PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS€¦ · PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018

PORTLAND PAINTS & PRODUCTS NIGERIA PLC

UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2018

CONTENTS PAGE

General information 3

Statement of comprehensive income 4

Statement of financial position 5

Statement of changes in equity 6

Statement of cash flows 7

Notes to the financial statements 8

2

Other information:

Statement of value added 31


GENERAL INFORMATION


BOARD OF DIRECTORS

Mr. Larry Ettah - Chairman

Mr. Adedamola Olusunmade - MD/CEO

Mr. Abdul Bello - Director

Mr. Mukhtar Yakasai - Director

Engr. Dipo Ashafa - Director

Mrs. Adeline Ogunfidodo - Director

REGISTERED OFFICE Sandtex House

105A, Adeniyi Jones avenue,

Ikeja. Lagos State.

FACTORYKm 36, Abeokuta – Lagos expressway

Ewekoro, Ogun State.

REGISTERED NUMBER RC76075

FRCN NUMBER FRC/2012/0000000000221

COMPANY SECRETARY Mrs. Bolanle Oyekan

UAC House

1-5 Odunlami street

Marina,Lagos

AUDITORS PricewaterhouseCoopers

Landmark Towers,

Plot 5B Water Corporation Road,

Victoria Island, Lagos.

REGISTRAR Africa Prudential Plc

220B, Ikorodu Road

Palmgrove, Lagos.

BANKERS Zenith Bank Plc

United Bank for Africa Plc

Guaranty Trust Bank

Ecobank Nigeria Plc

First City Monument Bank Plc

3


STATEMENT OF COMPREHENSIVE INCOME


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

3 Months to

JUNE 2018

6 Months to

JUNE 2018

3 Months to

JUNE 2017

6 Months to

JUNE 2017

Note N'000 N'000 N'000 N'000

Revenue 3 809,569 1,433,670 516,884 1,066,383

Cost of Sales 5 (489,946) (901,536) (367,141) (781,489)

Gross Profit 319,623 532,134 149,743 284,894

Other Operating Income 4 20,861 53,238 27,874 57,337

Selling and distribution expenses 5 (62,084) (127,219) (41,239) (81,004)

Administrative expenses 5 (183,188) (329,163) (117,586) (206,895)

Profit from Operations 95,212 128,990 18,793 54,332

Finance Income 6 2,513 5,734 1,026 1,029

Finance Expenses 7 (1,504) (3,726) (14,690) (36,856)

Net Finance Expenses 1,008 2,007 (13,665) (35,828)

Profit Before Taxation 96,221 130,998 5,129 18,505

(Tax expense)/Tax Credit 8 (30,790) (41,919) (1,641) (5,921)

Profit from Continuing Operations 65,431 89,079 3,487 12,583

Profit from Discountinued Operations - - - -

Other Comprehensive Income - - - -

Total Comprehensive Profit 65,431 89,079 3,487 12,583

Earnings Per Share for Profit Attributable to Owners of The Company

During The Year:

Basic (Kobo) 9 8.25 11 1 2

Diluted (Kobo) 9 7.41 11 1 1

4

The notes on pages 8 to 31 form an integral part of these financial statements


STATEMENT OF CHANGES IN EQUITY

AS AT 30 JUNE 2018

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

capital

Share

Premium

Revaluation

Surplus

Retained

earnings Total equity

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

1 January 2017 200,000 - 91,923 408,292 700,214

Rights Issue 196,708 437,923.00 - - 634,631

Profit for the Year - - - 58,170 58,170

31 December 2017 396,708 437,923 91,923 466,462 1,393,015

1 January 2018 396,708 437,923 91,923 466,462 1,393,015

Profit for the period - - 89,079 89,079

30 June 2018 396,708 437,923 91,923 555,541 1,482,093

6



STATEMENT OF CASH FLOWS



6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 N'000

Cash flows from operating activities:

Cash generated from operations 17 245,559 (392,129)

Income Tax paid 15 (28,255) (1,061)

Net cash (used in) / generated from Operating activities 217,304 (393,190)

Cash flows from investing activities:

Purchase of Property, Plant and Equipment 9 (17,485) (12,609)

Purchase of intangible assets 10 (2,189) (47,156)

Proceeds from sales of PPE (Property,Plant and Equipment) 6,391 1,290

Finance income 6 5,734 1,029

Net cash used in Investing activities (7,549) (57,446)

Cash flows from financing activities:

Repayments of borrowings (29,688) (30,717)

Interest paid (3,726) (36,856)

Right issues 634,631

Net cash used in financing activities (33,414) 567,058

Net increase/(decrease) in cash and cash equivalents 176,341 116,421

Cash and cash equivalents brought forward 194,205 34,408

Cash and cash equivalents 13 370,546 150,829

7


PORTLAND PAINTS & PRODUCTS NIGERIA PLCNOTES TO THE FINANCIAL STATEMENTS


1.0 Corporate Information

2.0 Summary of significant accounting policies

2.1 Basis of preparation

2.1.1 Basis of Measurement

2.2

(a)

(b)

Portland Paints and Products Nigeria Plc (The Company) was incorporated as a Limited Liability Company on 3 September 1985

and became a Public Company on 24 April 2008. The Company was listed on the floor of the Nigerian Stock Exchange on 9 July

2009.

