seven‐up bottling company plc annual report 31 …€¦ · seven-up bottling company plc annual...

Seven‐Up Bottling Company PLC

Annual Report

31 March 2017

Seven-Up Bottling Company PLCAnnual Report

31 March 2017

ContentsPage

Directors and other corporate information 1

Results at a glance 2

Directors’ report 3

Statement of directors’ responsibilities in relation to the financial statements 12

Report of the Audit committee 13

Independent Auditor's Report 14

Statement of financial position 18

Statement of profit or loss and other comprehensive income 19

Statement of changes in equity 20

Statement of cash flows 21

Notes to the financial statements 22

Other national disclosures 68

Value Added Statement 69

Five Year Financial Summary 70


31 March 2017

Directors and other corporate information

Board of Directors: Mr. Faysal El‐Khalil, O.O.N (Lebanese) ‐ Chairman

Mr. Sunil Sawhney (Indian) ‐ Vice Chairman with effect from 1 April 2017

Mr. Ziad Maalouf (Lebanese) ‐ Managing Director/ CEO with effect from 1 April 2017

Chief Farid El‐khalil (Lebanese)

Otunba (Dr) A. Ojora O.F.R., C.O.N.

(Alternate) ‐ Mrs. Oluwatoyin Ojora Saraki

Chief Emmanuel N. Nwokoro

Mallam Mohammed Hayatu‐Deen O.O.N.

Mr. Ziad A. El‐Khalil (Lebanese)

Mr. Femi MokikanMr. Georges Kolakez (Lebanese)

Company Secretaries: Equity Services Limited162 Ikorodu Road (2nd floor)Onipanu, Lagos

Registered Office: 247 Moshood Abiola WayIjoraLagos

Registrars: GTL Registrars Limited 2 Burma RoadApapa, Lagos

KPMG Professional ServicesKPMG TowerBishop Aboyade Cole StreetVictoria Island, Lagos

Principal Bankers: Access Bank PLC.

Citibank Nigeria Limited

Diamond Bank PLC.

Ecobank Nigeria PLC.

Fidelity Bank PLC.

First Bank of Nigeria Limited

First City Monument Bank Limited

FSDH Merchant Bank Limited

Guaranty Trust Bank PLC.

Heritage Bank Limited

Jaiz Bank PLC.

Rand Merchant Bank Nigeria Limited

Skye Bank PLC.

Sterling Bank PLC.Stanbic IBTC Bank PLC.

Standard Chartered Bank Nigeria Limited

Union Bank of Nigeria PLC.

United Bank for Africa PLC.

Zenith Bank PLC.

Independent Auditor:

1


31 March 2017

Results at a glanceIncrease

2017 2016 %

Financial information ‐ (in thousands of naira)

Revenue 108,277,000 85,634,679 26

(Loss)/profit before taxation (11,228,438) 3,757,390 (399)

(Loss)/profit for the year (10,776,712) 3,347,463 (422)

Share capital 320,295 320,295 ‐

Total equity 13,225,471 24,779,594 (47)

Data per 50k share ‐ (in naira )

Basic earnings per share (16.82) 5.23 (422)

Diluted earnings per share (16.82) 5.23 (422)

Declared dividend* 1.60 2.75 (42)

Net assets 20.65 38.68 (47)

Dividend proposed** NIL 1.60 ‐

Stock exchange quotation at 31 March

in Naira per share 109.40 155.00 (29)

Number of shares issued (‘000) 640,590 640,590 ‐

Market capitalization at 31 March (N '000) 70,080,546 99,291,506 (29)

Stock Exchange Information

* Declared dividend represents the final dividend proposed for the preceding year but declared

during the current year.

** In current year, no dividend was proposed by the directors (2016:dividend proposed amounting

to N1,024,944,581 representing N1.60 per share on the issued share capital of 640,590,363

ordinary shares of 50 kobo each).

2


31 March 2017

Directors’ ReportFor the year ended 31 March 2017

1 Legal Form

2 Principal Activities

3 Operating Results

The highlights of the Company’s operating results are as follows:

2017 2016

In thousands of naira

Revenue 108,277,000 85,634,679

Results from operating activities (7,208,085) 6,961,343

Loss/profit before taxation (11,228,438) 3,757,390

Loss/profit for the year (10,776,712) 3,347,463

Total comprehensive (loss)/ income for the year (10,562,376) 2,598,854

4 Dividend

5 Board of Directors

The Directors have pleasure in presenting their report on the affairs of Seven‐Up Bottling Company PLC

(“the Company”) together with the Company’s audited financial statements for the year ended 31 March

2017.

The Company was incorporated as a private limited liability company on 25th June, 1959 under the

name Seven‐Up Limited. On 16th May, 1960, the name was changed to Seven‐Up Bottling Company

Limited and in 1978 it became a public company. The name “Seven‐Up Bottling Company PLC” was

adopted on 26th November, 1991 in compliance with the provisions of the Companies and Allied

Matters Act 1990. Currently, the Company’s shares are quoted on the floor of the Nigerian Stock

Exchange.

The Company continued to be engaged in the bottling and marketing of a wide range of soft drinks

and Aquafina table water.

In current year, no dividend was proposed by the directors (2016:dividend proposed amounting to

N1,024,944,581 representing N1.60 per share on the issued share capital of 640,590,363 ordinary

shares of 50 kobo each).

The names of the Directors who held office during the year under review are as listed in Note6(a) of

this report.

Mr. Sunil Sawhney joined the company as Chief Operating Officer in 2001 and was appointed

Managing Director/Chief Executive Officer in May 2009. He was subsequently elevated to the

position of Vice Chairman with effect from 1st April 2017.

3


31 March 2017

6 Directors and their Interests

(a)

Name 2017 2016

Otunba (Dr.) A. Ojora O.F.R, C.O.N 2,252,635 2,252,635

Chief Emmanuel N. Nwokoro 600,300 672,643

Mr. Femi Mokikan 33,116 33,116

Mr. Faysal El‐Khalil ** ‐ ‐

Mr. Sunil Sawhney * ‐ ‐

Chief Farid El‐Khalil ** ‐ ‐

Mallam Mohammed Hayatu‐Deen O.O.N ‐ ‐

Mr. Ziad A. El‐Khalil ** ‐ ‐

Mr. Georges Kolakez ** ‐ ‐

* Indian

** Lebanese

(b)

(c)

Mr. Ziad Maalouf was appointed Managing Director/Chief Executive Officer after the last AGM

effective from 1st April 2017. In compliance with the Companies and Allied Matters, Act CAP C20

Laws of the Federation of Nigeria 2004 (hereinafter referred to as “CAMA”), he will retire at the next

following AGM and being eligible, he offers himself for re‐election.

As stipulated in Article 90 of the company’s Articles of Association, Mr. Faysal El‐Khalil and Mr. Ziad

El‐Khalil are the directors who are retiring by rotation. Being eligible, they offer themselves for re‐

election at the forthcoming AGM. With regard to Chief Emmanuel N. Nwokoro, Special Notice has

been received by the company, pursuant to section 256 of CAMA, of the intention to propose the

following resolution as an ordinary resolution:

“That Chief Emmanuel N. Nwokoro who has attained the age of 76 years, be and is hereby re‐elected

a Director of the company.”

The names of the Directors who held office during the year under review are as listed in Note 6(a) of

the Directors' report. Subsequent to the last Annual General Meeting (AGM), Alhaji Ahmadu Yaro

resigned as Director of the Company with effect from 22nd September, 2015.In accordance with Article 90 of the Company’s Articles of Association, Mr. Georges Kolakez, Otunba

(Dr.) Adekunle Ojora and Mallam Mohammed Hayatu‐deen are the Directors retiring by rotation at

this AGM and being eligible, they offer themselves for re‐election. Pursuant to section 258(2) of the

Companies and Allied Matters Act, CAP C20 LFN 2004, a record of the Directors’ attendances at

board meetings during the year under consideration will be made available for inspection by any

member.

The Directors who served during the year and their interests in the issued and paid up share

capital of the Company as recorded in the Register of Members for the purpose of section 275 of

the Companies and Allied Matters Act, CAP C20 LFN, 2004 were as follows:

Shareholdings as at

None of the Directors has notified the Company of any declarable interest in any contract or

proposed contract to which the Company was a party to during the year ended 31 March 2017

for the purpose of section 277 of the Companies and Allied Matters Act, Cap C20, Laws of the

Federation of Nigeria, 2004.

No share options were granted to the directors by Seven Up Bottling Company PLC.

4


31 March 2017

7 Analysis of ShareholdingsNumber of Number of

Shareholding Between shareholders % shares %

1 ‐ 1,000 19,492 60.51 9,208,386 1.44

1,001 ‐ 5,000 10,277 31.90 21,154,189 3.30

5,001 ‐ 10,000 1,380 4.29 9,749,507 1.52

10,001 ‐ 50,000 822 2.55 15,999,515 2.50

50,001 ‐ 100,000 100 0.31 6,920,015 1.08

100,001 ‐ 500,000 106 0.33 22,482,582 3.51

500,001 ‐ 1,000,000 14 0.04 9,923,486 1.55

1,000,001 and above 23 0.07 545,152,683 85.10

32,214 100 640,590,363 100

8 Substantial Shareholders

9 Donations

2017 2016


Lagos State Security Trust Fund ‐ 2,000

AFBTE Secretariat ‐ 3,000

Co‐sponsor Financial Reporting Council of Nigeria ‐ 1,000

2016 Nigeria Stock Market (Pearl Awards) ‐ 125

GCE Forms for 20 Abete Community Children 297 297

Nigeria Red Cross Babies Home 20 ‐

Entrepreneurship support for 2016 ‐ Fate Foundation Nigeria 90 ‐

URJA Foundation ‐Support for three kids 400 ‐

Scholarship for 3 Courage Education Foundation Students 610 ‐

Scholarship support to Bethesda Child Support Agency 450 ‐

Scholarship to UmuolaEgbelu Community 600 ‐

Nigeria Army Officers Mess ‐ Ikeja 100 ‐

Computer Centre Project for UmuolaEgbelu Youth 488 ‐

Anthony Akpati Annual Tribute 311 282

Privilege and Orphanage Home 150 ‐

Lady of the Rosary Church ‐ 600

3,516 7,304

In accordance with section 38(2) of the Companies and Allied Matters Act, Cap.20, Laws of the

Federation of Nigeria, 2004, the Company did not make any donation or gift to any political party,

political association or for any political purpose during the year.

As contained in the Register of Members, AFFELKA S.A. held 469,047,789 ordinary shares of 50k each

in the capital of the Company representing 73.22% of the issued capital as at 31st March, 2017. No

other shareholder held 5% or more of the share capital of the Company as at that date.

In the year under review, the Company made donations to charitable institutions, bodies and

individuals amounting to N3,515,500 (2016: N7,304,000). The beneficiaries were as follows:

5


31 March 2017

10 Local Sourcing of Raw Materials

11 Suppliers

12 Product Distribution

13 Acquisition of Own Shares

The Company did not acquire any of its own shares during the year under review.

14 Property, plant and equipment

15 Events after the reporting date

16 Employment and Employees

(a) Employment of physically challenged persons:

(b) Health and Safety at Work and Welfare of Employees:

The Company continues to maintain its policy of non‐discrimination on recruitment and selection

when considering applications for employment, including those received from physically

challenged persons. In the event of any employee becoming disabled in the line of duty through

industrial accident, the Company ensures continuity of employment by arranging suitable

training for such employees who are subsequently redeployed to jobs compatible with their

capability. Presently, the Company has seventeen (2016: seventeen) physically challenged

persons on its payroll.

Information relating to changes in property, plant and equipment is given in Note 11 to the financial

statements.

There were no events after the reporting date which could have had a material effect on the

financial position of the Company as at 31 March 2017 and its operating results for the year ended

which have not been adequately provided for in these financial statements.

The Company gives priority attention to health, safety and welfare of its employees, and ensures

that its Smoke Area Policy is observed in all its facilities. The health and ailment status of its

workforce are regularly monitored.

On a continuing basis, the Company explores the use of local raw materials in its production

processes and has successfully introduced the use of locally produced items such as sugar, crown

corks and chemicals in a number of its products.

The Company procures all of its raw materials on a commercial basis from overseas and local

suppliers including Bua Sugar Refinery, Golden Penny Sugar, Aristocrat, Prima Corporation and

Indorama.

The Company distributes its products directly nationwide. The Company motivates key dealers to

expand the existing distribution network by establishing mini depots.

6


31 March 2017

(c) Employee Involvement and Training:

17 Corporate Governance

Name of Directors

No. of

meetings

held

No. of

meetings

attended

Mr. Faysal El‐Khalil, O.O.N 5 5

Mr. Sunil Sawhney 5 4

Otunba (Dr.) A. Ojora, O.F.R, C.O.N 5 5

Chief Farid EL‐Khalil 5 2

Chief Emmanuel N. Nwokoro 5 4

Mallam Mohammed Hayatu‐deen, O.O.N 5 1

Mr. Ziad A. EL‐Khalil 5 4

Mr. Femi Mokikan 5 5

Mr. Georges Kolakez 5 4

The Board of Directors met five (5) times during the financial year ended 31 March 2017 and a

record of their attendance is as shown below:

The meetings were held on 22nd June 2016, 28th September 2016, 1st December 2016 , 8th

February 2017 and 8th March 2017

The Company is committed to providing employees information regarding issues that affect the

Company’s performance and plans as well as seeking their views, where practicable, on matters

that affect their interests. Towards this end, management holds meetings with employees,

through their representatives, at formal and informal sessions while circulars are published

regularly to brief them about significant corporate issues.

To improve the efficiency and productivity level, employees undergo on‐the‐job training in

addition to being reimbursed all expenses incurred in acquiring professional qualifications.

