portland paints and products nig. plc financial …portlandpaintsng.com/img-uploads/2015 annual...

PORTLAND PAINTS AND PRODUCTS NIG. PLC

FINANCIAL STATEMENTSFOR THE YEAR ENDED31st December 2015

PORTLAND PAINTS & PRODUCTS NIGERIA PLC

TABLE OF CONTENT

FOR THE YEAR ENDED 31 DECEMBER 2015

CONTENTS PAGE

GENERAL INFORMATION 3

4

IES 9

10

STATEMENT OF COMPREHENSIVE INCOME 12

STATEMENT OF FINANCIAL POSITION 13

STATEMENT OF CHANGES IN EQUITY 14

STATEMENT OF CASH FLOWS 15

NOTES TO THE FINANCIAL STATEMENTS 16

OTHER INFORMATION:

STATEMENT OF VALUE ADDED 44

FIVE-YEARS FINANCIAL SUMMARY 45


GENERAL INFORMATION


3

BOARD OF DIRECTORSMr. Larry Ettah - ChairmanMr. Mukhtar Yakasai - Managing Director/Chief ExecutiveMr. Olufemi Oguntade - Director - ResignedMr. Bayo Osibo - DirectorMr. Abdul Bello - DirectorEng. Dipo Ashafa - Director

REGISTERED OFFICE Sandtex House105A, Adeniyi Jones Avenue,Ikeja. Lagos State.

FACTORY Km 36, Abeokuta Lagos ExpresswayEwekoro, Ogun State.

REGISTERED NUMBER RC76075

FRCN NUMBER FRC/2012/0000000000221

COMPANY SECRETARY Adeleke Yusuff Esq,UAC of NigeriaUAC House, Lagos, Nigeria.

AUDITORS PricewaterhouseCoopers252E, Muri Okunola Street,Victoria Island, Lagos.

REGISTRAR Africa Prudential Registrars Plc(formerly called UBA Registrars Ltd)No. 220B, Ikorodu RoadPalmgrove, Lagos.

BANKERS Zenith Bank PlcUnited Bank for Africa PlcSkye Bank PlcEcobank Nigeria PlcFirst City Monument Bank Plc



4

The directors have the pleasure in presenting their report and the audited financial statements for the yearended 31 December 2015.

Legal Status

Portland Paints & Products Nigeria Limited was incorporated as a private limited liability company on3rd September, 1985.

The company by a special resolution of 24th April, 2008 changed its name to Portland Paints & ProductsNigeria Plc, consequent upon it becoming a Public Limited Liability Company.

Principal activities

The company is principally engaged in the business of manufacturing and sale of paints, marketing ofsanitary wares, and manufacture and marketing of instant road repairs materials and marketing ofHempel marine and protective coatings for the oil and gas sector.

During the year, the company continued to implement its strategies for enhancing the quality of itsservice delivery through restructuring of its operations, increased investment in technologyinfrastructure and enforcement of procedures and manpower development.

There was no change in the principal activities of the company during the year.

s

The directors of Portland Paints & Products Nigeria Plc are responsible for the preparation of thefinancial statements for each financial year, which give a true and fair view of the state of affairs of theCompany and of the profit or loss and cash flows for that year. In preparing these financial statements,the directors have selected suitable accounting policies and applied them consistently, madejudgements and estimates that are reasonable and prudent and in accordance with InternationalFinancial Reporting Standards (IFRS) and Companies and Allied Matters Act, CAP C20 Laws of theFederation of Nigeria, 2004.

The directors are responsible for ensuring that the Company keeps proper accounting records thatdisclose with reasonable accuracy at any time the financial position of the Company. The directors arealso responsible for safeguarding the assets of the Company and taking reasonable steps for theprevention and detection of fraud and other irregularities.

Operating Results

The following is a s:

2015 2014

N'000 N'000

Turnover 2,168,480 2,798,165

(Loss)/Profit before taxation (258,368) 194,297

Taxation 25,384 (45,656)

Other Comprehensive Income Net of tax - -

Total Comprehensive (loss)/income net of tax (232,984) 148,641

Basic (Loss)/Earnings per share (58k) 37k

Dividend

The directors do not recommend the payment of dividend for the financial year ended 31st December,2015 (2014: Nil)



5

Directors

T

1. Mr. Larry Ettah - Chairman2. Mr. Mukhtar Yakasai - MD/CEO3. Mr. Olufemi Oguntade - Director Resigned.4. Mr. Bayo Osibo - Director5. Mr. Abdul Bello - Director6. Eng. Dipo Ashafa - Director

In accordance with Section 256 of the Companies and Allied Matters Act, CAP C20, Laws of theFederation of Nigeria 2004 and iDipo Ashafa and Mr. Bayo Osibo are retiring by rotation at the forthcoming Annual General Meeting andbeing eligible, offer themselves for re-election.

In accordance with the provisions of Section 258(2) of the Companies and Allied Matters Act, 1990, the2015 is available at the Annual General

Meeting for inspection.

The direct and indirect interests of directors in the issued share capital of the Company as recorded in

and 276 of the Companies and Allied Matters Act, 1990 and the Listing Requirements of the NigerianStock Exchange are as follows:

Number ofShares

Number ofShares

As at Dec. 31,2015

As at Dec. 31,2014

Eng Dipo Ashafa 238,877 238,877

Analysis of Shareholdings

According to the register of members as at 24 March, 2016 the spread of Shareholdings in the companywas as follows:

RangeNumber of

shareholders UnitsUnits

%

1 1,000 198 68,017 0.02%

1,001 5,000 48 126,469 0.03%

5,001 50,000 228 8,066,263 2.02%

50,001 100,000 8 653,985 0.16%

100,001 500,000 26 6,858,018 1.71%

500,001 1,000,000 9 6,689,000 1.67%

1,000,001 250,000,000 25 377,538,248 94.38%

542 400,000,000 100.00%

Share Capital History

a) The initial authorized, issued and paid up share capital as at 3 September 1985 was 4,000,000shares of 50 kobo each, that is, N2, 000,000



6

b) On 26 August 2004 the authorized, issued and paid up share capital were increased from4,000,000 to 40,000,000 shares of 50 kobo each that is, increased to N20, 000,000

c) On 24 April 2008 the authorized share capital was increased from 40,000,000 to 400,000,000shares of 50 kobo each that is, increased to N200, 000,000

d) On 30 June 2008 the company distributed Bonus shares of 360,000,000 shares of 50 koboeach, that is, N180, 000,000

e)the Nigerian Stock Exchange.

f) Authorised, Issued and Fully Paid 400 million Ordinary shares of 50 kobo each:

31st December, 2015 31st December, 2014N200,000,000 N200,000,000

g) The shareholders who have more than 5% holding are as follows:

Number of Shares %UAC of Nigeria Plc 258,837,400 64.71

Contracts

None of the Directors has notified the Company for the purpose of Section 277 of the Companies andAllied Matters Act, CAP C20 Laws of Federation of Nigeria, 2004, of any interest in contracts made withthe company during the year under review.

Taxation

Adequate provision has been made for all forms of taxes relevant to the activities carried out by theCompany during the year.

Property, plant and equipment

Information relating to changes in property, plant and equipment is given in Note 9 to the financial

the value shown in the financial statements.

Corporate Governance

i) The company is committed to best practice and procedures in corporate governance. Itsbusiness is conducted in a fair, honest and transparent manner which conforms to high ethicalstandards.

ii) The Board consists of six (6) Directors, made up of five non-Executive Directors and oneExecutive Director. The company has a non-Executive Chairman and a Managing Director whois the Chief Executive Officer. During the year, the Managing Director resigned his appointmentand Mr. Mukhtar Yakasai was appointed the substantive Managing Director / Chief ExecutiveOfficer October 2015.

iii) Board meetings are held quarterly. However, special or emergency board meetings areconvened whenever the need arises.

iv) The Board takes decisions on policy matters and directs the affairs of the Company, allocatesresources, sets overall corporate targets and monitor strategies and plans.



7

BOARD MEETINGS:Attendance at board meetings during the year were as follows:

P = Present

AWP = Absent With Apology

AB = Absent

R = Resigned

P* = Attending in the capacity of Managing Director

In conformity with the Code of Best Practice in Corporate Governance, the following Committees wereestablished:

Risk and Governance Committee:

The Risk and Governance Committee consists of one Executive Director and four non-ExecutiveDirectors and is responsible for developing theand to consider the nature, extent and category of risks facing the Company.

Members of Committee No. of Meetings Held No. of meetings Attended

Mr. Bayo Osibo (Chairman) 4 3

Mr. Olufemi Oguntade 4 3

Mr. Abdul Bello 4 4

Mr. Mukhtar Yakasai 4 4

Eng. Dipo Ashafa 4 4

The committees work independent of each other and meet regularly to review policies and strategies toensure compliance, while creating value for all stakeholders of the Company.

Employment of Disabled Persons

Applications for employment by the physically challenged are always fully considered, the Company doesnot discriminate against any person on grounds of physical disability bearing in mind the respectiveaptitudes and abilities of the applicants concerned. In the event of members of staff becoming disabled,every effort is made to ensure their continued employment with the Company and appropriate training isarranged. It is the policy of the Company that training, career development and promotion of disabledpersons should, as far as possible, be identical with those of other employees.

