ANNUAL REPORT 2016 “Transitioning in these times”€¦ · CWG-PL 2016 CCOUNTS NOTICE OF 12TH ANNUAL GENERAL MEETING (Pursuant to section 213) NOTICE IS HEREBY GIVEN THAT the 12th

“...Transitioning in these times...”ANNUAL REPORT 2016

2“...Transitioning in these times...”

CWG-PLC 2016 ANNUAL REPORT AND ACCOUNTS

CORPORATE INFORMATION

NOTICE OF ANNUAL AGM

CORPORATE PROFILE

FOOTPRINTS

SOME OF OUR SERVICES 1

STRATEGIC PARTNERSHIP

CORPORATE GOVERNANCE

BOARD OF DIRECTORS

CWG AWARDS

CHAIRMAN’S STATEMENT

CEO’S REVIEW

REPORT OF THE DIRECTORS

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

REPORT OF THE AUDIT COMMITTEE

INDEPENDENT AUDITORS’ REPORT

BOARD EVALUATION SUMMARY

CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHERS COMPREHENSIVE INCOME

CONSOLIDATED AND SEPARATE OF FINANCIAL POSITION

CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

VALUE ADDED STATEMENT

FIVE YEAR FINANCIAL STATEMENT - GROUP

FOUR YEAR FINANCIAL SUMMARY- COMPANY

FINANCIAL SUMMARY

PROXY FORM

E MANDATE FORM

TABLE OF CONTENTS

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“...Transitioning in these times...”

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DIRECTORS Mr. Abiodun Fawunmi Chairman Mr. Austin Okere Vice Chairman Mr.JamesAgada ManagingDirector/ChiefExecutiveOfficer Mr.KunleAyodeji ChiefOperatingOfficer Mr. Philip Obioha Non-Executive Mrs. Adedoyin Odunfa Non–Executive - Appointed 20 June 2016 Dr. Olusegun Oso Non-Executive - Appointed 14 October 2016 Mr. Emmanuel Ijewere Non-Executive - Retired 14 October 2016 Mr. Ravi Sharma Non-Executive (British) -Resigned 14 October 2016 REGISTERED OFFICE Block 54A, Plot 10, Adebayo Doherty Road, Off Admiralty Way Lekki Phase 1. Lagos.Tel: 01-7406817, 01-8936502 | www.cwg-plc.com

EXTERNAL AUDITORS Ernst & Young (Chartered Accountants)10th & 13th Floors, UBA House 57, Marina, Lagos Nigeria | E-mail: [email protected]

SOLICITORS Ikeyi Arifayan1st Floor, 21, Boyle Street Onikan, Lagos INTERNAL AUDITORS PwCLandmark Towers 5B, Water Corporation Road Victoria Island Lagos NigeriaE-mail: [email protected] BANKERSAccess Bank Plc Stanbic IBTC Bank Plc

Diamond Bank Plc Standard Chartered Bank Plc

First Bank of Nigeria Limited United Bank for Africa Plc

First City Monument Bank Plc Zenith Bank PlcGuaranty Trust Bank Plc

REGISTRAR Africa Prudential Registrars Plc220, Ikorodu Road Somolu Palmgroove Bust Stop Lagos Nigeria

CORPORATE INFORMATION


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NOTICE OF 12TH ANNUAL GENERAL MEETING (Pursuant to section 213)

NOTICE IS HEREBY GIVEN THAT the 12th Annual General Meeting of CWG PLC will hold at VCP Hotel, 292B, Ajose Adeogun Street, Victoria Island, Lagos on Thursday the 22nd day of June 2017 at 10.00 a.m. prompt to transact the following business:

Ordinary Business

1. To lay before the Members, the Report of the Directors’, the audited Statements of Financial Position of the Company, together with the Statement of Comprehensive Income for the year ended 31st December 2016 and the Reports of the Auditors and the Audit Committee thereon.

2. To elect Directors (Mrs. Adedoyin Odunfa and Dr. Olusegun Oso)

3. Toappoint/re-appointtheCompany’sAuditorsandtoauthorizetheDirectorstofixtheirremuneration

4. To elect members of the Audit Committee

Special Business

5.Toconsiderandifthoughtfit,passthefollowingasaSpecialResolution:

“That the objects of the Company as provided by the Memorandum of Association be and are hereby amended to include Clause (“hh”) which states as follows - To Provide Telecommunication Services”.

Notes:

Proxy: A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a member of the Company. A Proxy form must be completedanddepositedattheofficeoftheCompany’sRegistrars,AfricaPrudentialRegistrarsPlcof220B,IkoroduRoad,Palmgrove,Lagosnotlaterthan48hoursbeforethetimefixedforthemeeting.Pleasenotethatthelodgingofaproxy form does not prevent you from attending the meeting and voting in person should you so wish. However, if you attend the meeting in person, your proxy will not be permitted to attend or vote.

Closure of Register: The Register of Members shall be closed from 30th May 2016 to 2nd June 2017, (both days inclusive) for the purpose of updating the Register of Members.

Nomination of Audit Committee Members: In accordance with Section 359(5) of the Companies and Allied Matters Act Cap C20, Laws of the Federal Republic of Nigeria, 2004, any member may nominate a shareholder as a member of the Audit Committee by giving notice in writing of such nomination to the Company Secretary at least twenty-one (21) days before the Annual General Meeting.

Rights of Security Holders to Ask Questions: In compliance with Rule 19.12(c) of the Nigeria Stock Exchange’s Rulebook, a member and other Securities’ Holders of the Company have a right to ask questions not only at the Annual General Meeting, but also in writing prior to the Meeting, and such questions must be submitted at least one week before the meeting.

DATED 31ST MAY 2017BY ORDER OF THE BOARD

FOLASADE AFOLABI-MODEBELUCOMPANY SECRETARY

FRC/2016/NBA/00000015716



CORPORATE PROFILE

WHO WE ARE

WHAT WE DO


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FOOTPRINTS


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SOME OF OUR SERVICES

CUSTOMER EXPERIENCE CENTER INTERNET MICROWAVE FIBRE V-SAT

GRADUATES OF THE WORLD CLASS CWG-PLC ACADEMY

MULTI-SKILLED FIELD SERVICE ENGINEERSATM SERVICES

TIER III DESIGNED DATA CENTRE


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STRATEGIC PARTNERSHIP



CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 31 DECEMBER 2016

In our pursuit to deliver greater shareholder value, CWG Plc. continues to subject its operations to the highest standards of Corporate Governance, which is an essential foundation for sustainable corporate success. We believe good CorporateGovernancepracticesenhancetheconfidenceplacedintheCompanybyourShareholders,BusinessPartners, Employees, and Customers.

We are committed to conducting business in line with best practice, in accordance with applicable laws and regulations in Nigeria and the requirements of the Nigerian Stock Exchange as well as in compliance with the Securities and Exchange Commission’s Code of Corporate Governance. The Company complied with Corporate Governance requirements during the year under review as set out below:

GOVERNANCE STRUCTURE

THE BOARD

The Board is responsible for the oversight of the business, long-term strategy and objectives, and the oversight of the Company’s operations while evaluating and directing implementation of controls and procedures including, in particular, maintaining a sound system of internal controls to safeguard Shareholders’ investments and the Company’s assets.

The Board carries out its responsibility through its Committees and Ad-hoc Committees which also report and make recommendations to the Board on issues within their respective Terms of Reference. Through these Committees, interactive dialogue is employed on a regular basis to set broad Policy Guidelines, and to ensure proper management and direction of the Company.

L-R standing: Dr Olusegun Oso (Director), Folashade Afolabi-Modebelu (Company Secretary), James Agada (Group CEO), Austin Okere (Vice-Chairman), Kunle Ayodeji (Group COO), Phillip Obioha (Director). L-R sitting Abiodun Fawunmi (Chairman), Adedoyin Odunfa (Director).


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COMPOSITION OF THE BOARD

Currently, the Board is composed of (7) Directors, two (2) of whom are Executive Directors, while the other five (5) are Non-Executive Directors. One of the Non-Executive Directors is an Independent Director. The Board is made up of seasoned professionals who have excelled in their various fields of endeavor, including Computer Science, Engineering, Economics as well as Accounting, and possess the requisite integrity, skills, and experience to bring independent judgement to bear on the deliberations of the Board and ensures its effectiveness.

Inadditiontohavingoneormoreofthesecorecompetencies,candidatesforappointmentasDirectorsareidentifiedandconsidered on the basis of knowledge, experience, integrity, diversity, leadership, reputation, and ability to understand theCompany’sbusiness.TheBoardandtheBoardCommitteesrespectivelymeetquarterlyineachfinancialyear,although additional meetings may be convened when the need arises. Decisions are taken at the Board meetings by way of resolutions, as provided for in the Companies and Allied Matters Act,2004. The Board met four (4) times during the year ended 31st December,2016.

RESPONSIBILITES OF THE BOARD

The Board has ultimate responsibility for determining the strategic objectives and policies of the Company to deliver long-term value by providing overall strategic direction within a framework of rewards, incentives and controls.

The Board has delegated the responsibility for the day to day operations of the Company to Management and ensures that Management strikes an appropriate balance between promoting long-term growth and delivering short-term objectives.Infulfillingitsprimaryresponsibility,theBoardisawareoftheimportanceofachievingabalancebetweenconformance to governance principles and economic performance.

Notwithstanding the delegation of the operations of the Company to Management, the Board reserved certain powers whichincludeamongothers,approvalmonitoringandimplementationoftheCompany’sStrategyandfinancialobjectives, approval of the Company’s investment policies and framework, strategic commitments that may have materialeffectsontheassets,profitsoroperationoftheCompanyandanymaterialchangesinthenatureofthebusiness of the Company.

CHANGES ON THE BOARD

The Board appointed Mrs. Adedoyin Odunfa as an Independent Non-Executive Director on the 20th of June 2016. Mr. Emmanuel Ijewere retired from the Board having reached the statutory requirement age on the 14th of October 2016. The Board also appointed Dr. Olusegun Oso as a Non-Executive Director on the 14th of October 2016 following the resignation of Mr. Ravi Sharma on the same date.

ROLES OF CHAIRMAN AND MANAGING DIRECTOR

The Chairman and Managing Director have separate roles on the Board and no one individual combines the two positions. The Chairman’s main responsibility is to lead and manage the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information to enable the Board take informed decisions and provide advice to promote the success of the Company. The Chairman also facilitates the contributions of Directors and promotes effective relationships and open communications between Executive and Non- Executive Directors, both inside and outside the Boardroom.

The responsibility for the day-to-day management of the Company has been delegated by the Board to the Managing DirectorwhoissupportedbytheChiefOperatingOfficer.TheManagingDirectorexecutesthepowersdelegatedtohim in accordance with guidelines approved by the Board of Directors.

BOARD COMMITTEES

TheeffectivenessoftheBoardoftheCompanyisfortifiedandstrengthenedbyitstwo(2)Committees–Finance,

“ The Board has ultimate responsibility for determining the strategic objectives and policies of the Company to deliver long-term value by providing overall strategic

direction within a framework of rewards, incentives and

controls.



Audit and Risk Committee (FARCOM) and General Purpose Committee (GENCOM), each chaired by a Non-Executive Director. The Board carries out its responsibilities through its Committee and ad-hoc sub-committees set up from time totime,whichhaveclearlydefinedtermsofreference,settingouttheirroles,responsibilities,functionsandscopeofauthority.TheCommitteemakerecommendationstotheBoard,whichretainsresponsibilityforfinaldecisionmaking.

FINANCE AUDIT & RISK COMMITTEE (FARCOM)

The Committee, among other functions, oversees the design and implementation of the Company’s internal control and risk management systems, and periodically review and assesses the adequacy of the Company’s internal control systemsbothfinancialandnon-financial.

Also, the Committee reviews and advises the Board on accounting policies to be used in the preparation of the Company’sauditedfinancialstatements.

TheCommitteeiscurrentlycomposedoffive(5)members:two(2)ExecutiveDirectorsand3Non-ExecutiveDirectors;andtheCommitteemet5timesduringthefinancialyearandwasatlibertytoconveneadditionalmeetinghadtheneedarisen. During the period under review, the members of FARCOM were:

S/N NAME STATUS DESIGNATION

1 Mr. Philip Obioha Non-Executive Chairman

2 Mr. Austin Okere Non-Executive Member

3 Dr. Olusegun Oso Non-Executive Member

4 Mr. James Agada Executive Member

5 Mr. Kunle Ayodeji Executive Member

Mr. Emmanuel Ijewere served as Chairman of the Committee until his retirement from the Board on the 14th of October 2016 following the Board appointed Mr. Philip Obioha as Chairman in his place. Dr. Olusegun Oso was also appointed a member of the Committee by the Board following the resignation of Mr Ravi Sharma on the 14th of October 2016.

GENERAL PURPOSE COMMITTEE (GENCOM)

The General Purpose Committee among other functions, oversees and makes recommendations to the Board with respect to the implementation of the Company’s business strategies, capital expenditure and regulatory compliance. Director’s annual performance target and compensation, as well as other Human Resource matters. The Committee also ensures that the Company’s Ethics and Conduct Policy, as well as other policies are complied with.

TheCommitteeiscurrentlycomposedoffive(5)members:2ExecutiveDirectorsand3Non-ExecutiveDirectors.TheCommitteemet4timesduringthefinancialyearandwasatlibertytoconveneadditionalmeetingshadtheneedarisen.

During the period under review, the members of GENCOM were:


1 Dr. Olusegun Oso Non-Executive Chairman

2 Mr. Austin Okere Non-Executive Member

3 Mr. Philip Obioha Non-Executive Member

4 Mr. James Agada Executive Member

5 Mr. Kunle Ayodeji Executive Member

Mr. Ravi Sharma served as Chairman of the Committee until his resignation from the Board on the 14th of October 2016


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following which the Board appointed Dr. Olusegun Oso as a Director and the Chairman of the Committee.

STATUTORY AUDIT COMMITTEE

The Statutory Audit Committee, established in compliance with the requirements of the Companies and Allied Matters Act, Cap C20, LFN, 2004 is composed of 3 representatives of the Shareholders and 2 Non-Executive Directors and 1 Executive Director.

The Committee is responsible for ensuring that the Company complies with all relevant regulatory policies and procedures. The Committee, amongst other functions keeps the effectiveness of the Company’s system of accounting, reportingandinternalcontrolunderreview,ensurescompliancewithLegalandagreedEthicalrequirements;reviewstheactivities,findings,conclusionsandrecommendationsoftheexternalauditorsrelatingtotheCompany’sannualauditedfinancialstatements;reviewthemanagementletteroftheexternalauditorsandManagement’sresponsethereto;reviewstheappropriatenessandcompletenessoftheCompany’sstatutoryaccountsanditsotherpublishedfinancialstatements;andoverseestheindependenceandobjectivityoftheexternalauditors.

The Committee has access to the external auditors to seek explanations and additional information, while the internal and external auditors have unrestricted access to the Committee which ensures their independence is not impaired. Thefollowingmembersservedonthecommitteeduringthe2016financialyear:


1 Mr. Amaechi Patrick Onyema Shareholders’ Representative Chairman

2 Mr. Ibekwe Robert Shareholders’ Representative Member

3 Alhaji Wahab Ajani Shareholders’ Representative Member

4 Mr. Philip Obioha Non-Executive Director Member

5 Dr. Olusegon Oso Non-Executive Director Member

6 Mr. Kunle Ayodeji Executive Director Member

Dr. Olusegun Oso was appointed on the 14th of October 2016 by the Board as a member of the Committee following the retirement of Mr. Emmanuel Ijewere .

ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS

The table shows the frequency of meetings of the Board of Directors and Board Committees, as well as attendance of theirrespectivemembers,forthefinancialyearendedDecember31,2016.



S/N BOARD GENCOM FARCOM COMMENT

Date of meetings

15/04/1620/06/1614/10/1616/12/16

14/04/1616/06/1613/10/1615/12/16

14/04/1616/06/1613/10/1629/11/1615/12/16

Number of meetings 4 4 5

1 Mr. Abiodun Fawunmi 3 N/A N/A

2 Mr. Austin Okere 3 4 4

3 Mr. Philip Obioha 4 4 5

4 Mr. James Agada 4 4 4

5 Mr. Kunle Ayodeji 4 4 4

6 Mr Ravi Sharma 1 2 2 Resigned w.e.f 14/10/2016

7 Mr. Emmanuel Ijewere 3 N/A 2 Retired w.e.f. 14/10/2016

8 Mrs. Adedoyin Odunfa 1 N/A N/A Appointed w.e.f 20/06/2016

9 Dr. Olusegun Oso 2 2 3Appointed as Director w.e.f 14/10/2016

BOARD APPRAISAL

In the Company’s customary manner of imbibing the best Corporate Governance practices, the Board engaged an independent consultant, DCSL Corporate Services Limited, to carry out the Annual Board and Directors Appraisal for the2016financialyear.TheannualappraisalcoveredallaspectsoftheBoard’sstructure,composition,responsibilities,processes, relationships, individual members’ competencies, and respective roles in the Board performance, as well as the Company’s compliance status with the provisions of the SEC Code and other relevant regulatory laws.

DIRECTOR NOMINATION PROCESS

The GENCOM is charged with the responsibility of leading the process for Board appointments and for identifying and nominating suitable candidates for the approval of the Board. When considering an appointment, the Board seeks to achieve a balance and mix of appropriate skills and experiences, with due consideration for integrity, professionalism, career success and ability to add value to the Company. The appointment of Directors is subject to the approval of the Shareholders.

INDUCTION AND CONTINOUS TRAINING

On appointment to the Board and the Board Committees, Directors receive an induction tailored to meet their individual requirement. The induction which is arranged by the Company Secretary may include meeting with senior management staff and key external advisors, to assist Directors in building a detailed understanding of the Company’s operations, strategicplans,businessenvironment,thekeyissuesthecompanyfaces,andtointroduceDirectorstotheirfiduciaryduties and responsibilities. Training and education of Directors on issues pertaining to their oversight functions is a continuous process, in order to update their knowledge and skills and keep them informed of new developments in the


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Company’s business and operating environment.

SHAREHOLDERS

The Company is conscious of and promotes the statutory and general Shareholders’ rights, particularly their right to vote at general meetings. The Board ensures that all Shareholders are treated equally and continues to take necessary steps in ensuring that Shareholders participate actively in matters affecting the growth and development of the Company. The General Meeting of the Company is the highest decision making body of the Company and is conducted in a transparentandfairmanner.ShareholdershavetheopportunitytoexpresstheiropinionontheCompany’sfinancialresultsandotherissuesaffectingtheCompany.TheBoardandtheManagementhavesignificantlybenefitedfromthe shareholder-members of the Audit Committee as well as the contributions of Shareholders at the Annual General Meetings.

