Jun 28, 2016 - -Deputy Managing Director. (Swiss). Resigned. 23/11/15. Resigned. 08/09/ ... 4th Floor Bank of Industry B
NORTHERN NIGERIA FLOUR MILLS PLC
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016
NORTHERN NIGERIA FLOUR MILLS PLC FINANCIAL STATEMENTS 31 MARCH 2016 CONTENT
PAGE
Corporate information
1
Results at a glance
2
Report of the directors
3
Statement of directors' responsibilities
7
Independent auditors' report
8
Statement of profit or loss and other comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13
Other national disclosures
50
Statement of value added Financial summary
51 52
NORTHERN NIGERIA FLOUR MILLS PLC CORPORATE INFORMATION DIRECTORS:
Alhaji (Dr.) Aminu Dantata, OFR Mr. John G. Coumantaros Alhaji Rabiu M. Gwarzo, OON Mr. Gert Kriek Alhaji Sani Umar Malam Mahmud Ahmed Mr. Peter Kradolfer Mr. Paul M. Gbededo Alhaji Y. Olalekan A. Saliu Alhaji Mahmoud Isa-Dutse Chief (Sir) Emmanuel A. Ukpabi Alhaji Garba Aliyu Hungu Dr. Jibrilla Mohammad Alhaji Sadiq A. Usman
1
-Chairman (US. Citizen) - Vice Chairman -Vice Chairman (South African) -Managing Director -Deputy Managing Director (Swiss)
Resigned 23/11/15 Resigned 08/09/15 Resigned 17/10/15 Appointed 17/10/15 Appointed 15/10/15
REGISTERED OFFICE:
15, Maimalari Road, Bompai Industrial Estate, Kano
POSTAL ADDRESS:
P.O.Box 6640 Kano E-mail:
[email protected]
HOLDING COMPANY: COMPANY SECRETARY:
JOINT AUDITORS:
REGISTRAR AND TRANSFER OFFICE:
BANKERS:
SOLICITORS:
Flour Mills of Nigeria Plc Miyetti Nominees Limited 26, Post Office Road Kano Akintola Williams Deloitte Aminu Ibrahim & Co (Chartered Accountants) (Chartered Accountants) 4th Floor Bank of Industry Building City Plaza Plot 256, Zone AO Cadastral Plot 596 Ahmadu Bello Way Off Herbert Macaulay Way Garki, FCT Central Business District Abuja, FCT Flour Mills Registrars Limited 45, Eric Moore Road Iganmu (BAGCO) Building P.O.Box 341 Apapa Lagos State Access Bank Plc First Bank of Nigeria Plc Guaranty Trust Bank Plc Sterling Bank Plc Union Bank of Nigeria Plc Zenith Bank Plc Messrs J. B Majiyagbe & Co. 4, Human Rights Avenue P.O.Box 726 Kano
2
NORTHERN NIGERIA FLOUR MILLS PLC RESULTS AT A GLANCE 2016 N'000
Revenue
2015 N'000
% Change
979,038
10,529,075
Loss before taxation
(233,071)
(215,430)
(91) 8
Loss for the year Total comprehensive loss for the year Retained earnings Share capital Shareholders' fund
(197,240) (175,666) 1,072,316 89,100 1,250,937
(199,558) (222,569) 1,301,442 89,100 1,480,063
(1) (21) (18) (15)
(111) (111)
(112) (112)
(1) (1)
PER SHARE DATA:
Based on 178,200,000 (2015:178,200,000) ordinary shares of 50k each: Loss per share (Kobo): - Basic - Diluted Net assets per share (Kobo) - Basic
Number of employees
3
702
831
(15)
65
221
(71)
Northern Nigeria Flour Mills Pic Financial Statements for the year ended 31 March 2016 Directors' report The Directors have the pleasure in submitting to the members of the Northern Nigeria Flour Mills Pic their annual report together with the audited financial statements for the year ended 31 March 2016. 1
Principal activity
The Company's main business is milling of wheat and other associated grains. 2
Directors and their interests
Directors
Alhaji (Dr,) Aminu Dantata, CON Mr. John G. Coumantaros Alhaji Rabiu Muhammad Gwarzo, OON Mr. Gert Kriek Chief (Sir) Emmanuel A. Ukpabi (KJW) Alhaji Sani Umar Mr. Paul M. Gbededo Alhaji Y. Olalekan A. Saliu Dr. Mahmoud Isa-Dutse Alhaji Garba Aliyu Hungu Mallam Mahmud Ahmed Mr. Peter Kradolfer Dr. Jibrilla Mohammed Sadiq A. Usman
As at 31 March 2016, the following directors were in Designation office: Non-executive Non-executive Office Non-executive Chairman Vice Executive chairman Vice Non-executive chairman Managing Executive director Resigned Non-executive 08/09/15 Non-executive Non-executive Non-executive Non-executive Resigned 23/11/15 Non-executive Resigned 17/10/15 Non-executive Non-executive
Appointed 17/10/15 Appointed 15/10/15 In accordance with Section 259 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, Two Directors, Dr. Mahmoud Isa Dutse, Alhaji Garba Aliyu Hungu resigned during the year and were replaced by Dr. Jibrilla Mohammed and Sadiq A. Usman. 3
Directors' shareholding
The 31 March 2016 interests in the issued share capital of the company as recorded in the Register of members and/ or notified by them for the purpose of Section 275 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004 are as follows: Interests in shares
as at 31 March 2016 DIRECT INDIRECT
Names of Directors
Shareholding 1,111,195 609,598 163,502 237,363 97,881 193,216
Alhaji (Dr,) Aminu Dantata, CON Alhaji Rabiu Muhammad Gwarzo, OON Chief (Sir) Emmanuel A. Ukpabi (KJW) Alhaji Sani Umar Alhaji Y. Olalekan A. Saliu Dr. Mahmoud Isa-Dutse
4
Shareholding 9,894,362 NIL NIL NIL NIL NIL
Northern Nigeria Flour Mills Pic Financial Statements for the year ended 31 March 2016 Directors' report 4
Holding company
The Company's holding company is Flour Mills of Nigeria Pic which holds 53.06% (2015: 53.06%) of the company's equity. Flour Mills of Nigeria Plc is incorporated in Nigeria. 5
Directors' responsibilities
In accordance with the provision of Sections 334 and 335 of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, the Directors are responsible for the preparation of financial statements which give a true and fair view of the financial position of the Company as at 31 March 2016 and the results of its operations, cash flows and changes in equity for the period ended, in compliance with International Financial Reporting Standards (IFRS) and in manner required by the Companies and Allied Matters Act of Nigeria, and the Financial Reporting Council of Nigeria Act, 2011. In doing so, they ensure that: - proper accounting records are maintained; - applicable accounting statements are followed; - suitable accounting policies are adopted and consistently applied; - judgments and estimates made are reasonable and prudent; - the going concern basis is used, unless it is inappropriate to presume that the Company will continue in - Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets, - Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets, prevent and detect fraud and other irregularities. 6
Corporate governance
The Company is committed to the best practice and procedures in corporate governance. Its business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. This enables the Company and Management to accomplish the N's strategic goals, ensure good growth and corporate stability for the benefit of all stakeholders. Members of the Board of Directors hold a minimum of four quarterly meetings to approve the Company's business strategy and objectives, decide on policy matters, direct and oversee the company's affairs, progress, performance, operations, finances; and ensure that adequate resources are available to meet the company's goal and objectives. Attendance of Directors at quarterly meetings is very good. In line with provisions of Section 258(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, record of Directors' attendance at Board meetings is available for inspection at the Annual General Meeting. Frequency and attendance of Board meetings
The Board held - meetings during the financial year ended 31 March 2016. The notice for each meeting was in line with the Company's Articles of Association and board papers are usually provided to Directors in advance. A summary of record of attendance at the meetings is presented below: Audit Committee Composition
Pursuant to section 359(3) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, the Company has put in place an Audit Committee comprising three Directors and three shareholders as follows: Mr. J. O. Salami Alhaji Rabi'u M. Gwarzo OON Mr. Soares P. Akinola Malam Mahmd Ahmed Dr. Jibrilla Mohammed Alhaji Bashir A. Muhammed
- Chairman
5
Northern Nigeria Flour Mills Pic Financial Statements for the year ended 31 March 2016 Directors' report The functions of the Committee are laid down under section 359 (6) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004. 7
Events after the reporting period
There were no significant developments since the reporting date which could have had a material effect on the state of affairs of the Company at 31 March 2016 and the profit for the year ended on that date which have not been adequately provided for or recognized. 8
Property, plant and equipment
Movements in Property, plant and equipment during the year are shown in Note 13 to the financial statements. In the opinion of the Directors, the market value of the Company's properties is not less than the value shown in the audited financial statements. 9
Human Capital Disabled Persons The Company employs disabled persons who are found to be suitable to particular types of work.
