23,391 42,980

Meeting expenses 7,478 8,858

Loss on exchange differences 390 -

Fines, penalties and non-recoverable taxes 5,127 105,229

Insurance 2,163 2,194

IT expenses 24,724 21,813

Motor vehicle expenses 61 80

Fuel, gas and oil 3,461 955

Other administrative expenses 4,132 32,127

44



N. '000 N. '000

10. General and administrative expenses (analysed by nature) (continued)

Shared services cost 23,234 28,481

Postages, telephone and cables 1,938 2,463

Printing and stationery 1,626 1,155

Repairs and maintenance 27,220 11,480

Subscriptions 2,650 4,979

Travelling and accomodation expenses 17,328 28,841

276,601 447,801

11. Interest income

Interest income 2,567 27,278

12. Finance costs

Interest on intragroup loan 112,101 243,005Interest on bank loans 428,126 236,616Total finance costs determined using effective interest rate

540,227 479,621Guarantee fees 20,403 -Monitoring fees 11,303 -

Total finance costs expensed 571,933 479,621

Monitoring fees relates to 0.125% charge on the outstanding balance of the loan payable quarterly. The guarantee fees relates to annualcharge payable to the bank guaranteeing the loan. The amount paid in the year is N20.4 million (2018: -). During the year, N29.6 million waspaid and N2 milllion was accrued at year end

13. Taxation

Per profit or loss

Education tax 2,746 1,265

Current tax expense 2,746 1,265Deferred taxation (23,463) (53,464)

Net income tax credit as per profit or loss (20,717) (52,199)

Corporation tax is calculated at 30% (2018: 30%) of the estimated taxable profit for the year while tertiary education tax is calculated at 2%(2018: 2%) of the estimated assessable profit for the year. There was no income tax charge in the current year (2018: Nil).

There was no company income tax charged during the year (2018: Nil).

Per statement of financial positionAt 1 April 17,818 17,824Charge for the year 2,746 1,265Minimum tax 10,915 9,223

Cash payment during the year (10,134) (10,494)

Current tax payable 21,345 17,818

45



N. '000 N. '000

13. Taxation (continued)

Reconciliation of effective tax rateLoss before tax on continuing operations (A) Rate (52,413) (113,187)

Tax at the statutory corporation tax rate of 30% (2018:30%) 30% (15,724) (33,956)Effect of income that is exempt from taxation -% - (5,429)Effect of expenses that are not deductible in determining taxable profit (19)% 9,815 38,011Effect of investment allowance and similar tax incentives 26% (13,760) (41,560)Education tax at 2% of assessable profits 2% (1,048) (2,264)Adjustments recognised in the current year in relation to the deferred tax of prior years -% - (7,001)

Income tax expense recognized in profit or loss (relating to continuing operations) (B) 40% (20,717) (52,199)

Effective tax rate (B/A) %40 %46

Minimum tax

The Company has been assessed for tax on minimum tax basis as there was no assessable profit as at year end.

14. Deferred taxation

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement.Therefore, they have been offset in the statement of financial position as follows:

Deferred tax asset 112,047 92,216

Analysis of deferred tax (assets)/liabilities

2019

Deferred tax (assets)/liabilities in relation to:

At 1 April 2018

N'000

Recognised inprofit or loss

N'000

Recognised inother

comprehensiveincome

N'000

At 31 March2019

N'000Property, plant and equipment 23,498 (32,095) - (8,597)Unused tax losses (8,686) 8,686 - -Exchange difference 514 (514) - -Retirement benefits (32,378) (9,660) 3,632 (38,406)Allowance for bad debt (54,182) (9,010) - (63,192)Write-down of obsolete inventories (20,982) 19,130 - (1,852)

(92,216) (23,463) 3,632 (112,047)

46



14. Deferred taxation (continued)

March 31, 2018

Deferred tax (assets)/liabilities in relation to:

At 1 April 2017

N'000

Recognised inprofit or loss

N'000

Recognised inother

comprehensiveincome

N'000

At 31 March2018

N'000Property, plant and equipment 122,167 (98,669) - 23,498Tax losses and unutilised capital allowances (27,730) 19,044 - (8,686)Exchange difference (26,144) 26,658 - 514Retirement benefit (35,326) 4,985 (2,037) (32,378)Allowance for bad debt (53,612) (570) - (54,182)Write-down for obsolete inventories (16,070) (4,912) - (20,982)

(36,715) (53,464) (2,037) (92,216)

Movement in Deferred tax asset

31-Mar-19 31-Mar-18N. '000 N. '000

Beginning of the year 92,216 36,715Charge for the year recognised in profit or loss 23,463 53,464Charge/(Credit) to other comprehensive income (3,632) 2,037

31 March 112,047 92,216

Assets Liabilities NetDeferred tax assets and liabilities areattributable to the following:

31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18

Property, plant and equipment - - 438,445 23,498 438,445 23,498Tax losses and unutilised capitalallowances

(447,043) (8,686) - - (447,043) (8,686)

Exchange difference - - - 514 - 514Retirement benefit (38,438) (32,378) - - (38,438) (32,378)Allowance for bad debt (63,161) (54,182) - - (63,161) (54,182)Write-down for obsolete inventories (1,850) (20,982) - - (1,850) (20,982)

(550,492) (116,228) 438,445 24,012 (112,047) (92,216)

The directors have recognised a deferred tax asset of N112.05 million relating to deductible temporary differences and unused tax lossesavailable for utilization against future taxable profits. Management assessment of the recoverability of the deferred tax asset is based onapproved forecast which reflects improved trading performance arising from introduction of new products and strengthening of the salesand distribution channels of the Company by partnering with the sales team of the parent company, Flour Mills of Nigeria Plc.