Health, Safety and Welfare of Employees

The company maintains a Health Insurance Scheme for members of staff and their families. The companyalso operates a statutorily defined contributory pension scheme for all employees.

Employee Involvement and Training

In line with the Company policy of continuous development of its manpower resources, the Companyprovides regular on-the-job training for all cadres of staff on the job in addition to other local and overseas

Names 16/3/15 22/4/15 26/05/15 15/12/15 23/10/15 15/12/15

Mr. Larry EttahChairman

P P P P P P

Mr. Olufemi OguntadeManaging Director / CEO

P P P P R R

Mr. Bayo OsiboNon-Executive Director

AWP P P P P AWP

Mr. Abdul BelloNon-Executive Director

P P P P p AWP

Mr. Mukhtar YakasaiNon-Executive Director

P P P P P* P*

Engr. Dipo AshafaNon-Executive Director

P P P P P P



courses. The Company maintains effective formal and informal channels of communication in order to keepall staff abreast of development within the Company.

Post Balance Sheet Events

UAC of Nigeria Plc acquired additional 7% shareholdings in Portland Paints & Products Nigeria Plc inFebruary 2016. This takes the shareholdings of UAC of Nigeria Plc in Portland Paints & Products NigeriaPlc to 71.71%.

There are no material post balance sheet events to date, which could have had a material effect on thefinancial statements of the Company as at 31st December, 2015 and the profit for the period ended on thatdate which have not been adequately provided for or recognized.

Auditors

Messrs. PricewaterhouseCoopers, having indicated their willingness to continue in office pursuant to Section357 (2) of the Companies and Allied Matter Act, CAP C20 Laws of the Federation of Nigeria, 2004.

8


RESPONSIBILITIES


The Companies and Allied Matters Act requires the Directors to prepare financial statements for eachfinancial year that give a true and fair view of the state of financial affairs of the Company at the end of theyear and of its profit or loss. The responsibilities include ensuring that the Company:

(a) ensuring that the company keeps proper accounting records that disclose, with reasonableaccuracy, the financial position of the company and comply with the requirements of theCompanies and Allied Matters Act;

(b) designing, implementing and maintaining internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due tofraud or error; and

(c) preparing supported byreasonable and prudent judgements and estimates, that are consistently applied.

The directors accept responsibility for the financial statements, which have been prepared usingappropriate accounting policies supported by reasonable and prudent judgements and estimates, inconformity with International Financial Reporting Standards and the requirements of the Companies andAllied Matters Act.

The directors are of the opinion that the financial statements give a true and fair view of the state of thefinancial affairs of the company and of its profit or loss. The directors further accept responsibility for themaintenance of accounting records that may be relied upon in the preparation of financial statements, aswell as adequate systems of internal financial control.

Nothing has come to the attention of the directors to indicate that the company will not remain a goingconcern for at least twelve months from the date of this statement.

9


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2015

(All amounts are in thousands of Naira, unless otherwise stated)

Dec-15 Dec-14

Note N'000 N'000

Revenue 3 2,168,480 2,798,165

Cost of sales 5 (a) (1,270,822) (1,492,342)

Gross Profit 897,658 1,305,823

Other Operating Income 4 53,300 102,469

Selling and distribution expenses 5 (a) (414,557) (486,580)

Administrative expenses 5 (a) (673,506) (617,216)

(Loss)/Profit from Operations (137,105) 304,496

Finance Income 6 3,276 4,860

Finance Expenses 6 (124,540) (115,060)

Net Finance Expenses (121,264) (110,200)

(Loss)/Profit Before Taxation (258,369) 194,296

Taxation 7 25,384 (45,654)

(Loss)/Profit for the year (232,985) 148,642

Other Comprehensive Income - -

Total Comprehensive (loss)/Income (232,985) 148,642

(Loss)/ Earnings Per Share:

Basic & Diluted (Kobo) 8 (58) 37

The notes on pages 16 to 43 form an integral part of these financial statements

12


STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2015


Share capital Revaluation reserve Retained earnings Total Equity

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

1 January, 2014 200,000 91,923 484,037 775,960

Profit for the year - - 148,642 148,642

31 December, 2014 200,000 91,923 632,679 924,602

1 January, 2015 200,000 91,923 632,679 924,602

Loss for the year - - (232,985) (232,985)

31 December, 2015 200,000 91,923 399,694 691,617

14


STATEMENT OF CASH FLOWS



Dec-15 Dec-14

Note N'000 N'000

Cash flows from operating activities:

Cash generated from operations 18 328,026 205,381

Income Tax paid 16 (78,655) (29,485)

Net cash generated from operating activities 249,371 175,896

Cash flows from investing activities:

Purchase of property, plant and equipment 9 (34,895) (121,495)

Proceeds from sale of property, plant and equipment 19,562 19,192

Finance income 6 3,276 4,860

Net cash used in investing activities (12,057) (97,443)

Cash flows from financing activities:

Proceeds from Borrowings - 458,206

Repayments of Borrowings (176,380) (196,402)

Interest paid 6 (124,540) (115,060)

Net cash used in/generated from financing activities (300,920) 146,744

Net (decrease)/increase in cash and cash equivalents (63,606) 225,197

Cash and cash equivalents at start of the year 225,050 (147)

Cash and cash equivalents at end of the year 14 161,444 225,050

15


NOTES TO THE FINANCIAL STATEMENTS


1.0 Corporate Information

2.0 Summary of significant accounting policies

2.1 Basis of preparation

2.1.1 Basis of Measurement

2.2

(a)

(b)

i)

New and amended standards not yet adopted by the Company

IFRS 15, ‘Revenue from contracts with customers’

Portland Paints and Products Nigeria Plc (The Company) was incorporated as a Limited Liability Company on 3 September

1985 and became a Public Company on 24 April 2008. The Company was listed on the floor of the Nigerian Stock Exchange

on 9 July 2009.

The registered office is located at Elephant Cement House 4th Floor, Assbifi Road, Central Business District, Alausa, Ikeja,

Lagos in Nigeria.

The principal activities of the Company are manufacturing and sale of paints, marketing of sanitary ware, manufacture and

marketing of Instant Road Repair materials and marketing of cements. The main products of the Company are Sandtex high

quality Decorative Industrial Paints and Hempel Marine Protective Coatings for Oil and Gas Sector.

The financial statements of Portland Paints and Products Nigeria Plc have been prepared in accordance with International

Financial Reporting Standards (IFRS), the provisions of the Companies and Allied Matters Act, CAP C20 Laws of the

Federation of Nigeria 2004 and Financial Reporting Council of Nigeria Act, No 6, 2011.

The policies set out below have been consistently applied to all the years presented as approved by the Board of Directors.

The financial statements have been prepared on a going concern basis.

The financial statements have been prepared on a historical cost basis modified by the revaluation of land and building at a

fair value. The Company’s financial statements are presented in naira, which is also the Company’s functional currency.

Transactions in the foreign currency are recognized in Naira at the official spot rate at the date of transaction.

Changes in accounting policy and disclosures

New and amended standards adopted by the Company

The following relevant IFRS and IFRIC interpretations which are effective for the first time for the financial year beginning

on or after 1 January 2016 have not yet been adopted by the Company. The Company has not elected to early adopt and the

impact of the new standards that are applicable to the Company is still being assessed.

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods

and services and IAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a

customer – so the notion of control replaces the existing notion of risks and rewards.

A number of new annual improvements to IFRSs 2010-2012 and 2011-2013 cycles were effective for the first time for

financial reporting periods commencing on or after 1 January 2015. However, none of the amended standards were adopted

by the Company in the period as they were not applicable in the preparation of the financial statements.

16




ii)

These accounting changes may have flow-on effects on the entity’s business practices regarding systems, processes and

controls, compensation and bonus plans, contracts, tax planning and investor communications.

Entities will have a choice of full retrospective application, or prospective application with additional disclosures.

Disclosure Initiative - Amendments to IAS 1

The amendments to IAS 1 Presentation of Financial Statements are made in the context of the IASB’s Disclosure Initiative,

which explores how financial statement disclosures can be improved. The amendments provide clarifications on a number of

issues, including:

1) Materiality – an entity should not aggregate or disaggregate information in a manner that obscures useful information.

Where items are material, sufficient information must be provided to explain the impact on the financial position or

performance.

2) Disaggregation and subtotals – line items specified in IAS 1 may need to be disaggregated where this is relevant to an

understanding of the entity’s financial position or performance. There is also new guidance on the use of subtotals.

3) Notes – confirmation that the notes do not need to be presented in a particular order.

4) OCI arising from investments accounted for under the equity method – the share of OCI arising from equity-accounted

investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group

should then be presented as a single line item in the statement of other comprehensive income.

According to the transitional provisions, the disclosures in IAS 8 regarding the adoption of new standards/accounting

policies are not required for these amendments.

A new five-step process must be applied before revenue can be recognised:

1) identify contracts with customers

2) identify the separate performance obligation

3) determine the transaction price of the contract

4) allocate the transaction price to each of the separate performance obligations, and

5) recognise the revenue as each performance obligation is satisfied.