Health, Safety at work and welfare of employees
The Company always ensures that high hygeinic standard of the premises is maintained. Work environment is always kept safe and conducive. In order to ensure prompt attention to its employees, the company operates its own clinic. In addition, the Company has agreement with a number of private hospitals run by qualified medical doctors to whom serious cases are referred to for treatment and/or admission. Lunch is provided in the staff canteen at heavily subsidized prices for junior and senior staff.
Employees Involvement and Training
The company encourages the formation of Trade Unions. Staff welfare scheme is currently in operation. A well established on-the-job training scheme is in place for all categories of staff. 10
Auditors
The joint auditors Messrs. Akintola Williams Deloitte and Aminu Ibrahim & Co. have indicated their willingness to continue in office as the auditors for the Company in accordance with Section 357(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004. A resoution will be proposed to authorize the Directors to fix their remuneration. 11
Nature of business
Northern Nigeria Flour Mills Plc was incorporated in Nigeria with interests in the manufacturing industry. The Company operates in Kano state, Nigeria. There have been no material changes to the nature of the Company's business from the prior year. 12
Ultimate holding company The Company's ultimate holding company is Flour Mills of Nigeria Plc which is incorporated in Nigeria.
13
Secretary The Company secretary is Miyetti Nominees Limited. Business address:
26, Post Office Road, Kano, Nigeria.
6
Northern Nigeria Flour Mills Pic Financial Statements for the year ended 31 March 2016 Directors' report 14
Date of authorisation for issue of financial statements
The financial statements have been authorised for issue by the directors on Thursday, 30 June, 2016. No authority was given to anyone to amend the financial statements after the date of issue. The financial statements set out on pages 9 to 52, which have been prepared on the going concern basis, were approved by the directors on 28 June 2016 and were signed on its behalf by: Approval of financial statement
- Director
- Director
- Director
7
Statement of Directors' Responsibilities for the preparation and approval of the Financial Statements For the year ended 31 March 2016
The Directors of Northern Nigeria Flour Mills Pic are responsible for the preparation of the financial statements that give a true and fair view of the financial position of the company as at 31 March 2016 and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011. In preparing the financial statements, the Directors are responsible for: properly selecting and applying accounting policies; presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the company's financial position and financial performance; and making an assessment of the company's ability to continue as a going concern. The Directors are responsible for: designing, implementing and maintaining an effective and sound system of internal controls throughout the company; maintaining adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and which enable them to ensure that the financial statements of the company comply with IFRS; maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; taking such steps as are reasonably available to them to safeguard the assets of company; and preventing and detecting fraud and other irregularities. Going Concern:
The Directors have made an assessment of the Company's ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead. The financial statements of the company for the year ended 31 March 2016 were approved by directors on 28 June 2016 On behalf of the Directors of the Company
Alh. Y.O.A. Saliu FRC/2013/ICAN/00000003595
Alhaji Sani Umar F RC/2014/I0DN/00000008814
28 June 2016
28 June 201628
8
NORTHERN NIGERIA FLOUR MILLS PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2016 Notes
Revenue Cost of sales
2016 N'000
2015 N'000
979,038 (1,079,755)
10,529,075 (10,272,982)
(100,717)
256,093
246,552 (90,330) (11,619) (324,366)
17,039 (77,789) (11,639) (463,570)
(280,480)
(279,866)
11
47,409
64,436
13 21.1
(233,071)
(215,430)
5 7
Gross (loss)/profit
Other operating income Other gains or losses Selling and distribution expenses Administration expenses
8 9 10
Operating loss
Investment income Loss before tax
Income tax credit Loss for the year
35,831
15,872
(197,240)
(199,558)
21,574
(23,011)
(175,666)
(222,569)
(111) (111)
(112) (112)
Other comprehensive loss for the year, net of taxes
Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Total comprehensive loss for the year
Earnings per share (Kobo): - Basic - Diluted
26
The accompanying notes on pages 13 to 49 and other national disclosures on pages 50 to 52 form an integral part of these financial statements.
9
NORTHERN NIGERIA FLOUR MILLS PLC STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016 Assets
Notes
2016 N'000
Non-current assets
2015 N'00 0
Property, plant and equipment Intangible assets Deferred tax assets Total non-current assets Current
13 14 21.4
assets
Inventories Trade and other receivables Cash and bank balances Total current assets Total assets Equity and Liabilities Capital and reserves Share capital Share premium Retained earnings Total equity Non-current liabilities Deferred
15 16 17
616,533 42,124
728,107 1,289 5,325
658,657
734,721
396,133 296,451 388,519
427,714 319,123 942,153
1,081,103
1,688,990
1,739,760
2,423,711
89,100 89,521 1,072,316
89,100 89,521 1,301,442
1,250,937
1,480,063
90,908 22,638
293,638 50,270
113,546
343,908
367,947 7,330
530,623 47,126 21,991
375,277
599,740
tax liabilities Retirement benefit obligation Long service awards Total non-current liabilities Current liabilities
18 19 20
Trade and other payables Provisions Current tax liabilities
21.4 22 23
Total current liabilities Total liabilities Total equity and liabilities
The financial statements on pages 9 to 52, were approved by the board of directors on 28 June 2016 and signed on its behalf by:
24 25 21.3
488,823
943,648
1,739,760
2,423,711
Alhaji Y. O. A. Saliu - Director FRC/2013/ICAN/00000003595
Alhaji Sani Umar - Deputy Managing Director FRC/2014/IODN/00000008814
Alhaji Ahmed Murtala Ahmadu - Chief Finance Officer FRC/2016/ICAN/00000014395
The accompanying notes on pages 13 to 49 and other national disclosures on pages 50 to 52 form an integral part of these financial statements.
10
NORTHERN NIGERIA FLOUR MILLS PLC STATEMENT OF CHANGES IN EQUITY AT 31 MARCH 2016
Balance at 31 March 2014
Dividend declared Loss for the year Other comprehensive loss for the year Balance at 31 March 2015
Dividend declared Loss for the year Other comprehensive income for the year
Share capital
Share premium
Retained earnings
Total
N'000 89,100
N'000 89,521
N'000 1,595,291
N'000 1,773,912
-
-
(71,280) (199,558) (23,011)
(71,280) (199,558) (23,011)
89,100
89,521
1,301,442
1,480,063
-
-
(53,460) (197,240) 21,574
(53,460) (197,240) 21,574
(175,666)
(175,666)
1,072,316
1,250,937
Total comprehensive loss for the year Balance at 31 March 2016
89,100
11
89,521
NORTHERN NIGERIA FLOUR MILLS PLC STATEMENT OF CASH FLOWS Notes
AT 31 MARCH 2016
Cash flows from operating activities
2016 N'000
2015 N'000
(197,240)
(199,558)
87,230 (17,098) 62,922 84,111 22,097 (47,409)
95,509 (2,265)
Loss for the year Adjustments for: Depreciation and ammortisation Adjustment to depreciation Property, plant and equipment adjustment Provision for bad and doubtful balances Provision no longer required Interest received Gain on asset disposal
14,770 1,222 (64,436) (469)
(5,387)
(155,227)
31,581 (61,439) (162,676) (203,253) (27,632) (36,799) (47,126) (14,661)
1,157,223 126,029 (549,830) 8,038 39,980 (47,725) 47,126 (70,515)
(527,392)
555,099
(20,191) 47,409
2,990 (135,472) 64,436
Operating cash flows before movements in working capital
Changes in assets and liabilities:
Decrease in inventories (Increase)/decrease in trade and other receivables Decrease in trade and other payables (Decrease)/increase in retirement benefits (Decrease)/increase in long service awards Decrease in deferred taxation (Decrease)/increase in provisions Decrease in tax payable Net cash (used in)/generated by operating activities Cash flows from investing activities
Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Interest received
13
27,218
(68,046)
(53,460)
(71,280)
(53,460)
(71,280)
(553,634) 942,153
415,773 526,380
388,519
942,153
Net cash provided by/(used in) investing activities Cash flows from financing activities
20
Dividend paid Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year 17
Cash and cash equivalents at the end of the year
12
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 1
General Information
1.1
Legal form
Northern Nigeria Flour Mills Pic was incorporated as a private limited company on 29 October 1971. The Company was converted to a public limited liability company in 1978 and was quoted on the Nigeria Stock Exchange in the same year. The Company's registered office and factory is located at No 15 Maimalari Road, Bompai, Kano. Its present ownership structure is 47% owned by individuals and institutions in Nigeria and 53% owned by Flour Mills Nigeria Plc which is the parent Company and ultimate controlling party. 1.2
Principal activity
The Company's main business is milling of wheat, maize and other associated grains. 1.3
Going concern status
The Directors believe that there is no intention or threat from any source to curtail significantly its line of business in the foreseeable future. Thus, these financial statements are prepared on going concern basis. 1.4
Financial period
The financial statements cover the financial period from 1 April 2015 to 31 March 2016 with comparative information for the year ended 31 March 2015.