There was no unrecognised deffered tax as at the end of the reporting period (2018: Nil).

47



15. Property, plant and equipmentLand andbuilding

Plant andmachinery

Furniture andequipment Motor vehicles

Capital work-in-progress Total

N. '000 N. '000 N. '000 N. '000 N. '000 N. '000CostBalance at 1 April 2017 111,765 1,344,749 86,889 305,771 1,359,432 3,208,606Additions - - 282 4,038 291,997 296,317Disposals - - - (1,617) - (1,617)Reclassification 14,649 (14,649) - - - -Transfer - capital work in progress - 1,399,995 - - (1,399,995) -Write-off - - - - (5,196) (5,196)

Balance at 31 March 2018 126,414 2,730,095 87,171 308,192 246,238 3,498,110

Balance at April 1, 2018 126,414 2,730,095 87,171 308,192 246,238 3,498,110Additions - - - - 107,928 107,928Disposals - - - - - -Transfers - capital work in progress 2,867 260,033 2,286 210 (265,396) -Transfer - inventory (Note 16) - - - - 76,753 76,753Write-off - - - - (10,810) (10,810)

Balance at March 31, 2019 129,281 2,990,128 89,457 308,402 154,713 3,671,981

Accumulated depreciationBalance at April 1, 2017 44,076 779,772 78,519 297,306 - 1,199,673Charge for the year 2,647 181,115 416 6,185 - 190,363Disposals - - - (1,617) - (1,617)

Balance at March 31, 2018 46,723 960,887 78,935 301,874 - 1,388,419

Balance at April 1, 2018 46,723 960,887 78,935 301,874 - 1,388,419Charge for the year 2,962 176,478 7,390 2,500 - 189,330

Balance at March 31, 2019 49,685 1,137,365 86,325 304,374 - 1,577,749

Carrying amountBalance as at March 31, 2019 79,596 1,852,763 3,132 4,028 154,713 2,094,232

Balance as at March 31, 2018 79,691 1,769,208 8,236 6,318 246,238 2,109,691

Impairment losses/(reversal)

No impairment loss or reversal has been recognised in the current year (2018: Nil).

Pledged as security

There is a negative pledge over the Company's property, plant and equipment given in relation to one of the Company's borrowing (2018:same).

Capital commitment

At 31 March 2019, the company had no authorised and/or contracted capital commitments for the acquisition of property, plant andequipment (2018: Nil).

Capital work in progress

All Capital work in progress relates to the installation of certain items of plant and machinery.

48



N. '000 N. '000

16. Inventories

Raw materials 2,061,346 2,501,002Goods in Transit - Raw Materials 36,998 -Finished goods 40,204 57,956Maintenance spares and consumables 46,226 180,363

2,184,774 2,739,321Inventories (write-downs) (5,782) (65,569)

2,178,992 2,673,752

The cost of inventories recognised as an expense (raw material consumed) during the year was N2.87 billion (2018: N1.67 million).

Reconciliation of changes in inventories included in the statement of cash flowsBalance at 1 April (2,178,992) (2,673,752)Balance at 31 March 2,673,752 1,367,418

Change in inventory 494,760 (1,306,334)Reclassification to property, plant and equipment (76,753) -

418,007 (1,306,334)

17. Trade and other receivables

Financial instruments:Trade receivables 228,965 252,453Trade receivables - related parties 81,362 355,899Rent receivables 200 -Staff debtors 6,478 7,384Loss allowance (197,381) (169,322)

Trade receivables at amortised cost 119,624 446,414Unclaimed dividends receivable from registrar 13,926 13,062

Total trade and other receivables 133,550 459,476

Exposure to credit risk

Trade receivables inherently expose the Company to credit risk, being the risk that the company will incur financial loss if customers fail tomake payments as they fall due.

Before accepting a new customer, the Company initially trades with the customer on a cash basis to assess the customer’s credit worthinessand also determine the customer’s transaction volumes. This enables a reasonable credit limit to be set. Once these are determined, thecustomer is then allowed to apply for a credit facility from the Company through a rigorous process with several levels of approval.

Credit sales form a small portion of overall sales. Other than amount due from parent company, the concentration of credit risk is limiteddue to this fact and the large and unrelated customer base. The Company has pledged no trade receivables during the year.

Trade and other receivables neither past due nor impaired

0 - 30 days 29,736 746

49



N. '000 N. '000

17. Trade and other receivables (continued)

Trade and other receivables past due but not impaired

31 - 60 days 204,00561 - 180 days 1,848 233,939181 - 365 days 7,725

1,848 445,669

Trade and other receivables impaired

Over 365 days 197,381 169,322

Movement in impairment of trade and other receivables

At 1 April 169,322 178,708Impairment 28,059 -Amounts recovered during the year (9,386)

At 31 March 197,381 169,322

In determining the recoverability of the trade receivables, management considers any change in the credit quality of the trade receivablefrom the date credit was initially granted up to the reporting date. The concentration of credit risk is high because the parent company,Flour Mills of Nigeria Plc is a major customer of the Company. However, the Company has not suffered any loss on amounts due from theparent company in the past. Accordingly, the directors believe that there is no further impairment required in excess of the allowance fordoubtful debts already recognised.

