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CAP plcRC: 4551
Chemical and Allied Products Plc
ANNUAL REPORT & FINANCIAL STATEMENTS
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 2
Chemical and Allied Products plc
CAP plcRC: 4551
2.13 Employee Benefits
2.14 Revenue Recognition
2.15 Leases
2.16 Fair Value Measurement
2.17 Dividend Distribution
2.18 Risk Management
3 Financial Risk Management
3.1 Financial Risk Factors
3.2 Capital Risk Management
4 Significant Judgments and Estimates
4.1 Significant Estimates
4.2 Significant Judgements
5 Segment Analysis
6 Other Income
7 Expenses by Nature
8 Employee Benefits
9 Finance Income
10 Finance Cost
11 Taxation
12 Dividend
13 Earnings Per Share
14 Property, Plant and Equipment
15 Intangible Assets
16 Inventories
17 Trade and Other Receivables
18 Prepayments
19 Cash and Cash Equivalents
20 Interest-bearing Loans and Borrowings
21 Trade and Other Payables
22 Share Capital
23 Deferred Tax
24 Refund Asset
25 Refund Liability
26 Related Party Transactions
27 Capital Commitments and Contingent Liabilities
28 Fair Values
29 Technical Support Agreements
29 Events after Reporting Date
Value Added Statement
Company Five-year Financial Summary
Salient Performance Graphs
Shareholders' Information
Proxy Form
Shareholders' E-service Application Form
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Contents
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 1
Chemical and Allied Products plc
CAP plcRC: 4551
Our Vision, Mission and Shared Values
Financial Highlights
Notice of Meeting
Corporate Profile
Product Range
Corporate Responsibility
Chairman's Statement
Directors and Professional Advisers
Profile of Board of Directors
Report of the Directors
Statement of Directors' Responsibilities
Report of Audit Committee
Report of Independent Auditors
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
1 General Information
2 Significant Accounting Policies
2.1 Basis of Preparation
2.1.1 Going Concern
2.1.2 New and Amended standards with Interpretation
2.1.3 Changes in Accounting Policies and Disclosures
2.2 Segment Reporting
2.3 Foreign Currency Translations
2.4 Property, Plant and Equipment
2.5 Impairment of Non-current Assets
2.6 Intangible Assets
2.7 Impairment of Non-financial Assets
2.8 Financial Assets
2.8.1 Initial Recognition and Measurement
2.8.2 Subsequent Measurement
2.8.3 Offsetting Financial Instruments
2.8.4 Trade Receivables
2.8.5 Financial Liabilities
2.8.6 Loans and Borrowings
2.8.7 Financial Instruments-initial recognition and subsequent
measurement under IFRS 9
2.8.8 Government Grant
2.9 Inventories
2.10 Cash and Cash Equivalents
2.11 Share Capital
2.12 Current and Deferred Income Tax
Contents3
4
5
8
10
11
18
21
22
25
38
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2018 ANNUAL REPORT & FINANCIAL STATEMENTS 4
Chemical and Allied Products plc
CAP plcRC: 4551
%
change
9
16
44
(20)
19
17
35
26
(26)
(17)
54
36
25
3
0
2
2017
N000
7,113,950
1,975,676
226,703
77,592
2,181,711
(682,981)
1,498,730
5,013,990
180,319
81,188
2,820,459
214
320
3,400
700,000
23,800,000
Revenue
Operating profit
Finance income
Other operating income
Profit before taxation
Taxation
Profit for the year
Total equity and liabilities
Additions to Property, Plant & Equipment (PPE)
Depreciation on PPE
Cash and cash equivalents
Earnings per share (kobo) – Basic and diluted
Net asset per share (kobo) – Basic
NSE quotation as at December 31 (kobo)
Number of shares in issue ('000 units)
Market capitalization as at December 31
2018
N000
7,764,534
2,285,201
327,249
61,837
2,597,832
(568,489)
2,029,343
6,311,246
133,982
94,736
4,339,294
290
401
3,485
700,000
24,395,000
Financial Highlights
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 3
Chemical and Allied Products plc
CAP plcRC: 4551Vision, Mission and Shared Values
Our vision“To be No. 1 in the
decorative coatings market, providing exceptional value
to our customers.”
Our mission“To grow our top-line
by a minimum of 20% annually at an EBIT profitability
of 34%.”
Shared valuesCustomer focus
Respect for the individualIntegrity
Team spiritInnovation
Openness and communication
Desired outcome“Adding value to lives
and businesses.”
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 6
Chemical and Allied Products plc
CAP plcRC: 4551
NOTES
DividendIn view of the results, the directors have recommended to members, the payment of a dividend of 290kobo per share. A resolution to this effect will be put to the meeting for the approval of the Members. Dividend WarrantsIf the payment of dividend is approved, the warrants will be posted on Friday June 21, 2019 to Shareholders whose names appear on the Register of Members at the close of business on Friday May 24, 2019.
Closure of Register and Transfer BooksThe Register of members and the Transfer Books of the company will be closed from Monday 27 May to Friday 31 May 2019 (both dates inclusive) for the purposes of payment of the dividend.
Rights of Shareholders to ask questionsShareholders have a right to ask questions not only at the meeting but also in writing prior to the meeting and such questions must be submitted to the Company Secretary on or before June 14, 2019.
Audit CommitteeThe Audit Committee consists of three (3) Shareholders and three (3) Directors. Any member may nominate a Shareholder as a member of the Committee by giving notice in writing of such nomination to the Company Secretary at least twenty-one days before the Annual General Meeting. Nominators should please submit a profile of their nominees to the Company Secretary for publication on the Company's website for the information of all shareholders.
Unclaimed Share Certificates and Dividend WarrantsShareholders are hereby informed that a sizeable quantity of share certificates and dividend warrants have been returned to the Registrars as unclaimed. Some dividend warrants have neither been presented to the Bank for payment nor to the Registrar for revalidation. Affected shareholders are by this notice advised to contact the Registrars, Africa Prudential Plc at their office at 220B, Ikorodu Road, Palmgrove, Lagos or call them on 234-7080606400 during normal business hours to revalidate their dividend warrants and update their contact information.
Annual Report & Unclaimed Dividend ListShareholders who wish to receive electronic copies of the Annual Report & Accounts and Unclaimed Dividends list should please send their names and e-mail addresses to the Registrars at [email protected].
Notice of Annual General Meeting cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 5
Chemical and Allied Products plc
CAP plcRC: 4551Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the 54th Annual General Meeting of Chemical and Allied Products Plc, will be held at the Arthur Mbanefo Hall, Golden Tulip Festac, Amuwo Odofin, Lagos State on Thursday June 20, 2019 at 10.00am in order to transact the following businesses:
ORDINARY BUSINESS1. Lay before the Members the Report of the Directors, the Financial Statements of the Company for the year ended 31st December 2018 together with the Reports of the Auditors and the Audit Committee thereon.
2. Declare a Dividend
3. Elect/Re-elect Directors
4. Authorize the Directors to fix the Remuneration of the Auditors
5. Elect Members of the Audit Committee
SPECIAL BUSINESS6. Fix the Remuneration of Directors
7. Renew the General Mandate authoring the Company to enter into recurrent transactions with related parties or companies.
PROXYA member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend instead of him/her and such a proxy need not be a member of the company. A proxy form is enclosed and if it is to be valid for the purposes of this meeting, it must be completed and deposited at the office of the Registrar not less than 48 hours before the time of holding the meeting.
Dated this 20th Day of March 2019By Order of the Board
Rose Joshua Hamis (Mrs.) Company SecretaryFRC/2013/ICSAN/00000002356
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 7
Chemical and Allied Products plc
CAP plcRC: 4551
E-dividend/BonusPursuant to the directive of the Securities and Exchange Commission, notice is hereby given to all shareholders to open bank accounts, stock broking accounts and CSCS accounts for the purpose of e-dividend. E-service application form is attached to this Annual Report for completion by all shareholders who are yet to complete the form, and to furnish the particulars of these accounts to the Registrars, Africa Prudential Plc at their office at 220B, Ikorodu Road, Palmgrove, Lagos or call them on 234-7080606400 during normal business hours, or send email messages to [email protected].
Notice of Annual General Meeting cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 8
Chemical and Allied Products plc
CAP plcRC: 4551
Chemical and Allied Products Plc (CAP), a subsidiary of UAC of Nigeria PLC, is the
technological licensee of AkzoNobel, the world's largest paint producer. CAP PLC evolved
from the world-renowned British multinational Imperial Chemical Industries Plc (ICI),
which formalized its Nigerian operations in 1957 under ICI Exports Limited. In 1965, ICI
Exports Limited changed its name to ICI Nigeria Limited and in 1968 it was subsumed by ICI
Paints Limited. ICI was acquired in 2008 by AkzoNobel.
Following the promulgation of the first and second Indigenization Decrees in 1972 and
1977, ICI Nigeria Limited at first sold 40 percent but later 60 percent of its share capital to
the Nigerian public, and went further to change its name by a special resolution of the
shareholders to Chemical and Allied Products Limited (CAPL) in the spirit of indigenization.
In 1991, the 'Limited' appellation was dropped for 'PLC' in compliance with the provision of
the Companies and Allied Matters Act of 1990.
In 1992, ICI Nigeria Limited finally disposed-off its minority 40% shareholding in CAP PLC
when it sold 35.7% of its equity to UAC of Nigeria PLC and the rest to the Nigerian public on
the floor of the Nigeria Stock Exchange. Currently, UAC of Nigeria PLC holds about 51.49%
of the Company's equity.
CAP PLC operates in the coatings business and provides a wide range of quality products
and services, and its brands have become household names. In November 2013, the
Company was awarded the ISO 14001:2004 Certification on Environmental Management
System (EMS). Dulux, the flagship brand, is positioned in the premium segment. Caplux is
offered in the standard segment as a complimentary brand to protect overall volume
share.
The Flagship Brand - DULUX
Dulux is the leading authority in decorative paints and stands at the forefront on
innovation and quality. The brand is a premium quality paint that provides an exceptional
combination of durability and beauty. It allows consumers to fully express themselves in
colours and creativity.
Distribution Channel
Dulux is strategically distributed through Dulux Colour Centres (DCCs). The DCC is an
innovative strategy introduced to bridge the gap between Dulux and its consumers. CAP
PLC pioneered the colour centre concept in Nigeria in 2005, a move that began a revolution
in the Nigerian paint industry.
Corporate Profile
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 9
Chemical and Allied Products plc
CAP plcRC: 4551
DULUX COLOUR CENTRESŸ17A, Ajao Road, off Adeniyi Jones Avenue Ikeja.Ÿ17A, Aboyade Cole Street, Victoria Island.Ÿ9A, Osolo-way, Aswani Market Roundabout Ajao Estate. ŸKm 18/19 Lekki-Epe Expressway(By Chevron Roundabout).ŸSuite 5-6 Blue Crest Mall, Abijo by Fara Park Estate, Ajah.ŸPlot 2016 Festac Link Road, Beside Mobil Filling Station Festac. Ÿ133, Ogunlana Drive, Opposite UBA Bank, Beside Access Bank, Surulere.Ÿ22A, Lanre Awolokun Street, Gbagada Phase 2, Gbagada.Ÿ12 Admiralty Way, Lekki Phase 1, Lekki.
S/N LOCATION1 Lagos
ŸPlot 1259, Aminu Kano Crescnt, Wuse 11.ŸPlot 171, Gouba Plaza, A.E Ekukinam St, Utako District, Beside Chisco Transport. Ÿ7, Dunukofia Street, by FCDA, Area 11 GarkiŸPlot 104 3rd Avenue (Pa Imodu) Gwarinpa II Estate.Ÿ33, Gana Street, Off Shehu Shagari Road, Adjacent Transcorp Hilton, Maitama.
2 Abuja
3 Port Harcourt
4 Kano5 Asaba
6 Warri7 Enugu8 Ibadan9 Gombe10 Edo
Ÿ190/172, Aba Road, Opposite Waterlines Bus-Stop.Ÿ36, Trans Amadi Industrial Layout Rumubiakani.
Ÿ9B, Niger Street, Opposite Royal Tropicana Hotel.ŸIdolor House, 417B, Nnebisi Road, Beside Uzoigwe Primary School, Opp Old Ecobank.Ÿ40,Effurun-Warri Road.Ÿ19, Ogui Road, Canute House.Ÿ2A, Aare Avenue Off Awolowo Road, New Bodija.ŸAlhajiyel Plaza, Opposite NIPOST Office, Bauchi Road.Ÿ 71, Akpakpava Road, James Watt, Benin City.
The company also has Dulux Colour Shops (DCSs) across the country.
Corporate Profile cont’d
Dulux Colour Centres Addresses
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 10
Chemical and Allied Products plc
CAP plcRC: 4551
DULUX PAINT
Dulux Trade: Considered as the best paint by professional decorators due to its performance.
It saves time and money with better opacity, better durability, higher spreading rates, pack
sizes that are more convenient and economical to use. It is available as millbases which can
be tinted with the aid of in-store machines to achieve desired colours. Dulux Trade offers a
wide variety of finishes including; Vinyl Silk, Vinyl Matt, Vinyl Soft Sheen, Eggshell, High
Gloss, Weathershield Masonry and special effect paints.
Dulux Emulsion: an interior and exterior finish formulated on high quality emulsion binder; gives an even matt coating.
Dulux Silk Emulsion: an acrylic base emulsion paint with mid sheen finish which is suitable for all interior and exterior surfaces.
Dulux Weathershield: the ultimate exterior paint range for long lasting durability and protection in various textured finishes including; Dulux Weathershield Textured, Dulux Weathershield Smooth, Dulux Weathershield Tex Matt and Dulux Weathershield Ultra.
Dulux Gloss: is a quality quick drying and hardwearing oil modified alkyd paint.
Dulux Eggshell: is a quality quick drying and hardwearing solvent based- modified alkyd satin paint.
Dulux Primer: this is a first coat of paint which can be used to cover a surface in order to get it ready for use or coating. The primers include: Dulux Alkali Resisting Primer and Dulux Undercoat.
Hammerite Metal Paint: Hammerite metal paint requires minimal surface preparation before application and offers long lasting protection, plus a great looking finish for both interior and exterior metal finishes. Unlike other conventional metal paints, Hammerite can be applied directly onto metals without using a primer and undercoat first.
CAPLUX PAINT Caplux paint is a standard product; good quality at an affordable price. It is available in emulsion, gloss and textured variants. It is formulated to give lasting brilliance on application.
Product Range
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 12
Chemical and Allied Products plc
CAP plcRC: 4551
Whistle Blowing: The whistle blowing procedure in place ensures that e-mails are anonymously received, discretely investigated and a report sent to the Audit Committee.
Marketplace Activities: Our service mission is to delight our customers with exceptional quality products and services. We aspire to provide peace of mind for our customers. Some of the marketplace activities are:-
Product Information Integrity: Precise and concise information about our products are provided to customers through clear and proper labelling and products information bulletin.
Value/culture alignment of dealers: Dealers and their employees are educated on the values of the company and are supported to imbibe them.
Customer involvement in improvement processes: Product knowledge and suggestions for improvement are discussed regularly with our customers at different customer/consumer engagement fora. Customer satisfaction surveys are also conducted as part of the feedback system.
Capacity building of dealers and users: Several training and development initiatives are conducted annually for our dealers, partners and other users of our products.
HSE compliance of dealers: Dealers' outlets are regularly assessed for compliance with HSE standards and practices. Corrective actions are taken as appropriate to ensure conformity.
Careline Unit: The Customer Careline unit collates and monitors feedback from our customers and other stakeholders. This is fed into our process for customer satisfaction improvement initiatives.
Workforce Activities We aspire to be an employer of choice. We recognize that our success is dependent on the calibre and motivation of our people.
Recruitment and Retention: Our policy involves the right placement of people in the right roles and retention of talented people. Annual employee surveys are conducted to provide information on what employees' value and where they want us to improve.
Training and Development: The annual training plan achievement is measured to monitor performance and progress. Effectiveness of training programs is also monitored through annual performance appraisal of staff and delegation of responsibilities.
Freedom of Association and Collective Bargaining: Our employees belong to a vibrant local union and an industry wide trade union.
Corporate Responsibility cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 11
Chemical and Allied Products plc
CAP plcRC: 4551
Commitment to Sustainability
CAP Plc is fully committed to sustainability and strives to formulate paints that are eco-friendly without compromising on quality and standards. CAP works closely with its technical partner, AkzoNobel, in furtherance of this objective.
Corporate Social Responsibility
CAP Plc participates in the United Nations Global Compact Initiative and pursues a vibrant corporate social responsibility agenda.
CAP Plc launched its Corporate Social Responsibility (CSR) policy in 2006 with the aim of looking at the business through a new lens. We are mindful that our little action or inaction affects our society, the economy and the environment. Therefore, CAP Plc has been steadfast and committed to the culture of truly Caring About People.
The focus, has been on the educational sector through interventionist initiatives that seek to uplift standards in the sector and provide a more conducive environment for a sound academic attainment.
CAP and Corporate Social Responsibility 2018
The principles of the UN Global Compact guide the way we work and the way we implement policies, processes and programs to clearly align our thrust for business growth with our obligations to the society.
Our CSR policy recognizes the company's role in the following broad areas: Leadership with vision and values, market place activities, workforce activities, supply chain activities, community activities, stakeholder engagement and environmental concerns. The journey has been rewarding and we are encouraged to keep doing good.
Leadership, Vision and Values
We regard ethical leadership and practice as critical to responsible business and are committed to conducting our business according to ethical, professional and legal standards.
Shared Values: The CAP community strives to live its shared values of integrity, respect for the individual, customer focus, team spirit, innovation and openness and communication.
UACN Code of Business Conduct: CAP is a signatory to the UACN code of business conduct which outlines expected pattern of conduct for all employees including the rejection of any form of inducement (giving or receiving).
Corporate Responsibility
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 14
Chemical and Allied Products plc
CAP plcRC: 4551
1. Donated paint accessories to the training event 0rganized by Grandman Concept
Service Limited.
2. Donated paints to Little Sisters of the Poor (Home for the Elderly) Enugu.
3. Repainted Manufacturers Association of Nigeria (MAN) Secretariat.
4. Repainted St. Paul's Anglican Primary School, Isolo (2018 Major CSR – Let's Colour
Campaign).
5. Supported:
a) The Pacelli School for the Blind Christmas Celebration
b) The YouthCan Project of the SOS Children Villages Nigeria
6. Sponsored:
a) The Annual School Inter-House Sports Competition of Ogba Primary School
b) The refurbishing and repairs of the patrol vehicle for the Nigerian Police
Divisional Headquarters MAN Centre Division
Community ActivitiesCAP Plc values community leadership and responsibility. We are committed to playing a responsible and responsive role in the community. In 2018, we undertook the following projects:
Corporate Responsibility cont’d
CAP - A Participant in the UN Global Compact InitiativeIn August 2006, the company was accepted by the United Nations' Secretary General as a participant in the Global Compact Initiative, raising the bar in human rights, labour standards, environment and anti-corruption. We have joined the local network and are committed to propagating the values of the Global Compact Initiative.
Global Compact Principle
Businesses should support and respect the protection of internationally proclaimed human rights
Businesses to ensure that they are not complicit in human rights abuses.
1
2
Action Taken/Impact Achieved
The staff handbook provides guidelines on Staff welfare, disciplinary and grievance procedures. Employees are made aware of their rights at the workplace and are assured of fair treatment always.
People are assessed based on defined criteria that do not discriminate on the basis of religion, tribe or gender.
CAP Plc is represented at employers' associations with a view to assisting the process of human rights observance.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 13
Chemical and Allied Products plc
CAP plcRC: 4551
Self-development: The tuition costs of pre-approved and relevant programs of study for our employees are fully paid for by the company.
The Crèche: A friendly crèche is operated at the company's head office at Ikeja to promote baby-mother bonding.
Recognition: We recognise the achievement of employees who display exemplary traits of integrity, dedication to duty, customer focus and initiative in line with our shared values.
Life after Work Training: We constantly remind employees of the inevitability of retirement and train them to face the challenges of that situation when it occurs.
Appointment and fair treatment of Suppliers and Contractors: Suppliers of goods and services are appointed using defined criteria that do not discriminate on the basis of religion, tribe or sex. We strive to treat them fairly and settle their invoices on due dates.