13
E
IA
NOTESTOTWE ^ NA i dfJL
OU
'FAlTi^MtS^lffecFOR THE YEAR ENDED 31 MARCH 2016
2. Application of new and revised International financial Reporting Standards (IFRS) 2.1
The following revisions to accounting standards and pronouncements were issued and effective at the reporting period Pronouncement Nature of change
Required to be implemented for periods beginning on __________________________________________________________ or after ___________
Employee Contributions (Amendments to IAS 19)
The amendments clarify how an entity should account for contributions made by employees or third parties that are linked to services to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employees. For contributions that are independent of the number of years of service, the entity may recognise the contribution as a reduction of the service cost in the period in which the related service is rendered, or attribute them to employees' period of service either using the plan's contribution formula or a straight-line basis. Whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the
1 -Jul-14
employee's periods of service. Amendments to IFRSs Annual improvements To IFRSs 20102012 cycle
Amendments to IFRSs Annual Improvements To IFRSs 20112013 cycle
1 -JulThe Annual Improvements to IFRSs 2010-2012 cycle includes a 14 number of amendments to various IFRSs. Amendments to IFRSs include: • Amendments to IFRS 2 share based payments • Amendments to IFRS 3 Business combinations • Amendments to IFRS 8 Operating Segments • Amendments to IFRS 13 Fair Value measurement • Amendments to IASs 16 and 38 Property Plant and Equipment and Intangible assets • Amendments to IAS 24 Related Party Disclosure This makes amendments to the following standards: • Amendments to IFRS 3 Business Combination • Amendments to IFRS 13 Fair Value Measurement • Amendments to IAS 40 Investment Property
1 -Jul14
The directors of the Company have determined that application of these standards and amendments have no significant impact on the financial statements NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 2.2
Accounting standards and interpretations issued but not yet effective
The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.(Earlier application is permitted in some cases) Required to be
14
NORTHERN NIGERIA FLOUR MILLS PLC
implemented for
PronouncementNature of changeperiods Amendments to IFRS 9IFRS 9 Financial Instruments issued in July 2014 is the lASB'S 1 January 2018 Financial Instruments replacement of IAS 39 Financial Instruments: Recognition and
Measurement. The IASB completed its project to replace IAS 39 in phases, adding to the standard as it finalized each phase. These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) address issues that have arisen in the context of applying the consolidation exception for investment entities by clarifying the following points: • The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value. • A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity. • When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries. • An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.
IFRS 14 IFRS 14 specifies the accounting for regulatory deferral account 1 January 2016 balances Regulatory that arise from rate-regulated activities. The standard is available only to first-time Deferral Accounts
adopters of IFRSs who recognised regulatory deferral account balances under pervious GAAP. IFRS 14 permits eligible first-time adopters of IFRSs to continue their previous GAAP rateregulated accounting policies, with limited changes and requires separate presentation of regulatory deferral account balances in the statement of financial position and statement of profit or loss and other comprehensive income. IFRS 15 Revenue This IFRS establishes a single comprehensive model for entities to 1 January 2018 from Contract with use in accounting for revenue arising from contracts with customers. It is intended to Customers supersede the following standards;
• IAS 18 Revenue • IAS 11 Construction Contracts • IFRIC 13 Customer Programmes • IFRIC 15 Agreements for the Construction of Real Estate • IFRIC 18 Transfer of Assets from Customers; and • SIC 31 Revenue Barter Transactions Involving Advertising Services. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 2.2
Accounting standards and interpretations issued but not yet effective (cont'd)
The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.
15
Pronouncement
Nature of change
NORTHERN NIGERIA FLOUR MILLS PLC Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) Bearer Plants (Amendments to IAS 16 and IAS 41)
Required to be implemented for periods beginning on or after
1 January 2016 The amendments provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 13 Business Combination. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 13 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment of cashgenerating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. Amendments to IAS 16 clarifying acceptable method of depreciation on1 January 2016 items of property, plant and equipment while IAS 38 clarifying acceptable method for amortization of intangible asset.
The amendments defines bearer plant and require biological assets that1 January 2016 meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. Also, bearer plants can be measured using either cost model or the revaluation models set out in IAS 16.
Equity Method in The amendments to IAS 27 is to permit investments in subsidiaries, joint 1 January 2016 These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) address 1 January 2016 Sale or Separate Financial ventures and assocites to be optionally accounted for using the equity Statements Contribution of issues that have arisen in the context of applying the consolidation exception for Assets between an investment entities by clarifying the following points: Investor and its method in the separate financial statements. A i t J i tV t (Amendments to IAS 27) ssoc a e or o n en ure (A
men
d
t t
men s o
• The exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity IFRS 10 and IAS measures all of its subsidiaries at fair value. 28)
• A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity. • When applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries. • An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 2.2
Accounting standards and interpretations issued but not yet effective (cont'd)
The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.
16
NORTHERN NIGERIA FLOUR MILLS PLC Pronouncement Nature of change
Required to be implemented for periods beginning on or after
Disclosure InitiativeThe amendment seek to address perceived impediments to 1 January 2016 (Amendments to IAS preparers exercising their judgement in presenting their financial 1) reports by making the
following changes: • clarification that information should not be obscured by aggregating or by providing immaterial information, materiality considerations apply to the all parts of the financial statements, and even when a standard requires a specific disclosure, materiality considerations do apply; • clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarification that an entity's share of OCI of equity accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss; • additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in paragraph 114 of IAS 1.
Agriculture: BearerThe amendments defines bearer plant and require biological 1 January 2016 Plants
assets that meet the definition of a bearer plant to be accounted (Amendments to IAS for as property, plant and equipment in accordance with IAS 16, 16
an
d IAS 41) instead of IAS
41. Also, bearer plants can be measured using either cost model or the revaluation models set out in IAS 16. Investment Entities: These amendments to IFRS 10, IFRS 12 and IAS 28 (2011) 1 January 2016 address Applying the issues that have arisen in the context of applying the consolidation exception for Consolidation investment entities by clarifying the following points: Exception (Amendments to IFRS • The exemption from preparing consolidated financial statements for an intermediate 10, IFRS 12 and IAS parent entity is available to a parent entity that is a subsidiary of an investment entity, 28)
even if the investment entity measures all of its subsidiaries at fair value. • A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity. • When applying the equity method to an associate or a joint venture, a noninvestment entity investor in an investment entity may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 2.2
Accounting standards and interpretations issued but not yet effective (cont'd)
The following revisions to accounting standards and pronouncements were issued but not effective at the reporting period.
17
Pronouncement
Nature of change
NORTHERN NIGERIA FLOUR MILLS PLC Required to be implemented for periods beginning on or after
Annual Improvements Cycle
The Annual Improvements to IFRSs 2012-2014 cycle includes 1 January 2016 a 20122014number of amendments to various IFRSs. These amendments to IFRS include:
□ IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which heldfor- distribution accounting is discontinued. □ IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements. □ IAS 9 — Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.
The directors of the Company do not anticipate that applications of these standards and amendments will have a significant impact on the financial statements.
18
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3 Significant accounting policies 3.1
Statement regarding status of compliance with IFRSs
The Company's financial statements are presented in accordance with, and comply with, International Financial Reporting Standards (IFRS) and International Reporting Interpretations Committee (IFRIC) interpretations issued and effective at the time of preparing these statements. 3.2
Basis of preparation
The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The significant accounting policies are set out below: 3.3
Revenue recognition
Revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. 3.3.1 Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: - the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; - the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the economic benefits associated with the transaction will flow to the entity; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably. 3.4
Dividend and interest revenue
Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably). Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
19
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.5
Foreign currency translation
For the purpose of these financial statements, the results and financial position of the Company are expressed in Naira, which is the functional currency of the Company, and the presentation currency for the financial statements. The functional and presentation currency was determined by the directors. In preparing the financial statements of the Company, transactions in currencies other than the Company's functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: • exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; • exchange differences on transactions entered into in order to hedge certain foreign currency risks; • exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items. 3.6
Pensions and other post-employment benefits
The Company operates a defined contribution based retirement benefit scheme for its staff, in accordance with the Pension Reform Act of 2014 with employee contributing 8% and employer contributing 10% each of the employee's relevant emoluments. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered the service entitling them to the contributions. The Company also operates a gratuity scheme for its qualified staff. Benefits are related to the employees' length of service and remuneration. The cost of providing gratuity benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Actuarial gains and losses (if any ) are recognised fully in other comprehensive income . Also, past service cost is recognised immediately in profit or loss. 3.7
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. 3.7.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in future years and items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantatively enacted by the end of the reporting period. 3.7.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
20
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.7.2
Deferred tax cont'd
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Current and deferred tax are recognised in the statement of comprehensive income, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. 3.8
Property, plant and equipment.
