uacn property development company plc · property development, sales & management - uacn...

uacn property development company plc RC.321582

uac house: 1 – 5 odunlami street, p.o. box 156 lagos, nigeria. e-mail: [email protected], care line: +234 1 7389363, website: www.updcplc.com

Directors: B. Kasali (Chairman), F. B. Aiyesimoju (CEO), A.F. Taiwo (Mrs) (ED, FM), F. Fadahunsi (Mrs) (CFO), Arc. H. T. Alao (Mrs),

A.O. Awojobi, Prof O. A. Ansa, A. Ajumogobia (Mrs)

mailto:[email protected]

http://www.updcplc.com/

TABLE OF CONTENT PAGE Consolidated statement of comprehensive income 1 Consolidated statement of financial position 2 Consolidated statement of changes in equity 3 Consolidated statement of cash flows 4 Notes to the consolidated financial statements 5 - 16

1 | P a g e

The summary of significant accounting policies and notes on pages 5 to 16 are an integral part of these financial statements.

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UACN Property Development Company Plc

Consolidated Statement of Financial Position

As at 30 June 2019

30 June 2019 31 Dec. 2018

Notes N'000 N'000

Assets

Non-current assets

Property, plant and equipment 10 34,789 46,972

Intangible assets 11 21,527 29,538

Investment properties 12 2,909,300 4,198,300

Investments in joint ventures 13 73,606 73,606

Investments in associates 13 20,602,477 20,017,860

14 17,729 17,729

Investments in subsidiaries 15 - -

23,659,428 24,384,005

Current assets

Inventories 16 7,440,561 8,290,381

Trade and other receivables 17 5,002,057 4,964,867

Cash at bank and in hand 18 409,739 507,462

12,852,357 13,762,710

25 8,320,174 8,320,174

Total assets 44,831,959 46,466,889

Equity

Share capital 1,299,198 1,299,198

Share premium 6,065,397 6,065,397

Retained earnings 9,579,489 10,861,012

16,944,084 18,225,607

Non controlling interest (177,873) (170,700)

Total equity 16,766,211 18,054,907

Liabilities

Non-current liabilities

19 4,255,753 4,255,753

Deferred taxation liabilities 72,537 72,537

Deferred revenue 21 1,088 1,577

4,329,378 4,329,867

Current liabilities

Trade and other payables 20 13,673,434 7,050,779

Current income tax liabilities 1,521,372 1,531,083

19 7,252,829 14,302,459

Dividend Payable 339,920 339,920

Deferred revenue 21 53,442 77,460

22,840,997 23,301,701

25 895,373 780,414

Total liabilities 28,065,748 28,411,982

Total equity and liabilities 44,831,959 46,466,889

Babatunde Kasali Adeniun F. Taiwo Folakemi Fadahunsi

Chairman Director Chief Financial Officer

FRC/2017/ICAN/00000016973 FRC/2013/ICAN/0000000723 FRC/2018/ICAN/00000018017

The unaudited financial statements on pages 1 to 4 were approved and authorised for issue by the

board of directors on 23 July 2019 and were signed on its behalf by:

Assets of disposal group classified as held for sale/distribution

to owners

Liabilities of disposal group classified as held for

sale/distribution to owners

Equity instrument at fair value through other comprehensive

income

Interest bearing Loans and Borrowings

Interest bearing Loans and Borrowings

Equity attributable to equity holders of the Company

The Group

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Consolidated Statement of Changes in Equity

For the Period Ended 30 June 2019

Non

Share Share Retained Controlling

Capital Premium Earnings Total interest Total

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

Balance at 1 January 2018 1,299,198 6,065,397 25,905,729 33,270,322 (165,936) 33,104,386

Loss for the period - - (1,820,906) (1,820,906) (12,071) (1,832,977)

Balance at 30 June 2018 1,299,198 6,065,397 24,084,823 31,449,416 (178,007) 31,271,409

Balance at 1 January 2019 1,299,198 6,065,397 10,861,012 18,225,606 (170,700) 18,054,905

Loss for the period - - (1,281,523) (1,281,523) (7,173) (1,288,696)