Fair treatment of Shareholders: All shareholders are treated equally.
Health, Safety and Environmental (HSE) Activities:We are committed to providing a working environment that is safe for all employees, contractors, customers and members of the public. The company is ISO 9001:2015 certified and also has the ISO 14001:2015 Environmental Management System (EMS) certification.
HSE Policy and Manual: This sets out the company policy on HSE and actions/guidelines for maintenance of a safe workplace. HSE assessments and fire drills are conducted regularly.
Environmental Assessment: We conduct periodic environmental assessment of our operations. The environmental assessment report is submitted to the regulatory agencies for verification.
Promoting Sustainable Environment: We maintain a vibrant relationship with the Nigeria Conservation Foundation. We also ensure that our operations are carried out with minimum impact on the environment.
Promoting Healthy Lifestyle: We conduct health seminars, provide the environment for recreation and share knowledge on the essence of living well. We have a gym and other recreational facilities to promote healthy living through regular exercise and relaxation.
Corporate Responsibility cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 16
Chemical and Allied Products plc
CAP plcRC: 4551
Global Compact Principle
Businesses should work against all forms of corruption, including extortion and bribery.
10
Action Taken/Impact Achieved
CAP Plc is a signatory to the UACN Code of Business Conduct, which outlines expected pattern of conduct for all employees including the rejection of any form of inducement, giving or receiving.
Corporate Responsibility cont’d
Registered Office/Head Office2, Adeniyi Jones AvenuePMB 21072, Ikeja, LagosTel: 08159493070
Careline telephone: 08159493070 e-mail: [email protected]: www.duluxnigeria.comwww.capplc.com
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 15
Chemical and Allied Products plc
CAP plcRC: 4551
Global Compact Principle
Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
The elimination of all forms of forced and compulsory labour;
The effective abolition of child labour;
The elimination of discrimination in respect of employment and occupation.
Businesses should support a precautionary approach to environmental challenges;
Undertake initiatives to promote greater environmental responsibility;
Businesses should encourage the development and diffusion of environmentally friendly technologies.
3
4
5
6
7
8
9
Action Taken/Impact Achieved
CAP Plc workers belong to a vibrant local union. CAP recognises the union's right to collective bargaining and implements industry's collective agreement on schedule.
Employees discuss, negotiate and agree their terms of employment and are free to accept/reject the terms without coercion. CAP employs 8 hour work day and annual leave with full benefits.
CAP Plc will not employ anyone under the age of 18 years and will not do business with any supplier that engages in child labour utilization.
CAP Plc is an equal rights employer, without discrimination on account of sex, tribe, religion or profession.
We have undertaken product substitutions in our operations based on environmental considerations.
We are committed to producing environmentally friendly products. For example, the company has successfully produced Lead-free water based paints making the company first to achieve this feat in the country. CAP is also at the advanced stage of producing a low VOC solvent based paint.
We work closely with agencies to monitor our environmental performance and sustain improvements. We conduct quarterly environmental audits. We ensure regular maintenance of our effluent system.
CAP Plc has a well-articulated Environmental Management Programme which made the company to be awarded the NIS ISO 14001:2004 (Environmental Management System) certification by SON.
In making decisions to buy or use products and services, we appraise their environmental friendliness.
Corporate Responsibility cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 17
Chemical and Allied Products plc
CAP plcRC: 4551CAP Cares
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 18
Chemical and Allied Products plc
CAP plcRC: 4551
I welcome you to the 54th Annual General Meeting of your company, Chemical and Allied Products Plc, holding today, 20th June 2019, at Golden Tulip Festac, Amuwo Odofin, Lagos. At this meeting, I will present to you the company's Audited Annual Report for the year ended December 31, 2018 which has been prepared under the International Financial Reporting Standards (IFRS).
Operating Environment
The Nigerian economy recorded improvements attributable to increasing business activities, rising oil prices in the global market, increase in oil output and inflow of foreign exchange and declining inflation.
Economic indicators have remained positive since the beginning of the year except for the equity market which experienced volatility, and the
manufacturing sector's inaccessibility to cheap funds.
The late signing of the budget slowed down activities as the annual Gross Domestic Product growth rate declined from 2.11% in the last quarter of 2017 to 1.94% in the first quarter of 2018. Purchasing Managers Index (PMI) has been growing, hovering between 56 and 57 index points since the beginning of the year.
Investors' optimism over the recovery of Nigeria's economy increased in the early part of 2018 after the nation pulled out of recession.
Economic activities remained relatively weak in the final quarter of 2018, following a modest showing in Q3 which was enhanced by higher oil production. The PMI slowed down in December and brought the Q4 average below that of Q3, signaling waning momentum of business activities towards the end of the year. On the demand side, multi-year high unemployment rate in Q3 coupled with high inflationary pressures by year-end affected private consumption in Q4.
The exchange rate stabilized with the Naira exchanging with the US Dollar as at December 2018 at an average interbank rate of N306, while the parallel market closed at N360.
Monetary policy remained broadly aggressive, with the MPC holding MPR at 14.0% throughout the year amid aggressive liquidity mop-up exercises. On the other hand, fiscal policy was broadly expansionary supported by massive borrowing programme and non-oil revenue mobilization.
In the social-political climate, the war on insurgency continued as Boko Haram's attacks on soft targets in the North East, and incidences of killings credited to cattle herdsmen continued.
The activities leading to 2019 elections gathered momentum in 2018, resulting in politics being prioritized over governance and economy development.
Review of Operations
We navigated the difficult business terrain by recovering our costs through various cost reduction initiatives and improved efficiencies. This was achieved through products' reformulation and vendor-managed inventory initiatives.
Chairman’s Statement
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 19
Chemical and Allied Products plc
CAP plcRC: 4551Chairman’s Statement cont’d
CAP Plc expanded its distribution channels and improved on field presence by opening 2 Dulux Colour
Centres in Lagos and Abuja. The company also increased marketing activities and value- adding services.
It extended in-plant paint production to silk line and commenced Dulux Colour Centre upgrades. We will
work harmoniously with Dulux Colour Centre distributors to achieve topline growth in 2019.
The company has successfully transited to ISO 9001:2015 and ISO 14001:2015 certifications on Quality
and Environmental Management Systems, respectively. We will continue to offer high quality products
and services to customers while complying with regulatory requirements in a healthy and safe
environment.
Financial Results
Despite the challenging operating environment in 2018, your company ended the year with an
impressive performance. The business recorded a turnover of N7.76bn representing a growth of 9% over
previous year. The operating profit was N2.28bn, a growth of 15% over 2017.
Dividend
On the strength of this performance, the Board has recommended a dividend of N2.03billion
representing 290kobo for every 50kobo ordinary share to shareholders on the Register of Members as at
close of business on May 24, 2019 for consideration and approval.
Outlook
The economy is expected to gain traction this year, on the back of stronger household consumption and
public spending. The recent slide in oil prices and OPEC's oil output cut pose downside risks going
forward. Economic Analysts see GDP increasing by 2.4% in 2019 and 2.9% in 2020 respectively.
During the President's presentation of 2019 budget to the National Assembly, he articulated his main
economic objectives as stimulation of the economy and promotion of Import substitution and exports.
Macroeconomic variables must significantly improve in order for the country to fully recover from
recession. Therefore, we expect that the economic environment in 2019 will continue to be fluid, and
uncertain and businesses must be proactive and make clear-cut choices about how to compete in the
market place. Businesses also need to make clear definition of strategy, business model and core
operations in order to increase revenue and profitability.
Your company is closely following developments at all levels and is prepared to key into opportunities
that will be created. We are equally poised to take advantage of other structural reforms of the Federal
Government, which might impact the housing and real estate sector.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 20
Chemical and Allied Products plc
CAP plcRC: 4551Chairman’s Statement cont’d
The business will respond appropriately to the emerging paint market trends and different economy scenarios by: • Opening New Dulux Colour Centres • Business development • Increasing volumes • Consistent engagement with professionals and specifiers • Completing DCC upgrades • Introducing new products and value added services • Launching Virtual DCC • Entrenching presence in the standard market • Building People Capabilities • Implementing impactful marketing initiatives to ensure effective customer engagement.
Board changes I wish to update you on the changes on the Board since the last Annual General Meeting. Mrs. Oluwakemi Ogunnubi, who served your company as the Managing Director/CEO resigned from her position with effect from 18th February 2019. Also, Messrs Larry Ephraim Ettah and Mr. Abdul Akhor Bello resigned from the board, following their retirement as Group Chief Executive Officers of UAC of Nigeria Plc on July 23 and December 31, 2018 respectively.
Mrs. Omolara Elemide, who was the Acting Group Managing Director/Chief Executive Officer of UAC of Nigeria Plc, was appointed to the Board of CAP Plc as the Acting Managing Director of the company until appointment of a substantive Managing Director.
AppreciationOn behalf of the Board, I thank our valued customers for their loyalty. We pledge to continue to deliver superior products and services to your delight. To our suppliers, trade partners and technical partners, AkzoNobel, we appreciate your support at all times.
I cannot but commend the Management and staff for their diligence in achieving a respectable performance in a turbulent year.
I wish to thank my colleagues on the Board, for their support in ensuring that the company maintains its leadership position amidst all the challenges.
In conclusion, on behalf of the Board of Directors, I wish to thank our distinguished shareholders for your support to the Board and Management of your Company over time. We look to the future with renewed confidence knowing that we have your cooperation at all times.
Thank you for your attention.
Solomon AigbavboaAg. ChairmanFRC/2014/PCNNG/00000007895
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 21
Chemical and Allied Products plc
CAP plcRC: 4551Board of Directors
& Professional Advisers, etcBoard of DirectorsMr. Solomon Ohiolei Aigbavboa Non - Executive Director/Ag. ChairmanMr. Opeyemi Olukayode Agbaje Non - Executive DirectorAmbassador Kayode Garrick Independent Non - Executive Director Mrs. Omolara Iswat Elemide Ag. Managing Director (Appointed wef 18/2/19)
Retirement by Rotation In accordance with the Articles of Association of the Company and provisions of the Companies and Allied Matters Act, Cap C20 LFN 2004, Mr. Opeyemi Olukayode Agbaje and Ambassador Kayode Garrick are the directors retiring by rotation. Amb. Garrick, being eligible, offers himself for re-election. Mr. Agbaje is however not offering himself for re-election.Also in accordance with the Law, Mrs Omolara Iswat Elemide having been appointed to the Board since the last AGM, retire at this meeting and offers herself for election. The biographical information of the directors for re-election and election are on pages 24 and 25 of this Annual Report.
Record of Directors' Attendance at Board MeetingsIn accordance with section 258 (2) of the Companies and Allied Matters Act, Cap C20 LFN 2004, the record of Directors' attendance at Board meetings during the year is available for inspection at this Annual General Meeting.
Company SecretaryRose Joshua Hamis (Mrs.)
Registered /HeadOffice
2, Adeniyi Jones Avenue
P.M.B. 21072, Ikeja – Lagos.
Tel: 08159493070
E-mail: [email protected]
Registrar
Africa Prudential Plc
220B Ikorodu Road
Palmgrove - Lagos
Tel: 07080606400
Auditors
Messrs Ernst & Young
10th and 15th Floor
UBA House, 57, Marina,
Lagos
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 22
Chemical and Allied Products plc
CAP plcRC: 4551Board of Directors’ Profile
Mrs. Omolara Iswat Elemide joined UAC of Nigeria Plc (UAC) on October 4, 1983. A Fellow of the Institute of Chartered Accountants of Nigeria, she holds a Higher National Diploma in Accountancy from Kwara State Polytechnic, Ilorin. She had worked in various capacities within the UAC group. She was on a six-month attachment with the Unilever International Audit Departments in United States of America, Germany and United Kingdom in 1991, after which she became the Senior Group Manager, Unilever International Audit, Lagos. At the divestment of Unilever from UACN in 1994, she assumed the position of Audit Manager for the UACN Group. She was at different times between 1997 and 2005, the Divisional Commercial Director and Finance Director of GB
Ollivant/MDS Division and UACN Property Development Company Plc, respectively.
Mrs Elemide joined the Board of Chemical and Allied Products PLC (“CAP PLC”) as Finance Director/Company Secretary in February 2005, a position she held until May 4, 2009 when she was appointed the Managing Director of the company.
She has attended various training programmes within and outside the country amongst which are International Management Seminar at the Four Acres UK, Unilever International Audit Seminar, USA, Strategy & Finance at the Ashridge Business School, UK and the Bullet-Proof Manager Training Series by Crestcom International, Colorado, USA. She was appointed the Executive Director, Corporate Services of UAC of Nigeria PLC with responsibility for Human Resource, Marketing and Strategy & Innovation on the 1st of January, 2018. She was appointed Acting Group Managing Director/CEO of the UAC of Nigeria PLC with effect from 1st January, 2019. She also currently doubles as Acting Managing Director of Chemical and Allied Products PLC, a subsidiary of the UACN.
Mr. Agbaje attended Igbobi College, Yaba, Lagos and holds a first degree in Law from University of Ife (now Obafemi Awolowo University, Ile-Ife) and two Masters Degrees in Law and Business from the University of Lagos and IESE Business School, Spain respectively. He has a multi-disciplinary background and professional experience including legal practice at Kola Awodein (SAN) and Co. for two years; over 16 years in banking and finance rising to Executive Director and has since 2004 managed RTC Advisory Services Limited, a leading strategy and business advisory company as Senior Consultant/CEO. He has also lectured in Business Strategy and the Environment of Business at the Lagos Business School. He is a member of the Board of Trustees of the Lagos
State Security Trust Fund and Chairman of the Board of The Integrity Organisation/Convention on Business Integrity. Mr Agbaje is a member of the Strategic Management Society, USA and was elected Representative-at-Large of the Strategy Practice Interest Group of the Society in November 2016. He also holds memberships of the International Bar Association and Institute of Directors, Nigeria. He writes a weekly column, “Economy, Polity, Society” in Businessday Nigeria and is a regular speaker at conferences, seminars and discussions on economy, business and national development. He joined the Board on 4th May 2009 as a Non-Executive Director.
Mrs. Omolara Iswat Elemide, 59
Mr Opeyemi Olukayode Agbaje, 54
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 23
Chemical and Allied Products plc
CAP plcRC: 4551Board of Directors’ Profile
Solomon, a Pharmacist was educated at the University of Benin and Federal University of Technology, Owerri where he bagged the B.Pharm (1990), M.Sc (1995) and MBA (2004) degrees respectively. He started his career in academics with the University of Benin where he left as Lecturer 2 in Pharmaceutical Chemistry to join UAC of Nigeria Plc in June 1997 as Personal Products Manager in the then GBO/MDS Division. He thereafter, occupied various Management positions in the UACN group including National Customer Service Manager, MDS Logistics; GM, Franchise Operations, Mr Biggs and GM, Operations, UAC Foods. In September 2008, he joined Zain Telecoms, Nigeria where he served as General Manager, North West Regional Operations and Director, Regional Support in the Sales
Group. In June 2009, he returned to UACN and was subsequently appointed in January 2010 as the Managing Director of MDS Logistics Limited, a joint venture between UACN and Imperial Holdings Limited of South Africa. He was appointed the Managing Director of Livestock Feeds Plc, a Subsidiary Company of UACN Plc, in January 2018.
He has attended several management courses and training locally and internationally. He is a recipient of both the University of Benin Scholarship for academic excellence, and the Federal Government of Nigeria's post graduate scholarship award. He is a Fellow of the Chartered Institute of Logistics & Transport, Nigeria (FCLIT); Chartered Institute of Supply Chain Management, Ghana (FCSCM) and the Institute of Logistics Management, Nigeria (F.ILM). He joined the Board on 5th May 2008 as a Non-Executive Director.
Ambassador Garrick holds a Bachelor of Arts (Languages) degree from the University of Ife (now Obafemi Awolowo University), Ile Ife. He is the founder and Director of South Strategy Consulting. He has 34 years diplomatic experience and is fluent in; English, French, German and Portuguese. Apart from several other diplomatic, consular and public service appointments, he was Nigeria's Ambassador Extraordinary and Plenipotentiary to Brazil, Paraguay and Bolivia.
He was awarded the Grand Cross of the Order of Rio Branco by the President of Brazil. He joined the Board on 21st March, 2013 as a non-executive director. He is an Independent Non-Executive Director.
Ambassador Kayode Garrick, 64
Mr Solomon Ohiolei Aigbavboa, 51
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 24
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 25
Chemical and Allied Products plc
CAP plcRC: 4551
The Directors hereby present their report with the audited financial statements for the year ended 31 December, 2018 which disclose the state of affairs of the company.
Principal ActivitiesThe principal activities of the Company are the manufacturing and sale of paints.
Profit for the YearThe result for the year is summarized as follows:-
Profit for the year
2018N000
2,029,343
2017N000
1,498,730
Report of the Directors
DividendThe Directors are pleased to recommend to shareholders a dividend of N2.03billion representing 290kobo per ordinary share of 50 kobo each. If approved, the dividend will be paid on 21st June 2019 to members, who are on the Register of Members at the close of business on Friday May 24, 2019. The total dividend will be net of withholding tax.
Corporate Governance ReportCAP Plc is a Company of integrity and high ethical standard. Our reputation for honest, open and dependable business conduct, built over the years, is as much an asset as our people and brand. We conduct our business in full compliance with the laws and regulations of Nigeria and our group Code of Business Conduct.
The Board of DirectorsUnder the Articles of Association of the Company, the business of the Company shall be controlled and managed by the Directors, who may exercise all such powers of the company as are not by statute or the Articles to be exercised by the company in General Meeting. The operations of the Board of CAP Plc are governed by a charter.
Composition of the Board of DirectorsThe Board of CAP Plc was made up of four (4) Non-Executive Directors and one (1) Executive Director during the year. All the Directors have access to the services of the Company Secretary. With the approval of the Chairman of the Board, they may take advice from third party professionals in areas where such advice will improve the quality of their contributions to Board deliberations.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 26
Chemical and Allied Products plc
CAP plcRC: 4551
Mr. Larry E. Ettah - Non-Executive Director/Chairman (Resigned wef 20/7/18)Mr. Abdul Akhor. Bello - Non-Executive Director/Ag. Chairman (Resigned wef 31/12/18)Mr. Solomon Ohiolei Aigbavboa - Non-Executive Director/Ag. Chairman Mrs. Oluwakemi Oluseyi Ogunnubi - Managing Director (Resigned wef 18/2/19)Mrs Omolara Iswat Elemide - Ag. Managing Director (Appointed wef 18/2/19)Mr. Opeyemi Olukayode Agbaje - Non-Executive DirectorAmbassador Kayode Garrick - Independent Non-Executive Director
Directors' ShareholdingThe Register of Directors' interests in the share capital of the Company is open for inspection at the Annual General Meeting. The direct and indirect interest of Directors in the issued share capital of the Company as recorded in the Register of Directors' shareholdings and/or as notified by the Directors for the purposes of sections 275 and 276 of the Companies and Allied Matters Act and the listing requirements of the Nigerian Stock Exchange are as follows:
Directors' Interest in ContractsNone of the Directors has notified the Company for the purpose of section 277 of the companies and Allied Matters Act of any disclosable interest in contracts with the Company or related party transactions during the year.
Separation in Chairman and CEO's Positions The position of the Chairman of the Board of Directors is distinct from that of the Managing Director/CEO. The Ag. Chairman of the Board was Mr. Abdul Akhor Bello, who was a Non-Executive Director, while the Managing Director/CEO during the year was Mrs Oluwakemi Oluseyi Ogunnubi.