The Board comprises eight Non‐Executive Directors including the chairman and one Executive

Director. In line with global best practice in corporate governance, the positions of the Chairman

and Chief Executive Officer are separate with two Directors acting in both capacities.

The Board has overall responsibility for supervising the Company’s business, maintaining adequate

and effective internal control system, adding value to shareholders and protecting the interests of

other stakeholders.

The Company’s premises are certified by the Fire Service for emergency preparedness with fire

fighting equipment strategically located within the premises. Fire drills are organised occasionally

to sensitize the employees on the dangers of fire accident in order to prepare them against any

eventuality.

The Company subsidizes housing, transportation and meals and provides free health care

services to employees and their nuclear families. Additionally, it operates a contributory Pension

Scheme and provides a comprehensive National Health Insurance Plan for its employees.

7


31 March 2017

Corporate Governance/Remuneration Committee

Name of Directors

No. of

meetings

held

No. of

meetings

attended

Otunba (Dr.) A. Ojora, O.F.R, C.O.N Chairman 3 3

Chief E.N Nwokoro Member 3 3

Mallam M. Hayatu‐deen Member 3 0

Mr. Femi Mokikan Member 3 3

Risk Management Committee

No. of

meetings

held

No. of

meetings

attended

Mr. Sunil Sawhney Chairman 3 2

Chief Farid EL‐Khalil Member 3 1

Mr. Georges Kolakez Member 3 3

Mr. Ziad El‐Khalil Member 3 3

Management Committee

The Management Committee is made up of two members: Messrs. Sunil Sawhney and Ziad El‐Khalil,

and has responsibility for recommending strategic initiatives to the Board of Directors and

supervising the implementation of board policies.

The committee met 36 times during the year under review and the members' attendance record is

as shown below:

The Risk Management Committee has the objective of advising the board on, among other things,

the company’s appetite for risk and its risk management policy, oversight function regarding

management’s process for the identification of significant risk across the company and the adequacy

of prevention, detection and reporting mechanisms as well as reviewing the adequacy and

effectiveness of risk management and controls.

The committee met on 22nd June 2016, 28th September 2016 and 1st December, 2016 during the

financial year ended 31st March 2017. The record of attendance of members is set out below:

The Committee comprises four Non‐Executive Directors with the responsibility of ensuring the

company’s compliance with good governance practice, nominating for board’s approval candidates

to fill board vacancies, considering and making recommendations on succession planning of the

company for the positions of chairman, managing director, executive director, and other senior

executives. Additionally, it ensures that an appropriate remuneration policy for all directors and

staff is in place and also oversees major changes in employees benefits structure.

The committee meetings were held on 22nd June 2016, 28th September 2016 and 1st December

2016 and the members’ record of attendance is as follows:

8


31 March 2017

No. of

meetings

held

No. of

meetings

attendedMr. Sunil Sawhney 36 36

Mr. Ziad A.EL‐Khalil 36 36

18 Securities Trading Policy

19 Complaints Management Policy

OR

20 Audit Committee

The Company has securities trading policy applicable and circulated to directors, insiders, external

advisers and all employees that may at any time possess any inside or material information about

our company.

The Company has adopted a code of conduct regarding securities transaction by the directors on

terms no less exacting than the required standard set out in the Listing Rules of the Nigerian Stock

Exchange.

The Company made specific enquiry of all directors whether they have complied with the required

standard set out in the listing rules and the Company’s code of conduct regarding securities

transactions by directors and the company is unaware of any non‐compliance.

Pursuant to section 359(3) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the

Company has an Audit Committee in place whose functions are as stated in section 359(6) of the Act.

The Committee consists of three (3) Directors and three (3) shareholders’ representatives, including

the chairman. The Committee members met four (4) times in the year under review and their

attendance record is as shown below:

All complaints should be directed to:

GTL Registrars Limited

274, Muritala Muhammed Way

Alagomeji, Yaba, Lagos

P.M.B. 12717

Lagos, Nigeria

Telephone: +234 12793161, +234 18131925

E‐mail: [email protected]

Website: www.gtlregistrars.com

Equity Services Limited

162, Ikorodu Road

Onipanu, Lagos

P.O. Box 7625

Lagos, Nigeria

Telephone: 08188811779

E‐mail:

[email protected]

In accordance with the Securities and Exchange Commission’s Rule Relating to the Complaints

Management Framework of the Nigerian Capital Market which became effective in February 2015,

Seven‐UP Bottling Company PLC has put in place a Complaints Management Policy for the effective

and efficient handling of shareholders’ complaints arising from issues covered under the Investments

and Securities Act, 2007 in a fair, impartial and timely manner.

The complaints management procedure will be posted on the Company’s website:

www.sevenup.org.

9


31 March 2017

No. of

meetings

held

No. of

meetings

attendedShareholders’ Representative 4 4

Mr Obarinde I. Obatosho Shareholders’ '' 4 4

Mr Kenneth N. Nwosu Shareholders’ '' 4 4

Mr Femi Mokikan Directors’ '' 4 3

Otunba (Dr.) A. Ojora, C.O.N, O.F.R Directors’ '' 4 4

Mr. Georges Kolakez Directors’ '' 4 4

21 Disclosures

(a) Borrowings and maturity dates

(b) Risk Management and Compliance System

(c) Related Party Transactions

22 Report on Social, Ethical, Safety, Health and Environmental Policies and Practices

Corporate Social Responsibility

Evang. Peter Akinola Soares‐ Chairman

The meetings were held on 20th June 2016, 28th November 2016, 6th February 2017 and 10th

February 2017.

The details of the borrowings and maturity dates are stated in Note 22 to the financial

statements.

The Directors are responsible for the total process of risk management as well as expressing their

opinion on the effectiveness of the process. The risk management framework is integrated into

the day‐to‐day operations of the business and provides guidelines and standards for

administering the acceptance and on‐going management of key risks such as operational,

reputational, financial, market, technology and compliance risk. The directors are of the view that

effective internal audit function exists in the Company.

The Company has contractual relationship with related companies in the ordinary course of

business. The details of the value of the transactions and outstanding balances arising from

related party transactions are stated in Note 29 to these financial statements.

Seven‐Up Bottling Company PLC continued its collaboration with the Lagos State Ministry of Youth

and Social Development on Corporate Apprentice Scheme aimed at equipping the youths with

relevant skills for self‐employment and creation of jobs for other people. The Company continued its

sponsorship of one Nigerian graduate each year to do an MBA programme at the Harvard Business

School with all expenses paid. Additionally, the Company has several local projects by which students

at secondary and tertiary levels are given scholarship.

On sports, the company has established the Pepsi Football Academy to give young and talented

players in Nigeria a platform where they can showcase their skills and actualize their dream of

becoming world’s best footballers, in addition to providing them with qualitative education that will

make them well rounded individuals.

The Company sponsors the Aquafina Elite Model competition which aims at promoting fashion and

lifestyle in addition to co‐sponsoring the annual COPA beach soccer in Lagos.

10


31 March 2017

Statement of profit or loss and other comprehensive incomeFor the year ended 31 March


Note 2017 2016

Revenue 4 108,277,000 85,634,679

Cost of sales 5(a) (95,349,880) (60,622,243)

Gross profit 12,927,120 25,012,436

Other income 5(b) 427,036 317,434

Selling and distribution expenses 5(a) (13,910,747) (11,801,831)

Administrative expenses 5(a) (6,651,494) (6,566,696)

Results from operating activities (7,208,085) 6,961,343

Finance income 6(a) 424,008 41,571

Finance costs 6(b) (4,444,361) (3,245,524)

Net finance costs (4,020,353) (3,203,953)

(Loss)/Profit before taxation 7 (11,228,438) 3,757,390

Income tax credit/(expense) 9(a) 451,726 (409,927)

(Loss)/Profit for the year (10,776,712) 3,347,463

Other comprehensive income

Items that will never be reclassified to profit or loss:

Remeasurement of defined benefit asset/(liability) 23(a) 315,200 (1,069,442)

Related tax 15(b) (100,864) 320,833

Other comprehensive income/(loss) for the year, net of tax 214,336 (748,609)

Total comprehensive (loss)/ income for the year (10,562,376) 2,598,854

Equity holders of the Company (10,776,712) 3,347,463

Equity holders of the Company (10,562,376) 2,598,854

Earnings per share

Basic and diluted earnings per share (kobo) 10(a) (1,682) 523

Total comprehensive (loss)/ income for the year is

attributable to:

(Loss)/profit for the year is attributable to:

The accompanying notes and significant accounting policies on pages 22 to 67 form an integral part of

these financial statements.

19


31 March 2017

Statement of changes in equityFor the year ended 31 March

In thousands of naira Note Share capital Share premium Retained earnings Total equity

Balance, 1 April 2015 320,295 299,140 23,314,198 23,933,633

Total comprehensive income

Profit for the year ‐ ‐ 3,347,463 3,347,463 Other Comprehensive loss ‐ ‐ (748,609) (748,609)Total comprehensive income ‐ ‐ 2,598,854 2,598,854

Transactions with owners of the Company

Contribution and distribution

Dividend to equity holders 10(b) ‐ ‐ (1,761,623) (1,761,623)Unclaimed dividend written back 24(c) ‐ ‐ 8,730 8,730 Total transactions with owners of the Company ‐ ‐ (1,752,893) (1,752,893)

Balance, 31 March 2016 320,295 299,140 24,160,159 24,779,594

Balance, 1 April 2016 320,295 299,140 24,160,159 24,779,594 Total comprehensive income Loss for the year ‐ ‐ (10,776,712) (10,776,712)Other comprehensive income ‐ ‐ 214,336 214,336

Total comprehensive income ‐ ‐ (10,562,376) (10,562,376)

Transactions with owners of the Company

Contribution and distribution

Dividend to equity holders 10(b) ‐ ‐ (1,024,943) (1,024,943)

Unclaimed dividend written back 24(c) ‐ ‐ 33,196 33,196 Total transactions with owners of the Company ‐ ‐ (991,747) (991,747)

Balance, 31 March 2017 320,295 299,140 12,606,036 13,225,471

The accompanying notes and significant accounting policies on pages 22 to 67 form an integral part of these financial statements.

20

Seven-Up Bottling Company PLC

Annual Report

31 March 2017

Statement of cash flowsFor the year ended 31 MarchIn thousands of naira

Note 2017 2016

Cash flows from operating activities

(Loss)/Profit for the year (10,776,712) 3,347,463

Adjustments for:

Depreciation of property plant and equipment 11(a) 9,487,448 9,325,971

Amortization of intangible assets 12 25,219 35,237

Finance income 6(a) (424,008) (41,571)

Finance costs 6(b) 4,444,361 3,245,524

Employee benefit charge 23(c) 752,221 1,142,434

Impairment loss on trade receivables 12,599 63,306

(Gain)/loss on sale of property, plant and equipment (174,973) 4,109

Bad debt written off 145,276 -

Income tax expense 9(a) (451,726) 409,927

3,039,705 17,532,400

Change in inventories (10,950,017) (1,926,393)

Change in trade and other receivables* (11,540,391) (1,222,739)

Change in investment (42,000) -

Change in prepayments 76,820 177,142

Change in deposit for imports 1,005,917 4,957,800

Change in trade and other payables (excluding dividend payable)** 9,811,283 1,577,023

Cash (used in)/generated from operating activities (8,598,683) 21,095,233

Value Added Tax (VAT) paid ** (1,378,957) (1,812,611)

Income tax paid 9(c) (953,617) (974,853)

Employee benefit paid (1,156,731) (1,323,426)

Net cash (used in)/generated from operating activities (12,087,988) 16,984,343

Cash flow from investing activities

Finance income received 6(d) 40,076 31,455

Proceeds from sale of property, plant and equipment 201,341 93,396

Acquisition of property, plant and equipment 11(a) (7,318,097) (7,321,118)

Acquisition of Intangible assets 12 (905) (62,908)

Net cash used in investing activities (7,077,585) (7,259,175)

Cash flow from financing activities

Proceeds from loans and borrowings 22(a)(ii) 153,550,872 70,326,373

Repayment of loans and borrowings 22(a)(ii) (138,938,617) (67,812,771)

Interest paid 6(c) (3,888,396) (3,015,927)

Dividend paid 24(c) (410,980) (1,643,748)

10,312,879 (2,146,073)

Net (decrease)/increase in cash and cash equivalents (8,852,694) 7,579,095

Cash and cash equivalents at the beginning of the year 4,780,270 (2,798,981)

Effect of exchange rate fluctuations on cash held 56,836 156

Cash and cash equivalents at the end of the year 20 (4,015,588) 4,780,270

Net cash generated from /(used in) financing activities

*Change in trade and other receivables has been adjusted for the effect of impairment loss on trade receivables, bad

debt written off and the effect of exchange rate fluctuations on cash held.

**Change in trade and other payables has been adjusted for the effect of Value Added Tax (VAT) paid shown

separately on the statement of cash flows as well as the portion of property plant and equipment unpaid as at year

end and net gain on foreign exchange transactions.

The accompanying notes and significant accounting policies on pages 22 to 67 form an integral part of these financial

statements.