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

Fair value of trade and other receivables

The fair value of trade and other receivables approximates their carrying amounts due to the immaterial impact of discounting as aconsequence of their short term nature. Accordingly, no further fair value information is presented.

Reconciliation of changes in trade and other receivables included in the statement ofcashflowsMovement during the year 325,926 (22,043)Transfer in (long service award) 5,623 -Reversal of status barred dividend 428 -

331,977 (22,043)

18. Prepayments

Prepaid rent & rates 22,700 19,070Other prepaid expenses 3,444 1,183

26,144 20,253

19. Investment

Investment represents a portion of unclaimed dividend which the Company has invested in treasury bills through an investment manager, inline with the requirements of the Securities and Exchange Commission that unpaid dividends be invested in an interest bearing instrumentwith an Investment manager. This amount is restricted from use by the Company. The investment is for 6 months with an interest rate of14%.

50



N. '000 N. '000

20. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 250 148Bank balances 415,808 534,138Short-term investments 6,725 22,022

Cash and cash equivalents per statement of financial position 422,783 556,308

Cash and cash equivalents per statement of cash flows 422,783 556,308

Cash and cash equivalents comprise cash and bank balances, net of outstanding bank overdrafts. The carrying amount of these assetsapproximate their fair values. See note 34 for additional information on exposure to credit and currency risk.

21. Share capital

Authorised200,000,000 (2018: 200,000,000) ordinary shares of 50 kobo each 100,000 100,000

Issued and fully paid share capital178,200,000 (2018: 178,200,000) ordinary shares of 50 kobo each 89,100 89,100Share premium 89,521 89,521

178,621 178,621

22. Borrowings

31-Mar-19 31-Mar-18N. '000 N. '000

Unsecured borrowingsRelated party loan 1,444,452 1,004,515

1,444,452 1,004,515

Secured BorrowingsBank of Industry loan 1,403,541 1,616,559CBN RSSF loan - 905,758

1,403,541 2,522,317

2,847,993 3,526,832

Analysed intoCurrent 2,098,923 2,465,130Non-current 749,070 1,061,702

2,847,993 3,526,832

Loan movementOpening balance 3,526,832 2,423,606Additions 1,659,016 2,974,690Accrued interest 569,865 479,621Repayment (2,527,479) (1,950,000)Interest, monitoring and other fees (380,241) (401,085)

Closing balance 2,847,993 3,526,832

51



22. Borrowings (continued)

Details of Borrowings

(a) The Bank of Industry (BOI) loans are secured by a Bank guarantee through Zenith Bank of Nigeria Plc.

(b) The Real Sector Support Facility (RSSF) loan is guaranteed by a negative pledge on the Company's assets.

The Bank of Industry (BOI) and the Real Sector Support Facility (RSSF) loans were obtained at below market interest rates and

were hence recorded at their fair value at inception using the appropriate market rate at date of draw down. Due to the nature of

the lending and the providers, the benefit of the below market rate has been treated as government grants and included in

deferred revenue (Note 25).

31 March 2019 Currency Nominalinterest rate

Maturity Carrying amount Face value

Bank of industry loan 1 Naira 10% 2024 736,128 968,000Bank of industry loan 2 Naira 12% 2021 667,413 1,000,000Real Sector Support Facility Naira 9% 2019 - -Intercompany loan Naira 18-21% On demand 1,444,452 1,444,452

2,847,993 3,412,452

31 March 2018 Currency Nominalinterest rate

Maturity Carrying amount Face value

Bank of industry loan 1 Naira 10% 2024 734,730 968,000Bank of industry loan 2 Naira 12% 2021 881,830 1,000,000Real Sector Support Facility Naira 9% 2019 905,758 1,000,000Intercompany loan Naira 18-21% On demand 1,004,514 1,004,514

3,526,832 3,972,514

23. Retirement benefits

Defined benefit plan

The Company operates unfunded defined benefit plans for qualifying employees of the Company. Under the plans, the employees areentitled to retirement benefits on attainment of a retirement age ranging from 50 to 60 years.

The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2019 by EYprofessional services (FRC registration number: FRC/2012/00000000738). The present value of the defined benefit obligation, and therelated current service cost, were measured using the Projected Unit Credit Method.

Amounts recognised in the financial statements in respect of the defined benefit scheme are as follows:

31-Mar-19 31-Mar-18N. '000 N. '000

Carrying value

Present value of the defined benefit obligation-wholly unfunded (95,744) (80,945)

52



N. '000 N. '000

23. Retirement benefits (continued)

Movements during the year

Opening balance 80,945 93,186Effect of staff transfer from parent company 11,104 -Benefits paid (1,108) (38,706)Net expense recognised in profit or loss and other comprehensive income 4,803 26,465

95,744 80,945

Net expense recognised in profit or loss and other comprehensive income

Current service cost 5,399 5,272Interest cost 10,755 14,828

Recognised in profit or loss 16,154 20,100Actuarial (gains)/losses recognised in other comprehensive income (11,351) 6,365

4,803 26,465

Actuarial gains and losses due to:Changes in assumptions (3,461) 12,890Changes in experience (7,890) (6,525)

(11,351) 6,365

Key assumptions used

31-Mar-19 31-Mar-18Discount rates (per annum) %14.55 %14.00Average rate of inflation (per annum) %12.00 %12.00Expected increase in salaries (per annum) %12.00 %12.00Average duration of the plan (years) 9.71 9.02