Directors’ Report cont’d
The Directors who held office during the year and to the date of the report were:-
Mr. Larry E. EttahMr. Abdul A. BelloMrs. Oluwakemi OgunnubiMr. Opeyemi O AgbajeMr. Solomon O AigbavboaAmbassador Kayode Garrick
NumberDirect
4,592,971365,952
40,66562,33257,330
1,215
31 December 2018 31 December 2017
Number4,083,332
365,95240,66562,33257,330
1,215
Abdul Akhor Bello 360,427,061
Percentage (%)Name Indirect Interest (UAC of Nig Plc)
51.49
Directors' Indirect Interest
UAC of Nigeria Plc
Shareholder
360,427,061
No. of Shares
51.49
(%)
Major ShareholdingsAccording to the Register of members, the following shareholder of the company held more than 5% of the issued shared capital of the company as at December 31, 2018.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 27
Chemical and Allied Products plc
CAP plcRC: 4551
The Roles and Responsibilities of the Board are: a) Formulation of policies, strategy and overseeing the management and conduct of the Business; b) Formulation and management of risk management framework; c) Succession planning and the appointment, training, remuneration and replacement of board members and senior management; d) Overseeing the effectiveness and adequacy of internal control system; e) Overseeing the maintenance of the company's communication and information dissemination policy; f) Performance appraisal and compensation of board members and senior executives; g) Ensuring effective communication with shareholders, stakeholders and the investing public; h) Ensuring the integrity of financial controls and reports; i) Ensuring that ethical standards are maintained; j) Ensuring compliance with the company's memorandum and articles of association, applicable laws, regulations, standards and code of corporate governance by the company k) Definition of the scope of delegated authority to board committee and management and their accountabilities; l) Definition of the scope of corporate social responsibility through the approval of relevant policies; m) Approval and enforcement of the group code of business conduct and code of conduct for directors.
Board Appointment The process of appointing Directors involves a declaration of a vacancy at the board meeting; the sourcing of the curriculum vitae of suitable candidates depending on the required skills, competence and experience at any particular time; and the reference of the curriculum vitae to the Risk and Governance committee of the Board for necessary background checks, informal interviews/interaction and a recommendation for the approval of the Board of Directors. A Director appointed by the Board is presented to the next Annual General Meeting of members of the Company for election in line with statutory requirement.
Directors' Induction and Training Every newly appointed Director receives a comprehensive letter of appointment detailing the terms of reference and composition of the board and board committee, schedule of board meetings, his entitlements and demand on his time as a result of the appointment. The letter of appointment is accompanied with the Memorandum and Articles of Association of the Company, the previous year's Annual Report and Financial Statements, the Code of Corporate Governance for Public Companies in Nigeria, UACN Code of Business Conduct, and other documents, policies, processes and procedures of the Company that help the director to gain understanding of the company, its history, culture, values, business principles, people, projects, processes and plan.
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 28
Chemical and Allied Products plc
CAP plcRC: 4551
A new Director undergoes an induction in order for him to get acquainted with the business operations, issues and brands of the company. As part of the induction process, he is introduced to the Directors, members of the Leadership Team, Company's operations and Dulux partners.
Board MeetingsThe Board met 6 (six) times during the 2018 financial year. The following table shows the list of Directors and their attendance at the Board meetings.
Board EvaluationA Board performance evaluation was undertaken in the year 2018. The performances of the Board, Board Committee and individual Directors were adjudged satisfactory. Necessary feedbacks were given to individual Directors arising from the exercise.
Board CommitteeThe Board functions as a full Board and through the Risk and Governance Committee. The Committee makes recommendations for approval by the full Board. The following are the Committee's terms of reference:-
Risks 1. Assist the Board in its oversight of risk management and monitoring the Company's performance with regards to risk management; 2. Recommend for Board approval the risk policy of the Company and review its implementation at all levels to achieve the Company's objective ; 3. Monitor that risk management policies are integrated into the Company's culture; 4. Review quarterly risk management reports and make recommendation to the Board on appropriate actions; 5. Periodically evaluate the Company's risk profile, action plans to manage high risks and progress on the implementation of these plans; 6. Ensure that the Company's risk exposures are within the approved risk control limits;
DIRECTORS
Mr. Larry Ephraim Ettah - ChairmanMr. Abdul Akhor BelloMrs. Oluwakemi Oluseyi OgunnubMr. Opeyemi Olukayode AgbajeMr. Solomon Ohiolei AigbavboaAmb Kayode Garrick
21 MAR
PPPPPP
20 APR
PPPPPP
19 JUN
PPPPPP
20 JUL
PPPPPP
18 OCT
RPPPPP
6 DEC
RPPPPP
Attendance Key: P = Present R = Resigned
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 29
Chemical and Allied Products plc
CAP plcRC: 4551
7. Undertake at least annually a thorough risk assessment covering all aspects of the company's business with a view to using the result of the risk assessment to update the risk management framework of the company; 8. Understand the principal risk to achieving the Company's strategy; 9. Ensure that the business profile and plans are consistent with the Company's risk appetite; 10. Make recommendation on the Company's risks management framework including responsibilities, authorities and control; 11. Review the process for identifying and analyzing business level risks; 12. Review the structure for, and implementation of, risk measurement and reporting standard as well as methodologies; 13. Review key control processes and practices of the Company, including limit structures. 14. Ensure that the Company's risk management practices and conditions are appropriate for the business environment; 15. Assess new risk return opportunities.
Governance 16. Oversee the Company's financial reporting, its policies and processes; 17. Review the Company's operational performance; 18. Make recommendations to the Board on capital expenditure, specific projects and their financing within the overall approved plan; 19. Appraise the investment climate and recommend to the board where, when and what investment(s) to make with the Company's surplus funds; 20. Make recommendations on management of Company's cash and debt exposure/ borrowings; 21. Monitor compliance with applicable laws and regulations by the Company; 22. Review updates on implementation level of Internal and external auditors' recommendations by management from Board representatives on the Audit Committee; 23. Periodically review the manning level and adequacy of the resources with which internal audit and the risk management functions discharge their duties; 24. Monitor, benchmark and apply as appropriate, best practices with regard to governance and risk; 25. Review accounting policies and reporting standards and ensure their adequacy for the Company's purposes; 26. Make recommendations on the composition of the Board; 27. Recommend the appointment, remuneration and promotion of Executive Directors and Senior Management; 28. Make recommendations to the Board on the adoption of a code of conduct (including the policy on trading in company shares) for Directors and senior executives and to review same from time to time;
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 30
Chemical and Allied Products plc
CAP plcRC: 4551
29. Periodically review and make recommendations to the Board on the compensation, performance and talent management, succession planning and retention for the Company; 30. Make recommendations on the whistle blowing process for the Company.
Directors’ Report cont’d
The Committee met four (4) times during the year. The following shows the dates of the
meetings and attendance of members of the Committee at such meetings:-
DIRECTORS
Mr. Opeyemi Olukayode Agbaje - ChairmanMr. Abdul Akhor BelloMrs. Oluwakemi Oluseyi OgunnubiMr. Solomon Ohiolei AigbavboaAmbassador Kayode Garrick
20 MAR
P-PPP
19 APR
PPPPP
19 JUL
PPPPP
18 OCT
PPPPP
Attendance Key: P = Present - = Not yet a member
Governance at Management Level The Executive Management of the Company gains group insight from presenting the Company's draft annual budget to the group executive management and Board of the parent Company, UAC of Nigeria Plc (UACN). The Chairman of the Board also attends the Company's annual business conference to give the employees feedback from the group and Board on Company's performance in the previous year, corporate strategy, business direction and performance expectation for the New Year. The Managing Director (MD) attends the monthly UACN group business review meetings where company's performance, business issues and plans are reviewed and direction given. The executive management and leadership team of the Company attend the annual UACN group business retreat where strategic and executional issues are discussed with clear direction and action plans, in additional to other periodic group functional review meetings. At the company level, the leadership team members report to the Managing Director and support the Managing Director in the day to day management of the business and in the implementation of the company policies. The Company structure ensures adequate in-built succession plans at all levels of the business. Accountability meetings and reviews are held on a weekly, monthly and quarterly basis. These include weekly meetings of the leadership team. The company holds an annual business conference where the financial goals and other strategies of the business for the year are discussed, agreed and unveiled with the leadership team, management, staff and business partners in attendance.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 31
Chemical and Allied Products plc
CAP plcRC: 4551
Statutory Audit CommitteeThe Statutory Audit Committee consists of six members, made up of three (3) representatives of the shareholders elected at the previous Annual General Meeting for a tenure of one year and three (3) representatives of the Board of Directors nominated by the Board.
The Chairman of the Committee is Mr. Solomon Ohiolei Aigbavboa, a Non-Executive Director. The Company Secretary is the Secretary of the Committee. The meetings of the Committee were attended by the Company's Risk & Compliance Team Lead, representatives of Ernst & Young, our external auditors, KPMG, our internal auditors and Head, Risk and Compliance of the UACN group. The Committee operates within the provisions of the Companies and Allied Matters Act CAP C20 Laws of the Federation 2004, 2011 SEC Code of Corporate Governance for Public Companies in Nigeria, its terms of reference and best practice.
Terms of Reference of the Audit CommitteeThe Committee is authorized by the Companies & Allied Matters Act, CAP C20 Laws of the Federation 2004: a) To ascertain whether the accounting and reporting policies of the Company are in accordance with legal requirements and agreed ethical practices; b) Review the scope and planning of external audit; c) Review the findings as reported through the management controls report and management responses thereon; d) Keep under review the effectiveness of the Company's system of accounting and internal control; e) Make recommendation to the Board with regards to the appointment, removal and remuneration of the external auditors of the Company; f) Authorise the internal auditor to carry out investigations into any activities of the Company, which may be of interest or concern to the Committee.
Directors’ Report cont’d
The Committee met five (5) times during the year and the following table shows the attendance of the members at the meetings.
MEMBERS
Mr. Solomon Ohiolei AigbavboaMr. Opeyemi Olukayode AgbajePrince Bassey ManfredMrs. Abigail Olufolake OlaajeAmbassador Kayode Garrick Mrs. Samiat Adebanke Odunuga
20 MAR
PPPPPP
11 JUN
PPPPPP
18 JUL
PPPPRP
18 OCT
PPPPRP
6 DEC
PPPPRP
Attendance Key: P = Present
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 32
Chemical and Allied Products plc
CAP plcRC: 4551
In addition, the 2011 Securities and Exchange Commission (SEC) Code of Corporate
Governance also assigns the following responsibilities to the Audit Committee:
a) To oversee internal audit and internal controls; and to document and
review the roles, responsibil ities, authority and scope of
operations of the internal audit function; approve the annual internal
audit plan.
b) Assist in the oversight of the integrity of the Company's financial
statements, compliance with legal and other regulatory requirements,
assessment of qualifications and independence of external auditor and
performance of the Company's internal audit function as well as that of
external auditors;
c) Establish an internal audit function and ensure there are other means of
obtaining sufficient assurance of regular review or appraisal of the system
of internal controls of the company;
d) Ensure the development of a comprehensive internal control framework
for the company; obtain assurance and report annually in the financial
report, on the operating effectiveness of the company's internal control
framework;
e) Oversee management's process for the identification of significant fraud
risks across the company and ensure that adequate prevention, detection
and reporting mechanisms are in place;
f) At least on an annual basis, obtain and review a report by the internal
auditor describing the strength and quality of internal controls including
any issues or recommendations for improvement, raised by the most
recent control review of the company;
g) Discuss the annual audited financial statements and half yearly unaudited
statements with management and external auditors;
h) Discuss policies and strategies with respect to risk assessment and
management;
i) Meet separately and periodically with management, internal auditors and
external auditors;
j) Review and ensure that adequate whistle-blowing procedures are in place.
A summary of issues reported are highlighted to the chairman;
k) Review, with the external auditor, any audit scope limitations or problems
encountered and management's responses to same
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 33
Chemical and Allied Products plc
CAP plcRC: 4551
l) Review the independence of the external auditors and ensure that where
non-audit services are provided by the external auditors, there is no conflict
of interest;
m) Preserve auditor independence, by setting clear hiring policies for
employees or former employees of independent auditors;
n) Consider any related party transactions that may arise within the company
or group;
o) Invoke its authority to investigate any matter within its terms of reference
and the company must make available resources, including internal audit
and access to external advice where necessary, to carry out this function;
and report to the members of the company at annual general meeting and
to the Board of Directors, when necessary.
Directors’ Report cont’d
Risk Management We have a risk management framework which articulates the Company's strategy, objective, vision and mission around risk management for the UACN group. The implementation of the framework commenced in quarter 1 2014. There is a risk and compliance unit in the Company to drive the process.
Trading in Securities PolicyIn compliance with clause 17 of the Nigerian Stock Exchange amended Rules, we have a Securities Trading Policy in place to guide our Board, Employees, External Advisers and Related Parties on trading in the securities of the Company within the closed period. Under the policy, the closed period is when no Director, employee, external adviser and related party with inside information can trade in the Company's securities. The closed period is 15 days prior to the date of any meeting of the Board of Directors proposed to be held to consider any price sensitive matter or the date of circulation of agenda papers pertaining to a board meeting on any of the said matters up to 24 hours after the price sensitive information is submitted to the exchange. The trading window shall thereafter be opened. We hereby confirm that no Director traded in the securities of the company within the closed period.
Shareholders Complaints Management PolicyWe have put in place a Complaints Management Policy to handle and resolve complaints from our shareholders and investors. The policy was defined and endorsed by the Company's senior management that is also responsible for its implementation and for monitoring compliance. The policy has been posted on the company's website and shall be made available to shareholders of the company at the Annual General Meeting.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 34
Chemical and Allied Products plc
CAP plcRC: 4551
Code of Business ConductAs a member of UACN group, the employees of the Company subscribe to UACN Code of Business Conduct. The code forms the basis of the conduct expected of every employee of the company and reflects our core values and principles. The Board of Directors is responsible for ensuring that the Code is communicated to, understood and observed by, all employees.
Compliance with the Code of Corporate GovernanceThe Company has complied with the 2011 Code of Corporate Governance for Public Companies.
HUMAN RESOURCES REPORT
Employment of Disabled PersonsThe Company adhered to its age-long policy of non-discrimination against disabled persons in 2018. The Company had one disabled person on its payroll as at 31 December, 2018.All employees are treated equally and are given equal opportunities to develop their careers; Disability is not a barrier to promotion or career development in our company.
Health, safety and welfare of Company employeesOur policy at all times is to conduct our operations safely, protecting the health and safety of employees and all persons who may be affected. We will manage all our activities so as to give benefits to the society, ensuring that relevant laws and regulations are kept and that our activities are acceptable to the community at large with minimum environmental impact.
HIV/AIDSOur company works to ensure a safe healthy working environment by providing basic HIV/AIDS training to inform, educate and train all employees about HIV/AIDS prevention, care and control. We do not discriminate against or dismiss any employee on the basis of his or her HIV status. The HIV status and medical records of any individual will be considered and kept as strictly confidential. As much as possible care will be taken to support such individuals by providing counselling and medical support services.
Employee Welfare The company has several welfare initiatives in the various locations of its operations, to ensure the health and vitality of the employees. Recreational facilities are also available in some locations. In addition, free medical care is provided for all employees, their spouses and up to four children through Health Management Organisation (HMO) while voluntary health screening exercises are also provided to employees on an ongoing basis.
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 35
Chemical and Allied Products plc
CAP plcRC: 4551
We implement a number of programmes to ensure that our employees have work-life balance. Employees are encouraged to take their annual vacation as and when due. The Company believes this will provide them the opportunity to refresh and renew to stay healthy to perform better on the job. It is the Company's policy not to allow accumulation of leave beyond one year except under extremely special circumstances. Work is organised to enable employees work within the official business hours to catch up with their social and family obligations. The Company has paternity leave of 5 working days in place for male employees whose wives are delivered of babies. The maternity leave policy has been reviewed to accommodate additional annual leave days.
Employee Engagement and Involvement Our employees are fully involved in strategy formulation and execution, in order to achieve business plan ownership and commitment at all levels. Regular meetings are held at different levels of the Company and Business Units to ensure that all Employees are given the opportunity to interact with one another and with the management team for exchange of ideas and sharing of relevant business information. The other engagement platforms are: Joint Consultative Committees (JCCs), Business Review Meetings, Open Forum/Community Briefings/Family Meetings and Leadership Team (LT) meetings of the various Business Units and the Corporate Centre.We also have in place counselling sessions between Executive Management and different cadres of talents. These sessions allow management to proactively engage the talents with a view of addressing their career issues, welfare and retention.
Training and Staff DevelopmentThe company recognizes training of its human resources as an investment which adds value to the business. We are therefore committed to continuous development of our workforce through courses and seminars organized internally and externally including overseas courses. Individual needs of each employee are considered in organizing training courses. Members of staff are also encouraged and assisted financially to embark on self-development schemes to improve themselves both academically and professionally.
Anti-corruption and business integrityOur company does not give or receive whether directly or indirectly, bribes or other improper advantages for business or financial gain. No employee may offer, give or receive any gift or payment which is or may be construed as being, a bribe. Any demand for, or offer of, a bribe must be rejected immediately and reported to management. No employee will be criticized for any loss of business resulting from adherence to these principles. The company's accounting records and supporting documents must accurately describe and reflect the nature of the underlying transactions. No undisclosed or unrecorded account, fund or asset will be established or maintained.
Whistle blowing A whistle blowing policy has also been put in place to encourage employees at all levels to alert and inform management of any negative development that might impinge on the value, performance and/or image of the company before any harm is done. Similarly a corporate fraud policy has been established to facilitate the development of controls which will aid in the detection and prevention of fraud against the company. It is our intention to promote consistent organizational behaviour by providing guidelines and assigning responsibility for the development of controls and conduct of investigations.
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 36
Chemical and Allied Products plc
CAP plcRC: 4551Directors’ Report cont’d
Dulux Agents 1. Ambroziny International Nig. Ltd. Enugu2. Amehgate Integrated Services Ltd. Abuja, Gombe3. Cellit Limited Lagos4. Charterbridge Ventures Limited Lagos5. Chrisbaki Nigeria Limited Warri6. Edeoga Nigeria Limited Abuja, Kaduna & Jos7. First Ebony Invest. & Allied Services Ltd. Lagos8. House Affairs Limited Lagos9. International Partners & Dev. Nig. Ltd. Kano10. Kay Taiwo International Limited Lagos11. Kapital Int. Consulting & Investment Nig. Ltd. Benin12. KSV Synergy Nigeria Limited Lagos13. Levitikal Realities & Construction Limited Abuja14. Marco Bruno Limited Port Harcourt15. Matojez Integrated Service Limited Lagos16. Metrospeed Property Limited Ibadan17. Stanzel Associates Limited Abuja18. Taes International Concept Limited Abuja19. Treaty Projects Limited Port Harcourt, Asaba
Donated paints accessories to the training event organized by Grandman Concept Service LimitedDonated paints to the Little Sisters of the Poor (Home for the Elderly) EnuguDonated paints for the repainting of the Manufacturers Association of Nigeria (MAN) SecretariatRepainted St. Paul's Anglican Primary School, IsoloSponsored the Annual School Inter-House Sports Competition of Ogba Primary SchoolSponsored the refurbishing and repairs of the patrol Vehicle for the Nigerian Police Divisional Headquarters MAN Centre DivisionSupported the Pacelli School for the Blind Christmas CelebrationSupported the YouthCan Project of the SOS Children Villages NigeriaTOTAL
301,038.00
287,749.80
284,604.401,450,346.69
108,100.00
100,000.0037,872.20
4,080,000.006,649,711.09
1
2
3
45
6
78
DonationsThe following amounts were given by way of gifts and donations during the year ended 31 December, 2018:
AMOUNTN
S/N INSTITUTIONS
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 37
Chemical and Allied Products plc
CAP plcRC: 4551
Customer Service and Quality PolicyWe remain a quality driven company. We pursue continuous improvement in products and customer service and quality in all areas of our activities.
Dated this 20th day of March, 2019By Order of the Board
Rose Joshua Hamis (Mrs.)Company SecretaryFRC/2013/ICSAN/00000002356
Directors’ Report cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 38
Chemical and Allied Products plc
CAP plcRC: 4551
The Companies and Allied Matters Act requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the company at the end of the year and of its profit or loss. The responsibility includes:
a) ensuring that the company keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the company and comply with the requirements of the Companies and Allied Matters Act;
b) designing, implementation and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and
c) preparing the company's financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, that are consistently applied.
The Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act.
The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the company and of its profit. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well 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 going concern for at least twelve months from the date of this statement.
Mrs. Omolara I. Elemide Solomon O. Aigbavboa Ag. Managing Director Ag. ChairmanFRC/2013/ICAN/00000001850 FRC/2014/PCNNG/0000000789520 March 2019 20 March 2019
Statement of Directors’ Responsibilities For the year ended 31 December 2018
Audit Committee Members
Am
bas
sad
or
Kay
od
e G
arri
ck
Mrs
. Sam
iat
Od
un
uga
Mr.