21


31 March 2017

Notes to the financial statementsFor the year ended 31 March 2017

Page Page

1 Reporting entity 23 16 Inventories 47

2 Basis of preparation 23 17 Investment 47

3 Significant accounting policies 24 18 Derivative 47

4 Revenue 38 19 Trade and other receivables 47

5 Analysis of expenses and other income 38 20 Cash and cash equivalents 48

6 Finance income and finance cost 39 21 Capital and reserves 48

7 Profit before taxation 39 22 Loans and borrowings 49

8 Personnel expenses 40 23 Employee benefits 51

9 Taxation 4224 Trade and other payables 53

10 Earnings and declared dividend per share 43

25 Financial instruments‐ Fair values

and risk management

54

11 Property, plant and equipment 44 26 Capital management 63

12 Intangible assets 45 27 Operating leases 63

13 Prepayments and other receivables 46 28 Contingencies 64

14 Deposit for import 46 29 Related parties 64

15 Deferred taxation 46 30 Subsequent events 67

22


31 March 2017

Notes to the financial statementsFor the year ended 31 March 2017

1 Reporting Entity

2 Basis of Preparation

(a) Statement of compliance

(b) Basis of measurement

(c) Functional and presentation currency

(d) Use of judgment and estimates

Judgments

Note 27 Leases: whether an arrangement is an operating or finance lease;

Note 9(d) Split of financial results into Pioneer and Non‐ Pioneer

Derivative financial

instruments

Measurement BasisItem

Fair Value

Defined Benefit Liability

Seven‐Up Bottling Company PLC (“the Company”) is a company domiciled in Nigeria. The Company

was incorporated in Nigeria as a private limited liability Company on 25th June, 1959 under the

name Seven‐Up Limited. On 16th May 1960, the name was changed to Seven‐Up Bottling Company

Limited and thereafter to “Seven‐Up Bottling Company PLC” on 26th November 1991 in compliance

with the provisions of the Companies and Allied matters Act 1990. Currently, the Company’s shares

are quoted on the floor of the Nigerian Stock Exchange. The majority shareholder of the Company is

AFFELKA S.A, having 73.22% interest in the equity of Seven‐Up Bottling Company PLC. The address

of the Company’s registered office is 247, Moshood Abiola Way, Ijora, Lagos.The Company is primarily involved in the business of bottling and marketing of a wide range of soft

drinks and Aquafina premium table water across Africa.

The financial statements have been prepared in accordance with the International Financial

Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters

Act, Cap C.20, Laws of the Federation of Nigeria, 2004 and the Financial Reporting Council of

Nigeria Act, 2011. These financial statements were authorized for issue by the Company's Board

of Directors on 28th June 2017.

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

items, which are measured on an alternative basis on each reporting date.

These financial statements are presented in Naira, which is the Company’s functional currency.

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

In preparing these financial statements, management has made judgements, estimates and

assumptions that affect the application of the Company's accounting policies and the reported

amounts of assets, liabilities, income and expenses. Actual results may differ from these

estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

estimates are recognised prospectively.

Information about judgements made in applying accounting policies that have the most

significant effects on the amounts recognised in the consolidated financial statements is

included in the following notes:

Present value of the defined benefit obligation

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31 March 2017

Assumptions and estimation uncertainties

Note 23 Measurement of defined benefit obligation: key actuarial assumption

Note 28

Note 24 Liability for returnable packaging material

(e) Measurement of fair values

(f)

3 Significant accounting policies

(a) Foreign currency

Foreign currency transactions

The accounting policies set out below have been applied consistently to all years presented in these

financial statements.

Transactions denominated in foreign currencies are translated and recorded in Naira at the

exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in

foreign currencies are translated into the functional currency at the exchange rate at the

reporting date. Non‐monetary assets and liabilities that are measured at fair value in a foreign

currency are translated into the functional currency at the exchange rate when the fair value

was determined. Non‐monetary items that are measured based on historical cost in a foreign

currency are translated at the exchange rate at the date of the transaction. Foreign currency

differences are generally recognised in profit or loss.

Information about assumptions and estimation uncertainties that have a significant risk of

resulting in a material adjustment in the year ending 31 March 2017 is included in the following

notes:

During the year, the Company reviewed the estimated useful life of its leasehold land as

unlimited on the bias that it is reasonably certain that the Government will usually renew the

leases upon expiration and that the substance of the lease is that the Company has ownership

of the Land, not a right to use the land for a predefined period. This change in accounting

estimate was applied prospectively in accordance with IAS 8 ‐ Accounting Policies, Changes in

Accounting Estimates and Errors.

A number of the Company’s accounting policies and disclosures require the measurement of fair

values, for both financial and non‐financial assets and liabilities.

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

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or

liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data

(unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the

fair value hierarchy, then the fair value measurement is categorised in its entirety in the same

level of the fair value hierarchy as the lowest level input that is significant to the entire

measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the

reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the

following notes:

• Note 25 ‐ Financial instruments‐ Fair values and risk management

Change in accounting estimate

Contingencies: key assumptions about the likelihood and magnitude of

an outflow of resources

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(b) Financial instruments

I. Non‐derivative financial assets‐recognition and measurement

Loans and receivables

Cash and cash equivalents

II. Non‐derivative financial liabilities‐recognition and measurement

Loans and receivables are financial assets with fixed or determinable payments that are not

quoted in an active market. Such assets are recognized initially at fair value plus any directly

attributable transaction costs. Subsequent to initial recognition, loans and receivables are

measured at amortized cost using the effective interest method, less any impairment losses.

An impairment loss is recognized if the carrying amount exceeds the estimated recoverable

amount. Loans and receivables comprise trade and other receivables.

Cash and cash equivalents comprise cash on hand, cash balances with banks and call

deposits with original maturities of three months or less. Bank overdrafts that are repayable

on demand and form an integral part of the Company’s cash management are included as a

component of cash and cash equivalents for the purpose of the statement of cash flows.

The Company’s non‐derivative financial assets are classified as loans and receivables and

cash and cash equivalents.

The Company initially recognizes loans and receivables and deposits on the date that they

are originated. All other financial assets are recognized initially on the trade date at which

the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows

from the asset expire, or it transfers the rights to receive the contractual cash flows on the

financial asset in a transaction in which substantially all the risks and rewards of ownership

of the financial asset are transferred. Any interest in transferred financial assets that is

created or retained by the Company is recognized as a separate asset or liability.

All financial liabilities are recognized initially on the trade date at which the Company

becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial liability when its contractual obligations are

discharged or cancelled or expire.

The Company has the following non‐derivative financial liabilities: loans and borrowings,

bank overdrafts, trade and other payables. Such financial liabilities are recognized initially at

fair value less any directly attributable transaction costs. Subsequent to initial recognition

these financial liabilities are measured at amortized cost using the effective interest method.

Financial assets and financial liabilities are offset and the net amount presented in the

statement of financial position when, and only when, the Company has a legally enforceable

right to offset the amounts and intends either to settle them on a net basis or to realise the

asset and settle the liability simultaneously.

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III. Derivative financial instruments

IV. Share capital

(c) Property, plant and equipment

I. Recognition and measurement

II . Subsequent costs

The Company holds derivative financial instruments to hedge its foreign currency

exposures. Embedded derivatives are separated from the host contract and accounted for

separately if certain criteria are met.

Derivatives are initially measured at fair value; any directly attributable transaction costs are

recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are

measured at fair value, and changes therein are generally recognised in profit or loss.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue

of ordinary shares and share options are recognized as a deduction from equity, net of any

tax effects.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Items of

property, plant and equipment under construction are disclosed as capital work‐in‐progress.

The cost of construction recognized includes the cost of materials and direct labour, the

costs of dismantling and removing the items and restoring the site on which they are

located, and borrowing costs on qualifying assets and any other costs directly attributable to

bringing the assets to the location and condition necessary for it to be capable of operating

in the manner intended by management. Engineering spare parts and stand‐by equipment

are capitalised as property, plant and equipment when the Company expects to use them

for more than one year.

The cost of replacing a part of an item of property, plant and equipment is recognized in the

carrying amount of the item if it is probable that the future economic benefits embodied

within the part will flow to the Company and its cost can be measured reliably. The carrying

amount of the replaced part is derecognized. The costs of the day‐to‐day servicing of

property, plant and equipment are recognized in profit or loss as incurred.

Items of property, plant and equipment are measured at cost less accumulated depreciation

and any accumulated impairment losses and residual value.

Purchased software that is integral to the functionality of the related equipment is

capitalized as part of the equipment.

When parts of an item of property, plant and equipment have different useful lives, they are

accounted for as separate items (major components) of property, plant and equipment.

The carrying amount of an item of property, plant and equipment is derecognized on

disposal or when no future economic benefits are expected from its use or disposal. The

gains and losses on disposal of an item of property, plant and equipment are determined by

comparing the proceeds from disposal with the carrying amount of property, plant and

equipment, and are recognized net within other income in profit or loss.

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III. Depreciation

The estimated useful lives for the current and comparative periods are as follows:

• Buildings 20 years

• Plant and machinery

‐ moulds 3 years

‐ Other plant and machinery 7 years

• Motor vehicle 5 years

• Office equipment

‐ Furniture and fittings 10 years

‐ IT equipment 4 years

• Returnable packaging materials

‐ Bottles 5 years

‐ Crates 7 years

(d) Intangible assets

I. Software

II. Subsequent expenditure

Depreciation is calculated to write off the cost of items of property, plant and equipment

less their estimated residual values using a straight‐line basis over their estimated useful

lives. Depreciation is generally recognized in profit or loss, unless the amount is included in

the carrying amount of another asset. Leased assets are depreciated over the shorter of the

lease term and their useful lives unless it is reasonably certain that the Company will obtain

ownership by the end of the lease term in which case the assets are depreciated over the

useful life.

Depreciation methods, useful lives and residual values are reviewed at each financial year

end and adjusted if appropriate. As disclosed in Note (2f), the Company reassessed the

useful life of leasehold land from the lease period (99 years) to unlimited. Consequently, the

Company discontinued the depreciation of leasehold land.

Capital work‐in‐progress is not depreciated. The attributable cost of each asset is transferred

to the relevant asset category immediately the asset is available for use and depreciated

accordingly.

Purchased software with finite useful life is measured at cost less accumulated amortization

and accumulated impairment losses.

Subsequent expenditure is capitalized only when it increases the future economic benefits

embodied in the specific asset to which it relates. All other expenditure, is recognized in

profit or loss as incurred.

Items of property, plant and equipment are depreciated from the date they are available for

use or, in respect of capital‐work‐in‐progress, from the date that the asset is completed and

ready for use.

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III. Derecognition

IV. Amortization

• Computer software 4 years

(e) Leases

I. Determining whether an arrangement contains a lease

● the arrangement contains a right to use the asset(s).

II. Leased assets

At inception of an arrangement, the Company determines whether such an arrangement is

or contains a lease. This will be the case if the following two criteria are met:

At inception or on reassessment of the arrangement, the Company separates payments and

other consideration required by such an arrangement into those for the lease and those for

other elements on the basis of their relative fair values. If the Company concludes for a

finance lease that it is impracticable to separate the payments reliably, then an asset and a

liability are recognised at an amount equal to the fair value of the underlying asset.

Subsequently the liability is reduced as payments are made and an imputed finance cost on

the liability is recognised using the Company’s incremental borrowing rate.

● the fulfillment of the arrangement is dependent on the use of a specific asset or assets;

and

Amortization is calculated over the cost of the asset, or other amount substituted for cost,

less its residual value.

An item of intangible asset is derecognized on disposal or when no future economic benefits

are expected from its use or disposal. The gain or loss arising from the derecognition of an

intangible assets are determined by comparing the net proceeds (if any) from disposal with

the carrying amount of the intangible assets and are recognized net within other income in

profit or loss.

Amortization is recognized in profit or loss on a straight‐line basis over the estimated useful

lives of intangible assets, from the date that they are available for use, since this most closely

reflects the expected pattern of consumption of the future economic benefits embodied in

the asset. The estimated useful life for the current and comparative periods is as follows:

Amortization methods, useful lives and residual values are reviewed at each financial year‐

end and adjusted if appropriate.

Assets held by the Company under leases for which the Company assumes substantially all

the risks and rewards of ownership are classified as finance leases. Upon initial recognition

the leased asset is measured at an amount equal to the lower of its fair value and the

present value of the minimum lease payments. Subsequent to initial recognition, the asset is

accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are operating leases and the leased assets are not recognized

in the Company’s statement of financial position.

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III. Lease payments

(f) Inventories

Engineering spares:

Goods‐in‐transit: purchase cost incurred to date

Allowance is made for obsolete, slow moving or defective items where appropriate.

Raw and non‐returnable packaging materials

Products‐ in‐ process and manufactured finished

goods

purchase cost on a weighted

average cost basis, including

transportation and clearing costs

purchase cost on a first‐ in, first ‐ out

basis including transportation and

clearing costs

weighted average cost of direct

materials and labour plus a

reasonable proportion of

manufacturing overheads based on

normal levels of activity

Inventories are measured at the lower of cost and net realizable value. The cost of inventories

includes expenditure incurred in acquiring the inventories, production or conversion costs and

other costs incurred in bringing them to their existing location and condition. In the case of

manufactured inventories and work‐in‐progress, cost includes an appropriate share of

production overheads based on normal operating capacity. Cost incurred in bringing each

product to its present location and condition is based on:

Payments made under operating leases are recognized in profit or loss on a straight‐line

basis over the term of the lease. Lease incentives received are recognized as an integral part

of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance

expense and the reduction of the outstanding liability. The finance expense is allocated to

each period during the lease term so as to produce a constant periodic rate of interest on

the remaining balance of the liability.

Weighted average cost is reviewed periodically to ensure it consistently approximates historical

cost.

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

estimated costs of completion and selling expenses.

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(g) Impairment

I. Non‐derivative financial assets

II. Non‐financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting

date to determine whether there is objective evidence that it is impaired. A financial asset is

impaired if objective evidence indicates that a loss event has occurred after the initial

recognition of the asset, and that the loss event had a negative effect on the estimated

future cash flows of that asset that can be reliably estimated.

Objective evidence that financial assets are impaired can include; default or delinquency by

a debtor, restructuring of an amount due to the Company on terms that the Company would

not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the

disappearance of an active market for a security. In addition, for an investment in an equity

security, a significant or prolonged decline in its fair value below its cost is objective evidence

of impairment.