Key changes to current practice are:

1) Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract

price must generally be allocated to the separate elements.

2) Revenue may be recognised earlier than under current standards if the consideration varies for any reasons (such as for

incentives, rebates, performance fees, royalties, success of an outcome etc) – minimum amounts must be recognised if they

are not at significant risk of reversal.

3) The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in

time at the end of a contract may have to be recognised over the contract term and vice versa.

4) There are new specific rules on licenses, warranties, non-refundable upfront fees and, consignment arrangements, to

name a few.

5) As with any new standard, there are also increased disclosures.

There are no other standards issued and effective in subsequent periods that are applicable to the Company

17




2.3

2.3.1 Accounts receivable

2.3.2

2.3.3

2.3.4 Revaluation of land and building

2.3.5

Useful life and residual value of property, plant and equipment and definite life intangible assets.

The allowance for doubtful accounts involves management judgment and review of individual receivable balances based on

an individual customer’s prior payment record, current economic trends and analysis of historical bad debts of a similar type.

Additional information on impaired receivables is included in note 12.

Property, plant and equipment and intangible assets with definite life are depreciated over their useful life. The Company

estimates the useful lives of PPE and intangible assets based on the period over which the assets are expected to be available

for use. The estimation of the useful lives of plant and machinery are based on technical evaluations carried out on the assets.

Estimates could change if expectations differ due to physical wear and tear and technical or commercial obsolescence.

It is possible however, that future results of operations could be materially affected by changes in the estimates brought about

by changes in factors mentioned above. The amounts and timing of expenses for any period would be affected by changes in

these factors and circumstances. A reduction in the estimated useful lives of the plant and machinery would increase

expenses and decrease the value of non-current assets.

Significant accounting judgements, estimates and assumptions

Externally acquired intangible assets that have indefinite useful lives are initially recognized at cost and are subsequently

tested for impairment at each financial year end and stated at their recoverable amount. The impairment loss where the

carrying amount is greater than the recoverable amount is charged to the profit or loss or income statement.

Management is of the opinion that the trademark is adjudged to have an indefinite live as the ownership had been

transferred to the Company in perpetuity and the Company expects to generate cashflows from the use of the asset in

perpetuity. There were no contractual commitment as at 31 December, 2015.

As at 31 December 2015,there was no impairment indicator and no impairment provisions were required on the Company's

trademark asset.

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect

the reported amounts of revenues, expenses assets and liabilities. Uncertainty about these assumptions and estimates could

result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future

periods.

The Company based its assumptions and estimates on parameters available when the financial statements were prepared.

Existing circumstances and assumptions about future developments, however, may change due to market changes or

circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Material estimates in the financial statements include the following:

Impairment of non-financial assets

The company reviews other non-financial assets for possible impairment if there are events or changes in circumstances that

indicate that the carrying values of the assets may not be recoverable, or at least at every reporting date, when there is any

indication that the assets might be impaired. If any such indication exists, the Company estimates the recoverable amount of

the relevant assets.

Impairment of intangible assets with indefinite life

The Company has a revaluation policy for items of land and building.Management assesses the carrying amount of these

items at the end of each reporting period to ensure that the carrying amount represents the best estimate of fair value. As at

31 December 2015 no revaluation adjustments were deemed necessary due to the fact that the property is located in an area

where fair value is not expected to fluctuate significantly

18




2.4 Summary of significant accounting policies

2.4.1 Intangible Assets

Category Useful lives

Trade Mark Indefinite

Computer software 20%

2.4.2

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets with finite lives are

amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset

may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are

reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of

consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method,

as appropriate, and are treated as changes in accounting estimates. The amortisation expense on tangible assets with finite

lives is recognised in the income statement as the expense category that is consistent with the function of the intangible

assets. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net

disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is

derecognised.

Intangible assets include purchased trade mark and computer software.

Trade mark is externally acquired with indefinite useful lives. It is recognized at cost and are subsequently tested for

impairment at each financial year end and stated at their recoverable amounts. The impairment loss, where the carrying

amount is greater than the future economic benefits, is charged to the income statement.

Land and Building are initially recognized at cost but subsequently recognized at fair value less cost to sell based on the

valuations by the independent valuers less accumulated depreciation and accumulated impairment loss for building.

All other property, plant and equipments are initially recognized at historical cost less accumulated depreciation and

accumulated impairment loss.

Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is available

for use. In the case of assets of own construction, cost comprises direct and indirect costs attributable to the construction

work, including salaries and wages, materials, components and work performed by subcontractors.

Replacement or major inspection costs are capitalised when incurred and if it is probable that future economic benefits

associated with the item will flow to the entity and the cost of the item can be measured reliably.

The depreciation base is determined as cost less any residual value. Depreciation is charged on a straight-line basis over the

estimated useful lives of the assets and begins when the assets are available for use.

The assets’ residual values, and useful lives and method of depreciation are reviewed and adjusted, if appropriate, at each

financial year end and adjusted prospectively, if appropriate.

Impairment reviews are performed when there are indicators that the carrying value may not be recoverable. Impairment

losses are recognised in the income statement as an expense.

On revaluation of property, plant and equipment, the surplus thereon is transferred to the revaluation surplus account in the

statement of changes in equity and recognized as other comprehensive income in the comprehensive income statement.

Property Plant and Equipment

Computer software primarily comprises external costs and other directly attributable costs.

Purchased software with finite useful lives are recognised as assets if there is sufficient certainty that future economic

benefits associated with the item will flow to the entity. Amortisation is calculated using the straight-line method over 5

years.

19




2.4.3 Assets on lease

Category Useful lives

Long leasehold land Over the lease period

Freehold buildings 2%

Plant and machinery 10%

10%

Motor vehicles 20%

Computer equipments 33.33%

2.4.4 Earnings per share

2.4.5 Impairment of non-financial assets

2.4.6 Inventories

Finance leases are recognized at amount equal to the fair value of the leased property or if lower the present value of the

minimum lease property, each determined at the inception of the lease.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The

finance charge is allocated to each period during the lease terms so as to produce a constant periodic rate of interest on the

remaining balance of the liability.

Property, plant and equipment and intangible assets are reviewed at each reporting date to determine whether there is any

indication of impairment. If any such indication exists, or in the case of indefinite life intangibles, then the asset’s (CGU’s)

recoverable amount is estimated. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels

for which there are separately identifiable cash-generating units (CGUs). The recoverable amount is the higher of an asset’s

fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or

CGUs). An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable

amount.

Portland Paints & Products Nigeria Plc evaluates impairment losses for potential reversals when events or circumstances may

indicate such consideration is appropriate. The increased carrying amount of an asset other than goodwill attributable to a

reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation or

depreciation) had no impairment loss been recognised for the asset in prior years.

Furniture, fittings and equipment

An item of property and equipment is derecognised upon disposal or when no further future economic benefits are expected

from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net

disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is

derecognised.

Basic earnings are determined by dividing the profit attributable to share holders by the weighted average number of shares

on issue during the year.

Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present

location and conditions are accounted for as follows:

• Raw materials:

Purchase cost on weighted average basis

• Goods-In-Transit, Work-in-progress and Finished goods:

Goods in transit are valued at invoice price together with other attributable charges.

20




2.4.7 Financial instruments

2.4.7.1 Financial Asset

Classification

Loans and receivables

Subsequent measurement

Derecognition of financial assets

Impairment of financial assets

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate

method.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an

active market.

A financial asset (or, when applicable, a part of a financial asset or part of a Company of similar financial assets) is

derecognised when:

a) The rights to receive cash flows from the asset have expired or

b) The Company retains the right to receive cash flows from the asset or has assumed an obligation to pay the received cash

flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either:

c) The Company has transferred substantially all the risks and rewards of the asset or the Company has neither transferred

nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A

financial asset is impaired and impairment losses are incurred only if, there is objective evidence of impairment as a result of

one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has

an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably

estimated.

Work-in-progress cost consist of direct materials and labour and a proportion of manufacturing overheads based on normal

operating capacity but excluding borrowing costs.

The cost of finished goods comprises suppliers’ invoice prices and, where appropriate, freight, printing costs and other

charges incurred to bring the materials to their location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and

the estimated costs necessary to make the sale

A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity

instrument of another party.

When the Company has transferred its right to receive cash flows from an asset and has neither transferred nor retained

substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of

the Company’s continuing involvement in the asset.

The Company’s financial assets include cash, trade and other receivables, all of which are classified as loans and receivables.

This classification is based on the purpose for which the financial assets were acquired. Management determines the

classiification of finanancial assets at initial recognition.

21




Financial assets carried at amortised cost

2.4.7.2 Financial liabilities

Classification

Subsequent measurement

Derecognition of financial liabilities

2.4.7.3 Offsetting financial instruments

2.4.8 Cash and cash equivalent

The financial liabilities are at amortised cost. The classification is based on the purpose for which the financial liabilities were

incurred. Management determines the classification of financial liabilities at initial recognition.

These includes borrowings and trade and other payables. They are classified as current liabilities except for those with

maturities greater than 12 months after the reporting period and these are classified as non-current liabilities.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial

difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other

financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash

flows, such as changes in arrears or economic conditions that correlate with defaults.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an

existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original

liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the

income statement.