The Board and Management of the Company ensure that communication and dissemination of information regarding the operations and management of the Company to Shareholders via NSE and other media is timely, accurate and continuous.

THE COMPANY SECRETARY

The Company Secretary provides a point of reference and support for all Directors. The Company Secretary consults regularly with Directors to ensure they receive required information promptly.

The Company Secretary is also responsible for assisting the Board and Management in the implementation of the Company’sCorporateGovernancePrinciples;assistingtheChairmanandManagingDirectortoformulateanannualBoardplanandwiththeadministrationofotherstrategiesissuesattheBoardlevel;organizingBoardMeetingsandensuring that the minutes of the Board meetings clearly and properly capture Board discussions and decisions.

When the need arises for external expertise, the Board obtains information from external sources, such as consultants and other advisers, via the Company Secretary or directly.

INDEPENDENT ADVICE

Independent professional advice is available, on request, to all Directors at the Company’s expense when such advice is required to enable a Member or Committee of the Board effectively perform certain responsibilities. The Company bears the cost of Independent Professional advice obtained jointly or severally by a Director or Directors, where such adviceisnecessarytoenablethemtofulfiltheobligationimposedonthembyvirtueoftheirBoardmembership.

EXECUTIVE MANAGEMENT COMMITTEE

The Executive Management Committee comprises Senior Management Staff of the Company. The Committee analyzes and makes recommendations on Business Prospects as well as risks arising from day to day activities of the Company. The Committee provides inputs for the Board Committee and also ensures that recommendations of the Board and BoardCommitteeareeffectivelyandefficientlyimplemented.TheCommitteemeetsasfrequentlyasnecessarytoimmediatelytakeactionanddecisionswithintheconfinesofitspower.

CODE OF PROFESSIONAL CONDUCT

The Company has an Ethics and Conduct Policy which all Directors and Members of Staff are expected to abide by. Directors and all Members of Staff are expected to strive to maintain the highest standards of ethical conduct and integrity in all aspects of their professional life as contained in the Ethics and Conduct Policy which prescribes the common Ethical Standard, Policies and Procedures of the Company.

INTERNAL MANAGEMENT STRUCTURE

The Company operates an Internal Management structure where all Officers are accountable for duties and responsibilitiesattachedtotheirrespectiveofficesandthereareclearlydefinedandacceptablelinesofauthorityandresponsibility.



CONFLICT OF INTEREST

TheDirectorsoftheCompanyareexpectedtoavoidanyaction,positionorinterestthatconflictsorwilllikelyconflictwith the interest of the Company. Every Director is expected to declare annually his/her economic interest in any contractorarrangementbetweenCWGandanyothercompanyinwhichhe/sheisalsoaDirector,Officer,Servant,Creditor, or a Holder of substantial shares or other Securities.

Every Director who has any material or personal interest in any matter that relates to the affairs of CWG, is required to give the other Directors notice of such interest during any meeting in which the matter is to be discussed. The Company Secretaryismandatedtonotesuchinterestintheminutesofthatmeeting.TheDirectorwhohasaconflictofinterestisexcludedfromtakingpartindiscussionsanddecisionsrelatingtotheconflictedmatter.

WHISTLE BLOWING

In line with the Company’s commitment to instill the best Corporate Governance Practices, the Company has established a whistle blowing procedure. The policy is designed to encourage the Company’s employees to raise concerns about malpractice, danger and wrongdoing internally without fear of any negative repercussion.

ThepolicyalsoseekstoprovideavenuesforEmployeesandStakeholderstoraiseconcernsanddefineawaytohandletheseconcerns;enableManagementtobeinformedatanearlystageaboutanyactoffraudormisconduct;reassureEmployeesoftheirprotectionfrompunishmentorunfairtreatmentfordisclosingconcernsingoodfaith;developacultureofopenness,accountabilityandintegrity;fostergoodrelations,avoidcrisismanagementandminimizedamaging incidents and unpleasant publicity about the Company.

The Policy demonstrates the Company’s commitment to ensuring that its affairs are conducted ethically, honestly and tohighstandards,andconfirmstheCompany’scommitmenttoacultureofopenness,accountabilityandintegrityinline with its core values.

SECURITIES TRADING

CWG’s Securities Trading Policy aims at protecting the interest of Investors in general, by regulating the trading of the Company’s Securities by its Directors and Employees, as well as those who are closely connected to them (“Insiders”), who may have access to or be in possession of unpublished price sensitive information regarding the state of affairs of the Company and/or its Securities. Aside from the need to comply with mandatory requirement of the Rulebook of theNSE,CWG’ssteptoputinplaceitsSecuritiesTradingPolicyisborneoutofthefactthatInsidersoweafiduciaryduty to, among others, the Shareholders of the Company, to place the interest of the Shareholders above their own and conducttheirpersonaltransactionsinamannerthatdoesnotcreateanyconflictofinterestsituationorjeopardizetheinterest of the Shareholders.

COMPLAINTS MANAGEMENT

TheCompanyhasaComplaintsManagementPolicywhichappliestoallEmployees,Officers,Directors,Representativesand Advisors of CWG ,and which is in compliance with the Complaints Management Framework of the Nigerian Capital Market (“the framework”).This policy helps the Company to handle and resolve complaints arising from issues covered under the Investment and Securities Act 2007,from Clients, Shareholders, other Public Companies, Investors and other relevant Stakeholders in a timely, effective, fair and consistent manner.


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BOARD OF DIRECTORS

• Chairman Board of Directors, CWG Plc.

• Leader, Mentor, Board Member and Executive Partner in Financial and Manufacturing Services Industries.

• Co-Founder, NEOPANORA, an International Network of Scientists and Engineers supporting renewable energies and nuclear applications strategy for many countries.

• Retired from the United Nations Service.

• Vice-Chairman, CWG Plc.• Entrepreneur in

Residence at the Columbia Business School.

• He is a member of the World Economic Forum’s Global Agenda Council on Innovation and Intrapreneurship.

• He also serves on the Board of National Competitiveness Council of Nigeria and initiative for Global Development and on the Advisory Board of the Global Business School Network.

• He is also a Fellow of the Institute of Directors of Nigeria.

• He was named ICT personality of the Year 2014 by the Nigerian Computer Society and ICT man of the decade by ICT Watch Africa Digital Network in 2012

• Received the Lifetime Entrepreneurship Achievement Award by the American University of Nigeria in 2017.

• B.Sc Computer Science, University of Lagos, MBA, NESE, Navarra Spain.

• Group CEO, CWG Plc.• A highly innovative and

versatile Technology Expert.

• Holds both a Frist Class Degree and Master’s Degree in Electronic Engineering with specialization in Digital Systems from UNN, Nsukka.

• He has a vast experience in consulting, software development, implementation and support.

• He was the Chief TechnologyOfficerand also the Executive Director overseeing the Company’s former Software Division, ExpertEdge.

• He is a Fellow of the Institute of Directors

• MBA from the International Graduate School of Management (IESE).

• Group COO, CWG Plc. • A seasoned Professional

with enormous experienceinthefieldsof Banking, Financial Consulting and Private Equity.

• He was an Investment Principal with Aureos Capital (now The Abraaj Group).

• He has also worked as a Senior Consultant with KPMG Nigeria where he was involved with the valuation, due diligence and feasibility studies for several Corporations.

• He was instrumental in the investment of over US$45 Million of Abraaj funds as Associate Director.

• BSc.in Economics from Obafemi Awolowo University, Ile Ife, Nigeria and an MBA from the University of Birmingham, United Kingdom.

ABIODUN FAWUNMI AUSTIN OKERE JAMES AGADA KUNLE AYODEJI


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• He has more than 20 years of cognitive experience in the Information Technology Industry.

• Trained as an Electrical Engineer with specialization in digital electronics at West Virginia University, Morgantown, West Virginia in USA.

• MBA from the International Graduate School of Management (IESE), NAVARA, SPAIN.

• Member of the institute of Electrical and Electronics Engineers (IEEE, USA). Nigerian Economic Summit Group (NESG, Corporate) and Nigerian Computer Society (NCS).

• Served for several years as the Chief Operating OfficeroftheCompany(CWG).

• She is the MD/CEO of Digital Jewels Limited, an Information Value Chain Consulting and Capacity Building Firm which specializes in IT.

• She worked at Philips Consulting as an Executive Director InformationSystems&e‐Business and Associate partner, DSL and Lagos Business School.

• B.Sc (Combined Honors) in Computer Science and Economics from the Obafemi Awolowo University, Ile Ife and MBA (Information technology and Management) from the City University Business School (now Cass business School), UK.

• SheisaCertifiedInformation System Auditor(CISA),CertifiedInformation System Security Professional (CISSP),certifiedinthe Governance of Enterprise IT (CGEIT), Project management Professional (PMP), as wellasaCertifiedCobit5 Implementer and Assessor.

• He is a Director at Abraaj Group and a Lead Health Specialist focused on improving access to quality healthcare for low-income populations in Africa.

• He has over 18 years’ experience invariousfieldsincluding Healthcare, Investment Banking, Private Equity, Mergers and Acquisitions, Telecommunications and Fast-Moving Consumer Goods.

• MBA from the Sloan School of Management at MIT, a Bachelor’s degree in Medicine and Surgery (MBBS).

• Prior to joining Abraaj Group, he was Assistant Vice President and Co-head of Investment Banking at Afrinvest West Africa a leading Nigerian boutique Investment Bank.

PHILLIP OBIOHA ADEDOYIN ODUNFA DR. OLUSEGUN OSO

The Board is responsible for the

oversight of the business, long-

term strategy and objectives, and the oversight of the Company’s

operations while evaluating

and directing implementation of controls and

procedures including, in particular,

maintaining a sound system of internal

controls to safeguard Shareholders’

investments and the Company’s assets.

“



CWG AWARDS

CWG-PLC

CSR NIGERIA AWARD

BEST ICT COMPANY IN CSR, 2015

CWG-PLC

SPREAD THE RED

ORACLE PARTNER OF THE YEAR, FY 15

CWG-PLC

BEACON OF INFORMATION & COMMUNICATION TECHNOLOGY

BANKING APPLICATION OF THE YEAR (FINACLE) 2016

CWG-PLC

TITANS OF TECH AWARDS

MOST VALUABLE ICT BRAND OF THE YEAR 2016

CWG-PLC

NIGERIA COMPUTER SOCIETY

PRESIDENTS SPECIAL RECOGNITION AWARD 2016

AUSTIN OKERE

NIGERIA COMPUTER SOCIETY

NCS PRESIDENTIAL AWARD FOR PROMOTION OF ICT IN NIGERIA 2016

JAMES AGADA

AFRICAN PRIZE FOR LEADERSHIP EXCELLENCE

ICT PERSONALITY LEADERSHIP PRIZE WINNER 2016

OPENSHOPEN OF CWG PLC

BEACON OF INFORMATION & COMMUNICATION TECHNOLOGY

E-COMMERCE PLATFORM OF THE YEAR 2015

JAMES AGADA


NIGERIA’S TOP 50 TECH TITANS 2016

CWG PLC

HUAWEI

COLLABORATION & DEVELOPMENT PRIZE 2016

CWG PLC

AFRICA DIGITAL AWARDS

ICT CONGLOMERATE OF THE YEAR 2016

JAMES AGADA

SUCCESS CIRCLE AFRICA

COMMITMENT TO ENTREPRENEURIAL EXCELLENCE 2016

CWG PLC

TD Triple A

PARTNER OF THE YEAR 2016

AUSTIN OKERE


NIGERIA’S TOP 50 TECH TITANS 2016

FINACLE

BEACON OF ICT

BANKING APPLICATION OF THE YEAR (FINACLE) 2016

AUSTIN OKERE

ICT SUCCESS SUMMIT

2016 EXCELLENCE AWARD

2016 AWARDS


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Distinguished Fellow Shareholders, It is a pleasure to welcome you to the 12th Annual General Meeting of CWG Plc. It still is a privilege serving as your Chairman for the 2nd year running and I use this opportunity to say Happy 25th year Anniversary to ‘us’, CWG. It is time once again to present to you, our Annual Reports and Financial Statementsforthefinancialyearended31stofDecember,2016andtheoutlookforthenextfinancialyear.

THE OPERATING ENVIRONMENT

Thefinancialyearhasbeenoneofthemosteventfulforour company and industry in the face of several economic uncertainties. The business environment seemed very dire and the Nigerian economy was under a lot of strain and remained challenging all through. It was indeed a cause of great concern to us and every Nigerian business operating under the harsh economic conditions. Many organizations were forced to fold up and only the truly resilient pulled through.

We are still recovering from the negative impact of the drop in global prices of crude oil which came about quite suddenly and precipitated a chain of events that saw the Nigeria economy slide into recession.

The renewed violence by militants in the Niger Delta further cut into exports that were depressed as a result of infrastructure damage, underscoring the serious security threat to oil production which accounts for 70% of Nigeria’s revenue.

The year therefore witnessed severe scarcity of foreign exchange (forex) which eventually resulted in the devaluation of the Naira. This came with attendant negative impact on interest rates (driven by the increase in the Monetary Policy Rate), supply of raw materials and machinery. The forex shortages meant that many companies were unable to pay foreign suppliers for goods and services or had to do so at gravely expensive rates.

The Nigerian economy plunged deeper into recession as Gross Domestic Product (GDP) contracted by 2.24 per cent (year-on-year) in real terms in the third quarter of 2016.

On a positive note, the 0.03 per cent growth in the non-oil sector in real terms in the third quarter of 2016, reversed the negative growth recorded in the first and second quarters of the year. The growth in the non-oil sector was largely driven by the activities in the agriculture (crop production), information and communication and other services.

CHAIRMAN’S STATEMENT

“ This impressive result recorded by the Company last

year is attributable to our focus on

profitable information technology solutions with deliberately less exposure to foreign

exchange fluctuations and with predictable recurrent revenues.

ABIODUN FAWUNMIChairman


25


Recent policies by the Apex bank – CBN, which saw the Naira stabilize against the Dollar were widely applauded. So also was the President Muhammadu Buhari’s administration launch of an Economic Recovery and Growth Plan, a medium-term plan for 2017-2020, broadly targeting restoration of growth, human development and globally competitive economy, in efforts to combat current economiccrisisandtoachievesustaineddiversificationand inclusiveness. The impact on the mindset of the people, local and foreign investors was immense.

FINANCIAL PERFORMANCE

This time last year, we wore forlorn faces and tried to stare down challenges, we went back, articulated and implemented with new strategies and made the anticipated impact to turn our dear Company’s fortunes around.

Despite all odds, CWG has recovered from a loss position ofN1.8B-in2015toachieveaN128MProfitAfterTax(PAT)in2016,perourfull-yearfinancialresultsfor2016which were released in April.

Though, there was a downward trend in revenue from N15.6B in 2015 to N10.2B in 2016, our Group recorded higher gross margins from 16% in 2015 to 24% in 2016. Also,administrativeexpensessignificantlydeclinedby41% from N4.41B in 2015 to N2.61B in 2016.

Thissignificantlyimprovedperformancewasachievedthrough strategic cost optimisation initiatives adopted by the management following our promises to you that wewillbuckledownandpullthroughthehardtimes;themitigated measures instituted against foreign exchange losses (2015:N600M), the absence of income reversals (2015:N250M) and non-recurrence of inventory write-offs (2015:N431M).

Also,financecostfellby10%tocloseatN153Min2016compared to N170M in 2015 as a result of the conscious effort to reduce borrowings and improve receivable collections. All these positively impacted the bottom line.

This impressive result recorded by the Company last yearisattributabletoourfocusonprofitableinformationtechnology solutions with deliberately less exposure to foreign exchange fluctuations and with predictable recurrent revenues.

Your Company therefore exudes an impressive and promising outlook for current and potential investors considering that some quoted companies recorded a bearish trend following the economic headwinds in the country last year. It shows that the strategic action

of leveraging on home-grown initiatives as a means of keeping the business running, has carved resilience for weathering the hard economic recession.-

CORPORATE DEVELOPMENT

You will recall that in 2015, we planned to expand our operations through cloud and subscription-based businesses. Some of these platforms are now active and subscribers are growing both in Nigeria and in some parts ofAfrica.TheCompanyhasmadesignificantprogressinprovidingservicesandsolutionsintheareasoffinancialservices, telecommunications, government, utilities and other sectors of the Nigerian economy. Notwithstanding the economic challenges, I would like to urge our shareholdersandstakeholderstoremainconfidentthatthe board and management of the Company will continue to put in their best to achieve excellent results.

GROWTH PRIORITIES FOR 2017

The Company will continue to focus on its recurrent businesses with lower cost of sales, more predictable and recurring income. Management will ensure better



penetration of the Company’s home grown products in various sectors of the economy. Areas of focus include but is not limited to:

FINEDGE: a comprehensive and integrated CORE banking application that manages the operations and addressestheneedsoffinancialservicesproviders.Wecurrently have about 9 microfinance banks and have partnered with co-operative regulators and commercial banks to grow the Platform.

E-Government platform for efficient Internally Generated Revenue (IGR): The platform ensures automation and remittance of all Internally Generated Revenue i.e. levies and taxes. We are working closely with all tiers of government to ensure adoption.

BillsNPay: This is an electronic bills presentment and payment service for schools, utility firms, telcos, associations, individuals etc.

ATM As A Service: With this initiative, CWG will own, support and manage Automated Teller Machines (‘ATMs’). This initiative will also help to meet the infrastructure gap of about 45,000 ATMs across the country as banks will no longer have to deploy high capex on ATMs on their own but partner with CWG to deploy ATMs in areas of increased demands. The Company has made traction so far and we believe that more progress will be made this year.

Power Solution: This includes CWG’s power theft and power audit solutions. CWG has a signed Memorandum of Understanding (MOU) with one of the distribution companies (DISCOs) and has also deployed the solution to a few locations across the country. The Company will intensify efforts to ensure increased adoption of the solution by both the DISCOs and individual users.

TheCompanywillalsofocusonrunningmoreefficientlyandprofitablyduringtheyear,appropriatemeasureswillbe put in place to ensure the optimization of resources.

BOARD AND COMMITTEE CHANGES

During the year, there were changes in the board and committee membership:

Mr. Emmanuel Ijewere retired from his position as Director.

Mr. Ravi Sharma resigned from his position as Director in the company.

New appointments were as follows:

Mrs Adedoyin Odunfa was appointed a Director on the boardoftheCompany;

Dr Olusegun Oso was appointed Director and Chairman of the General Purpose Committee (“GENCOM”) following asuccessfulhandoverbyMr.RaviSharma;

Mr Philip Obioha was appointed Chairman of the Finance, Audit and Risk Committee following Mr Ijewere’s retirement.

CONCLUSION / APPRECIATION

To our shareholders, on behalf of the Board, I would like to express my utmost gratitude and appreciation for your continued support of the Company over the years.

