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Champion Breweries Plc
Annual Report --31 December 2015
Page
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10
11
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13
38
- Value Added Statement 39
- Financial Summaries 40
Table of Contents
Directors' Report
Independent Auditor's Report
Statement of Changes in Equity
Statement of Directors’ Responsibilities
Audit Committee's Report
Statement of Financial Position
Statement of Profit or Loss and Other Comprehensive Income
Statement of Cash Flows
Notes to the Financial Statements
Corporate Information
Additional Financial Information
Champion Breweries Plc
Annual Report --31 December 2015
Corporate Information
Date of Incorporation: 31 July 1974
Registration No: RC 13388
Directors: Dr. Elijah Akpan – Chairman
Mr. Sharm Kulkarni (Indian) – Managing Director
Mr. Samson Aigbedo
Mr. Hendrik van Rooijen (Dutch)
Mrs Helen Umanah
Mr. Thompson S.B. Owoka
Alhaji Shuaibu A. Ottan
Mr Marinus Johannes Adrianus Gabriels (Dutch)
Mr. Samuel O. Onukwue
Company Secretary: Mr. Tosan Atle Aiboni
Registered office: Aka Offot, PMB 1106
Uyo
Akwa Ibom State
Nigeria
Independent Auditors: KPMG Professional Services
(Chartered Accountants)
KPMG Tower
Bishop Aboyade Cole Street
Victoria Island Lagos
www.kpmg.com/ng
Registrars: African Prudential Registrars Plc
220B, Ikorodu Road
Palmgrove, Lagos
Nigeria
1
Champion Breweries Plc
Annual Report --31 December 2015
Directors’ ReportFor the year ended 31 December 2015
Legal Form and Principal Activity
Operating Results
2015 2014
N’000 N’000
Revenue 3,501,845 3,302,383
Operating profit 206,769 25,511
Profit/(loss) before tax 210,179 (1,071,765)
Taxation 317,242
Profit/(loss) for the year 77,140 (754,523)
Other comprehensive income, net of tax 17,485 (39,422)
Total comprehensive income for the year 94,625 (793,945)
Dividend
The directors did not recommend any dividend during the year (2014: Nil).
Directors and their Interests
The Directors are pleased to present the annual report of Champion Breweries Plc ("the Company") together
with the financial statements and independent auditor's report for the year ended 31 December 2015.
The Company was incorporated in Nigeria as a limited liability company on 31 July 1974 and was later
converted to a public limited liability company on 1 September 1992. The Company's principal activities
continue to be brewing and packaging of Champion Lager Beer as well as provision of contract brewing
services to Nigerian Breweries Plc, a related party within the Heineken group. The Company re-commenced
production and marketing of its non-alcoholic beverage drink- Champ Malta in October 2015.
The following is a summary of the Company’s operating results:
The names of Directors who held office during the year under review as well as their interest in the issued
share capital of the Company as recorded in the Register of Members and/or notified by the Directors in
compliance with Section 275 of the Companies and Allied Matters Act Cap C 20 Laws of the Federation of
Nigeria 2004 were as follows:
Board of Directors
The Directors are responsible for oversight of the business, long-term strategy and objectives, and oversight of
the Company’s risks while evaluating and directing implementation of the Company’s controls and procedures
including, in particular, maintaining a sound system of internal controls to safeguard shareholders’
investments and the Company’s assets.
(133,039)
2
Champion Breweries Plc
Annual Report --31 December 2015
2015 2014
Dr. Elijah Akpan (Chairman)** 1,000 -
- 1,000
- -
Mr. Marinus J.A. Gabriels (Dutch) (appointed 11 February 2015)** - -
Mr. Hendrik van Rooijen (Dutch) (appointed 11 February 2015)** - -
- -
Mr. Thompson S.B. Owoka** 500,000 1,000,000
- -
Alhaji Shuaibu A. Ottan** - -
- -
8,110 -
Mr. Samson Aigbedo- (appointed 3 December 2015)**
*Executive Director
** Non-executive Director
Issuance of Ordinary Shares
% 2015 % 2014
N '000 N '000
The Raysun Nigeria Limited 60.7 2,376,539 57.9 2,084,760
Assets Management Nominee 12.3 480,932 13.4 480,960
Akwa Ibom State Government 10.0 391,484 8.5 304,920
Other shareholders. 17.0 665,793 20.2 729,360
100 3,914,748 100 3,600,000
Property, Plant and Equipment
Ordinary shares
Information relating to movement in property, plant and equipment during the year is disclosed in Note 11 of
the financial statements.
In accordance with Section 277 of the Companies and Allied Matters Act of Nigeria, no Director notified the
Company of any declarable interest in any contract in which the Company was involved during the year under
review (2014: Nil).
Mr. Samuel O. Onukwue**
Analysis of Shareholding
As at 31 December, the company's ordinary shares were held as follows:
During the year, the Board of Directors approved the conversion of share deposits made by The Raysun Nigeria Limited and Akwa Ibom State Government amounting to N1.1 billion and N52.9 million respectively to ordinary share capital. This resulted in issuance of 629,496,464 million units of ordinary shares of 50k each at N1.85 through private placement to these shareholders after obtaining regulatory approval in March 2015. As a result of these transactions, the Company's issued share capital increased to N3.9 billion (2014:N3.6 billion) while share premium increased to N9.1 billion (2014: N8.3 billion).
Mr. A.K. Mirchandani (American) (retired 22 October 2015)**
Mrs Helen Umanah- (appointed 3 December 2015)**
Mr. Didier Leleu (French) (retired 3 December 2015)**
Number of Ordinary Shares
Chief Senas J. Ukpanah, OFR (resigned 22 October 2015)**
Mr. Sharm Kulkarni (Indian) (Managing Director)*
3
Champion Breweries Plc
Annual Report --31 December 2015
Donations and sponsorship
2015 2014
N '000 N '000
Scholarship to indigenes of host community 1,200 1,200
Free eye screening for indigenes of host community 720 -
Other donations - 600
1,920 1,800
Corporate Governance
Distribution of Company's Products
Employment and Employees
(b) Employee training and consultation:
The Company intends to continue the fulfilment of its objectives as indicated in its Memorandum and
Articles of Association.
The Directors are committed to ensuring that best practices in corporate governance are observed in all
areas of the Company’s business. The Company’s policies on corporate governance are continually
reviewed with focus on high ethical standards of transparency, integrity, accountability and honesty. The
Board continues to formulate policies aimed at creating a well-positioned Company that is keen on
constantly harmonising the interests of various stakeholders to the business.
(a) Employment of physically-challenged persons
Business Review and Future Development
The Company’s products are sold by distributors within the country. The list of names of such distributors
is available at the Commercial Department of the Company.
Code of Business Conduct
The Company has in place a Code of Business Conduct (CoBC) which provides guidance to all its users
on the importance of high ethical values in sustainable business growth. The CoBC is subscribed to by all
members of the Board of Directors and all employees of the Company. The Company mandates strict
adherence to the Code in the Company’s day-to-day operation.
The Company gave donations and provided sponsorship during the year as follows:
In accordance with Section 38(2) of the Companies and Allied Matters Act, 1990 the Company did not
make any donation or give gifts to any political party, political association or for any political purpose
during the year (2014: Nil).