The Company's financial liabilities are recignised initially at fair value and subsequently, measured at amortised cost using

the effective interest rate method.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a

legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset

and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be

enforceable in the normal course of business and in the event of default,insolvency or bankruptcy of the Company or the

Counterparty.

For financial assets carried at amortised cost, the Company first assesses individually whether objective evidence of

impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are

not individually significant. If the Company determines that no objective evidence of impairment exists for an individually

assessed financial asset, whether significant or not, it includes the asset in a Company of financial assets with similar credit

risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and

for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the

loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash

flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original

effective interest rate.

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three

months or less in the statement of financial position.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined

above, net of any outstanding bank overdraft.

22




2.4.9 Taxes

• Current income tax

• Deferred tax

• Sales tax

2.4.10 Government grants

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or

paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or

substantively enacted by the reporting date in Nigeria. Current income tax assets and liabilities also include adjustments for

tax expected to be payable or recoverable in respect of previous periods.

Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or

other comprehensive income and not in the income statement.

Deferred tax is provided using the liability method in respect of temporary differences at the reporting date between the tax

bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised

for all deductible temporary differences, carry forward of unused tax credits.

No deferred tax is recognised when relating to temporary differences that arise from the initial recognition of an asset or

liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting

profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer

probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become

probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is

realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the

reporting date.

Deferred tax items are recognised in correlation to the underlying transaction either in profit or loss, other comprehensive

income or directly in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation

authority and there is an intention to settle the balance on a net basis.

Revenues, expenses and assets are recognised net of the amount of sales tax, except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which

case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

• Receivables and payables are stated with the amount of sales tax included

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or

payables in the statement of financial position.

Grants for expenditure are netted against the relevant expenditures as and when these are recognized in profit and loss in the

statement of comprehensive income.

Where retention of a government grant is dependent on the Company satisfying certain criteria, it is recognized as deferred

income. When the criteria for retention have been satisfied, the deferred income balance is released to the statement of

comprehensive income (when related to expenses) or netted against the asset purchased (when specific to an asset).

When loans or similar assistance are provided by governments or related institutions with an interest rate below the current

applicable market rate, the effect of this favourable interest is regarded as a government grant.

23




2.4.11 Provisions

2.4.12 Revenue recognition

Sale of goods

Rendering of services

2.4.13 Interest income

2.4.14 Borrowing cost

Specific Borrowing costs on qualifying assets are capitalized from the date the actual costs on the qualifying asset are

incurred. Where such borrowed amount, or part thereof, is invested, the income earned is netted off the borrowing costs

capitalised.

Where the entity does not specifically borrow funds to construct a qualifying asset, general borrowing costs are capitalized by

applying the weighted average cost of the borrowing cost proportionate to the expenditure on the asset.

Revenue from painting services is recognised as income from special project by reference to the stage of completion. Stage of

completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each

contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses

incurred are eligible to be recovered. Where immaterial,revenue from painting services are classified as other income.

All financial instruments measured at amortised cost and interest income or expense is recorded using the effective interest

rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of

the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.

Interest income is included in finance income in the income statement.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue

can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the

consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.

The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or

agent.

The Company has concluded that it is acting as a principal in all of its revenue transactions. The following specific

recognition criteria must also be met before revenue is recognised:

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to

the buyer, usually on delivery of the goods. Where a buyer has a right of return, the Company defers recognition of revenue

until the right to return lapsed.

Provisions are recognised when there is a present obligation (legal or constructive) 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 amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for

example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement

is virtually certain. The expense relating to any provision is presented in the income statement. If the effect of the time value

of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific

to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance

cost.

24




2.4.15 Foreign currency

2.4.16

2.4.17 Employees' benefits

The Company’s financial statements are presented in naira, which is also the Company’s functional currency. Transactions in

the foreign currency are recognized in Naira at the official spot rate at the date of transaction.

Monetary assets and liabilities denominated in a foreign currency are translated into Naira at the spot rate of exchange ruling

at reporting date. Differences arising on settlement or translation of monetary items are recognised in income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using

the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency

are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation

of non-monetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the

item (i.e. the translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also

recognised in OCI or profit or loss, respectively).

Segment reporting

The reportable segments are identified on the basis of Strategic Business Units (SBU) and the threshold of recognition is a

contribution of not less than 10% of the revenue, assets, profits or losses of all the operating segments. Where the board and

management is of the opinion that a strategic business unit is important to the growth initiative of the Company such SBU

may be reported as a reportable segment even though it is not meeting the threshold of a reportable segment. The Managing

Director (CEO) is the Chief Operating Decision Maker (CODM) of the Company whom the segment information is presented

to.

Employees' benefits both legal and constructive are adequately recognized in the profit or loss.

The Company operates a defined contribution pension scheme in line with the Pension Reform Act 2014. The total

contribution rate is 18%,where the employees contributes 8% and the Company contributes 10% of basic salary, housing and

transport allowances. The Company's contributions are accrued and charged to the income statement as and when the

relevant service is provided by employees. The Company has no further payment obligations once the contributions have

been paid.

25





3 Segment Information:

No other segment has been aggregated to form the above listed reportable operating segments.

(i) Income Decorative Marine PaintsPortland

Bathrooms Total

Dec-15 Dec-15 Dec-15 Dec-15N'000 N'000 N'000 N'000

Revenue:

Total Revenue 1,598,993 544,716 24,771 2,168,480

Inter-segmental revenue - - -

Total Revenue From External Customers 1,598,993 544,716 24,771 2,168,480

Company's Revenue per Statement ofComprehensive Income 1,598,993 544,716 24,771 2,168,480

Depreciation (64,429) (20,317) - (84,746)

Amortisation (30,395) (9,079) - (39,474)

Segment Profit 1,504,169 515,320 24,771 2,044,260

Operating Expenses (1,685,634) (529,935) (15,509) (2,231,078)

Depreciation on Factory Building (3,587) - - (3,587)

Finance Income 37,230 (20,615) (13,339) 3,276

Finance Expense (95,896) (28,644) - (124,540)

Other Income 53,073 - 227 53,300Company's Loss Before Tax (190,645) (63,874) (3,850) (258,369)

Decorative Marine PaintsPortland

Bathrooms Total

Dec-14 Dec-14 Dec-14 Dec-14N'000 N'000 N'000 N'000

Revenue:

Total Revenue 2,173,526 427,670 196,969 2,798,165

Total Revenue From External Customers 2,173,526 427,670 196,969 2,798,165

Company's Revenue per Statement ofComprehensive Income 2,173,526 427,670 196,969 2,798,165

Depreciation (57,127) (20,020) (6,964) (84,111)

Amortisation (27,237) (9,079) (3,158) (39,474)

Segment Profit 2,089,162 398,571 186,847 2,674,580

Operating Expenses (1,987,191) (331,079) (151,350) (2,469,620)

Depreciation on Factory Building (2,933) - - (2,933)

Finance Expense (79,391) (26,464) (9,205) (115,060)

Finance Income 4,860 - - 4,860

Other Income 102,469 - - 102,469

Company's Profit Before Tax 126,976 41,028 26,292 194,296

Two customers accounted for 24% of total sales in the period. Below are the details;

Sale (N'000) Segment % of sale

Customer 1 272,595 Marine 13

Customer 2 246,620 Marine 11

Total 519,215 24

The operating segments did not transact with each other and as such there are no transfer prices between operating segments.

For management purpose, the Company is organised into Strategic Business Units (SBU) based on productscategories and has three reportable segments as follows:

- Portland Bathroom segment, which markets and distributes ranges of sanitary ware products.

The chief operating decision maker (CODM) has been identified as the Managing Director. The Managing Director monitors theoperating results of each business units separately for the purpose of making decisions about resource allocation and performanceassessment. Segment performance is evaluated based on net profit or loss before taxation and is measured consistently with netprofit or loss in the combined financial statements. However, the segment liabilities are absorbed by the decorative segment havingthe highest segment profit.

- Portland Decorative Paints segment, which manufactures and market various ranges of decorative paints.

- Portland Marine Segment, which manufactures and markets various ranges of marine protective paints.