The Company considers evidence of impairment for receivables at both a specific asset and

collective level. All individually significant receivables are assessed for specific impairment.

All individually significant receivables found not to be specifically impaired are then

collectively assessed for any impairment that has been incurred but not yet identified.

Receivables that are not individually significant are collectively assessed for impairment by

grouping together receivables with similar risk characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of

default, timing of recoveries and the amount of loss incurred, adjusted for management’s

judgment as to whether current economic and credit conditions are such that the actual

losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as

the difference between its carrying amount and the present value of the estimated future

cash flows discounted at the asset’s original effective interest rate. Losses are recognized in

profit or loss and recognized in an allowance account against receivables. Interest on the

impaired asset continues to be recognized through the unwinding of the discount. When a

subsequent event causes the amount of impairment loss to decrease, the decrease in

impairment loss is reversed through profit or loss. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would

have been determined, if no impairment loss had been recognized.

The carrying amounts of the Company’s non‐financial assets, other than inventories are

reviewed at each reporting date to determine whether there is any indication of

impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For intangible assets that have indefinite useful lives or that are not yet available for use, the

recoverable amount is estimated each year at the same time.

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(h) Employee benefits

I. Defined contribution plans

The recoverable amount of an asset or cash‐generating unit is the greater of its value in use

and its fair value less costs to sell. 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. For the

purpose of impairment testing, assets that cannot be tested individually are grouped

together into the smallest group of assets that generates cash inflows from continuing use

that are largely independent of the cash inflows of other assets or groups of assets (the

“cash‐generating unit, or CGU”).

The Company’s corporate assets do not generate separate cash inflows. If there is an

indication that a corporate asset may be impaired, then the recoverable amount is

determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its

estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in respect of CGUs are allocated to reduce the carrying

amounts of the other assets in the unit (group of units) on a pro rata basis.

In respect of other assets, impairment losses recognized in prior periods are assessed at

each reporting date for any indications that the loss has decreased or no longer exists. An

impairment loss is reversed if there has been a change in the estimates used to determine

the recoverable amount. An impairment loss is reversed only to the extent that the asset’s

carrying amount does not exceed the carrying amount that would have been determined,

net of depreciation or amortization, if no impairment loss had been recognized.

A defined contribution plan is a post‐employment benefit plan under which an entity pays

fixed contributions into a separate entity and has no legal or constructive obligation to pay

further amounts in respect of all employee benefits relating to employee service in current

and prior periods.

In line with the provisions of the Pension Reform Act 2014, the Company has instituted a

defined contribution pension scheme for their permanent staff. Staff contributions to the

scheme are funded through payroll deductions. Obligations for contributions to the defined

contribution plan are recognized as employee benefit expense in profit or loss in the periods

which related services are rendered by employees. The Company and its employees each

contribute 10% and 8% respectively of the employees' basic salaries, transport & housing

allowances to the fund on a monthly basis.

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II. Defined benefit plans

III. Other long term employee benefits

IV. Termination benefits

The discount rate is the yield at the reporting date on Federal Government of Nigeria issued

bonds that have maturity dates approximating the term of the Company’s obligation. The

calculation is performed using the Projected Unit Credit method. Any remeasurements are

recognized in the profit or loss.

Termination benefits are recognized as an expense when the Company is committed

demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either

terminate employment before the normal retirement date, or to provide termination

benefits as a result of an offer made to encourage voluntary redundancy. Termination

benefits for voluntary redundancies are recognized as an expense if the Company has made

an offer of voluntary redundancy, it is probable that the offer will be accepted, and the

number of acceptances can be estimated reliably. If benefits are payable more than 12

months after the reporting period, then they are discounted to their present value.

The Company’s other long‐term employee benefits represent Long Service Awards scheme

instituted for all permanent employees. The Company’s obligation in respect of the Long

Service Awards scheme is the amount of future benefits that employees have earned in

return for their service in the current and prior periods. The benefit is discounted to

determine its present value.

A defined benefit plan is a post‐employment benefit plan other than a defined contribution

plan. The Company’s net obligation in respect of defined benefit gratuity scheme is

calculated by estimating the amount of future benefit that employees have earned in return

for their service in the current and prior years and that benefit is discounted to determine its

present value. In determining the liability for employee benefits under the defined benefit

scheme, consideration is given to future increases in salary rates and the Company's

experience with staff turnover.

The Company's liability with respect to this scheme is determined by an independent

actuarial valuation every year using the projected unit credit method. Remeasurements

arising from differences between the actual and expected outcome in the valuation of the

obligation are recognized in other comprehensive income. When the benefits of a plan are

changed or when a plan is curtailed, the resulting change in benefit that relates to past

service or the gain or loss on curtailment is recognised immediately in profit or loss. The

Company recognises gains and losses on the settlement of a defined benefit plan when the

settlement occurs The discount rate is the yield on Federal Government of Nigeria issued

bonds that have maturity dates approximating the terms of the company’s obligation.

Although the scheme is not funded, the Company ensures that adequate arrangements are

in place to meet its obligations under the scheme

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V. Short‐term employee benefits

(i) Provisions

(j) Contingent liabilities

(k) Revenue

Revenue is recognized when persuasive evidence exists that the significant risks and rewards of

ownership have been transferred to the buyer, recovery of the consideration is probable and

there is no continuing management involvement with the goods, and the amount of revenue

can be measured reliably. If it is probable that discount will be granted and the amount can be

measured reliably, then the discount is recognized as a reduction of revenue as the sales are

recognized.

Short‐term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short‐term cash bonus or

profit sharing plans if the Company has a present legal or constructive obligation to pay this

amount as a result of past service provided by the employee, and the obligation can be

estimated reliably.

A provision is recognized if, as a result of a past event, the Company has a present legal or

constructive obligation that can be estimated reliably, and it is probable that an outflow of

economic benefits will be required to settle the obligation. Provisions are determined by

discounting the expected future cash flows at a pre‐tax rate that reflects current market

assessments of the time value of money and the risks specific to the liability. The unwinding of

the discount is recognized as finance cost.

A contingent liability is a possible obligation that arises from past events and whose existence

will be confirmed only by the occurrence or non‐occurrence of one or more uncertain future

events not wholly within the control of the Company, or a present obligation that arises from

past events but is not recognized because it is not probable that an outflow of resources

embodying economic benefits will be required to settle the obligation; or the amount of the

obligation cannot be measured with sufficient reliability.

Contingent liabilities are only disclosed and not recognized as liabilities in the statement of

financial position. If the likelihood of an outflow of resources is remote, the possible obligation is

neither a provision nor a contingent liability and no disclosure is made.

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value

of the consideration received or receivable, net of value added tax, sales returns, trade

discounts and volume rebates.

Transfer of significant risk and rewards of ownership is determined to be transferred to the

buyer at the point of delivery to the buyer.

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(l) Finance income and finance costs

(m) Income tax

I. Current tax

II. Deferred tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the

year, using tax rates statutorily enacted at the reporting date, and any adjustment to tax

payable in respect of previous years. The Company is subject to the following types of

current income tax;

• Company Income Tax‐ This relates to tax on revenue and profit generated by the Company

during the year, to be taxed under the Companies Income Tax Act Cap C21, LFN 2004 as

amended to date.

• Tertiary Education Tax‐ This is based on the assessable income of the Company and is

governed by the Tertiary Education Trust Fund (Establishment) Act LFN 2011.

Deferred tax is recognized in respect of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for

taxation purposes. Deferred tax is not recognized for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that

is not a business combination and that affects neither accounting nor taxable profit or loss;

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible

temporary differences to the extent that it is probable that future taxable profits will be

available against which they can be used. Deferred tax assets are reviewed at each reporting

date and are reduced to the extent that it is no longer probable that the related tax benefit

will be realised. Such reductions are reversed when the probability of future taxable profits

impairs. Deferred tax is measured at the tax rates that are expected to be applied to

temporary differences when they reverse, using tax rates enacted or substantively enacted

at the reporting date.

Finance income comprises gain on derivative financial instruments and interest income on funds

invested. Interest income is recognized as it accrues in profit or loss, using the effective interest

method.Finance costs comprise interest expense on borrowings, loss on derivative financial instruments

and impairment losses recognized on financial assets (other than trade receivables).

Borrowing cost that are not directly attributable to the acquisition, construction or production

of a qualifying asset are recognized in profit or loss.

Foreign currency gains and losses are recognised in profit or loss and presented on a net basis as

either finance income or finance cost.

In 2013, the Company was granted a 5 year pioneer tax relief (i.e. tax exemption) for Can and

Pet products in 3 of its plant locations. The financial results for the non‐pioneer products and

pioneer products is determined based on the revenue and the expenses from the pioneer and

non‐pioneer products. Income tax expense represents the sum of current tax expense and

deferred tax expense.

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(n) Deposit for Returnable Packaging Material

(o) Earnings per share

(p) Dividends

Dividends are recognized as a liability in the period they are declared.

(q) Related parties

The Securities and Exchange Commission (SEC) published a circular in 2015 directing Capital

Market Registrars to return all unclaimed dividend which has been in their custody for fifteen

(15) months and above to the paying companies. These unclaimed dividends are included as a

liability to the shareholders until they become statute barred in accordance with the provisions

of Section 385 of CAMA.

Deferred tax are recognized in profit or loss except to the extent that it relates to a business

combination, or items recognized directly in equity or in other comprehensive income.

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the

Company by the weighted average number of ordinary shares outstanding during the period,

adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss

attributable to ordinary shareholders and the weighted average number of ordinary shares

outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary

shares.

Dividends which remained unclaimed for a period exceeding twelve (12) years from the date of

declaration and which are no longer actionable by shareholders in accordance with Section 385

of Companies and Allied Matters Act of Nigeria are written back to retained earnings.

Related parties include the holding company and other group entities. Directors, their close

family members and any employee who is able to exert a significant influence on the operating

policies of the Company are also considered to be related parties. Key management personnel

are also regarded as related parties. Key management personnel are those persons having

authority and responsibility for planning, directing and controlling the activities of the entity,

directly or indirectly, including any director (whether executive or otherwise) of that entity.

Deferred tax assets and liabilities are offset only if certain criteria are met.

The Company collects deposits for returnable packaging materials (i.e. bottles and crates) from

customers. A liability is then recognized in the financial statements with respect to these

deposits. The deposit is refunded to the customer when the customer returns the packaging

material.Each year an amount is written into the Income statement. This amount represents the

breakages in trade of which the customers would not come back to collect deposit made on the

bottles or crates. Factors such as bottle turnover, bottle additions, bottle refill rate, amount of

bottles with distributors, market trend and market loss rates are considered in the

determination of the amount to be written back into the income statement on a yearly basis.

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(r) Segment reporting

(s) Standards and interpretations not yet adopted

(i)

(ii) IFRS 9 Financial Instruments effective for annual periods beginning 1 January 2018

IFRS 15 Revenue from contracts with customers effective for annual periods beginning 1

January 2018

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer

Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18

Transfer of Assets from Customers and SIC‐31 Revenue – Barter of Transactions Involving

Advertising Services.

On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which

replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39

Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on

the classification and measurement of financial instruments, a new expected credit loss

model for calculating impairment on financial assets, and new general hedge accounting

requirements. It also carries forward the guidance on recognition and derecognition of

financial instruments from IAS 39. The Company is yet to carry‐out an assessment to

determine the impact that the initial application of IFRS 9 could have on its business;

however, the Company will adopt the standard for the year ending 31 March 2019.

All of the Company’s products have similar risks and returns thus management does not use

operating segments’ operating results to make decisions about resources to be allocated to the

segment and assess its performance.

A number of new standards, amendments to standards and interpretations are effective for

annual periods beginning after 1st April 2016, and have not been applied in preparing these

financial statements. Those which may be relevant to the Company are set out below. The

extent of the impact of these standards is yet to be determined. The Company does not plan to

adopt these standards early. These will be adopted in the period that they become mandatory

unless otherwise indicated

An operating segment is a distinguishable component of the Company that earns revenue and

incurs expenditure from providing related products or services (business segment), or providing

products or services within a particular economic environment (geographical segment), and

which is subject to risks and returns that are different from those of other segments.

The standard contains a single model that applies to contracts with customers and two

approaches to recognising revenue: at a point in time or over time. The model features a

contract‐based five‐step analysis of transactions to determine whether, how much and

when revenue is recognised.This new standard will most likely have a significant impact on

the Company, which will include a possible change in the timing of when revenue is

recognised and the amount of revenue recognised. The Company is yet to carry‐out an

assessment to determine the impact that the initial application of IFRS 15 could have on its

business; however, Company will adopt the standard for the year ending 31 March 2019.

36


31 March 2017

(iii)

(iv)

Amendments to IAS 7 Disclosure Initiative effective for annual periods beginning 1 January

2017

The amendments provide for disclosures that enable users of financial statements to

evaluate changes in liabilities arising from financing activities, including both changes arising

from cash flow and non‐cash changes. This includes providing a reconciliation between the

opening and closing balances arising from financing activities. The Company will adopt the

amendments for the year ending 31 March 2018.

IFRS 16‐ Leases effective for annual periods beginning 1 January 2019

IFRS 16 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. The standard sets out the principles for the

recognition, measurement, presentation and disclosure of leases for both parties to a

contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 eliminates the

classification of leases as operating leases or finance leases as required by IAS 17 and

introduces a single lessee accounting model. Applying that model, a lessee is required to

recognise:

a. assets and liabilities for all leases with a term of more than 12 months, unless the

underlying asset is of low value; and

b. depreciation of lease assets separately from interest on lease liabilities in the profit or

loss.

For the lessor, IFRS 16 substantially carries forward the lessor accounting requirements in

IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance

leases, and to account for those two types of leases differently.

The Company is yet to carry out an assessment to determine the impact that the initial

application of IFRS 16 could have on its business; however, the Company will adopt the

standard for the year ending 31 March 2020.