The registered office is located at 105A, Adeniyi Jones Avenue, Ikeja, Lagos in Nigeria.

The principal activities of the Company are manufacturing and sale of paints and marketing of sanitary ware. The main products

of the Company are Sandtex range of decorative and industrial coatings and Hempel marine & protective coatings for Oil and Gas

Sector.

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

periods commencing on or after 1 January 2017.However,none of the amended standards were adopted by the company in the

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

The financial statements of Portland Paints and Products Nigeria Plc ("the Company") have been prepared in accordance with

International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC)

applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International

Accounting Standards Board (IASB).

The financial statements are presented in the functional currency, Nigerian naira (N), rounded to the nearest thousand, and

prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also

requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving

a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements

are disclosed in note 2.3

The financial statements have been prepared on a historical cost basis. The company’s financial statements are presented in

naira, which is also the company’s functional currency. Transactions in foreign currency are recognized in naira at the official spot

rate at the date of transaction.

Changes in accounting policy and disclosures

New and amended standards adopted by the Company

Amendments to IAS 12 Income taxes

New standards, amendments and interpretations not yet adopted

The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for the recognition of

deferred tax assets. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is not

permitted.

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

after 1 January 2017 have been adopted by the Company.The company has not elected to early adopt and the impact of new

standards that is applicable to the company is still being assessed.

The amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The

amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s

tax base. They also clarify certain other aspects of accounting for deferred tax assets.

8



IFRS 16 Leases

2.3

The new hedging rules align hedge accounting more closely with the Company’s risk management practices. As a general rule it

will be easier to apply hedge accounting going forward as the standard introduces a more principles-based approach. The new

standard also introduces expanded disclosure requirements and changes in presentation.

The new impairment model is an expected credit loss (ECL) model which may result in the earlier recognition of credit losses.

The company currently does not have any hedging arrangements and hence would not be affected by the new rules.

IFRS 15: Revenue from contract with customers.

This standard is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater

consistency in the recognition and presentation of revenue.Revenue is recognized based on the satisfaction of performance

obligations,which occurs when control of good or service transfers to a customer.

Amendments to IAS 7 Cash flow statements

IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction

between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a

financial liability to pay rentals are recognised. The only exceptions are short term and low-value leases.

The accounting for lessors will not significantly change.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on

the company.

Following the changes approved by the IASB in July 2014, the Company no longer expects any impact from the new classification,

measurement and derecognition rules on the Company’s financial assets and financial liabilities.

The new requirements will not have any impact on the Company's financial assets.

Significant accounting judgements, estimates and assumptions

In January 2016, the International Accounting Standards Board (IASB) issued an amendment to IAS 7 introducing an additional

disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities.

IFRS 9 Financial instruments

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

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

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

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

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

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

Material estimates in the financial statements include the following:

The standard is effective for annual periods beginning on or after 1 January 2019 and earlier application is not permitted. The

Company is assessing the impact of IFRS 16.

The amendment responds to requests from investors for information that helps them better understand changes in an entity’s

debt. The amendment will affect every entity preparing IFRS financial statements. However, the information required should be

readily available. Preparers should consider how best to present the additional information to explain the changes in liabilities

arising from financing activities. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier

application is not permitted.

Amendment is not applicable to current year financial statements.

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new

rules for hedge accounting.

In July 2014, the IASB made further changes to the classification and measurement rules and also introduced a new impairment

model. These latest amendments now complete the new financial instruments standard.

9



2.3.1

2.3.2

2.3.3

2.3.4

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

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

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

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

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

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

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

decrease the value of non-current assets.

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

Accounts receivable

Income Tax

The Company is subject to income tax under the Nigerian tax legislation.Significant judgement is required in determining the

provision for income taxes.There are many transactions and calculations for which the ultimate tax determination is uncertain.

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

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

Additional information on impaired receivables is included in note 13.

Impairment of intangible assets

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

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

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

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

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

10



2.4 Summary of significant accounting policies

2.4.1 Intangible Assets

Category Useful livesTrade Mark Indefinite

Computer software 5 years

2.4.2

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

Property Plant and Equipment

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

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

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

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

economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are

treated as changes in accounting estimates. The amortisation expense on tangible assets with finite lives is recognised in the

income statement as the expense category that is consistent with the function of the intangible assets. Gains or losses arising from

derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of

the asset and are recognised in the income statement when the asset is derecognised.