So
lom
on
A
igb
avb
oa
Mrs
. Ab
igai
l O
laaj
e
Pri
nce
Bas
sey
Man
fre
d
Mr.
Op
eye
mi
Agb
aje
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 39
Chemical and Allied Products plc
CAP plcRC: 4551
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 40
Chemical and Allied Products plc
CAP plcRC: 4551Report of the Audit Committee
In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act,
we have reviewed the audited financial statements of the company for the year ended 31
December 2018 and report as follows:-
a. The accounting and reporting policies of the company are consistent with
legal requirements and agreed ethical practices.
b. The scope and planning of the external audit were adequate.
c. The company maintained effective systems of accounting and internal
controls during the year.
d. The company's management adequately responded to matters covered in
the management report issued by the external auditors.
We deliberated with the external auditors who confirmed that all necessary cooperation was
received from management and that they had issued a clean report in respect of the year
ended 31 December 2018.
Solomon O. AigbavboaChairman, Audit CommitteeFRC/2014/PCNNG/00000007895Dated 20th March 2019
Members of the CommitteeMr. Solomon Aigbavboa - ChairmanMr. Opeyemi Agbaje - Non-Executive directorAmbassador Kayode Garrick - Non-Executive directorPrince Bassey Manfred - Shareholders' representativeMrs. Abigail O. Olaaje - Shareholders' representativeMrs. Samiat Odunnuga - Shareholders' representative
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 41
Chemical and Allied Products plc
CAP plcRC: 4551
Ernst & Young10th FloorUBA House57, MarinaP. O. Box 2442, MarinaLagos, Nigeria.
Tel: +234 (01) 631 4500Fax: +234 (01) 463 0481Email: [email protected]
Opinion
We have audited the financial statements of Chemical and Allied Products Plc which comprise
the statement of financial position as at 31 December 2018, the statement of profit or loss and
other comprehensive income, statement of changes in equity and statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies and other explanatory information.
In our opinion, the financial statements give a true and fair view of the financial position of
Chemical and Allied Products Plc as at 31 December 2018, and its financial performance and
cash flows for the year then ended in accordance with the International Financial Reporting
Standards (IFRS) issued by International Accounting Standards Board, the provisions of the
Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and in
compliance with the Financial Reporting Council of Nigeria Act No.6, 2011
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditors' Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the
Company in accordance with International Ethics Standards Board for Accountants' Code of
Ethics for Professional Accountants (IESBA Code) and other independence requirements
applicable to performing the audit of Chemical and Allied Products Plc. We have fulfilled our
other ethical responsibilities in accordance with the IESBA Code, and in accordance with other
ethical requirements applicable to performing the audit of Chemical and Allied Products Plc.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion .
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial, statements of the current period. We have determined
that there are no key audit matters to communicate in our report.
Independent Auditors' Report
To the Members of Chemical and Allied Products Plc
Report on the Audit of the Financial Statements
Report of the Auditors
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 42
Chemical and Allied Products plc
CAP plcRC: 4551
Other InformationThe Directors are responsible for the other information. The other information comprises the Directors' Report, the Audit Committee Report, Corporate Governance Report and Other National Disclosures (Value Added Statement and 5 Year Financial Summary) as required by the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004. The other information does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004 and in compliance with the Financial Reporting Council of Nigeria Act, No 6, 2011, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Report of the Auditors cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 43
Chemical and Allied Products plc
CAP plcRC: 4551
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Ÿ Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Ÿ Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's internal control.
Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
Ÿ Conclude on the appropriateness of the Directors' use of the going concern basis of
accounting and based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Company's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors' report to the
related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors' report. However, future events or conditions may cause
the company to cease to continue as a going concern.
Ÿ Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Ÿ Obtain sufficient appropriate audit evidence regarding the financial information of
the entity or business activities within the Company to express an opinion on the
financial statements. We are responsible for the direction, supervision and
performance of the company's audit. We remain solely responsible for our audit
opinion.
Report of the Auditors cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 44
Chemical and Allied Products plc
CAP plcRC: 4551
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act,
CAP C20 Laws of the Federation of Nigeria 2004, we confirm that:
i) we have obtained all the information and explanations which to the best of
our knowledge and belief were necessary for the purposes of our audit;
ii) in our opinion proper books of account have been kept by the Company, so
far as appears from our examination of those books; and
iii) the Company's statement of financial position and statement of profit or
loss and other comprehensive income are in agreement with the books of
account.
Yusuf Aliu, FCA
FRC/2012/ICAN/00000000138
For: Ernst & Young
Lagos, Nigeria
27 March 2019
Report of the Auditors cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 45
Chemical and Allied Products plc
CAP plcRC: 4551
The notes on pages 49 to 119 are an integral part of these financial statements.
RevenueCost of sales
Gross profitSelling and distribution expensesAdministrative expensesOther income
Operating profitFinance incomeFinance costNet Finance income
Profit before taxationIncome tax expense
Profit after tax Other comprehensive income for the year net of tax
Total comprehensive income for the year, net of tax
Earnings per share for profit attributable to the equity holders of the company:
Basic and diluted EPS (kobo)
Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December 2018
Notes
57i
7iii7ii6
910
11
13
2018N000
7,764,534 (4,034,561)
3,729,973(356,737)
(1,149,872) 61,837
2,285,201
327,249 (14,618) 312,631
2,597,832 (568,489)
2,029,343
-
2,029,343
290
2017N000
7,113,950 (3,863,985)
-3,249,965 (301,225)
(1,050,656) 77,592
1,975,676
226,703(20,668) 206,035
2,181,711 (682,981)
1,498,730
-
1,498,730
214
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 46
Chemical and Allied Products plc
CAP plcRC: 4551
AssetsNon-current assetsProperty, plant and equipmentIntangible assetsFinance lease receivable
Current assetsInventoriesRefund AssetTrade and other receivablesPrepaymentsCash and cash equivalents
Total assets
LiabilitiesNon-current liabilitiesDeferred taxation liabilities
Current liabilitiesTrade and other payablesCurrent income tax liabilitiesDividend payableBorrowingGovernment grantRefund liability
Total liabilitiesEquity Ordinary share capitalShare premiumRetained earningsTotal equity
Total equity and liabilities
Notes
1415
17b
1624
17a1819
23
211112202025
2222
22
2018N000
729,962 25,814 10,377
766,153
884,115 926
172,488 148,270
4,339,294 5,545,0936,311,246
127,053 127,053
1,559,016
800,841 1,013,328
- -
2,070 3,375,254 3,502,307
350,000
19,254 2,439,685 2,808,939
6,311,246
2017N000
691,059 49,068 10,379
750,506
1,187,405 -
110,700 144,920
2,820,459 4,263,484 5,013,990
100,049 100,049
1,130,834
652,175 809,598
77,631 1,484
- 2,671,721 2,771,770
350,000
19,254 1,872,966 2,242,220
5,013,990
Statement of Financial PositionFor the year ended 31 December 2018
Mr. Solomon AigbavboaAg.Chairman
FRC/2014/PCNNG/00000007895
Mrs. Olufunke OlokodanaFinance Controller
FRC/2013/ICAN/00000003222
Mrs. Omolara ElemideAg. Managing Director
FRC/2013/ICAN/00000001850
The notes on pages 49 to 119 are an integral part of these financial statements.
The financial statements on pages 49 to 119 has been approved and authorised for issue by the Board of directors on March 20th 2019.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 47
Chemical and Allied Products plc
CAP plcRC: 4551
At 1 January 2017
Profit for the yearOther comprehensive income
Total comprehensive income:
Transaction with owners:Dividends paid and proposed
Balance at 31 December 2017
Effect of adoption of new accounting standards
Restated opening balance
Profit for the year
Other comprehensive income
Total comprehensive income:Transactions with owners:Dividend paid and proposed
Balance at 31 December 2018
ShareCapital
N000
350,000 -
-
-
350,000
-
-
-
350,000
Share Premium
N000
19,254 -
-
19,254
19,254
-
19,254
RetainedEarnings
N000
1,914,236
1,498,730 -
1,498,730
(1,540,000)
1,872,966
(27,624)
1,845,342
2,029,343
-
2,029,343
(1,435,000)
2,439,685
TOTALEQUITY
N000
2,283,490
1,498,730 -
1,498,730
(1,540,000)
2,242,220
(27,624)
2,214,596
2,029,343
-
2,029,343
(1,435,000)
2,808,939
Statement of Changes in EquityFor the year ended 31 December 2018
The notes on pages 49 to 119 are an integral part of these financial statements.
Notes
12
2.1.3 (i & ii)
12
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 48
Chemical and Allied Products plc
CAP plcRC: 4551
Profit before taxationAdjustments forDepreciation of PPEAmortisation of intangible assetsProfit on sale of PPEFinance costsGovernment grantImpairment on other receivableImpairment and write-off on trade receivableImpairment on intercompany receivableImpairment of short term depositsFinance leaseFinance incomeNet foreign exchange loss/(gains)Cash flows from operations before working capital changesDecrease/(Increase) in inventory(Increase)/decrease in trade and other receivablesIncrease/(decrease) in payables(Increase)/decrease in prepaymentIncrease in refund assetDecrease in refund liabilityCash flows generated from operationsIncome taxes paid Net cash flows from operating activities
Cash flows from investing activities Purchase of PPEPurchase of Intangible assetsProceeds from disposal of PPEImpairment of cash short termInterest received Net cash flows from investing activities
Cash flows from financing activities Dividends refundedDividends paidInterest PaidLoan RepaymentNet cash flows used in financing activities
Net increase in cash and cash equivalentsNet foreign exchange differenceCash and cash equivalents at beginning of periodCash and cash equivalents at end of period
2018N000
2,597,832
94,736 23,255
(52)14,618 (1,484)
81414,776
2,633 11,243
2(327,249)
2,473 2,433,596
303,290 (156,439)
428,182 (3,350)
256(424)
3,005,111 (319,081)2,686,030
(133,982)
-395
(43,095) 327,249 150,567
206,683
(1,437,953) (4,019)
(80,000) (1,315,289)
1,521,308
(2,473)2,820,459 4,339,294
2017N000
2,181,711
81,188 22,242 (4,877) 20,668 (4,136)
1,205 1,296
-- 2
(226,703) (6,271)
2,066,325 (253,519)
493,774 (45,244) 220,840
--
2,482,176 (682,923) 1,799,253
(180,319)
(13,964) 8,515
-226,703
40,935
288,781
(1,540,000) (15,239) (85,082)
(1,351,540)
488,648 6,271
2,325,540 2,820,459
Statement of Cash FlowsFor the year ended 31 December 2018
The notes on pages 49 to 119 are an integral part of these financial statements.
Notes
14156
10207ii7ii7ii7ii1796
17c
2425
11
1415
9
12122020
61919
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 49
Chemical and Allied Products plc
CAP plcRC: 4551
1. General Information
Chemical and Allied Products Plc ('the company') is a company incorporated in Nigeria. The company is involved in the manufacturing and sale of paint. The address of the registered office is 2 Adeniyi Jones Avenue, Ikeja, Lagos.
The company is a Public Limited Liability Company, which is listed on the Nigerian Stock Exchange domiciled in Nigeria.
2. Summary of Significant Accounting Policies
2.1 Basis of Preparation The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs). The financial statements have been prepared on a historical cost basis. The policies set out below have been consistently applied to all the years presented.
(All amounts are in Naira thousands unless otherwise stated)
2.1.1 Going Concern Nothing has come to the attention of the Directors to indicate that the company
will not remain a going concern for at least twelve months from the date of this financial statements.
2.1.2 New and Amended Standards and Interpretation The following new standards and amendments became effective as of 1 January
2018:
IFRS 15 Revenue from contract with customers-IFRS 9 Financial Instruments-IFRIC Interpretation 22 Foreign Currency Transactions and Advance Considerations-Amendments to IAS 40 Transfers of Investment Property-Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions-Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts-Amendments to IAS 28 Investments in Associates and Joint Ventures - Clarification that measuring investees at fair value through profit or loss is an investment-by-investment choice-Amendments to IFRS 1 First-time Adoption of IFRS - Deletion of short-term exemptions for first-time adopters
For the year ended 31 December 2018Notes to the Financial Statements
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 50
Chemical and Allied Products plc
CAP plcRC: 4551
2.1.3 Changes in accounting policies and disclosures i Impact of application of IFRS 15 Revenue from Contracts with Customers
The company adopted IFRS 15 using the modified retrospective method of adoption with the date of initial application of 1 January 2018. Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not completed at this date. The company elected to apply the standard to all contracts as at 1 January 2018.
The company applied IFRS 15 and IFRS 9 for the first time. The nature and effect of the changes as a result of adoption of these new accounting standards are described below:
Several other amendments and interpretations applied for the first time in 2018, but did have an impact on the financial statements of the company. The company has not earlier adopted any standard, interpretation or amendment that have been issued, but are not yet effective.
The cumulative effect of initially applying IFRS 15 is recognised at the date of initial application as an adjustment to the opening balance of retained earnings. Therefore, the comparative information was not restated and continues to be reported under IAS 18.
The effect of adopting IFRS 15 on the Statement of Financial Position as at January 1, 2018 was, as follows:
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
AssetsRight of Return assets
Total Asset
LiabilitiesDeferred Tax LiabilitiesRefund Liabilities
Total LiabiltiesTotal Adjustment on equity:Retained earnings
Reference Increase/Decrease
1,182 1,182
(394)2,494
2,100
(918)
a
ba
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 51
Chemical and Allied Products plc
CAP plcRC: 4551
Set out below, are the amounts by which each financial statement line item is affected as at and for the year ended 31 December 2018 as a result of the adoption of IFRS 15. The adoption of IFRS 15 did not have a material impact on OCI or the company's operating, investing and financing cash flows. The first column shows amounts prepared under IFRS 15 and the second column shows what the amounts would have been had IFRS 15 not been adopted:
Statement of Profit or loss and Other Comprehensive Income for the year ended 31 December 2018
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
Amounts prepared under
Revenue from Contracts with CustomersSale of goodsRendering of ServicesRevenueCost of SalesGross ProfitSelling and distribution expensesAdministrative expensesOther incomeNet finance incomeProfit before taxIncome tax expense Profit for the yearEarnings per share
7,758,380 6,154
7,764,534(4,034,561)
3,729,973 (356,737)
(1,149,872)61,837
312,631 2,597,832 (568,489)2,029,343
2.90
7,757,956 6,154
7,764,110 (4,034,305)
3,729,805 (356,737)
(1,149,872)61,837
312,631 2,597,664 (568,439)2,029,225
2.90
424-
424(256)
168
-
-168
50218
ImpactPrevious
IFRS
N000N000N000
IFRS 15Reference
a
a
b
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 52
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Amounts prepared under
AssetsRight of return assetsTotal Assets
EquityRetained earnings Total equity LiabilitiesDeferred Tax LiabilitiesTotal non-current liabilities
Refund LiabilitiesTotal current LiabilitiesTotal LiabilitiesTotal Equity and Liabilities
9266,311,246
2,439,685 2,808,939
127,053 127,053
2,070 3,375,254 3,502,307 6,311,246
- 6,309,008
2,439,467 2,808,721
127,103 127,103
-
3,373,184 3,500,287 6,309,008
9262,238
218218
(50)(50)
2,070 2,070 2,020 2,238
Increase/(decrease)
Previous IFRSIFRS 15Reference
a
b
b
a
The nature of the adjustments as at 1 January 2018 and the reasons for the significant changes in the statement of financial position as at 31 December 2018 and the statement of profit or loss for the year ended 31 December 2018 are described below:
a) Sale of paint with variable consideration Some contracts for the sale of goods provide customers with a right of return.
Before adopting IFRS 15, the company recognised revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns. If revenue could not be reliably measured, the Company deferred recognition of revenue until the uncertainty was resolved. Under IFRS 15, rights of return rebates give rise to variable consideration.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 53
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2017
Rights of return Under IFRS 15, the consideration received from the customer is variable because
the contract allows the customer to return the products. The company used the probability-weighted expected value of returns to estimate the goods that will not be returned. For goods expected to be returned, the company presented a refund liability and asset for the right to recover products from a customer separately in the statement of financial position. Upon adoption of IFRS 15, the remeasurement resulted in additional refund liability of N2,494,177 and right of return assets N1,181,788 as at 1 January 2018. As a result of these adjustments, retained earnings as at 1 January 2018 decreased by N1,312,389.
As at 31 December 2018, right of return assets and refund liabilities decreased to N2,070,258 and N925,821 respectively. It also increased Revenue from contracts with customers and cost of sales by N423,919 and N255,968 respectively, for the year ended 31 December 2018.
b Other adjustments In addition to the adjustments described above, other items of the primary
financial statements such as deferred taxes and retained earnings were adjusted as necessary.
ii Impact of application of IFRS 9, Financial instruments IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition
and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of accounting for financial instruments: classification and measurement; impairment; and hedge accounting.
The Company applied IFRS 9 prospectively, with an initial application date of 1 January 2018. The Company has not restated the comparative information, which continues to be reported under IAS 39. Differences arising from the adoption of IFRS 9 have been recognised directly in retained earnings and other components of equity.
The effect of adopting IFRS 9 as at 1 January 2018 was, as follows:
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Assets Trade receivables Intercompany receivables Short-term deposits Total Assets Liabilities Deferred tax liabilities Total liabilities Total adjustment on equity: Retained earnings
N000
(6,260)(40)
(31,852)(38,152)
(11,446)(11,446)
(26,706)(26,706)
a,b
c
b,c
Adjustments 1 January 2018
The nature of these adjustments are described below:
a Classification and measurement Under IFRS 9, debt instruments are subsequently measured at fair value through
profit or loss, amortised cost, or fair value through OCI. The classification is based on two criteria: the company's business model for managing the assets; and whether the instruments' contractual cash flows represent 'solely payments of principal and interest' or the principal amount outstanding.
The assessment of the company's business model was made as of the date of initial application, 1 January 2018. The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.
The classification and measurement requirements of IFRS 9 did not have a significant impact to the company. The following are the changes in the classification of the company's financial assets.
Trade and other receivables, cash and short-term deposits classified as Loans and receivables as at 31 December 2017 are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These are classified and measured as Debt instruments at amortised cost beginning 1 January 2018.
The company has not designated any financial liabilities as at fair value through profit or loss. There are no changes in classification and measurement for the company's financial liabilities.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 54
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 55
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
In summary, upon adoption of IFRS 9, the company had the following required or elected reclassifications as at 1 January 2018.
b Impairment of Financial assets The adoption of IFRS 9 has fundamentally changed the company's accounting for
impairment losses for financial assets by replacing IAS 39's incurred loss approach with a forward-looking Expected Credit Loss (ECL) approach. IFRS 9 requires the Company to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets.
Upon adoption of IFRS 9 the company recognised additional impairment on its trade receivables, intercompany receivables and short-term deposits, amounting to N6 million, N40,000 and N31 million respectively, which resulted in a decrease in retained earnings of N38 million as at 1 January 2018.
*The change in the carrying amount is as a result of additional impairment allowance.
IFRS 9 Measurement Category
IAS 39 Measurement CategoryLoans and RecievablesTrade and other recievables*Cash and short-term deposits
-
-
110,700
2,820,459
-
-
104,400
2,788,607
Amortized cost
Fair Value through
OCI
Fair Value through
Profit/ Loss
N000 N000 N000 N000
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 56
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
C Other adjustments In addition to the adjustments described above, other items such as deferred
taxes were adjusted to retained earnings as necessary upon adoption of IFRS 9 as at 1 January 2018.
Set out below is the reconciliation of the year end closing impairment allowances as at 31st December in accordance with IAS 39 to the opening loss allowances as determined in accordance with IFRS 9:
IFRS 9 Measurement Category
Loans and receivables under IAS 39/Financial assets at amortised cost under IFRS 9 and contract assets Trade receivablesIntercompany receivablesShort-term deposits
19,643 6,690
-26,333
6,260 40
31,852 38,152
25,903 6,730
31,852 64,485
ECL under IFRS 9 as at 1
January 2018Remeasur
ement
Allowance for impairment
under IAS 39 as at 31 December
2017
N000 N000 N000
Retained earningsClosing balance under IAS 39 (31 December 2017)Recognition of IFRS 9 ECLsDeferred tax in relation to the aboveOpening balance under IFRS 9 (1 January 2018) Total change in equity due to adopting IFRS 9
1,872,966 (38,152)
11,446 1,846,260
(26,706)
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 57
Chemical and Allied Products plc
CAP plcRC: 4551
Impact of new standards, amendments and interpretations Standard issued not yet effective
IFRS 17 Insurance Contracts In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new
accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17, will replace IFRS 4 issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., Life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as certain guarantees and financial instruments with discretionary participation features.