Balance at 30 June 2019 1,299,198 6,065,397 9,579,489 16,944,084 (177,873) 16,766,209

The GroupAttributable to owners of the Company

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UACN Property Development Company PlcConsolidated Statement of Cash FlowsFor the Period Ended 30 June 2019

2019 2018

June June

N'000 N'000

Cash flow from operating activities (Note 22) 7,508,447 149,758

Company Income Tax paid (10,093) -

Capital Gains Tax Paid (120,592) -

VAT paid (104,919) (213,122)

Net Cash inflow from operating activities 7,272,843 (63,364)

Cash flow from investing activities

Proceeds from sale of investment property 1,241,809 649,405

Purchase of property, plant & equipment (1,366) (1,025)

Purchase of intangible asset - (2,930)

Proceeds from sale of property, plant and equipment 10,156 7,582

Income Distribution from UPDC REIT - 578,305

Interest received 637 8,912

Net cash flow from investing activities 1,251,236 1,240,249

Cash flow from financing activities

Proceeds from borrowings - Note 19 (ii) - 1,321,365

Repayment of borrowings - Note 19 (ii) (7,049,631) (929,467)

Interest paid (1,572,171) (2,222,795)

Net cash flow from financing activities (8,621,802) (1,830,897)

Net increase/(decrease) in cash and cash equivalents (97,723) (654,011)

Net foreign exchange difference - (15)

Cash and cash equivalents at the beginning of the period 507,462 526,509

Cash and cash equivalents at the end of the period

(Note 18) 409,739 (127,517)

The Group

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Notes to the Consolidated Financial Statement


1. General information

UAC Property Development Company Plc ('the Company') and its subsidiaries (together 'the Group') is a company incorporated in

the Nigeria. The Group has business with activities in the following principal sectors: real estate and hotel management. The address

of the registered office is 1-5 Odunlami Street, Lagos.

The company is a public limited company and is listed on the Nigerian Stock Exchange.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements have been prepared in accordance with IAS 34. The financial statements have been prepared on a historical

cost basis except for investment property, held for trading and available for sale financial instruments which are carried at fair value.

(All amounts are in Naira thousands unless otherwise stated)

2.2 Accounting Policies

The accounting policies adopted are consistent with those for the year ended 31 December, 2018.

2.3 Estimates

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

application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ

from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the group’s

accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial

statements for the year ended 31 December 2018.

2.4 Financial Risk Management

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow

interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the

unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.

This interim financial statements do not include all financial risk management information and disclosures required in the annual

financial statements; they should be read in conjunction with the company’s annual financial statements as at 31 December 2018.

There have been no changes in the risk management structure since year end or in any risk management policy.

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Notes to the Consolidated Financial Statements (continued)


3. Segment Analysis

The following measures are reviewed by Exco:

- Revenue to third parties

- Earnings before interest and tax

- Profit before tax

- Net current assets

- Property, plant and equipment

30 June 2019

Property

development sales

& management

Hospitality

services

Classified as

Discontinued

Operation/ Held

for Sale

Total

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

Total Revenue 1,492,429 625,172 (625,172) 1,492,429

Intergroup revenue - - - -

Revenue to third parties 1,492,429 625,172 (625,172) 1,492,429

Earnings before interest and tax (45,468) (135,387) 135,387 (45,468)

Loss before tax (1,617,002) (135,337) 135,337 (1,032,385)

Net current assets (9,988,640) (614,312) 614,312 (9,988,640)

Property, plant and equipment 34,789 11,855,509 (11,855,509) 34,789

30 June 2018

Property

development sales

& management

Hospitality

services

Classified as

Discontinued

Operation/ Held

for Sale

Total

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

Total Revenue 1,200,109 654,787 (654,787) 1,200,109

Intergroup revenue - - - -

Revenue to third parties 1,200,109 654,787 (654,787) 1,200,109

Earnings before interest and tax 227,742 (227,747) 227,747 227,742

Loss before tax (1,407,836) (227,747) 227,747 (1,525,025)