37


31 March 2017

4 Revenue

Revenue for the year comprises:

In thousands of naira 2017 2016

Sale of goods:

Local 108,002,978 85,616,691

Export 274,022 17,988

Total Revenue 108,277,000 85,634,679

5 Analysis of expenses and other income

(a) Analysis of expenses by nature


Raw materials and consumables 85,626,440 48,058,473

Advertising and sales promotion 2,410,149 3,352,822

Depreciation (Note 11(a)) 9,487,448 9,325,971

Auditors' remuneration 41,000 39,000

Professional fees (i) 83,767 89,924

Amortization (Note 12) 25,219 35,237

Personnel expenses (Note 8(a)) 10,045,983 10,872,213

Transportation 2,126,620 2,360,438

Repairs and maintenance 5,523,144 4,350,490

Management fees (ii) 112,722 ‐

Lease and rentals 429,629 506,202

115,912,121 78,990,770

Total cost of sales, selling & distribution and administrative expenses is made up of:


Cost of sales 95,349,880 60,622,243

Selling and distribution expenses 13,910,747 11,801,831

Administrative expenses 6,651,494 6,566,696

115,912,121 78,990,770

(i)

(ii)

(b) Other income represents income from the sale of scrap.

Tax and advisory services amounting to N15 million (2016:N25 million) were provided by

KPMG Professional Services. The balance of professional fees amounting to N68 million

(2016: N64million) represent expenses for professional services provided by companies and

firms other than the external audit firm.

Total cost of sales, selling & distribution and administrative

expenses

This represents 2016 financial year Management fees which is now recognised following the

receipt of NOTAP approval in current year. See details on Note 29(d))vi).

38


31 March 2017

6 Finance income and finance cost

(a) Finance income comprises:


Interest income on bank deposit 40,076 31,455

Net gain on foreign exchange transactions 252,084 10,116

Derivative gain 131,848 ‐

424,008 41,571

(b) Finance costs comprises:


Interest on overdraft (746,604) (429,096)

(3,390,977) (2,816,428)

Derivative loss (306,780) ‐

(4,444,361) (3,245,524)

Net finance costs recognized in profit or loss (4,020,353) (3,203,953)

(c) Finance costs in the cash flow


Finance costs per profit or loss 4,444,361 3,245,524

Interest accrual (249,185) (229,597)

Derivative loss (306,780) ‐Interest paid per statement of cash flows 3,888,396 3,015,927

(d) Finance income in the cash flow


Finance income in the statement of profit or loss / cash flows (424,008) (41,571)

Gain on foreign exchange transactions* 252,084 10,116

Derivative gain 131,848 ‐ Finance income received per statement of cash flows (40,076) (31,455)

7 (Loss)/profit before taxation

(Loss)/profit before taxation is stated after charging/(crediting):


Depreciation of property, plant and equipment (Note 11 (a)) 9,487,448 9,325,971

Amortization of intangible assets (Note 12) 25,219 35,237

Auditor’s remuneration 41,000 39,000

Directors’ remuneration (Note 8 (c)) 11,567 18,695

Personnel expenses (Note 8 (a)) 10,045,983 10,872,213

(Gain)/loss on sale of property, plant and equipment (174,973) 4,109

Gain on foreign exchange transactions (Note 6(d)) 252,084 (10,116)

Operating lease cost (Note 27) 429,629 462,253

Management service fee (29(d)(vi)) 112,722 ‐

*The effect of the gain in foreign exchange transactions in the statement of cash flows has been

adjusted for in the change in trade and other payables.

Financial liabilities measured at amortized cost‐

interest expense (Note 22 (a)(ii))

39


31 March 2017

8 Personnel expenses

(a) Personnel expenses for the year comprise the following:


Salaries, wages and allowances 7,737,790 7,878,078

Expenses related to other employee benefits (Note 23(c)) 752,221 1,142,434

Expenses related to defined contribution plans (Note 24(b)) 413,258 465,598

Other personnel expenses 1,142,714 1,386,103

10,045,983 10,872,213

(b)

2017 2016

N N Number Number

600,001 ‐ 650,000 ‐ 1

650,001 ‐ 700,000 ‐ 2

700,001 ‐ 800,000 2 18

800,001 ‐ 1,000,000 408 1,144

1,000,001 ‐ 1,200,000 614 393

1,200,001 ‐ 1,400,000 208 153

1,400,001 ‐ 1,600,000 116 159

1,600,001 ‐ 1,800,000 113 177

1,800,001 ‐ 2,000,000 111 150

2,000,001 ‐ 2,500,000 229 208

2,500,001 ‐ 3,000,000 124 102

3,000,001 ‐ 3,500,000 82 77

3,500,001 ‐ 4,000,000 59 54

4,000,001 ‐ 4,500,000 36 32

4,500,001 ‐ 5,000,000 20 16

5,000,001 ‐ 7,000,000 31 36

7,000,001 and above 40 37

2,193 2,759

Employees of the Company, whose duties were wholly or mainly discharged in Nigeria, received

remuneration (excluding pension costs and certain benefits) in the following ranges:

40


31 March 2017

The number of full‐time persons employed per function as at 31 March was as follows:

2017 2016

Number Number

Manufacturing 1,206 1,169

Distribution 633 1,102

Finance 156 163

Human Resources/ Administration 170 297

Information Technology 28 28 2,193 2,759

(c) Directors' remuneration

Remuneration paid to directors of the Company was as follows:


Fees paid to non‐executive directors 700 700

Remuneration paid to the chairman 4,809 4,212

Remuneration paid to executive directors 6,058 13,783

11,567 18,695

The executive directors’ remuneration shown above includes:


Highest paid director 6,058 5,370

2017 2016

N N Number Number

0 ‐ 3,000,000 7 8

3,000,001 ‐ 4,500,000 ‐ ‐

7 8

The number of other directors (excluding the Chairman and highest paid director) who received

emoluments excluding pension contributions and certain benefits were within the following

41


31 March 2017

9 Taxation

(a) Income tax expense


Current tax expense

Current year income tax 1,433,009 871,705

Tertiary education tax 217,901 156,314 Capital gains tax ‐ 5,400

1,650,910 1,033,419

Deferred tax expense

Origination and reversal of temporary differences (2,102,636) (623,492)

Total income tax (credit)/expense (451,726) 409,927

(b) Income tax recognized directly in other comprehensive income


Remeasurement of defined benefit asset/ (liability) (Note 23(a)) 315,200 (1,069,442)

Related tax (Note 15(b)) (100,864) 320,833 Defined benefit plan actuarial gain/(loss), net of tax 214,336 (748,609)

(c) Movement in current tax liabilities

Movement in tax payable account during the year was as follows


Balance, beginning of the year 1,398,371 1,339,805

Payments in the year (953,617) (974,853)

Charge for the year 1,650,910 1,033,419

Balance, end of the year 2,095,664 1,398,371

The tax charge for the year has been computed after adjusting for certain items of expenditure

and income, which are not deductible or chargeable for tax purposes, and comprises:

42


31 March 2017

(d)

i Can products produced at the Company's Lagos Plant

ii

(e) Reconciliation of effective tax rate

2017 2016


(Loss)/profit for the year (10,776,712) 3,347,463

Taxation 451,726 409,927

Profit before tax (11,228,438) 3,757,390

30.0% (3,368,531) 30.0% 1,127,217

Impact of Tertiary education tax 2.0% (224,568.76) 4.2% 156,314

Impact of Capital gains tax 0.0% ‐ 0% 5,400

Non‐deductible expenses ‐1.3% 145,038 2.0% 76,585

Tax exempt income 3.1% (337,204) ‐1.9% (75,044)

Effect of pioneer charges/(gains) ‐10.8% 1,210,034 ‐23.4% (880,545)

‐18.9% 2,123,506 0.0% ‐

Tax expense 4.1% (451,726) 11.0% 409,927

10 Earnings and declared dividend per share

(a)

(b)

Income tax using the Company’s

domestic tax rate

Declared dividend per share of 160 kobo (2016: 275 kobo) is based on the dividend declared

on 28 September 2016 of N1,024,942,585 (2016: N1,761,623,498) on 640,590,363 ordinary

shares of 50 kobo each (2016: 640,590,363 ordinary shares of 50 kobo each), being the

number of ordinary shares in issue during the year.

Basic and diluted earnings per share of (1,682)kobo (2016: 523 kobo) was calculated based on

loss attributable to the owners of the Company for the year of N10,776,712,000 (2016:Profit

of N3,347,463,000) and on 640,590,363 ordinary shares of 50 kobo each (2016: 640,590,363

ordinary shares of 50 kobo each), being the number of ordinary shares in issue during the year

and at the end of the year.

In 2013, the Nigerian Investment Promotion Council (NIPC) granted the Company a pioneer

status for a five year period with respect to the following production activities of the

Company.

PET products produced at the Lagos, Enugu and Abuja plant locations, with a retroactive

commencement production date of 1 September 2011.

The effective commencement production date was certified by the Industrial Inspectorate

Department of the Federal Ministry of Commerce and Industry on 23 November 2013. In

accordance with the provision of the Industrial Development (Income Tax Relief) Act, the

Company's profit attributable to the pioneer line of business is therefore not liable to income

taxes for the duration of the pioneer period. In current year, the Company's pioneer status

expired hence the pioneer period was for only five (5) months.

Tax effect of changes in pioneer status

43


31 March 2017

11 Property, plant and equipment (PPE)

(a) The movement on these accounts during the year was as follows:


Cost

Balance at 1 April 2015 87,027 15,491,568 38,386,199 9,400,938 6,178,542 14,634,493 2,038,915 86,217,682

Additions 15,500 24,789 52,500 230,166 54,720 4,200,368 2,886,950 7,464,993

Transfers from capital work in progress ‐ 1,110,397 3,017,308 171,916 248,193 ‐ (4,547,814) ‐

Reclassification*** ‐ ‐ ‐ ‐ ‐ ‐ 53,924 53,924

Disposals ‐ ‐ (24,199) (454,677) (3,156) (1,678,267) ‐ (2,160,299)

Balance at 31 March 2016 102,527 16,626,754 41,431,808 9,348,343 6,478,299 17,156,594 431,975 91,576,300

Balance at 1 April 2016 102,527 16,626,754 41,431,808 9,348,343 6,478,299 17,156,594 431,975 91,576,300

Additions ‐ ‐ 85,500 96,600 46,528 4,332,985 2,756,484 7,318,097

Transfers from capital work in progress ‐ 69,691 1,583,468 ‐ 85,718 ‐ (1,738,877) ‐

Disposals ‐ ‐ ‐ (408,249) ‐ (1,850,095) ‐ (2,258,344)

Balance at 31 March 2017 102,527 16,696,445 43,100,776 9,036,694 6,610,545 19,639,484 1,449,582 96,636,053

Depreciation and impairment

Balance at 1 April 2015 8,401 3,453,745 19,835,220 7,842,160 4,232,439 6,405,042 ‐ 41,777,007

Depreciation for the year 1,404 791,662 4,185,194 724,945 717,425 2,905,341 ‐ 9,325,971

Disposals ‐ ‐ (23,993) (445,354) (1,479) (1,591,968) ‐ (2,062,794)‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Balance at 31 March 2016 9,805 4,245,407 23,996,421 8,121,751 4,948,385 7,718,415 ‐ 49,040,184

Balance at 1 April 2016 9,805 4,245,407 23,996,421 8,121,751 4,948,385 7,718,415 ‐ 49,040,184

Depreciation for the year ‐ 824,372 4,274,397 480,585 564,991 3,343,103 ‐ 9,487,448

Disposals ‐ ‐ ‐ (381,881) ‐ (1,850,095) ‐ (2,231,976) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Balance at 31 March 2017 9,805 5,069,779 28,270,818 8,220,455 5,513,376 9,211,423 ‐ 56,295,656

Carrying amounts

At 1 April 2015 78,626 12,037,823 18,550,979 1,558,778 1,946,103 8,229,451 2,038,915 44,440,675

At 31 March 2016 92,722 12,381,347 17,435,387 1,226,592 1,529,914 9,438,179 431,975 42,536,116

At 1 April 2016 92,722 12,381,347 17,435,387 1,226,592 1,529,914 9,438,179 431,975 42,536,116

At 31 March 2017 92,722 11,626,666 14,829,958 816,239 1,097,169 10,428,061 1,449,582 40,340,397

*** Amount represents reclassification of qualifying spares from inventory.

Returnable

packaging

PPE Under

ConstructionTotal Leasehold land Buildings

Plant and

MachineryMotor Vehicles

Office

Equipment

44


31 March 2017

(b) Property, plant and equipment under construction

Capital work in progress at the year is analyzed as follows:


Plant and machinery 300,665 163,271

Land and buildings 1,148,917 265,516

Furniture equipment ‐ 3,188

1,449,582 431,975

No borrowing costs were capitalized in current year (2016: Nil).

(c) Capital commitments

2017 2016

Approved and contracted 18,757,015 748,419,830 Approved but not contracted ‐ 195,847,440

18,757,015 944,267,270

(d) Additions in cash flow statement

2017 2016

Additions per Note 11 (a) 7,318,097 7,464,993

Reclassification of qualifying spares from inventories ‐ 53,924

Accrued additions to property, plant and equipment ‐ (197,799)

Acquisition of PPE per statement of cash flows 7,318,097 7,321,118

12 Intangible assets

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


Cost 2017 2016

Balance beginning of the year 178,037 115,129

Additions 905 62,908

Balance end of year 178,942 178,037

Amortization

Balance beginning of the year 122,668 87,431

Amortization for the year 25,219 35,237

Balance end of year 147,887 122,668

Carrying amounts

Balance beginning of the year 55,369 27,698 Balance end of year 31,055 55,369

Capital expenditure commitments at the year‐end authorized by the Board of Directors comprise:

45


31 March 2017

13 Prepayments and other receivables

(a) Prepayments represent current and non‐current portions of prepaid rent.