My colleagues on the Board, thank you for your support andshowoffaith,confidenceandcooperationthroughoutthe period under review.

I use this opportunity to appreciate our key partners, regulators, media partners and other stakeholders for their continued passion and commitment towards the business despite the harsh economic conditions. To our clients whose immense trust and loyalty have inspired us to forge ahead in our quest for greater innovative technology solutions and the entire Staff of CWG Plc, I say a big thank you.

I have no doubts that as we pulled out of the doldrums of 2016, we will together achieve greater heights in the years to come. With this I can boldly say, brighter days lie ahead for each and every one of us.

Thank you

MR. ABIODUN BAMIDELE FAWUNMI

Chairman


27




CEO’S REVIEW

We started 2016 with the macroeconomic headwinds that started in 2015 - continued low price of oil, the Nigerian economy descending into recession, continued uncertainty in the foreign exchange market still in place. We also had presidential elections in Ghana, one of our operating countries. These head winds severely affected the Nigerian ICT market in 2016 leading to a 52% decline in PC shipments according to IDC. Several of our blue chipcustomershaveseensignificanttighteninginoutlayfor ICT investments as a result of these developments.

Your Company was however able to generate a profit of N127,675,000.00 compared to the loss of N1,795,846,000.00 in 2015. As we promised you at the end of 2015, we continued to reposition our company to exit from businesses that we were unable to generate and protectprofitablemargins.Wehencerefocusedmoreonservice contracts with better margins. We also walked away from businesses where we could not cover the foreign exchange risks. By streamlining our businesses, we were able to reduce our administrative costs from N4.41b in 2015 to N2.61b, a 41% reduction which allowed ustomakeaprofiteventhoughourrevenuedroppedby47% compared to last year. Our business mix has also tilted in favor of subscription service contracts which have better margins and predictability hence raising our gross margins to 24% from the 16% in 2015. While the bulk of our new services are still some distance from becoming majorcontributors,weareconfidentthatseveralwillstartcontributing in the New Year.

Ourforeignoperationsintheaggregatestayedprofitablethough losses in Cameroon and Uganda reduced their overall contribution. But their aggregate contribution still significantlyimpactedouroverallprofitandjustifiesourstrategy of de-risking our overall business by expanding into other countries. Our Ghana operations has done significantlywellandhasbeenonlongstreakofprofitablequarters. Our operations in Uganda and Cameroon are smallerandnotyetprofitable.Inthecomingyear,wewillbeworkingtoimprovetheprofitabilityoftheseregionaloperations.

Distinguished Shareholders,

It is my honor to present to you the financial statement of Our Company for the financial year ended December 31st, 2016. This being my first full year in the saddle, I will like to extend my thanks to you Distinguished Shareholders, for the confidence you have reposed in the Board and Management of the Company in this period.

JAMES AGADAGroup CEO


29


We will also be working in the New Year to convert our investments in new services in our utility, health, transport and government sectors to start contributing to our top line and bottom line. These will be in addition to investments in converting our previously outright sales businesses to subscription mode businesses. We will be starting our ATM as a Service business (converting ATM sales to ATM subscription) in the New Year. We will also commence offering our FinacleCloud service (providing outright Finacle and infrastructure sales with hosted infrastructure and subscription) in the new year.

Our ultimate target is to become one of the largest provider of IT platform services out of Africa by 2020. We will be well on our way by meeting the target of six million transactions per month in the next year and then growing aggressively from there to a minimum of sixty million transactions per month by 2020. Meeting these targets set us on the way to reaching the $1bn a year benchmark. Meeting these targets require us to have an innovative mindset and also to invest in the necessary talent and infrastructure that will be needed to build and operate these platforms. We look forward to your continued support when the time comes to make the necessary investments. Clearly, the future of the industry is in platforms and we aim to be one of the leaders out of Africa.

You can start your support for us today by opening a DYA account - if you are an MTN customer- please dial *771#. Use our BillsnPay product at www.billsnpay.com for your schools, associations or businesses to distribute bills, collect contributions and also collect donations for a worthy cause. Bring your co-operative association to use our co-operative platform at www.cooplatform.com.ng. If you are a UBA customer, please use their UMobile product to transact with the bank. Each time you use these services, your company gets paid for the value we are helping our customers create.

Send a lead to [email protected] wherever and whenever you think there are problems to be solved that can scale to millions of users. Your company is in the business of solving such problems with technology and as we continue to solve them, the value of your investments will continue to grow.

Weareconfidentthatwithyoursupport,weshallcontinueto deliver technology solutions that enable growth, and asaresultcontinuetoreportsustainablygrowingprofits.

Thank You.

JAMES AGADA

Group CEO



REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2016

The Directors have pleasure in presenting their report on the affairs of CWG Plc (Formerly Computer Warehouse Group Plc)(“theCompany”)togetherwithitssubsidiaries(“theGroup”)andtheConsolidatedandseparateauditedfinancialstatements of the Group and Company for year ended 31 December 2016.

LEGAL FORM AND PRINCIPAL ACTIVITIES

CWG Plc was incorporated in Nigeria as a Private limited liability company on 1 February 2005 and became a public limited liability company on 15 November 2013 with RC No.615619. The Group is principally engaged in the Supply, Installation, Integration, Maintenance and Support of Computer Hardware, Software, Consultancy, Communications, and Managed Services.

STATE OF AFFAIRS

In the opinion of the Directors, the state of the Group’s affairs is satisfactory and there has been no material change sincethereportingdate,whichwouldaffectthefinancialstatementsaspresented.

2016N’000

2015N’000

2016N’000

2015N’000

Turnover 10,165,971==========

15,613,282 ===========

8,558,821=========

13,888,580=========

Profit/(loss) before taxation 142,004 (1,746,997) 32,087 (1,876,099)

Taxation (14,329) 48,849) -

Profit/(loss) after taxation 127,675 (1,795,846) 32,087 (1,876,099)

RESULTS FOR THE YEAR

THE GROUP THE COMPANY


31


Mr. Abiodun Fawunmi Mr. Austin Okere

Chairman Vice Chairman

Mr. James Agada Mr. Kunle Ayodeji

GroupChiefExecutiveOfficer GroupChiefOperatingOfficer

Mr. Philip Obioha

Non-Executive

Mrs. Adedoyin Odunfa

Non-Executive | Appointed 20 June 2016

Dr. Olusegun Oso

Non-Executive | Appointed 14 October 2016

Mr. Emmanuel Ijewere

Non-Executive | Retired 14 October 2016

Mr. Ravi Sharma

Non-Executive (British) | Resigned 14 October 2016

ThenamesoftheDirectorsatthedateofthisreportandofthosewhoheldofficeduringtheyearareasfollows:

DIRECTORS

DIVIDEND

The Directors have not recommended any dividend payment for the year ended 31 December 2016 (2015:Nil).

PROPERTY, PLANT AND EQUIPMENT

Informationrelatingtomovementinproperty,plantandequipmentisshowninNote15tothefinancialstatements.Inthe opinion of the Directors, the market values of the Group’s properties are not less than the value shown in these financialstatements.

DIRECTORS INTEREST IN CONTRACTS

NoneoftheDirectorshasnotifiedtheCompanyforthepurposeofSection277oftheCompaniesandAlliedMattersAct, CAP C20 Laws of the Federation of Nigeria 2004 of any discloseable interest in contracts with which the Company is involved as at 31 December 2016.

DONATIONS

The company did not make any donations during the year ended 31 December 2016.



Number of Shares Holding % Nominal Value

Mr. Austin Okere 590,129,287 23.37 295,064,644

Aureos Africa Fund LLC (The Abraaj Group) 517,576,289 20.50 258,788,145

Mr. Abiodun Fawunmi 456,077,754 18.06 228,038,877

Mr. Philip Obioha 456,077,754 18.06 228,038,877

Mr. James Agada 101,707,006 4.03 50,853,503

Mr. Emmanuel Ijewere 1,000,000 0.04 500,000

Others 402,258,269 15.94 201,129,134

2,524,826,359=============

100.00======

1,262,413,180============

TheissuedandfullypaidsharecapitaloftheCompanyasat31December2016wasbeneficiallyowned as follows:

TheissuedandfullypaidsharecapitaloftheCompanyasat31December2015wasbeneficiallyownedasfollows:

Number of Shares Holding % Nominal Value

Mr. Austin Okere 590,129,287 23.37 295,064,644

Aureos Africa Fund LLC (The Abraaj Group)

517,576,289 20.50 258,788,145

Mr. Abiodun Fawunmi 456,077,754 18.06 228,038,877

Mr. Philip Obioha 456,077,754 18.06 228,038,877

Mr. James Agada 101,707,006 4.03 50,853,503

Mr. Emmanuel Ijewere 1,000,000 0.04 500,000

Others 402,258,269 15.94 201,129,1342,524,826,359

=============100.00======

1,262,413,180============

SHARE HOLDINGS AND SUBSTANTIAL INTEREST IN SHARES

DIRECTORS’ INTERESTSDirectors’ interests in the issued share capital of the Company are as disclosed above.


33


Range No. of Holders Holders % Units Units%

1 - 1,000 534 77% 108,810 0.00%

1,001 - 5,000 42 6% 122,953 0.00%

5,001 - 10,000 15 2% 128,028 0.01%

10,001 - 50,000 26 4% 739,971 0.03%

50,001 - 100,000 20 3% 1,711,018 0.07%

100,001 - 500,000 25 4% 6,249,453 0.25%

500,001 - 1,000,000 8 1% 7,718,289 0.31%

1,000,001 - ABOVE 20 3% 2,508,047,837 99.34%

690 100.00 2,524,826,359 100.00

Year Authorised (N) Issued and Fully Paid Up (N) Considera-tion

Increase Cummulative Units Increase / Decrease Cummulative Units Cash/

Bonus

1992 5,000,000.00 5,000,000.00 10,000,000 5,000,000.00 10,000,000 Cash

2008 1,745,000,000.00 1,745,000,000.00 3,500,000,000 995,000,000.00 1,000,000,000 2,000,000,000 Bonus

2008 - 1,745,000,000.00 25,000,000.00 1,025,000,000.00 2,050,000,000 Cash

2011 (25,000,000.00) 1,000,000,000.00 2,000,000,000 Staff Share Scheme

2013 264,400,329.50 1,262,400,329.50 2,524,800,659Loan Stock Conversion

2013 12,850.00 1,262,413,179.50 2,524,826,359 Staff Share Allotment

SHAREHOLDING RANGE ANALYSIS AS AT 31 DECEMBER 2016

CWG PLC SHARE CAPITAL HISTORY



EMPLOYMENT AND EMPLOYEES

EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS

It is the Company’s policy that there is no discrimination in considering applications for employment including those from physically challenged persons. All employees whether or not physically challenged are given equal opportunities to develop their expertise and knowledge and to qualify for promotion in furtherance of their careers. The company has one physically challenged person in her employment as at 31 December 2016.

WELFARE

The Company is registered with 3 Health Management Organisations (HMO) – (KBL, Mansard Healthcare and Metro Health). Staff, spouse and 4 children choose a primary health care provider, where cases of illness are referred for treatment.

Incentive schemes designed to meet the circumstances of each individual are implemented wherever appropriate and some of these schemes include, bonuses, promotions and wage reviews.

TRAINING

The Company attaches great importance to training and all categories of staff attend courses or seminars as considered necessary by the Company’s management.

FINANCIAL COMMITMENTS

The Directors are of the opinion that all known liabilities and commitments have been taken into account. These liabilities are relevant in assessing the company’s state of affairs.

EVENTS AFTER REPORTING DATE

As stated in Note 31, there are no events or transactions that have occurred since the reporting date which would haveamaterialeffectonthefinancialstatementsaspresented.

FORMAT OF FINANCIAL STATEMENTS

The financial statements of CWG Plc have been prepared in accordance with the reporting and presentation requirements of the Companies and Allied matters Act, CAP C20, Laws of the Federation of Nigeria, 2004 and are in compliance with the International Financial Reporting Standards issued by International Accounting Standards Board and the requirements of Financial Reporting Council of Nigeria Act No 6, 2011. The Director considers that the format adopted is the most suitable for the Company.

AUDITORS

Ernst&YounghaveindicatedtheirwillingnesstocontinueinofficeasAuditorstotheCompanyinaccordancewithSection 357(2) of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004. A resolution willbeproposedattheAnnualGeneralMeetingauthorizingtheDirectorstofixtheirremuneration.

BY ORDER OF THE BOARDMrs. FOLASADE MODEBELU

FRC/2016/NBA/00000015716.

COMPANY SECRETARY LAGOS, NIGERIA

30 April 2017


35


STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED 31 DECEMBER 2016

The Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, requires the directors to preparefinancialstatementsforeachfinancialyearthatgiveatrueandfairviewofthestateoffinancialaffairsofthegroupattheendoftheyearandofitsprofitorloss.TheresponsibilitiesincludeensuringthattheGroup:

1. keepsproperaccountingrecordsthatdisclose,withreasonableaccuracy,thefinancialpositionoftheGroupandcomply with the requirements of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004;

2. establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities;and

3. prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, and are consistently applied.

TheDirectorsacceptresponsibilityfortheannualConsolidatedandSeparatefinancialstatements,whichhavebeenprepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards issued by International Accounting Standard Board and the requirements of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, and Financial Reporting Council of Nigeria Act, No 6, 2011.ThedirectorsareoftheopinionthattheConsolidatedandSeparatefinancialstatementsgiveatrueandfairviewofthestateofthefinancialaffairsofthegroupandofitsprofitorloss.Thedirectorsfurtheracceptresponsibilityforthemaintenanceofaccountingrecordsthatmayberelieduponinthepreparationoffinancialstatements,aswellasadequatesystemsofinternalfinancialcontrol.Nothing has come to the attention of the directors to indicate that the group will not remain a going concern for at least twelve months from the date of this statement.

Mr. James Agada

(GroupChiefExecutiveOfficer)FRC/2016/IODN/00000014107

Mr. Kunle Ayodeji

(GroupChiefOperatingOfficer)FRC/2016/IODN/00000014112

30 April 2017



REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED 31 DECEMBER 2016

In accordance with the provisions of Section 359 (6) of the Companies and Allied Maters Act 2004, the members of the Audit Committee of CWG Plc (“the Company”) hereby report as follows:• We have exercised our statutory functions under Section 359 (6) of the Companies and Allied Matters Act, 2004

and acknowledge the cooperation of management and staff in the conduct of these responsibilities.• We are of the opinion that the accounting and reporting policies of the Group are in accordance with legal

requirements and agreed ethical practices and that the scope and planning of both the external and internal audits for the year ended 31 December 2016 were satisfactory and reinforce the Group’s internal control systems.

• WehavedeliberatedwiththeExternalAuditors,whohaveconfirmedthatnecessarycooperationwasreceivedfrommanagementinthecourseoftheirstatutoryauditandwearesatisfiedwithmanagement’sresponsestotheExternalAuditor’s recommendations on accounting and internal control matters and with the effectiveness of the Group’s system of accounting and internal control.

*Mr. Patrick Onyema Amaechi has been granted a waiver from the Financial Reporting Council (FRC) to sign the 2016 AnnualReportandFinancialStatements,withoutindicatinghisFRCregistrationnumberalongwiththecertification,with the understanding that all regulatory requirements for the Chairman Audit Committee are met before the 2017 financialstatements.

MEMBERS OF THE COMMITTEE

Alhaji Wahab AjaniMr. Robert IbekweDr. Olusegun Oso - Appointed 14 October 2016Mr. Philip ObiohaMr. Kunle AyodejiMr. Emmanuel Ijewere – Retired 14 October 2016

Chairman, Audit CommitteeMr Patrick Onyema Amaechi*

Dated 30 April 2017


37


REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

OPINION WehaveauditedtheconsolidatedandseparatefinancialstatementsofCWGPlc(theCompany)anditssubsidiaries(together,theGroup)whichcomprisetheconsolidatedandseparatestatementsoffinancialpositionasat31December2016,andtheconsolidatedandseparatestatementsofprofitorlossandothercomprehensiveincome,theconsolidatedandseparatestatementsofchangesinequityandtheconsolidatedandseparatestatementsofcashflowsfortheyearthenended,andnotestotheconsolidatedandseparatefinancialstatements,includingasummaryofsignificantaccounting policies. Inouropinion,theconsolidatedandseparatefinancialstatementsgiveatrueandfairviewofthefinancialpositionofCWGPlcanditssubsidiariesasat31December2016,andtheirfinancialperformanceandcashflowsfortheyear then ended in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board, and the relevant provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and the Financial Reporting Council of Nigeria Act No. 6, 2011.

BASIS FOR OPINIONWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and the Company in accordance with International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and otherindependencerequirementsapplicabletoperformingtheauditofCWGPlc.Wehavefulfilledourotherethicalresponsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performingtheauditofCWGPlc.Webelievethattheauditevidencewehaveobtainedissufficientandappropriateto provide a basis for our opinion.

KEY AUDIT MATTERSKeyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditoftheconsolidatedandseparatefinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditoftheconsolidatedandseparatefinancialstatementsasawhole,andinformingouropinionthereon,andwedo not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. WehavefulfilledtheresponsibilitiesdescribedintheAuditor’sresponsibilitiesfortheauditoftheconsolidatedandseparatefinancialstatementssectionofourreport,includinginrelationtothesematters.Accordingly,ourauditincluded the performance of procedures designed to respond to our assessment of the risks of material misstatement oftheconsolidatedandseparatefinancialstatements.Theresultsofourauditprocedures,includingtheproceduresperformed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated andseparatefinancialstatements.

INDEPENDENT AUDITORS’ REPORT TO THE MEMEBER OF CWG PLC



KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT

Impairment - Goodwill and Intangible Assets

The Group has goodwill with carrying value of N814.1 million as of 31 December 2016 which arose from past acquisitions. During 2016 no impairment charge was recognised in the statementofprofitorloss.On an annual basis, the Directors assess the valuation of goodwill which relies on key assumptions and judgements made by them concerning the estimated value of future cash flows,associateddiscountrates,andgrowthrates based on their view of future business prospects. This assessment requires the exercise of significant judgement about future market conditions, including growth rates and discount rates particularly those affecting the Software and Hardware Cash Generating Units (CGU) for the year ended 31 December 2016. We focused on this area primarily because ofthesignificantjudgementandestimationinvolved. The key assumptions to the impairment test and the sensitivity of changes in these assumptions to the risk of impairment are disclosed in Note 14.2 to the consolidated andseparatefinancialstatements.