26

PORTLAND PAINTS & PRODUCTS PLC


FOR THE PERIOD ENDED 31ST DECEMBER 2015


(ii) Assets & Liabilities Decorative Marine PaintsPortland

Bathrooms Total

Dec-15 Dec-15 Dec-15 Dec-15

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

Reportable Segment Assets:

Addition to Non-current Assets 34,895 - - 34,895

Inventories 400,587 123,257 92,443 616,287

Other Segment Assets 596,138 256,599 192,449 1,045,186

Factory Office Property 202,913 - - 202,913

Total Company Assets 1,234,534 379,856 284,892 1,899,282

Reportable Segment Liabilities:

Loans and Borrowings 225,868 - - 225,868

Defined Contribution PensionScheme 7,395 - - 7,395

Government Grant 56,756 - - 56,756

Deferred Tax Laibilities 19,106 - - 19,106

Other Liabilities 898,540 - - 898,540

-

Total Company Liabilities 1,207,665 - - 1,207,665

Decorative Marine PaintsPortland

Bathrooms Total


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

Reportable Segment Assets:

Addition to Non-current Assets 121,495 - - 121,495

Inventories 491,752 151,308 113,481 756,541

Other Segment Assets 667,917 304,204 228,153 1,200,274

Factory Office Property 199,249 - - 199,249

Total Company Assets 1,480,412 455,512 341,634 2,277,558

Reportable Segment Liabilities:

Loans and Borrowings 399,791 - - 399,791

Defined Contribution PensionScheme 10,014 - - 10,014

Government Grant 81,271 - - 81,271

Deferred Tax Laibilities 74,278 - - 74,278

Other Liabilities 787,602 - - 787,602

Total Company Liabilities 1,352,955 - - 1,352,955

Production activities in the factory are mainly production of decorative paints. Hence the relevant costs are absorbed byDecorative Business Unit. This accounts for the depreciation on Factory building wholly absorbed by Decorative BusinessUnit. Other Income is generated from the application of paints in addition to the sales and marketing of paint products.

Items of Property, Plant and Equipment are directly allocated to the SBU enjoying the economic benefits of the assets.

The amounts provided to the chief operating decision maker (CODM) with respect to total assets are measured in amanner consistent with that of the financial statements. These assets are allocated based on the operations of thesegments and the physical location of the assets.

27





Dec-15 Dec-14

4 Other Operating Income: N'000 N'000

Government grants 24,516 24,534

Profit on sale of property, plant & equipment 3,092 4,205

Sale of scrap 1,827 3,412

Insurance claim received 535 1,483

Income from executed projects 2,024 18,747

Exchange gain - 4,294

Franchisee Fee 15,949 42,614

Toll Manufacturing 229 1,894

Rental Income - 749

Container Deposit Refund 1,095 -

Other income 4,033 537

Total 53,300 102,469

5 (a) Expense by function

Cost of sales 1,270,822 1,492,342

Selling & distribution expenses 414,557 486,580

Adminstrative expenses 673,506 617,216

2,358,885 2,596,138

5 (b) Expenses by nature

Change in inventories of finished goods and work in progress 1,270,822 1,492,342

Amortization of intagible assets 39,474 39,474

Depreciation on property, plant and equipment 109,258 115,326

Staff costs 284,830 304,616

Marketing support 131,755 176,415

Distribution costs 142,133 107,436

Repairs and maintenance 29,608 69,311

Advert and promotional expenses 31,510 54,384

Management fee 21,685 28,194

Auditors' fees 10,735 10,000

Bad debt provision 111,664 22,437

Information technology 49,570 37,604

Rent & rates 8,635 30,512

Legal fees 43,451 27,960

Travelling expenses 42,814 41,114

Exchange loss 4,695 -

Other expenses 26,246 39,013

2,358,885 2,596,138

6 Finance income:

Interest received on bank deposits 3,276 4,860

Total 3,276 4,860

Finance costs:

Interest on debts and borrowings 124,540 110,480

Finance charges payable under finance lease - 4,580

Total 124,540 115,060

7 Taxation

(i) Tax on profits for the year:

Company income tax 8,209 49,589

Education tax 852 5,729

Tax charge 9,061 55,318

Deffered tax (55,172) (9,664)

Additional tax liability - back duty 20,727 -

Total current tax((credit)/expense) (25,384) 45,654

28




(ii) Reconciliation of tax charge:

Profit / (Loss) before tax (258,369) 194,296

Tax at Nigerian's statutory income tax rates (77,511) 58,289

Disallowable expenses 100,878 44,178

Disallowable income (10,586) (16,535)

Balancing charge 3,949 5,757

Tax effect of capital allowance (8,520) (42,100)

Education tax @2% of assessable profit 852 5,729

Total tax charge for the year 9,061 55,318

8 Earnings per share

Net (Loss)/profit attributable to ordinary equity holders (232,985) 148,642

Weighted average number of ordinary shares for basic earnings per share 400,000 400,000

Basic (Loss)/earnings per share (in kobo) (58) 37

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders

The following reflects the income and share data used on the basic earnings per share computations:

29





Land Factory building Plant and

machinery

Furniture and

fittings

Computer

Equipments

Motor vehicles Work-in-

progress

Total

9 Property, plant and equipment N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

COST/REVALUATION

At 1 January 2014 40,000 146,492 344,032 184,749 26,587 238,053 20,945 1,000,858

Additions - 19,420 55,487 16,245 2,612 13,732 13,999 121,495

Transfers - - 16,445 4,500 - - (20,945) -

Disposal - - (10,910) (4,462) (2,358) (24,778) - (42,508)

At 31 December 2014 40,000 165,912 405,054 201,032 26,841 227,007 13,999 1,079,845

At 1 January 2015 40,000 165,912 405,054 201,032 26,841 227,007 13,999 1,079,845

Additions - 7,252 5,955 22,582 - 2,471 (3,365) 34,895

Disposal - - (15,849) (82,835) (31,869) - (130,553)

At 31 December 2015 40,000 173,164 395,160 140,779 26,841 197,609 10,634 984,187

DEPRECIATION

At 1 January 2014 - 3,730 190,767 97,959 18,472 134,229 - 445,157

Additions - 2,933 27,732 34,278 6,388 43,995 - 115,326

Disposal (5,732) (2,628) (1,903) (17,415) (27,678)

At 31 December 2014 - 6,663 212,767 129,609 22,957 160,809 - 532,805

At 1 January 2015 - 6,663 212,767 129,609 22,957 160,809 - 532,805

Additions - 3,587 32,634 40,062 - 32,975 - 109,258

Disposal - (15,848) (72,021) (26,209) - (114,078)

At 31 December 2015 - 10,250 229,553 97,650 22,957 167,575 - 527,985

NET BOOK VALUE

At 31 December 2015 40,000 162,914 165,607 43,129 3,884 30,034 10,634 456,202

At 31 December 2014 40,000 159,249 192,287 71,423 3,884 66,197 13,999 547,040

Fair Value of land and building:

The company land and buildings were fair valued as at 31 December 2012 by Obosi Eleh & Co. (Estate Valuer), an accredited independent professional valuer who holds relevant professional qualifications and have

recent experience in the location and categories of the properties valued. The fair value measurement is based on its "highest and best use" and its represents the price that would be received to sell the property

in an orderly transaction between market participant. Fair value is determined by reference to market-based evidence, based on active market prices, adjusted for any difference in the nature, location or condition

of the specific property and falls within level 2 fair value hierarchy which are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Management is of the opinion that the value represents the value as at 31 December, 2015 as the property is situated in ewekoro village where prices are not expected to fluctuate significantly year on year.Other

items of PPE were carried at cost, duly reviewed for impairment as at 31 December, 2015, no impairment provision is deemed necessary.

Depreciation amounting to N109m (Dec 2014-N115m) was charged to income statement, which consist of N33m (Dec 2014-N35m) charged to cost of sales, N57m (2014- N53) to administrative expenses and N19m

(2014-N27m) to selling and distribution expenses.

Included in motor vehicles is the carrying amount of the leased vehicles that was completely liquidated in 2014.

30





Trade MarkComputer

Software Total

10 Intangible Assets N'000 N'000 N'000

COST

At 1 January 2014 49,024 197,368 246,392

At 31 December 2014 49,024 197,368 246,392

At 1 January 2015 49,024 197,368 246,392

At 31 December 2015 49,024 197,368 246,392

AMORTIZATION

At 1 January 2014 - 42,760 42,760

Charge for the year - 39,473 39,473

At 31 December 2014 - 82,233 82,233

At 1 January 2015 - 82,233 82,233

Charge for the year - 39,474 39,474

At 31 December 2015 - 121,707 121,707

NET BOOK VALUE

At 31 December 2015 49,024 75,661 124,685

At 31 December 2014 49,024 115,135 164,159

The Company's intangible asset represents the N49m trade mark purchased from Blue Circle Industries Plc adjudged to havean indefinite life. N197m relates to investment on licence and technical agreement on oracle ERP applications. The oracle ERPapplication was acquired in year 2012 and put to use December 2012, to be amortised to income statement over a period of fiveyears. The trade mark is carried at cost to be tested annually for impairment, at present no impairment is deemed required andthere is no contractual commitment as at 31 December, 2015.

Intangible assets amortization charged to income statement amounts to N39m (2014-N39m) included as part of administrativeexpenses.

31





Dec-15 Dec-14

N'000 N'000

11 Inventories:

Raw Materials 96,179 103,854

Packaging Materials 22,389 25,978

Work in progress 6,940 13,813

Goods In Transist 3,294 11,350

Finished Goods 504,369 599,328

Spare Parts 15,888 17,948

Diesel 3,180 3,887

Stock Impairment (35,952) (19,617)

Total 616,287 756,541

Dec-15 Dec-14

N'000 N'000

12 Trade and Other Receivables

(i) Trade receivables 560,140 493,550

Less: Provision for impairment of trade receivables - (Note 12iii) (204,841) (93,177)

Net receivables 355,299 400,373

Receivables from related parties 701 8,383

Witholding tax receivable 16,968 24,220

VAT receivable 32,411 28,073

Other receivables 62,321 43,792

467,700 504,841

(ii) Prepayments

Prepayments - Current 62,174 54,895

Prepayments - Non Current portion 10,789 25,032

Total prepayments 72,963 79,927

Dec-15 Dec-14

N'000 N'000

Trade receivables 355,299 400,373

Receivables from related parties (Note 19) 701 8,383

Witholding tax receivable 16,968 24,220

VAT receivable 32,411 28,073

Other receivables 62,321 43,792

Total 467,700 504,841

Dec-15 Dec-14

N'000 N'000

(iii) Allowance for impairment of trade receivables:As at 1 January 93,177 70,740

Additional allowance for receivable impairment 111,664 22,437

As at 31 December 204,841 93,177

The balance on prepayment represents rent,medical and insurance paid in advance which will be charged against earnings in periods it relates.