Intangible assets include purchased trade mark and computer software.

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

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

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

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

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

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

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

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

impairment loss.

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

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

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

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

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

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

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

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

year end and adjusted prospectively, if appropriate.

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

are recognised in the income statement as an expense.

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

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

11



2.4.3 Assets on lease

Category Useful lives

Long leasehold land Over the lease period

Freehold buildings up to 99 years

Heavy Plant and machinery 5-10 years

3-5years

Motor vehicles 2-4 years

Computer equipments 3-5 years

2.4.4 Earnings per share

2.4.5 Diluted Earnings per share

2.4.6 Impairment of non-financial assets

2.4.7 Inventories

Diluted Earnings per share is calculated by dividing the profit attributable to shareholders by the total number of shares (inclusive

of diluted shares)

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

issue during the year.

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

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

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

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

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

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

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

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

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

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

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

and conditions are accounted for as follows:

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

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

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

operating capacity but excluding borrowing costs.

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

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

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

estimated costs necessary to make the sale.

• Raw materials:

Purchase cost on weighted average basis

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

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

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

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

balance of the liability.

Furniture, fittings and equipment

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

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

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

12



2.4.8 Financial instruments

2.4.8.1 Financial Asset

Classification

Loans and receivables

Subsequent measurement

Derecognition of financial assets

Impairment of financial assets

Financial assets carried at ammortised cost

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

exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually

significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset,

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

collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss

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

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

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

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

rate.

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

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

events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the

estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated.

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

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

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

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

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

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

Company’s continuing involvement in the asset.

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

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

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

c) The Company has transferred substantially all the risks and rewards of the asset or the Company has neither transferred nor

retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

market.

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

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

when:

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

of another party.

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

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

finanancial assets at initial recognition.

13



2.4.8.2 Financial liabilities

Classification

Subsequent measurement

Derecognition of financial liabilities

2.4.8.3 Offsetting financial instruments

2.4.9 Cash and cash equivalent

2.4.10 Taxes

•Current income tax

• Deferred tax

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

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

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

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

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

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

by the reporting date in Nigeria. Current income tax assets and liabilities also include adjustments for tax expected to be payable

or recoverable in respect of previous periods.

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

comprehensive income and not in the income statement.

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

or less in the statement of financial position.

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

net of any outstanding bank overdraft.

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

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

the liability simultaneously.

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

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

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

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

deductible temporary differences, carry forward of unused tax credits.

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

in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor

taxable profit or loss.

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

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

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

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

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

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

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

or directly in equity.

The Company's financial liabilities are recognised initially at fair value and subsequently, measured at ammortised cost using the

effective interest rate method.

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

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

14



2.4.10 Taxes (continued)

• Sales tax

2.4.11 Government grants

2.4.12 Provisions

2.4.13 Revenue recognition

Sale of goods

Rendering of services

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

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

the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible

to be recovered.

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

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

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

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

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

the statement of financial position.

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

the statement of comprehensive income.

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

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

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

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

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

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an

outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of

the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an

insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The

expense relating to any provision is presented in the income statement. If the effect of the time value of money is material,

provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where

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

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

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

right to return lapsed.

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

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

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

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

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

criteria must also be met before revenue is recognised:

15



2.4.14 Interest income

2.4.15 Borrowing cost

2.4.16 Foreign currency

2.4.17

2.4.18 Employees' benefits

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

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

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

income is included in finance income in the income statement.

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

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

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

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

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

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

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

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

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

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

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

monetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the item (i.e. the

translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or

profit or loss, respectively).

Segment reporting

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

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

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

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

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

Employees' benefits both legal and constructive which are long and short term in nature are adequately recognized in the income

statement.

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

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

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

provided by employees. The Company has no further payment obligations once the contributions have been paid.

16


NOTES TO THE FINANCIAL STATEMENTS


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

3 Segment Information:

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

(i) Income Decorative

Marine &

Industrial

Paints Sanitary Wares Total

Jun-18 Jun-18 Jun-18 Jun-18

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

Revenue:

Total Revenue 830,655 602,887 128 1,433,670

Inter-segmental revenue - - - -

Total Revenue From External Customers 830,655 602,887 128 1,433,670

Company's Revenue per Statement of

Comprehensive Income 830,655 602,887 128 1,433,670

Segment Gross Profit 299,466 234,732 -2,065 532,134

Operating Expenses 420,566

Depreciation 30,469

Amortisation 5,347

Finance Income (5,734)

Finance Expense 3,726

Other Income (53,238)

Sub-total 401,136

Company's Profit Before Tax 130,998

Decorative Marine Paints Sanitary Wares Total

Jun-17 Jun-17 Jun-17

6 Months to

JUNE 2017

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

Revenue:

Total Revenue 857,236 208,940 207 1,066,383

Total Revenue From External Customers 857,236 208,940 207 1,066,383

Company's Revenue per Statement of

Comprehensive Income 857,236 208,940 207 1,066,383

Segment Gross Profit 160,750 49,300 -39 210,010

Operating Expenses 254,630

Depreciation 31,698

Amortisation 1,572

Finance Income (1,029)

Finance Expense 36,856

(Other Income)/Loss (57,337)

Sub-total 266,390

Company's Profit Before Tax 18,505

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

segments.