(b)

14 Deposit for imports

15 Deferred taxation

Recognized deferred tax liabilities

(a) Deferred tax liabilities are attributable to the following:

In thousands of naira 31‐Mar‐17 31‐Mar‐16 31‐Mar‐17 31‐Mar‐16 31‐Mar‐17 31‐Mar‐16Property, plant and equipment ‐ ‐ 3,015,311 3,528,304 3,015,311 3,528,304

Employee benefits (1,228,171) (1,248,874) ‐ ‐ (1,228,171) (1,248,874)

Unrealized exchange gain (65,853) ‐ ‐ 3,034 (65,853) 3,034 Derivative gain (42,191) ‐ ‐ ‐ (42,191) ‐ Derivative loss ‐ ‐ 98,170 98,170 ‐ Unrelieved losses (1,496,575) ‐ ‐ ‐ (1,496,575) ‐

Tax (asset)/liabilities (2,832,790) (1,248,874) 3,113,481 3,531,338 280,691 2,282,464

Set off of tax 2,832,790 1,248,874 (2,832,790) (1,248,874) ‐ ‐ Net tax liabilities ‐ ‐ 280,691 2,282,464 280,691 2,282,464

(b) Movement in temporary differences during the year


Balance 31

March 2015

Recognized

in profit or

loss

Recognized in

other

comprehensive

income

Balance 31

March 2016

Recognized

in profit or

loss

Recognized in

other

comprehensive

income

Balance 31

March 2017

Property, plant and equipmen 4,178,687 (650,383) ‐ 3,528,304 (512,993) ‐ 3,015,311

Employee benefits (964,421) 36,380 (320,833) (1,248,874) (80,161) 100,864 (1,228,171)

Unrelived losses ‐ ‐ ‐ ‐ (1,496,575) ‐ (1,496,575)

Unrealized exchange gain 12,523 (9,489) ‐ 3,034 (68,886) ‐ (65,853)

Derivative gain ‐ ‐ ‐ ‐ (42,191) ‐ (42,191)

Derivative loss ‐ ‐ ‐ ‐ 98,170 ‐ 98,170

3,226,789 (623,492) (320,833) 2,282,464 (2,102,636) 100,864 280,691

Net Liabilities Assets

Non‐current other receivables represent non interest bearing loans granted to the Company’s employees, which are secured by the

employees’ retirement benefit obligations.

Deposit for imports represent funds placed with banks for the purpose of funding letters of credit in respect of imported raw materials and

items of property plant and equipment.

46


31 March 2017

16 Inventories


12,431,921 4,785,266

Work in progress 382,584 216,103

Finished products 1,275,545 688,380

Engineering spares 2,513,327 2,188,774

Goods in transit 5,841,502 3,616,339

22,444,879 11,494,862

17

18


(a) Derivative financial loss

Forward exchange contracts 306,780 ‐

(b) Derivative financial asset

Future exchange contracts 131,848 ‐

19 Trade and other receivables


Trade receivables 619,541 455,875

Staff loans and advances 1,850,389 565,112

Due from related parties (Note 29 (d)(ii)) 6,138,481 3,892,995

Other receivables 8,322,587 677,087

Deposit with Company's registrars for dividend 107,641 70,515

17,038,639 5,661,584

The value of raw materials, non‐returnable packaging materials, spare parts, changes in finished

products and products in process recognized in cost of sales during the year amounted to N89 billion

(2016: N57.2 billion).

The Company’s exposure to credit and currency risks, and impairment losses related to trade and

other receivables are disclosed in Note 25.

Raw materials, consumables and non‐returnable

packaging materials

Included in other receivables is an amount of N8.2 billion (2016:Nil) receivable from the bank which

constitutes margin deposit for forward and future contracts.

Investment

Investment represents a portion of unclaimed dividend which the Company had invested with an

investment manager. This amount is restricted from use by the Company.

Derivative

Derivative comprise of:

The Company’s exposure to credit and market risks, and fair value measurement is included in Note

25.

47


31 March 2017

20 Cash and cash equivalents


Cash and cash equivalents in statement of financial position 6,009,919 5,856,658

Bank overdrafts used for cash management purposes (10,025,507) (1,076,388)Cash and cash equivalents in the statement of cash flows (4,015,588) 4,780,270

21 Capital and reserves

(a) Ordinary shares

(i) Authorized ordinary shares of 50k each

In number of shares 2017 2016

640,590,363 640,590,363

(ii) Issued and fully paid ordinary shares of 50k each

In number of shares 2017 2016

640,590,363 640,590,363

The Company’s exposure to credit risk, currency risk and a sensitivity analysis for cash and cash

equivalents is disclosed in Note 25.

Included in cash and cash equivalents are unclaimed dividend amounting to N504 million (2016:

N635 million) held in a separate bank account in accordance with the guidelines issued by the

Securities and Exchange Commission. This amount is restricted from use by the Company.

Included in cash and cash equivalents is also an amount of N194 million held in lien with a bank. This

amount is restricted for use as it is the margin deposit for the forward contract.

The total overdraft facilities available to the Company as at year end amounted to N11 billion with a

negative pledge on the total assets of the Company. The interest rate on the overdraft facilities

during the year ranged between 16% and 22%.

48


31 March 2017

22 Loans and borrowings

(a)

(i) Loans and borrowing as at 31 March is as follows:


Non‐ current liabilities:Secured bank loans 12,675,925 1,520,205

Current liabilities:

Secured bank loans 20,395,015 16,689,294

33,070,940 18,209,499

(ii) Movement in the loans and borrowings

Secured bank loans

2017 2016

Balance beginning of year 18,209,499 15,466,300

Increase in borrowings 153,550,872 70,326,373

Interest charged (Note 6(b)) 3,390,977 2,816,428

Interest repayment (3,141,791) (2,586,831) Principal repayment (138,938,617) (67,812,771) Balance end of year 33,070,940 18,209,499

This note provides information about the contractual terms of the Company’s interest‐bearing

loans and borrowings, which are measured at amortized cost. For more information about the

Company’s exposure to interest rate, foreign currency and liquidity risks, see Note 25.

49


31 March 2017

Terms and debt repayment schedule

(b) Terms and conditions of outstanding loans were as follows:


Citibank Nigeria Limited $11,682,644 USD libor+3.5% 2017 3,702,841 3,702,841 3,702,841 ‐ ‐ ‐ Citibank Nigeria Limited $3,181,362 USD Libor + 5% 2016 ‐ ‐ ‐ 628,319 628,319 628,319 Fidelity Bank € 243,857 EUR Libor+12% 2017 82,062 82,062 82,062 ‐ ‐ ‐ First City Monument Bank $692,406 USD Libor+8% 2017 217,845 217,845 217,845 ‐ ‐ ‐ Guaranty Trust Bank N500,000 NGN 19% 2017 500,000 505,726 505,726 ‐ ‐ ‐ Guaranty Trust Bank N6,000,000 NGN 13% 2016 ‐ ‐ ‐ 4,000,000 4,146,393 4,146,393 Guaranty Trust Bank $927,252 USD Libor+7% 2017 305,344 305,344 305,344 ‐ ‐ ‐ Rand Merchant Bank N1,000,000 NGN 22% 2017 1,000,000 1,017,534 1,017,534 ‐ ‐ ‐ Rand Merchant Bank $546,374 USD Libor+4% 2017 171,900 171,900 171,900 ‐ ‐ ‐ Stanbic IBTC N10,000,000 NGN 19% 2019 10,000,000 10,061,062 10,048,323 ‐ ‐ Standard Chartered $3,000,060 USD Libor + 7% 2016 ‐ ‐ ‐ 592,512 592,512 592,512 Standard Chartered N1,200,031 NGN 13% 2016 ‐ ‐ ‐ 1,200,031 1,217,399 1,217,399 Standard Chartered Bank € 414,701 EUR Libor+7% 2017 139,554 139,554 139,554 ‐ ‐ ‐ Standard Chartered Bank $14,255,390 USD Libor+7% 2017 4,508,140 4,508,140 4,508,140 ‐ ‐ ‐ Union Bank of Nigeria $416,881 USD Libor+9% 2017 131,943 131,943 131,943 ‐ ‐ ‐ United Bank for Africa N2,500,000 NGN 20% 2019 2,500,000 2,614,863 2,613,634 ‐ ‐ United Bank for Africa € 468,028 EUR Libor+10% 2017 157,500 157,500 157,500 ‐ ‐ ‐ United Bank for Africa $3,407,288 USD Libor+10% 2017 1,072,001 1,072,001 1,072,001 ‐ ‐ ‐

Zenith Bank $2,852,244 USD Libor + 9% 2016 ‐ ‐ ‐ 559,040 559,040 559,040

Zenith Bank N1,500,000 NGN 17% 2018 ‐ ‐ ‐ 1,500,000 1,520,205 1,526,444

Zenith Bank N3,000,000 NGN 16% 2016 ‐ ‐ ‐ 3,000,000 3,043,500 3,043,500

Zenith Bank N5,000,000 NGN 23% 2017 5,000,000 5,000,000 5,000,000 ‐ ‐ ‐

Zenith Bank N7,500,000 NGN 13% 2016 ‐ ‐ ‐ 6,500,000 6,502,131 6,502,131

Zenith Bank € 351,136 EUR Libor+11% 2017 118,163 118,163 118,163 ‐ ‐ ‐

Zenith Bank $10,387,153 USD Libor+11% 2017 3,264,462 3,264,462 3,264,462 ‐ ‐ ‐

Total Interest bearing liabilities 32,871,755 33,070,940 33,056,972 17,979,902 18,209,499 18,215,738

The bank loans are secured by a negative pledge on the Company’s assets in line with their relative exposures.

31 March 2017 31 March 2016

Nominal

interest

rate

Year of

maturity

Carrying

amount

Carrying

amount

Facility

amount

Curr

ency

Fair valueFace Value Face Value Fair value

50


31 March 2017

23 Employee benefits


Present value of unfunded obligation for gratuity (Note (a)) 3,094,529 3,738,175

Long service awards benefit plan (Note (b)) 743,506 819,570 Total employee benefit liabilities 3,838,035 4,557,745

(a) Movement in present value of unfunded obligation for gratuity


Balance, beginning of the year 3,738,175 2,939,619

Included in profit or loss

Current service costs 185,014 181,710

Interest costs on obligation 506,085 511,497

Past service cost 12,179 268,197

703,278 961,404

Included in OCI

(315,200) 1,069,442

Benefit paid by the plan (1,031,724) (1,232,290)

Balance, end of the year 3,094,529 3,738,175

(b) Movement in long service award benefit plan


Balance, beginning of the year 819,570 729,676

Included in profit or loss

Current service costs 70,712 60,612

Interest costs on obligation 109,290 131,071

Past service cost (139,607) ‐

Actuarial loss/(gain) 8,548 (10,653) 48,943 181,030

Benefit paid by the plan (125,007) (91,136)

Balance, end of the year 743,506 819,570

(c) Amount recognized in the profit or loss


Unfunded obligation for gratuity 703,278 961,404

Long service award benefit plan 48,943 181,030 752,221 1,142,434

The Company operates an unfunded annualized defined benefit gratuity scheme for its employees.

The benefits under which are related to the employees' length of service and remuneration. Under

the annualized defined benefit plan, gratuity is calculated on an annual basis using the salaries for

each year to determine the benefits using projected unit credit method. Lump sum benefit payable

upon retirement or resignation of employment are fully accrued over the service lives of the

employees. Gratuity and other long term employee benefit provisions are based upon independent

actuarial valuation by HR Nigeria Limited with FRC number FRC/2012/NAS/00000000738.

Employee benefit expense shown above are recognized in administrative expenses and cost of

sales in the statement of profit or loss as follows.

Actuarial (gain)/loss

Total expenses recognised in profit or loss (Note (8a))

51


31 March 2017

2017 2016

In thousands of Naira

Cost of sales 75,222 114,243

Administrative expense 676,999 1,028,191

752,221 1,142,434

(d) Actuarial assumptions

Financial Assumptions

2017 2016

Long term average discount rate (p.a.)

Gratuity 16.0% 13.3%

Long service awards 16.0% 13.3%

Average Pay Increase (p.a.) 13% 10%

Weighted average duration of the plan (years) 7 8

Mortality in service

Sample age Number of deaths in year out of 10,000 lives

2017 2016

25 7 7

30 7 7

35 9 9

40 14 14

45 26 26

(e) Sensitivity Analysis


rate Gratuity Long service

awards

1% (165,865) (37,702)

‐1% 184,712 41,456

1% 90,113 24,094

‐1% (82,620) (22,236)

+1 year 1,861 (1,941)

‐1 year (1,674) 1,739

Assumptions regarding future mortality are based on published statistics and mortality tables.

Mortality rate

Principal actuarial assumptions at the reporting date (expressed as weighted averages) fall under

two broad categories. These assumptions depict management’s estimate of the likely future

experience of the Company.

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate

Tables, published jointly by the Institute and Faculty of Actuaries in the UK. This is due to

unavailability of published reliable demographic data in Nigeria.