The amount of write-down on inventories to net realizable value recognised as an expense is N36m (2014: 19.6m). This represents provision forslow moving, obsolete and damaged inventories. All inventory with the exception of finished goods are stated at cost. Finished goods are statedat their net realisable values.

The fair values of trade and other receivables classified as loans and receivables are as follows:

Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 31December 2015 werereviewed for impairment test and additional impairment charge of N111.7m was booked for the period (2014: N22.4m).

32




13 Borrowings: Dec-15 Dec-14

N'000 N'000

(i) Non-Current Borrowings:

Bank loans:

Long term liabilities - Note 13(iii) 101,571 237,407

Non Current Borrowings 101,571 237,407

(ii) Current Borrowings:

Bank loans:

Long term liabilities due within one year 124,297 162,384

Current Borrowings 124,297 162,384

Total Borrowings 225,868 399,791

Current borrowings:

- Execution of trust receipts by the borrower.

- Ownership of assets financed

- Promissory note of the Company for principal and interest

- Sales collection agreement

(iii) Long term borrowings

Non current liabilities

Lender Total Facility Dec-15 Dec-14

N'000 N'000

Bank of Industry (BOI) Intervention funds Through EcobankNigeria Plc N300m 73,852 104,389

Bank of Industry (BOI) Intervention Funds Through FCMBNigeria Plc N255m 152,016 202,107

Zenith Bank Plc N100m

36 monthsequalinstalment - 93,295

Total Facility 225,868 399,791

Current Portion of Term-Loans (124,297) (162,384)

Due After One Year 101,571 237,407

The secured loan is a Central Bank of Nigeria (CBN) intervention fund through Bank of Industry (BOI). The applicable interest rate is 6% perannum subject to review by the BOI from time to time in line with the prevailing market conditions. The loan is repayable in instalments atvarious dates between January 2011 to 2018. After bifurcation of the government grant, in the form of a low interest rate loan, the loan bears aneffective interest rate of 15%. As at 31 December 2015, interest on BOI facility of N25m (2014:N25m) was charged to income statement.

RepaymentTerms

Carrying Value -28 equalquarterlyinstallmentsfrom date ofdraw down

The borrowings were secured with the followings:

The bank loans and import finance facility were secured with the following:

- Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at December 2011, by Ubosi Eleh &Co. estate surveyors

Carrying Value -60 equalmonthlyinstallmentswith 12 monthsmoratorium

33




(iv) Government grants:Dec-15 Dec-14

N'000 N'000

As at 1 January 81,271 105,805

Total Government Grant for the year 81,271 105,805

Amortised to the income statement (24,516) (24,534)

As at 31 December 56,756 81,271

Current 24,516 11,609

Non current 32,240 69,662

56,756 81,271

14 Cash and Cash Equivalent:

Dec-15 Dec-14

N'000 N'000

Cash in hand and bank 115,124 151,248

Short Term / Fixed deposit 46,320 73,802

Cash and cash equivalents 161,444 225,050

15 Trade and Other Payables Dec-15 Dec-14

N'000 N'000

Trade payables 157,031 210,034

Other payables 15,594 14,338

Witholding tax payable 8,467 21,582

Customer Deposits 60,056 24,303

Accruals 117,149 122,416

Total financial liabilities, excluding loans andborrowings, classified as financial liabilities measuredat amortised cost 358,297 392,674

Intercompany Payable 526,897 335,334

Total trade and other payables 885,194 728,008

The working capital loan facilities are at an interest rate of 14.5% (UACN) and 13.5% (UAC Food Ltd), payable on demand and with no fixedrepayment terms.

Government grants relates to loan granted by Agency of Nigeria Government (Centra Bank of Nigeria) with 6% interest rate which was belowthe current applicable market rate, the effect of this favourable interest is regarded as a government grant. There are no unfulfilled conditions orcontigencies attached to these grants.

Trade payables are non-interest bearing and normally settled on 30 day termOther payables and accruals are non-interest bearing and have an average term of 90 days.

Included in intercompany payable are working capital loan facilities of N350m from UAC of Nigeria and N100m from UAC Food Ltd. (2014:N300m from UAC of Nigeria only).

For the purpose of the statement of cash flow, cash and cash equivalents comprise the following as at 31 December 2015:

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between onemonth and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term depositrates.

As at 31 December 2015, the Company had available N36.6 million (2014: N36.6 million) of undrawn committed borrowing facilities on behalfof its former associates (Portland Construction Limited) in respect of which all conditions precedent had been met. The fixed deposit of N46m(2014: N74) is used as collateral to the extent of the guarantee.

34




16 Corporate Tax LiabilityDec-15 Dec-14

N'000 N'000

Balance at Beginning of the year

Company Income Tax 63,879 36,525

Education Tax 5,729 7,250

69,608 43,775

Current Tax Expense

Company Income Tax 8,209 49,589

Education Tax 852 5,729

Additional tax liability - back duty 20,727 -

99,396 99,093

Payment During the year (78,655) (29,485)

Income tax payable at end of the year 20,741 69,608

Deferred taxes

Dec-15 Dec-14

2012 2014

N'000 N'000

Deferred tax liabilities/(assets)

- Deferred tax liability to be settled after more than 12 months 82,436 106,830

- Deferred tax assets to be settled within 12 months (63,328) (32,550)

Deferred tax liabilities/(assets) 19,108 74,280

Dec-15 Dec-14

N'000 N'000

As at 1 January 74,280 83,944

(Credit) to profit or loss (55,172) (9,664)

As at 31 December 19,108 74,280

Provisions

Property,plant &

equipment

Unrealisedexchange (gain)

/ loss Total

Deferred tax liabilities/(assets) N'000 N'000 N'000 N'000

As at 1 January 2015 (33,838) 106,830 1,288 74,280

(Credited)/charge to profit or loss (38,400) (24,394) 7,622 (55,172)

As at 31 December 2015 (72,238) 82,436 8,910 19,108

Provisions

Property,plant &

equipment

Unrealisedexchange (gain)

/ loss Total

Deferred tax liabilities/(assets) N'000 N'000 N'000 N'000

As at 1 January 2014 (24,853) 108,839 (44) 83,942

(Credited)/charge to profit or loss (8,985) (2,009) 1,332 (9,662)

As at 31 December 2014 (33,838) 106,830 1,288 74,280

The analysis of deferred tax liabilities is as follows:

The movement in deferred tax liabilities during the year without taking into consideration the offsetting of balances within the same taxjurisdiction is as follows:

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate of 30% (2014: 30 %).

35




17 Share capital


Number N'000 Number N'000

Ordinary shares of 50 kobo each 400,000,000 200,000 400,000,000 200,000

Total 400,000,000 200,000 400,000,000 200,000

Issued andFully Paid





Number N'000 Number N'000

Ordinary shares of 50kobo each at the beginning of the year 400,000,000 200,000 400,000,000 200,000

At end of the year 400,000,000 200,000 400,000,000 200,000

(ii) Nature and purpose of reserves:Dec-15 Dec-14

Revaluation Reserve N'000 N'000

As at 1 January 91,923 91,923

Revaluation during the year - -

As at 31 December 91,923 91,923

(iii) Earnings per share

Dec-15 Dec-14

N'000 N'000

Net (loss)/profit attributable to ordinary equity holders (232,985) 148,642

Weighted average number of ordinary shares for basic earningsper share 400,000 400,000

Basic (loss)/earnings per share (in kobo) (58) 37

Authorised Authorised

The asset revaluation reserve is used to record increases in the fair value of property, plant and equipment and decreases to the extent that suchdecrease relates to an increase on the same asset previously recognised in equity. The revaluation was carried out on land and building inDecember 2010 and 2012 by Ubosi Eleh & Co., a professional firm of Chartered Surveyors on an open market basis.