A few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, IFRS 17 provides comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model, supplemented by:
Ÿ A specific adaptation for contracts with direct participation features (the variable fee approach)
Ÿ A simplified approach (the premium allocation approach) mainly for short- duration contracts
IFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with comparative figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. This standard is not applicable to the CAP Plc.
IFRIC Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax
treatments involve uncertainty that affects the application of IAS 12 and does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 58
Chemical and Allied Products plc
CAP plcRC: 4551
The Interpretation specifically addresses the following: Ÿ Whether an entity considers uncertain tax treatments separately Ÿ The assumptions that an entity makes about the treatments by taxation
authorities Ÿ How an entity determines taxable profit (tax loss), tax bases, unused tax
losses, unused tax credits and tax rates Ÿ How an entity considers changes in facts and circumstances
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
An entity has to determine whether to consider each uncertain tax treatment separately or together. The approach that better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or after 1 January 2019, but certain transition reliefs are available. The Company will apply the interpretation from its effective date. In addition, the Company may need to establish processes and procedures to obtain information that is necessary to apply the Interpretation on a timely basis.
Amendments to IFRS 9: Prepayment Features with Negative Compensation Under IFRS 9, a debt instrument can be measured at amortised cost or at fair value
through other comprehensive income, provided that the contractual cash flows are 'solely payments of principal and interest on the principal amount outstanding' (the SPPI criterion) and the instrument is held within the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract.
The amendments should be applied retrospectively and are effective from 1 January 2019, with earlier application permitted. These amendments have no impact on the financial statements of the Company.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 59
Chemical and Allied Products plc
CAP plcRC: 4551
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors' interests in the associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The standard does not impact on the financial statement of the company.
Amendments to IAS 19: Plan Amendment, Curtailment or Settlement The amendments to IAS 19 addresses as the accounting of a plan amendment,
curtailment or settlement that occur during a reporting period. The amendments specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to:
Ÿ Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the actuarial assumptions used to remeasure the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event
Ÿ Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability (asset).
The amendments also clarify that an entity first determines any past service cost, or a gain or loss on settlement, without considering the effect of the asset ceiling. This amount is recognised in profit or loss.
An entity then determines the effect of the asset ceiling after the plan amendment, curtailment or settlement
Any change in that effect, excluding amounts included in the net interest, is recognised in other comprehensive income.
The amendments apply to plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual reporting period that begins on or after 1 January 2019, with early application permitted. These amendments will apply only to any future plan amendments, curtailments, or settlements of the Company.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 60
Chemical and Allied Products plc
CAP plcRC: 4551
Amendments to IAS 28: Long-term interests in associates and joint ventures The amendments clarify that an entity applies IFRS 9 to long-term interests in an
associate or joint venture to which the equity method is not applied but that, in substance, form part of the net investment in the associate or joint venture (long-term interests). This clarification is relevant because it implies that the expected credit loss model in IFRS 9 applies to such long-term interests.
The amendments also clarified that, in applying IFRS 9, an entity does not take account of any losses of the associate or joint venture, or any impairment losses on the net investment, recognised as adjustments to the net investment in the associate or joint venture that arise from applying IAS 28 Investments in Associates and Joint Ventures.
The amendments should be applied prospectively and are effective from 1
January 2019, with early application permitted. Since the Company does not have such long-term interests in its associate and joint venture, the amendments will not have an impact on its financial statements.
(b) Annual Improvements 2015-2017 Cycle
These improvements include:
IFRS 3 Business Combinations The amendments clarify that, when an entity obtains control of a business that is
a joint operation, it applies the requirements for a business combination achieved in stages, including remeasuring previously held interests in the assets and liabilities of the joint operation at fair value. In doing so, the acquirer remeasures its entire previously held interest in the joint operation. An entity applies those amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2019, with early application permitted. These amendments will apply on future business combinations of the Company.
IFRS 11 Joint Arrangements A party that participates in, but does not have joint control of, a joint operation
might obtain joint control of the joint operation in which the activity of the joint operation constitutes a business as defined in IFRS 3.
.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 61
Chemical and Allied Products plc
CAP plcRC: 4551
The amendments clarify that the previously held interests in that joint operation are not remeasured. An entity applies those amendments to transactions in which it obtains joint control on or after the beginning of the first annual reporting period beginning on or after 1 January 2019, with early application permitted. These amendments are currently not applicable to the Company but may apply to future transactions.
IAS 12 Income Taxes The amendments clarify that the income tax consequences of dividends are
linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity recognises the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events.
An entity applies those amendments for annual reporting periods beginning on or after 1 January 2019, with early application is permitted. When an entity first applies those amendments, it applies them to the income tax consequences of dividends recognised on or after the beginning of the earliest comparative period. The company will review its effect on its financial statements when it becomes effective.
IAS 23 Borrowing Costs The amendments clarify that an entity treats as part of general borrowings any
borrowing originally made to develop a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete. An entity applies those amendments to borrowing costs incurred on or after the beginning of the annual reporting period in which the entity first applies those amendments. An entity applies those amendments for annual reporting periods beginning on or after 1 January 2019, with early application permitted. Since the Company's current practice is in line with these amendments, the Company does not expect any effect on its financial statements.
The following amendments that are issued but not yet effective would not have impact on the company
-Definition of a Business - Amendment to IFRS 3 - I Jan 2020 -Definition of Material - Amendment to IAS 1 and IAS 8 - I Jan 2020 -Amendment to The Conceptual Framework for Financial Reporting - 1 Jan 2020
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 62
Chemical and Allied Products plc
CAP plcRC: 4551
IFRS 16 Leases IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4
Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of 'low-value' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 is substantially unchanged from today's accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard's transition provisions permit certain reliefs. In 2017, the Company plans to assess the potential effect of IFRS 16 on its consolidated financial statements.
2.2 Segment reporting
Segment information is reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Directors that make strategic decisions. A segment is a distinguishable component of the company that is engaged either in providing related products or within a particular service or in providing products or services in an economic (geographical) segment that is subject to risks and returns that are different from those of other segments.
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 63
Chemical and Allied Products plc
CAP plcRC: 4551
2.3 Foreign currency translation
(a) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Naira (N), which is the company's functional currency.
(b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of profit or loss and other comprehensive income within 'finance income or cost'.
(c) Foreign currency policy Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates 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 items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., 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).
2.4 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administration purposes, are stated at cost less any accumulated impairment losses (for land and buldings) and accumulated depreciation (for buildings). All other property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Costs include expenditure that is directly attributable to the acquisition of the items. Land and building comprise mainly of factories and offices.
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 64
Chemical and Allied Products plc
CAP plcRC: 4551
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost can be measured reliably. The carrying amount of the replaced cost is derecognised. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred.
Land is not depreciated. Leasehold properties are depreciated over their useful lives, unless the lease period is shorter, in which case the lease period is used. Depreciation on other classes of property, plant and equipment is calculated using the straight line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
Building on leasehold land Shorter of useful life and lease terms (44 to 99 years) Plant and machinery 3 to 43 years Furniture and fittings 3 to 6 years Tinting equipment 4 years Motor vehicles 4 to 6 years
The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting date.
2.5 Imparment of non-current assets
Where an indication of impairment exists, an asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than it's estimated recoverable amount (refer to impairment Note 2.6 for further details)
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss for the period.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 65
Chemical and Allied Products plc
CAP plcRC: 4551
2.6 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any
accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the statement profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
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 intangible assets with finite lives is recognised in the statement of profit or loss and other comprehensive income in the expense category that is consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. 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 statement of profit or loss and other comprehensive income when the asset is derecognised.
Computer software Costs associated with maintaining computer software programmes are
recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognised as intangible assets when the following criteria are met:
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 66
Chemical and Allied Products plc
CAP plcRC: 4551
- it is technically feasible to complete the software product so that it will be available for use; - the directors intend to complete the software product and use it; - there is an ability to use or sell the software product; - it can be demonstrated how the software product will generate probable future economic benefits; - adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and - the expenditure attributable to the software product during its development can be reliably measured.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed five years.
2.7 Impairment of non-financial assets
Assets that are subject to depreciation and amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 67
Chemical and Allied Products plc
CAP plcRC: 4551
2.8 Financial assets - IAS 39
2.8.1 Initial recognition and measurement (Under IFRS 9)
All financial assets are recognised initially at fair value plus in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Regular purchases and sales of financial assets are recognised on the trade date –
the date on which the company commits to purchase or sell the asset.
2.8.2 Subsequent measurement
(i) Loans and receivablesThis category is the most relevant to the company. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss nd other comprehensive income. The losses arising from impairment are recognised in the profit or loss in finance costs for loan and in th other operating expenses for receivables.The company's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the statement of financial position (Notes 17a and 19).
Derecognition A financial asset (or, where applicable, a part of a financial asset or part of
similar financial assets) is primarily derecognised (i.e., removed from the company's statement of financial position) when: The rights to receive cash flows from the asset have expired or the company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without materials delay under a 'pass through' arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognise the transferred asset to the extent of its continuing involvement.
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 68
Chemical and Allied Products plc
CAP plcRC: 4551
Impairment of financial assets The company assesses, at each reporting date, whether there is objective
evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset, has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. 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 re-organisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost For financial assets carried at amortised cost, the Company first assesses
whether 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 group 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.The amount of any impairment loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred).
The present value of the estimated future cash flows is discounted at the financial asset's original EIR. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the statement of profit or loss and other comprehensive income. Interest income (recorded as finance income in the statement of profit or loss and other comprehensive income) continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 69
Chemical and Allied Products plc
CAP plcRC: 4551
Obective evidence that financial assets are impaired includes: - significant financial difficulty of the issuer or obligor; - a breach of contract, such as a default or delinquency in interest or principal payments; - the company, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; - it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; - the disappearance of an active market for that financial asset because of financial difficulties; or - observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the
assets in the portfolio.
2.8. Offsetting financial instruments
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.
2.8.4 Trade receivables-IAS 39
Trade receivables are amounts due from customers for goods sold in the ordinary course of business.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 70
Chemical and Allied Products plc
CAP plcRC: 4551
2.8.5 Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction cost.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.8.6 Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. For more information, refer to Note 20.
Derecognition
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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss and other comprehensive income.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
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Chemical and Allied Products plc
CAP plcRC: 4551
2.8.7 Financial Instruments-intial recognition and subsequent measurement under IFRS 9
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial
asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in Revenue from contracts with customers above.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
For the year ended 31 December 2018Notes to the Financial Statements cont’d
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 72
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the financial statements cont’d
For the year ended 31 December 2016For the year ended 31 December 2018Notes to the Financial Statements cont’d
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified into 1 category:
Ÿ Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company measures financial assets at amortised cost if both of the following conditions are met:
Ÿ The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; andŸ The contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Company's financial assets at amortised cost includes trade receivables, other receivables, loans, cash and cash equivalents and related parties receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Company's statement of financial position) when:
Ÿ The rights to receive cash flows from the asset have expired Or Ÿ The Company has transferred its rights 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 (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 73
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in the note below:
Ÿ Trade receivables Note 17a The Company recognises an allowance for expected credit losses (ECLs) for
all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment using the loss rate model.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 74
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
ii) Financial Liabilities
Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair
value through statement of profit or loss and other comprehensive income, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans
and borrowings and payables, net of directly attributable transaction costsThe Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Subsequent measurement The measurement of financial liabilities depends on their classification, as
described below:
Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities
held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Company has not designated any financial liability as at fair value through profit or loss.
For receivables to related parties (non-trade), other receivables and short-term deposits, the Company applies general approach in calculating ECLs. It is the Company's policy to measure ECLs on such asset on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 75
Chemical and Allied Products plc
CAP plcRC: 4551
Loans and borrowings
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings.
Derecognition
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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss and other comprehensive income.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
2.8.8 Government grant
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the costs, which it is intended to compensate, are expensed. Where the grant relates to an asset, it is recognised as deferred income in equal amounts over the expected useful life of the related asset.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 76
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
When the Company receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset by equal annual instalments. 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.
The company's government grant is presented in the statement of financial position by setting up a deferred income named government grant. This is a Bank of industry loan grant as a result of reduction in interest rate which is below effective interest rate. (No unfulfilled conditions exist in respect of the grant).
After initial recognition, the government grant is recognized as income in profit or loss on a systematic basis over the life of the loan.
2.9 Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is calculated based on the actual cost that comprises cost of direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
2.10 Cash and cash equivalents
Cash and cash equivalents includes cash at bank and in hand plus short-term deposits. Short-term deposits have a maturity of less than three months from the date of acquisition, are readily convertible to cash and are subject to an insignificant risk of change in value.
2.11 Share capital
Ordinary shares are classified as equity.
2.12 Current and deferred income tax
The tax for the year comprises current (company income tax and education tax) and deferred tax. Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is recognised in other comprehensive income or directly in equity, respectively.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 77
Chemical and Allied Products plc
CAP plcRC: 4551
The tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in 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 is charged or credited to the profit or loss, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its tax liabilities on a net basis.
2.13 Employee benefits
The company operates a defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. The company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 78
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
(a) Defined contribution schemes i) Statutory contributions (Note 8): The Pensions Reform Act of 2014 requires all
companies to pay a minimum of 10% of employees monthly emoluments to a pension fund on behalf of all full time employees.
ii) Voluntary contributions (Note 8): The company also contributes on an annual basis a fixed percentage of the employees salary to a fund managed by a fund administrator. The funds are invested on behalf of the employees and they will receive a payout based on the return of the fund upon retirement.
The contributions are recognised as employee benefit expenses when they are due. The company has no further payment obligation once the contributions have been paid. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available.
(b) Productivity incentive and bonus plans All full time staff are eligible to participate in the productivity incentive scheme.
The company recognises a liability and an expense for bonuses and productivity incentive, based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
2.14 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, rebates and sales related taxes. Revenue is recognised when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.
(i) Sale of goods Revenue arises from the sale of paints and other decoratives and is recognised
when the risks and rewards associated with ownership are transferred to the buyer. Due to the short term nature of these transactions no significant judgements are required.
(ii) Interest Income Interest income is recognised using the effective interest method. (iii) Rendering of services Revenue arises from the use of assets and provision of technical support to the
agents.
Revenue is recognized when services are rendered
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 79
Chemical and Allied Products plc
CAP plcRC: 4551
2.14 Revenue From Contracts with Customers (IFRS 15)
The Company is involved in the manufacturing and sale of paint. Revenue from contracts with customers is recognised when control of the goods
or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.
The Company has applied IFRS 15 practical expedient to a portfolio of contracts (or performance obligations) with similar characteristics since the Company reasonably expect that the accounting result will not be materially different from the result of applying the standard to the individual contracts. The Company has been able to take a reasonable approach to determine the portfolios that would be representative of its types of customers and business lines. This has been used to categorise the different revenue stream detailed below.
Sale of Paints The Company manufactures and sells paint and other decoratives. Revenue are
recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the products. The normal credit term is 30 to 60 days upon delivery.Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.
The paint is often sold with volume rebates based on aggregate sales over a three months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume rebates.The Company normally transfer the products to the customers premises as part of the sales incentive which is a logistics discount. The logistic discount which is the transport cost paid on behalf of the customer is recognised as a reduction to revenue for the related goods.The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (if any). In determining the transaction price for the sale of paint, the Company considers the existence of significant financing components and consideration payable to the customer (if any).
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 80
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
i) Variable ConsiderationIf the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of paint and other decorative provide customers with a right of return and usage based fees (management fee). The rights of return and usage based fees give rise to variable consideration.
Rights of return Certain contracts provide a customer with a right to return the goods within a
specified period. The Company uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Company will be entitled. The requirements in IFRS 15 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods that are expected to be returned, instead of revenue, the Company recognises a refund liability. A right of return asset (and corresponding adjustment to cost of sales) is also recognised for the right to recover products from a customer.
Customer Usage The Company has contracts where support staffs are located in the colour
centres/shops that belongs to its numerous customers. The fee charged is based on a constant rate on sales made by the customer. The total transaction price of service cost rendered by Company would be variable since the contracts have range of possible transaction prices arising from different volume purchased even though the rate per unit/band is fixed. The Company estimates the variable consideration using the expected value (i.e.., a probability weighted amount) because this method best predicts the amount of consideration.
ii) Significant financing component Using the practical expedient in IFRS 15, the Company does not adjust the
promised amount of consideration for the effects of a significant financing component since it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 81
Chemical and Allied Products plc
CAP plcRC: 4551
Application of paint The Company provides service of application of paints to its customers.Such
services are recognised as a performance obligation satisfied over time. Revenue is recognised by measuring progress using the input method that is labour hours.
Using the practical expedient in IFRS 15 for the application of paint, the Company has elect to recognise revenue based on the amount invoiced to the customer since the Company has a right to consideration from its customer in an amount that corresponds directly with the value to the customer of the Company's performance completed to date.
Contract Balances
Trade Recievables A receivable represents the Company's right to an amount of consideration
that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Assets and liabilities arising from rights of return
Right of return assets Right of return asset represents the Company's right to recover the goods
expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods, including any potential decreases in the value of the returned goods. The Company updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products.
Refund Liabilities A refund liability is the obligation to refund some or all of the consideration
received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer. The Company updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period. Refer to above accounting policy on variable consideration
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 82
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Cost to obtain a contract The Company pays sales commission to its employees for each contract that
they obtain for sales of paint. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commissions (included under employee benefits and part of selling and distribution) because the amortisation period of the asset that the Company otherwise would have used is one year or less.
2.15 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
A lease is classified at the inception date of a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the company is classified as a finance lease.
Finance lease Leases that transfer substantially all the risks and rewards incidental to ownership
of an asset to another party, the lessee, are classified as finance leases. Title may or may not eventually be transferred. Where the company is the lessor, assets subject to finance leases are initially reported as receivables at an amount equal to the net investment in the lease. Lease income from finance lease is subsequently recognised as earned income over the term of the lease based on the effective interest rate method.
Operating lease payments are recognised as an operating expense in the statement of profit or loss and other comprehensive income on a straight-line basis over the lease term.
Company as a lessor Leases in which the company does not transfer substantially all the risks and
ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contigent rents are recognised as revenue in the period in which they are earned.
2.16 Fair value measurement
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 83
Chemical and Allied Products plc
CAP plcRC: 4551
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(a) Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
(b) Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
(c) Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
2.17 Dividend distribution
Dividend distribution to the company's shareholders is recognised as a liability in the company's financial statements in the period in which the dividends are approved by the company's shareholders. In respect of interim dividends these are recognised once declared by the board of directors.
Dividend not claimed for over a period of 15 months are refunded back to the company and are treated as a liability in the company's financial statements.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 84
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
2.18 Risk management
The board through the Risk and Governance Committee has the responsibility for developing and implementing an enterprise - wide risk management framework for identifying, measuring, monitoring and controlling risks in the company. The executive management ensures the implementation of controls put in place to mitigate the various identified risks and report updates of status to the Board quarterly.
3. Financial risk management
3.1 Financial risk factors
The company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company's financial performance.
(a) Market risk (i) Foreign exchange risk The company is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar as a result of importing key raw materials. Foreign exchange risk arises from future commercial transactions. There are limited exposures to recognised assets and liabilities.
The company manages its risk in the following ways: Scenario planning, information sharing within the group,In-plant tinting,local production of dulux trade bases,effective working capital management and planning, export drive,insurance, participation in MAN,NECA activities to influence government policies.
The company does not make use of derivatives to hedge its exposures. Letters of credit are issued by the company to the foreign suppliers for the purchase of materials.The Company does not hedge but buys from the official market to mitigate the difference between the official and parallel markets.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 85
Chemical and Allied Products plc
CAP plcRC: 4551
(ii) Price risk The company is not exposed to equity securities price risk and commodity
price risk. The company had no equity securities as at 31 December 2018 and 31 December 2017.