Our audit procedures focused on the assessment of key assumptions in forming the CGUs’ Value in Use (VIU) calculation, including the cash flow projections and discount rates.Weassessedassumptionsusedincashflowprojectionswhich the outcome of the impairment test is most sensitive to, and evaluated the reasonableness of these assumptions made by management by comparing it to externally availableindustry,economicandfinancialdata.Westress-testedthecashflowprojections.Thesecashflowprojections have been approved by management.Furthermore, we evaluated Management’s budgeting process by comparing the actual results to previously forecasted results.We also assessed the appropriateness of the financial statement disclosures concerning those key assumptions to which the outcome of the impairment test is most sensitive.


39


KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT

Impairment - Trade Receivables

As at 31 December 2016, the Group had trade receivables of N2.65 billion before allowance for impairment of N192 million as disclosed in Note 20 to the consolidated and separate financialstatements.Thenettradereceivablesrepresents 48% of total assets.The Company/Group experienced uncertainty over the collectability of trade receivables from certain customers.The determination as to whether a trade receivable is collectible involves management judgement. Management considers factors such as the age of the balance, location of customers, existence of disputes, recent historical payment patterns and any other available information concerning the creditworthiness of counterparties. Management uses this information to determine whether an allowance forimpairmentisrequiredeitherforaspecifictransaction or for a customer’s balance overall. We focused on this area because of the materiality of the amount and the involvement of management judgment.

We tested aged balances where no allowance for impairment was recognised to determine that there were no indicators of impairment. This included verifying if payments had been subsequently received since the year-end, and reviewing historical payment patterns and any correspondence with customers on expected settlement dates.In order to evaluate the appropriateness of these judgementsweverifiedwhetherbalanceswereoverdue,the customer’s historical payment patterns and whether any post year-end payments had been received up to the date of completing our audit procedures. We also considered the consistency of management’s application of policy for bad debt write offs and reversal of allowance for impairment where a customer had paid. Reversal of allowance for impairment during the year included some infrequent payments of overdue amounts from customers where an allowance continues to be recognized. Despite these payments, management continues to provide for such customers on the basis that there still remains ongoing uncertainty over their underlyingfinancialconditionasindicatedbytheadhoctiming of payments beyond due dates.

The Directors are responsible for the other information. The other information comprises the Directors’ Report, the Audit Committee Report and Corporate Governance Report as required by the Companies and Allied Matters Act, CAP C20, LawsoftheFederationofNigeria2004.Theotherinformationdoesnotincludethefinancialstatementsandourauditors’reportthereon.Ouropinionontheconsolidatedandseparatefinancialstatementsdoesnotcovertheotherinformationand we do not express an audit opinion or any form of assurance conclusion thereon. Inconnectionwithourauditoftheconsolidatedandseparatefinancialstatements,ourresponsibilityistoreadtheotherinformation and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separatefinancialstatementsorourknowledgeobtainedintheaudit,orotherwiseappearstobemateriallymisstated.If, based on the work we have performed on the other information obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Consolidated and Separate Financial Statements

TheDirectorsareresponsibleforthepreparationandfairpresentationoftheconsolidatedandseparatefinancialstatements in accordance with International Financial Reporting Standards, the provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and in compliance with the Financial Reporting

OTHER INFORMATION



Council of Nigeria Act, No 6, 2011, and for such internal control as the Directors determine is necessary to enable the preparationofconsolidatedandseparatefinancialstatementsthatarefreefrommaterialmisstatement,whetherdueto fraud or error. Inpreparingtheconsolidatedandseparatefinancialstatements,theDirectorsareresponsibleforassessingtheGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Ourobjectivesaretoobtainreasonableassuranceaboutwhethertheconsolidatedandseparatefinancialstatementsas a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud orerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisoftheseconsolidatedandseparatefinancialstatements.As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: •Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedandseparatefinancialstatements,whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfrom fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significantdoubtontheGroup’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separatefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebased on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluatetheoverallpresentation,structureandcontentoftheconsolidatedandseparatefinancialstatements,includingthedisclosures,andwhethertheconsolidatedfinancialstatementsrepresenttheunderlyingtransactionsand events in a manner that achieves fair presentation.

• ObtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithintheGrouptoexpressanopinionontheconsolidatedandseparatefinancialstatements.Weareresponsiblefor the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.


41


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act, CAP C20, Laws of the FederationofNigeria2004,weconfirmthat:

1. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthepurposesofouraudit;

2. in our opinion proper books of account have been kept by the Group in so far as it appears from our examination ofthosebooks;and

3. theGroup’sandtheCompany’sconsolidatedandseparatestatementsoffinancialpositionandconsolidatedandseparatestatementsofprofitorlossandothercomprehensiveincomeareinagreementwiththebooksofaccount.

Yusuf Aliu, FCA

FRC/2012/ICAN/00000000138

For: Ernst & Young Chartered Accountants

Lagos, Nigeria.30 April 2017



BOARD EVALUATION REPORT

Directors: ● Abel Ajayi (Chairman) ● Obi Ogbechi ● Adeniyi Obe ● Adebisi Adeyemi (Managing Director)

DCSL Corporate Services Limited 235 Ikorodu Road Abuja Office: Ilupeju 4th Floor, Bank of Industry Building P. O. Box 965, Marina Central Business District Lagos, Nigeria Abuja, Nigeria Tel: +234 9 4614902-5 Tel: +234 1 2717800 RC NO. 352393 Fax: +234 1 2717801 www.dcsl.co.ng

REPORT OF THE EXTERNAL CONSULTANTS ON THE PERFORMANCE OF THE BOARD OF DIRECTORS OF CWG PLC (“CWG”) FOR THE YEAR-ENDED DECEMBER 31, 2016

In line with the provisions of Section 15.6 of the Securities and Exchange Commission’s Code of Corporate Governance for Public Companies in Nigeria (“the SEC Code”), DCSL Corporate Services Limited (DCSL) was engaged by CWG Plc. (“CWG”) to carry out an evaluation of the performance of the Board of Directors for the year-ended December 31, 2016. The evaluation entailed a review of the Company’s corporate and statutory documents, the Minutes of Board and Committee meetings, policies as well as other ancillary documents made available to us. To reach a conclusion on the performance of the Board, we benchmarked the Company’s corporate governance structures, policies and processes against the provisions of the SEC Code as well as global Best Practices.

We considered seven key corporate governance indicators as follows:

1. Board Structure and Composition 2. Strategy and Planning 3. Board Operations and Effectiveness 4. Measuring and Monitoring of Performance 5. Risk Management and Compliance 6. Corporate Citizenship; and 7. Transparency and Disclosure.

Following our review of the corporate governance standards and processes, we are of the opinion that the Board has substantially complied with the provisions of the SEC Code as well as corporate governance best practices.

The Board is however yet to put in place a Remuneration Policy as required by Section 14.1 of the Securities and Exchange Commission’s Code of Corporate Governance. To ensure better transparency, we recommend that the Board should also put in place a Policy on the annual declaration by Directors of their financial interests in the Company’s Service Providers.

We urge the Board to take deliberate steps to address these and other recommendations outlined in the prior and current year Reports.

Details of our key findings and other recommendations are contained in our full Report.

Yours faithfully, For: DCSL Corporate Services Limited

Bisi Adeyemi Managing Director


43


CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

The Group The Company

2016 2015 2016 2015NOTES N’000 N’000 N’000 N’000

Revenue 6 10,165,971 15,613,282 8,558,821 13,888,580

Cost of sales 7 (7,692,666)-----------------

(13,170,345)--------------------

(6,466,464)----------------

(11,734,701)---------------------

Grossprofit 2,473,305 2,442,937 2,092,357 2,153,879

Other income 8 395,075 350,234 351,521 256,701

Administrative expenses 9 (2,613,857) (4,412,186) (2,307,276) (4,174,817)

Finance cost 10 (152,757) (170,131) (144,753) (154,011)

Finance income 11 40,238-----------------

42,149-----------------

40,238-----------------

42,149---------------

Profit/(Loss)beforetaxation 142,004 (1,746,997) 32,087 (1,876,099)

Income tax expense/(credit) 12.1 (14,329)------------

(48,849)----------------

------------

----------------

Profit/(Loss)aftertaxation 127,675 (1,795,846) 32,087 (1,876,099)Other comprehensive income:Other comprehensive income tobereclassifiedtoprofitorloss in subsequent periods (net of tax):

Translation of foreign entities (1,886) (38,682) - -

Availableforsalefinancialassets 18 (2,243) (15,877) (2,243) (15,877)

Net other comprehensive (loss) /incometobeclassifiedtoprofitorlossinsubsequentperiod

----------(4,129)-----------

---------(54,559)----------

-----------(2,243)-----------

------------(15,877)------------

Other comprehensive income nottobereclassifiedtoprofitorloss in subsequent periods (net of tax):

------------

------------

------------

-------------

Other comprehensive income net of tax (4,129) (54,559) (2,243) (15,877)

----------- ------------ ----------- -----------Total comprehensive Income/ (Loss)for the year net of tax

123,546=======

(1,850,405)=========

29,844======

(1,891,976)=========

Earnings per share:Basic /Diluted earnings /(loss) per share 13.1 N0.05 (N0.71) N0.01 (N0.07)

** All subsidiaries are 100% owned by the Group hence all the profits or losses and other comprehensive income belong to the owners of the company. See notes to the consolidated and separate financial statements.



CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016


31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

NOTES N’000 N’000 N’000 N’000NON-CURRENT ASSETS

Goodwill and other intangibles 14.2 814,088 814,088 814,088 814,088

Property, plant & equipment 15 423,225 479,180 401,790 473,695

Intangible assets 16 119,324 135,388 119,324 135,388

Investment in subsidiaries 17 - - 273,284 273,284Availableforsalefinancialassets 18 67,548 69,791 67,548 69,791

---------------1,424,185

---------------1,498,447

----------------1,676,034

---------------1,766,246

CURRENT ASSETS

Inventories 19 3,471,636 1,449,320 3,471,389 1,449,150Trade and other receivables 20 7,126,994 6,169,796 6,712,274 5,844,951Prepayments 21 938,814 586,968 927,740 577,175

Cash & short term deposit 22 1,806,651--------------

821,589------------

1,643,838--------------

755,416--------------

13,344,095--------------

9,027,673--------------

12,755,241---------------

8,626,692-------------

TOTAL ASSET 14,768,280======

10,526,120=======

14,431,275=======

10,392,938========

EQUITY

Share capital 23 1,262,413 1,262,413 1,262,413 1,262,413Share premium 23.1 1,852,748 1,852,748 1,852,748 1,852,748Retained earnings 23.1 48,535 (79,140) 227,742 195,655Available for sale reserve 23.1 (846) 1,397 (846) 1,397Foreign currency translation reserve 23.1 23,537 25,423 - -

---------------3,186,387--------------

--------------3,062,841

--------------------------------3,342,057--------------

----------------3,312,213

----------------

CURRENT LIABILITIES

Trade & other payables 24 10,238,421 6,433,667 9,897,269 6,191,608Short term loans & borrowings 25 169,426 251,115 99,730 178,118Income tax payable 12.2 643,411 629,082 561,584 561,584Deferred revenue 26 530,635 149,415 530,635 149,415

--------------11,581,893---------------

---------------7,463,279

------------------------------11,089,218----------------

----------------7,080,725

----------------Total liabilities 11,581,893 7,463,279 11,089,218 7,080,725

Total equity & liabilities--------------14,768,280========

---------------10,526,120

=========---------------14,431,275

=========---------------10,392,938

=========

Signature Name FRC. No.

--------------------------------------- JAMES AGADA (GroupChiefExecutiveOfficer)

FRC/2016/IODN/00000014107

--------------------------------------- KUNLE AYODEJI (GroupChiefOperatingOfficer)

FRC/2016/IODN/00000014112

--------------------------------------- OBIANUJU EJEH (GroupChiefFinancialOfficer)

FRC/2014/ICAN/00000007858

See notes to the consolidated and separate financial statements.


45


CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY – THE GROUP AS AT 31 DECEMBER 2016

DESCRIPTION Share Capital

Retained Earnings

Share Premium

Available for sale reserve

Foreign currency

translation reserve

TOTAL

N’000 N’000 N’000 N’000 N’000 N’000

Bal as at 1 Jan 2015 1,262,413 1,767,202 1,852,748 17,274 64,105 4,963,742

Loss for the year - (1,795,846) - - - (1,795,846)

Other comprehensive income

- - - (15,877) - (15,877)

Foreign currency translation

-------------

---------------

-------------

------------

(38,682)------------

(38,682)--------------

1,262,413 (28,644) 1,852,748 1,397 25,423 3,113,337

Dividend - -----------

(50,496)--------------

---------------

-----------

---------------

(50,496)--------------

Bal as at 31 Dec 2015 1,262,413 (79,140) 1,852,748 1,397 25,423 3,062,841Profitfortheyear - 127,675 - - - 127,675


- - - (2,243) - (2,243)

Foreign currency translation

------------

---------------

---------------

------------

(1,886)--------------

(1,886)--------------

Bal as at 31 Dec 2016 1,262,413--------------

48,535--------------

1,852,748--------------

(846)-----------

23,537--------------

3,186,387--------------


STATEMENT OF CHANGES IN EQUITY – THE COMPANY AS AT 31 DECEMBER 2016

DESCRIPTION Share Capital

Retained Earnings

Share Premium

Available for sale reserve

Foreign currency

translation reserve

TOTAL

N’000 N’000 N’000 N’000 N’000 N’000

Bal as at 1 Jan 2015 1,262,413 2,122,250 1,852,748 17,274 - 5,254,685

Loss for the year - (1,876,099) - - - (1,876,099)Other comprehensive income

------------

---------------

---------------

(15,877)--------------

---------------

(15,877)--------------

1,262,413 246,151 1,852,748 1,397 - 3,362,709

Dividend paid ---------------

(50,496)--------------

---------------

---------------

---------------

(50,496)--------------

Bal as at 31 Dec 2015 1,262,413 195,655 1,852,748 1,397 - 3,312,213

Profitfortheyear - 32,087 - - - 32,087


---------------

---------------

---------------

(2,243)--------------

---------------

(2,243)--------------

Bal as at 31 Dec 2016 1,262,413--------------

227,742--------------

1,852,748--------------

(846)--------------

---------------

3,342,057--------------



CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2016


31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

NOTES N’000 N’000 N’000 N’000

Profit/(loss)beforetax 142,004 (1,746,997) 32,087 (1,876,099)

NON-CASH ADJUSTMENT TO RECONCILE PROFIT BEFORE TAX TO NET CASH FLOWS

Depreciation of property, plant and equipment 15 123,645 248,471 118,900 243,383

Amortisation of intangible assets 16 69,411 56,466 69,411 56,466

Impairment of receivables 20 40,835 80,826 42,913 78,748

Inventory write off - 430,954 - 430,954

Finance income 11 (40,238) (42,149) (40,238) (42,149)

Finance cost 10 152,757 170,131 144,753 154,011

Net foreign exchange differences 49,998 155,818 51,011 86,027

Loss/(gain) on sale of property, plant and equipment 8,389 (68) 8,389 (68)

Deferredrevenuereleasedtoprofitorloss 26 (105,339) (1,299,573) (105,339) (1,299,573)

CHANGES IN WORKING CAPITAL

(Increase)/decrease in trade and other receivables (763,084) 545,701 (867,323) 983,815

Increase in prepayments (351,846) (269,741) (350,565) (291,170)

(Increase) /decrease in inventories (2,022,227) 1,673,470 (2,022,239) 1,673,234

Increase in trade and other payables 3,417,687--------------

34,843--------------

3,540,512---------------

134,705-------------

721,992 38,152 622,272 332,284

Income tax paid 12.2 - (40,879) - -

Cash received from deferred revenue 486,559---------------

149,415--------------

486,559--------------

149,415-------------

Net cash provided by operating activities 1,226,257---------------

146,688--------------

1,126,537---------------

481,699--------------

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant & equipment 15 (39,660) (178,295) (38,787) (175,290)

Acquisition of intangible asset 16 (18,840) (112,093) (18,840) (112,093)

Purchaseoffinancialassets 18 - (6,900) - (6,900)

Proceeds from sale of equipment 500 3,367 500 3,367

Interest received 11 40,238-------------

42,149-------------

40,238-------------

42,149-------------

Net cash utilised in investing activities (17,762)-------------

(251,772)-------------

(16,889)-------------

(248,767)-------------

CASH FLOWS FROM FINANCING ACTIVITIES

Loan paid (3,301) (582,805) - (799,655)

Lease obligation addition/(repaid) 13,677 (12,504) 13,677 (12,504)

Interest paid 10 (152,727) (170,131) (144,753) (154,011)

Additional investment in subsidiary 17 - - - (242,674)

Dividend paid - (50,496) - (50,496)

-------------- -------------- --------------- ---------------

Net cash utilised by (142,381) (815,936) (131,076) (1,035,086)

financingactivities -------------- --------------- --------------- ---------------

Net increase/(decrease) in cash & cash equivalents 1,048,408 (921,020) 960,866 (802,154)

Net foreign exchange difference 15,042 (26,660) 5,944 (9,410)

Cash & cash equivalents at 01/01/2016 22.1 643,471 1,591,151 577,298 1,388,862

Cash and cash equivalents at 31/12/2016 22.1---------------1,706,921

========

---------------634,471

========

---------------1,544,108

========

----------------577,298

========



47




NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

1 CORPORATE INFORMATION

TheconsolidatedandseparatefinancialstatementsofCWGPlcanditssubsidiaries(collectively,theGroup)fortheyear ended 31 December 2016 were authorised for issue in accordance with the approval of the board of directors on 18 April 2017. CWG Plc (the Company) is a limited liability company incorporated and domiciled in Nigeria and became publicbylistingon15November2013.TheregisteredofficeislocatedatBlock54A,Plot10,AdebayoDohertyRoad,off Admiralty Road, Lekki Phase 1, Lagos State in Nigeria.

The Group is principally engaged in the supply, installation, integration, maintenance and support of computer equipment, e-payment hardware and ancillary equipment.

2.1 BASIS OF PREPARATION

TheconsolidatedandseparatefinancialstatementsoftheGrouphavebeenpreparedinaccordancewithInternationalFinancial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as approved by the Financial Reporting Council of Nigeria and in accordance with the provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004.

Functional and presentation currency

The consolidated and separate financial statements have been prepared on a historical cost basis, except for available-for-salefinancialinstrumentsthathavebeenmeasuredatfairvalue.Theconsolidatedandseparatefinancialstatements are also presented in Naira and all values are rounded to the nearest thousand (N000), except when otherwise indicated.

Composition of financial statements

Thefinancialstatementscomprise:

1. Consolidatedandseparatestatementofprofitorlossandothercomprehensiveincome

2. Consolidatedandseparatestatementoffinancialposition

3. Consolidated and separate statement of changes in equity

4. Consolidatedandseparatestatementofcashflows

5. NotestotheConsolidatedandseparatefinancialstatements

Current versus non-current classification

ThegrouppresentsassetsandliabilitiesintheConsolidatedandseparatestatementoffinancialpositionbasedoncurrent/non-currentclassification.Anassetiscurrentwhenitis:

Expected to be realised or intended to be sold or consumed in the normal operating cycle

Held primarily for the purpose of trading

Expected to be realised within twelve months after the reporting period

Or

Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Allotherassetsareclassifiedasnon-current.