Land and buildings mainly comprise factories, depots, warehouses and offices. All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which it is incurred. Depreciation on property, factory buildings, machinery, vehicles, furniture and equipment is calculated on a straight-line basis at rates deemed appropriate to write off the cost of the assets to their residual values over their expected useful lives.
21
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.8
Cont'd Depreciation is recognised so as to write off the cost or valuation of assets (other than land and properties under construction) less their residual values over their useful lives, using the straight-line method, on the following basis: Buildings Plant and machinery Mobile plant Loose tools & workshop equipment Furniture and fitings IT equipment Motor vehicle Trailers Pallets
50 10 10 10 10 4 5 5 3
years - 15 years years years years years years years years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Profits and losses on disposals of fixed assets are determined by comparing proceeds with the carrying amounts. These profits and losses are included within ‘items of a capital nature' in profit or loss. Properties in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includes professional fees and for qualifying assets borrowing costs capitalised in accordance with the Company's accounting policy.
3.9
Impairment of tangible and intangible assets excluding goodwill and financial assets. At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. 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 which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease subject to the available surplus in the revaluation When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
3.10 Inventories Inventories are stated in the financial statements at the lower of cost and net realisable value. Raw Materials which include purchase cost and other costs incurred to bring the materials to their location and condition, are valued at First- In-First-Out (FIFO). Cost of finished goods and work-in-progress include cost of materials used in production, direct labour and factory overheads. Engineering spare parts and other consumables are valued at standard cost and adjusted to reflect actual cost after making allowance for obsolete and damaged stocks. Engineering spare parts with high value and held for commissioning of a new plant or for infrequent maintenance of plants are capitalised and depreciated over their useful life and the useful life starts when they are put to use. If the estimated useful life of the spare parts from installation exceeds that for the whole plant, depreciation is limited to the remaining life of the plant.
22
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.11
Trade receivables
Trade receivables are initially recognized at fair value and subsequently measured at amortized cost less any allowance for doubtful debts. Allowances are made where there is evidence of a risk of nonpayment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any allowance available and then to profit or loss. Subsequent recoveries of amounts for which a previous allowance was made are credited to the profit or loss. Long-term receivables are discounted where the effect is material. Trade receivables are measured at amortized cost. Interest income is recognised by applying the effective interest rate, except for shortterm receivables when the recognition of interest would be immaterial. 3.12
Trade payables
Trade payables are held at amortised cost which equates to nominal value. Long-term payables are discounted where the effect is material. 3.13
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and highly liquid investments generally with maturities of three months or less from the date of acquisition. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value. 3.14
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. 3.15
Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement. 3.15.1
Financial assets
The Company's financial assets are classified as loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
23
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.15.2
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments thal are not quoted in an active market. Loans and receivables include 'trade and other receivables', 'loans to joint ventures' and 'cash and cash equivalents' in the statement of financial position which are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 3.15.3
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For loans and receivables, objective evidence of impairment could include: *significant financial difficulty of the issuer or counterparty; or *breach of contract, such as a default or delinquency in interest or principal payments; or *it is becoming probable that the borrower will enter bankruptcy or financial re-organisation; *the disappearance of an active market for that financial asset because of financial difficulties.
24
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.15.3
Impairment of financial assets cont'd
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 90 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. 3.15.4
Derecognition of financial assets
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
25
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3.15.4
Derecognition of financial assets cont'd
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. 3.16
Financial liabilities and equity instruments
3.16.1
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. 3.16.2
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised as the proceeds received, net of direct issue costs. Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. 3.16.3
Financial liabilities
Financial liabilities are classified as 'other financial liabilities'. 3.16.3.1
Other financial liabilities
Other financial liabilities (including borrowings and trade and other payables) are initially measured at fair value. Subsequently they are measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. 3.16.3.2
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. 3.17
Segment information
The Company is involved in the milling of wheat and other associated grains as well as sales of other Golden product products purchased from the Parent Company. There are two business segments and operating results of the segment reported regularly to the Chief Operating Decision Maker ( the Chief Executive Officer) for purposes of resource allocation and performance assessment.
26
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 3.18
Earnings per share
The company presents basic earnings per share(EPS) for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share
Diluted earnings per share are computed by dividing adjusted net income available to shareholders of the Company by the weighted average number of common shares outstanding during the year adjusted to include any dilutive potential common shares. Potential dilutive common shares result from stock options and convertible bonds issued by the Company on its own common shares. 4
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, which are described in note 4, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgements and estimates that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in financial statements. 4.1
Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company, accounting for about 36% of the Company's total assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Company's financial position and performance. The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. Increasing an asset's expected life or it's residual value would result in the reduced depreciation charge in the statement of comprehensive income. The useful lives and residual values of property, plant and equipment are determined by management based on historical experience as well as anticipation of future events and circumstances which may impact their useful lives. 4.2
Provision for gratuity
The Company operates an unfunded defined benefit scheme which entitles staff who put in a minimum qualifying working period of five years to gratuity upon leaving the employment of the Company. IAS 19 requires the application of the Projected Unit Credit Method for actuarial valuations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnover etc and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.
27
NORTHERN NIGERIA FLOUR MILLS PLC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 4.3
Allowance for doubtful receivables
Judgment is exercised to make allowance for trade receivables doubtful of recovery by reference to the financial and other circumstances of the debtor in question. Based on objective evidence of impairment, the Company makes a collective impairment allowance for doubtful debt. 4.4
Taxation
The Company's tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the of the Company's total tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finally determined until resolution has been reached with the relevant tax authority. Under the Nigerian tax system, selfassessment returns are subjected to a desk review for the determination of tax due for remittance in the relevant year of assessment. This is however not conclusive as field audits are carried out within six years of the end of the relevant year of assessment to determine the adequacy or otherwise of sums remitted under selfassessment thus making tax positions uncertain.
28
3/31/2016 3/31/2015 N'000 N'000 NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 5 Revenue
The following is an analysis of the Company's revenue for the year from continuing operations (excluding other income): Sales of wheat/maize products
Wheat flour Semovita Wheat offal Masaflour Germ flour Masavita Corn offal 5.2
140,416 14,669 18,425 249,711 94,571 419,015 39,014
7,901,138 817,327 720,974 464,628 38,107
975,821
9,942,174
3,210 7
558,384 10,154 18,363
Sales of other Golden Penny products
Golden penny flour confectionery Golden penny sugar Golden penny rice 5.1
5.2
Wheat flour Semovita Wheat offal Masaflour Germ flour Masavita Corn offal
586,901
Sales of other Golden Penny |
Golden penny flour confection Golden penny sugar Golden penny rice 52
586,901
Segment information
Information reported to the Chief Operating Decision Maker (COMD) for the purpose of resources allocation and assessment of segment performance focuses on the types of goods or services delivered or provided: The Company's reportable segments are milling and sale of wheat/maize products (wheat/maize products segment), and sale of other Golden Penny (GP) products (other Golden Penny (GP) products segment).
29
NORTHERN NIGERIA FLOUR MILLS PLC
6.1
Segment revenue and results 3/31/2016 N'000
30
Segment revenueSegment profit 3/31/2015 3/31/2016 3/31/2015 N'000 N'000 N'000
NORTHERN NIGERIA FLOUR MILLS PLC Wheat/maize products
975,821
Other Golden Penny products
3,217
9,942,174
198,474
(30)
57,619
(100,717)
256,093
Other operating income Other gains or losses Selling and distribution expenses Administration expenses Investment income
246,552 (90,330) (11,619) (324,366) 47,409
17,039 (77,789) (11,639) (463,570) 64,436
Loss before tax
(233,071)
(215,430)
979,038
586,901
(100,687)
10,529,075
Segment loss represent the loss before tax incurred by each segments without allocation of other operating income, other gains and losses, selling and distribution expenses, administrative expenses, investment income and other expenses. This is the measure reported to the Chief Operating Decision Maker for the purpose of resource allocation and assessment of segment performance.
31
3/31/2015 N'000
7.2 Segment assets and liabilities 3/31/2016
Wheat/maize products Other Golden Penny products
N'QQQ 1,739,760 -
4,934,766 -
1,739,760
4,934,766
488,823 -
3,454,703 -
488,823
3,454,703
3/31/2016 N'000
3/31/2015 N'00 0
756,231 1,140 44,330 61,874 2,138 7,251 71,556 4,271 7,044 69,755 48,800 216 1,902 -
8,481,046 1,93 8 105,703 420,025 839 2,53 9 140,119 5,20 7 45,256 71,033 284,104 488 3,81 37,972
1,076,508
9,600,086
3,240 7
500,954 10,051 18,277
3,247
529,282
1,079,755
10,129,368
201,463 21,975 1,017 22,097
14,754 1,06 3 1,22 2 17,039
Segment liabilities:
Wheat/maize products Other Golden Penny products
Cost of sales Cost of Wheat/maize products
Raw materials Production expenses Repairs and maintenance Factory power Rent and rates Insurance Salaries and wages Pension Gratuity Depreciation Transportation of raw materials Laboratory expenses Medical Restructuring cost
Cost of Golden Penny products:
Golden penny flour confectionery Golden penny sugar Golden penny rice
Other operating income
Intragroup subsidy (Note 8.1) Sundry income Rental income Provision no longer required (Note 8.2)
246,552 7.1
7.27
7.27
Segment assets:
5.55 5.55 The Company suspended the milling of wheat during the year and limits its production activities to milling of maize products. The parent Company (Flour Mills of Nigeria Plc) resolved that for the transition period of three years, the targeted sales of Masavita and Masaflour is 4,166.7metric tonnes/Month i.e. 50,000 metric tonnes per year. Hence, the Parent company decided to be paying NNFM Plc the sum of N5,000 per metric tonne for every metric tonnes that falls short of the target. This payment is to a maximum of 50,000metric tonnes and a maximum sum of N250million over the transition period of three years.