(iii) Interest rate riskInterest 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 is not exposed to the risk of changes in market interest rates because the loans and borrowings are fixed rate.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
The company's foreign exchange risk is as follows:
NairaUSDGBP Total cash and short term deposits
2018 2017
N000N000Cash and short term deposits:2,780,823
39,369 267
2,820,459
4,151,457 146,074
41,763 4,339,294
If the Naira was to decrease by 1% against the foreign currencies the impact on profit would be as follows (and vice versa for a 1% increase)
2018 2017
N000N000
- -
USDGBP
1,461 418
3943
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 86
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
(b) Credit risk
Credit risk is monitored and managed in the company by the Finance Controller. The company is responsible for managing and analysing the credit risk for each of her new clients before standard payment and delivery terms and conditions are offered. Credit risk arises from cash and cash equivalents,and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, the company utilises the institutions that have sufficient reputational risk but do not strictly monitor their formal ratings . In addition the company monitors its exposures with individual institutions and has internal limits to control maximum exposures. Credit terms are set with customers based on past experiences, payment history and reputations of the customers. Sales to retail customers are settled in cash, while only agents and corporate customers are given credits based on limits set by the board, typically 30 days.
No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.
Impairment losses Trade Receivables For trade receivables, the company applied the simplified approach in computing
ECL. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses (ECL). The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, customer type and rating, and coverage by letters of credit). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 17. The company does not hold collateral as security.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 87
Chemical and Allied Products plc
CAP plcRC: 4551
Set out below is the information about the credit risk exposure on the Company's trade receivables as at 31 December 2018 using a provision matrix:
Expected credit loss measurement - other financial assets
The company applied the general approach in computing expected credit losses (ECL) for intercompany receivables and short-term deposits. The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
Trade receivablesDays past due
31 December 2018
In thousands of nairaExpected credit loss rateEstimated total gross carrying amount at defaultExpected credit loss
100.00%
19,609 19,609
-
123,393 34,419
Total>365 days100.00%
- -
100.00%
- -
16.17%
14,885 2,407
13.95%
88,899 12,403
181-365 days
91-180 days1-90 daysCurrent
Trade receivablesDays past due
31 January 2018
In thousands of nairaExpected credit loss rateEstimated total gross carrying amount at defaultExpected credit loss
100%
19,609 19,609
68,46225,903
Total>365 days100%
-
100%
1,438 1,438
13%
263 34
10%
47,152 4,822
181-365 days
91-180 days1-90 daysCurrent
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 88
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
The ECL is determined by projecting the PD, LGD and EAD for each future month and for each individual exposure. These three components are multiplied together and adjusted for the likelihood of survival (i.e. the exposure has not prepaid or defaulted in an earlier month). This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The 12-month and Lifetime PDs are derived by mapping the internal rating grade of the obligors to the PD term structure of an external rating agency for all asset classes. The 12-month and lifetime EADs are determined based on the expected payment profile, which varies by product type. The assumptions underlying the ECL calculation – such as how the maturity profile of the PDs, etc. – are monitored and reviewed on a regular basis. There have been no significant changes in estimation techniques or significant assumptions made during the reporting period. The significant changes in the balances of the other financial assets including information about their impairment allowance are disclosed below respectively.
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Analysis of inputs to the ECL model under multiple economic scenarios
An overview of the approach to estimating ECLs is set out in Note 3.b(ii) Summary of significant accounting policies and in Note 4 Significant accounting judgements, estimates and assumptions. To ensure completeness and accuracy, the Company obtains the data used from third party sources (Central Bank of Nigeria, Standards and Poor's etc.) and a team of expert within its credit risk department verifies the accuracy of inputs to the Company's ECL models including determining the weights attributable to the multiple scenarios. The following tables set out the key drivers of expected loss and the assumptions used for the Company's base case estimate, ECLs based on the base case, plus the effect of the use of multiple economic scenarios as at 1 January 2018 and 31 December 2018.
The tables show the values of the key forward looking economic variables/assumptions used in each of the economic scenarios for the ECL calculations. The figures for “Subsequent years” represent a long-term average and so are the same for each scenario.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 89
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
31 December, 2018
Key drivers GDP growth
Oil Price %
Exchange rate %
Inflation rate %
Assigned probabilitie
s
10%80%10%
10%80%10%
10%80%10%
10%80%10%
ECL scenario
UpturnBase
Downturn
UpturnBase
Downturn
UpturnBase
Downturn
UpturnBase
Downturn
2019
0.260.200.14
56.0055.0044.00
180.00199.50204.75
26.0031.0034.00
2020
0.2919.00
0.11
59.0057.0041.00
175.00209.48214.99
24.0032.0036.00
2021
0.320.150.08
62.0062.0038.00
170.00219.95225.74
22.0033.0038.00
2022
0.350.160.05
65.0054.0035.00
165.00230.95237.02
20.0034.0040.00
Subsequent years
0.410.15
-0.01
71.0057.0029.00
155.00254.62261.32
16.0036.0044.00
2023
0.380.140.02
68.0056.0032.00
160.00242.49248.87
18.0035.0042.00
1 January, 2018
Key drivers GDP growth
Oil Price %
Exchange rate %
Inflation rate %
Assigned probabilities
11%79%10%
11%79%10%
11%79%10%
11%79%10%
ECL scenario
UpturnBase
Downturn
UpturnBase
Downturn
UpturnBase
Downturn
UpturnBase
Downturn
2018
0.230.200.17
53.0050.0047.00
185.00190.00195.00
28.0030.0032.00
2019
0.260.200.14
56.0055.0044.00
180.00199.50204.75
26.0031.0034.00
2020
0.2919.00
0.11
59.0057.0041.00
175.00209.48214.99
24.0032.0036.00
2021
0.320.150.08
62.0062.0038.00
170.00219.95225.74
22.0033.0038.00
Subsequent years
0.380.140.02
68.0056.0032.00
160.00242.50248.88
18.0035.0042.00
2022
0.350.160.05
65.0054.0035.00
165.00230.95237.03
20.0034.0040.00
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 90
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Short-term depositsAn analysis of changes in the gross carrying amount and the corresponding ECL allowances is, as follows:
The following tables outline the impact of multiple scenarios on the allowance:
Short-term deposit
Other receivables31 December 2018
Intercompany receivables
Upside (10%)Base (80%)Downside (10%)Total
2,265 18,119
2,265 22,649
4,310 34,476
4,310 43,096
6255,003
6256,253
7,200 57,598
7,200 71,998
Total
Short-term deposits
Other receivables1 January 2018
Intercompany receivables
Upside (11%)Base (79%)Downside (10%)Total
2,408 17,294
2,189 21,891
3,504 25,163
3,185 31,852
7405,317
6736,730
4,244 30,480
3,858 38,582
Total
Stage 2Stage 1 Stage 3
In thousands of nairaGross carrying amount as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
2,741,170 4,185,456
(2,741,170)4,185,456
2,741,170 4,185,456
(2,741,170)4,185,456
--
--
--
--
Total
Stage 2Stage 1 Stage 3
In thousands of nairaECL allowance as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
31,852 43,096
(31,852)
43,096
31,852 43,096
(31,852)
43,096
--
--
--
--
Total
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 91
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Other receivablesAn analysis of changes in the gross carrying amount and the corresponding ECL allowances is, as follows:
Intercompany recivablesAn analysis of changes in the gross carrying amount and the corresponding ECL allowances is, as follows:
Stage 2Stage 1 Stage 3
In thousands of nairaGross carrying amount as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
47,191 26,679
-
73,870
47,191 26,679
-
73,870
--
--
--
--
Total
Stage 2Stage 1 Stage 3
In thousands of nairaGross carrying amount as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
6,999 7,246
-
14,245
6,999 7,246
-
14,245
--
--
--
--
Total
Stage 2Stage 1 Stage 3
In thousands of nairaECL allowance as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
21,891 758
- 22,649
21,891 758
- 22,649
--
--
--
--
Total
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 92
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Stage 2Stage 1 Stage 3
In thousands of nairaECL allowance as at 1 January 2018New asset purchasedAsset derecognised or repaid (excluding write offs)At 31 December 2018
6,690 -
(437)6,253
6,690 -
(437)6,253
--
--
--
--
Total
Finance lease receivableTrade receivablesReceivable from related partiesOther receivablesAdvances to staffCash and bank balancesShort term deposits
10,377 123,393
14,245 73,870
118196,933
4,185,456 4,604,392
10,379 88,974
7,992 51,221
118196,933
4,142,361 4,497,978
--------
-34,419
6,253 22,649
- -
43,095 106,416
N000N000 N000N000
TotalFully
performing
Past due but not
Impaired Impaired
31 December 2018
Finance lease receivableTrade receivablesReceivable from related partiesOther receivablesAdvances to staffCash and bank balancesShort term deposits
10,379 68,152
6,999 47,191
34479,289
2,741,170 2,953,524
10,379 48,509
30925,300
34479,289
2,741,170 2,905,300
--------
-19,643
6,690 21,891
---
48,224
N000N000 N000N000
Total gross amount
Fully performing
Past due but not
Impaired Impaired
31 December 2017
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 93
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Reconciliation of the provision for impairment:
Other receivablesAt 1 JanuaryAdditional impairment charge for the yearAt 31 December
21,891 758
22,649
20,686 1,205
21,891
N000
2017
N000
2018
(c) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the 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.
Cash flow forecasting is performed in the company and rolling forecasts of the company's liquidity requirements is monitored to ensure it has sufficient cash to meet operational needs at all times. In addition, the company obtained letter of credits as a cover for it's foreign suppliers.
The group is finalising newpolicies on cash reserves and liquidity.
Reconciliation of the provision for impairment:
Trade receivablesAt 1 JanuaryAdjustment upon application of IFRS 9Balance as at 1 January 2018 /1 January 2017– As restatedProvision for expected credit lossWrite off during the yearAt 31 December
19,643 6,260
25,903 14,810 (6,294) 34,419
20,938 -
20,938 34
(1,330)19,643
N000
2017
N000
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 94
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Surplus cash held by the company over and above balance required for working capital management are invested in interest bearing current accounts, time deposits, money market deposits. At the reporting date, the company held money market funds of N4,142,360,619.51 (2017: N2,741,169,579.57) that are expected to readily generate cash inflows for managing liquidity risk.
The table below analyses the company's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
3.2 Capital risk management
The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
At 31 December 2018
Trade payables
At 31 December 2017
BorrowingTrade payables
Less than 3 months
344,147 344,147
Less than 3 months
N00020,000
219,896 239,896
Between 3 months
and 1 year
Between 3 months
and 1 yearN000
59,115 -
59,115
Between 1 and 5 years
--
Between 1 and 5 yearsN000
---
Over 5 years
--
Over 5 years
N000---
N000N000 N000N000
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 95
Chemical and Allied Products plc
CAP plcRC: 4551
The company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the Statement of financial position). Total equity is calculated as 'equity' as shown in the statement of financial position.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
4. Significant judgements and estimates
4.1 Significant estimates
The preparation of financial statement in conformity with IFRS requires the use of certain critical accounting estimates. In the process of applying the Company's accounting policies, management has exercised judgment and estimates in determining the amounts recognised in the financial statements. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. The areas where judgment and estimates are significant to the financial statements are as follows:
Property, Plant and Equipment/Intangible Assets Estimates are made in determining the depreciation/amortisation rates and
useful lives of these property, plant and equipment. These financial statements have, in the management's opinion been properly prepared within reasonable limits of materiality and within the framework of the summarised significant accounting policies.(refer to Note 2.4 for further details).
The amortisation period/useful lives of intangible assets also require management estimation.
Trade and other payablesBorrowingLess:cash and cash equivalentsNet cash and cash equivalents
EquityTotal EquityCapital and DebtGearing ratioThe company is a low geared company.
1,559,016 -
(4,339,294)(2,780,278)
2,808,939 2,808,939
56%
1,130,834 79,115
(2,820,459)(1,610,510)
2,242,220 2,242,220
50%
N000
2017
N000
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 96
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Provision for expected credit losses of trade receivables The Company uses a provision matrix to calculate ECLs for trade receivables. The
provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, customer type and rating).
The provision matrix is initially based on the Company's historical observed default rates. The Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future. The information about the ECLs on the Company's trade receivablesis disclosed in Note 3(b).
Impairment losses on other financial assets The Company's ECL calculations are outputs of complex models with a number of
underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and estimates include:
Ÿ The segmentation of financial assets when their ECL is assessed on a collective basis
Ÿ Development of ECL models, including the various formulas and the choice of inputsDetermination of associations between macroeconomic scenarios and, economic inputs, such as unemployment levels, inflation rate and GDP, and the effect on PDs, EADs and LGDs
Ÿ Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL models
4.2 Significant judgements
Revenue from Contracts with Customers The company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 97
Chemical and Allied Products plc
CAP plcRC: 4551
Determining the timing of satisfaction of application paints
The company concluded that revenue for installation services is to be recognised over time because the customer simultaneously receives and consumes the benefits provided by the company. The fact that another entity would not need to re-perform the service that the company has provided to date demonstrates that the customer simultaneously receives and consumes the benefits of the company's performance as it performs.
The company determined that the input method is the best method in measuring progress of the application of paint services because there is a direct relationship between the company's effort (i.e., labour hours incurred) and the transfer of service to the customer. The company recognises revenue on the basis of the labour hours expended relative to the total expected labour hours to complete the service.
Determining the timing of satisfaction of sales of paint The company concluded that revenue for sales of product is to be recognised as a
point in time; when the customer obtains control of the paint. The company assess when control is transferred using the indicators below:
Ÿ The company has a present right to payment for the product;Ÿ The customer has legal title to the product;Ÿ The company has transferred physical possession of the asset and delivery
note received;Ÿ The customer has the significant risks and rewards of ownership of the
product; andŸ The customer has accepted the asset
Estimating variable consideration for returns and volume rebates The company estimates variable considerations to be included in the transaction price for the sale of paints with rights of return and volume rebates.
The company developed a statistical model for forecasting sales returns. The model used the historical return data of each product to come up with expected return percentages. These percentages are applied to determine the expected value of the variable consideration. Any significant changes in experience as compared to historical return pattern will impact the expected return percentages estimated by the company.
The company updates its assessment of expected returns monthly and the refund liabilities are adjusted accordingly. Estimates of expected returns are sensitive to changes in circumstances and the company's past experience regarding returns may not be representative of customers' actual returns and rebate entitlements in the future.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 98
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
5. Segment Analysis
The chief operating decision-maker has been identified as the executive directors. The executive directors review the company's internal reporting on monthly income statement and financial position in order to assess performance and allocate resources.
The Executive Director assess performance of the operating segment based on profit from operations.
Operating profitDepreciation (Note 14)Interest income (Note 9)Profit before taxationIncome tax (Note 11)Total assetsTotal liabilities
Entity wide information:Analysis of revenue:Sale of paint productsRevenue from services
2,285,201 94,736
327,249 2,597,832
568,489 6,311,246 3,502,307
2018
N000 7,758,380
6,154 7,764,534
1,975,676 81,188
226,703 2,181,711
682,981 5,013,990 2,771,770
2017
N0007,103,932
10,018 7,113,950
N000
2017
N000
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 99
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Disaggregated revenue information
Set out below is the disaggregation of the company's revenue from contracts with customers:
Set out below is the amount of revenue recognised from:
For the year ended 31 December 2018
Sale of paint products
Application of paint
Geographical marketsWithin NigeriaOutside NigeriaTotal revenue from contracts with customers
Type of goods/service Sale of paint productsApplication of paintTotal revenue from contracts with customers
Timing of revenue recognitionGoods transferred at a point in timeServices transferred over timeTotal revenue from contracts with customers
Sales channelsThrough intermediariesDirectly to customersTotal revenue from contracts with customers
Amounts included in refund liabilities at the beginning of the year
7,758,380 -
7,758,380
7,758,380 -
7,758,380
7,758,380 -
7,758,380
2,637,849 5,120,531 7,758,380
6,154 -
6,154
- 6,154 6,154
-6,154 6,154
- 6,154 6,154
7,764,534 -
7,764,534
7,758,380 6,154
7,764,534
7,758,380 6,154
7,764,534
2,637,849 5,126,685 7,764,534
2018N000
2,494
Total
N000N000N000
Segments
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 100
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Performance obligations
Information about the company's performance obligations are summarised below:
Sale of paints The performance obligation is satisfied upon customers obtaining control of the
paints that is upon delivery and acceptance. Invoices are usually payable generally within 30 to 60 days from delivery. Some contracts provide customers with a right of return. Returned goods are exchanged only for new goods i.e. no cash refunds are offered.
Application of paint The performance obligation is satisfied over a period of time and payment is
generally due upon completion of the service and acceptance of the customer. Revenue is recognised by measuring progress using the input method that is labour hours.
Concentration risk
Three customers who are agents of the company contributed 34% of the
Sale of scrap itemsProfit on sale of PPEInterest from Government grantManagement feesRealised Exchange Loss/gain
5,328 52
1,484 57,445 (2,473)61,837
9,482 4,877 4,136
52,826 6,271
77,592
N000
2017
N000
2018
6. Other income
Management fees represent income generated from management services rendered to the company's key distributors.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 101
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
7ii Administrative expenses
7. Expenses by nature
7i Cost of sales
Change in inventories of finished goods and work in progressStaff costs Royalty fees (Note 29a)Hire of equipmentCapdec project costDepreciation of property,plant & equipment (Note 14)General risk insurance premiumDirect overheadOther expenses
3,531,246 182,119 139,827
29,721 4,745
57,372 14,389
8,152 66,990
4,034,561
3,428,242 147,992 123,235
33,633 7,070
49,637 13,007
4,726 56,443
3,863,985
N000
2017
N000
2018
Staff costs excluding directors' emolumentsDirectors' emoluments (Note 8iii)Auditors' feesDepreciation of property,plant & equipment (Note 14)\Amortisation of intangible assets (Note 15)InsuranceCommercial service fees (Note 29b)Computer chargesCleaning and laundrySecurityImpairment on other receivablesImpairment on intercompany receivablesImpairment and write off on trade receivablesImpairment of short term depositsOther expenses
541,515 74,18320,983
37,364 23,255
3,199 81,534 39,612 18,546 10,357
8142,633
14,776 11,243
269,858 1,149,872
551,268 69,633 19,530
31,551 22,242
4,215 74,701 26,457 18,347 11,347
1,205 -
1,296-
218,864 1,050,656
N000
2017
N000
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 102
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
7iii Selling and distribution expenses
Other expenses relates to office cleaning expenses, awards and conferences expenses incurred during the year.
Marketing communication & entertainmentTour and travellingCarriage outwardOther expenses
137,228 48,151 94,219 77,140
356,737
105,741 36,807 85,950 72,727
301,225
N000
2017
N000
2018
Particulars of directors and staff
(i) The company had in its employment during the year the weekly average number of staff in each category below. The aggregate amount stated against each category was incurred as wages and retirement benefit costs during the year.
8. Employee benefits
Staff costs include:Wages and salariesPension costs: - Defined contribution plans (Statutory) - Defined contribution plans (Voluntary)
648,107
38,413 37,114
723,634
621,089
37,970 40,201
699,260
N000
2017
N000
2018
CostManagementStaffTotal
480,367 243,267 723,634
485,785 213,475 699,260
N000
2017
N000
2018
20172018NumbersManagementStaff
80133213
86119205
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 103
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
(ii) The table below shows the number of employees who earned over =N=300,000 as emoluments in the year and were within the bands stated.
(iii) Emoluments of directors
Fees Passage allowance Other emoluments
(iv) The Chairman's emoluments
(v) Emolument of the highest paid director
1,294 57,076 15,813 74,183
12,857
15,813
1,175 50,003 18,455 69,633
11,721
18,455
N000
2017
N000
2018
N300,000 700,001 1,000,001 1,400,001 1,800,001 2,200,001 2,600,001 3,000,001 4,000,001 5,000,001 6,000,001 8,000,001 9,000,001 10,000,001 10,000,001
700,000 1,000,000 1,400,000 1,800,000 2,200,000 2,400,000 3,000,000 4,000,000 5,000,000 6,000,000 8,000,000 9,000,000
10,000,000 16,000,000 18,000,000
2018Number
29673620
89
1417
4331110
213
2017Number
29593620
89
1417
4331101
205
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 104
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Key management compensation
Key management have been defined as the executive directors.