49


A liability is current when:

It is expected to be settled in the normal operating cycle

It is held primarily for the purpose of trading

It is due to be settled within twelve months after the reporting period

Or

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

Deferredtaxassetsandliabilitiesareclassifiedasnon-currentassetsandliabilities.

2.2 BASIS OF CONSOLIDATION

TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheGroupanditssubsidiariesasat31December 2016. Subsidiaries are entities controlled by the Group.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continuetobeconsolidateduntilthedatewhensuchcontrolceases.Thefinancialstatementsofthesubsidiariesare prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Thefinancialstatementsofthesubsidiarieshavebeenpreparedonahistoricalcostbasis.Thecompanyaccountsforits investment in subsidiaries at cost.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement(s) with the other vote holders of the investee

• Rights arising from other contractual arrangements

• The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses ofasubsidiaryacquiredordisposedofduringtheyearareincludedintheconsolidatedfinancialstatementsfromthedate the Group gains control until the date the Group ceases to control the subsidiary.

ProfitorlossandeachcomponentofOCIareattributedtotheequityholdersoftheparentoftheGroupandtothenon-controllinginterests,evenifthisresultsinthenon-controllinginterestshavingadeficitbalance.Whennecessary,adjustmentsaremadetothefinancialstatementsofsubsidiariestobringtheiraccountingpoliciesintolinewiththeGroup’saccountingpolicies.Allintra-groupassetsandliabilities,equity,income,expensesandcashflowsrelatingtotransactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controllinginterestandothercomponentsofequity,whileanyresultantgainorlossisrecognisedinprofitorloss.Anyinvestment retained is recognised at fair value.

In the Company the investment in its subsidiaries are accounted for using the cost method.



2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ThefollowingarethesignificantaccountingpoliciesappliedbytheGroupinpreparingitsfinancialstatements:

2.3.1 GOODWILL

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred over the fair valueofnetidentifiableassetsacquiredandliabilitiesassumed.Ifthefairvalueofthenetassetsacquiredisinexcessoftheaggregateconsiderationtransferred,thegainisrecognisedinprofitandlossimmediately.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’sCashGeneratingUnits(CGU)thatareexpectedtobenefitfromthecombination,irrespectiveofwhetherotherassets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

2.3.2 FOREIGN CURRENCIES

The Group’s consolidated and separate financial statements are presented in Naira, which is also the parent company’s functional currency. For each entity the Group determines the functional currency and items included in thefinancialstatementsofeachentityaremeasuredusingthatfunctionalcurrency.TheGroupusesthedirectmethodofconsolidationandondisposalofaforeignoperation;thegainorlossthatisreclassifiedtoprofitorlossreflectstheamount that arises from using this method.

i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spotratesatthedatethetransactionfirstqualifiesforrecognition.Monetaryassetsandliabilitiesdenominatedinforeigncurrencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising onsettlementortranslationofmonetaryitemsarerecognisedinprofitorloss.Non-monetaryitemsthataremeasuredin terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differencesonitemswhosefairvaluegainorlossisrecognisedinothercomprehensiveincomeorprofitorlossarealsorecognisedinothercomprehensiveincomeorprofitorloss,respectively).

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

ii) Foreign Operations

On consolidation, the assets and liabilities of foreign operations are translated into Naira at the rate of exchange prevailing at the reporting date and their statement of comprehensive income are translated at exchange rates that approximate the exchange rates at the date of transactions which is often an average rate for the period. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is


51


recognisedinprofitorloss.

2.3.3 REVENUE RECOGNITION

RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecan be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of theconsiderationreceivedorreceivable,takingintoaccountcontractuallydefinedtermsofpaymentandexcludingtaxesorduty.TheGroupassessesitsrevenuearrangementsagainstspecificcriteriatodetermineifitisactingasprincipaloragent.Thespecificrecognitioncriteriadescribedbelowmustalsobemetbeforerevenueisrecognised.The group also separate out the revenue from the sales of goods for hardware and software and form service contract and determines the recognition criteria for these two separately.

Sale of goods

Revenue from the IT infrastructure services such as hardware devices and accessories is recognised when the significantrisksandrewardsofownershipoftheitemshavepassedtothebuyer,usuallyondeliveryoftheitems.

Rendering of services

Revenue from the provision of communication services (maintenance, support services, communication and integration, software licenses etc) is recognised by reference to the stage of completion. Stage of completion is measured by reference to data and service usage. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group.

Interest income

Forallfinancialinstrumentsmeasuredatamortisedcostandinterestbearingfinancialassetsclassifiedasavailablefor sale, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimatedfuturecashpaymentsorreceiptsovertheexpectedlifeofthefinancialinstrumentorashorterperiod,whereappropriate,tothenetcarryingamountofthefinancialassetorliability.Interestincomeisincludedinfinanceincomeinprofitandloss.

Deferred Revenue

Deferred revenue is a liability as at reporting date related to revenue producing activity for which revenue has not yet been recognized. The deferred revenue represents revenue received in advance in respect of long term service contract. Deferred revenue is subsequently recognised in the period that the service is delivered.

2.3.4 TAXES

Current income tax

Current income tax and education tax for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equityorothercomprehensiveincome,respectivelyandnotintheprofitandloss.Managementperiodicallyevaluatespositions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.



Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilitiesandtheircarryingamountsforfinancialreportingpurposesatthereportingdate.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that isnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitor loss. In respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits andanyunusedtaxlosses.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitwillbeavailable against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accountingprofitnortaxableprofitorlossuInrespectofdeductibletemporarydifferencesassociatedwithinvestmentsin subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences willreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbe utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilised.Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has becomeprobablethatfuturetaxableprofitswillallowthedeferredtaxassettoberecovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at thereportingdate.Deferredtaxrelatingtoitemsrecognisedoutsideprofitorlossisrecognisedoutsideprofitorloss.Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Taxbenefitsacquiredaspartofabusinesscombination,butnotsatisfyingthecriteriaforseparaterecognitionatthatdate, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement periodorrecognisedinprofitorloss.

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-termconstructionprojectsiftherecognitioncriteriaaremet.Whensignificantpartsofproperty,plantandequipmentarerequiredtobereplacedatintervals,theGrouprecognisessuchpartsasindividualassetswithspecificusefullives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carryingamountoftheplantandequipmentasareplacementiftherecognitioncriteriaaresatisfied.Allotherrepairandmaintenancecostsarerecognisedinprofitandlossasincurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the components of each item of


53


Property plant and equipment as follows:

PPE Class % PPE Class %Buildings 2 Plant & machinery 25Furnitureandfittings 25 Loose tools 25Officeequipment 33.33 Service option equipment 33.33Communication equipment 25 Land Not depreciatedMotor vehicles 25Building improvement 25

Anitemofproperty,plantandequipmentandanysignificantpartinitiallyrecognisedisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossarisingonde-recognitionof the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is includedinprofitandlosswhentheassetisderecognised.

The residual values, useful lives and methods of depreciation of each item of property, plant and equipment are reviewedateachfinancialyearendandadjustedprospectively,ifappropriate.

2.3.6 LEASES

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at theinceptiondate.Thearrangementisassessedforwhetherfulfilmentofthearrangementisdependentontheuseofaspecificassetorassetsorthearrangementconveysarighttousetheassetorassets,evenifthatrightisnotexplicitlyspecifiedinanarrangement.

Group as a lessee

FinanceleasesthattransfertotheGroupsubstantiallyalloftherisksandbenefitsincidentaltoownershipoftheleaseditem, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present valueoftheminimumleasepayments.Leasepaymentsareapportionedbetweenfinancechargesandreductionofthelease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognisedinfinancecostsintheprofitorloss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operatingleasepaymentsarerecognisedasanoperatingexpenseintheprofitorlossonastraight-linebasisoverthe lease term.

Contingent rents are recognised as revenue in the period in which they are earned.

2.3.7 INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibleassets,excludingcapitaliseddevelopmentcosts,arenotcapitalisedandexpenditureisreflectedinprofitand loss in the period in which the expenditure is incurred.

Theusefullivesofintangibleassetsareassessedaseitherfiniteorindefinite.



Intangibleassetswithfinitelivesareamortisedovertheusefuleconomiclifeandassessedforimpairmentwheneverthere is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method foranintangibleassetwithafiniteusefullifearereviewedatleastattheendofeachreportingperiod.

Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedinthe assets are considered to modify the amortisation period or method, as appropriate, and are treated as changes inaccountingestimates.Theamortisationexpenseonintangibleassetswithfinitelivesisrecognisedintheprofitandloss as the expense category that is consistent with the function of the intangible assets.

Intangibleassetswithindefiniteusefullivesarenotamortised,butaretestedforimpairmentannually,eitherindividuallyoratthecash-generatingunitlevel.Theassessmentofindefinitelifeisreviewedannuallytodeterminewhethertheindefinitelifecontinuestobesupportable.Ifnot,thechangeinusefullifefromindefinitetofiniteismadeonaprospective basis.

The software is amortised using a straight line method over a period of 5 years.

Asat31December2016,thegroupdidnothaveanyindefiniteintangibleassets.

Licenses

Licences represent the cost of an operating licence obtained from the Nigerian Communication Commission (NCC) for a period of 10 years. Upon expiration of the license terms, the group may renew the licence with NCC. Licence fees are amortised over a period of 10 years.

2.3.8 FINANCIAL INSTRUMENTS

TheGrouprecognisesfinancialassetsandfinancialliabilitiesontheGroup’sstatementoffinancialpositionwhenitbecomesapartytothecontractualprovisionsoftheinstrument.TheGroupdeterminestheclassificationofitsfinancialassetsandliabilitiesatinitialrecognition.Allfinancialassetsandliabilitiesarerecognisedinitiallyatfairvalueplusdirectlyattributabletransactioncosts,exceptforfinancialassetsandliabilitiesclassifiedasfairvaluethroughprofitorloss.

Financial assets

i. Nature and measurement

TheGroup’sfinancialassetsincludeAvailableforsalefinancialassets,Loansandreceivables,Tradeandotherreceivables,andCashandshort-termdeposits.Afterinitialmeasurement,thesubsequentmeasurementoffinancialassetsdependsontheirclassificationasfollows:

Financial Assets -Subsequent measurement

Loans and receivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactive market. After initial measurement, loans and receivables are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance/interestincomeinthestatementofcomprehensiveincome.Gainsandlossesarerecognisedinprofitorlosswhen the investments are derecognised or impaired, as well as through the amortisation process.

Trade and other receivables

Trade receivables are recognised initially at fair value as the invoice amount and subsequently measured at amortised cost. A provision for impairment of trade receivables is established when there is objective evidence that the Group will notbeabletocollectallamountsdueaccordingtotheoriginaltermsofreceivables.Significantfinancialdifficultiesofthe debtor and default or delinquency in payments are considered indicators that the trade receivable is impaired. The


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Group deploys age analysis tools to track the payment pattern of customers. The carrying amount of trade receivable is reduced through the use of an allowance account. When trade receivables are uncollectible, it is written off as bad debtsinadministrativeexpensesinprofitorloss.Subsequentrecoveriesofamountspreviouslywrittenoffareincludedas ‘Bad debt recoveries’ in other income in the statement of comprehensive income.

Available-for-sale financial assets

Available-for-salefinancialassetsincludeequityinvestments.Equityinvestmentsclassifiedasavailableforsalearethosethatareneitherclassifiedasheldfortradingnordesignatedatfairvaluethroughprofitorloss.Afterinitialmeasurement,available-for-salefinancialassetsaresubsequentlymeasuredatfairvaluewithunrealisedgainsorlosses recognised in other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to beimpaired,whenthecumulativelossisreclassifiedfromtheavailable-forsalereservetoprofitandloss.

ii. Derecognition of Financial assets

TheGroupderecognizesafinancialassetonlyandonlyiftheGroup’scontractualrightstothecashflowsfromtheassetexpiresortheGrouphastransferreditsrightstoreceivecashflowsfromtheassetorhasassumedanobligationtopaythereceivedcashflowsinfullwithoutmaterialdelaytoathirdpartyundera‘pass-through’arrangement;andeither

the Group has transferred substantially all the risks and rewards of the asset, or

the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

WhentheGrouphastransferreditsrightstoreceivecashflowsfromanasset,itevaluatesifandtowhatextentithasretained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associatedliabilityaremeasuredonabasisthatreflectstherightsandobligationsthattheGrouphasretained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

iii. Impairment of financial assets

TheGroupassesses,ateachreportingdate,whetherthereisobjectiveevidencethatafinancialassetoragroupoffinancialassetsisimpaired.Afinancialassetoragroupoffinancialassetsisdeemedtobeimpairedifthereisobjectiveevidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset and thatlosseventhasanimpactontheestimatedfuturecashflowsofthefinancialassetorthegroupoffinancialassetsthat can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencingsignificantfinancialdifficulty,defaultordelinquencyininterestorprincipalpayments,theprobabilitythattheywillenterbankruptcyorotherfinancialreorganisationandobservabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflows,suchaschangesinarrearsoreconomicconditionsthatcorrelatewithdefaults.

Financial assets carried at amortised cost

Forfinancialassetscarriedatamortisedcost,theGroupfirstassesseswhetherobjectiveevidenceofimpairmentexistsindividuallyforfinancialassetsthatareindividuallysignificant,orcollectivelyforfinancialassetsthatarenotindividuallysignificant.

IftheGroupdeterminesthatnoobjectiveevidenceofimpairmentexistsforanindividuallyassessedfinancialasset,whethersignificantornot,itincludestheassetinagroupoffinancialassetswithsimilarcreditriskcharacteristicsand collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the differencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows(excluding



futureexpectedcreditlossesthathavenotyetbeenincurred).Thepresentvalueoftheestimatedfuturecashflowsisdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Loansandreceivablestogetherwiththeassociatedallowance are written off when there is no realistic prospect of future recovery. If in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is laterrecovered,therecoveryisrecognisedasotherincomeintheprofitorloss.

Available for sale financial assets

Foravailable-for-salefinancialassets,theGroupassessesateachreportingdatewhetherthereisobjectiveevidencethatanassetsoragroupoffinancialassetsisimpaired.Inthecaseofequityinstrumentsclassifiedasavailable-for-sale,objectiveevidencewouldincludeasignificantorprolongeddeclineinthefairvalueoftheinvestmentbelowitscost.‘Significant’isevaluatedagainsttheoriginalcostoftheinvestmentand‘prolonged’againsttheperiodinwhichthe fair value has been below its original cost.

When there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost andthecurrentfairvalue,lessanyimpairmentlossonthatinvestmentpreviouslyrecognisedinprofitandloss–isremovedfromothercomprehensiveincomeandrecognisedinprofitandloss.Impairmentlossesonequityinstrumentsarenotreversedthroughprofitorloss;increasesintheirfairvalueafterimpairmentarerecogniseddirectlyinothercomprehensive income.

Financial liabilities

i) Nature and measurement

Thecompany’sfinancialliabilitiesincludetradepayablesandinterestbearingloansandborrowingsandconvertibleloanstock.Allfinancialliabilitiesarerecognizedinitiallyatfairvalueplus,inthecaseofloansandborrowings,directlyattributabletransactioncosts.Thesubsequentmeasurementoffinancialassetsdependsontheirclassificationasfollows:

Financial Liabilities-Subsequent measurement

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIRmethod.Gainsandlossesarerecognisedinprofitorlosswhentheliabilitiesarederecognisedaswellasthroughthe EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are anintegralpartoftheEIR.TheEIRamortisationisincludedasfinancecostsinprofitandloss.

Financial Liabilities-Subsequent measurement

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business fromsuppliers.Tradepayablesareclassifiedascurrentliabilitiesifpaymentisduewithinoneyear(orinthenormaloperating cycle of the business, if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest.

ii) Derecognition of financial liabilities

Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelled,orexpires.Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasthederecognitionoftheoriginal liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised inprofitandloss.


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2.3.8.1 OFF-SETTING OF FINANCIAL INSTRUMENTS

Financialassetsandfinancialliabilitiesareoffsetandthenetamountisreportedintheconsolidatedandseparatestatementoffinancialpositionifthereisacurrentlyenforceablelegalrighttooffsettherecognisedamountsandthereis an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

2.3.9 INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

Rawmaterials:Purchasecostonafirstin,firstoutbasis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

2.3.9 IMPAIRMENT OF NON-FINANCIAL ASSETS

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs tosellanditsvalueinuse.Itisdeterminedforanindividualasset,unlesstheassetdoesnotgeneratecashinflowsthat are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Indetermining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Group’s CGU to which the individual assets are allocated. These budgets and forecast calculations are generally coveringaperiodoffiveyears.Forlongerperiods,along-termgrowthrateiscalculatedandappliedtoprojectfuturecashflowsafterthefifthyear.

Impairmentlossesofcontinuingoperations,includingimpairmentoninventories,arerecognisedinprofitandlossinthose expense categories consistent with the function of the impaired asset

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairmentlossbeenrecognisedfortheassetinprioryears.Suchreversalisrecognisedinprofitandloss..

Thefollowingcriteriaarealsoappliedinassessingimpairmentofspecificassets:

Goodwill

Goodwill is tested for impairment annually at 31 December and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.



2.3.10 CASH AND CASH EQUIVALENTS

Cashandshort-termdepositsinthestatementoffinancialpositioncomprisecashatbanksandonhandandshort-termdepositswithamaturityofthreemonthsorlessfromthedateofacquisition.Forthepurposeoftheofcashflows,cashandcashequivalentsconsistofcashandshort-termdepositsasdefinedabove,netofoutstandingbankoverdrafts.

2.3.11 DIVIDEND DISTRIBUTIONS

The Group recognises dividends when the distribution is authorised and is no longer at the discretion of the Group.

2.3.12 PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but onlywhenthereimbursementisvirtuallycertain.Theexpenserelatingtoaprovisionispresentedinprofitandlossnetof any reimbursement.

2.3.13 EMPLOYEE BENEFITS

Employeebenefitsareallformsofbenefitsgiveninexchangeforservicesrenderedbyemployees.Theseareclassifiedas:

1. Short-termemployeebenefits-benefitsduetobesettledwithin12monthsaftertheendoftheperiodinwhichtheemployeesrenderedtherelatedservices;

2. Post-employmentbenefitsarebenefitspayableafterthecompletionofemployment.Suchplans(orfunds)maybeeitherdefinedcontributionfundsordefinedbenefitfunds.