For management purpose, the Company is organised into Strategic Business Units (SBU) based on products

categories and has three reportable segments as follows:

The chief operating decision maker (CODM) has been identified as the executive management. The Executive Management

monitors the operating results of each business units separately for the purpose of making decisions about resource allocation and

performance assessment. Segment performance is evaluated based on gross profit or loss and is measured consistently with gross

profit or loss in the combined financial statements.

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

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

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

17





(ii) Assets & Liabilities Decorative Marine Paints

Sanitary

Wares Total

Jun-18 Jun-18 Jun-18 Jun-18

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

Addition to Non-current Assets 17,485 17,485

Reportable Segment Assets 1,939,406 30,969 97,942 2,068,317

Factory Office Property 194,159 - - 194,159

Total Company Assets 2,151,050 30,969 97,942 2,279,961

Reportable Segment Liabilities:

Loans and Borrowings (Excluding Leases and

Overdrafts) 14,054 - - 14,054

Defined Contribution Pension Scheme 8,383 - - 8,383

Financial Liabilities 1,159 - - 1,159

Deferred Tax Laibilities 22,054 - - 22,054

Other Unallocated and Central Liabilities 752,214 - - 752,214

Total Company Liabilities 797,865 - - 797,865

Decorative Marine Paints

Sanitary

Wares Total

Dec-17 Dec-17 Dec-17 Dec-17

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

Addition to Non-current Assets 54,325 54,325

Reportable Segment Assets 1,387,874 367,395 13,143 1,768,413

Factory Office Property 213,164 - - 213,164

Total Company Assets 1,655,364 367,395 13,143 2,035,902

Reportable Segment Liabilities:

Loans and Borrowings (Excluding Leases and

Overdrafts) 43,742 43,742

Defined Contribution Pension Scheme 9,595 - - 9,595

Financial Liabilities 7,742 - - 7,742

Deferred Tax Laibilities 22,056 - - 22,056

Other Unallocated and Central Liabilities 559,752 - - 559,752

Total Company Liabilities 642,886 - - 642,886

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

assets.

Production activities in the factory is mainly production of decorative paints. Hence the relevant costs are absorbed by

Decorative Business Unit. This accounts for the depreciation on Factory building wholly absorbed by Decorative Business Unit.

Other Income is generated from the application of paints in addition to the sales and marketing of paint products.

The amounts provided to the chief operating decision maker (CODM) with respect to total assets are measured in a manner

consistent with that of the financial statements. These assets are allocated based on the operations of the segments and the

physical location of the assets.

18




(All amounts are in thousands of naira, unless otherwise stated) 6 Months

to JUNE

2018

6 Months

to JUNE

2017

N'000 N'000

4 Other Operating Income:

Government grants 6,113 12,252

Profit on sale of fixed assets 50 545

Sale of scrap 1,018 4,426

Insurance claim received 3,367 996

Exchange gain/(loss) 7,650 17,853

Sundry Income 34,734 21,039

Container Deposit Refund 307 227

Total 53,238 57,337

5a Expense by function

Cost of sales 901,536 781,489

Selling & distribution expenses 127,219 81,004

Adminstrative expenses 329,163 206,895

1,357,917 1,069,388

5b Expenses by nature

Change in inventories of finished goods and work in progress 796,526 682,567

Amortization of intangible assets 5,347 1,572

Depreciation on property, plant and equipment 52,376 31,698

Staff costs 257,266 168,525

Distribution costs 32,992 21,590

Repairs and maintenance 31,309 20,590

Energy Consumption 16,348 19,336

Advert and promotional expenses 37,649 13,557

Commercial Service Fee 11,283 11,559

Auditors' fees 5,400 5,400

Bad debt provision 12,500 10,000

Contingent liability 20,000 -

Information technology 18,564 20,083

Rent & rates 9,853 15,340

Bank Charges 2,996 2,054

Legal & Professional Fees 16,629 16,803

Travelling expenses 24,102 17,164

Directors Fees 1,303 1,068

Telephone & Stationery 2,024 5,396

Other expenses 3,454 5,086

1,357,917 1,069,388

6 Finance Income:

Interest received on bank deposits 5,734 1,029

Total 5,734 1,029

7 Finance costs:

Interest on debts and borrowings 3,726 36,856

Total 3,726 36,856

8 Taxation:

(i) Current tax on profits for the period:

Company income tax 39,299 5,551

Education tax 2,620 370

41,919 5,921

Deferred tax ( Note 15b) - -

Total current tax 41,919 5,921

(ii) Reconciliation of tax charge:

Profit before tax 130,998 18,505

Tax at Nigerian's statutory income tax rates (Minimum Tax) 39,299 5,551

Disallowable expenses - 31,012

Disallowable income - (1,550)

Balancing charge - 2,008

Tax effect of capital allowance - (31,470)

Education tax @2% of assessable profit 2,620 370

Deffered Tax - -

Total tax charge for the period 41,919 5,921

Sundry Income is majorly made up of:profit from closed projects (N15.7m);Franchisee fee -

non refundable deposit (N4.1m);Management fee (N8.7m);Others (N6.2m)

19



FOR THE PERIOD ENDED 30 JUNE 2018(All amounts are in thousands of Naira, unless otherwise stated)

Land

Factory

building

Plant and

machinery

Computer

Equipments

Furniture

and fittings

Motor

vehicles

Work-in-

progress Total

9

Property, plant and

equipment N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Cost

At 1 January 2017 40,000 173,164 409,428 139,759 26,841 199,716 400 989,306

Additions - - 12,270 16,465 1,961 21,257 2,372 54,325

Write off (400) (400)

Transfers / Held for sales - - - - - - - -

Disposal - - (4,068) (121) (24,462) - (28,651)

At 31 December 2017 40,000 173,164 417,630 156,103 28,802 196,510 2,372 1,014,581

At 1 January 2018 40,000 173,164 417,630 156,103 28,802 196,510 2,372 1,014,581

Additions - 0 7,159 3,065 5,361 1,900 - 17,485

Transfers / Held for sales - - - - - - (1,066) (1,066)

Disposal - - - (1,002) - - (1,002)

At 30 JUNE 2018 40,000 173,164 424,789 158,166 34,163 198,410 1,306 1,029,997

40,000 173,165 427,355 153,669 34,370 196,510 371

Depreciation

At 1 January 2017 - 13,812 254,064 109,321 22,957 151,071 - 551,225

Charge for the Year - 3,462 29,917 15,183 2,494 12,657 - 63,713

Disposal (673) (64) 0 (20,576) (21,313)

Transfer - -

At 31 December 2017 - 17,274 283,308 124,440 25,451 143,152 - 593,625

At 1 January 2018 - 17,274 283,308 124,440 25,451 143,152 - 593,625

Charge for the period - 1,731 15,281 3,528 1,690 6,397 - 28,627

Disposal - - - -

At 30 JUNE 2018 - 19,005 298,589 127,968 27,141 149,549 - 622,252

Net book Value as at:

At 30 JUNE 2018 40,000 154,159 126,200 30,198 7,021 48,861 1,306 407,746

At 31 December 2017 40,000 155,890 134,322 31,663 3,351 53,358 2,372 420,956

Fair Value of land and building

Land and building held for use in the production or supply of goods and services, or for administrative purposes are stated at cost less any

accumulated impairment losses (for land and buildings) and accumulted depreciation (for buildings).Land and building comprise mainly of factories

and offices.

Depreciation amounting to N14.6m (2017-N64m) has been charged to income statement, N9.6m (2017-N29m) charged to cost of sales, N22.6m

(2017- N10m) to administrative expenses and N12.6m (2017-N15m) to selling and distribution expenses.

20





Trade Mark

Computer

Software Total

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

Cost

At 1 January 2017 49,025 197,368 246,393

Additions - 51,276 51,276

At 31 December 2017 49,025 248,644 297,669

At 1 January 2018 49,025 248,644 297,669

Additions - externally acquired during the period - 2,189 2,189

At 30 JUNE 2018 49,025 250,833 299,858

Amortization:

At 1 January 2017 - 197,368 197,368

Charge for the year - 6,356 6,356

At 31 December 2017 - 203,724 203,724

At 1 January 2018 - 203,724 203,724

Charge for the period - 5,347 5,347

At 30 JUNE 2018 - 209,071 209,071

Net Book values at:

At 30 JUNE 2018 49,025 41,763 90,788

At 31 December 2017 49,025 44,920 93,945

Intangible assets amortization charged to income statement amounts to N5.3m (2017-N6.4m) has been

included as part of administrative expenses.

The Company's Intangible asset represents the N49million trade mark purchased from Blue Circle Industries

Plc adjudged to have an indefinite life. The trade mark is carried at cost to be tested annually for impairment.

The trade mark was reviewed for impairment as at 30 June,2018 and at present no impairment is deemed

required and there are no contractual commitment that may have impact on the carrying value of the trade

mark.