Demgraphic assumption

Mortality and withdrawal from service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Institute andFaculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives

Withdrawalfrom Service(Age band)

Withdrawalfrom Service

(Rate)25 7 </=30 2.5%30 7 31 - 39 1.5%35 9 40 -44 1.0%40 14 45 - 59 0.0%45 26

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, wouldhave affected the defined benefits obligation as shown below:

53



23. Retirement benefits (continued)

2019 N '000Base 95,744Discount rate +1%

-1%87,491

103,026Salary increase +1%

-1%98,40491,513

Mortality experience Age rated up by 1 yearAge rated down by 1 year

94,86894,745

Defined contribution plan

The employees of the Company are members of a government approved Pension scheme (Pension Reform Act, 2014) which is managed byseveral private sector service providers. The Company and employees are required to contribute 10% and 8% respectively of the employeesbasic salaries, housing and transport allowances to the retirement benefit scheme to fund the benefits. The only obligation of the Companywith respect to the retirement benefit plan is to make the specified contributions.

The Company is under no obligation to cover any unfunded benefits.

31-Mar-19 31-Mar-18N. '000 N. '000

Movement in pension payableOpening balance 14,396 5,730Employee's contribution 5,957 8,644Employer's contribution 7,446 10,805Remittances (13,159) (10,783)

Closing Balance (Note 26) 14,640 14,396

24. Long service award

The Company operates a long service award scheme where employees are rewarded after a specific number of years in service. Employeesare 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 numberof years in service.

The most recent actuarial valuations of the present value of the defined benefit obligation were carried out by EY professional services (FRCregistration number: FRC/2012/00000000738). The present value of the defined benefit obligation, and the related current service cost andpast service cost, were measured using the Projected Unit Credit Method.

Carrying value

The amount included in the statement of financial position arising from the Company’s obligations in respect of its long service awards is asfollows:

31-Mar-19 31-Mar-18N. '000 N. '000

Long service awards 24,374 20,235

The movement in the account during the year was as follows:

54



N. '000 N. '000

24. Long service award (continued)

Movement in Long service award

At the begining of the year 20,235 24,566Effect of staff transfer from parent company 5,623 -Net expense recognised in profit or loss 3,103 (1,238)Benefits paid (4,587) (3,093)

At the end of the year 24,374 20,235

Net expense recognised in profit or lossService cost 1,685 1,698Interest cost 2,622 3,645Actuarial (gains)/ losses (1,204) (6,581)

3,103 (1,238)

The actuarial gains and losses on long service awards are analyzed as follows: Change in economic assumption (797) 1,200Change in demographic assumption (407) (7,781)

(1,204) (6,581)

The principal assumptions used for the purpose of the actuarial valuation were as follows:

Valuation at31-Mar-19 31-Mar-18

Discount rate (per annum) 14.55 14%Expected rate(s) of salary increases (per annum) 12% 12%Average rate of inflation (per annum) 12% 12%Benefit inflation rate (per annum) 6% 6%Average duration of the plan (years) 7.29 6.80

Demographic assumptions

Mortality and withdrawal from service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Institute andFaculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives Age bandWithdrawalfrom service

25 7 </= 30 2.5%30 7 31 - 39 1.5%35 9 40 - 44 1.0%40 14 45 - 55 0.0%45 26 56 - 59 0.0%

55



24. Long service award (continued)

Sensitivity analysis

Reasonbly possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, wouldhave affected the long service awards obligation to the amount shown below.

N. '000Base 24,374Discount rate +1%

-1%23,02925,856

Salary increase +1%-1%

25,83023,037

Benefit escalation rate +1% 24,546-1% 24,214

Mortality experience Age rated up by 1 yearAge rated down by 1 year

24,28124,458

56



N. '000 N. '000

25. Deferred income

Non-current liabilities 87,688 206,183Current liabilities 124,179 187,209

211,867 393,392

Openning balance 393,392 -Additions - 465,494Release of deferred income from government grant (181,525) (72,102)

Closing balance 211,867 393,392

The deferred income represents government grants arising from the benefit received from below-market-interest rate government assistedloans (BOI and RSSF loans) granted to date (Note 22). The income is recognised in profit or loss over the tenor of the loan on a systematicbasis. See Notes 8 and 22.

26. Trade and other payables

Financial instruments:Trade payables 188,736 335,667Trade payables - related parties 175,035 136,796Other accrued expenses 18,343 54,887Other payables 30,142 27,442Non-financial instruments:Statutory payables 116,033 81,253Pension payable (Note23) 14,640 14,396Payroll related liabilities - 28,609

542,929 679,050

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

Fair value of trade and other payables

The fair value of trade and other payables approximates their carrying amounts due to the immaterial impact of the discounting as aconsequence of their short term nature.

Changes in trade and other payables per statement of cash flowTrade payables as at year end 542,929 679,050Trade payables as at 1 April (679,050) (454,255)VAT paid 142,779 94,644Effect of exchange differences - 1,605Monitoring fees accrued (2,074) -

4,584 321,044

27. Dividend payable

At 1 April 24,062 24,980Payment made in the year by registrar (724) -Unclaimed dividends transferred to reserves (428) (918)

At 31 March 22,910 24,062

28. Customer depositsAdvance payment by customers for goods to be supplied 75,038 1,043

57



29. Earnings per share

Basic loss per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the Company by the weightedaverage number of ordinary shares outstanding during the year.