3. TerminationbenefitsareemployeebenefitspayableasaresultofeithertheGroup’sdecisiontoterminateanemployee’s employment before normal retirement date, or an employee’s decision to accept voluntary redundancy inexchangeforthosebenefits.

Short-term benefits

Thecostofallshort-termemployeebenefits,suchassalaries,profitsharingarrangements,employeeentitlementsto leave pay, bonuses, medical aid and other contributions, are recognised during the period in which the employee renders the related service. The Group recognises the expected cost of bonuses only when the Group has a present legal or constructive obligation to make such payment and a reliable estimate can be made. During the year the Group companiescontributedtoemployeebenefitsinthefollowingcategories:-remunerationintheformofsalaries,wagesand bonuses.

Post-employment Retirement Benefit Funds

Inlinewithstatutorypension/retirementslaws,theGroupanditsemployeescontributetostatutoryretirementbenefitsplans for the benefits of its qualifying staff. The Funds which are defined contribution plans are independently administeredwithnoobligationsontheGroupotherthanthedefinedcontributionasapercentageofemployees’qualifying remunerations. Both employees’ and the group’s share of the contributions are charged as staff cost in the administrativeexpensesintheprofitandlosswhentheemployeerenderstheservice.


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Otherlong-termbenefitsOtherlong-termbenefitsarerecognisedwhenanobligationarises.TheGrouphadnootherlong-termbenefitcommitmentsduringtheyear.

Termination benefits

TheGrouprecognisesterminationbenefitsasaliabilityandanexpensewhenitisdemonstrablycommittedtoeither:

1. terminatetheemploymentofanemployeeorgroupofemployeesbeforethenormalretirementdate;or

2. provideterminationbenefitsasaresultofanoffermadeinordertoencouragevoluntaryredundancy.

Terminationbenefitsarerecognisedasexpenseintheperiodtheyarise.TheGrouphadnoterminationbenefitcommitments during the year.

2.3.15 SEGMENT REPORTING

TheGroupidentifiessegmentsascomponentsoftheGroupthatengageinbusinessactivitiesfromwhichrevenuesareearned and expenses incurred. The segments’ operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to each segment and assess its performance, and forwhichdiscretefinancialinformationisavailable.Theidentificationofoperatingsegmentsisonthebasisofinternalreports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segmentandassessitsperformance.TheGrouphasidentifiedtheChiefExecutiveOfficerasthechiefoperatingdecision maker.

Measurement of segment information

The amount reported for each operating segment is based on the measure reported to the chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance.

2.3.16 FAIR VALUE MEASUREMENT

The Group has available for sale investment measured at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability

Or

• In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Afairvaluemeasurementofanon-financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheasset in its highest and best use.

TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataareavailableto measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Allassetsandliabilitiesforwhichfairvalueismeasuredordisclosedinthefinancialstatementsarecategorisedwithinthefairvaluehierarchy,describedasfollows,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurement as a whole:



• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level2—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisdirectly or indirectly observable

• Level3—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisunobservable

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsatfairvalueonarecurringbasis,theGroupdetermines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on thelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated and separate financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, which havethemostsignificanteffectontheamountsrecognisedintheconsolidatedandseparatefinancialstatements.

Going concern

TheGroup’smanagementhasmadeanassessmentofitsabilitytocontinueasagoingconcernandissatisfiedthatit has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of anymaterialuncertaintiesthatmaycastsignificantdoubtupontheGroup’sabilitytocontinueasagoingconcern.Therefore,thefinancialstatementscontinuetobepreparedonthegoingconcernbasis.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that haveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyear,aredescribedbelow.TheGroupbaseditsassumptionsandestimatesonparametersavailablewhentheconsolidatedandseparatefinancialstatementswereprepared.Existingcircumstancesandassumptionsaboutfuture developments, however, may change due to market changes or circumstances arising beyond the control of the Group.Suchchangesarereflectedintheassumptionswhentheyoccur.

Taxes

Deferredtaxassetsarerecognisedforunusedtaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthelossescanbeutilised.Significantmanagementjudgementisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognised,baseduponthelikelytimingandtheleveloffuturetaxableprofitstogether with future tax planning strategies

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions, conducted at arm’s length for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flowmodel.ThecashflowsarederivedfromthebudgetforthenextfiveyearsanddonotincluderestructuringactivitiesthattheGroupisnotyetcommittedtoorsignificantfutureinvestmentsthatwillenhancetheasset’sperformanceofthe CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flowmodelaswellastheexpectedfuturecashinflowsandthegrowthrateusedforextrapolationpurposes.Thekeyassumptions used to determine the recoverable amount for the different CGUs in goodwill are disclosed and further


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explained in Note 14.2.

Allowance for uncollectible accounts receivable

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable amounts are based on the ageing of the receivable balances and historical experience based on the facts and circumstances prevailing as at reporting date. In addition, a large number of minor receivables is grouped into homogeneous groups and assessed for impairment collectively. Individual trade receivables are written off when management considers them to be uncollectable.

Re-assessment of useful lives and residual values

TheGroupcarriesitspropertyplantandequipmentatcostinthestatementoffinancialposition.TheannualreviewoftheusefullivesandresidualvalueofPPEresultintheuseofsignificantmanagementjudgements.

4. STANDARDS ISSUED BUT NOT YET EFFECTIVE AND AMENDMENTS

StandardsandinterpretationsissuedbutnotyeteffectiveuptothedateofissuanceoftheGroup’sfinancialstatementsaredisclosedbelow.TheGroupiscurrentlyassessingtheimpactthatthesestandardswillhaveonthefinancialpositionand performance.

The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments

InJuly2014,theIASBissuedthefinalversionofIFRS9FinancialInstrumentswhichreflectsallphasesofthefinancialinstruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions ofIFRS9.Thestandardintroducesnewrequirementsforclassificationandmeasurement,impairment,andhedgeaccounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory.

Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015. The impact of this standard have not been assessed by the Group but it is expected that this standard will affect the impairment of trade receivables. This will change the model from incurred loss model to expected loss model and it would possibly lead to more impairment being recognized at the end of the year. There will nolongerbeaclassoffinancialassetsclassifiedasavailableforsale.

IFRS 15 Revenue from Contracts with Customers

IFRS15wasissuedinMay2014andestablishesafive-stepmodeltoaccountforrevenuearisingfromcontractswithcustomers.UnderIFRS15,revenueisrecognisedatanamountthatreflectstheconsiderationtowhichanentityexpects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospectiveapplicationoramodifiedretrospectiveapplicationisrequiredforannualperiodsbeginningonorafter1January 2018. Early adoption is permitted. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date

IFRS 16 - Leases

Effective for annual periods beginning on or after 1January 2019. Early application is permitted, but not before an entity applies IFRS 15. The key features of the amendment are:

• Thenewstandardrequireslesseestoaccountforallleasesunderasingleon-statementoffinancialpositionmodel(subjecttocertainexemptions)inasimilarwaytofinanceleasesunderIAS17.

• Lessees recognise a liability to pay rentals with a corresponding asset, and recognise interest expense and



depreciation separately.

• The new standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less).

• Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events.

• Lessoraccountingissubstantiallythesameastoday’slessoraccounting,usingIAS17’sdualclassificationapproach.

The Group is still assessing the impact of this amendment.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.

TheamendmentsaddresstheconflictbetweenIFRS10andIAS28indealingwiththelossofcontrolofasubsidiarythat is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from thesaleorcontributionofassetsthatconstituteabusiness,asdefinedinIFRS3,betweenaninvestoranditsassociateor joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.TheIASBhasdeferredtheeffectivedateoftheseamendmentsindefinitely,butanentitythatearlyadoptstheamendments must apply them prospectively. The Group has not assessed the impact of this standard.

IAS 7 Disclosure Initiative – Amendments to IAS 7

The amendments to IAS 7 Statement of Cash Flows are part of the IASB’s Disclosure Initiative and require an entity to providedisclosuresthatenableusersoffinancialstatementstoevaluatechangesinliabilitiesarisingfromfinancingactivities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 January 2017, with early application permitted. These amendments to some standards have been issued but not yet effective. The Group intends to adopt these standards, if applicable, when they become effective.

Amendments issued but not yet effective

IAS 12 Recognition of Deferred Tax Assets for Un- realized Losses – Amendments to IAS 12

Theamendmentsclarifythatanentityneedstoconsiderwhethertaxlawrestrictsthesourcesoftaxableprofitsagainstwhich it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provideguidanceonhowanentityshoulddeterminefuturetaxableprofitsandexplainthecircumstancesinwhichtaxableprofitmayincludetherecoveryofsomeassetsformorethantheircarryingamount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact. These amendments are effective for annual periods beginning on or after 1 January 2017 with early application permitted. If an entity applies the amendments for an earlier period, it must disclose that fact. These amendments are not expected to have any impact on the Group.

IFRS 2 Classification and Measurement of Share-based Payment Transactions

Amendments to IFRS 2 The IASB issued amendments to IFRS 2 Share-based Payment that address three main areas:theeffectsofvestingconditionsonthemeasurementofacash-settledshare-basedpaymenttransaction;theclassificationofashare-basedpaymenttransactionwithnetsettlementfeaturesforwithholdingtaxobligations;andaccountingwhereamodificationtothetermsandconditionsofashare-basedpaymenttransactionchangesitsclassificationfromcashsettledtoequitysettled.

On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application


63


is permitted if elected for all three amendments and other criteria are met. The amendments are effective for annual periods beginning on or after 1 January 2018, with early application permitted. This amendment will not have any effect on the Group.

New standards and amendments effective

IFRS 14 Regulatory Deferral Accounts

IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying mostofitsexistingaccountingpoliciesforregulatorydeferralaccountbalancesuponitsfirst-timeadoptionofIFRS.Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financialpositionandpresentmovementsintheseaccountbalancesasseparatelineitemsinthestatementofprofitor loss and OCI. The standard requires disclosure of the nature of, and risk associated with, the entity’s rate-regulation andtheeffectsofthatrate-regulationonitsfinancialstatements.

Since the Group is an existing IFRS preparer and is not involved in any rate-regulated activities, this standard does not apply.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflectsapatternofeconomicbenefitsthataregeneratedfromoperatingabusiness(ofwhichtheassetisapart)ratherthantheeconomicbenefitsthatareconsumedthroughuseoftheasset.Asaresult,arevenue-basedmethodcannotbe used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are applied prospectively and do not have any impact on the Group, given that it has not used a revenue-based method to depreciate its non-current assets.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

Theamendmentschangetheaccountingrequirementsforbiologicalassetsthatmeetthedefinitionofbearerplants.Undertheamendments,biologicalassetsthatmeetthedefinitionofbearerplantswillnolongerbewithinthescopeof IAS 41 Agriculture. Instead, IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance will apply. The amendments are applied retrospectively and do not have any impact on the Group as it does not have any bearer plants.

Amendments to IAS 27: Equity Method in Separate Financial Statements

The amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associatesintheirseparatefinancialstatements.EntitiesalreadyapplyingIFRSandelectingtochangetotheequitymethodintheirseparatefinancialstatementshavetoapplythatchangeretrospectively.TheseamendmentsdonothaveanyimpactontheGroup’sconsolidatedfinancialstatements.

Annual improvements 2012 – 2014 Cycle

These improvements include:

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Assets (or disposal groups) are generally disposed of either through sale or distribution to the owners. The amendment clarifiesthatchangingfromoneofthesedisposalmethodstotheotherwouldnotbeconsideredanewplanofdisposal,rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment is applied prospectively.

IFRS 7 Financial Instruments: Disclosures

(i) Servicing contracts

Theamendmentclarifiesthataservicingcontractthatincludesafeecanconstitutecontinuinginvolvementina



financialasset.Anentitymustassessthenatureofthefeeandthearrangementagainsttheguidanceforcontinuinginvolvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures need notbeprovidedforanyperiodbeginningbeforetheannualperiodinwhichtheentityfirstappliestheamendments.

(ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements

Theamendmentclarifiesthattheoffsettingdisclosurerequirementsdonotapplytocondensedinterimfinancialstatements,unlesssuchdisclosuresprovideasignificantupdatetotheinformationreportedinthemostrecentannualreport. This amendment is applied retrospectively.

IAS 19 Employee Benefits

Theamendmentclarifiesthatmarketdepthofhighqualitycorporatebondsisassessedbasedonthecurrencyinwhichthe obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment is applied prospectively.

IAS 34 Interim Financial Reporting

Theamendmentclarifiesthattherequiredinterimdisclosuresmusteitherbeintheinterimfinancialstatementsorincorporatedbycross-referencebetweentheinterimfinancialstatementsandwherevertheyareincludedwithintheinterimfinancialreport(e.g.,inthemanagementcommentaryorriskreport).Theotherinformationwithintheinterimfinancialreportmustbeavailabletousersonthesametermsastheinterimfinancialstatementsandatthesametime.This amendment is applied retrospectively. These amendments do not have any impact on the Group.

Amendments to IAS 1 Disclosure Initiative

TheamendmentstoIAS1clarify,ratherthansignificantlychange,existingIAS1requirements.Theamendmentsclarify:

• The materiality requirements in IAS 1

• Thatspecificlineitemsinthestatement(s)ofprofitorlossandOCIandthestatementoffinancialpositionmaybedisaggregated

• Thatentitieshaveflexibilityastotheorderinwhichtheypresentthenotestofinancialstatements

• That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregateasasinglelineitem,andclassifiedbetweenthoseitemsthatwillorwillnotbesubsequentlyreclassifiedtoprofitorloss

Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statementoffinancialpositionandthestatement(s)ofprofitorlossandOCI.Theseamendmentsdonothaveanyimpact on the Group.

5. SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

• The IT infrastructure segment, which supplies, installs and supports Computer hardware, operating and middle ware systems, Automated Teller Machines “ATM” etc.

• The Software segment, which provides services in software deployment, implementation and supports, systems


65


analysis, design and implementation and smartcard applications. The segment also provides training to their clients on the systems offered and other off-the-shelf packages.

• Communication and integrated equipment segment, which specializes in VSAT and Fibre Connectivity, Metropolitan Area Networks, Wide Area Networks, Local Area Networks, and Systems Integration and provides provision of network communications support to clients.

• The Managed and support service segment provides internal and external clients managed /outsourcing services and provides related accessories for equipment and service maintenance.

Segmentgrossprofitisusedtomeasureperformanceasmanagementbelievesthatsuchinformationisthemostrelevant in evaluating the results of certain segments relative to other entities that operate within these industries. However,financing(includingfinancecostsandfinanceincome)incometaxesandassetsandliabilitiesaremanagedon a group basis and are not allocated to operating segments. There are no transfers between the operating segments hence there are no transfer prices set for any transactions that may arise. The segments managers are assessed based on the performance on sales and cost of sales. They do not have control over the assets and liabilities. Segments results are as shown below:

IT Infrastructure Services

Managed & Support services

Communications & Integrated Software Total

N’000 N’000 N’000 N’000 N’000

2016

Revenue 3,227,482 5,239,607 230,986 1,467,896 10,165,971Cost of sales (2,557,313) (3,768,328) (201,335) (1,165,690) 7,692,666

---------------- ---------------- -------------- ---------------- ----------------GrossProfit 670,169 1,471,279 29,651 302,206 2,473,305

======= ======== ====== ======= =========2015Revenue 7,514,518 5,181,913 858,105 2,058,746 15,613,282Cost of sales (6,680,922) (4,177,321) (794,371) (1,517,731) (13,170,345)

GrossProfit----------------

833,956=======

-----------------1,004,592

========

--------------63,734

======

----------------541,015

=======

----------------2,442,937

=========

Operating assets and liabilities are controlled at group level and information on this is not readily available as they are not considered by the chief operating decision maker in resource allocation decisions.



Geographical Information

Revenue

2016 2015

N’000 N’000

Nigeria 8,558,821 13,888,580

Ghana 1,143,405 1,250,621

Uganda 456,544 415,584

Cameroon 7,201 58,497

Total-----------------10,165,971

=========

-----------------15,613,282

=========

Information about major Customers

The Group

2016 2015MTN UBA MTN UBA N’000 N’000 N’000 N’000

It Infrastructure 1,587,482 31,216 2,341,439 342,627

Comm. & Integrated services 73,933 - 295,525 178Software 193,544 646,907 237,699 146,964Manage & Support Service 3,427,271 380,052 3,181,064 702,469

-------------5,282,230

========

-------------1,058,175

========

-------------6,055,725

========

-------------1,192,238=======

The Company

MTN UBA MTN UBAN’000 N’000 N’000 N’000

IT Infrastructure 1,494,961 31,216 2,000,696 342,627Comm. & Integrated services 68,024 - 295,525 178Software 196,758 646,907 133,017 146,965Manage & Support Service 3,417,603 380,052 3,181,064 702,469

--------------5,177,026

========

--------------1,058,175

========

---------------5,610,302

========

-------------1,192,238=======

As at 31 December 2016 the receivables from MTN and UBA are N112million (2015:N252million) and N18million (2015: N 219 million) respectively.


67


6. REVENUE

Revenue is made up of:


2016 2015 2016 2015

N’000 N’000 N’000 N’000

IT infrastructure services 3,227,482 7,514,518 1,895,796 6,170,653

Comm. & integrated services 230,986 858,105 248,113 741,002

Managed & support services 5,239,607 5,181,913 5,025,864 5,053,476

Software 1,467,896 2,058,746 1,389,048 1,923,449

-----------------10,165,971

==========

---------------15,613,282

=========

-----------------8,558,821

=========

----------------13,888,580

=========

7. COST OF SALES

The Group The Company2016 2015 2016 2015N’000 N’000 N’000 N’000

OEM and Other Cost

7,692,666 13,170,345 6,466,464 11,734,701

-----------------7,692,666

=========

-----------------13,170,345

==========

-----------------6,466,464

==========

---------------11,734,701

=========

The above represents the details of the cost of sales, which is original equipment manufacturer (OEM) and other direct cost.Employeebenefitexpenses,depreciationandamortisationdonotformpartofthecompany’scostofsales.

8. OTHER INCOME

2016 2015 2016 2015N’000 N’000 N’000 N’000

Sundry incomes 53,458 50,510 32,064 37,205

ProfitondisposalofProperty - 68 - 68

Exchange gain 341,617 299,656 319,457 219,428

-----------395,075

=======--------------350,234

=======-------------351,521

=======-----------256,701

=======

The sundry incomes are mostly scrap sales and refunds received by the company during the year.