It is the policy of the Company that there should be no discrimination in considering applications for
employment including those from physically-challenged persons. All employees whether or not disabled
are given equal opportunities to develop their experience and knowledge and to qualify for promotion in
furtherance of their careers. A total of two physically-challenged persons were in employment by the
Company during the year (2014: two)
The Company is committed to keeping employees fully informed as far as possible regarding the
Company’s performance and progress and seeking their views wherever practicable on matters, which
particularly affect them as employees.
Training is carried out at various levels through both in-house and external courses. Management,
professional and technical expertise are the Company’s major assets and investment in developing such
skills continues. The Company’s expanding skills base has extended the range of training provided
and broadened the opportunities for career development within the organisation.
4
Champion Breweries Plc
Annual Report --31 December 2015
Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December
Notes 2015 2014
N '000 N '000
Revenue 5 3,501,845 3,302,383
Cost of sales 8(d) (2,502,147) (2,662,451)
Gross profit 999,698 639,932
Other income 6 52,271 104,130
Selling and distribution expenses 8(d) (255,913) (185,658)
Administrative expenses 8(d) (589,287) (532,893)
Operating profit 206,769 25,511
Finance income 7(a) 41,674 200,351
Finance costs 7(b) - (1,287,645)
Net finance income/(cost) 41,674 (1,087,294)
Profit/(loss) before minimum tax 248,443 (1,061,783)
Minimum tax (38,264) (9,982)
Profit/(loss) before tax 8(a) 210,179 (1,071,765)
Income tax 9(a) (133,039) 317,242
Profit/(loss) for the year 77,140 (754,523)
Other comprehensive income
Items that will never be reclassified to profit or loss
Re-measurement of defined benefit liability 21(a) 24,979 (50,432)
Related tax 21(c) (7,494) 11,010
Other comprehensive income, net of tax 17,485 (39,422)
Total comprehensive income 94,625 (793,945)
Earnings/(loss) per share
Basic and diluted earning/(loss) per share (kobo) 10 1 (24)
The notes on pages 13 to 37 are integral parts of these financial statements.
10
Champion Breweries Plc
Annual Report --31 December 2015
Statement of Changes in EquityFor the year ended 31 December
Share
capital
Share
premium
Accumulated
loss
Other
reserve
Total
equity
N '000 N '000 N '000 N '000 N '000
Balance as at 1 January 2014 450,000 129,184 (8,889,182) 3,701,612 (4,608,386)
Total comprehensive income
Loss for the year - - (754,523) - (754,523)
Other comprehensive income - - (39,422) - (39,422)
Total comprehensive income - - (793,945) - (793,945)
Transactions with owners of the Company
Contributions by owners
Issuance of ordinary shares (Notes 18 and 19) 3,150,000 8,122,762 - - 11,272,762
Total contribution 3,150,000 8,122,762 - - 11,272,762
Balance at 31 December 2014 3,600,000 8,251,946 (9,683,127) 3,701,612 5,870,431
Balance at 1 January 2015 3,600,000 8,251,946 (9,683,127) 3,701,612 5,870,431
Total comprehensive income for the year
Profit for the year - - 77,140 - 77,140
Other comprehensive income - - 17,485 - 17,485
Total comprehensive income - - 94,625 - 94,625
Transactions with owners of the Company
Contributions by owners
Issuance of ordinary shares (Notes 18 and 19) 314,748 841,833 - - 1,156,581
Total contribution 314,748 841,833 - - 1,156,581
Balance at 31 December 2015 3,914,748 9,093,779 (9,588,502) 3,701,612 7,121,637
The notes on pages 13 to 37 are integral parts of these financial statements.
11
Champion Breweries Plc
Annual Report --31 December 2015
Statement of Cash Flows
For the year ended 31 December
Notes 2015 2014
N '000 N '000
Cash flows from operating activities
Profit/(loss) for the year 77,140 (754,523)
Adjustments for:
Finance income 7(a) (41,674) (200,351)
Finance cost 7(b) - 1,287,645
Taxation 9(a) 133,039 (317,242)
Depreciation charge 11 622,428 848,485
Amortisation charge 12 6,878 4,863
Write-off of property, plant and equipment 11 - 24,797
(Gain)/loss on sale of property, plant and equipment (300) (489)
Impairment of inventories 13 51,396 58,349
848,907 951,534
Changes in:
Inventories (47,243) (107,004)
Trade and other receivables (99,649) (46,011)
Prepayments (57,691) (14,741)
703,996 225,389
Employee benefits 9,496 29,762
Cash generated from operating activities 1,348,320 1,038,929
Value added tax paid (61,137) (30,811)
Net cash generated from operating activities 1,287,183 1,008,118
Cash flows from investing activities
Interest received 7(a) 41,674 200,351
Proceeds from sale of property, plant and equipment 300 533
Acquisition of property, plant and equipment 11 (695,701) (478,043)
Net cash utilised in investing activities (653,727) (277,159)
Cash flows from financing activities
Net proceeds from issuance of ordinary shares 18(c) - 11,272,762
Repayment of amounts due to related party 18(c) - (11,586,569)
Net cash generated from financing activities - (313,807)
Net increase in cash and cash equivalents 633,456 417,152
Cash and cash equivalents at 1 January 536,297 119,145
Cash and cash equivalents at 31 December 1,169,753 536,297
The notes on pages 13 to 37 are integral parts of these financial statements.
* Value added tax paid as shown above has been adjusted from "changes in trade and other payables " on the
statement of cash flows.
Trade and other payables*
12
Champion Breweries Plc
Annual Report --31 December 2015
Notes to the Financial Statements
Page Page
1 Reporting entity 14 20 Other reserve 30
2 Basis of accounting 14 21 Employee benefits 30
3 Significant accounting policies 15 22 Trade and other payables 33
4 New standards and interpretations not
yet adopted 21
23 Related parties 33
24 Financial instruments- financial 34
5 Revenue 22 risk management and fair values
6 Other income 22 25 Contingencies 37
7 Finance income and finance cost 22 26 Segment reporting 37
8 Profit/(loss) before tax 22 27 Subsequent events 37
9 Taxation 24
10 Basic and diluted earnings/(loss) per share 26
11 Property, plant and equipment 27
12 Intangible assets 28
13 Inventories 28
14 Trade and other receivables 28
15 Prepayment 29
16 Cash and cash equivalents 29
17 Deposit for shares 29
18 Share capital 29
19 Share premium 30
13
Champion Breweries Plc
Annual Report --31 December 2015
1 Reporting entity
2 Basis of accounting
(a) Functional and presentation currency
(b) Use of estimates and judgments
(c) Measurement of fair values
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the charge has occurred. Further information about the assumptions made in measuring fair value
is included in Note 26- Financial instruments- financial risk management and fair values.
A number of the Company's accounting policies and disclosures require the determination of fair value for
both financial and non-financial assets and liabilities. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Significant valuation issues are reported to the Audit Committee.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
These financial statements are presented in Naira (N), which is the Company’s functional currency. All
financial information presented in Naira has been rounded to the nearest thousand, except when otherwise
Champion Breweries Plc ('the Company’) is domiciled in Nigeria. The Company was incorporated in Nigeria
as a limited liability company on 31 July 1974 and later converted to a public limited liability Company on 1
September 1992. The address of the Company’s registered office is Industrial Layout, Aka Uffot, Uyo, Akwa
Ibom State, Nigeria.
The Company is involved in the brewing and marketing of Champion Lager Beer and Champ Malta. The
Company also provides contract brewing and packaging services to Nigerian Breweries Plc, a related party
within the Heineken group.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of
the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.