31-Mar-19 31-Mar-18N. '000 N. '000

Reconciliation of loss for the year to earnings per shareLoss for the year attributable to equity holders of the parent (31,696) (60,988)

Weighted average number of shares ('000)* 178,200 178,200

Basic loss per shareKobo per share (18.00) (34.00)

Diluted loss per share

In the determination of diluted earnings per share, profit or loss attributable to the equity holders of the Company and the weightedaverage number of ordinary shares are adjusted for the effects of all dilutive potential ordinary shares.

Where there is a discontinued operation, diluted earnings per share is determined for both continuing and discontinued operations.

31-Mar-19 31-Mar-18N. '000 N. '000

Reconciliation of loss for the year to earnings per shareLoss for the year attributable to equity holders of the parent (31,696) (60,988)

Weighted average number of shares ('000) 178,200 178,200

Diluted (loss) earnings per shareFrom continuing operations (kobo per share) (18.00) (34.00)

The Company has no potentially dilutive instruments as at year year end.

30. Employee information

Employee costs

Salaries, wages and other benefits 228,607 193,110Pensions 13,403 19,449Long service awards 3,103 (1,238)Gratuity 16,154 20,100

261,267 231,421

Total employee costs recognised in profit or lossCost of sales 165,619 122,040General and administrative expenses 89,180 101,864Selling and distribution expenses 6,468 7,517

261,267 231,421

58



30. Employee information (continued)

Average number of persons employed as at year end

31-Mar-19 31-Mar-18Number Number

Managerial 4 9Non-managerial staff 60 54

64 63

The table shows the number of employees (excluding directors) whose earnings during the year fell within the ranges shown below:N.500,001 - N.1,000,000 31 33N.1,000,001 - N.1,500,000 19 17N.1,500,001 - N.2,000,000 4 4N.2,000,001 - N.2,500,000 2 2N.2,500,001 - N.3,000,000 3 3N.3,000,001 - N.3,500,000 1 1N.3,500,001 and above 4 3

64 63

31. Categories of financial instruments

31-Mar-19 31-Mar-18N. '000 N. '000

Non- derivative financial assetsCash and cash equivalents (Note 20) 422,783 556,308Trade and other receivables (Note 17) 133,550 459,476Investment 25,164 5,943

581,497 1,021,727

Other Financial liabilitiesBorrowings (Note 22) 2,847,993 3,526,832Trade and other payables (excluding statutory deductions) (Note 26) 412,256 554,792Dividend payable 22,910 24,062

3,260,249 4,081,624

59



32. Related parties transactions

`

RelationshipsParent company Flour Mills of Nigeria Plc

`

Name of related party Nature of relationshipApapa Bulk Terminal Limited Fellow subsidiaryGolden Shipping Company Nigeria Limited Fellow subsidiaryGolden Sugar Company Limited Fellow subsidiaryKaboji Farms Limited Fellow subsidiaryPremier Feed Mills Company Limited Fellow subsidiaryNigerian Eagles Flour Mills Limited Fellow subsidiaryCrestview Towers Limited Fellow subsidiaryOlympic Towers Limited Fellow subsidiaryAgri Palm Limited Fellow subsidiaryAgri Estates Limited Fellow subsidiarySunflag Farms Limited Fellow subsidiaryShao Golden Farms Limited Fellow subsidiaryPremium Edible Oil Products Limited Fellow subsidiaryPremium Cassava Products Limited Fellow subsidiaryBest Chickens Limited Fellow subsidiarySunti Golden Sugar Estates Limited Fellow subsidiaryGolden Agri Inputs Limited Fellow subsidiaryEastern Premier Feeds Limited Fellow subsidiary

Related party balances

31-Mar-19 31-Mar-18N. '000 N. '000

Trade and other receivablesFlour Mills of Nigeria Plc 41,638 333,141Apapa Bulk Terminal Limited - 4,198Premier Feed Mills Company Limited 4,833 18,560Eastern Premier Feed Mills Company Limited 34,891 -

81,362 355,899

Trade and other payablesFlour Mills of Nigeria Plc 122,722 19,495Apapa Bulk Terminal Limited 30,064 30,064Golden Shipping Company Nigeria Limited 14,043 14,043Golden Agri Input Limited 8,206 73,194

Total (Note26) 175,035 136,796

Flour Mills of Nigeria Plc 1,444,452 1,004,515

The following transactions were carried out with related parties during the year:Purchase of goods and servicesFlour MIlls of Nigeria Plc 1,796,944 340,863Golden Agri Input Limited 27,098 2,664,498

1,824,042 3,005,361

60



N. '000 N. '000

32. Related parties transactions (continued)Sale of goods and servicesFlour Mills of Nigeria Plc 752,514 1,005,605Eastern Premier Feed Mills Limited 96,360 208,140Premier Feed Mills Company Limited 166,920 154,120

1,015,794 1,367,865

Related party transactions disclosed is inclusive of the relevant Value Added Tax applicable on the transactions.

Compensation of key management personnelShort term benefits 18,978 45,997Post-employment benefits - Pension - Defined contribution plan 1,516 335Gratuity - 35,810

20,494 82,142

33. Directors emoluments

The members of the executive management team and all directors are considered to be the key management personnel of the Company.