9. ADMINISTRATIVE EXPENSES


2016 2015 2016 2015

N’000 N’000 N’000 N’000Audit fee 27,521 23,641 17,760 17,760Amortisation 69,411 56,466 69,411 56,466Depreciation 123,645 248,471 118,900 243,383Salaries and allowances 1,462,457 1,266,009 1,288,864 1,155,003Pension 69,256 47,224 49,914 35,015Donations and gifts 3,161 8,010 3,161 8,010Printing postage & telephone 42,743 234,069 32,040 231,837Internet Subscriptions 31,165 52,234 29,230 52,019Transport and travelling 124,173 119,783 109,676 114,451Accommodations and entertainment 16,175 28,651 16,175 28,651

Exchange loss - 600,426 - 600,426Professional fees 54,698 122,150 53,151 118,865Welfare 95,541 175,602 95,541 175,602Provision for doubtful debts 42,913 80,826 42,913 78,748Bad debts - 315,083 - 315,190Insurance 21,620 31,844 21,541 31,025Bank charges 45731 103,464 39067 90,936Rents 100,720 114,769 74,856 92,182Repairs and maintenance 57,074 35,120 54,924 33,105Advert and Sales Commission 8,216 85,508 8,216 79,951Research and development 12,244 55,102 12,244 55,102Inventory write off - 430,954 - 430,954Others 214,143 182,662 178,442 130,137

---------------2,613,857

========

---------------4,412,186

========

-------------2,307,276

========

---------------4,174,817

========

Otherexpensesrelatestosecurityservices,officecleaningexpenses,ITFandNSITF,prebidcontractexpenses,awards, license fees and conferences expenses incurred during the year.


69


10. FINANCE COST


2016 2015 2016 2015N’000 N’000 N’000 N’000

Interest on loan 152,757=======

170,131=======

144,753=======

154,011=======

11. FINANCE INCOME


2016 2015 2016 2015

N’000 N’000 N’000 N’000

Interest income 40,238 42,149 40,238 42,149

12. INCOME TAX

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

12.1. TAXATION: CONSOLIDATED PROFIT OR LOSS


Current income tax:

Current Income tax charge 14,329 48,849 - -Education tax - - - -

---------14,329

---------48,849

------

------

Deferred tax - - - -

Incometaxexpensereportedinprofitandloss ---------14,329

-----------48,849

-------

-------

Consolidatedstatementofprofitorloss&othercomprehensive income: - - - -

Net exchange gain/(loss) on translation of foreign operations - - - -

Income tax charged directly to other comprehensive income - - - -



Thecompanytaxexemption(taxholiday)certificategrantedbytheNigeriaInvestmentPromotionCommission(NIPC)for a period of 5 years commencing in 2011 elapsed in 2015 and the company has assessable loss and will not pay minimumtaxationinthecurrentperiod.Reconciliationbetweentaxexpenseandtheproductofaccountingprofitmultiplied by Nigeria’s domestic tax rate for the years ended 31 December 2016 and 2015 is as follows:


Reconciliation of tax charge

Profit/(loss)beforetaxcharge 142,004======

(1,746,997)========

32,087=====

(1,876,099)=========

Tax at Nigeria statutory income tax of 30% 42,601 (524,099) 9,626 (562,830)

Income exempt from tax (170,424) - (184,753 -

Non-deductible expenses 134,701 572,948 134,701 562,830

Impact of tax losses not recognised 7,451 - 40,426 -

Effective tax charge-----------14,329

======----------48,849

======------------

-=======

-------------

=======

12.2. INCOME TAX: STATEMENT OF FINANCIAL POSITION


2016 2015 2016 2015N’000 N’000 N’000 N’000

At 1 Jan 629,082 621,112 561,584 561,584Income tax 14,329 48,849 - -Education tax - - - -Tax paid - (40,879) - -

At 31 December-------------643,411

=======

-------------629,082

=======

-------------561,584

=======

-------------561,584

=======

12.3. DEFERRED TAX

Deferred tax relates to the following:


2016 2015 2016 2015N’000 N’000 N’000 N’000

At 1 January - - - -Write back during the year - - - -

----------

=====----------

-======

------------

======-----------

-======


71


The deferred tax asset from the Group and the Company was not recognised during the year as a result of the unabsorbed losses from prior year, the balance not recognised in the book of the company and the group was N378.81 million. (2015: N406.14 million). Also some of the subsidiaries are not paying tax and they do not have assessed losses during the year, (2015: N48,849million).

13. EARNINGS PER SHARE

Basicearningspershareamountsarecalculatedbydividingthenetprofit(loss)fortheyearattributabletoordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.


2016 2015 2016 2015N’000 N’000 N’000 N’000

Netprofit/(loss)/attributabletoordinaryequity holders of the parentfor basic earnings

127,675

-------------

(1,795,846)

-----------------

32,087

-----------

(1,876,099)

--------------

13.1. EARNINGS PER SHARE


2016 2015 2016 2015Thousands Thousands Thousands Thousands

Weighted average number of ordinary shares for basic and diluted earnings per share

2,524,826 2,524,826 2,524,826 2,524,826

Additional share issued - - - -

--------------2,524,826

========

--------------2,524,826

========

--------------2,524,826

========

----------------2,524,826

========Weighted average number of ordinary shares

2,524,826 ========

2,524,826 ========

2,524,826 ========

2,524,826 ========

Basic / earnings /(loss)per share 0.05 (0.71) 0.01 (0.74)

14. BUSINESS COMBINATION

14.1. INTEREST IN SUBSIDIARIES:

ThesummarisedfinancialinformationofCWGLimitedGhana,CWGLimitedUgandaandCWGLimitedCameroonare provided below. This information is based on amounts before inter-company eliminations.



Summarized profit or loss

CWG Ghana CWG Uganda CWG Cameroon

31 Dec. 2016

31 Dec. 2015

31 Dec. 2016

31 Dec. 2015

31 Dec. 2016

31 Dec. 2015

N 000 N 000 N 000 N 000 N 000 N 000Revenue 1,143,405 1,250,621 456,544 415,584 7,201 58,497Operating expenses (829,627) (1,021,098) (396,575) (361,672) - (52,874)Administrative expenses (198,796) (114,094) (85,959) (89,390) (21,826) (21,357)Other operating income 19,945 88,954 - 4,579 1,449 -Finance cost - (10,906) (8,004) (17,022) - (720)

---------- ---------- ------------ ------------- ------------ ----------Profitbeforetax 134,927 193,477 (33,994) (47,921) (13,176) (16,454)Income tax expense (14,329) (48,779) - - - (70)

---------- ---------- ----------- ----------- ---------- ----------Profitfortheyear 120,598 144,698 (33,994) (47,921) (13,176) (16,524)

====== ====== ====== ====== ====== ======Total comprehensive income 120,598 144,698 (33,994) (47,921) (13,176) (16,524)Attributable to:Equity holders of parent 120,598 144,698 (33,994) (47,921) (13,176) (16,524)Non-controlling interests - - - - - -

120,598 144,698 (33,994) (47,921) (13,176) (16,524)====== ====== ====== ====== ====== ======

SummarisedstatementsoffinancialpositionInventories and cash and bank balances (current) 140,910 62,820 20,014 830 2,136 2,693Trade and other receivables, Due from related parties and Prepayments

433,071 213,081 175,894 221,086 15,793 7,488

Property, plant and equipment and other non-currentfinancialassets(non-current)

21,369 3,546 2 56 1,121 1,396

Income tax payable (81,827) - - -Trade and other payables (current) (246,542) (163,317) (230,618) (166,096) (75,065) (53,010)

Interest-bearing loans and borrowing (Current) - - - (69,696) - -

----------- ----------- ------------ ------------ ------------- -------------

Total equity 266,981 116,130 (64,144) (104,404) (56,015) (41,433)Attributable to:Equity holders of parent 266,981 116,130 (64,144) (104,404) (56,015) (41,433)Non-controlling interests - - - - - -

-----------266,981=======

-------------116,130=======

-----------(64,144)=======

-----------(104,404)=======

-----------(56,015)======

-----------(41,433)======


73


14.2. GOODWILL

Goodwill acquired through business combinations has been allocated to two CGUs, which are also operating and reportable segments, for impairment testing as follows:

1] Software CGU 2] Hardware CGU

Carrying amount of goodwill allocated to each of the CGUs:

2016 2015

N’000 N’000Software CGU 76,717 76,717Hardware CGU** 737,371 737,371

-------------814,088

=======-------------814,088

=======

** The hardware CGU is included in the IT Infrastructure segment.

SOFTWARE CGU

The recoverable amount of software cash generating unit was based on its value in use and was determined by discountingthefuturecashflowprojectionsfromthefinancialbudgetsapprovedbyseniormanagementcoveringa5years period. Unless indicated the value in use in December 2016 was determined in similar way as 31 December 2015.

The calculation of value in use was based on the following keys assumptions:

Cash flow was projected based on past experience, actual operating result and a 5 – year operating cash-flow in both 2015 and 2016.

Revenue growth rate

The revenue growth rate was based on 4% (2017), 5% (2018), 5% (2019), 5% (2020) and 5% (2021). The revenue growth included in the cash flow projections for the years 2017-2021 has been on the trend of foreseeable growth in the business segments.

Pre-tax discount rate

The pre-tax discount rate of 10.51% was applied in determining the recoverable amount of the unit. The discount rate was estimated based on past experience and industry weighted average cost of capital which was based on the incremental borrowing rate.

Gross/Cost margin

The gross margin has been projected as 30% (2017), 32% (2018), 32% (2019), 30% (2020) and 28% (2021) while the relevant cost margin was estimated as 70% (2017), 68% (2018), 68% (2019), 70% (2020) and 72% (2021)

HARDWARE CGU

The recoverable amount of hardware CGU generating unit was based on its value in use and was determined by discountingthefuturecashflowprojectionsfromfinancialbudgetapprovedbyseniormanagementcoveringa4yearsperiod. Unless indicated the value in use in December 2016 was determined similarly to as in 31 December 2015.

The calculation of value in use was based on the following keys assumptions:



Cashflowwasprojectedbasedonpastexperience,actualoperatingresultanda5yearoperatingplaninboth2015and 2016.

Revenue growth rate

The revenue growth rate was based on 4% (2017), 5% (2018), 5% (2019), 5% (2020) and 5% (2021). The revenue growthincludedinthecashflowprojectionsfortheyears2017-2021hasbeenonthetrendofforeseeablegrowthinthe business segments.

Pre-tax discount rate

The pre-tax discount rate 10.51% was applied in determining the recoverable amount of the unit. The discount rate was estimated based on past experience and industry weighted average cost of capital which was based on the incremental borrowing rate.

Gross/Cost Margins

The gross margin was projected as 15% (2017), 21% (2018), 21% (2019), 20% (2020), and 19% (2021), while the relevant cost margin was estimated as 85% (2017), 79% (2018), 79% (2019), 80% (2020) and 81% (2021)

The recoverable amount for the hardware CUG was N2.2billion while software CUG was N1.4billion. As a result of this analysis, there was no impairment charged for Hardware CGU and software CGU in 2015 and 2016.

Sensitivity to changes in assumptions

Withregardtotheassessmentofvalue-in-useoftheCGUunit,therearenosignificantchangestothesensitivityinformationdisclosedintheannualconsolidatedfinancialstatementsfortheyearended31December2016.


75


15. PROPERTY, PLANT & EQUIPMENT – THE GROUP

Land Building Plant & Machinery

Furniture & Fittings

Office Equip-ment

Motor Vehi-cles

Loose tools

Service Option

Equipment

Commu-nication

equipment

Total

N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

Cost:

At 1 January 2015

111,395 92,171 88,795 54,367 116,602 124,462 25,048 1,090,533 1,024,196 2,727,569

Additions - 20,7581 22,735 12,628 52,775 33,250 - - 36,126 178,295Disposals - - - - (182) (12,333) - - - (12,515)Reclassifica-tion

- - - 158 (158) - - - - -

At 31 Decem-ber 2015

-----------111,395======

----------112,952======

----------111,530======

---------67,153

======

-----------169,037

=======

-----------145,379======

---------25,048=====

--------------1,090,533

========

------------1,060,322======

-------------2,893,349

========At 1January 2016

111,395 112,952 111,530 67,153 169,037 145,379 25,048 1,090,533 1,060,322 2,893,349

Additions - 2,475 50 7,859 15,656 30,450 - - 876 57,366Disposals - - - - - (16,061) - - (16,061)Exchange difference

- - - 4,036 5,543 16,092 - - 4,013 29,684

Reclassi-ficationtoIntangible assets

- - - - (610) - - - - (610)


111,395======

115,427=====

111,580======

79,048======

189,626=====

175,860======

25,048=====

1,090,533=======

1,065,211======

2,968,728======

Depreciation:

At 1 January 2015

- 22,622 53,785 16,415 90,420 74,800 24,691 1,049,307 842,874 2,174,914

Charge for the year

- 10,161 17,364 14,053 23,288 25,410 231 41,225 116,739 248,471

Disposals - - - - (182) (9,035) - - - (9,216)Reclassifica-tion

- - - 52 (52) - - - - -


-----------

======

----------32,783

======

----------71,149

======

----------30,520

======

-----------113,474

=======

------------91,175

======

---------24,922=====

--------------1,090,532

========

------------959,613======

------------2,414,168

========

At 1January 2016

- 32,783 71,149 30,520 113,474 91,176 24,922 1,090,532 959,613 2,414,169

Charge for the year

- 15,310 14,490 16,756 24,074 11,263 85 - 41,667 123,645

Disposals - - - (7,172) - - - (7,172)Exchange difference

- - - 3,055 2,432 320 - - 4,055 9,862


-----------

======

----------48,093

======

----------85,639

======

----------50,331

======

-----------139,980======

------------95,587

======

---------25,007=====

--------------1,090,532=======

------------1,005,335======

-------------2,540,503

========Net book Value


111,395======

67,334======

25,941======

28,717======

49,646======

80,273======

41====

1======

59,876======

423,225=======


111,395======

80,169======

40,381======

36,633======

55,563======

54,203======

126====

1======

100,709======

479,180======

There was no interest capitalised as part of Property plant & equipment during the year. The net carrying amount of leased motor vehicles is N25miilion (2015:12million)



Also, there was no existence and amount of restrictions for title on Property plant & equipment pledged as securities for liabilities during the year

.

15. PROPERTY, PLANT & EQUIPMENT – THE COMPANY

Land Build-ing

Plant & Machin-

ery

Furni-ture &

Fittings

Office Equip-ment

Motor Vehicles

Loose tools

Service Option Equip-ment

Comm. equip-ment

Total

N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

Cost:

At 1 January 2015 111,395 92,171 86,706 49,414 103,877 115,327 25,048 1,090,532 1,013,070 2,687,540

Additions ------------

20,781-----------

22,735-----------

11,601-----------

50,797-----------

33,250-----------

----------

------------

36,126-----------

175,290-----------

Disposals ------------

------------

------------

------------

(182)-----------

(12,333)-----------

----------

------------

------------

(12,515)-----------

At 31 Dec. 2015

111,395=====

112,952=====

109,441======

61,015======

154,492======

136,244======

25,048====

1,090,532======

1,049,196======

2,850,315======

At 1January 2016 111,395 112,952 109,441 61,015 154,492 136,244 25,048 1,090,532 1,049,196 2,850,315

Additions - 2,475 50 7,862 15,656 30,450 - - - 56,493Disposals - - - - - (16,061) - - - (16,061)Reclassificationto Intangible assets

- - - - (610) - - - (610)

At 31 Dec. 2016

111,395====

115,427=====

109,491======

68,877======

169,538======

150,633======

25,048====

1,090,532=======

1,049,196=======

2,890,137======

Depreciation

At 1 January 2015 - 11,939 53,647 13,830 81,222 76,480 24,691 1,049,307 831,337 2,142,453

Charge for the year - 10,161 17,025 12,199 20,987 24,816 231 41,225 116,739 243,383

Disposals ---------

---------

---------

---------

(182)--------

(9,035)--------

---------

---------

---------

(9,216)--------

At 31 Dec. 2015

-=====

22,100=====

70,672=====

26,029=====

102,027=====

92,261=====

24,922====

1,090,532=======

948,076=======

2,376,619=======

At 1January 2016 - 22,100 70,672 26,029 102,027 92,262 24,922 1,090,532 948,076 2,376,620

Charge for the year - 15,310 14,490 15,362 22,748 9,290 85 41,615 118,900

Disposals ---------

---------

---------

---------

---------

(7,172)--------

---------

---------

---------

(7,172)--------

At 31 Dec. 2016

-=====

37,410=====

85,162=====

41,391======

124,775======

94,380======

25,007====

1,090,532=======

989,691=======

2,488,347=======

Net book Value

At 31 Dec. 2016

111,395======

78,017======

24,329======

27,486======

44,763======

56,253======

41====

-======

59,505======

401,790======

At 31 Dec. 2015

111,395=====

90,582======

38,769======

34,986======

52,465======

43,982======

126====

-======

101,120======

473,695======

There was no interest capitalised as part of Property plant & equipment during the year.

Also, there was no existence and amount of restrictions for title on Property plant & equipment pledged as securities for liabilities during the year.


77


16. INTANGIBLE ASSETS


Software Licence Total Software Licence TotalN’000 N’000 N’000 N’000 N’000 N’000

Cost:

At 1January 2015 153,791 25,000 178,791 153,791 25,000 178,791Additions 112,093 - 112,093 112,093 - 112,093

At 31 December 2015------------265,884======

-----------25,000=====

------------290,884======

------------265,884======

-----------25,000=====

------------290,884======

At 1January 2016 265,884 25,000 290,884 265,884 25,000 290,884Additions 18,840 - 19,450 18,840 - 19,450Reclassification 33,896 610 34,506 33,896 610 34,506

At 31 December 2016------------318,620======

-----------25,610=====

------------344,230======

------------318,620======

-----------25,610=====

------------344,230======

Amortisation:

At 1January 2015 84,030 15,000 99,030 84,030 15,000 99,030Amortisation charge for the year 53,966 2,500 56,466 53,966 2,500 56,466

At 31 December 2015-----------137,996======

----------17,500=====

-----------155,496======

-----------137,996=====

----------17,500=====

-----------155,496=====

At 1January 2016 137,996 17,500 155,496 137,996 17,500 155,496Amortisation charge for the year 66,300 3,110 69,411 66,300 3,110 69,411

At 31 December 2016-----------204,296======

----------20,610=====

-----------224,906======

-----------204,296======

----------20,610=====

-----------224,906======

Net book Value:

At 31 December 2016 114,324======

5,000======

119,324======

114,324=====

5,000======

119,324======

At 31 December 2015 127,888======

7,500=====

135,388======

127,888=====

7,500=====

135,388======

The intangible assets are in respect of software and an operating licence which was granted for a minimum of 10 years by the relevant government agency, the Nigerian Communication Commission. The licence have been acquired with the option to renew at the end of the period at little or no cost to the Group. The remaining useful life of the licence as at31December2016is2years.Thesoftwareisdeemedtohaveafiniteusefullifeanditthusamortisedoveraperiodof 5 years. As at 31 December 2016, these assets were tested for impairment and no indicators of impairment were identified.