In preparation of these financial statements, management has made judgments, estimates and assumptions that
affect the application of the Company's accounting policy and the reported amounts of assets, liabilities,
income and expenses. Actual result may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing bases. Revisions to estimates are
recognised prospectively.
The financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS). These financial statements were authorised for issue by the Board of Directors on 11 February 2015.
Judgment
There were no significant judgment made by management in applying accounting policies that could have had
a material effect on the amount and disclosures in financial statement.
Assumptions and estimation uncertainties.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment in the year ending 31 December 2015 is included in the following note:
Note 22- Measurement of defined benefit obligations: key actuarial assumptions.
14
Champion Breweries Plc
Annual Report --31 December 2015
(d) Basis of measurement
Items
Non-derivative financial instruments
Employee benefits
3 Significant accounting policies
(a) Foreign currency transactions
(b) Financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three
months or less from the acquisition date that are subject to an insignificant risk of changes in their fair
value, and are used by the Company in the management of its short-term commitments.
(ii) Non-derivative financial liabilities
All financial liabilities are recognised initially on trade date at which the Company becomes a party to the
contractual provisions of the instrument. The Company classifies non-derivative financial liabilities into
the other financial liabilities category. The Company derecognises a financial liability when its contractual
obligations are discharged or cancelled or expire.
The significant accounting policies set out below have been applied consistently to all periods presented in
these financial statements, unless otherwise indicated.
Transactions in foreign currencies are translated to naira at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated to the naira at the
exchange rate at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
translated to the functional currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on translation are recognised in profit or loss. Non-monetary items
that are measured based on historical cost in a foreign currency are translated at the exchange rate at the
date of the transaction.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction
in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any
interest in transferred financial assets that is created or retained by the Company is recognised as a
separate asset or liability.
(i) Non-derivative financial assets
The Company's non-derivative financial assets include trade and other receivables and cash and cash
equivalents. The Company initially recognises trade and other receivables on the date that they are
originated. All other financial assets are recognised initially on the trade date at which the Company
becomes a party to the contractual provisions of the instrument.
The financial statements have been prepared on the historical cost basis except for the following items
which have been measured on an alternative basis:
Measurement bases
Initially measured at fair value and subsequently
measured at amortised cost.
Present value of defined benefit obligation.
Trade and other receivables
Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, trade and other receivables are measured at amortised cost using
the effective interest method, less any impairment losses.
15
Champion Breweries Plc
Annual Report --31 December 2015
(c)
(d) Property, plant and equipment
Leasehold land Lease period
15 to 40 years
5 to 30 years
3 to 5 years
- Cars and trucks 5 years
- Forklifts 5 years
Returnable packaging materials:
- Bottles 5 years
- Crates 8 years
Share capital and share premium
Ordinary shares are classified as equity. When new shares are issued, they are recorded in share capital at
their par value. The excess of the issue price over the par value is recorded in the share premium reserve.
All ordinary shares rank equally with regard to the Company's residual assets. Holders of these shares are
entitled to dividends as declared from time to time and are entitled to one vote per share at general
meetings of the Company.
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from
equity, net of any tax effects.
The Company's non derivative financial liabilities comprise of trade and other payables and deposit for
shares. Such financial liabilities are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised
cost using the effective interest method.
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Company has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
(iii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values on a straight-line basis over their estimated useful lives and is generally
recognised in profit or loss. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease
term. Land and capital work in progress are not depreciated.
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. If significant part of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property, plan
and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company.
Plant & machinery
Furniture and fittings:
Motor vehicles:
Buildings
The estimated useful lives of property plant and equipment for current and comparative periods are as
shown below:
16
Champion Breweries Plc
Annual Report --31 December 2015
(e)
(f)
(g)
Allowance is made for obsolete, slow-moving or defective items where appropriate.
The Company considers evidence of impairment for financial assets measured at amortised cost (trade
and other receivables) at both a specific asset and collective level. All individually significant assets are
assessed for specific impairment. Those found not to be specifically impaired are then collectively
assessed for any impairment that has been incurred but not yet identified. Assets that are not individually
significant are collectively assessed for impairment by grouping together assets with similar risk
characteristics.
In assessing collective impairment, the Company uses historical trends of the probability of default, the
timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether
current economic and credit conditions are such that the actual losses are likely to be greater or less than
suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate.
Impairment losses are recognised in profit or loss and reflected in an allowance account against trade and
other receivables. Interest on the impaired asset continues to be recognised. When an event occurring
after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through profit or loss.
Impairment
(i) Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is
objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that
asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor,
restructuring of an amount due to the Company on terms that the Company would not consider otherwise,
indications that a debtor will enter bankruptcy, adverse changes in the payment status of debtors or
economic conditions that correlate with defaults.
Financial assets measured at amortised cost
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on
the following:
- Raw material, spare parts and non returnable packaging materials- weighted average cost.
- Manufactured finished products and products-in-process - weighted average cost of direct materials,
labour costs and a proportion of production overheads based on normal operating capacity.
Intangible assets
Intangible assets represents computer software with useful live of 3 years and are measured at cost less
accumulated amortisation and any accumulated impairment loss.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values
using straight line method over their estimated useful lives, and is generally recognised in profit or loss.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
17
Champion Breweries Plc
Annual Report --31 December 2015
(ii) Non-financial assets
(h)
(iii) Defined benefit plans
The Company’s net obligation in respect of defined benefit plan is calculated by estimating the amount
of future benefit that employees have earned in the current and prior periods, discounting that amount
and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually using the projected unit credit
method by Alaxender Forbes Consulting Actuaries Nigeria Limited (FRC/2012/0000000000504). When
the calculation results in a potential asset for the Company, the recognised asset is limited to the present
value of economic benefits available in the form of any future refunds from the plan or reductions in
future contributions to the plan. To calculate the present value of economic benefits, consideration is
given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, return on
plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are
recognised immediately in other comprehensive income. The Company determines the net interest
expense (income) on the net defined benefit liability for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then-net defined
benefit liability, taking into account any changes in the net defined benefit liability during the period as a
result of contributions and benefit payments. Net interest expense and other expenses related to defined
benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The
Company recognises gains and losses on the settlement of a defined benefit plan when the settlement
occurs.
The carrying amounts of the Company’s non-financial assets, other than inventories are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. Indefinite-lived intangible assets are tested annually for
impairment. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit
(CGU) exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are
allocated to reduce the carrying amounts of the assets in the CGU (group of CGUs) on a pro rata basis.
Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
Obligations for contributions to defined contribution plans are recognised as an employee benefit
expense in profit or loss in the periods during which related services are rendered by employees.
(ii) Defined contribution plans
In line with the provisions of the Pension Reform Act 2014, the Company has instituted a defined
contribution pension scheme for its permanent staff. Staff contributions to the scheme are funded
through payroll deductions while the Company's contribution is recognised in profit or loss as employee
benefit expense in the periods during which services are rendered by employees. Under this scheme,
employees contribute 8% of their basic salary, transport and housing allowances to a fund on a monthly
basis. The Company's contribution is 10% of each employee's basic salary, transport and housing
allowances to the fund.
18
Champion Breweries Plc
Annual Report --31 December 2015
(v) Termination Benefit
(i) Provisions and contingent liabilities
Provisions
Contingent liabilities
(j) Revenue
(k)
(l) Income tax
(i) Current tax
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised for unutilised tax losses, unutilised tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they
can be used. Future taxable profits are determined based on business plans.