Net current assets (9,538,991) (291,238) 291,238 (9,538,991)

Property, plant and equipment 46,972 11,855,509 (11,855,509) 46,972

Entity wide information

30 June 2019 30 June 2018

Analysis of revenue by category: N'000 N'000

Sale of Property Stock 1,084,579 953,207

Share of James Pinnock Sale of Property Stock 198,390 -

Rental income & Management Fee on Rent 78,681 143,799

Project and Management Surcharge Income 130,778 103,103

1,492,429 1,200,109

30 June 2019 30 June 2018

Analysis of revenue by geographical location: N'000 N'000

Nigeria 1,492,429 1,200,109

Analysis of revenue by category

Sales of Goods - Sale of property stock

Rendering of services - Management fees and service charge surcharge

Rental Income

The chief operating decision-maker has been identified as the Executive Committee (Exco). Exco reviews the company's

internal reporting in order to assess performance and allocate resources.

Nigeria is the Company's primary geographical segment as the operations of the Company are entirely carried out in

Nigeria. As at June 30 2019, UPDC Plc operations comprised two main business segments which is Property

development, sales/management and hospitality services. However, the later has been classified as discontinued

operation/ held for sale.

Property development, sales & management - UACN Property Development Plc (UPDC) main business is the

acquisition, development, sales and management of high quality serviced commercial and residential properties in the

luxury, premium and classic segments of the real estate market in Nigeria. The company approaches property planning

from the customers' perspective to create comfortable living/working environments.

Hospitality services - UPDC Hotels Limited, the company's subsidiary is in the hospitality industry and leverages

significantly on the success of its principal promoter UACN Property Development Company Plc. The hotel provides

services such as sale of rooms, conference halls as well as food & beverages.

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4. Other Operating Income

30 June 2019 30 June 2018

N'000 N'000

Infrastructure, transfer and title regularisation fees - 110,140

Service charge received from Golden Tulip Hotel 5,824 6,158

Sales commission (paid)/received (19,020) 333,551

Gain on disposal of PPE 3,351 4,138

Exchange (loss)/gain - (15)

Recovery on facility management 22,247 17,900

Others 5,277 2,812

Total other income 17,679 474,684

5. Share of profit of associate 584,617 578,305

6 (i) Expenses by nature

30 June 2019 30 June 2018

N'000 N'000

Change in inventories of finished goods and other

direct costs of inventories1,033,152 1,029,861

Direct operating expenses for Investment Properties/

Vacant Apartments67,659 55,567

Personnel expenses 188,140 232,906

Depreciation & Amortization 14,756 22,557

Rents and Rates 6,496 5,948

Vehicles repairs, maintenance & fueling 963 2,560

Other repairs & maintenance 902 255

Legal expenses 40,198 7,849

Directors' emoluments 9,307 30,474

Information Technology 12,886 14,675

Insurance 6,533 6,339

Marketing, advertising & communication 3,126 2,489

Professional fees 53,715 41,703

Printing and stationery 324 749

UACN management fee (Note 24) 13,586 12,601

1,451,745 1,466,533

6 (ii) Expenses by function

Cost of sales 1,160,968 1,133,734

Selling and distribution expenses 47,502 39,145

Admininstrative expenses 243,275 293,654

1,451,745 1,466,533

7. Net Finance Income/(Cost)

30 June 2019 30 June 2018

N'000 N'000

Finance Income 637 8,912

Interest on borrowings (1,572,171) (2,174,625)

Interest on bank overdraft - (48,170)

Finance Costs (1,572,171) (2,222,795)

Net Finance Cost (1,571,534) (2,213,883)

8. Taxation

30 June 2019 30 June 2018

Current tax N'000 N'000

Minimum tax charge for the year 33,467 80,205

Capital Gain tax 87,507 -

Total current tax charge 120,974 80,205

The Group

The Group

The Group

The Group

UPDC diversified its portfolio in 2013 through the floating of the UPDC Real Estate

Investment Trust (REIT) at a capital value of N26.7 billion listed on the Nigerian Stock

Exchange (NSE) on 1 July, 2013. The REIT is a property fund backed by five (5) major

investment properties located in Lagos, Abuja and Aba. The REIT's income comprises of

rental income from the property assets and interest earned from short term investments

in money market instruments and other real estate related assets. UPDC held 61.5% of

the fund as at 30 June 2019 The share of profit recognised in the group financial

statements relates to UPDC's share of the REIT's profit.