Key management compensation includes:
(vi) The table below shows the number of Directors of the company, whose remuneration, excluding pension contributions, are within the bands shown below.
Short-term employee benefits:- Wages and salaries- Directors emolumentsPost employment benefits: - Defined contribution plan
15,813 8,023
1,581
25,417
18,455 8,435
2,027
28,917
N000
2017
N000
2018
The amounts above have been included in directors emoluments.
Interest income on short-term bank depositsInterest income on loan to related partyInterest income on finance lease assets
323,951 -
3,298 327,249
191,631 32,074
2,998 226,703
N000
2017
N000
2018
9. Finance income
Interest costAmortised costInterest element on loan
4,019 2,369 8,230
14,618
20,668 - -
20,668
N000
2017
N000
2018
10. Finance Cost
14,000,00118,000,001
16,000,00020,000,000
N --
2 0 1 8N u m b e r
1-1
2017Number
- 11
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 105
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
11. Taxation
Nigeria corporation tax is calculated at 30% (2017: 30%) of the estimated assessable profit for the year.
Current taxNigeria corporation tax charge for the year
Education taxCapital gain taxIncome tax expense
747,194
53,647 -
800,841
589,503
45,335 92
634,930
N000
2017
N000
2018
The tax charge for the year can be reconciled to the profit per the statement of profit or loss as follows:
Accounting Profit before tax
Tax at the Nigeria corporation tax rate of 30% (2017: 30%)Impact of disallowable expensesImpact of Education taxPrior year over provisionTax exempt incomeCapital gain taxTax incentives
Effective tax rate
Income tax for the yearTax at the Nigeria corporation tax rate of 30% (2017: 30%)Education taxPrior Year Over ProvisionCapital gain taxDeferred tax charged/ writeback for the year
Tax charge for the year
2,597,832
779,350 43,322 53,647
(271,196) (34,082)
-(2,552)
568,489
22%
747,194 53,647
(271,196) -
38,844
568,489
2,181,711
654,513 18,221 45,335
-(18,526)
92(16,654) 682,981
31%
589,503 45,335
-92
48,051
682,981
N000
2017
N000
2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 106
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Per statement of profit or loss
Income taxEducation taxPrior CIT over provisionCapital gain taxDeferred taxation (Note 23)
747,194 53,647
(271,196)-
38,844 568,489
589,503 45,335
-92
48,051 682,981
N000
2017
N000
2018
Per statement of financial position:Balance 1 January
(Payments)/writeback during the year:Income taxEducation taxCapital gains taxBack duty taxTotal cash paymentWHT UtilisedPrior CIT over provision
Provision for the year:Income taxEducation taxCapital gain tax
Balance as at 31 December
652,175
(273,654)(45,335)
(92)-
(319,081)(61,898)
(271,196)(652,175)
747,194 53,647
-800,841
800,841
720,713
(635,753)(47,000)
-(170)
(682,923)(20,545)
-(703,468)
589,503 45,335
92634,930
652,175
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 107
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
12. Dividend
Amounts recognised as distributions to ordinary shareholders in the year comprise:
***The dividend refunded relates to a recall of dividend deposited with the Registrars which have stayed over and above 15 months in accordance with SEC requirement.
Approved dividend for 2018: 290 kobo per share (2017:205 kobo per share)
The directors proposed, out of 2018 profit, a dividend of 290 kobo per share amounting to N2.03billion subject to approval at the annual general meeting and are not recognised as liability as at 31 Dec. 2018
At 1 January*Approved dividend***Dividend refundedPayments during the yearAt 31 December
809,598 1,435,000
206,683 (1,437,953)
1,013,328
520,817 1,540,000
288,781 (1,540,000)
809,598
N000
2017
N000
2018
13. Earnings per share
(a) Basic Basic earnings per share is calculated by dividing the profit attributable to equity
holders of the company by the weighted average number of ordinary shares in issue during the year.
There were no potentially dilutive shares outstanding at 31 December 2018.
Weighted average number of ordinary shares in issue ('000)Profit attributable to ordinary equity shareholders (N'000) Basic earnings per share (kobo)
(b) Diluted
700,000
2,029,343 290
290
700,000
1,498,730 214
214
20172018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 108
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
14. Property, plant and equipment
Cost
At 1 January 2017 Additions Disposals Reclassification At 30 December 2017
At 1 January 2018 Additions Disposals Reclassifications At 31 December 2018
Accumulated depreciation At 1 January 2017 Charge for the year Disposals At 31 December 2017
At 1 January 2018 Charge for the year Disposals At 31 December 2018
Net book values At 31 December 2018
At 31 December 2017
Leasehold Land
11,472 - -
11,472
11,472 ---
11,472
3,862--
3,862
3,862 - -
3,862
7,610
7,610
Buildings on
leaseholdland
N000
53,846 --
53,846
53,846 843
-0
54,689
14,107 1,765
-15,872
15,872 1,765
- 17,637
37,052
37,974
Tinting equipment
N000
164,300 -
(2,550)
161,750
161,750 15,449
(41,376) -
135,823
129,553 11,847 (2,405)
138,995
138,995 12,480
(41,307) 110,168
25,655
22,755
Plant and Machinery
N000
419,304 117,907 (5,145)
211,793 743,860
743,860 23,841 (1,676) 45,776
811,801
216,050 37,789 (5,009)
248,831
248,831 44,893 (1,665)
292,060
519,741
495,029
Furniture and fittings
N000
124,351 16,637 (5,167)
135,821
135,821 14,491 (2,202)
-148,110
102,997 12,589 (5,125)
110,461
110,461 14,679 (1,939)
123,201
24,909
25,360
Motor vehicles
N000
171,684 -
(33,141)
138,543
138,543 79,358
--
217,901
99,613 17,198
(29,827) 86,984
86,984 20,919
107,903
109,998
51,559
Total
N000
1,161,750 180,319 (46,003)
1,296,066
1,296,068 133,982 (45,254)
-1,384,796
566,182 81,188
(42,366) 605,004
605,004 94,736
(44,911) 654,829
729,962
691,059
WIP
N000
216,793 45,776
-(211,793)
50,776
50,776 --
(45,776) 5,000
----
-- - -
5,000
50,776
Leasehold properties have an unexpired tenure of between 43 and 65 years. Work in progress (WIP) relates to the amount incurred for factory extension which is yet to be completed.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 109
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
15. Intangible assets
Cost of software: At 1 January Additions Balance at 31 December
Amortization of software At 1 January Amortization of software during the year Balance at 31 December
Net Balance at 31 December
2018N000
116,271 -
116,271
67,202 23,255 90,457
25,814
2017N000
102,306 13,964
116,270
44,960 22,242 67,202
49,068
16. Inventories
Raw materials Intermediates Technical stocks and spares Containers and labels Consumable stocks Finished goods
2018N000
295,194 14,330 31,520 43,777 27,654
471,641 884,115
Value at
CostCostCostCostCostCost
2017N000
350,512 21,077 18,962 41,287
9,386 746,181
1,187,405
The amount of inventory expensed during the year is N3,531,246,000 (2017 N3,428,242,000) This is recognised in cost of sales.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 110
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
17a. Trade and other receivables Receivables due within one year
Trade receivables Less: provision for impairment of trade receivables Net trade receivable Receivables from related parties (Note 25) Impairment on receivables from related parties Witholding tax receivable Impairment on witholding tax receivable Witholding tax credit notes received Other receivables Impairment on other receivables Advances to staff
2018N000
123,393 (34,419)
88,974 14,245 (6,253) 20,689
(14,080) 17,575 73,870
(22,649) 118
172,488
2017N000
68,152 (19,643)
48,509 6,999
(6,690) 52,758
(53,295)36,776 47,191
(21,891) 344
110,700
Other receivables includes interest receivables and non-interest bearing advances granted to trade partners.
Gross investment in lease Unearned finance income Net investment in lease
17b. Receivables due after one year, finance lease receivables
2018N000
91,601 (81,224)
10,377
2017N000
91,601 (81,222)
10,379
Movements in the provision for expected credit losses on trade receivables are as follows:
At 1 January under IAS 39 Adjustment upon application of IFRS 9 Balance as at 1 January 2018 – As restated Additional impairment charge for the year Receivables written off during the year At 31 December
2018N000
19,643 6,260
25,903 14,776 (6,260) 34,419
2017N000
20,939 -
- 34
(1,330) 19,643
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 111
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Gross finance lease receivable - minimum lease receivable - No later than 1 year - 2 to 5 years - More than 5 years
Future finance income on lease
Present value of finance lease receivable
The present value is analysed as follows: - No later than 1 year - 2 to 5 years - More than 5 years
Gross investment in lease2018N000
2,200 11,000 78,401 91,601
(81,224)
10,377
1,606 4,306 4,464
10,377
2017N000
2,200 11,000 78,401 91,601
(81,222)
10,379
1,608 4,306 4,464
10,379
The company has finance lease for a warehouse to a related party, MDS Logistics. The lease is for a total period of 51 years; of this period 41 years remain in the contract. The property reverts to the company at the end of the lease period.
17c. Decease/(Increase) in Trade and other Receivables
2017 movement
Trade & Other Receivables WHT utilized Impairment of Trade & Other Rec.
2016
627,520
Increase/Decrease2017
110,700 516,820 (20,545)
(2,501)493,774
Trade & Other Receivables Prior year Imp. Current year imp. Interest element on loan WHT Utilised
2018 movement2017
110,700 6,999
47,191
Increase/Decrease2018
172,488 14,245 73,870
(61,788)(6,300)
(18,223)(8,230)
(61,898)(156,439)
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 112
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
19. Cash and cash equivalents
Cash at bank and in hand Short-term deposits
2018N000
196,933 4,142,361 4,339,294
2017N000
79,289 2,741,170 2,820,459
Cash at banks earns interest at floating rates on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months,depending on the immediate cash requirements of the company, and earn interest at the respective short-term deposit rates.
In 2015, Security and Exchange Commision directed all Registrars to return all unclaimed dividends, which have been in their custody for 15 months and above, to the paying companies. Included in the cash and shorterm deposits is N1.395b which represents unclaimed dividends received from Africa Prudential Registrars as at 31st December 2018.
18. Prepayments
Import prepayment Other prepayments Packaging Material Insurance
2018N000
13,539 61,648 49,083 24,001
148,270
2017N000
20,470 47,050 60,213 17,187
144,920
Other prepayments includes staff prepayments on housing, education allowance etc.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 114
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Other accruals includes gratuity payable to staff, car grant payable to staff, accrued incentives to staff and professiional fee outstnding during the period.
Authorised: Ordinary shares of 50k each Issued and fully paid: Ordinary shares of 50k each
Movements during the year: Balance at 1 January 2018 At 31 December 2018
Number '000
1,500,000
700,000
Number of shares
'000 700,000 700,000
Amount N000
750,000
350,000
Ordinary shares
N000 350,000 350,000
2017
Amount N000
750,000
350,000
Number '000
1,500,000
700,000
22. Share capital
Average credit period taken for trade purchases (days) 30 30
2018 2017
Terms and conditions of the above financial liabilities: Trade payables are non-interest bearing and are normally settled on 30 days term.
Other payables are non-interest bearing and have an average term of six months.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 113
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Borrowing Current portions As at 1/1 Interest accrued (Note 10) Interest paid Loan repayment Balance as at 31 December
Grant Balance as at 1 Jan. Release to P or L Balance as at 31 December
20. Interest-bearing loans and borrowings
2018N000
77,631 6,388
(4,019) (80,000)
-
1,484 (1,484)
-
2017N000
157,284 20,668
(15,239) (85,082)
77,631
5,620 (4,136)
1,484
The of Bank of Industry granted N200m loan to the company for the procurement of plant and machinery for expansion of its production capacity at an interest rate of 10%. The tenor of the loan is 36 months. The company's grant is disclosed in the Financial statement because the interest on the loan is below the effective interest rate.
21. Trade and other payables
Trade payables Royalty accrual
Provision for employee leave VAT payable Witholding tax payable Income received in advance Accrued marketing expenses Payable to related parties Accrued customers rebate Accrued dealer's reward Accrued audit fee Sundry creditors Reclassification of dividend payable Other accruals
2018N000
344,147 139,827 483,974
1,515 168,790
17,102 203,223
17,260 38,074
-15,186 20,948 52,724
389,043 151,177
1,559,016
2017N000
219,896 123,235 343,131
- 87,324
3,946 -
3,307 9,870
112,776 32,499 18,900 49,236
389,043 80,802
1,130,834
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 115
Chemical and Allied Products plc
CAP plcRC: 4551
Nature and purpose of reserves The share premium reserve is used to recognise the amount above the par value of issued and fully paid ordinary share of the Company.
Share premium balance at 1 january
At 31 December
N0002018
19,254
19,254
N0002017
19,254
19,254
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
Accelerated depreciation property, plant & equipment Trade and other receivables Inventories
Accelerated depreciation property, plant & equipment Trade and other receivables Inventories
2018N000
132,630 (30,456)
(2,126)100,049 156,905 (24,768)
(5,083)127,053
2017N000
81,119 (26,905)
(2,216)51,998
132,630 (30,456)
(2,126)100,049
23. Deferred tax The analysis of deferred tax assets and deferred tax liabilities is as follows: Statement of financial position:
At 1 January Adjustment upon adoption of new standards At 1 January (restated) Profit or loss charge (Note 11) At 31 December
2018N000
(100,049)11,840
(88,209)(38,844)
(127,053))
2017N000
(51,998)-
(51,998)(48,051)
(100,049)
The movement on the deferred income tax account is as follows:
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 116
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
26. Related party transactions
The immediate and ultimate parent, as well as controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies that are related to CAP Plc through common shareholdings and directorship.
The following transactions were carried out with related parties:
(a) Sales of goods and services
24. Refund Asset
This relates to return asset on right of return previously taken as cost of sales.
Right of return asset 926926
--
2018 2017
This relates to refund liabililty on right of return previously taken as revenue.
25. Refund Liability
At 1 January At 31 December
2,0702,070
--
UAC of Nigeria Plc UAC Foods Limited UACN Property Dev. Company Plc UAC Restaurants
Relationship
ServiceSales of paint
Sales of paintSales of paint
ParentFellow subsidiary
Fellow subsidiaryFellow subsidiary
6861,565
29,108 654
32,013
-1,643
3,744 370
5,757
2018N000
2017N000
UAC of Nigeria Plc: Commercial service fee (Note 7)
2018N000
81,534
2017N000
74,701
(b) Purchases of goods and services
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 117
Chemical and Allied Products plc
CAP plcRC: 4551
(c) Key management compensation
Key management have been determined as directors (executive and non-executive) the Chairman and other senior management that form part of the leadership team. Details of compensation are documented in note 8. There were no other transactions with key management during the year.
Notes to the Financial Statements cont’dFor the year ended 31 December 2018
(d) Year-end balances arising from sales/purchases of goods/services:
Pension Service
Sales of paintService
ServiceServiceSales of paint
Fellow subsidiary
Fellow subsidiaryParent
Fellow subsidiaryFellow subsidiaryFellow subsidiary
Receivables: UNICO CPFA Limited UACN Property Dev. Company Plc UAC of Nigeria Plc Portland Paint Products Nig. PLC Grand Cereals Ltd UAC Foods Ltd
2018N000
-
10,521 -
2,735 -
98914,245
2017N0006,690
263-
- 46
- 6,999
Relationship
Service
Fellow subsidiary
Fellow subsidiaryParent
Payable: Grand Cereals Ltd Portland Paint Products Nig. PLC UAC of Nigeria Plc
2018N000
150
15,000 22,924 38,074
2017N000
-
-9,870 9,870
Relationship
Fellow subsidiary
Finance lease receivable: MDS Logistices
2018N000
10,377
2017N000
10,379
Relationship
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 118
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
Contingent liabilities
31 December 2018 and 2017 The company is involved in some legal actions in the ordinary course of business.
Based on advice from the company's counsel, the directors are of the opinion that the company has good defence against the claims and no material loss is anticipated.
Capital expenditure authorised & contracted
2018N000
133,963
2017N000
32,795
27. Capital commitments and contingent liabilities
Capital commitments
28. Fair values
The carrying value of cash and cash equivalent, trade and other receivables, trade and other payables and receivables from related parties approximates their fair values as at the reporting dates.
Methods and assumptions used: Assets for which fair value approximates carrying value For financial assets and financial liabilities that have a short term maturity (less
than three months) it is assumed that the carrying amounts approximate their fair value. These includes cash and cash equivalent.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2018, the Company recorded an impairment of receivables relating to amounts owed by related parties 2018: N6,252,659.98 (2017: N6,690,000). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 119
Chemical and Allied Products plc
CAP plcRC: 4551Notes to the Financial Statements cont’d
For the year ended 31 December 2018
29. Technical support agreements
(a) The company has a royalty agreement with AkzoNobel United Kingdom in respect of paints produced and sold. Amount charged for the year (representing 3% of turnover of Dulux Brand) is N139.827million (2017: N123.24million)
(b) The company has commercial services agreement with UACN Plc for support services. Expense for commercial services fee (representing 1% of turnover of the company) is N81.53million (2017: N74.70million).
30. Events after reporting date
No event or transaction has occurred since the reporting date which would have a material effect on this financial statements.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 120
Chemical and Allied Products plc
CAP plcRC: 4551
RevenueOther income
Bought in materials and servicesLocalImportedValue added
Applied as follows:To pay employees assalaries, wages and other benefitsTo pay government as taxes Retained for replacement of assets and business growth:Deferred taxationAmortization of intangibles and depreciationProfit attributable to members
7,764,534 374,468
(3,455,602) (1,243,943)
3,439,457
723,634 529,645
38,844
117,991 2,029,343 3,439,457
100
21 15
1
3 59
100
7,113,950 283,627
(3,112,143) (1,301,033)
2,984,401
699,260 634,930
48,051
103,430 1,498,730 2,984,401
100
19 23
-
3 54
100
2018N000
% %
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, government, providers of capital and the amount retained for the future creations of more wealth.
2017N000
Value Added StatementFor the year ended 31 December 2018
EmployeeTaxesDeferred taxDepreciationRetained profit
Deferred tax1%Depreciation
3%
Retained profit 59%
Taxes 15%
Employees 21%
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 121
Chemical and Allied Products plc
CAP plcRC: 4551Company Five-year Financial Summary
Assets employedProperty, plant and equipmentIntangible assetsFinance lease assetsNet current assets
Deferred taxation
Funds employedShare capitalShare premiumRetained earnings
RESULTSContinued business
Turnover and profitsTurnover Profit before taxationTaxationProfit for the year attributable Interim dividendProfit retained
Notes
Earnings and dividend per share are based on profit after tax and on the number of ordinary shares issued and fully paid at the end of each year.