Below is the sensitivity analysis of the principal actuarial assumptions adopted in determining the

employee benefit liabilities:

Discount rate

Salary increase rate

52


Annual Report

31 March 2017

24 Trade and other payables


Trade payables 7,179,610 5,359,902

Other payables and accrued expenses (Note (a)) 2,332,838 2,632,345

Amount due to related parties (Note 29(d)(ii)) 4,444,263 182,062

Advance from customer 2,904,971 790,496

Pension payable (Note (b)) 197,150 180,219

Dividend payable (Note (c)) 1,287,108 706,341

Liability for returnable packaging material 5,907,619 5,641,185

24,253,559 15,492,550

(a)

(b)

In thousands of Naira 2017 2016


Employer's Contributions during the year (Note 8(a)) 413,258 465,598

Employee's Contributions during the year 316,737 351,240

Payments (713,064) (844,219)

Balance, end of the year 197,150 180,219

(c) Movement in dividend payable



Declared dividend (Note 10(b)) 1,024,943 1,761,623

Unclaimed dividend written back (33,196) (8,730)

Dividend paid (410,980) (1,643,748)

Balance, end of the year 1,287,108 706,341

Other payables and accrued expenses represents payroll related accruals, non-Company Income

Tax as well as general accruals as at year end.

Pension payable represents pension contributions yet to be remitted to the pension fund

administrators at the year end. The movement on the pension payable account during the year

was as follows:

The Company’s exposure to currency and liquidity risk related to trade and other payables is

disclosed in Note 25.

As at 31 March 2017, an amount of N108 million (2016: N71 million) of the total dividend payable

was held with the Company’s registrar, GTL Registrars Limited while an amount of N504 million

(2016: N635 million) represents unclaimed dividends, which have been returned to the Company

by the Registrar. The remaining amount of N675million (2016: Nil) represents outstanding

dividened to be paid to Affleka the major shareholder of the Company included in note 29(a).

In current year, no dividend was proposed by the directors (2016:dividend proposed amounting

to N1,024,944,581 representing N1.60 per share on the issued share capital of 640,590,363

ordinary shares of 50 kobo each).

53


31 March 2017

25 Financial Instruments‐ Fair values and risk management

A Financial risk management

∙ Credit risk

∙ Liquidity risk

∙ Market risk

Risk management framework

(i) Credit risk

Exposure to credit risk

In thousands of naira Note 2017 2016

Other receivables (non‐current) 13(b) 43,813 95,188

Trade and other receivables 19 17,038,639 5,661,584

Cash and cash equivalents 20 6,009,919 5,856,658

Investment 17 42,000 ‐

Derivative financial asset 18(b) 131,848 ‐

23,266,219 11,613,430

The Company has exposure to the following risks from its use of financial instruments:

This note presents information about the Company’s exposure to each of the above risks, the

Company’s objectives, policies and processes for measuring and managing risk, and the Company’s

management of capital. Further quantitative disclosures are included throughout these financial

statements.

The Board of Directors' have overall responsibility for the establishment and oversight of the

Company’s risk management framework. The Board has established a Management Committee,

which is responsible for developing and monitoring the Company’s risk management policies. The

committee reports regularly to the Board of Directors on its activities. The Committee is assisted in

its oversight role by Internal Audit.

The Company’s risk management policies are established to identify and analyze the risks faced by

the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to

limits. Risk management policies and systems are reviewed regularly by the Management Committee

to reflect changes in market conditions and the Company’s activities.

Credit risk is the risk of financial loss to the Company if a customer or a counterparty to a

financial instrument fails to meet its contractual obligations and arises principally from the

Company's receivable from customers or investment in securities.

The carrying amount of financial assets represents the maximum credit exposure. The maximum

exposure to credit risk at the reporting date was:

Carrying amount

The Company’s Audit Committee oversees how management monitors compliance with the

Company’s risk management policies and procedures, and reviews the adequacy of the risk

management framework in relation to the risks faced by the Company. Internal Audit undertakes

both regular and ad hoc reviews of compliance with established controls and procedures, the results

of which are reported to Senior Management of the Company at Management meetings.

54


31 March 2017

Trade and other receivables

The Company’s most significant customer accounts for N184 million of the loans and receivables

carrying amount at 31 March 2017 (2016: N65 million).

Management has credit policies in place and the exposure to credit risk is monitored on an

ongoing basis. Under the credit policies all customers requiring credit over a certain amount are

reviewed and new customers analyzed individually for creditworthiness before the Company’s

standard payment and delivery terms and conditions are offered. The Company’s credit

assessment process includes specified cash deposits by new customers. Credit limits are

established for qualifying customers and these limits are reviewed regularly by the Credit control

unit. Customers that fail to meet the Company’s benchmark creditworthiness may transact with

the Company only on a prepayment basis.

The Credit control unit is charged with the review of each customer’s credit limit in line with the

customer's performance and perceived risk factor assigned to the customer.

In monitoring customer credit risk, customers are grouped according to their credit

characteristics, including whether they are an individual or legal entity, whether they are a key

distributor or retail distributor, geographic location, and existence of previous financial

difficulties. Trade and other receivables relate mainly to the Company’s wholesale customers.

Customers with no trading activities for a period of up to one year are placed on a dormant

customer list, and future sales are made on a prepayment basis only with approval of

management.

Amount due from related parties as at year end represents advance to the Company's key

suppliers’ with respect to purchases of packaging materials and funds required to boost their

working capital requirements.

Other receivables represent unclaimed dividends with the registrars, staff advances and

receivables.

The Company establishes an allowance for impairment that represents its estimate of incurred

losses in respect of trade and other receivables. The main components of this allowance are a

specific loss component that relates to individually significant exposures, customers with

outstanding amounts but have not placed orders/traded for a prolonged period of time (usually

one year) and a collective loss component established for groups of similar assets in respect of

losses that have been incurred but not yet identified. The collective loss allowance is determined

based on historical data of payment statistics.

55


Annual Report

31 March 2017

In thousands of naira Note 2017 2016

Key customers 601,698 639,814

Other customers 17,843 148,805

Trade receivables 619,541 788,619

Other receivables and advances 10,376,624 1,303,719

10,996,165 2,092,338

Impairment (203,648) (394,264)

10,792,517 1,698,074

Due from related parties (Note 29(d)(i)) 6,138,481 3,892,995

Deposit with the Company's registrars 107,641 70,515

17,038,639 5,661,584

Impairment losses

The ageing of trade receivables at the reporting date was:

Gross Impairment Gross Impairment

In thousands of naira 2017 2017 2016 2016

Not pass due 0-30 days 2,621,116 - 865,772 -

Past due 31-90 days 7,156,853 (37,313) 942,216 (109,914)

Past due 91-180 days 409,105 (9,283) 87,443 (87,443)

Past due 181-365 days 809,091 (157,052) 196,907 (196,907)

More than 365 days - - - -

10,996,165 (203,648) 2,092,338 (394,264)

Carrying amount

The maximum exposure to credit risk for trade and other receivables at the reporting date by

type of counterparty was:

56


31 March 2017



Impairment loss recognized during the year 12,599 63,306

Amount received (57,939) ‐

Amounts written off (145,276) ‐ Balance, end of the year 203,648 394,264

The ageing of amount due from related parties at the reporting date was:

Gross Impairment Gross Impairment

In thousands of naira 2017 2017 2016 2016

Neither past due nor impaired 4,931,238 ‐ 2,281,114 ‐

Past due 31‐90 days 1,207,243 ‐ 1,611,881 ‐

Past due 91‐180 days ‐ ‐ ‐ ‐

Past due 181‐365 days ‐ ‐ ‐ ‐

More than 365 days ‐ ‐ ‐ ‐

6,138,481 ‐ 3,892,995 ‐

Cash and cash equivalents

Derivative financial asset

The movement in the allowance for impairment in respect of loans and receivables during the year

was as follows:

The impairment loss as at 31 March 2017 relates to several customers that are not expected to be

able to pay their outstanding balances, mainly due to economic circumstances. The Company

believes that the unimpaired amounts that are past due are still collectible, based on historical

payment behaviour and extensive analysis of the underlying customers’ credit ratings.

Based on historic default rates, the Company believes that, apart from the above, no impairment

allowance is necessary in respect of trade receivables not past due by up to 30 days.

The Company believes that the unimpaired amounts that are past due by more than 30 days are

still collectible in full, based on historic payment behaviour and extensive analysis of customer

credit risk.

The Company held cash and cash equivalents of N6 billion at 31 March 2017 (2016: N5.9 billion)

which represents its maximum credit exposure on these assets. The cash and cash equivalents are

held with bank and financial institution counterparties, which are reputable and have a sound

financial position.

The Company's derivatives balances of N131million as at 31 March 2017 (2016: Nil) represents its

maximum credit exposure on these assets. The Company mitigates its exposure to derivatives by

selecting reputable banks with good credit ratings and history of strong financial performance.

57


31 March 2017

(ii) Liquidity risk

In addition, the Company maintains the various lines of credits as listed in note 22(b).

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.

The Company uses weighted average cost to cost its products, which assist it in monitoring cash

flow requirements and optimizing its cash return on investments. The Company aims to maintain

the level of cash and cash equivalents at an amount in excess of expected cash outflows on financial

liabilities (other than trade payables) over the succeeding 60 days. The Company also monitors the

level of expected cash inflows on trade and other receivables together with expected cash outflows

on trade and other payables. At 31 March 2017, the expected cash flows from trade and other

receivables maturing within two months were N10billion (2016: N2 billion). This excludes potential

impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

58


31 March 2017

Exposure to liquidity risk

31 March 2017


Non‐derivative financial

liabilities

Loans and borrowings 33,070,940 36,340,992 (20,395,015) ‐ ‐ (15,945,977) ‐

Trade and other payables* 12,287,869 12,287,869 (12,287,869) ‐ ‐ ‐ ‐

Bank overdraft 10,025,507 10,025,507 (10,025,507) ‐ ‐ ‐ ‐

55,384,316 58,654,368 (42,708,391) ‐ ‐ (15,945,977) ‐

Derivative financial liabilities

Forward exchange contracts 306,780 8,267,494 (8,267,494) ‐ ‐ ‐ ‐

31 March 2016


Non‐derivative financial

liabilities

Loans and borrowings 18,209,499 18,743,013 (17,094,903) (126,452) (1,521,658) ‐ ‐

Trade and other payables* 7,947,696 7,947,696 (7,947,696) ‐ ‐ ‐ ‐

Bank overdraft 1,076,388 1,076,388 (1,076,388) ‐ ‐ ‐ ‐

27,233,583 27,767,097 (26,118,987) (126,452) (1,521,658) ‐ ‐

Derivative financial liabilitiesForward exchange contracts ‐ ‐ ‐ ‐ ‐ ‐ ‐

Carrying

amount

Contractual

cash flows

6 months or

less6‐12 months 1‐2 years 2‐5years

More than

5 years

*Trade and other payables excludes statutory deductions such as Value Added Tax payable, Witholding Tax Payable, PAYE payable,

Pension Payable, other non ‐ income payables and deposit for returnable packaging material.

6 months or

less6‐12 months 1‐2 years 2‐5years

The forward exchange contracts disclosed in the above table represent the contractual undiscounted cashflows relating to derivative

financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different

amounts.

More than

5 years

Carrying

amount

Contractual

cash flows

59


31 March 2017

(iii) Market risk

a. Currency risk

Amounts in thousands Euro USD Euro USD

Cash and cash equivalent 12 480 12 832

Trade and other receivables 33 24,357 ‐ 592

Trade and other payables (455) (14,119) (108) (943)

Bank Loan (1,478) (42,315) ‐ (6,181)

Net exposure (1,888) (31,597) (96) (5,700)

The following significant exchange rates applied during the year;

2017 2016 2017 2016

Euro 314 220 337 225

United States Dollar (USD) 294 199 315 199

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest

rates will affect the Company’s income or the value of its holdings of financial instruments. The

objective of market risk management is to manage and control market risk exposures within

acceptable parameters, while optimizing the return.

31 March 2016

Year end spot rateAverage rate

Exposure to currency risk

The Company is exposed to currency risk on sales and purchases and borrowings that are

denominated in a currency other than the functional currency of the Company, primarily the

Naira. The currencies in which these transactions primarily are denominated are Euro and

US Dollars (USD). The currency risk is the risk that the fair value or future cash flows of a

financial instrument will fluctuate due to the changes in foreign exchange rates. Currency

risk related to the banks loans taken out by Euro and US Dollars (USD) have been hedged

using forward and future contracts that mature on the same dates as the loans are due for

repayment.

In respect of monetary assets and liabilities denominated in foreign currencies, the

Company's policy is to ensure that its net exposure are kept to an acceptable level by

buying or selling foreign currencies at spot rates when necessary to address short term

imbalances.

The summary quantitative data about the Company’s exposure to currency risk as reported

to the Management of the Company based on its risk management policy was as follows:

31 March 2017

60


31 March 2017

Sensitivity analysis

Effect in thousands of Naira

31 March 2017

USD (20% strengthening) 1,988,191

USD (20% weakening) (1,988,191)

Euro (20% strengthening) 127,062

Euro (20% weakening) (127,062)

31 March 2016

USD (20% strengthening) 226,860

USD (20% weakening) (226,860)

Euro (20% strengthening) 4,320

Euro (20% weakening) (4,320)

b. Interest rate risk


Fixed rate instruments

Financial assets 631,257 1,053,785

Financial liabilities (19,199,185) (16,429,628)

(18,567,928) (15,375,843)

Variable rate instruments

Financial liabilities (13,871,755) (1,779,871)

(13,871,755) (1,779,871)

Fair value sensitivity analysis for fixed rate instruments

Carrying Amount

In managing interest rate risk, the Company aims to reduce the impact of short‐term fluctuations

in earnings. Dividend pay‐out practices seek a balance between giving good returns to

shareholders on one hand and maintaining a solid debt/equity ratio on the other hand.

At the reporting date the interest rate profile of the Company’s interest‐bearing financial

instruments was:

A strengthening of the naira, as indicated below, against the USD would have affected the

measurement of financial instruments denominated in foreign currency and increased profit

or loss by the amounts shown below. This analysis is based on foreign currency exchange

rate variances that the Company considered to be reasonably possible at the end of the

reporting period. The analysis assumes that all other variables, in particular interest and

inflation rates, remain constant and ignores any impact of forecast sales and purchases.