(iv) Other long-term employee benefits
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in
profit or loss except to the extent that they relate to a business combination, or items recognised directly
in equity or in other comprehensive income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable
in respect of previous years. Current tax assets and liabilities are offsets only if certain criteria are met.
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer
of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected
to be settled wholly within 12 months of the reporting date, then they are discounted.
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. That benefit is
discounted to determine its present value. Remeasurements are recognised in profit or loss in the period
in which they arise.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as finance cost.
Revenue from the sale of goods and rendering of services is measured at the fair value of the
consideration received or receivable, net of value added tax, returns, trade discounts and volume rebates.
Revenue is recognised when significant risks and rewards of ownership have been transferred to the
customer, recovery of the consideration is probable, the associated costs and possible return of goods
can be estimated reliably, there is no continuing management involvement with the goods, and the
amount of revenue can be measured reliably. If it is probable that discounts will be granted and the
amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales
are recognised.
Finance income comprises interest income on bank deposits.
Finance costs comprise interest expense on borrowings, bank overdrafts and impairment losses
recognised on financial assets (other than trade receivables). Borrowing costs that are not directly
attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or
loss using the effective interest method. Foreign currency gains and losses on financial assets and
financial liabilities are reported on a net basis as either finance income or finance cost depending on
whether foreign currency movements are in a net gain or net loss position. Interest income or expense is
recognised using the effective interest method.
Finance income and finance costs
Contingent liabilities are only disclosed and not recognised as liabilities in the statement of financial
position. If the likelihood of an outflow of resources is remote, the possible obligations is neither a
provision nor a contingent liability and no disclosure is made.
19
Champion Breweries Plc
Annual Report --31 December 2015
(iii) Minimum tax
(m) Earnings per share
(n) Segment reporting
(o) Leases
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for the following temporary differences:
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. The
measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities. For this purpose, the carrying amount of investment property measured at fair value is
presumed to be recovered through sale, and the Company has not rebutted this presumption.
Deferred tax assets and liabilities are offset only if certain criteria are met.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised; such reductions are reversed when the probability
of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each reporting date
and recognised to the extent that it has become probable that future taxable profits will be available
against which they can be utilised.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Company determines whether the arrangement is or contains a lease.
An operating segment is a component of the Company that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions with
any of the Company’s other components. All operating segments’ operating results are reviewed
regularly by the Company's Managing Director to make decision about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available.
i. the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss,
ii. differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future, and
iii. temporary differences arising on the initial recognition of goodwill.
Minimum tax payable is calculated using the tax rate applicable based on certain parameters stipulated
in the Nigerian tax law. Any amount by which this minimum amount payable exceeds company income
tax is shown as minimum tax expenses and presented separately in the statement of comprehensive
In determining the amount of current and deferred tax, the Company takes into account the impact of
uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on
estimates and assumptions and may involve a series of judgements about future events. New information
may become available that causes the Company to change its judgement regarding the adequacy of
existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a
determination is made.
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of
all dilutive potential ordinary shares.
Segment results that are reported to the Company's Managing Director include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise
mainly corporate assets, office expenses as well as income and deferred tax assets and liabilities.
20
Champion Breweries Plc
Annual Report --31 December 2015
(i) Leased assets
(ii) Lease payments
(p) Statement of cash flows
4 New standards and interpretations not yet adopted
The statement of cash flows is prepared using the indirect method. Changes in statement of financial
position items that have not resulted in cash flows such as translation differences, fair value changes and
other non-cash items have been eliminated for the purpose of preparing the statement. Interest paid is
included in financing activities.
Assets held by the Company under leases which transfer to the Company substantially all of the risks
and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is
measured at an amount equal to the lower of its fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting
policy applicable to that asset.
Assets held under other leases are classified as operating leases and are not recognised in the Company’s
statement of financial position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised as an integral part of the total lease expense,
over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and
the reduction of the outstanding liability. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
At inception or on reassessment of an arrangement that contains a lease, the Company separates
payments and other consideration required by the arrangement into those for the lease and those for
other elements on the basis of their relative fair values. If the Company concludes for a finance lease that
it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an
amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments
are made and an imputed finance cost on the liability is recognised using the Company's incremental
borrowing rate.
IFRS 9- Financial Instruments (effective for annual reporting periods beginning on or after 1 January
2018, with early adoption permitted.). IFRS 9, published in July 2014, replaces the existing guidance in
IAS 39 Financial Instruments: Recognition and Measuremen t. IFRS 9 includes revised guidance on the
classification and measurement of financial instruments, including a new expected credit loss model for
calculating impairment on financial assets, and the new general hedge accounting requirements. It also
carries forward the guidance on recognition and depreciation of financial instruments from IAS 39.
IFRS 15 Revenue from Contracts with Customers - (effective for periods beginning 1 January 2017 and
early adoption is permitted). IFRS 15 establishes a comprehensive framework for determining whether,
how much and when revenue is recognised. It replaces existing revenue recognition guidance, including
IAS 18 Revenue , IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes .
The extent of the impact of these standards has not been determined and the Company does not plan to
adopt these standards early.
A number of new standards and amendments to standards are effective for annual periods beginning
after 1 January 2015; however, the Company has not applied the following new or amended applicable
standards in preparing these financial statements:
IAS 1 Disclosure Initiative - (effective for periods beginning 1 January 2016 and early adoption is
permitted). The amendments provide additional guidance on the application of materiality and
aggregation when preparing financial statements.
21
Champion Breweries Plc
Annual Report --31 December 2015
5 Revenue
2015 2014
N’000 N’000
Sale of goods 1,228,834 786,101
Contract brewing and packaging 2,273,011 2,516,282
3,501,845 3,302,383
6 Other income
7 Finance income and finance cost
(a)
(b)
8 Profit/(loss) before tax
(a)
2015 2014
N’000 N’000
Depreciation of property, plant and equipment (Note 11) 622,428 848,485
Amortisation of intangible asset 6,878 4,863
Personnel expenses (Note (8b)) 794,984 672,253
Auditor’s remuneration 9,504 8,800
Management fees 69,649 63,312
Technical service fees - 42,182
Directors’ remuneration (Note 8(c)) 14,005 10,838
Gain on sale of property, plant and equipment (300) (489)
(b) Personnel expenses
(i)
2015 2014
N’000 N’000
Salaries and wages 460,558 490,250
Pension 15,553 15,970
Defined benefit obligation charge (Note 21(a)(i)) 32,909 12,235
Long service awards charge (Note 21(a)(ii)) (2,787) 36,257
Other personnel related expenses 288,751 117,541
794,984 672,253
(ii)
2015 2014
Number Number
Production 106 116
Logistics 18 18
Sales and Marketing 20 21
Administration 27 29
171 184
Other income represents amount earned from the sale of scraps, by-products, sales commissions and
insurance claims.
The number of full time employees as at 31 December was as follows:
Profit/(loss) before tax is stated after charging/ (crediting) the following amounts which are
analysed by nature:
Finance income represents interest on short term bank deposits. Finance income in 2014 represents
income earned from placement of proceeds of issued ordinary shares in interest-bearing bank
account.
Personnel expenses comprise of:
Finance cost in 2014 represents interest charged on N11.6 billion due to The Raysun Nigeria
Limited (parent company) which was fully repaid in 2014.