The remuneration paid to Directors was:Fees 7,218 12,790Salaries and other emoluments 16,173 30,190

23,391 42,980

Fees and other emoluments disclosed above include amount paid to:Chairman - -Other directors 23,391 42,980

23,391 42,980

The number of Directors excluding the Chairman whose emoluments (excluding certain benefits) were within the following ranges:

31-Mar-19 31-Mar-18

Range (N.)1 - 5,000,000 10 95,000,001 - 20,000,000 1 2

11 11

In thousands of NairaHigest paid Director received 16,173 16,086

The Chairman did not receive any remuneration during the year (2018: Nil).

Loan to key management personnel

No loan was given to any key management personnel during the year (2018: Nil).

61



34. Financial instruments and risk management

Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to providereturns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company manages its capital through the optimisation of the net to debt equity ratio. The overall strategy remains unchanged from theprevious year.

The capital structure of the Company consists of debt, which includes the borrowings disclosed in notes 22 and equity as disclosed in thestatement of financial position.

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

The Company is not subject to any externally imposed capital requirements.

Ratios

The capital structure and gearing ratio of the company at the reporting date was as follows:

31-Mar-19 31-Mar-18N. '000 N. '000

Borrowings 22 2,847,993 3,526,832

Cash and cash equivalents 20 (422,783) (556,308)

Net borrowings 2,425,210 2,970,524

Equity 1,150,711 1,174,257

Gearing ratio 1 : 2.11 1 : 2.53

Financial risk management

Overview

The company is exposed to the following risks from its use of financial instruments: Credit risk; Liquidity risk; and Market risk (currency risk, interest rate risk and price risk).

Risk management is carried out by management under policies approved by the board of directors. Management identifies and evaluatesthe financial risks in co-operation with the Company's operating units. The board provides written principles for overall risk management, aswell as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Company'soverall risk management program seeks to minimize potential adverse effects on the Company's financial performance.

Financial risk management is an integral part of the way the Company is managed. The Board of Directors establishes the Company’sfinancial policies and the Managing Director establishes objectives in line with these policies. The Chief Financial Officer is then responsiblefor setting financial strategies, which are executed by the Centralised Treasury department.

The risk management activities are supervised by the Internal Audit Department of the parent company, Flour Mills of Nigeria Plc, and theyprovide an independent assurance of the risk framework. The Internal Audit assesses compliance with established controls andrecommendations for improvement in processes are escalated to relevant management, Audit Committee and Board of Directors.

62



34. Financial instruments and risk management (continued)

34.1 Credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractualobligations.

The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss fromdefaults. 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. Ongoing credit evaluation is performed on the financial condition ofcounterparties to assess recoverability of amount due. See Note 17.

The maximum exposure to credit risk is presented in the table below:

31-Mar-19 31-Mar-18

Gross carryingamount

Credit lossallowance

Amortised cost/ fair value

Gross carryingamount

Credit lossallowance

Amortised cost/ fair value

Trade receivables 17 228,965 (197,381) 31,584 252,453 (169,322) 83,131Related party receivables 17 81,562 - 81,562 355,899 - 355,899Staff receivables 17 6,478 - 6,478 7,384 - 7,384Bank balances 20 415,808 - 415,808 534,138 - 534,138Investment 25,164 - 25,164 5,943 - 5,943

757,977 (197,381) 560,596 1,155,817 (169,322) 986,495

The amount of cash and cash equivalents and investments disclosed in the table above represents the Company's maximum credit exposureon these assets. The cash and cash equivalents are held with banks and financial institution counterparties, which are reputable and have asound financial position.

34.2 Liquidity risk

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

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity riskmanagement framework for the management of the Company’s short-, medium- and long-term funding and liquidity managementrequirements. The Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowingfacilities, bycontinuously monitoring forecast and actual cashflows, and by matching the maturity profiles of financial assets and liabilities.

Maturity analysis of financial liabilities

The maturity profile of contractual cash flows of non-derivative financial liabilities, are presented in the following table. The cash flows areundiscounted contractual amounts.

2019

Contractual cash flows

Carryingamount

Total 1 to 3months

3 monthsto 1 year

1 to 5years

Over5 years

N. '000 N. '000 N. '000 N. '000 N. '000 N. '000

Trade and other payables (excludingstatutory deductions) 412,256 412,255 101 - 412,154 - -Borrowings 2,847,993 3,514,542 - - 2,098,123 - 1,416,419Dividend payable 22,910 22,910 - - 22,910 - -

3,283,159 3,949,707 101 - 2,533,187 - 1,416,419

63




2018

Contractual cash flows

Carryingamount

Total Less than1 month

1 to 3months

3 monthsto 1 year

1 - 5years

Over5 years

N. '000 N. '000 N. '000 N. '000 N. '000 N. '000 N. '000

Trade and other payables (excludingstatutory deductions) 554,792 554,792 - 554,792 - - -Borrowings 3,526,832 4,630,716 89,921 112,520 2,446,176 1,747,810 234,289Dividend payable 24,062 24,062 - - 24,062 - -

4,105,686 5,209,570 89,921 667,312 2,470,238 1,747,810 234,289

34.3 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market pricessuch as interest rate, exchange rates and other prices. The Company maintains a centralised treasury department and borrowing is done inorder to obtain lower interest rates. The Company negotiates long term credit facilities and obtains subsidised loans from the Governmentin order to reduce the risk associated with high cost of borrowing. The Company also takes advantage of the Central Bank of Nigeriaintervention funds and grants from the Federal Government at below market rate in order to mitigate this risk.