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9. Earnings Per Share

(a) Basic

30 June 2019 30 June 2018

N'000 N'000

Loss after tax for the year from discontinued operations (135,337) (227,747)

Loss attributable to ordinary equity shareholders (NGN'000) (1,281,523) (1,820,906)

Basic earnings per share (Kobo) (49) (70)

From discontinued operations (5) (9)

From loss for the period (44) (61)

Diluted earnings per share (Kobo) (49) (70)

30 June 2019 30 June 2018

Number ('000) Number ('000)

2,598,396 2,598,396

Absolute number of shares 2,598,396 2,598,396

(b) Diluted

10. Property, plant and equipment

The Group

Motor

vehicles

Plant and

Machinery

Furniture &

Fittings

Computer

EquipmentTotal

Cost N'000 N'000 N'000 N'000 N'000

At 1 January 2018 172,568 139,932 56,977 57,057 426,534

Addition 25,000 - 1,039 1,507 27,546

Disposals (34,183) (61,207) (341) (933) (96,664)

At 31 December 2018 163,385 78,724 57,675 57,631 357,416

At 1 January 2019 163,385 78,724 57,675 57,631 357,416

Addition - - - 1,366 1,366

Disposals (33,410) - - (1,096) (34,505)

At 30 June 2019 129,976 78,724 57,675 57,902 324,277

Accumulated depreciation and impairment

At 1 January 2018 147,766 101,425 49,619 51,660 350,470

Charge for the period 11,558 13,020 2,946 2,489 30,013

Disposals (31,751) (37,215) (307) (766) (70,039)

At 31 December 2018 127,573 77,229 52,259 53,383 310,444

At 1 January 2019 127,573 77,229 52,259 53,383 310,444

Charge for the period 4,594 438 1,027 687 6,746

Disposals (26,687) - - (1,018) (27,705)

At 30 June 2019 105,480 77,667 53,286 53,052 289,484

Net book values

At 30 June 2019 24,496 1,057 4,390 4,850 34,789

At 31 December 2018 35,812 1,495 5,417 4,249 46,972

No Property, Plant and Equipment was pledged as security for any liability as at 30 June 2019 (2018: Nil)

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted

average number of ordinary shares in issue during the year excluding ordinary shares purchased by the company and held as

treasury shares.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume

conversion of all dillutive potential ordinary shares. The group has no dilutive instruments.

The Group

The Group

Basic weighted average and Diluted weighted average number of

shares

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11. Intangible assets

The Group

Software

Cost N'000

At 1 January 2018 285,364

Additions 6,994

At 31 December 2018 292,358

At 1 January 2019 292,358

At 30 June 2019 292,358

Amortisation

At 1 January 2018 247,470

Amortisation for the period 15,350

At 31 December 2018 262,820

At 1 January 2019 262,820

Amortisation for the period 8,010

At 30 June 2019 270,830

Net book values

At 30 June 2019 21,527

At 31 December 2018 29,538

No intangible asset was pledged as security for any liability as at 30 June 2019 (2018: Nil)

12. Investment properties

Freehold

building

Leasehold

building

Total

investment

properties

Fair value N'000 N'000 N'000

At 1 January 2018 423,000 10,000,675 10,423,675

Transfer from properties under construction

(Note 16)140,000 - 140,000

Net loss from fair value adjustments on

investment properties6,300 (648,175) (641,875)

Write down of Investment properties - (632,000) (632,000)

Disposals (297,000) (4,794,500) (5,091,500)

At 31 December 2018 272,300 3,926,000 4,198,300

At 1 January 2019 272,300 3,926,000 4,198,300

Disposals - (1,289,000) (1,289,000)