Basic earnings per share is calculated by dividing profit after tax for the year attributable to ordinary equity holders of the parent by theweighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used on the basic earnings per share computations:

36




Dec-15 Dec-14

N'000 N'000

18 Reconciliation of net (loss)/profit to net cash

provided by operating activities

(Loss)/Profit before tax (258,369) 194,296

Adjustments to reconcile net income to net cash

provided by operating activities:

Interest paid 124,540 115,060

Finance income (3,276) (4,860)

Depreciation Charges 109,258 115,326

Amortization of government grant (24,516) (24,534)

Additional interest based on amortised cost 2,457 8,352

Profit on disposal of property,plant & equipment (3,087) (4,205)

Amortisation of intangible assets 39,474 39,474

244,850 244,613

Changes in assets and liabilities:

Decrease/(Increase) in Trade debtors and prepayments 44,105 (28,016)

Decrease/(Increase) in Inventories 140,254 (68,691)

(Decrease)/Increase in Trade creditors & Accruals 157,186 (136,821)

341,545 (233,528)

Net Adjustment 586,395 11,085

Net cash provided by operating activities 328,026 205,381

19 Related party transactions

The following transactions were carried out with related parties:

(a) Sales of goods and services Relationship Dec-15 Dec-14

N'000 N'000UACN Property Dev. Company Plc Fellow subsidiary 6,594 -

UAC Foods Ltd (UFL) Fellow subsidiary 863 -

MDS Logistics Ltd. Fellow subsidiary 701 913

8,158 913

(b) Purchases of goods and services Dec-15 Dec-14

N'000 N'000UAC of Nigeria Plc: Service fee Parent 76,616 35,053

UAC Foods Ltd (UFL): Personnel cost Fellow subsidiary 281 281

76,897 35,334

(c) Other transactions with related parties Dec-15 Dec-14

N'000 N'000UAC of Nigeria Plc: Working Capital Finance Loan Parent 50,000 300,000

UAC Foods Ltd (UFL): Working Capital Finance Loan Fellow subsidiary 100,000 -

150,000 300,000

The parent, ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies thatare related to Portland Paints & Products Nigeria Plc through common share holdings and directorship.

37




Outstanding balances as at year end:Dec-15 Dec-14

(d) Intercompany Receivables N'000 N'000MDS Logistics Ltd 701 913

UACN Property Development Companny (UPDC) - 7,470Total receivables from related parties 701 8,383

Dec-15 Dec-14

(e) Intercompany Payables N'000 N'000

UAC of Nigeria Plc 426,616 335,053

UAC Foods Ltd (UFL) 100,281 281

Total payables to related parties 526,897 335,334

All trading balances will be settled in cash.

All related party transactions were carried out on commercial terms and conditions. See also disclosures in note 15

Dec-15 Dec-14

N'000 N'000

20 Compensation to key management personnel:

Short-term employee benefits 12,479 18,895

Post employment benefits 954 978

13,433 19,873

Dec-15 Dec-14

N'000 N'000

The emoluments of the highest paid Director 3,387 19,873

Emolument of Non-executive Directors:

Fee 1300 1,170

Sitting Allowance 1,100 1,671

2,400 2,841

Directors' mix Dec-15 Dec-14

Number Number

Executive Directors 1 1

Non-executive Directors 4 5

5 6

21 Staff Numbers:

Dec-15 Dec-14

Number Number

Production 28 33

Sales, marketing and depot 54 72

Administration 30 52

112 157

The number of employees in respect of emoluments within the following ranges was:Dec-15 Dec-14

Number Number

N10,000 - N500,000 56 99

N500,001 - N1,000,000 56 58

Above N1,000,001 112 157

The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel (TheDirectors). The Executive Directors are paid salaries and a housing allowance, transportation is also provided for them. While the non-executiveDirectors are only entitled to Directors Fees and sitting allowance. As at 31 December 2015, an amount of N2.4million (2014: N2.841 million)was paid to Non-executive Directors as Directors Fees and sitting allowance. Executive Directors are entitled to a defined contribution plan(pension) in accordance with Pension Reform Act 2014. But non-executive Directors are not entitled to any form of pension or post employmentbenefits.

The average number of persons employed by the Company during the year, including Directors, is as follows:

There were no provisions for doubtful related party receivables as at 31 December 2015, (2014: nil) and no charges to the income statement inrespect of related party receivables.

38




22 Financial risk management

22.1 Credit risk

The concentration of Company credit risk is as follows:

Item Total gross amount Fully performing

Past due but not

impaired Impaired

Trade receivables 560,140 179,112 176,187 204,841

Receivables from related companies 701 701 - -

Other receivables 62,321 62,321 - -

Advances to staff 311 311 - -

Cash and cash equivalent 161,444 161,444 - -784,916 403,888 176,187 204,841

Item Total gross amount Fully performing

Past due but not

impaired Impaired

Trade receivables 493,550 264,577 135,796 93,177

Receivables from related companies 8,383 8,383 - -

Other receivables 43,792 43,792 - -

Advances to staff 600 600 - -

Cash and cash equivalent 225,050 225,050 - -771,375 542,402 135,796 93,177

Other receivables excludes Witholding tax and VAT receivable (see note 12) as these are non financial instruments

Age analysis of past due but not impared receivables

Dec-15 Dec-14

30,246 42,219

145,941 93,577176,187 135,796

(a) Trade receivables

Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this

assessment. Outstanding customer receivables are regularly monitored by the credit committee comprising of sales, finance and internal audit and the

Company intends to explore issuing of issurance certificates to major distributors and customers.

The entity has adopted a policy of only dealing with credit worthy counter-parties and a credit committee is instituted which comprises of sale, finance

and internal audit department to review the outstanding balances on customers’ account. Insurance certificate is required before credit is granted to

key distributors. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. On-going credit

evaluation is performed on the financial conditions of account receivable and where appropriate, credit guarantee insurance cover is purchased.

Apart from Satkay Nig. Ltd. and Chevron Nig. Ltd. the largest customers of the entity with an outstanding balance of N95 million and N67 million

respectively, the entity does not have significant credit risk exposure to any single counterparts or any group of counterparties having similar

characteristic. Concentration of credit risk to any other counterparty did not exceed 5% of gross monetary assets at any time during the year.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-rating assigned by international credit-rating agencies.

Dec-15

Portland Paints & Products Nigeria Plc’s principal financial assets comprise trade and other receivables, cash and short term deposits that arise

directly from its operations. The Company’s principal financial liabilities comprise of interest bearing loans and borrowing and trade and other

payables. The main purpose of these financial liabilities is to finance and to provide guarantee to support the Company’s operations.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness

and flexibility.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below:

Dec-14

Portland Paints & Products Nigeria Plc’s is exposed to credit risk, liquidity risk and market risk. The company’s board has overall responsibility to

oversee the management of these risks. The company’s board of director’s is supported by a risk management and governance committee that is

responsible for developing the Company’s Corporate Governance policies and practices and to consider the nature, extent and category of risks facing

the Company.

This is the risk of financial loss to the Company if a customer or counterparty to financial instrument fails to meet its Contractual obligations. The

Company is mainly exposed to credit risk from credit sales. It is Company policy, implemented locally, to assess the credit risk of new customers

before entering contracts.

91 - 180 days

181 - 360 days

39




Analysis of credit quality

Dec-15 Dec-14

168,291 102,164

178,061 355,427

213,788 35,959560,140 493,550

The Company defines the rating as follows:

Group 1 – These are balances with Blue Chip, Listed and other large entities with a low chance of default.

Group 2 - These are balances with small – medium sized entities with no history of defaults.

Group 3 – These are balances with small – medium sized entities with history of defaults or late payments.

(b) Cash and short term deposit

Analysis of credit quality

Dec-15 Dec-14

25,546 45,031

298 -

21,329 40,414

12,653 8,500

47,927 82,590

8,147 2,552

44,970 45,136

574 827

161,444 225,050

Credit risk from balances with banks and financial institutions is managed by the Portland Paints’ treasury department in accordance with the

Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party.

Trade receivables

Group 1

'Bb' Financial condition is satisfactory and ability to meet obligations as and when they fall due exists. May have one or more major weaknesses.

Adverse changes in the environment (macro-economic, political and regulatory) will increase risk significantly.

Cash and short term deposits

A+

A

Counterparty credit limits are reviewed by the Company’s Board of Directors on an annual basis, and may be updated throughout the year subject to

approval of the Managing Director. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential

counterparty’s failure. Portland Paints’ maximum exposure to credit risk for the components of the statement of financial position at 31 December

2015 and 2014 is the carrying amounts.

Aaa

Aa-

BB

Bb+ & Bbb-

B-B

Unrated

Total

'B' Financial condition is weak but obligations are still being met as and when they fall due. Has more than one major weakness and may require

external support.

'Aaa' A financial institution of impeccable financial condition and overwhelming capacity to meet obligations as and when they fall due. Adverse

changes in the environment (macro-economic, political and regulatory) are unlikely to lead to a deterioration in financial condition or an impairment

of the ability to meet its obligations as and when they fall due.

'Aa' A financial institution of very good financial condition and strong capacity to meet its obligations as and when they fall due. Adverse changes in

the environment (macro-economic, political and regulatory) will result in a slight increase the risk attributable to an exposure to this financial

institution. However, financial condition and ability to meet obligations as and when they fall due should remain strong.

The modifiers "+" or "-" may be appended to a rating to denote comparative position within the rating categories.

Group 3

Total

Group 2

This is based on Augusto & Co Ltd risk ratings.

'A' A financial institution of good financial condition and strong capacity to meet its obligations. Adverse changes in the environment (macro-

economic, political and regulatory) will result in a medium increase in the risk attributable to an exposure to this financial institution. However,

financial condition and ability to meet obligations as and when they fall due should remain largely unchanged.