8.1
This represents write back of excess provision made for restructuring cost after all staff who are entitled to the benefits have been paid.
8.2
32 6.2
94,545,, 159
53.06
53.06
3/31/2015 N'000 9 Other gains or losses
3/31/2016 N'000
(5,099) (19,991) (28,281) (36,959)
Gain on asset disposal Gain on resale of wheat Exchange loss Inventory write off Provision for obsolete and slow moving stock Other operating expenses (Note 9.1)
9.1
(90,330)
469 9,853 (82,310) (143,614) (5,801)
(221,403)
The amount is majorly made up group cost allocated to Northern Nigeria Flour Mills by the Parent Company - Flour Mills Nigeria Plc. 3/31/2016 3/31/2015 N'000 N'000 10 Administration expenses
Salaries and wages Repairs and maintenance Depreciation and amortization Bank charges Travelling and hotel accommodation General expenses Corporate publicity Directors expenses Insurance Staff welfare expenses/long service award Audit fees Pension fund Postage, telephone and telegrams Staff training and management development Rent and rates Legal and professional fees Printing and stationery Bad debt written off Bad debt provision Industrial training fund Donation and subscription Medical expenses Restructuring cost Penalties and fines
80,538 18,921 10,851 6,212 12,514 13,117 189 19,482 5,308 15,929 14,500 2,343 6,162 105 14,500 1,262 12,614 84,111 1,502 2,782 551 873 324,366
Investment income
3/31/2016 N'000
Interest income
163,187 21,179 22,213 28,143 21,221 13,739 627 23,579 8,773 69,429 14,500 7,938 9,924 4,546 7,279 3,450 14,770 1,755 13,727 2,421 9,155 2,015 463,570 3/31/2015 N'000
47,409
64,436
47,409
64,436
Loss before tax
12 The loss before tax is arrived at after charging/(crediting): Depreciation and amortization Directors' emoluments Services as Directors As Managers Auditors' remuneration Profit on disposal of fixed assets Other operating income
80,606 730 25,235 14,500 (246,552)
33
95,509 730 25,056 14,500 (469) (17,039)
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 13 Property, plant and equipment Loose tools &
N'000 Cost Balance at 1 April 2014 Additions Disposals Reclassification Balance at 31 March 2015 Additions Disposals Reclassification Adjustment (Note 13.1) Balance at 31 March 2016 Accumulated depreciation Balance at 1 April 2014 Depreciation expense Eliminated on disposal Adjustment Balance at 31 March 2015 Depreciation expense Eliminated on disposal Adjustment (Note 13.1) Balance at 31 March 2016
111,765 111,765 -
111,765
Plant and machinery N'000
1,140,761 17,366 105,726 1,263,853 -
18,299 (52,449) 1,229,703
workshop equipment N'000 7,605 7,605 -
7,605
631,615 43,047 -
6,911 54 -
39,897 2,198 -
674,662 52,768 -
6,965 54 -
42,095
(6,625) 720,805
Carrying amount At 31 March 2016
69,670
508,898
586
At 31 March 2015
71,868
589,191
640
IT
Motor
fittings N'000
equipment N'000
vehicles N'000
Trailers N'000
Pallets N'000
progress N'000
40,879 345 -
129,389 7,700 (20,751) -
248,654 -
2,776 6,300 -
13,912 103,761 -
178
37,779 -
(105,904)
41,402 -
37,779 -
116,338 -
248,654 -
(21,177) -
(11,892) -
9,076 -
11,769 20,191 -
-
(18,299) 13,661
-
-
37,699 2,198 -
Capital Furniture and
(10,473)
Total N'000 1,733,520 135,472 (20,751) 1,848,241 20,191 (33,069) (62,922)
41,402
27,306
95,161
236,762
9,076
32,559 1,359 -
35,705 2,526 -
101,626 11,010 (18,230) -
205,743 24,533 -
2,776 1,268 -
94,406 8,247 (21,177) -
230,276 18,010 (11,892) -
4,044 1,890 -
-
-
-
1,054,634 85,995 (18,230) (2,265) 1,120,134 85,941 (33,069) (17,098)
33,918 1,314
7,019
-
work-in-
(2,265) 35,966 1,460
-
-
-
(10,473)
-
1,772,441
35,232 6,170
26,953 353
81,476 13,685
236,394 368
5,934 3,142
13,661
1,155,908 616,533
7,484
1,813
21,932
18,378
5,032
11,769
728,107
13.1
Adjustments represent entries passed to correctly agree the records with assets register after a reconciliation and assets verification exercise.
13.2
Capital work in progress relates to cost of acquisition and installation of Maize intake cleaning equipment,dry stoner,degerminator 1 kg Masavita packer and bag chutes.
13.3
There are no indicators of impairment at the end of the reporting period thus, the directors are of the opinion that allowance for impairment is not required. However, in line IAS 16, Paragraph 79(a) which encourages an entity to disclose the amount of property, plant and equipment that is temporarily idle, the sum of N146million in plant and machinery relates to the net book value of the D-Mill plant which is currently idle in the entity's production process.
13.4
No asset of the Company was pledged as security for loans during the reporting period.
34
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3/31/2016 N'000 14
Intangible assets (Computer software)
3/31/2015 N'00 0
Cost
At 1 April Additions At 31 March
38,056 -
38,056 -
38,056
38,056
At 1 April Charge for the year
36,767 1,289
At 31 March
38,056
27,253 9,51 4 36,767
-
1,289
Accumulated amortization
Net book value At 31 March
Computer softwares relates to acquisition of software licence and anyother development attributable to the preparation of the computer software for its intended use. 15
3/31/2016 N'000
3/31/2015 N'00 0
215,613 15,255 23,532 170,014
153,608 33,288 82,588 158,230
Inventories
Raw materials Consumables Finished goods Maintenance spares
costs directly
424,414
Allowance for obsolete/slow moving inventories
427,714 ------ 396,133 --------- ------ 427,714—
(28,281)
The cost of inventories recognised as an expense during the year in respect of continuing operations was N756.23 million (2015: N8.481 billion). 16 Trade and other receivables
3/31/2016 N'000
3/31/2015 N'000
156,726 (114,226)
224,614 (41,183)
42,500
183,431
206,659 25,428 23,977 (2,113)
32,309 43,698 63,279 (3,594)
296,451
319,123
Trade receivables
Trade receivables Allowance for doubtful debts Other receivables
Amount due from related companies (Note 32.3) Other debtors Staff debtors Allowance for other receivables
The average credit period granted to customers is 90 days. No interest is charged on overdue receivables. The Company has provided fully for all receivables over 365 days, except where recovery is considered probable. The Company does not hold any collateral over these balances. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 16 Trade and other receivables (continued)
Before accepting a new customer the Company initially trades with the customer on a cash basis to
35
NORTHERN NIGERIA FLOUR MILLS PLC assess the customer's ability and also determine the customer's transaction volumes. This enables a reasonable credit limit to be set. Once these are determined the customer is then allowed to apply for a credit facility from the company through a rigorous process with several levels of approval. Also credit customers provide bank guarantees before being accepted as credit customers of the Company. Credit sales form a small portion of overall sales. The company has pledged no trade receivables during the year. Of the trade receivables balance at the end of the year, the following Companies made up the largest customer in the Company: 31/3/2016 N'000 %
Company A Company B Company C
27,010 12,224 10,269
12 5 5
31/3/2015 N'000
%
41,963 26,363 18,818
10 6 5
No other customer represents more than 5% of the total balance of trade receivables. There are no trade receivables which are past due at the reporting date for which the Company has not provided as there has not been a significant change in the credit quality and the amounts are still considered recoverable. The Company does not hold any collateral over these balances. 31/3/2016 N'000
31/3/2015 N'000
Ageing of past due but not impaired trade receivables -
31-60 days 61-180 days 181-365 days Total
-
-
Ageing of impaired trade receivables 31-60 days 91-180 days 181-365 days Over 365 days Total
1,829 45,511 66,886
1,662 39,521
114,226
41,183
Movement in the allowance for doubtful debts and other receivables Balance at 1 April Amounts recovered during the year Write off
44,777 (12,549)
31,229 (1,222) -
81,998 2,113 -
11,176 3,594
116,339
44,777
Increase in allowance recognised in profit or loss: Trade receivables Employee receivables Intercompany receivables Balance at 31 March
In determining the recoverability of the trade receivable, Company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited because of the customer base being large and unrelated and large credit risks are insured against irrecoverability. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3/31/2016 N'000
36
3/31/2015 N'000
NOTES TO THE FINANCIAL STATEMENTS 17 Cash and cash equivalents FOR THE YEAR ENDED 31 MARCH 2016 Cash on hand Bank balance Bank deposit Cash and bank balances Cash and cash equivalents comprise cash and bank balance, carrying amount of these assets approximate their fair value.