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

34.3.1 Foreign currency risk

The company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreigncurrencies. Exchange rate exposures are managed within approved policy parameters utilising foreign forward exchange contracts wherenecessary.

The Company is mainly exposed to fluctuation in the exchange rate of the American Dollar (USD).

Effective closing rate as at 31 March 2019 is N358.68/ US Dollar (2018: 360/ US Dollar). Average rate for the year is N358.68/ US Dollar(2018: N360/ US Dollar).

Foreign currency exposure at the end of the reporting period

The net carrying amounts, in Naira, of the exposure to the Amercan Dollars. The amounts have been presented in Naira by converting theforeign currency amounts at the closing rate at the reporting date:

31-Mar-19 31-Mar-18USD'000 USD'000

Trade and other receivables - 879

Trade and other payables (2,927) (41,871)

Net US Dollar exposure (2,927) (40,992)

64




Foreign currency sensitivity analysis

The following table details the Company's sensitivity to a 10%, increase and decrease in the value of Naira against USD. Managementbelieves that a 10% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analysis below includeoutstanding balances of USD denominated assets and liabilities. A positive number indicates an increase in profit where Naira strengthensby 10% against the USD. For a 10% weakening of Naira against the USD there would be an equal and opposite impact on profit, and thebalances below would be negative.

31-Mar-19 31-Mar-19 31-Mar-18 31-Mar-18

Increase or decrease in rate Increase Decrease Increase DecreaseN. '000 N. '000 N. '000 N. '000

Impact on profit or loss: Naira changes by 10% against the USD 90 (90) 1,475 (1,475)

34.3.2 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in marketinterest rates. The Company maintains a centralised treasury department and Group borrowing is done in order to obtain lower interestrates. The Company negotiates long term credit facilities and obtains subsidised loans from the Government in order to reduce the riskassociated with high cost of borrowing and also takes advantage of the Central Bank of Nigeria intervention funds and grants from theFederal Government at below market rate in order to mitigate this risk.

Interest rate sensitivity analysis

The following sensitivity analysis has been prepared using a sensitivity rate which is used when reporting interest rate risk internally to keymanagement personnel and represents management's assessment of the reasonably possible change in interest rates. All other variablesremain constant. The sensitivity analysis includes only financial instruments exposed to interest rate risk which were recognised at thereporting date. No changes were made to the methods and assumptions used in the preparation of the sensitivity analysis compared to theprevious reporting period.

If LIBOR had been 1000 basis points (i.e. 10%) higher/lower and all other variables were held constant, the Company's profit or loss will beaffected as follows:

31-Mar-19 31-Mar-19 31-Mar-18 31-Mar-18

Increase or (decrease) in rate Increase Decrease Increase DecreaseN. '000 N. '000 N. '000 N. '000

Impact on profit or loss: Borrowings - - 100,451 (100,451)

34.3.3 Price risk

The Company is further exposed to commodity price risk. The risk arises from the Company’s need to buy specific quantities and qualities ofraw materials to meet its milling requirements. These raw materials include wheat. The risk is partly mitigated by buying these rawmaterials 3 months in advance of use. This is based on management past experience with price movements.

65



35. Fair value information

Accounting classifcation and fair values

The following table shows the carrying amount and fair values of financial assets and liabilites, including their levels in the fair value hierarchy. It does not include fair value information for financial assets andfinancial libailities not measured at fair value if the carring amount is a reasonable approximation of fair value.

Carrying amount Fair value31 March 2019In thousands of Naira Note Financial

assetsmeasured at

amortised cost

Fnancialliabilites

measured atamortised cost

Total Level 1 Level 2 Level 3 Total

Financial assets measured at amortised costTrade and other receivables 17 133,550 - 133,550 - - - -Cash and cash equivalents 20 422,783 - 422,783 - - - -Investment 25,164 - 25,164 - - - -

581,497 - 581,497 - - - -

Financial liabilities not measured at fair valueSecured loans 22 - (1,403,541) (1,403,541) - (1,563,377) - (1,563,377)Unsecured loans 22 - (1,444,452) (1,444,452) - - - -Dividend payable 27 - (22,910) (22,910) - - - -Trade and other payables (excluding statutory deductions) - (412,256) (412,256) - - - -

- (3,283,159) (3,283,159) - (1,563,377) - (1,563,377)

66



35. Fair value information (continued)

Carrying amount Fair value31 March 2018In thousands of Naira Note Financial

assetsmeasured at

amortised cost

Financialliabilites at

amortised cost

Total Level 1 Level 2 Level 3 Total

Financial assets measured at amortised costTrade and other receivables 17 459,476 - 459,476 - - - -Cash and cash equivalents 20 556,308 - 556,308 - - - -Investment 5,943 - 5,943 - - - -

1,021,727 - 1,021,727 - - - -

- - - - - - -Financial liabilities not measured at fair valueSecured loans 22 - (2,522,317) (2,522,317) - (2,522,317) - (2,522,317)Unsecured loans 22 - (1,004,515) (1,004,515) - - - -Dividend payable 27 - (24,062) (24,062) - - - -Trade and other payables (excluding statutory payables) - (554,792) (554,792) - - - -

- (4,105,686) (4,105,686) - (2,522,317) - (2,522,317)

67



35. Fair value information (continued)

Fair value hierarchy

Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the company can access at measurement date.