Per 50k share data (kobo)Earnings per share- BasicEarnings per share- AdjustedDividend per share- BasicDividend cover
290290290
-
214214 205
-
229229220
1
249249235
1
237237235
1
729,962 25,814 10,377
2,169,839 2,935,992
127,053 3,063,045
350,000 19,254
2,439,685 2,808,939
7,764,534
7,764,534 2,597,832 (568,489) 2,029,343
- 2,029,343
691,059 49,068 10,379
1,591,763 2,342,269
100,049 2,442,318
350,000 19,254
1,872,966 2,242,220
7,113,950
7,113,950 2,181,711 (682,981) 1,498,730
-1,498,730
595,565 57,347 10,381
1,757,277 2,420,570 (137,080) 2,283,490
350,000 19,254
1,914,236 2,283,490
6,813,984
6,813,984 2,296,821 (693,464) 1,603,357
-1,603,357
410,324 74,708 10,382
1,080,048 1,575,462
(55,329) 1,520,133
350,000 19,254
1,150,879 1,520,133
7,056,876
7,056,876 2,570,021 (830,462) 1,739,559 (805,000)
934,559
399,746 94,630 10,383
750,124 1,254,883
(74,310) 1,180,573
350,000 19,254
811,319 1,180,573
6,987,604
6,987,604 2,442,140 (779,715) 1,662,425
(1,050,000) 612,425
IFRS2018N000
IFRS2017N000
IFRS2016N000
IFRS2015N000
IFRS2014N000
For the year ended 31 December 2018
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 122
Chemical and Allied Products plc
CAP plcRC: 4551Salient Performance Graphs
For the year ended 31 December 2018
2,000
2,500
-
500
1,000
1,500
1,603
1,499
Profit after tax
YEAR
2014 2015 2016 2017 2018
1,662
1,740
2,029
Nm
YEAR
Turnover
6,200
6,400
6,600
6,800
7,000
7,200
7,400
7,600
2014 2015 2016 2017 2018
6,988
7,057
6,814
7,114
7,7657,800
Nm
8,000
100
200
250
350
Kobo
300
-
237249
229
2014 2015 2016 2017 2018
YEAR
214
290
150
Earnings per 50k share - Adjusted
50
235
235
50
150
200
250
2014 2015
220205
2016 2017 2018
Year
Kobo
100
Dividend per 50k share - Adjusted
300
290
YEAR
Turnover PAT Earnings Dividend per share Continued business
2014
6,988 1,662
237235
6,988
2015
7,057 1,740
249235
7,057
2016
6,814 1,603
229220
6,814
2017
7,114 1,499
214205
7,114
2018
7,765 2,029
290290
7,765
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 123
Chemical and Allied Products plc
CAP plcRC: 4551
Range
Number ofShareholders
Unit ofHoldings
Value ofHoldings
N
Percentage%
4,094 8,821 2,110
30647
41
1,531,384 28,817,631 56,708,489 81,884,898
102,311,003 68,319,534
360,427,061
765,692 14,408,815 28,354,245 40,942,449 51,155,501 34,159,767
180,213,531
0.224.128.10
11.7014.62
9.7551.49
9999,999
99,999 999,999
9,999,999 99,999,999
999,999,999
-------
11,000
10,000100,000
1,000,00010,000,000
100,000,000
Register Range Analysis
15,383 700,000,000 350,000,000 100Total
19911992199319941995199619971998199920002001200220032004201020112012201320142015201620172018
Share capital history
25,00025,00050,000
50,00050,000
100,000100,000100,000100,000100,000100,000100,000150,000150,000150,000420,000420,000420,000420,000420,000420,000
1,500,000 1,500,000
N'00014,00014,00033,352
4,97142,00052,00052,00052,00063,00063,00063,00063,00084,00084,000
105,000280,000280,000350,000350,000350,000350,000350,000
28,00028,00066,704 83,942 84,000
105,000105,000105,000126,000 126,000126,000168,000 168,000210,000 210,000 560,000 560,000700,000 700,000700,000700,000700,000700,000
Right Issue 3:2Bonus Issue 1:5
Scrip Issue 1:5
Bonus Issue 1:3
Bonus 1:4Bonus 1:3Bonus 1:1
Bonus 1:4
AuthorizedN000
IssuedN000
No of sharesN000
Shareholders’ Information
According to the Register of Members, the one shareholder UAC of Nigeria Plc held 5% of the issued share capital of the Company as at 31 December 2018.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 124
Chemical and Allied Products plc
CAP plcRC: 4551Shareholders’ Information cont’d
Five year dividend historyDividends declared during the last five years were as follows:-
1,575,000 1,645,000 1,645,000 1,540.000 1.435,000
11198949696
Total AmountN000
% of CompanyProfit after tax
225k235k235k220k205k
Dividend per share
2013 19th June 20142014 18th June 2015 2015 16th June 2016 2016 13th June 20172017 19th June 2018
Date declared
Notice to shareholders
Unclaimed dividends and share certificates
Since becoming a public company in 1974, the Company has declared and issued a number of scrip shares. Currently, our unclaimed dividends account indicates that some dividends warrants have not been returned to the registrars as unclaimed because the addresses could not be traced.
Total amount of unclaimed dividend as at December 31, 2018 was N1,334,912,540.78. The total number of unclaimed certificates as at December 31, 2018 was nil.
This notice is to request all affected shareholders to contact the Head, Business Development & Relationship Management of Africa Prudential Plc at 220B Ikorodu Road, Palmgrove, LagosTel +234-7080606400. Website: africaprudential.com
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 125
I/We
being a member/members of CHEMICAL AND ALLIED PRODUCTS PLC, hereby appoints,** ………………………………………………………………..or failing him the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the company to be held on Thursday June 20, 2019 and at any adjournment thereof:-
Dated this ……….………….. day of …………………………… 2019
Shareholder's Signature ……………………………………….........
IF YOU ARE UNABLE TO ATTEND THE MEETING
A member who is unable to attend the Annual General Meeting in person is allowed to attend by proxy. The above form has been prepared to enable you to exercise your right to vote, in case you cannot personally attend the meeting.
Following the normal practice, the name of the Chairman of the company has been entered on the form to ensure that someone will be at the meeting to act as your proxy but if you wish you may insert in the blank space on the form (marked**) the name of any person, whether a member of the company or not, who will attend meeting and vote on your behalf instead of one of the directors.
If executed by a corporation, the Proxy Form should be sealed with the Common Seal. The Proxy must produce the admission card sent with the Report and Accounts to obtain entrance to the meeting.
Please sign this proxy form and send it, so as to reach the address shown overleaf not later than Monday June 17, 2019
Please admit: ADMISSION FORM to the Annual General Meeting of CAP Plc which will be held at the ARTHUR MBANEFO HALL GOLDEN TULIP FESTAC, AMUWO ODOFIN LAGOS ON THURSDAY JUNE 20, 2019
IMPORTANT NOTE 1. This admission card must be produced by the shareholder or the proxy to obtain admission to to the Annual General Meeting. 2. Shareholders or their proxies are requested to sign the admission card in the appropriate place before attending the meeting.
Rose Hamis (Mrs.)Company Secretary
Signature of person attending SHAREHOLDER……………………………………………………………...... PROXY……………………………………………………………………….........Name and address of Shareholder
Annual General MeetingChemical and Allied Products Plc
Annual General MeetingChemical and Allied Products Plc
Proxy Form
54TH ANNUAL GENERAL MEETING TO BE HELD AT THE ARTHUR MBANEFO HALL, GOLDEN TULIP FESTAC, AMUWO ODOFIN, LAGOS STATE ON THURSDAY JUNE 20, 2019 AT
1234
5
6
7
RESOLUTIONS FOR AGAINST ABSTAIN ORDINARY BUSINESS To declare a dividend To re- elect Amb. Kayode Garrick as a Director To elect Mrs. Omolara Elemide as a DirectorTo authorize the Directors' to fix Auditors' remunerationThe Auditor's remuneration and expenses for 2018 was N20.64million inclusive of VATTo elect members of the Audit CommitteeSPECIAL RESOLUTIONSTo approve N35,011,283.47 as Directors' remuneration for 2019The Directors' remuneration for 2018 was N58,369,832.21To renew the general mandate authorizing the Company to enter into recurrent transactions with related parties or companies.
Please indicate with an “X” in the appropriate square how you wish your votes to be cast on the above resolutions. Unless otherwise instructed, the proxy will vote or abstain from voting at his discretion.
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 126
PLEASE AFFIXPOSTAGE STAMP
THE REGISTRARAfrica Prudential Plc220B Ikorodu RoadPalm GroveLagosTel: 01-4548118, 4548120
If undelivered please return to
THE REGISTRARAfrica Prudential Plc220B Ikorodu RoadPalm GroveLagosTel: 01-4548118, 4548120
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 127
1. AFRICA PRUDENTIAL PLC
2. ABBEY MORTGAGE BANK PLC
3. AFRILAND PROPERTIES PLC
4. ALUMACO PLC
5. A & G INSURANCE PLC
6. .R.M LIFE PLCA
7. DAMAWA STATE GOVERNMENT BONDA
8. ECO PETROLEUM PRODUCTS PLCB
9. UA GROUPB
10. ENUE STATE GOVERNMENT BONDB
11. AP PLCC
12. APPA AND D'ALBERTO PLCC
13. EMENT COY. OF NORTHERN NIG. PLCC
14. SCS PLCC
15. HAMPION BREWERIES PLCC
16. CWG PLC
CORDROS MONEY MARKET FUND17.
18. EBONYI STATE GOVERNMENT BOND
1 . OLDEN CAPITAL PLC9 G
. NFINITY TRUST MORTGAGE BANK PLC20 I
2 . VESTMENT & ALLIED ASSURANCE PLC1 IN
2 . IZ BANK PLC2 JA
2 . DUNA STATE GOVERNMENT BOND3 KA
2 .4 LAGOS BUILDING INVESTMENT CO. PLC
2 .5 MED-VIEW AIRLINE PLC
2 . XTA REAL ESTATE PLC6 MI (formerly ARM Properties Plc)
27. NEXANS KABLEMETAL NIG. PLC
28. OMOLUABI MORTGAGE BANK PLC
9 PER2 . SONAL TRUST & SAVINGS LTD
S MANDRIDES PLC30. P.
. RTLAND PAINTS & PRODUCTS NIG. PLC31 PO
. EMIER BREWERIES PLC32 PR
3 . SORT SAVINGS & LOANS PLC3 RE
3 . ADS NIGERIA PLC4 RO
3 . OA NIGERIA PLC5 SC
3 .6 TRANSCORP HOTELS PLC
3 . ANSCORP PLC7 RT
3 .8 TOWER BOND
3 . E LA CASERA CORPORATE BOND9 TH
. CN PLC40 UA
. ITED BANK FOR AFRICA PLC41 UN
. ITED CAPITAL PLC42 UN
4 . BALANCED FUND3 UNITED CAPITAL
44. UNITED CAPITAL BOND FUND
45. UNITED CAPITAL EQUITY FUND
4 . MONEY MARKET FUND6 UNITED CAPITAL
7 UNITED CAPITAL NIGERIAN EUROBOND FUND4 .
48. UNITED CAPITAL WEALTH FOR WOMEN FUND
49. UNIC DIVERSIFIED HOLDINGS PLC
. IC INSURANCE PLC50 UN
51 U. AC PROPERTY DEVELOPMENT COMPANY PLC
. TC NIGERIA PLC52 U
. EST AFRICAN GLASS IND PLC53 W
CLIENTELE
Please tick against the company(ies)where you have shareholdings
HEAD OFFICE: 220B, Ikorodu Road, Palmgrove, Lagos. Tel: 07080606400
PORT-HARCOURT: . Tel: 084-303457Oklen Suite Building (2nd Floor), No. 1A, Evo Road, GRA Phase 2
E- : @africaprudential.comMAIL cfc | www.africaprudential.com | @afriprud
Africa PrudentialRC 649007
e-SHARE REGISTRATION APPLICATION FORM
Dear Registrar,
Please take this as authority to activate my account(s) on your SharePortalwhere I will be able to view and manage my investment portfolio online withease.
11. NAME OF STOCKBROKER:
10. CSCS CLEARING HOUSE NO.:
9. POSTAL ADDRESS:*
8. ALTERNATE MOBILE NO.:
6. MOBILE NO.:*
5. ALTERNATE E-MAIL:
4. E-MAIL:*
3. OTHER NAME:
2. FIRST NAME:*
1. SURNAME/COMPANY NAME:*
7. SEX: MALE FEMALE
C
OTHERS:
Signature:
Joint/Company’s Signatories
Company Seal(if applicable)Signature:
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 128
E-SERVICE/DATA UPDATE FORM
KINDLY FILL AND RETURN FORM TO ANY OF OUR OFFICE ADDRESSES STATED BELOW | = COMPULSORY FIELDS*
10. OLD ADDRESS(if any)
13. NEXT OF KIN*
1. SURNAME/COMPANY NAME*
2. FIRST NAME* 3. OTHER NAME
4. GENDER* M F 5. E-MAIL
6. ALTERNATE E-MAIL
8. MOBILE (1)* (2)
9. ADDRESS*
14. MOTHER’S MAIDEN NAME*
NAME MOBILE
11. NATIONALITY* 12. OCCUPATION*
15. NAMEBANK 16. A/C NO.
7. DATE OF BIRTH*
17. NAMEA/C 18. OPENING DATEA/C
D D M M Y Y Y Y
D D M M Y Y Y Y
19. BANK VERIFICATION NO. (BVN)
2 . CSCS CLEARING HOUSE NO. (CHN)1 C
20. NAME OF STOCKBROKING FIRM
Africa Prudential
HEAD OFFICE: 220B, Ikorodu Road, Palmgrove, Lagos. Tel: 07080606400
PORT-HARCOURT: . Tel: 084-303457Oklen Suite Building (2nd Floor), No. 1A, Evo Road, GRA Phase 2
E- : @africaprudential.comMAIL cfc | www.africaprudential.com | @afriprud
1. AFRICA PRUDENTIAL PLC
2. ABBEY MORTGAGE BANK PLC
3. AFRILAND PROPERTIES PLC
4. ALUMACO PLC
5. A & G INSURANCE PLC
6. .R.M LIFE PLCA
7. DAMAWA STATE GOVERNMENT BONDA
8. ECO PETROLEUM PRODUCTS PLCB
9. UA GROUPB
10. ENUE STATE GOVERNMENT BONDB
11. AP PLCC
12. APPA AND D'ALBERTO PLCC
13. EMENT COY. OF NORTHERN NIG. PLCC
14. SCS PLCC
15. HAMPION BREWERIES PLCC
16. CWG PLC
CORDROS MONEY MARKET FUND17.
18. EBONYI STATE GOVERNMENT BOND
1 . OLDEN CAPITAL PLC9 G
. NFINITY TRUST MORTGAGE BANK PLC20 I
2 . VESTMENT & ALLIED ASSURANCE PLC1 IN
2 . IZ BANK PLC2 JA
2 . DUNA STATE GOVERNMENT BOND3 KA
2 .4 LAGOS BUILDING INVESTMENT CO. PLC
2 .5 MED-VIEW AIRLINE PLC
2 . XTA REAL ESTATE PLC6 MI (formerly ARM Properties Plc)
27. NEXANS KABLEMETAL NIG. PLC
28. OMOLUABI MORTGAGE BANK PLC
9 PER2 . SONAL TRUST & SAVINGS LTD
S MANDRIDES PLC30. P.
. RTLAND PAINTS & PRODUCTS NIG. PLC31 PO
. EMIER BREWERIES PLC32 PR
3 . SORT SAVINGS & LOANS PLC3 RE
3 . ADS NIGERIA PLC4 RO
3 . OA NIGERIA PLC5 SC
3 .6 TRANSCORP HOTELS PLC
3 . ANSCORP PLC7 RT
3 .8 TOWER BOND
3 . E LA CASERA CORPORATE BOND9 TH
. CN PLC40 UA
. ITED BANK FOR AFRICA PLC41 UN
. ITED CAPITAL PLC42 UN
4 . BALANCED FUND3 UNITED CAPITAL
44. UNITED CAPITAL BOND FUND
45. UNITED CAPITAL EQUITY FUND
4 . MONEY MARKET FUND6 UNITED CAPITAL
7 UNITED CAPITAL NIGERIAN EUROBOND FUND4 .
48. UNITED CAPITAL WEALTH FOR WOMEN FUND
49. UNIC DIVERSIFIED HOLDINGS PLC
. IC INSURANCE PLC50 UN
51 U. AC PROPERTY DEVELOPMENT COMPANY PLC
. TC NIGERIA PLC52 U
. EST AFRICAN GLASS IND PLC53 W
CLIENTELE
Please tick against the company(ies)where you have shareholdings
OTHERS:
Signature:
Joint/Company’s Signatories
Company Seal(if applicable)Signature:
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 129
E-DIVIDEND MANDATE ACTIVATION FORM
Bank Name:
Bank Account Number:
Account Opening Date:
SHAREHOLDER ACCOUNT INFORMATION
Surname/Company’s Name First Name Other Name
Address
City State Country
Previous Address (if any)
Clearing House Number (CHN) (if any) Name of Stockbroking Firm
CMobile Telephone 1 Mobile Telephone 2
E-mail Address
Signature:
Joint/Company’s Signatories
Company Seal(if applicable)
CurrentPassport
USE GUM ONLYNO STAPLE PINS
(to be stamped by your banker)
ONLY CLEARING BANKS ARE ACCEPTABLE
1. AFRICA PRUDENTIAL PLC
2. ABBEY MORTGAGE BANK PLC
3. AFRILAND PROPERTIES PLC
4. ALUMACO PLC
5. A & G INSURANCE PLC
6. .R.M LIFE PLCA
7. DAMAWA STATE GOVERNMENT BONDA
8. ECO PETROLEUM PRODUCTS PLCB
9. UA GROUPB
10. ENUE STATE GOVERNMENT BONDB
11. AP PLCC
12. APPA AND D'ALBERTO PLCC
13. EMENT COY. OF NORTHERN NIG. PLCC
14. SCS PLCC
15. HAMPION BREWERIES PLCC
16. CWG PLC
CORDROS MONEY MARKET FUND17.
18. EBONYI STATE GOVERNMENT BOND
1 . OLDEN CAPITAL PLC9 G
. NFINITY TRUST MORTGAGE BANK PLC20 I
2 . VESTMENT & ALLIED ASSURANCE PLC1 IN
2 . IZ BANK PLC2 JA
2 . DUNA STATE GOVERNMENT BOND3 KA
2 .4 LAGOS BUILDING INVESTMENT CO. PLC
2 .5 MED-VIEW AIRLINE PLC
2 . XTA REAL ESTATE PLC6 MI (formerly ARM Properties Plc)
27. NEXANS KABLEMETAL NIG. PLC
28. OMOLUABI MORTGAGE BANK PLC
9 PER2 . SONAL TRUST & SAVINGS LTD
S MANDRIDES PLC30. P.
. RTLAND PAINTS & PRODUCTS NIG. PLC31 PO
. EMIER BREWERIES PLC32 PR
3 . SORT SAVINGS & LOANS PLC3 RE
3 . ADS NIGERIA PLC4 RO
3 . OA NIGERIA PLC5 SC
3 .6 TRANSCORP HOTELS PLC
3 . ANSCORP PLC7 RT
3 .8 TOWER BOND
3 . E LA CASERA CORPORATE BOND9 TH
. CN PLC40 UA
. ITED BANK FOR AFRICA PLC41 UN
. ITED CAPITAL PLC42 UN
4 . BALANCED FUND3 UNITED CAPITAL
44. UNITED CAPITAL BOND FUND
45. UNITED CAPITAL EQUITY FUND
4 . MONEY MARKET FUND6 UNITED CAPITAL
7 UNITED CAPITAL NIGERIAN EUROBOND FUND4 .
48. UNITED CAPITAL WEALTH FOR WOMEN FUND
49. UNIC DIVERSIFIED HOLDINGS PLC
. IC INSURANCE PLC50 UN
51 U. AC PROPERTY DEVELOPMENT COMPANY PLC
. TC NIGERIA PLC52 U
. EST AFRICAN GLASS IND PLC53 W
CLIENTELE
Please tick against the company(ies)where you have shareholdings
HEAD OFFICE: 220B, Ikorodu Road, Palmgrove, Lagos. Tel: 07080606400
PORT-HARCOURT: . Tel: 084-303457Oklen Suite Building (2nd Floor), No. 1A, Evo Road, GRA Phase 2
E- : @africaprudential.comMAIL cfc | www.africaprudential.com | @afriprud
DISCLAIMER"In no event shall Africa Prudential Plc be liable for any damages , losses or liabilities including without limitation, direct or indirect,special, inciden tal, consequential damages, losses or liabilities, in connection with your use of this form or your inability to use theinformation, materials, or in connection with any failure, error, omission, defect, delay in operation or transmission, or systemfailure, even if you advice us of the possibility of such damages, losses of expenses, whether express or implied in respect of such
OTHERS:
information."
Africa PrudentialRC 649007
INSTRUCTIONPlease complete all section of this form to make it eligible for processing and return tothe address below.
The RegistrarAfrica Prudential Plc220B, Ikorodu Road, Palmgrove, Lagos.
I/We hereby request that henceforth, all my/our Dividend Payment(s) due to me\us from
my/our holdings in all the companies ticked at the right hand column be credited directly
to my /our bank detailed below:
DD MM YYYY
Signature:
Gender Male Female:
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 130
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 132
Chemical and Allied Products plc
CAP plcRC: 4551
2018 ANNUAL REPORT & FINANCIAL STATEMENTS 131
Chemical and Allied Products plc
CAP plcRC: 4551