2,577 58,801 327,141
3,690 544,194 394,269
388,519
942,153
net of outstanding bank overdrafts. The 3/31/2016 N'000
3/31/2015 N'000
18 Share capital Authorised:
200,000,000 ordinary shares of 50 kobo each
100,000
100,000
89,100
89,100
89,521
89,521
Issued and fully paid:
178,200,000 ordinary shares of 50 kobo each 19 Share premium
Balance at end of year 20 Retained earnings
At 1 April Dividend declared Transfer from statement of profit and loss Other comprehensive income/(loss)
1,301,442 (53,460) (197,240) 21,574
1,595,291 (71,280) (199,558) (23,011)
At 31 March
1,072,316
1,301,442
At the General Meeting of the Company held on 8 September 2015, the shareholders approved the payment of dividend of 30 kobo per share amounting to N53.46 million which was paid to shareholders during the year. In respect of the current year, the directors propose a dividend of XX kobo per ordinary share of 50 kobo each on the 178,200,000 existing ordinary shares. The proposed dividend amounting to NXX.XX million is subject to approval by shareholders at the Annual General Meeting and deductions of withholding tax at the appropriate rate. Consequently, the proposed dividend has not been included as a liability in these financial statements.
37
Taxation 21.2 The income tax credit for the year can be reconciled to the accounting loss as per the statement of profit or loss and 21.1 Income tax recognised in profit or loss other comprehensive income as follows: 3/31/2016 3/31/2015 3/31/2016 3/31/2015 N'000 N'000 N'000 N'000 Current tax expense in respect of the current year based on minimum tax 7,330 20,549 (233,071) (215,430) Loss before tax NORTHERN NIGERIA FLOUR MILLS PLC Underprovision of company income tax liabilities in prior year
12 (69,921)7,330 2,872 10,214 6,383 16,156 1,339 (62,201)
tax (2% of assessable profit) TaxEducation at the statutory corporation tax rate of 30% Effect of minimum tax provisionstax liabilities in prior year Underprovision of education Education tax at 2% of assessable profit Effect of expenses that are not deductible in determining taxable profit Underprovision of deferred tax liabilities in prior year Effect of investment allowance Deferred tax credit recognised in the current year
Total income tax credit recognised in current year
1,442 (64,629) 20,549 21,991 1,442 4,448 26,011 (3,693) (63,874)
A(35,831)
Adjustments recognised in the current year in relation to the deferred tax of prior years Adjustments recognised in the current year in relation to the company income and education tax of prior year
Income tax (income)/expense
(15,872) 16,156
26,011
2,884
B
(35,831)
(15,872)
15%
Effective Tax rate
7%
The tax rate used for the 2016 and 2015 reconciliations above is based on the minimum tax rates applicable to corporate entities in Nigeria under Companies Income Tax Act, CAP C21 LFN 2004 as amended. No income tax was recognised directly in equity. No income tax was recognised in other comprehensive income.
21.3 Current tax liabilities
At 1 April Charge for the year Underprovision in prior year Payment during the year At 31 March
3/31/2016 N'000
3/31/2015 N'000
21,991 7,330 2,884 (24,875)
92,506 21,991 (92,506)
7,330
38
21,991
NOTES TO THE FINANCIAL STATEMENTS NOTES TOYEAR THE FINANCIAL FOR THE ENDED 31 MARCH 2016 STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 21.4 Deferred tax liabilities The following is the analysis of deferred tax assets presented in the statement of financial position.
3/31/2016 3/31/2015 N'000 N'000 Deferred tax liabilities Deferred tax assets
(42,124)
146,953 (189,077)
135,484 (140,809)
(5,325)
The following are the major deferred tax liabilities and assets recognised during the current and prior reporting period.
by the Company and movements thereon
3/31/2016 N'000
3/31/2015 N'000
At 1 April Credit to profit or loss Charge/(credit) to other comprehensive income (Note 22)
(5,325) (46,045) 9,246
42,400 (37,863) (9,862)
As 31 March
(42,124)
(5,325)
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
2016
Prior year adjustment Recognise d Opening recognised in profit or balance in current loss N'000 N'000 N'000
Recognised in other comprehensive Closing income balance N'000 N'000
Deferred tax assets/liabilities in relation to: Property, plant and equipment Provisions Exchange difference Losses and unutilised capital allowances
135,485 (116,117) (24,693) -
30,782 (14,626) -
(19,314) 32,774 (75,661)
9,246 -
(5,325)
16,156
(62,201)
9246 (42,124)
122,495 (82,578) 2,483
20,037 5,974 -
(7,047) (29,651) (27,176)
- 135,485 (9,862) (116,117) - (24,693)
42,400
26,011
(63,874)
(9,862)
146,953 (88,723) (24,693) (75,661)
2015 Deferred tax assets/liabilities in relation to: Property, plant and equipment Provisions Exchange difference
39
(5,325)
NORTHERN NIGERIA FLOUR MILLS PLC
22 Retirement benefit plans
The employees of the Company are members of a Government approved Pension scheme (Pension Reform Act, 2014) which is managed by several private sector service providers. The Company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Company with respect to the retirement benefit plan is to make the specified contributions and remit to the nominated Pension Fund Administrators. The total expense recognised in the Company's statement of profit or loss and other comprehensive income of N14.06 million (2015:N13.15 million) represents contributions payable to these plans by the Company at rates specified in the rules of the plans. As at 31 March 2016, contributions of N0.871 million (2015: N1.316 million) due in respect of the 2016 reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting period. The Company operates unfunded defined benefit plans for qualifying employees of the Company. Under the plans, the employees are entitled to retirement benefits varying between 1.25% and 2.5% of final salary on attainment of a retirement age of 60. No other post-retirement benefits are provided to these employees. The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2016 by HR Nigeria Limited a firm of Independent Actuarial Consultants. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using
At 1 April Additional provisions recognised Payment during the period Amount recognised in SOCI (Note 27) Transfer out Curtailment At 31 March
3/31/2016 N'000
3/31/2015 N'000
293,638 66,612 (214,700) 4,833 (120) (59,355)
262,589 45,236 (53,257) 39,070 -
90,908
293,638
The principal assumptions used for the purpose of the actuarial valuations were as follows; Financial assumptions
Discount rate Expected rate(s) of salary increases Average rate of inflation
2016
2015
% 13 12 9
% 15 12 9
Demographic assumptions
Mortalitiy in service The rates of mortality assumed for employees are the rates published in the A49/52 Ultimate Tables, published jointly by the Institute and Faculty of Actuaries in the UK. Sample of age Number of
the Projected Unit Credit Method. deaths in year out of 10,000 lives
25 30 35 40 45
40
7 7 9 14 26
NORTHERN NIGERIA FLOUR MILLS PLC 22 Retirement benefit plans (continued) Withdrawal from service Age Band Rate
less than or equal to 30 31-49 40-44
2.5% 1.5% 1%
45-50
0.0%
Amounts recognised in the statement of profit or loss and other comprehensive income in respect of these defined benefit schemes are as follows: 3/31/2016 N'000
Current service cost Interest on obligation Actuarial losses recognised in the year (Note 26)
3/31/2015 N'000
22,654 43,958 4,833
25,155 20,081 39,070
71,445
84,306
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is Accrued Liability N'000 90,908
Base + 1%
Discount rate
-1%
Salary increase
Mortality experience The amount included in the statement of financial position arising respect of its defined retirement benefit schemes is as follows:
83 541 99,245
+ 1%
94,218
-1%
87,904
+ 1 year -1 year
90,967 90,855
from the Company's obligations in 3/31/2016 N'000
Present value of defined benefit obligations
90,908
293,638
90,908
293,638 -
90,908
293,638
Past service cost not yet recognised in statement of financial position . Liability recognised in the statement of financial position.