22
Champion Breweries Plc
Annual Report --31 December 2015
(iii)
2015 2014
Number Number
- 2
- 3
18 6
25 22
65 48
14 37
7 26
8 13
16 15
5 1
3 4
1 3
1 2
1 1
7 1
171 184
(c) Directors remuneration
2015 2014
N’000 N’000
Directors' fees 725 360
Other remuneration 13,280 10,478
14,005 10,838
Further analysed as follows;
N’000 N’000
Remuneration of non-executive directors 725 360
Remuneration of executive directors 13,280 10,478
14,005 10,838
2015 2014
N’000 N’000
Chairman 200 60
Highest paid director 13,280 10,478
2015 2014
Number Number
N100,000 and below 4 7
N100,001-N200,000 1 -
5 7
Employees of the Company, other than directors, whose duties were wholly or mainly discharged in
Nigeria, received remuneration (excluding pension contributions) in the following ranges:
N 400,001 – N 600,000
N 600,001 – N 800,000
N 800,001 – N 1,000,000
N 1,000,001 – N 1,200,000
N 1,200,001 – N 1,400,000
N 1,400,001 – N 1,600,000
N 1,600,001 – N 1,800,000
N 1,800,001 – N 2,000,000
N 2,000,001 – N 2,500,000
N 2,500,001 – N 3,000,000
N 3,000,001 – N 3,500,000
Directors’ remuneration was as follows:
The directors’ remuneration shown above includes amount paid to:
Other directors received emoluments (excluding pension contributions) within the following ranges:
N 3,500,001 – N 4,000,000
N 4,000,001 – N 4,500,000
N 4,500,001– N 5,000,000
N 5,000,000 – and above
23
Champion Breweries Plc
Annual Report --31 December 2015
(d) Analysis of expenses by nature2015 2014
N’000 N’000
Raw materials and consumables 367,753 310,877
Advertising and promotion 131,412 66,469
Depreciation of property, plant and equipment 622,428 848,485
Amortisation of intangible asset 6,878 4,863
Personnel costs (Note 8(b)) 794,984 672,253
Utilities 608,968 747,949
Repairs and maintenance 473,988 393,256
Management fee 69,649 63,312
Technical service fee - 42,182
Lease rental expenses 10,000 5,000
Audit fee 9,504 8,800
Professional services costs 14,373 13,046
Impairment loss reversal (27,567) (2,882)
IT infrastructure 57,522 38,216
Transportation and accommodation expenses 32,487 4,527
Excise duties 85,359 47,124
Staff training costs 21,365 10,946
Security services costs 27,178 25,173
Others 41,066 81,406
Total cost of sales, marketing, distribution and administrative
expenses 3,347,347 3,381,002
These expenses are further analysed as follows: 2015 2014
N’000 N’000
Cost of sales 2,502,147 2,662,451
Selling and distribution expenses 255,913 185,658
Administrative expenses 589,287 532,893
3,347,347 3,381,002
9 Taxation
(a)
2015 2014
Current tax: N’000 N’000
Income tax - -
Tertiary education tax 16,779 -
16,779 -
Deferred tax expenses
Origination and reversal of temporary differences 116,260 317,242
133,039 317,242
Tax charge for the year has been computed after adjusting for certain items of expenditure and
income, which are not deductible or chargeable for tax purposes, and comprises:
24
Champion Breweries Plc
Annual Report --31 December 2015
(b) Reconciliation of effective tax rate
2015 2014
% N’000 % N’000
Profit/(loss) before tax 210,179 (1,071,765)
30.0 63,054 30 (321,530)
8.0 16,779 - -
(6.0) (12,663) 3 (27,301)
1.6 3,420 - 552
29.7 62,450 - -
- - (3) 31,037
Tax using domestic tax rate
Effect of tertiary education tax
Tax effect of tax incentives
Tax effect of non-deductable expenses Change in recognised deductible temporary differences Others
Total income tax charge 63 133,039 30 (317,242)
- (c) Movement in current tax liability
Balance beginning of the year - -
Charge for the year 16,779 -
- -
Balance end of the year 16,779 -
(d) Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14
N’000 N’000 N’000 N’000 N’000 N’000
Property, plant and equipment 104,435 - - (30,097) 104,435 (30,097)
Employee benefits 40,926 25,894 - - 40,926 25,894
Trade and other receivables 43,835 43,835 - - 43,835 43,835
Unutilised tax losses 896,744 1,162,568 - - 896,744 1,162,568
Net 1,085,940 1,232,297 - (30,097) 1,085,940 1,202,200
Net
Payment during the year
Assets Liabilities
25
Champion Breweries Plc
Annual Report --31 December 2015
Amounts of temporary differences recognised in statement of profit or loss and other comprehensive income were as follows:
Property,
plant and
equipment
Employee
benefits
Trade and
other
receivables
Unutilised tax
lossesNet
N’000 N’000 N’000 N’000 N’000
31 December 2014
Recognised in profit and loss 200,583 (3,964) (4,729) 125,352 317,242
Recognised in other comprehensive income - 11,010 - - 11,010
31 December 2015
Recognised in profit and loss (134,532) (15,032) - 265,824 116,260
Recognised in other comprehensive income - (7,494) - - (7,494)
10 Basic and diluted earnings/(loss) per share
2015 2014
Profit/(loss) for the year NGN 77,139,700 (NGN 754,523,000)
Weighted average number of ordinary shares
Issued ordinary shares at January 1 3,116,565,667 900,000,000
Effect of rights issue during the year - 2,216,565,667
Effect of private placement during the year 4,595,654,744 -
Weighted average number of ordinary shares at 31 December 7,712,220,410 3,116,565,667
Basic and diluted earnings/(loss) per share (kobo) 1 (24)
There were no potential dilutive ordinary shares during the year.
The calculation of basic and diluted earnings per share for the year ended 31 December 2015 was based on the profit for the year of N77.3 million (2014: loss of N754.5
million), attributable to ordinary shareholders and weighted average number of ordinary shares outstanding of 3,736,485,180 (2014: 3,116,565,667) calculated as follows:
26
Champion Breweries Plc
Annual Report --31 December 2015
11 Property, plant and equipment
Land &
Buildings
Plant and
Machinery
Furniture
and Fittings
Motor
vehicles
Returnable
Packaging
Materials
Capital Work
in Progress Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost
Balance at I January 2014 4,016,004 4,584,435 209,399 288,830 61,235 246,019 9,405,922
Additions - 326,043 8,156 - 21,278 122,566 478,043
Reclassification (372,876) 612,087 157 (239,368) -
Write-offs (14,695) (10,102) - - - (24,797)
Disposals - - - (9,125) - - (9,125)
Balance as at 31 December 2014 3,628,433 5,512,463 217,712 279,705 82,513 129,217 9,850,043
Balance at I January 2015 3,628,433 5,512,463 217,712 279,705 82,513 129,217 9,850,043
Additions 78,608 292,893 28,008 43,914 173,958 78,319 695,701
Reclassification -
Transfers 129,216 (129,216) -
Disposals (2,234) (2,234)
Balance as at 31 December 2015 3,707,041 5,934,572 245,720 321,386 256,471 78,321 10,543,510
Accumulated Depreciation
Balance at I January 2014 434,682 1,436,807 59,163 205,316 30,341 2,166,309
Depreciation charge 154,116 609,091 37,627 32,812 14,839 - 848,485
Disposals - - - (9,081) - - (9,081)
Balance as at 31 December 2014 588,798 2,045,898 96,790 229,047 45,180 - 3,005,713
Balance at I January 2015 588,798 2,045,898 96,790 229,047 45,180 3,005,713
Depreciation charge 145,562 356,898 65,151 31,082 23,735 - 622,428
Disposals - - - (2,234) - - (2,234)
Balance as at 31 December 2015 734,360 2,402,796 161,941 257,895 68,915 - 3,625,906
Carrying amounts
At 31 December 2014 3,039,635 3,466,565 120,922 50,658 37,334 129,217 6,844,330
At 31 December 2015 2,972,681 3,531,776 83,779 63,491 187,555 78,321 6,917,604
(a)
(b)
(c) No borrowing costs were capitalised during the year (2014:Nil)
The Company had no authorised or contractual capital commitments as at the reporting date (2014: Nil).