21





Jun-18 Dec-17

N'000 N'000

11 Inventories:

Raw Materials 188,130 299,514

Packaging Materials 34,513 32,170

Work in progress 7,778 6,974

Finished Goods 654,363 607,633

Spare Parts 13,397 15,008

Diesel 4,848 4,093

Stock Impairment (84,961) (64,961)

Total 818,069 900,430

The amount of write-down on inventories to net realizable value recognised as an expense is N84.9m

(2017: N64.9m). This represents impairment for slow moving, obsolete and damaged inventories. All

inventory with the exception of finished goods are stated at cost. Finished goods are stated at their net

realisable values.

Quarter end stock count was conducted across all Company's stock holding locations. The quantity

counted was valued using Weighted Average Costing model as per the Company's policy and agreed

as stated herein.

The value of finished goods include N463m (Dec 2017: N395m) imported merchandizing products.

22





Jun-18 Dec-17

12 Trade and Other Receivables N'000 N'000

(i) Trade receivables 555,666 433,810

Less: Provision for impairment of trade receivables - (Note

13iii) (184,682) (176,905)

Net trade receivables 370,983 256,905

Other receivables 87,779 14,545

Less: Provision for impairment of other receivables - -

Net other receivables 87,779 14,545

Receivables from related parties (note 18a) 13,171 13,171

Withholding tax receivable 10,029 66,990

VAT receivable 52,235 55,202

Total trade and other receivables 534,197 406,812

(ii) Prepayments

Prepayments - Current 48,393 16,307

Prepayments - Non Current portion 10,223 3,245

Total prepayments 58,616 19,552

The fair values of trade and other receivables classified as

loans and receivables are as follows:

Jun-18 Dec-17

N'000 N'000

Trade receivables 370,983 256,906

Receivables from related parties (Note 18d) 13,171 13,171

Withholding tax receivable 10,029 66,990

VAT receivable 52,235 55,202

Other receivables 87,779 14,545

Total 534,197 406,813

Jun-18 Dec-17

(iii) Allowance for impairment of trade receivables: N'000 N'000

As at January 1st 2018 176,905 171,765

Additional allowance for receivable impairment 12,500 23,000

189,405 194,765

Un-utilised amounts reversed / (amount written off) (4,723) (17,860)

Total as at 30 June 2018 184,682 176,905

Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other

receivables as at 30 June, 2018 were not reviewed for impairment test.

The balance on prepayment represent rent,medical,education and insurance paid in advance which will

be charged against earnings in the periods it relates.

23





13 Interest bearing loans and borrowings:

Jun-18 Dec-17

N'000 N'000

(ii) Current Borrowings:

Bank loans:

Long term liabilities due within one year 14,054 43,742

Total Current Borrowings 14,054 43,742

Total Loans and Borrowings 14,054 43,742

Current borrowings:

- Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued

at N1.1 billion as at August 2016, by Steve Akhigbemidu & Co Estate Surveyors &Valuers

- Execution of trust receipts by the borrower.

- Ownership of assets financed

- Promissory note of the Company for principal and interest

- Sales collection agreement

(iii) Long term borrowings

Non current liabilities

Lender

Total

Facility Jun-18 Dec-17

Bank of Industry (BOI) Intervention funds Through

Ecobank Nigeria PlcN300m - 0

Bank of Industry (BOI) Intervention Funds Through

FCMB Nigeria PlcN255m 14,054 43,742

Total Long Term Facility 14,054 43,742

Current Portion of Term-Loans (14,054) (43,742)

Due After One Year - 0

The movement in Loan and Borrowings represent principal repayment as at 30 June 2018

Repayment

Terms

Carrying Value -

28 equal quarterly

installments from

date of draw down

Carrying Value -

60 equal monthly

installments with 12

months moratorium

The bank loan is secured with the followings:

The secured loan is a Central Bank of Nigeria (CBN) intervention fund through Bank of Industry (BOI). The applicable interest

rate is 6% per annum subject to review by the BOI from time to time in line with the prevailing market conditions. The loan is

repayable in instalments at various dates between January 2011 to 2018. After bifurcation of the government grant, in the form

of a low interest rate loan, the loan bears an effective current interest rate of 22%. N2.7m (2017:N6m) interest on BOI facility

was charged to income statement as at 30 June,2018

24





(v) Government grants:

Jun-18 Dec-17

N'000 N'000

As at January 01 2018 7,742 32,239

Total Government Grant for the period 7,742 32,239

Released to the income statement (6,113) (24,504)

1,628 7,742

Current 1,628 7,742

Non current - 0

At 30 June 2018 1,628 7,742

(iv) Cash & Cash Equivalent:

N'000 N'000

Cash in hand and bank 256,718 74,207

Treasury Bills 113,828 120,000

Cash & short term deposit 370,546 194,207

Cash and Cash Equivalents 370,546 194,207

For the purpose of the statement of cash flow, cash and cash equivalents comprise

the following as at 30 June 2018

Treasury bills are made for varying periods of between one month and three

months depending on the immediate cash requirements of the Company, and earn

interest at the respective short-term deposit rates.