3/31/2015 N'000
Movements in the present value of defined benefit obligations were as follows: At 1 April Service cost Interest cost Payment during the year Transfer out Curtailment Actuarial losses (Note 26) At 31 March
293,638 22,654 43,958 (214,700) (120) (59,355) 4,833 90,908
41
262,589 25,155 20,081 (53,257) 39,070 293,638
NORTHERN NIGERIA FLOUR MILLS PLC
42
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 23 Long service awards
The Company operates a long service award scheme where employees are rewarded after a specific number of years in service. Employees are entitled to the benefits after being in service for 10, 15, 20, 25, 30 and 35 years. The amounts and items given are based on the number of years in service. The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2016 by HR Nigeria Limited a firm of Independent Actuarial Consultants. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using 3/31/2016 3/31/2015 the Projected Unit Credit Method.
At 1 April Additional provisions recognised Payment during the year Actual gain recognised in SOCI (Note 26) At 31 March
N'000
N'000
50,270 10,997 (2,976) (35,653)
10,290 56,328 (10,151) (6,197)
22,638
50,270
Amounts recognised in the statement of profit or loss and other comprehensive income in respect of these defined benefit schemes are as follows:
Current service cost Interest on obligation Additional provision in respect of prior period Actuarial (gains)/losses recognised in the year (Note 26)
The amount included in the statement of financial position arising respect of its defined benefit schemes is as follows:
Present value of defined benefit obligations Past service cost not yet recognised in statement of financial position. Liability recognised in the statement of financial position.
3/31/2016 N'000
3/31/2015 N'000
3,780 7,217 (35,653)
4,416 7,420 44,492 (6,197)
(24,656)
50,131
from the Company's
obligations in
3/31/2016 N'000
3/31/2015 N'000
22,638
50,270
22,638 -
50,270 -
22,638
50,270
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Accrued Liability N'000 22,638
Base Discount rate Salary increase Inflation increase
Mortality experience
43
+ 1%
21,404
-1% + 1% -1% + 1% -1%
24,004 23,949 21,437 22,723 22,557
Age rated up by 1 year Age rated
22,550
down by 1 year
22,718
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS 24 Trade and other payables
3/31/2016 N'000
Trade payables Sundry creditors Accruals Advances from customers Value added tax payable Withholding taxes Amount due to related company (Note 32.4)
54,156 24,171 37,073 52,672 1,905 729 197,241
FOR THE YEAR ENDED 31 MARCH 2016
3/31/2015 N'00 0 61,924
33,279 51,703 200,202 21,881 161,634
The average credit period on purchases is 58 367,947 530,623 days. No interest is charged on trade payables. The Company have financial risk management policies in place to ensure that all payables are paid within a reasonable time of the credit time frame. 25 Provisions 3/31/2016
Restructuring cost
3/31/2015
Opening Additional balance provision N'000 N'000
-
47,126
Opening Additional balance provision N'000 N'000
Restructuring cost
Write back N'000
Provision utilised N'000
Closing balance N'000
(22,097)
(25,029)
-
Write back N'000
Provision utilised N'000
Closing balance N'000
47,126
47,126
47,126
47,126
In prior year, the Board approved a staff restructuring plan with the aim of reducing the employee headcount that is right for the current operations of the company. A provision of N47.1 million was made to take care of the severance payments to exiting staff out of which N25 million crystalised after the exercise. 26 Other comprehensive income (OCI) 3/31/2016 3/31/201 5 N'000
Actuarial loss on employee retirement benefit liability Actuarial gain on employee long service awards liability Deferred tax on actuarial gains and losses
4,833 (35,653) 9,246 (21,574) ___
N'000
39,070 (6,197) (9,862) 23,011
Deferred taxation on OCI items have been computed using the rate of 30% in accordance with the Companies Income Tax Act of Nigeria. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 3/31/2016 N'000
44
3/31/2015 N'000
NORTHERN NIGERIA FLOUR MILLS PLC 27 Earnings per share From continuing operations
Net loss attributable to equity holders of the company Adjustments to exclude loss for the period from discontinued operations Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations Effect of dilutive potential ordinary shares: Interest on convertible loan notes (net of tax) Earnings from continuing operations for the purpose of diluted earnings per share excluding discontinued operations
(197,240)
(199,558)
(197,240)
(199,558)
(197,240)
(199,558)
Based on 178,200,000 (2015:178,200,000) ordinary shares of 50k each: Basic (kobo) Diluted (kobo)
(111) (111)
(112) (112)
28 Capital risk management
The Company manages its capital to ensure that it is able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company's overall strategy remains unchanged from 2015. The capital structure of the Company consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in relevant notes in the financial statements. The Company is not subject to any externally imposed capital requirements. The management of the Company reviews the capital structure on a frequent basis to ensure that gearing is within acceptable limit. The gearing ratio at the end of the reporting period is calculated as follows:
45
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 Financial instruments 29 Categories of financial instruments 3/31/2016
Loans and Non-financial receivables assets
Total
N'000
N'000
396,133 616,533 42,124 1,054,790
388,519 296,451 396,133 616,533 42,124 1,739,760
Amortised Non-financial cost liabilities
Total
Assets
Cash and cash equivalents Trade and other receivables Inventories Intangible assets Property, plant and equipment Deferred tax
388,519 296,451 684,970
N'000
N'000
N'000
116,550 7,330 22,638 90,908 237,426
367,947 7,33 0 22,638 90,908 488,823
Loans and Non-financial advances assets
Total
N'000
N'000
427,714 1,289 728,107 5,325 1,162,435
942,153 319,123 427,714 1,28 9 728,107 5,32 5 2,423,711
Amortised Non-financial cost liabilities
Total
Liabilities
Trade and other payables Provisions Current tax liabilities Long service awards Retirement benefit obligation
251,397 251,397
3/31/2015 Assets
Cash and cash equivalents Trade and other receivables Inventories Intangible assets Property, plant and equipment Deferred tax
942,153 319,123 1,261,276
N'000
N'000
N'000
307,065 21,991 50,270 293,638 672,964
530,623 47,126 21,991 50,270 293,638 943,648
Liabilities
Trade and other payables Provisions Current tax liabilities Long service awards Retirement benefit obligation
223,558 47,126 270,684
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 30 Risk management
Risk management roles and responsibilities are assigned to stakeholders in the company at three levels: The board, executive and line managers. The Board oversight is performed by the Board of Directors through Board Risk and Ethics Committee.
46
NORTHERN NIGERIA FLOUR MILLS PLC The second level is performed by the Executive Management Committee (EXCOM). The third level is performed by all line managers under EXCOM and their direct reports. They are required to comply with all risk policies and procedures and to manage risk exposures that arise from daily operations. The Internal Audit Department provides an independent assurance of the risk frame work. They assess compliance with established controls and recommendations for improvement in processes are escalated to relevant management, Audit Committee and Board of Directors. The Company monitors and manages financial risks relating to its operations through internal risk report which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk ), credit risk and liquidity risk. 30.1
Market risk
The Company's activities expose it primarily to financial risks of changes in foreign currency exchange rates . Market risk exposures are measured using sensitivity analysis. There has been no change to the Company's exposure to market risks or the manner in which these risks are managed and measured. 30.1.1
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Company is mainly exposed to USD, EURO and GBP. The following table details the Company's sensitivity to a 3%, increase and decrease in Naira against USD, GBP and EUR currencies. Management believes that a 3% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analyses below include outstanding balances of USD, GBP and EUR denominated assets and liabilities. A positive number indicates an increase in profit where Naira strengthens by 3% against the USD, GBP and EURO. For a 3% weakening of Naira against the USD, GBP, and EUR, there would be an equal and opposite impact on profit, and the balances below 3/31/2016 N'000
3/31/2015 N'000
5
33 1
Naira strengthens by 3% against USD Naira strengthens by 3% against Euro Naira strengthens by 3% against GBP
-
Naira strengthens by 3% against USD Naira strengthens by 3% against Euro Naira strengthens by 3% against GBP
-
10 (5)
would be negative.
47
(33) (1) (10)
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 30.2 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Company uses other publicly available financial information and its own trading records to rate its major customers. The Company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the executive committee periodically. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. The carrying value of the Company's financial assets represents its maximum exposure to credit risk. The maximum exposure to credit risk at the reporting date was:
Trade receivables Other receivables Bank deposits
3/31/2016 N'000
3/31/2015 N'000
42,500 253,951 385,942
183,431 135,692 938,463
682,393
1,257,586
The maximum exposure to credit risk for trade receivables at the reporting date by type of receivable was: 3/31/2016 N'000
3/31/2015 N'000
42,500
183,431
Parastatals/Government Corporates SMEs
42,500 30.2.1
183,431
Collateral held as security and other credit enhancements
The company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets. 30.3
Liquidity risk management
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company's short-, mediumand long-term funding and liquidity management requirements. The Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
48
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 30.4
Maturity analysis of financial liabilities
The following tables details the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the balance sheet date. The contractual maturity is based on the earliest date on which the entities may be required to pay. 0-3 months
Total
3/31/2016
Trade payables
54,156
54,156
54,156
54,156
61,924
61,924
61,924
61,924
3/31/2015
Trade payables 31
Fair value of financial instruments
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values.