The Company holds land under a finance lease arrangement. The maximum tenor of the lease arrangements is 99 years in line with the Land Use Act. The lease
amounts were fully paid at the inception of the lease arrangements.
27
Champion Breweries Plc
Annual Report --31 December 2015
12 Intangible assets
2015 2014Cost N'000 N'000
Balance, beginning of the year 11,741 11,741
Additions - -
Balance, end of the year 11,741 11,741
Amortisation
Balance, beginning of the year 4,863 2,851
Amortisation charge 6,878 2,012
Disposal - -
Balance, end of the year 11,741 4,863
Carrying amount
At 31 December 2014 6,878 8,890
At 31 December 2015 - 6,878
13 Inventories
2015 2014
N '000 N '000
Raw materials 47,445 10,700
Finished products 3,406 296
Work-in-progress 40,684 36,671
Packaging materials 13,003 10,901
Engineering spares 233,644 227,353
Other consumables 11,951 68,365
350,133 354,286
14
2015 2014
N '000 N '000
Trade receivables 87,363 46,428
Other receivables 177,735 197,005
Amounts due from related parties (Note(23 (a)) 412,003 334,019
677,101 577,452
Intangible assets represents computer software. The movement on this account during the year was as
follows:
The Company’s exposure to credit risks and impairment losses related to trade and other receivables is
disclosed in Note 24.
The amortisation charge of intangible assets is included in administrative expenses.
The value of raw materials, non-returnable packaging materials, spare parts, changes in finished
products and work-in-progress recognised in cost of sales during the year amounted to N771 million
(2014: N739 million). During the year, impairment of inventory amounted to N51.4 million (2014
N58.3 million). This amount has been adjusted in the 'changes in inventories ' on the statement of cash
flows.
Trade and other receivables
28
Champion Breweries Plc
Annual Report --31 December 2015
15 Prepayments
Prepayments represent advance payment for the supply of spares and other consumables.
16 Cash and cash equivalent
2015 2014
N’000 N’000
Cash 345,594 536,297
Short term deposits 824,159 -
1,169,753 536,297
17 Deposit for shares
2015 2014
N’000 N’000
1,164,569 1,164,569
- -
- par value of issued ordinary shares (Note 18 (a)) (314,748) -
- excess of issue price over par value (Note 19) (849,821) -
- 1,164,569
18 Share capital
2015 2014
N’000 N’000
(a) Authorised share capital
4,500,000 4,500,000
Allotted, called-up and fully paid
The movement in share capital during the year was as follows:
Number of ordinary shares of 50k each 2015 2014
In thousands
At 1 January 7,200,000 900,000
Additional shares issued 629,496 6,300,000
At 31 December 7,829,496 7,200,000
2015 2014
Ordinary shares of 50k each N’000 N’000
Balance as at 1 January 3,600,000 450,000
Issue of ordinary shares through private placement (Note18(b)) 314,748 -
Effect of right issue of ordinary shares (Note18(c)) - 3,150,000
Balance as at 31 December 3,914,748 3,600,000
(b) Conversion of deposit for shares to ordinary share capital
Further information relating to conversion of deposit of shares to ordinary share capital are disclosed in
Notes 18 and 19 to the financial statement.
During the year, the Board of Directors approved the conversion of deposits made for shares by The
Raysun Nigeria Limited amounting to N1.1 billion and Akwa Ibom State Government amounting to
N52.9 million to share capital through private placement of ordinary shares. The Company obtained
regulatory approval in March 2015 for this transaction and a total of 629,496,464 units of ordinary
shares of 50 kobo each at N1.85 were issued to these shareholders.
(9,000,000,000 ordinary shares of 50k each (2014: 9,000,000,000
ordinary shares of 50k each)
The movement on these account was as follows:
Balance as at 1 January
Effect of ordinary share issuance during the year:
Balance as at 31 December
29
Champion Breweries Plc
Annual Report --31 December 2015
(c) Rights issue of ordinary shares.
19 Share premium
The movement in share premium reserve was as follows:
2015 2014
N’000 N’000
8,251,946 129,184
- 8,122,762
849,821 -
Share issue costs (7,988)
9,093,779 8,251,946
20 Other reserve
21 Employee benefits
(a) Long term employee benefit
2015 2014
N’000 N’000
- Defined benefit obligation (Note 21(a)(i)) 89,153 95,098
- Long service award (Note 21(a)(ii)) 44,372 47,923
133,525 143,021
(i) Movement in the present value of the defined benefit obligation
2015 2014
N’000 N’000
Liability as at 1 January 95,098 40,245
Included in profit or loss
Current service cost 12,065
Past service cost 15,810
Interest cost 5,034
32,909
Included in other comprehensive income
Remeasurment loss/(gain)
Actuarial (gain)/loss arising from changes in:
- Economic assumptions (32,227) 42,473
- Statistical data 833 - 313
- Salary increase (4,694) 7,189
- Financial assumptions 11,108 1,083
(24,979) 50,432
Other
Benefits paid by the plan (13,875) (7,814)
Liability as at 31 December 89,153 95,098
12,235
6,929
-
5,306
Present value of:
Effect of private placement of ordinary shares (Note17)
Effect of right issue of ordinary shares (Note18(c))
Balance as at 1 January
Balance as at 31 December
Other reserve represents difference between the carrying amounts and fair values of certain items of
property, plant and equipment as at transition date (1 January 2011). This was created as part of the
Company’s election to apply optional exemptions of deemed cost on transition to IFRS.
In 2014, the Company issued 6,300,000,000 units of ordinary shares of 50k each at N1.85 to its
existing shareholders through rights issue and this resulted in increase of ordinary share capital by
N3.2 billion. The gross and net proceeds from the rights issue of ordinary shares amounted to
N11,600,000,000 and N11,272,762,000 respectively. The excess of issue price over par value
amounting to N8.1 billion was recognised as share premium (Note 20).
The proceeds from the rights issue was used to repay amount of N11,586,596,000 billion due to The
Raysun Nigeria Limited (the parent company) in 2014.