At 30 June 2019 272,300 2,637,000 2,909,300 Schedule of net gain/ (loss) on disposal

30 June 2019 30 June 2018

N'000 N'000

Net Sales Proceed 1,185,169 634,482

Carrying value of investment properties (1,289,000) (611,500)

(103,831) 22,982

The Group

The Group

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13. Investments in associates and equity accounted joint ventures

The amounts recognised in the balance sheet are as follows:

30 June 2019 31 Dec. 2018

N'000 N'000

Associate 20,602,477 20,017,860

Joint ventures 73,606 73,606

20,676,083 20,091,466

13 (i). Investments in Associate

Nature of investment in associate:

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018 Measurement

N'000 N'000 % ownership % ownership

UPDC REIT Nigeria 20,602,477 20,017,860 61.5% 61.5% Equity

The movement in the investment in associates during the year is stated below:

30 June 2019 31 Dec. 2018

N'000 N'000

At 1 January 20,017,860 18,918,826

Share of profit 584,617 1,923,492

Dividend received - (824,458)

20,602,477 20,017,860

13 (ii). Investments in Joint Ventures

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

Investment in Joint Ventures N'000 N'000 % holding % holding

UPDC Metro City Limited - - 60.0% 60.0%

First Festival Mall Limited - - 45.0% 45.0%

Transit Village Dev. Co. Ltd 73,606 73,606 40.0% 40.0%

73,606 73,606

The movement in the investment in joint ventures during the year is stated below:

30 June 2019 31 Dec. 2018

N'000 N'000

At 1 January 73,606 190,795

Share of (loss)/ profit of First Festival Mall Limited - (117,189)

Impairment of investment in First Festival Mall Limited - -

73,606 73,606

30 June 2019 31 Dec. 2018

N'000 N'000

Opening balance at 1 January 17,729 10,000

Fair value gain on available-for-sale financial assets - 7,729

17,729 17,729

This represents 6.7% holding in the ordinary share capital of UNICO CPFA Limited, a company incorporated and operating in Nigeria.

The Group

The Group

Country of

incorporation

Set out below is the associate of the group as at 30 June 2019. The associate as listed below have share capital consisting solely

of ordinary shares, which are directly held by the group. The country of incorporation or registration is also their principal place

The Group

The Group

The UPDC Real Estate Investment Trust (REIT) is a close-ended real estate investment trust which is listed on the Nigerian Stock

Exchange. As at 30 June 2019, the fair value of each unit holders' contribution in UPDC REIT is N5.40.

14. Equity instrument at fair value through other

comprehensive income

The Group

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15. Investments in subsidiaries

Principal investments 30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

N'000 N'000 % %

UPDC Hotels Limited

2,082,500,000 Shares of =N=1.00 each 2,082,500 2,082,500 94.7 94.7

Manor Gardens

53,810,000 Ordinary Shares of =N=1.00 each 53,810 53,810 67.5 67.5

2,136,310 2,136,310

Impairment of investments (2,136,310) (2,136,310)

- -

Investments in subsidiaries are measured at cost.

16 (i). Inventories

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

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

Non trade stock 11,483 14,997 11,483 14,997 Properties under construction (note 20) 7,429,078 8,275,383 7,429,078 8,275,383

7,440,561 8,290,381 7,440,561 8,290,381

All Inventory above are carried at lower of cost or net realisable value at all the periods reported.

16 (ii). Properties under construction

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

Cost N'000 N'000 N'000 N'000

Balance 1 January 8,275,383 11,523,469 8,275,383 11,523,469

Additions 72,256 410,123 72,256 410,123

Transfer to Invesment Properties - (140,000) - (140,000)

Disposal (918,562) (1,502,307) (918,562) (1,502,307)

Impairment of VMP3B, Parkview & Awoyaya Land - (1,317,616) - (1,317,616)

Reallocation - (698,286) - (698,286)

Balance 31 December 7,429,078 8,275,383 7,429,078 8,275,383

17. Trade and other receivables

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

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

Trade receivables 897,649 845,178 881,819 829,348

Less: Provision for impairment of trade receivables (211,141) (211,141) (211,141) (211,141)