49
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016
The following transactions were carried out with related parties during the year: 32.1
N'000
N'000
283,067 18,519 26,442 30,272
6,872,498 619,032 4,415 6,502 157,613
358,300
7,660,060
288,602 14,506 75,858
2,500,778 71,724 10,461
Purchase of goods/services
Flour Mills of Nigeria Pic Golden Transport Company Limited Premier Feed Mills Golden Sugar Bagco (MORPACK) Northern Bag Manufacturing Company Limited Sale of goods
Flour Mills of Nigeria Plc Golden pasta Premier Feed Mills Eastern Premier Feed Mills Niger Biscuit
378,966
2,582,963
Amount due from related companies
Flour Mills of Nigeria Plc Nigeria Eagle Flour Mills Limited Premier Feed Co. Ltd Portharcourt Flour Mills Limited
183,635 34 13,428 9,562 206,659
20,801 1,947 9,561 32,309
Amount due to related companies
Flour Mills of Nigeria Plc Golden Transport Company Limited Apapa Bulk Terminal Limited Golden Shipping Company Limited Maiduguri Flour Mill Plc 32
153,499 5,913 23,761 14,043 25
97,385 4,154 23,762 14,043 22,290
197.24F
161,634'
3/31/2016
3/31/2015
Related party transactions
Flour Mills of Nigeria Plc: This is the ultimate parent company which owns 53% of NNFM Plc. The company entered into various transactions with the related party ranging from purchase of goods and services, to expenses incurred on behalf of each other.
Flour Mills Registrars Limited, Golden Transport Company Limited, Nigerian Eagle Flour Mills Limited, Golden Pasta Company Limited, Niger Mills Company Limited, Portharcourt Flour Mills Limited and Northern Bag Manufacturing Company Limited are sister companies in the Flour Mills of Nigeria Plc Group. The company entered into various transactions with the related parties ranging from purchases and sales of goods and services, to expenses incurred on behalf of each other. 32.2
32.3
50 32.4
The related party transactions were carried out on commercial terms and conditions.
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 32.5
Compensation of key management personnel
The remuneration of directors and other members of key management personnel during the year was as follows:
51
NORTHERN NIGERIA FLOUR MILLS PLC The remuneration of executive management team excluding directors during the year was as follows:
Short-term benefits The remuneration of directors during the year was as follows: Short-term benefits
Other information on directors emoluments: Fees: - Chairman - Other Directors
3/31/2016 N'000
3/31/2015 N'000
4,832
18,593
4,832
18,593
25,235
25,056
25,235
25,056
100 630
100 630
730
730
Salaries, allowances and expenses: - Executive Directors - Other Directors
9,149 16,086
5,400 54,370
Highest Paid Director
25,965 16,086
60,500 16,086
Number
Number
9 2
8 3
Number of Directors whose emoluments were within the following ranges: 1 - 5,000,000 5,000,001 - 20,000,000 20,000,000 and above
-
11
11
The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. 32.6
Employees renumeration at higher rates
The numbers of employees in receipt of emoluments (excluding allowances) within the following ranges were: N
1 - 1,000,000 1,000,001 - 2,000,000 2,000,001 3,000,001 32.7
N
3,000,000 Above
2015 Number
2014 Number
50 9 4 2
154 40 1 5
Staff
Average number of persons employed in the financial year and the related staff cost were as follows: Senior Management 2 6 Junior Management 7 12 Senior Staff 27 68 Junior Staff 29 114 65 200 Staff Cost relating to the above: Salaries,wages and allowances
52
N'000
N'000
165,752
375,652
NORTHERN NIGERIA FLOUR MILLS PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 33
Guarantees and other financial commitments (a)
Financial commitments
The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the company's state of affairs have been taken into consideration in the preparation of the Company's financial statements. (b)
Capital commitments
There were no capital commitments entered into by the Company as at 31 March 2016 (2015: Nil). 34
Major shareholders
According to the Register of Members, the following shareholders of the Company held more than 5% of the issued share capital of the Company. Number of shares 3/31/2016
53
3/31/2015
Percentage holding (%) 3/31/2016 3/31/2015
NORTHERN NIGERIA FLOUR MILLS PLC Shareholders
Flour Mills of Nigeria Pic 94,545, Segment assets and liabilities Northern Nigeria Investment Limited 12,955, Segment assets: Dantata Investment & Securities Limited 9,894, Wheat/maize products Other Golden Penny products
Segment liabilities:
Wheat/maize products Other Golden Penny products
Cost of sales Cost of Wheat/maize products
Raw materials Production expenses Repairs and maintenance Factory power Rent and rates Insurance Salaries and wages Pension Gratuity Depreciation Transportation of raw materials Laboratory expenses Medical Restructuring cost
Cost of Golden Penny products:
Golden penny flour confectionery Golden penny sugar Golden penny rice
Other operating income
Intragroup subsidy (Note 8.1) Sundry income Rental income Provision no longer required (Note 8.2) 94,545,,159 53.06 53.06 7.27 7.27 5.55 5.55 None of the directors has notified the company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20, LFN 2004 of any declarable interest in contracts in which the Company is involved at 31 March 2016. 6.2
35
Events after the reporting date
The Directors are of the opinion that there were no events after the reporting date which could have had a material effect on the financial statements of the Company that had not been adequately provided for or disclosed in the Company's financial statements. 36
Contigent liabilities
The Company has no contingent liability arising from pending or ongoing litigation at the year end.
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NORTHERN NIGERIA FLOUR MILLS PLC
OTHER NATIONAL DISCLOSURES
55
NORTHERN NIGERIA FLOUR MILLS PLC STATEMENT OF VALUE ADDED 3/31/2016 N'000
Revenue Investment income Other operating income
Cost of materials and services employed to generate these earnings: - Local - Imported VALUE ADDED
%
3/31/2015 N'000
979,038 47,409 246,552 1,272,999
10,529,075 64,436 17,039 10,610,550
(1,259,712)
(7,541,937) (2,812,882)
%
100
255,731
100
165,752
1,247
375,652
147
10,214
77
21,991
9
607 (347) (1,484)
95,509 (37,863) (199,558)
37 (15) (78)
100
255,731
100
13,287
Which was applied as follows: To pay employees
Wages, salaries and other benefits To pay providers of capital
Finance cost To pay Government
Income tax To provide for the maintenance of assets
Depreciation and amortization Deferred taxation Profit or loss account
80,606 (46,045) (197,240) 13,287
"Value added" represents the additional wealth which the company has been able to create by its own and its employee's efforts. The statement shows allocation of that wealth to employees,government, provider of finance and shareholders and the retained for future creation of wealth.
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NORTHERN NIGERIA FLOUR MILLS PLC FINANCIAL SUMMARY Non IFRS statement 3/31/2016 3/31/2015 3/31/2014 N'000 N'000 N'000
3/31/2013 N'000
3/31/2012 N'000
678,886 10,803 1,399,502
837,389 20,317 1,146,228
730,774 27,583 11,084 955,139
1,364,483 1,823,971 (90,908) (293,638) (22,638) (50,270) -
2,089,191 (262,589) (10,290) (42,400)
2,003,934 (356,946) (14,620) (26,651)
1,724,580 (365,956) (5,479) -
1,250,937
1,480,063
1,773,912
1,605,717
1,353,145
89,100 89,521 1,072,316
89,100 89,521 1,301,442
89,100 89,521 1,595,291
89,100 89,521 1,427,096
89,100 89,521 1,174,524
1,250,937
1,480,063
1,773,912
1,605,717
1,353,145
13,509,406 341,800 233,545
11,701,741 330,377 225,145
12,674,555 30,824 (21,776)
(23,011)
5,930
27,427
(113,940)
(112) (112)
131 131
126 126
(12) (12)
611 611 50
785 785 40
643 643 85
536 536 -
Assets/Liabilities
Property,plant and equipment Intangible assets Deferred tax assets Net current assets Retirement benefit obligation Long service awards Deferred tax liabilities
616,533 42,124 705,826
728,107 1,289 5,325 1,089,250
Capital and reserves
Share capital Share premium Retained earnings
Revenue and profit
Revenue (Loss)/profit before taxation (Loss)/profit after taxation Other comprehensive income/(loss) net of taxes
979,038 10,529,075 (233,071) (215,430) (197,240) (199,558) 21,574
Per share data: (kobo)
(Loss)/earnings per share (kobo) Basic -Diluted Net asset per share (kobo) -Basic -Diluted Dividend per share (kobo)
(111) (111) 702 702 -
Loss per share are based on loss after taxation and the weighted average number of fully paid ordinary shares at the end of each financial year
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NORTHERN NIGERIA FLOUR MILLS PLC end of each financial year Net asset per share are based on net assets and the number of issued and fully paid ordinary shares at the
58