The fair value of financial instruments traded in active markets (quoted equity) is based on quoted market prices at the reporting date. Amarket is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricingservice, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis

The quoted market price used for financial assets held by the Company is the bid price at the reporting date. These instruments are includedin level 1. There were no transfers between levels during the year.

Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.

The fair value of financial instruments that are not traded in an active market (loans and borrowings) is determined by using discountedcash flow valuation techniques. This valuation technique maximize the use of observable market data by using the market related interestrate for discounting the contractual cash flows. There are no significant unobservable inputs. There were no transfers between levels duringthe year. The basis of measurement has remained the same between current and prior years. The discount rate used to determine the fairvalue of loans is 22% (2018 :22%).

36. Contingencies

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

37. Commitments

The directors are of the opinion that all known liabilities and commitments which are relevant in assessing the company's state of affairshave been taken into consideration in the preparation of these financial statements.

38. Going concern

The Company recorded a loss after tax of N32 million for the year ended 31 March 2019 (2018: N61 million). The Company has been makinglosses since the year ended 31 March 2016 following the significant decline in the Company’s operations in the same year. In addition tothis, the Company generated a negative operating cash flow during these years except the current year.

The Company made further investments in prior year by refurbishing one of the major milling lines to enable the milling and sales of its ownsorghum and wheat based products. This commenced in 2019 financial year. The Directors have also planned to strengthen the sales anddistribution channels of the Company to cover more geographical locations within the northern part of the Country by partnering with thesales team of the parent company, Flour Mills of Nigeria Plc.

The parent company has decided to use the Company as a local grain milling hub for the Group. As part of this arrangement, the Companymills locally produced wheat for the parent company for which a fee is payable to the Company. Management expects the fee from thearrangement to be an additional source of revenue for the Company. The parent company, Flour Mills of Nigeria Plc, has also confirmedthat it will continue to provide financial and other support necessary for the Company to continue to settle its liabilities and realize its assetsin the normal course of business.

On the basis of the foregoing, the directors believe it is appropriate to prepare the financial statements on the basis of accounting policiesapplicable to a going concern.

39. Events after the reporting period

There are no significant events after the reporting date which could have had a material effect on the financial position and the loss for theyear ended on that date, which have not been adequately provided for or disclosed in the Company's financial statements.

68

Other National Disclosures


Statement of Value Added31-Mar-19 31-Mar-19 31-Mar-18 31-Mar-18

N. '000 % N. '000 %

Value Added

Revenue 4,149,917 2,861,752Investment income 2,567 27,278Other operating income 264,912 90,522

Bought - in materials and services (3,436,364) (2,182,111)

Total Value Added 981,032 100 797,441 100

Value Distributed

To Pay EmployeesSalaries, wages, medical and other benefits 261,267 231,421

261,267 27 231,421 29

To Pay Providers of CapitalFinance costs 571,933 479,621

571,933 58 479,621 60

To Pay GovernmentIncome tax 10,915 9,223Education tax 2,746 1,265

13,661 1 10,488 1

To be retained in the business for expansion and future wealth creation:

Depreciation, amortisation and impairments 189,330 190,363Deferred tax (23,463) (53,464)

165,867 17 136,899 17

Value retainedDepleted reserves (31,696) (60,988)

(31,696) (3) (60,988) (8)

Total Value Distributed 981,032 100 797,441 100

Value added represents the additional wealth which the company has been able to create by its own and employees efforts.

70


Five Year Financial Summary31-Mar-19 31-Mar-18 31-Mar-17 31-Mar-16 31-Mar-15

N. '000 N. '000 N. '000 N. '000 N. '000

Statement of Financial Position

AssetsNon-current assets 2,206,279 2,201,907 2,045,648 658,657 734,721Current assets 2,786,633 3,715,732 2,291,796 1,081,103 1,688,990

Total assets 4,992,912 5,917,639 4,337,444 1,739,760 2,423,711

LiabilitiesNon-current liabilities 956,876 1,369,065 117,752 113,546 343,908Current liabilities 2,885,324 3,374,312 2,980,114 375,277 599,740

Total liabilities 3,842,200 4,743,377 3,097,866 488,823 943,648

EquityShare capital 89,100 89,100 89,100 89,100 89,100Share premium 89,521 89,521 89,521 89,521 89,521Retained earnings 972,091 995,641 1,060,957 1,072,316 1,301,442

Total equity 1,150,712 1,174,262 1,239,578 1,250,937 1,480,063

Total equity and liabilities 4,992,912 5,917,639 4,337,444 1,739,760 2,423,711

Statement of Profit or Loss and Other Comprehensive Income

Revenue 4,149,917 2,861,752 1,330,537 979,038 10,529,075

Loss before taxation (41,498) (103,964) (1,403) (233,072) (215,431)Taxation 9,802 42,976 (16,639) 35,831 15,872

Loss for the year (31,696) (60,988) (18,042) (197,241) (199,559)

Retained loss for the year (31,696) (60,988) (18,042) (197,241) (199,559)

Per share data

Loss per share (Basic) (kobo) (18) (34) (10) (111) (112)Loss per share (Diluted) (kobo) (18) (34) (10) (111) (112)Net assets per share (kobo) 646 659 696 702 831

Loss/earnings per share are based on loss/profit after tax and the number of issued and fully paid ordinary shares at the end of eachfinancial year.

Net assets per share is based on the net assets total and the number of issued and fully paid ordinary shares at the end of each financialyear.

71

northern nigeria flour mills plc - nse.com.ng · the directors have pleasure in submitting their...

Documents