Net trade receivables 686,509 634,037 670,678 618,207

Receivables from group companies (Note 23) 2,826,853 2,834,650 10,209,519 10,196,922

Other receivables 1,419,175 1,438,837 1,419,175 1,438,837

Advances to staff 69,520 57,343 69,520 57,343

5,002,057 4,964,867 12,368,892 12,311,309

Analysis of other receivables

Mobilization payments to contractors 740,788 740,788 740,788 740,788

Prepayments and accrued income 6,938 18,403 6,938 18,403

WHT Receivables 39,337 35,515 39,337 35,515

Unutilised WHT credit notes 126,613 126,613 126,613 126,613

VAT Receivables 130 2,166 130 2,166

Other Debtors 505,367 515,351 505,367 515,351

1,419,175 1,438,837 1,419,175 1,438,837

Movements in the provision for impairment of trade receivables are as follows:

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

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

At 1 January 211,141 133,254 211,141 133,254

Adjustment upon application of IFRS 9 - 82,116 - 82,116

Balance as at 1 January 2018 /1 January 2017– As restated 211,141 215,370 211,141 215,370

Provision for expected credit losses - 440,228 - 440,228

Unused amount reversed - (413,108) - (413,108)

Write off during the year - (31,350) - (31,350)

211,141 211,141 211,141 211,141

The Group

The Company

The Company

The Company

The Group

The Group The Company

The Group

The Group % Shareholding

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18. Cash and cash equivalents

30 June 2019 31 Dec. 2018

N'000 N'000

Cash at bank and in hand 304,932 352,326

Short term investment 104,905 155,235

Less: Impairment of Short term investments (99) (99)

Cash and cash equivalents 409,739 507,462

19. Borrowings

30 June 2019 31 Dec. 2018

Current borrowings N'000 N'000

Commercial papers dues within one year (i) 7,244,614 14,294,245

5-year bond 8,215 8,215

7,252,829 14,302,459

Non-current borrowings

5-year bond 4,255,753 4,255,753

4,255,753 4,255,753

Total borrowings 11,508,582 18,558,213

(i) Commercial papers

30 June 2019 31 Dec. 2018

N'000 N'000

Commercial Paper 7,244,614 14,294,245

Total Commercial Papers 7,244,614 14,294,245

(ii) Movement in total borrowing during the year is as follows:

30 June 2019 31 Dec. 2018

N'000 N'000

Balance as at 1 January 18,558,213 19,290,533

Proceeds from borrowings - 1,863,997

Repayment of borrowings (7,049,631) (2,262,800)

Repayment of bank overdrafts - (333,516)

Balance 11,508,582 18,558,213

Offsetting of bank overdraft against cash at bank and in hand is only for the purpose of the

statement of cash flow.

The N7.2 billion Commercial Papers represent liquidity support provided by FBN Merchant

Bank and Coronation Merchant Bank.

The Group

The Group

The Group

The Group

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20. Trade and other payables

30 June 2019 31 Dec. 2018

N'000 N'000

Trade payables 1,158,377 1,104,454

Contract liabilities - Note 20 (i). 2,821,685 2,362,822

Amounts owed to other related parties (Note 30) 8,268,053 2,237,637

12,248,116 5,704,912

Provision for employee leave 4,153 5,040

VAT/WHT Payables 46,971 74,894

Other payables 405,631 444,920

Provisions/Accruals 968,564 821,012

Total 13,673,434 7,050,779

20 (i). Contract liabilities

30 June 2019 31 Dec. 2018

N'000 N'000

Deposit by customers 2,821,685 2,362,822

2,821,685 2,362,822

21. Deferred revenue

30 June 2019 31 Dec. 2018

N'000 N'000

Within one year 53,442 77,460

Greater than one year 1,088 1,577

54,530 79,037

This represents advances received from customers in respect of sale of property stocks and

facility management fees. This is a non-interest bearing liability.