Government grants relates to loan granted by an Agency of the Nigeria

Government (Central Bank of Nigeria) with 6% interest rate which is below the

current applicable market rate, the effect of this favourable interest is regarded as

a government grant. There are no unfulfilled conditions or contigencies attached

to these grants.

25





14 Trade and Other Payables

Jun-18 Dec-17

N'000 N'000

Trade payables 105,131 227,150

Other payables 33,127 17,558

Withholding tax payable 2,759 2,705

Customer Deposits (9,905) (10,882)

Accruals 484,940 129,706

Total financial liabilities, excluding loans and borrowings,

classified as financial liabilities measured at amortised cost 616,053 366,237

Intercompany Payable 38,810 111,509

Dividends payable 20,009 20,009

Total trade and other payables 674,871 497,755

15(a) Corporate Tax Liability

Jun-18 Dec-17

N'000 N'000

Balance at Beginning of the year

Company Income Tax 65,806 26,739

Education Tax 5,787 1,061

71,593 27,800

Current Tax Expense

Company Income Tax 39,299 46,947

Education Tax 2,620 5,787

113,512 80,535

Payment (28,255) (8,942)

Income tax payable 85,257 71,593

At 30 JUNE 2018

The analysis of tax payment during the period is as follows:

Cash payment 15,560 1,061

Withholding tax credit 12,695 7,881

28,255 8,942

15(b)

Deferred tax

Jun-18 Dec-17

N'000 N'000

At 1 January 2018 22,054 22,054

Recognised in profit and loss

Tax expense (0) -

At 30 JUNE 2018 22,054 22,054

Deferred income tax assets/(liabilities): Jun-18 Dec-17

N'000 N'000

Total deferred tax assets b/f 73,512.38 -

Property, plant and equipment - 318,752.17

Provisions - (241,866.13)

Post employment benefit obligation - (3,373.66)

Unrealised exchange gain - -

Total deferred tax assets 73,512 73,512

Defferred Tax balance: N'000 N'000

Deferred Tax b/f 22,054 9,093

Deferred tax movt on B/S method - 12,961

Expected bal to carry forward 22,054 22,054

Trade payables are non-interest bearing and normally settled on 30 day term

Other payables and accruals are non-interest bearing and have an average term of 90 days.Dividend

payable represents the total unclaimed dividend as at 30 June 2018,the company has not declared

dividend since 2012 financial year.

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax

rate 30% (2017:30%).

Terms and conditions of the above financial and non-financial liabilities.

26





16 Share capital

(i)

Jun-18 Jun-18 Dec-17 Dec-17

Number'000 N'000 Number'000 N'000

Ordinary shares of 50 kobo each 1,000,000 500,000 1,000,000 500,000

Total 1,000,000 500,000 1,000,000 500,000

Issued and Fully

Paid

Issued and Fully

Paid

Issued and

Fully Paid

Issued and

Fully Paid

Jun-18 Jun-18 Dec-17 Dec-17

Number'000 N'000 Number'000 N'000

Ordinary shares of 50kobo each at

the beginning of the year 793,416 396,708 400,000 200,000

Rights Issue - - 393,416 196,708

As at 30 June 2018 793,416 396,708 793,416 396,708

(ii) Nature and purpose of reserves:

Jun-18 Dec-17

Other capital reserve (Revaluation Reserve) N'000 N'000

At 1 January 2018 91,923 91,923

Revaluation during the year - -

As at 30 June 2018 91,923 91,923

Asset revaluation reserve:

(iii) Earnings per share

Jun-18 Jun-17

N'000 N'000

Net profit attributable to ordinary

equity holders89,079 12,583

Weighted average number of

ordinary shares for basic earnings

per share

793,416 793,416

Basic earnings per share (in kobo) 11 2

Weighted average number of

ordinary shares for diluted earnings

per share

882,828

Diluted earnings per share (in kobo) 10.09 3

Authorised Authorised

The asset revaluation reserve is used to record increases in the fair value of property, plant and equipment and

decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity.

The revaluation was carried out on land and building in December 2010 and 2012 by Ubosi Eleh & Co., a

professional firm of Chartered Surveyors on an open market basis.However due to change in company policy, no

further revaluation was recognized into the account for the period under review.

The following reflects the income and share data used on the basic and diluted

earnings per share computations:

Basic earnings per share is calculated by dividing net profit for the period attributable to ordinary equity holders

of the parent by the weighted average number of ordinary shares outstanding ( inclusive of diluted shares) during

the period.