30
Champion Breweries Plc
Annual Report --31 December 2015
(ii) Movement in the present value of long service awards
2015 2014
N’000 N’000
47,923 22,582
5,855 2,558
6,941 2,559
Remeasurment loss/(gain)
Actuarial (gain)/loss arising from:
- Change in economic assumptions (13,965) 23,532
- Financial assumptions (233) 4,694
- Salary increase (156) 857
- Demographic assumptions (1,229) 2,057
(2,787) 36,257
(764) (10,916)
44,372 47,923
(b)
2015 2014 2015 2014 2015 2014
N’000 N’000 N’000 N’000 N’000 N’000
Defined benefit obligation 26,327 9,788 6,582 2,447 32,909 12,235
Long service awards (2,230) 29,006 (557) 7,251 (2,787) 36,257
Pension 12,442 12,776 3,111 3,194 15,553 15,970
36,540 51,570 9,135 12,892 45,675 64,462
(c) Actuarial (gain)/losses recognised in other comprehensive income are analysed as follows:
Before tax Tax After tax
Before
tax Tax After tax
N’000 N’000 N’000 N’000 N’000 N’000
Defined benefit obligation (24,979) 7,494 (17,485) 50,432 (11,010) 39,422
Actuarial loss/(gain) (24,979) 7,494 (17,485) 50,432 (11,010) 39,422
Actuarial assumptions
Principal financial actuarial assumptions at the reporting date (expressed as weighted averages):
2015 2014
Average discount rate (p.a.) 11% 13%
Average pay increase (p.a.) 13% 20%
Average rate of inflation (p.a.) 9% 8%
These assumptions depicts managements estimate of the likely future experience of the Company.
Due to unavailability of published reliable demographic data in Nigeria, the demographic assumptions
regarding future mortality are based on the rates on A1949/52 tables published jointly by the Institute
and Faculty of Actuaries in the UK.
2015
Administrative Cost of sales
The expense is recognised in the following line items in the statement of comprehensive income:
Total
2014
Payments
Other
Liability as at 31 December
Liability as at 1 January
Current service cost
Included in profit or loss
Interest cost
31
Champion Breweries Plc
Annual Report --31 December 2015
(d) Sensitivity analysis
Defined benefit
obligation
Long service
award
N’000 N’000
Discount rate +1% 8,054 2,854
-1% (9,275) (3,194)
Salary increase +1% (5,737) (2,269)
-1% 5,191 2,051
Mortality rate +1% 40 174
-1% (40) (156)
(e) Short term employee benefits
2015 2014
N’000 N’000
Obligation as at 1 January - 2,033
Charge for the year 15,553 15,970
Payments (15,553) (18,003)
Liability as at 31 December included in trade and other payables - -
Sensitivity to each actuarial assumption was determined while other assumptions were held
constant. There has not been a change from the sensitivity approach adopted in prior years.
Although the analysis does not take account of the full distribution of cash flows expected under
the plan, it does provide an approximation of the sensitivity of the assumptions shown.
Balance on the pension payable account represents the amount due to the Pension Fund
Administrators which is yet to be remitted at the year end. The movement on this account during
the year was as follows:
It is assumed that all employees covered by the defined end of service benefit scheme would
retire as follows:
-Junior staff 55 years
-Senior staff 60 years
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions
holding other assumptions constant would have affected the defined benefit obligation by the
amounts shown below.
32
Champion Breweries Plc
Annual Report --31 December 2015
22 Trade and other payables
2015 2014
N’000 N’000
Trade payables 303,499 139,051
Other payables and accrued expense 1,669,008 1,606,682
Amounts due to related parties (Note 23(a)) 1,084,712 668,627
3,057,219 2,414,360
23 Related parties
(a) Parent company and other related entities
2015 2014 2015 2014
N’000 N’000 N’000 N’000
Amount due from related parties
Contract Packaging:
-Nigerian Breweries 2,273,011 2,516,282 411,076 333,092
Other transactions:
-Superbrew - - 927 927
2,273,011 2,516,282 412,003 334,019
2015 2014 2015 2014
N’000 N’000 N’000 N’000
Amount due to related parties
Royalties and Technical Fees:*
-Montgomery Ventures Incorporated - (42,182) (273,018) (273,018)
Management fee:
-The Raysun Nigeria Limited (69,649) (63,312) (69,649) (63,312)
Purchases:
-Nigerian Breweries Plc (625,003) - (398,045) -
-The Raysun Nigeria Limited - 10,033,663 (344,000) (332,297)
(694,652) 9,928,169 (1,084,712) (668,627)
Deposit for shares:
-The Raysun Nigeria Limited - - - (1,111,594)
-Akwa Ibom State Government - - - (52,975)
- - - (1,164,569)
*Management fee relates to agreement between the Company and Montgomery Ventures Incorporated
which was approved by the National Office for Technology Acquisition and Promotion.
The Company’s exposure to liquidity risk related to trade and other payables is disclosed in Note 21.
Transaction value Balance due to
Balance due fromTransaction value
The Company's parent company is The Raysun Nigeria Limited which owns approximately 60.9% of the
Company's equity as at reporting date. Heineken N.V. is the ultimate parent company of Champion
Breweries Plc.
The Company had transactions with its parent and other entities who are related to the Company by
virtue of being members of the Heineken Group. The transaction value and amounts due from /(to)
related parties by the nature of the transaction are shown below:
33
Champion Breweries Plc
Annual Report --31 December 2015
(b) Key management personnel
2015 2014
N’000 N’000
Short-term employee benefits 45,086 28,661
Post-employment benefits 17,046 10,287
62,132 38,948
24 Financial instruments- financial risk management and fair values
Financial risk management
The Company has exposure to the following risks from its use of financial instruments:
- credit risk
- liquidity risk
- market risk
Risk management framework
(a) Credit risk
The Company's Risk Management Committee oversees how management monitors compliance with
the Company's risk management policies and procedures, and reviews the adequacy of the risk
management framework in relation to the risks faced by the Company.
Internal audit undertakes both regular and ad hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Company’s
receivables from customers and related parties.
The Company's financial assets comprise trade and other receivables and cash and cash equivalent as
indicated on the statement of financial position. The carrying amount of these financial assets
represents maximum credit exposure of the Company.
In addition to their salaries, the Company also provides non-cash benefits to executive officers, and
contributes to a post-employment defined benefit plan on their behalf. In accordance with the terms of
the plan, executive officers retire at age 55 and are entitled to receive post employment benefits.
Key management personnel compensation comprised:
This note presents information about the Company’s exposure to each of the above risks, the
Company’s objectives, policies and processes for measuring and managing risk, and the Company’s
management of capital.
The Risk Management Committee is responsible for developing and monitoring the Company's risk
management policies which are established to identify and analyse the risks faced by the Company, to
set appropriate risk limit and controls, and monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Company's activities.
34
Champion Breweries Plc
Annual Report --31 December 2015
Trade and other receivables
2015 2014N’000 N’000
Gross trade receivables 205,912 192,544
Impairment (118,549) (146,116)
87,363 46,428
412,003 334,019
Other receivable 177,735 197,005
677,101 577,452
Impairment losses
Gross Impairment Gross Impairment
2015 2015 2014 2014
N’000 N’000 N’000 N’000
0-30 days 87,363 - 46,428 -
30-90 days - - - -
91-180 days - - 80 (80)
More than 180 days 118,549 (118,549) 146,036 (146,036)
205,912 (118,549) 192,544 (146,116)
2015 2014
N’000 N’000
Balance at 1 January (146,116) (148,998)
Impairment loss reversal 27,567 2,882
Balance at 31 December (118,549) (146,116)
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The Company considers that it is not exposed to significant concentration risk in relation to trade receivables
because over 90% of the Company's customers are concentrated in the South-South geographical region of
Nigeria. However, credit risk can arise in the event of non-performance of a counterparty. Credit limits are
established for each customer and reviewed on quarterly basis. Customers that fail to meet the Company’s
benchmark creditworthiness may transact with the Company only on a cash-and-carry basis.