The Group as lessor enters into operating leases for its investment properties under non-

cancellable basis, as the lessee does not have the power to cancel the contract without the

permission of the lessor. The tenure of the lease arrangements vary from 1 year to 2 years. The

group as lessor does not have any lease arrangements under finance lease basis it does not

typically transfer substantially all the risks and rewards incidental to ownership of leased assets

to the lessee. All leased assets under operating leases as classified as Investment Properties and

faired valued annually based on the group’s accounting policy and in line with the requirements

of IAS 40”.

Deferred revenue are rentals received in advance which are recognized in the income

statement when earned.

Trade and other payables comprise amounts outstanding for trade purchases and ongoing

costs. The Directors consider the carrying amount of trade and other payables to approximate

its fair value due to their short term maturity period and no significant discounts is expected on

payments of the obligations.

The Group

The Group

The Group

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Movement in the deferred revenue is as follows:

30 June 2019 31 Dec. 2018

N'000 N'000

Opening balance 79,037 160,015

Rental received in the period 54,174 192,185

Less amount released to Comprehensive Income (78,681) (273,163)

Balance carried forward 54,530 79,037

22. Reconciliation of profit before tax to cash generated from operations

30 June 2019 30 June 2018

N'000 N'000

Loss before tax (1,032,385) (1,525,025)

Adjustment for non cash items:

Depreciation 6,746 14,452

Amortization of intangible asset 8,010 7,645

(Gain)/ Loss on disposal of investment properties 103,831 (22,982)

(Profit)/ Loss on disposal of property, plant and equipment (3,351) (4,138)

Finance cost 1,572,171 2,222,795

Finance income (637) (8,912)

Exchange (gain)/ Loss - 15

Share of profit of UPDC REIT (584,617) (578,305)

Share of loss of Joint Ventures - 117,189

69,768 222,735

Changes in working capital:

(Increase)/decrease in inventories 849,820 761,138

Decrease/(increase) in receivables (37,190) (75,923)

Increase/(decrease) in payables 6,761,390 (865,868)

Cash generated from continued operations 7,643,788 42,082

(Increase)/decrease in inventories 24,565 57,577

Decrease/(increase) in receivables 28,081 53,605

Increase/(decrease) in payables (187,987) (3,505)

Cash generated from discontinued operations (135,341) 107,676

Net cash from/(used in) operations 7,508,447 149,758

The Group

The Group

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23. Related party transactions

The following transactions were carried out with related parties:

(a) Sales of goods and services

30 June 2019 30 June 2018 30 June 2019 30 June 2018

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

UAC of Nigeria Plc Parent 40,293 42,233 40,293 42,233

MDS Logistics Plc Fellow Subsidiary 4,895 4,752 4,895 4,752

(b) Purchases of goods and services

30 June 2019 30 June 2018 30 June 2019 30 June 2018

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

UAC of Nigeria Plc Parent 19,790 18,931 19,790 18,931

Chemical & Allied Products Plc Fellow Subsidiary 8,351 - 8,351 -

Portland Paints & Products Nig. Plc Fellow Subsidiary - 8,450 - 8,450

(c) Period-end balances arising from sales/purchases of goods/services

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

Receivable: Relationship N'000 N'000 N'000 N'000

UPDC Metrocity Limited Joint Venture 1,699,482 1,681,460 1,699,482 1,681,460

First Restoration Dev. Co. Limited Joint Venture 375,556 360,084 375,556 360,084

Calabar Golf Estate Limited Joint Venture 321,692 237,055 321,692 237,055

Imani and Sons JV Partner 350,415 496,734 350,415 496,734

UPDC REIT Associate 32,753 12,363 32,753 12,363

Grand Cereals Limited Fellow Subsidiary 48,158 48,158 48,158 48,158

UAC Restaurants Limited Fellow Subsidiary 1,126 1,126 1,126 1,126

Impairment of Intercompany receivables - IFRS 9 (2,329) (2,329) (2,329) (2,329)