The Company does not account for any fixed financial assets and liabilities at fair value through

profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or

loss.

Increase/(decrease) in profit or

loss

61


31 March 2017

B Accounting classification and fair values


Financial assets measured at fair valueFuture exchange contracts 131,848 131,848

131,848 ‐ ‐ ‐ 131,848 ‐ Financial assets not measured at fair value

Other receivables (non‐current) ‐ 43,813 ‐ ‐ ‐ ‐

Trade and other receivables ‐ 17,038,639 ‐ ‐ ‐ ‐

Cash and cash equivalents ‐ 6,009,919 ‐ ‐ ‐ ‐

‐ 23,092,371 ‐ ‐ ‐ ‐

Financial liabilities measured at fair value

306,780 306,780

306,780 ‐ ‐ ‐ 306,780 ‐

Financial liabilities not measured at fair value

Loans and borrowings‐non current ‐ ‐ 12,675,925 ‐ 12,661,669 ‐

Loans and borrowings‐current ‐ ‐ 20,395,015 ‐ ‐ ‐

Trade and other payables* ‐ ‐ 12,287,869 ‐ ‐ ‐

Bank overdraft ‐ ‐ 10,025,507 ‐ ‐ ‐

‐ ‐ 55,384,316 ‐ 12,661,669 ‐

Financial assets not measured at fair value

Other receivables (non‐current) ‐ 95,188 ‐ ‐ ‐ ‐

Trade and other receivables ‐ 5,661,584 ‐ ‐ ‐ ‐

Cash and cash equivalents ‐ 5,856,658 ‐ ‐ ‐ ‐ ‐ 11,613,430 ‐ ‐ ‐ ‐

Financial liabilities not measured at fair valueLoans and borrowings‐non current ‐ ‐ 1,520,205 ‐ 1,526,444 ‐

Loans and borrowings‐current ‐ ‐ 16,689,294 ‐ ‐ ‐

Trade and other payables* ‐ ‐ 7,947,696 ‐ ‐ ‐

Bank overdraft ‐ ‐ 1,076,388 ‐ ‐ ‐

‐ ‐ 27,233,583 ‐ 1,526,444 ‐

*Trade and other payables excludes statutory deductions such as Value Added Tax payable, Witholding Tax Payable, PAYE payable, Pension Payable, other non ‐

income payables and deposit for returnable packaging material.

Other

financial

liabilities

Fair ValueCarrying amount

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does

not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of

fair value.

31 March 2016

Level 3Level 2

Fair value ‐

hedging

instruments

Level 1

31 March 2017

Loans and

Receivable

Forward exchange contracts

62


31 March 2017

C Measurment of fair values

‐ Forward and Future exchange contracts

‐ Other financial liabilities

26 Capital management


Total liabilities 73,871,176 43,017,017

Less: cash and cash equivalents (6,009,919) (5,856,658)

Net debt 67,861,257 37,160,359

Total equity 13,225,471 24,779,594

Net debt to equity ratio 5.13 1.50

27 Operating leases

The fair value is determined using quoted forward exchange rates at the reporting date and

present value calculations based on high credit quality yield curves in the respective currencies.

There are no significant unobservable inputs.

Fair value, which is determined for disclosure purposes, is calculated based on the present value

of future principal and interest cash flows, discounted at the market rate of interest at the

reporting date.

The Head office, Ibadan and Ilorin land leases were entered into many years ago. The Company

determined that the land elements of these warehouse and office leases are operating leases. The

rent paid to the landlord is increased to market rate at regular intervals. As a result, it was

determined that substantially all the risks and rewards of the land and buildings are with the

landlord.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market

confidence and to sustain future development of the business. Management monitors the net debt

to equity ratio, which the Company defines as net debt divided by total equity. Management also

monitors the level of dividends to all shareholders.

The Company’s debt to adjusted capital ratio at the end of the reporting period was as follows:

The Company leases equipment, offices, warehouse and accommodation facilities under operating

leases. The leases typically run for a period of one to five years, with an option to renew the lease

after that date. Lease payments are usually increased at the expiration of the lease term and

consequent renewal to reflect market rentals. Lease rentals are paid upfront and included in

prepayments, which are amortized to the profit and loss over the life of the lease on a straight line

basis and therefore there are no future lease payment payable in relation to these lease. Lease

rental payment in current year amounted to N293 million (2016: N376 million).

During the year ended 31 March 2017, an amount of N429 million (2016: N462 million) was

recognized as an expense in profit or loss in respect of operating leases.

63


Annual Report

31 March 2017

28 Contingencies

(a) Pending litigation and claims

(b) Financial commitments

29 Related parties

(a) Parent and ultimate controlling party

(b)

Loans to key management personnel

(c) Key management personnel compensation

Key management personnel compensation comprised:


Short-term employee benefits 230,116 225,162

Contribution to compulsory pension fund scheme 10,016 9,498

Long-term employee benefits 111,034 195,918

351,166 430,578

(d) Other related party transactions

Transactions with key management personnel

The Company is engaged in lawsuits that have arisen in the normal course of business. The

contingent liabilities in respect of pending litigation and other possible claims amounted to

N517 million as at 31 March 2017 (2016: N932 billion). In the opinion of the directors, and

based on independent legal advice, the Company is not expected to suffer any material loss

arising from these claims. Thus no provision has been made in these financial statements.

The directors are of the opinion that all known liabilities and commitments, which are relevant

in assessing the financial position of the Company, have been taken into consideration in the

preparation of these financial statements.

Related parties include the parent company, AFFELKA, S.A and other Seven-Up entities and

entities under common control with Seven-Up. Directors, their close family members and any

employee who is able to exert a significant influence on the operating policies of the Company

are considered as related parties. Key management personnel are also regarded as related

parties. Key management personnel are those persons having authority and responsibility for

planning, directing and controlling the activities of the entity, directly or indirectly, including any

director (whether executive or otherwise) of that entity.

The major shareholder of the Company is AFFELKA S.A with 73.22 % shareholding. The ultimate

controlling party of the Group is MAK Holdings Ltd (Bermuda).

There were no unsecured loans with key management personnel as at year end (2016:

Nil).

In addition to their salaries, the Company also provides non-cash benefits to directors and

executive officers, and contributes to a post-employment defined contribution plan on their

behalf. In accordance with the terms of the plan, directors and executive officers are entitled to

access the fund when they retire.Executive officers also participate in the Company’s long service awards programme. This

programme awards a certain sum of cash benefit which accrues to the recipient on graduated

periods of uninterrupted service.

64


31 March 2017

(i) Amounts due from related parties


Related Party 2017 2016 2017 2016

Sunglass Limited iii

Advance

payment/

supply of glass

900,979 8,662,902 4,100,729 3,133,563

iv

Advance

payment/

supply of corks

1,112,203 10,171,303 1,962,502 663,045

viiSale of

finished goods116,508 17,988 71,240 96,387

viiiSale of

finished goods11,573 ‐ 4,010 ‐

2,141,263 18,852,193 6,138,481 3,892,995

(ii) Amounts due to related parties


Related Party 2017 2016 2017 2016

vCash advance/

Services8,623 967 192,634 182,062

vi

Good and

services/Mana

gement fee

39,674,425 17,680,902 4,251,629 ‐

39,683,048 17,681,869 4,444,263 182,062

Balance outstanding as at

31 March

Transaction value year

ended 31 March

SBC Beverages Ghana

Limited

SBC Tanzania Limited

Nature of

transaction

Green Eagle, Cork

Seal Nigeria Limited

Nature of

transaction

Balance outstanding as at

31 March

M. El Kalil Properties

Limited

Transaction value year

ended 31 March

Continental

Beverages SAL

(Offshore)

A number of key management personnel, or their related parties, hold positions in other

entities that result in them having control or significant influence over the financial or operating

policies of the entities. During the year, a number of these entities transacted with the

Company. The total amounts due to/from related parties by nature of their transaction are

shown below.

65


31 March 2017

(iii) Sunglass Limited:

(iv) Green Eagle, Cork Seal Nigeria Limited (Green Eagle):

(v) M. El Kalil Properties Limited:

(vi) Continental Beverages SAL (Offshore):

(vii) SBC Beverages Ghana Limited

SBC Beverages Ghana Limited is related to the Company through common shareholding. SBC

Beverages Ghana Limited purchases finished products from Seven‐Up Bottling Company PLC for

resale in Ghana.

Sunglass Limited whose principal activity is the manufacturing of glass and glass wares is a major

supplier of bottles to Seven‐Up bottling Company PLC "the Company". Sunglass is related to the

Company through common shareholding, as the majority shareholders in Seven‐Up also have

majority shares in Sunglass limited.

The Company advances money to Sunglass Limited to boost their working capital and assist them in

the procurement of materials required for production. These advances are subsequently recovered

from future transactions from the supply of bottles.

Green Eagle, Cork Seal Nigeria Limited whose principal activity is the manufacturing and marketing

of Corks, Seals and Crates for bottling companies and breweries, is a major supplier of crowns and

crates to Seven‐Up Bottling Company PLC. Green Eagle, Cork Seal Nigeria Limited is related to the

Company through common shareholding.

The Company also advances money to Green Eagles to boost their working capital and assist them

in the procurement of materials required for production. These advances are subsequently

recovered from future transactions with the company for the supply of corks and crates.

The Company occupies properties owned by M. El‐Kalil & Sons (Properties) Limited. M. El‐Kalil &

Sons (Properties) Limited is related to the Company through common shareholding. Seven‐Up

Bottling Company also provides management services (mainly legal advice) to M.El Kalil.

Continental Beverages SAL (Offshore) sells goods and provides management services to Seven‐up

Bottling Company PLC. A consideration of 3% of profit before tax (but not exceeding

N639,382,650 from 1 April 2015 to 31 March 2018), is paid as management service fees to

Continental Beverages. This agreement is backed up with a National Office for Technology

Acquisition and Promotion (NOTAP) agreement with file number NOTAP/AG/MN/1159/4/98.

All outstanding balances with these related parties are expected to be settled within twelve months

of the reporting date. None of the balances is secured or bears interest.

Management fees payable to Continental Beverages for the year ended 31 March 2017 amounted

to N112 million (2016: Nil).

66


31 March 2017

(viii) SBC Tanzania Limited

30 Subsequent events

SBC Tanzania Limited is related to the Company through common shareholding. SBC Tanzania

Limited purchases finished products from Seven‐Up Bottling Company PLC for resale in Tanzania.

There are no events after the reporting date which could have had a material effect on the financial

position of the Company as at 31 March 2017 and its operating results for the year then ended that

have not been adequately provided for or disclosed in these financial statements.

67


31 March 2017

Other National Disclosures

68


31 March 2017


Value Added StatementFor the year ended 31 March

2017 % 2016 %


Revenue 108,277,000 85,634,679

Brought in materials and services

‐ Local (63,593,291) (39,021,969)

‐ Imported (32,760,180) (19,735,380)

11,923,529 26,877,330

Other income 427,036 317,434

Finance income 424,008 41,571

Value Added 12,774,573 100 27,236,335 100

Distribution of Value Added:

To Government as:

Taxes and duties

‐ Government as taxes (451,726) (4) 409,927 2

To Employees:

‐ Employees as wages and salaries

and end of service benefits 10,045,983 79 10,872,213 40

To Providers of Finance:

‐ Finance costs 4,444,361 35 3,245,524 12

Retained in the business:

To maintain and replace

‐ Property, plant and equipment 9,487,448.00 74 9,325,971 34

‐ Intangible assets 25,219.00 ‐ 35,237 ‐

To (delete)/ augment reserves (10,776,712.00) (84) 3,347,463 12

Value added 12,774,573 100 27,236,335 100

69


31 March 2017


Five ‐ Year Financial Summary

Statement of profit or loss and other

comprehensive income2017 2016 2015 2014 2013 2012


Revenue 108,277,000 85,634,679 82,450,505 77,888,548 64,088,879 59,864,385

Results from operating activities (7,208,085) 6,961,343 11186832 9,130,834 5,526,734 4,802,379

(Loss)/profit before taxation (11,228,438) 3,757,390 8,749,101 7,616,444 3,262,719 2,558,644

(Loss)/profit for the year (10,776,712) 3,347,463 7,125,788 6,434,601 2,856,504 1,678,471 Total Comprehensive (loss)/income for the

year (10,562,376) 2,598,854 8,189,312 6,160,014 2,928,875 1,678,471

Ratios

Per 50k share data:

Basic/ diluted earnings per share (1,682) 523 1,112 1,004 446 262

Declared dividend per share (kobo) NIL 275 250 220 200 200

Share price at year end (Naira) 109 155 156 90 49 42

Net assets per share 21 39 37 27 20 16

Statement of financial position

2017 2016 2015 2014 2013 2012


Employment of Funds

Share capital 320,295 320,295 320,295 320,295 320,295 320,295

Share premium 299,140 299,140 299,140 299,140 299,140 299,140

Retained earnings 12,606,036 24,160,159 23,314,198 16,709,260 11,958,545 9,688,160

Shareholder's fund 13,225,471 24,779,594 23,933,633 17,328,695 12,577,980 10,307,595

Current liabilities 57,076,525 34,656,603 34,656,603 29,867,824 27,862,495 29,670,126

Non current liabilities 16,794,651 8,360,414 8,360,414 8,666,690 10,929,695 8,507,941

87,096,647 67,796,611 66,950,650 55,863,209 51,370,170 48,485,662

Asset Employed

Non current assets 40,457,022 42,771,624 44,702,571 38,238,065 35,873,744 33,480,167

Current assets 46,639,625 25,024,987 22,984,268 17,625,144 15,496,426 15,005,495

87,096,647 67,796,611 67,686,839 55,863,209 51,370,170 48,485,662

70

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