The Company further considers that the concentration of credit risk with respect to trade receivables is limited
on the bases that the Company grants a credit period of 2 to 3 weeks to selected customers, which mitigates
the risk of default by customers.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect
of trade and other receivables, which is a specific loss component that relates to individually significant
exposures.
Amounts due from related parties
As at the reporting date, the aging of trade receivables based on the most recent transaction date was:
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
35
Champion Breweries Plc
Annual Report --31 December 2015
(b) Liquidity risk
Note Carrying Contractual 6 months 6 to 12
amount cash flows or less months
N’000 N’000 N’000 N’000
31-Dec-15
Trade and other payables 22 3,057,219 3,057,219 3,057,219 -
3,057,219 3,057,219 3,057,219 -
31-Dec-14
Trade and other payables 22 2,414,360 2,414,360 2,414,360 -
Deposit for shares 17 1,164,569 1,164,569 - 1,164,569
3,578,929 3,578,929 2,414,360 1,164,569
(c) Market risk
The impairment loss as at reporting date relates to trade receivables which in the Company's assessment
will not be recoverable from the customers mainly due to their economic circumstances. With respect to
other receivables and amounts due from related parties, the Company believes that these unimpaired
receivables are collectible based on historical payment behaviour and analyses of the underlying counter
party’s credit ratings.
Based on historical default rates, the Company believes that, apart from the above, no additional
impairment allowance is required in respect of trade and other receivables. The impairment loss is
included in administrative expenses.
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The Company’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Company’s reputation.
The Company has an appropriate liquidity risk management framework for addressing its short, medium
and long term liquidity requirements and makes monthly cash flow projections which assists in
monitoring cash flow requirements and optimising cash return on investments.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or
at significantly different amounts.
The following are the contractual maturities of financial liabilities:
Non-derivative financial liabilities
Non-derivative financial liabilities
Market risk is the risk that changes in market prices such as foreign exchange rate will effect the
Company's income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters while
optimising the return. The Company manages market risk by keeping cost low through various cost
optimisation programmes and also by regular monitoring of market developments.
Capital management
The Company considers equity contribution from shareholders as its capital.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
going concern in order to provide returns for the shareholders and to maintain an optimal capital structure.
36
Champion Breweries Plc
Annual Report --31 December 2015
2015 2014
N’000 N’000
Profit/(loss) for the year 77,140 (754,523)
Total equity 7,121,637 5,870,431
Return on capital 1% -13%
2015 2014
N’000 N’000
Total liabilities 3,207,523 3,721,950
Less: cash and cash equivalents (1,169,753) (536,297)
Net debt 2,037,770 3,185,653
Total equity 7,121,637 5,870,431
Adjusted net debt to equity ratio 1:3.5 1:1.84
Accounting classification and fair values
25 Contingencies
(a) Pending litigation and claims
(b) Financial commitments
26 Segment reporting
27 Subsequent events
The Directors are of the opinion that all known liabilities and commitments, which are relevant in
assessing the financial position of the Company, have been taken into consideration in the preparation of
these financial statements.
The Company is a defendant in various law-suits that have arisen in the normal course of business. The
contingent liabilities in respect of pending litigation at year end amounted to N345.3 million. (2014:N472
million ). In the opinion of the directors and based on independent legal advice, the Company’s liability is
not likely to be significant, thus no provision has been made in these financial statements.
There were no significant subsequent events which could have had a material effect on financial position
of the Company as at 31 December 2015 and its financial performance for the year then ended that have
not been adequately provided for or disclosed in these financial statements.
In order to maintain an appropriate capital structure, during the year, the Company increased its ordinary
share capital to N3,915 million (2014: N3,600 million) by converting deposit for shares into ordinary
share capital through private placement. In addition, the Company ensures appropriate capital
management by monitoring returns on capital and net debt to equity ratio.
The Company's return on capital as at the end of the reporting period was as follows:
Furthermore, the Company's adjusted net debt to equity ratio at the end of the reporting period was as
follows:
The fair values of financial assets and liabilities are not significantly different from the carrying amounts
shown in the statement of financial position.
Nigeria is the Company's primary geographical segment as the Company's revenue is entirely earned from
sales of similar product in Nigeria. Additionally, none of the Company's customers accounts for more than
ten percent of the Company's total revenue. Accordingly, no further business or geographical segment
information is reported.
37
Champion Breweries Plc
Annual Report --31 December 2015
Value Added StatementFor the year ended 31 December
2015 2014
N'000 % N'000 %
Revenue 3,501,845 3,302,383
Bought-in-materials and services (1,778,539) (1,607,926)
1,723,306 1,694,457
Other income 52,271 104,131
Value generated by operating activities 1,775,577 100 1,798,588 100
Distribution of Value Added
To Government
85,359 5 47,124 3
38,264 2 9,982 1
133,039 7 (317,242) (18)
To Employees:
Personal expenses 794,984 45 672,253 37
To Providers of Finance:
- Finance cost - - 1,287,645 72
Retained in the Business:
To maintain and replace
- property, plant and equipment 622,428 35 848,485 47
- intangible asset 6,878 1 4,863 0
To augment reserves 94,625 5 (793,945) (44)
Value added 1,775,577 100 1,798,588 100
- Excise duties
- Minimum tax
- Taxation
39
Champion Breweries Plc
Annual Report --31 December 2015
Financial Summary
Statement of comprehensive income 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
2015 2014 2013 2012 2011
N'000 N'000 N'000 N'000 N'000
Revenue 3,501,845 3,302,383 2,233,259 1,785,345 1,791,109
Profit/(loss) from operating activities 206,769 25,511 (543,902) (1,222,013) (1,251,538)
Profit/(loss) before taxation 248,443 (1,061,783) (1,730,432) (1,928,865) (1,770,001)
Profit/(loss) for the year 77,140 (754,523) (1,178,025) (1,336,690) (1,193,780)
Comprehensive loss for the year 94,625 (793,945) (1,178,386) (1,337,505) (1,193,780)
Ratios
1 (24) (127) (149) (133)
Net liabilities per share (kobo) (91) (188) (508) (381) (232)
Statement of financial position 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
2015 2014 2013 2012 2011
N'000 N'000 N'000 N'000 N'000
Property, plant and equipment 6,917,604 6,844,330 7,239,613 5,657,055 6,362,871
Intangible asset - 6,878 11,741 - -
Deferred tax assets 1,085,940 1,202,200 873,948 321,386 -
Net current liabilities (748,382) (2,039,956) (12,670,861) (9,345,446) (8,144,702)
Employee benefits (133,525) (143,021) (62,827) (62,995) (39,556)
Deferred tax liabilities - - - - (271,108)
Net liabilities 7,121,637 5,870,431 (4,608,386) (3,430,000) (2,092,495)
Funds Employed
Share capital 3,914,748 3,600,000 450,000 450,000 450,000
Share premium 9,093,779 8,251,946 129,184 129,184 129,184
Other reserves 3,701,612 3,701,612 3,701,612 3,701,612 3,701,612
Accumulated loss (9,588,502) (9,683,127) (8,889,182) (7,710,796) (6,373,291)
7,121,637 5,870,431 (4,608,386) (3,430,000) (2,092,495)
Basic and diluted profit/(loss) per share
40