27





6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 N'000

17 Reconciliation of net profit to net cash

provided by operating activities

Profit before tax 130,998 18,505

Adjustments to reconcile net income to net cash

provided by operating activities:

6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 N'000

Interest payable 3,726 36,856

Finance income (5,734) (1,029)

Depreciation Charges 30,469 31,698

Exchange gain - (17,853)

Amortization of government grant (6,113) -

(Profit) on disposal of fixed assets (50) (545)

Amortisation of intangible assets 5,347 1,572

27,645 50,699

Changes in assets and liabilities:

(Increase)/Decrease in Trade debtors and prepayments (166,448) (23,089)

Decrease/(Increase) in Inventories 82,361 (87,397)

(Decrease)/Increase in Trade creditors & Accruals 171,003 (350,846)

86,916 (461,332)

Net Adjustment 114,562 (410,633)

Net cash provided by operating activities 245,559 (392,128)

28





18 Related party transactions

The following transactions were carried out with related parties:

(a) Sales of goods and services Relationship Jun-18 Dec-17

N'000 N'000

UACN Property Dev. Company Plc Sister Company 2,785 10,210

GRAND CEREALS LIMITED Sister Company 4,867 -

CAP Sister Company 270 -

LIVESTOCK FEEDS Sister Company - 2,961

7,922 13,171

(b) Purchases of goods and servicesJun-18 Dec-17

N'000 N'000

UAC of Nigeria Plc: Service fee

Principal

Shareholder 11,283 22,307

11,283 22,307

(c) Other transactions with related parties Jun-18 Dec-17

N'000 N'000

UAC of Nigeria Plc: Bills settled on behalf of

Portland Paints 27,304 89202

27,304 89,202

(d) Intercompany payable: N'000 N'000

UAC of Nigeria Plc

Principal

Shareholder 38,587 111,475

GCL Sister Company 34 34

38,621 111,509

(e) Intercompany receivable: N'000 N'000

UACN Property Dev. Company Plc Sister Company 2,785 10,210

CAP Sister Company 270.40 -

GCL Sister Company 4,867 2,961

7,922 13,171

The parent, ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria.

There are other companies that are related to Portland Paints & Products Nigeria Plc through common share

holdings and directorship.

All trading balances will be settled in cash.

There were no provisions for doubtful related party receivables as at 30 June,2018 (N2017:Nil) and

no charges to the income statement in respect of related party receivables.

All related party transactions were carried out on commercial terms and conditions (See also

disclosures in Note 14).

29





6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 N'000

19 Compensation to key management personnel:

Short-term employee benefits 7,020 4,889

Long-term employee benefits 562 391

7,582 5,280

6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 N'000

The emoluments of the highest paid Director 7,582 5,280

Emolument of Non-executive Directors:

Fee 567 567

Sitting Allowance 500 500

1,067 1,067

Directors' mix

6 Months to

JUNE 2018

6 Months to

JUNE 2017

Number Number

Executive Director 1 1

Non-executive Directors 5 5

6 6

20 Staff Numbers:

6 Months to

JUNE 2018

6 Months to

JUNE 2017

Number Number

Production 39 39

Sales, marketing and depot 52 39

Administration 26 37

117 115

The number of employees in respect of emoluments within the following ranges was:

6 Months to

JUNE 2018

6 Months to

JUNE 2017

Number Number

N10,000 - N500,000 0 0

N500,001 - N1,000,000 30 57

Above N1,000,001 87 58

117 115

The amounts disclosed above are the amounts recognised as an expense during the reporting period related

to key management personnel (The Directors). The Executive Director is paid salaries and housing

allowance, transportation is also provided for them. While the Non-executive Directors are only entitled to

Directors Fees and sitting allowance. As at 30 June,2018 an amount of N1.06 million (2017: N1.06 million)

was paid to Non-executive Directors as Directors Fees and sitting allowance. The Executive Director is

entitled to a defined contribution plan (pension) in accordance with Pension Reform Act 2004. But Non-

executive Directors are not entitled to any form of pension or post employment benefits.

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

30


STATEMENT OF VALUE ADDED


6 Months to

JUNE 2018

6 Months to

JUNE 2017

N'000 % N'000 %

Turnover 1,433,670 1,066,383

Non trading items 58,972 58,366

1,492,642 1,124,749

Bought-in-material and services:

- Local (826,545) (643,968)

- Imported (233,128) (181,632)

Value added 432,968 100% 299,149 100%

Applied as follows:-

Salaries and labour related

expenses 267,775 62% 192,345 64%

To pay Government:

Corporate tax 41,919 10% 5,921 2%

To pay provider of capital:

Interest charges 3,726 1% 36,856 12%

To pay shareholders

as dividend - 0% - 0%

Retained for replacement of assets and

business growth:

- Depreciation 30,469 7% 51,444 17%

- Deferred tax - 0% - 0%

- Profit for the period 89,079 21% 12,583 4%

432,968 100% 299,149 100%

Value added represents the additional wealth which the company has been able to create by

its own and its employees' efforts. This statement shows the allocation of that wealth to

employees, providers of capital, government and the portion retained for the future creation

of more wealth.

31

Documents

PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS€¦ · PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018