'Bbb' A financial institution of satisfactory financial condition and adequate capacity to meet its obligations as and when they fall due. It may have

one major weakness which, if addressed, should not impair its ability to meet obligations as and when due. Adverse changes in the environment

(macro-economic, political and regulatory) will result in a medium increase in the risk attributable to an exposure to this financial institution.

40




22.2 Liquidity risk

31-Dec-15 Less than 3 months

Between 3 months

and 1 year

Between 1 and 5

years Over 5 years

Borrowings - 106,607 149,468 -

Trade and other payables 816,671 - - -

Total 816,671 106,607 149,468 -

31-Dec-14

Borrowings - 106,607 253,741 -

Trade and other payables 682,123 - - -

Total 682,123 106,607 253,741 -

Other payables excludes witholding tax payable and customer deposits (see note 15) as these are non financial instruments

22.3 Market risk

22.4 Interest rate risk

Concentration of Interest Risks is as follows:

Weighted average

interest rate (%)

Interest bearing

balance (NGN)

Non interest

bearing

Fixed rate

N'000 N'000

Financial assets:

Trade and other receivables - 545,011

Cash and bank balances - 115,124

Short term deposits 22 46,320 -

Total 46,320 660,135

Financial liabilities:

Borrowings 16 225,868 -

Trade and other payables - 816,671

Total 225,868 816,671

Dec-15

The company interest rate risk arises from short term deposits and borrowings held at fixed rates. The company’s policy is to keep all of its borrowings

at fixed rates of interest and has been achieved by converting the short term funds to long term fund through the BOI which has fixed and single digit

effective interest rate and more flexibility in repayments. The Company does not carry any borrowings at fair value and as such is not exposed to fair

value risk.

This is the risk arising from the Company’s management of working capital and the finance charges and principal repayments on its debt instruments.

It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.

The Company policy is to ensure that it will always have sufficient cash to allow it meet its liabilities when they become due. Ultimate responsibility for

liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the

management of the entity’s short, medium and long-term funding and liquidity requirement. The entity manages liquidity risk through the use of bank

overdrafts, bank loans, and finance leases. The company has agreement with our bankers to provide overdraft facilities for short term funds

requirement and long-term borrowing facilities, by continuously monitoring forecast and actual cash flow and matching the maturity profile of

financial assets and liabilities.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The activities

of the entity are exposed primary to the following market risks; interest rate risk, foreign currency risk and commodity price risk.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The company’s exposure to the risk of changes in market interest rates relates primarily to the company’s short-term debt obligations with floating

interest rates.

The balances below are undiscounted amounts and are based on contractual cashflows.

41




Weighted average

interest rate (%)

Interest bearing

balance (NGN)

Non interest

bearing

Fixed rate

N'000 N'000

Financial assets:

Trade and other receivables - 584,768

Cash and bank balances - 151,248

Short term deposits 9 73,802 -

Total 73,802 736,016


Borrowings 16 399,790 -

Trade and other payables - 682,123

Total 399,790 682,123

22.5 Foreign currency risk

Naira USD GBP Total

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

Financial assets:

Trade and other receivables 444,233 96,430 - 540,663

Cash and short term deposits 118,324 43,120 161,444

Total 562,557 139,550 - 702,107


Long term borrowings 133,811 - - 133,811

Current portion of long term borrowing 148,813 - - 148,813

Trade and other payables 340,698 16,006 1,592 358,297

Inter-company payables 526,897 - - 526,8971,150,219 16,006 1,592 1,167,818

Naira USD GBP Total

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

Financial assets:

Trade and other receivables 392,004 192,764 - 584,768

Cash and short term deposits 200,024 25,026 - 225,050

Total 592,028 217,790 - 809,818


Long term borrowings 307,069 - - 307,069

Current portion of long term borrowing 173,992 - - 173,992

Trade and other payables 250,836 141,838 - 392,674

Inter-company payables 335,334 - - 335,3341,067,232 141,838 - 1,209,070

Dec-14

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange

rates. The company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue

or expense is denominated in a different currency from the Company’s functional currency). In preparing the financial statement of the entity,

transactions in currencies other than the entity’s functional currency [foreign currencies] are recognized at the rates of exchanges prevailing at the

date of the transactions. The company is not managing its foreign currency risk by hedging because the entity’s dealing in foreign currencies is

minimal and will not have material effect on the financial statements of Portland Paints & Products Nigeria Plc.

Dec-15

Dec-14

The Company's exposure to foreign currency risk as at each reported period is deemed immaterial,therefore no sensitivity analysis has been presented.

42




23 Capital management

Dec-15 Dec-14

675,868 699,790

691,617 924,6031,367,485 1,624,393

49% 43%

24 Events after the reporting period

25 Commitments and contingencies

Capital commitments

Legal claim contingency

Guarantees

The company monitors capital using a gearing ratio, which is interest bearing debt divided by total capital plus interest bearing debt. The company’s

policy is to keep the gearing ratio between 20% and 50%.

Management considers capital to consist only of equity as disclosed in the statement of financial position. The primary objective of the Portland Paints

capital management is to ensure that it maintains a healthy capital ratio that support its business and maximize shareholder value. The company

manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the

Company may adjust the dividend payment to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 December 2015. In order to ensure an

appropriate return for shareholder’s capital invested in the company, management thoroughly evaluates all material projects and potential

acquisitions before approval. The company is not subject to any capital restriction requirements.

The company has been advised by its legal counsel that it is only probable, but not possible, that the action will succeed. Accordingly, no provision for

any liability has been made in these financial statements.

The company has provided financial guarantee contracts on behalf of Portland Construction Ltd to maximum amount of N36.6 million (Dec 2014:

N36.6 million). See note 14.

Item

Interest bearing debt

Equity

Total capital

Gearing ratio

UAC of Nigeria Plc acquired additional 7% interest in Portland Paints & Products Nigeria Plc in February 2016.This takes the shareholdings of UAC of

Nigeria Plc in Portland Paints & Products Nigeria Plc to 71.71%

At 31 December 2015, the Company did not have any capital commitments (Dec 2014: Nil).

There is litigation and claim against the Company as at 31 December 2015 amounting to N50 million (Dec 2014: N50 million).

43


STATEMENT OF VALUE ADDED FOR THE PERIOD ENDED

FOR THE PERIOD ENDED 31ST DECEMBER 2015

Dec-15 Dec-14

N'000 % N'000 %

Revenue 2,168,480 2,798,165

Non trading items 86,276 107,329

2,254,756 2,905,494

Bought-in-material and services:

- Local (1,555,709) (1,700,074)

- Imported (438,790) (479,508)

Value added 260,257 100% 725,912 100%

Applied as follows:-

To pay employees:

Salaries and labour related expenses 284,830 110% 301,230 41%

To pay Government:

Corporate tax (25,384) -10% 45,654 6%

To pay provider of capital:

Interest charges 124,540 48% 115,060 16%

To pay shareholders

as dividend - 0% - 0%

To provide for replacement of assets

dividend to shareholders and 0%

development of business

- Depreciation 109,258 42% 115,326 17%

- Deferred tax - 0% - 0%

- (Loss)/ Profit for the year (232,985) -90% 148,642 20%

260,257 100% 725,912 100%

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

statement shows the allocation of that wealth to employees, providers of capital, government and that retained for the future creation of

more wealth.

44


FIVE YEARS FINANCIAL SUMMARY


2015 2014 2013 2012 2011

N’000 N’000 N’000 N’000 N’000

Statement of financial position:

Property, plant & equipment 456,202 547,040 555,701 650,086 642,359

Intangible asset 124,685 164,160 203,633 243,103 189,989

Investment in associate - - - 2,842 3,345

Non-current prepayments 10,789 25,032 26,518 38,008 -

Net current assets 252,857 556,689 612,221 255,839 654,799

Non-current liabilities:

Borrowings (101,571) (237,407) (302,200) (140,473) (163,485)

Government grants (32,240) (56,633) (81,272) (55,389) (69,237)

Employee benefit - - (46,619) (134,837) (87,880)

Deferred taxation (74,278) (74,278) (83,944) (82,613) (91,158)

636,443 924,603 884,038 776,566 1,078,732

Shareholders’ funds:

Issued share capital 200,000 200,000 200,000 200,000 200,000

Other capital reserve 91,923 91,923 91,922 91,923 69,945

Retained earnings 399,694 632,680 592,116 484,643 808,787

691,617 924,603 884,038 776,566 1,078,732

Statement of comprehensive income

Revenue 2,168,480 2,798,165 2,771,147 2,865,581 2,584,183

(Loss)/profit before taxation (258,369) 194,297 123,591 (199,166) 253,188

Taxation 25,384 (45,654) (16,118) (29,199) (79,336)

(Loss)/profit after taxation (232,985) 148,643 107,473 (228,365) 173,852

Dividend declared - - - - (80,000)

Per share data (kobo)

Earnings per share – Basic (58) 37 27 (56) 48

Dividend per share - - - - 20

Note:

1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary share at the end of each

financial year.

2. Dividends per share are based on the dividend declared and the number of issued and fully paid ordinary shares at the end of each

financial year

45

portland paints and products nig. plc financial …portlandpaintsng.com/img-uploads/2015 annual...

Documents