2,826,853 2,834,650 10,209,519 10,196,922

30 June 2019 31 Dec. 2018 30 June 2019 31 Dec. 2018

Payable: Relationship N'000 N'000 N'000 N'000

UAC of Nigeria Plc. Parent Company 7,651,545 1,431,580 7,651,545 1,431,580

Chemical and Allied Products Plc Fellow Subsidiary 262 7,725 262 7,725

MDS Logistics Plc Fellow Subsidiary 209,465 241,006 209,465 241,006

James Pinnock Joint Operation 90,108 32,359 90,108 32,359

Portland Paints and Products Nig. Plc Fellow Subsidiary 2,237 2,237 2,237 2,237

UAC Foods Limited Fellow Subsidiary 314,421 522,715 314,421 522,715

Spring Waters Nig Ltd. Fellow Subsidiary 15 15 15 15

8,268,053 2,237,637 8,268,053 2,237,637

All trading balances will be settled in cash.

The related party transactions were carried out on commercial terms and conditions.

24. Management service agreement

The company has a Management Service Agreement with UAC of Nigeria Plc. This agreement provides that the

Company pays an annual fee of 1% of its turnover to UACN for services received under the agreement. The

services provided include Business Strategy and Financial Advisory, Treasury, Secretarial & Legal, Human

Resources Management, Insurance, Pensions & Gratuity Administration, Medical etc. The amount charged in these

financial statements is N13.6million (2018: N12.6million). This does not include share of James Pinnock sales

(Company's joint operation)

Relationship

The Company

The Group


The Company


The Group

Relationship

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

other companies that are related to UPDC through common shareholdings.

16 | P a g e



25. Disposal group held for sale and discontinued operations

UPDC Hotels Ltd.

Exception to one year requirement:

Analysis of the results of the discontinued operations is as follows:

6 months 6 months

30/06/19 30/06/18

N'000 N'000

Revenue 625,172 654,787

Cost of sales (623,169) (630,344)

Gross profit 2,003 24,442

Selling and distribution expenses (31,225) (40,639)

Administrative expenses (106,166) (213,092)

Other operating income - 1,542

Operating profit (135,387) (227,747)

Finance income 50 -

Loss before taxation from discontinued operations (135,337) (227,747)

Taxation - -

(135,337) (227,747)

Analysis of the results of the disposal group held for sale and distribution to owners is as follows:

30 June 2019 31 Dec. 2018

N'000 N'000

Assets

Non-current assets:

Property, plant and equipment 11,855,509 11,855,509

Intangible assets 3,634 4,726

11,859,142 11,860,235

Current assets:

Inventories 127,861 152,426

Trade and other receivables 170,346 198,427

Cash and short-term deposits (17,146) 138,323

281,061 489,176

Assets of disposal group classified as held for sale/ distribution to owners 8,320,174 12,349,411

Less: Impairment of assets of disposal group held for sale - (4,029,237)

8,320,174 8,320,174

Liabilities

Current liabilities

Trade and other payables 895,373 780,414

895,373 780,414

Cashflows from discontinued operations:

The net cash flows incurred by UPDC Hotels Ltd. are as follows: 30 June 2019 30 June 2018

N'000 N'000

Operating 54,108 78,327

Investing (42,779) (41,238)

Financing - -

11,328 37,089

The Board decided to sell its investment in UPDC Hotels (UHL) in 2017. Efforts are on going to improve the performance

of the Hotel. Consequently, UHL has been classified as a disposal group held for sale and as a discountinued operation in

accordance with IFRS 5

UPDC Hotels Ltd

UPDC Hotels owe UPDC Plc N13.98 billion of which there is an impairment of N6.6 billion in UPDC's book.

UPDC Hotels Ltd

Loss from discontinued operations

Liabilities of disposal group classified as held for sale/ distribution to owners

Fair value of disposal group held for sale

Net cash (outflows)/inflows

IFRS 5 requires that except for certain exceptions, the sale of a non-current asset or disposal group is expected to qualify

for recognition as a completed sale within one year from the date of classification. However, during the year, there were

certain factors considered to be beyond the control of management which have invariably extended the sale period

beyond one year. These factors include but are not limited to slow down in business activities in view of the upcoming

elections. Management however, remains committed to concluding the sale within a reasonable time frame.

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