Additions to the intangible asset relates to investment in software and licenses to support the group’s subscription businesses and these includes Vericash, PTSP software, Infosight software, EBPP licence, SMERP software and Smart energy metering solution. Thesoftwarewasreclassifiedfromprepayments.



17. INVESTMENT IN SUBSIDIARIES – THE COMPANY

2016 2015

N’000 N’000CWG Ghana 883 883CWG Uganda 272,098 272,098CWG Cameroun 303 303

-------------273,284

=======

-------------273,284

=======

18. AVAILABLE FOR SALE FINANCIAL ASSET

2016 2015N’000 N’000

At 1 Jan 2016 69,791 78,768Additions during the year - 6,900Lossonavailableforsalefinancialasset -2,243 -15,877

At 31 Dec 2016----------67,548

======

----------69,791

======

Thegrouprecognisegainorlossonavailable-for-salefinancialassetwithintheothercomprehensiveincome.

18.1 FAIR VALUE MEASUREMENT

TheGroupmeasuresfinancialinstrumentsandnon-financialassetsatfairvalue.Fairvalueisthepricethatwouldbe received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Afairvaluemeasurementofanon-financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheasset in its highest and best use.

TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataareavailable to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.Allassetsandliabilitiesforwhichfairvalueismeasuredordisclosedinthefinancialstatementsarecategorisedwithinthefairvaluehierarchy,describedasfollows,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level2—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisdirectly or indirectly observable


79


Level3—Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurementisunobservable

Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis,theGroupdetermineswhether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest levelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.

Asat31December2016,thecompanyandtheGroupheldthefollowingfinancialinstrumentscarriedatfairvalueonthestatementoffinancialposition:

Assets measured at fair value 31 December 2015 Level 1 Level 2 Level 3

N’000 N’000 N’000 N’000Available-for-salefinancialassets:

Quoted equity 69,791======

69,791======

-===

-=====

31 December 2016Available-for-salefinancialassets:

Quoted equity 67,548======

67,548======

-===

-===

19. INVENTORIES


2016 2015 2016 2015N’000 N’000 N’000 N’000

ATM and other inventory items 470,812 431,752 470,812 431,752Work-in-progress 3,000,577 1,017,398 3,000,577 1,017,398Goods-in-transit 247 170 - -

Total inventories at the lower of cost and net realisable value

---------------3,471,636

========

---------------1,449,320

========

-------------3,471,389

========

---------------1,449,150

========

During 2016, Nil (2015: N430,954,000) was written off and N1,508,827,857 (2015:N916,431,452) was recognised as an expense for inventories carried at net realisable value. This is recognised in cost of sales.



20. TRADE AND OTHER RECEIVABLES


Trade receivable 2,657,820 2,304,172 2,538,068 2,057,107Impairment allowance (Note 20.1) (192,088) (151,253) (192,088) (149,175)

--------------2,465,732

--------------2,152,919

-------------2,345,980

-------------1,907,932

Other receivables 410,683 165,603 285,621 37,575Due from related parties (Note 27) - - 102,109 107,017

WHT receivables 4,181,528 3,851,274 3,978,564 3,792,427VAT receivables 69,051 - - -

---------------7,126,994

========

---------------6,169,796

========

----------------6,712,274

========

----------------5,844,951

========

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. The carrying value of these items approximates their fair value.

As at 31 December 2016, Group trade receivables of an initial value of N 192,088,000 (2015: N 151,253,000) were impaired and fully provided for while Company trade receivables of an initial value of N 192,088,000 (2015: N 149,175,000) were impaired and fully provided for. See Note 20.1 below for the movements in the provision for impairment of receivables for the company and the group.

20.1 ALLOWANCES FOR IMPAIRMENT ACCOUNT – GROUP

Individually Impaired Total

N’000 N’000At 1 January 2015 70,427 70,427Charge for the year 80,826 80,826Unused amounts reversed - -

------------ -------------At 1 January 2016 151,253 151,253Charge for the year 42,913 42,913Utilised (2,078) (2,078)

At 31 December 2016-------------192,088

=======

-------------192,088

=======


81


20.1 ALLOWANCES FOR IMPAIRMENT ACCOUNT – COMPANY

Individually impaired Total

N’000 N’000At 1 January 2015 70,427 70,427Charge for the year 78,748 78,748Unused amounts reversed - -

------------ -------------At 1 January 2016 149,175 149,175Charge for the year 42,913 42,913

At 31 December 2016-------------192,088

=======

-------------149,175

=======

20.2 AGEING ANALYSIS

As at 31 December, the ageing analysis of trade receivables for group and the company are as follows:

Total Current >30 days >60 days >90 daysN’000 N’000 N’000 N’000 N’000

The Group

31 December 2016 2,657,820 812,508 258.872 909,881 676,559

31 December 2015 2,304,172 822,749 303,885 453,367 724,171

The Company

31 December 2016 2,538,068 782,570 228.934 879,943 646,621

31 December 2015 2,057,107 674,509 254,471 416,307 711,820

21. PREPAYMENTS


Prepaid project cost 518,059 481,095 518,059 481,095Staff advances 14,125 10,103 14,125 10,103Other prepayments 406,630 95,770 395,556 85,977

------------938,814

=======

------------586,968

=======

------------927,740

=======

------------577,175

=======

The other payments are mainly attributable to rents and insurance during the year. The staff advances are in respect of short-term advances granted to employees of the group at no interest. The advances are expected to be received within one year. The carrying value of these items approximates their fair values.



22. CASH AND CASH EQUIVALENTS


Bank 1,608,391 820,580 1,445,732 754,534Cash 598 1,009 444 882

Short term deposit 197,662--------------

---------------

197,662---------------

----------------

1,806,651 821,589 1,643,838 755,416

Bank overdrafts (99,730) (178,118) (99,730) (178,118)Net cash and cash equivalents used in the Statement of Cash Flows

--------------1,706,921

========

--------------643,471

========

-------------1,544,108

========

-------------577,298

========

Cashatbanksearninterestatfloatingratesondailybankdepositrates.Thebankoverdraftsareunsecuredandaccrueinterest at the prevailing market interest rate from time to time.

23. SHARE CAPITAL

2016 2015N000 N000

Authorised shares: 3,500,000,000 ordinary shares of 50kobo each. 1,750,000 1,750,000

Issued and fully paid shares 2,524,826,359 ordinary shares of 50kobo each.

At 31 December 2016 1,262,413========

1,262,413========

23.1. NATURE AND PURPOSE OF RESERVES

23.1.1. RETAINED EARNINGS

The Group’s retained earnings reserve comprises Group’s retained earnings, net of distribution made to equity holders.

23.1.2. SHARE PREMIUM

The share premium is excess amount received over and above the par value of the shares. They form part of the non-distributablereservesofthecompanywhichcanbeusedonlyforthepurposesspecifiedunderCompaniesandAlliedMatters Act, CAP C20, LFN 2004.

23.1.3. AVAILABLE FOR SALE RESERVE

The available for sale reserve comprises the cumulative net change in the fair value of the Groups available for sale investments.


83


23.1.4. FOREIGN CURRENCY TRANSLATION RESERVE

Thetranslationreservecomprisesallcurrencyexchangedifferencesarisingfromthetranslationofthefinancialstatements of non-Naira denominated operations into the presentation currency of the Group.

24. TRADE AND OTHER PAYABLES


Trade payables 2,262,023 2,104,702 2,012,592 1,881,859Other payables (Note 24.1) 4,031,575 3,862,633 3,877,475 3,784,842Due from related party (Note 27) - - 70,262 -Employeebenefits–Pension - 30,809 - 30,809Development Levy - 13,941 - 13,941Accruals 3,944,823 421,582 3,936,940 480,157

-----------------10,238,421

=========

----------------6,433,667

========

----------------9,897,269

========

---------------6,191,608

========

The accruals relate to provision for Pay As You Earned, Industrial Training Funds and accrued cost of goods sold.

24.1. OTHER PAYABLES


Value Added tax 3,287,498 3,240,073 3,275,628 3,228,106Withholding tax 555,071 525,621 555,071 525,621Unclaimed dividend 5,076 3,562 5,076 3,562Lease liability 41,700 27,602 41,700 27,602Sundry creditors 142,230 65,775 - -

---------------4,031,575

========

---------------3,862,633

========

---------------3,877,475

========

---------------3,784,842

========

Sundry creditors are made up of small or infrequent outstanding’s owed to suppliers that are not assigned individual ledger account

Termsandconditionsoftheabovefinancialliabilities:

• Trade payables are non-interest bearing and are normally settled on 45-day terms

• Other payables are non-interest bearing and have an average term of six months

For explanations on the Group’s credit risk management processes, refer to Note 29.



25. SHORT-TERM INTEREST BEARING LOANS AND BORROWINGS


2016 2015 2016 2015N’000 N’000 N’000 N’000

Interest-bearing loans and borrowings ( Note 25.1) 69,696 72,997 - -

Bank overdraft 99,730 178,118 99,730 178,118-------------169,426

=======

-------------251,115

=======

-------------99,730

=======

-------------178,118

=======

25.1 INTEREST-BEARING LOANS AND BORROWINGS

The Group The Company 2016 2015 2016 2015N’000 N’000 N’000 N’000

Ecobank Uganda Limited & Stanbic Bank Uganda(i) 69,696 72,997 - -

Total-----------69,696

======

------------72,997

=======

-----------

=====

-------------

=======

i. Ecobank Uganda Limited & Stanbic Bank Uganda

InJuly2015,theGroupwasgrantedalocalpurchaseorderfinancingfacilitybyStanbicBankLimited.ThefacilityamountgrantedwasamaximumofUSD500,000.Thefacilitywasgrantedtofinanceworkingcapitalrequirementsofthe company. The facility is a drawdown on the company’s account as a short term loan for a maximum of 120 days with a 30 days roll-over option. The facility is co-available in both Ushs and United States Dollars (USD). The interest on the facility is charged at 12% per annum. As at 31 December 2015, UGX 1,269million ($365,952USD) had been drawn down by the company. The loan is repayable not later than 120 days from the date of availment with a 30 days roll-over option.

26. DEFERRED REVENUE


At 1 January 149,415 1,299,573 149,415 1,299,573

Deferred during the year 486,559 149,415 486,559 149,415

Releasedtoprofitandloss (105,339) (1,299,573) (105,339) (1,299,573)

At 31 December--------------530,635

=======

---------------149,415

========

--------------530,635

=======

---------------149,415

========


85


The deferred revenue represents revenue received in advance in respect of long term service contract. Deferred revenue is subsequently recognised in the period that the service is delivered.

27. RELATED PARTY DISCLOSURES - COMPANY

TheconsolidatedandseparatefinancialstatementsincludethefinancialstatementsoftheGroupandthesubsidiarieslisted in the following table:

% Equity Interest

Name Country of incorporation 2016 2015

CWG Ghana Limited Ghana 100 100

CWG (Uganda) Limited Uganda 100 100

CWG Cameroon Limited Cameroon 100 100

The following table provides the total amount of transactions that have been entered into with related parties for the relevantfinancialyear.

Related Party

Relationship Nature Of Transaction

Balance Payable

Balance Receivable

Balance Payable

Balance Receivable

31 Dec 2016

31 Dec 2016

31 Dec 2015

31 Dec 2015

N’000 N’000CWG Uganda

Fellow subsidiary

Advances and payment of salaries

-

28,913

-

28,615

CWG Ghana Fellow subsidiary


70,262 - - 13,350

CWG Cameroon

Fellow subsidiary


- 73,196 - 65,052

TOTAL: -----------70,262=====

------------102,109======

-----------

=====-------------107,017======

Terms and conditions of transactions with related parties

Transactions to and from related parties are made at terms equivalent to those that prevail in arm’s length transactions. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2016, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2015: Nil).

Thisassessmentisundertakeneachfinancialyearbyexaminingthefinancialpositionoftherelatedpartyandthemarket in which the related party operates.

The Group has no related party transactions other than Director’s fees.

The average number of persons employed by the group during the year, including Directors, was as follows:



The Group The Company2016 2015 2016 2015

Technical 360 422 348 410Non-technical 166 141 140 123

------526===

------563===

------488===

------533===

Directors’ emoluments comprise:


Fees - 6,350 - 6,350

Other remuneration 104,213 209,827 104,213 209,827

Highest paid director 38,977 46,772 38,977 46,772

The numbers of Directors whose gross emoluments are within the bands stated below were:-

2016 2015 2016 2015Number Number Number Number

N NUp to - 1,000,000 - - - -

1,000,001 - 2,000,000 - - - -2,000,001 - 3,000,000 - - - -3,000,001 and above 2 4 2 4

---2

==

----4

==

----2

==

---4

==

Staff Costs - Salaries and allowances:


Wages, Salaries, allowances andotherbenefits 1,523,497 1,266,009 1,323,138 1,155,003

Pension costs - 47,224 - 35,015----------------1,523,497

========----------------1,447,179

========---------------1,323,138

========---------------1,190,018

========


87


The numbers of employees with gross emoluments within the bands stated below were:

The Group The Company2016 2015 2016 2015

Number Number Number NumberN

Up to -1,000,000 210 209 203 2051,000,001- 2,000,000 145 154 136 147

2,000,001- 3,000,000 53 69 49 60

3,000,001 and above 118 131 100 121------526===

-----563===

-----488===

-----533===

Transactions with key management personnel

Compensation of key management personnel of the Company and the Group

2016 2015N’000 N’000

Short-termemploymentbenefits 201,324 209,827Post-employmentpensionandmedicalbenefits - 6,350Fees paid for meetings attended - -

Total compensation paid to key management personnel

------------201,324

=======

------------216,177

=======

28. COMMITMENTS AND CONTINGENCIES

TheGrouphasfinanceleasesforvariousmotorvehiclepurchasedonlease.TheGroup’sobligationsunderfinanceleasesaresecuredbythelessor’stitletotheleasedassets.Futureminimumleasepaymentsunderfinanceleases,together with the present value of the net minimum lease payments are, as follows:

2016 2015

Minimum payments

Present value of payments

Minimum payments

Present value of

paymentsWithin one year 17,993 16,900 15,187 14,550Afteroneyearbutnotmorethanfiveyears 30,121 24,800 15,221 27,602

Total minimum lease payments ------------48,114

------------41,700

------------30,408

------------27,375

Lessamountrepresentingfinancecharge ( 6,414) - (2,806) -

Present value of minimum lease payments

--------------41,700

========

-------------------41,700

========

--------------27,602

========

--------------27,602

========



29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

TheGroup’sprincipalfinancialliabilities,otherthanderivatives,compriseloansandborrowings,andtradeandotherpayables.ThemainpurposeofthesefinancialliabilitiesistofinancetheGroup’soperationsandtoprovideguaranteesto support its operations. The Group has loan and other receivables, trade and other receivables, and cash and short-term deposits that arise directly from its operations. The Group also holds available-for-sale investments.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. The Group’s risk management is governed by the Board, through the Board Financial, Risk and Audit committee (FARCOM).

The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

29.1 MARKET RISK

Marketriskistheriskthatthefairvalueoffuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesin market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include: current loans and borrowings, deposits, available-for-sale investments.

29.1.1 INTEREST RATE RISK

Interestrateriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchanges in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily totheGroup’sshort-termdebtobligationswithfloatinginterestrates.TheGroupmanagesitsinterestrateriskbyhavingapredominantportfoliooffixedrateloansandborrowings.TheGroup’spolicyistokeeptakefloatingrateborrowingsonly under exceptional circumstances, where the risks are thoroughly considered and approved. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the Group’s only loan stock. With all othervariablesheldconstant,theGroup’sprofitbeforetaxwillbeaffectedasfollows:

Increase / decrease in basis points

Effect on profit before taxN’000

2016 +1.50 (12,000)

-1.50 12,000

2015 +1.50 (15,000)

-1.50 15,000

29.1.2 FOREIGN CURRENCY RISK

Foreigncurrencyriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseof changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries. Management has set up a policy requiring the Group to manage their foreign currency risk against their functional currency. The Group is requiredtomanageitsentireforeigncurrencyriskexposurewiththeGroupfinance.Tomanagetheirforeigncurrencyrisk arising from future commercial transactions and recognized assets and liabilities, companies in the Group ensure


89


thatsignificanttransactionarecontractedintheGroup’sfunctionalcurrency.Foreigncurrencyriskariseswhenfuturecommercial transactions or recognised assets or liabilities are denominated in a currency that is not the group’s functional currency. The Group is mostly affected by changes in USD rate than any other foreign currency. The table belowshowsthesensitivityanalysisoftheGroup’sprofitbeforetaxbasedonchangesinUSDrate:

Change in USD rate Effect on profit before taxN’000

2016 +5% (65,580)-5% 65,580

2015 +5% (85,293)

-5% 85,293

29.2 CREDIT RISK

Creditriskistheriskthatcounterpartywillnotmeetitsobligationsunderafinancialinstrumentorcustomercontract,leadingtoafinancialloss.TheGroupisexposedtocreditriskfromitsoperatingactivities(primarilyfortradereceivables)andfromitsfinancingactivities,includingdepositswithbanksandfinancialinstitutions,foreignexchangetransactionsandotherfinancialinstruments.Thegroupandthecompany’smaximumexposuretocreditrisktakingintoaccounttheguarantees granted and letters of credit as at year end are shown as follow:


Trade receivables 2,751,353 2,152,919 2,631,601 1,907,932

Due from related parties (Note 27) - - 102,109 107,017

Cash & short term deposit 1,806,651 821,589 1,643,838 755,416

---------------4,558,004--------------

---------------2,947,643---------------

---------------4,377,548---------------

---------------2,741,422

----------------

29.2.1 TRADE RECEIVABLES

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on an extensive creditratingscorecardandindividualcreditlimitsaredefinedinaccordancewiththisassessment.Customer’screditratings determine the proportion of sales invoice that is required in advance of delivery.

The requirement for impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The Group does not hold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several sectors and industries and operate in largely independent markets.



29.2.2 FINANCIAL INSTRUMENTS AND CASH DEPOSITS

CreditriskfrombalanceswithbanksandfinancialinstitutionsismanagedbytheGroup’streasurydepartmentinaccordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Group’s Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financiallossthroughpotentialcounterparty’sfailuretomakepayments.

29.3 LIQUIDITY RISK

TheGroup’sobjectiveistomaintainabalancebetweencontinuityoffundingandflexibilitythroughtheuseofbankoverdrafts,bankloansandfinanceleases.TheGroupassessedtheconcentrationofriskwithrespecttorefinancingitsdebtandconcludedittobelow.Accesstosourcesoffundingissufficientlyavailableanddebtmaturing within 12 months can be rolled over with existing lenders. Liquidity risk is the risk that the group will encounterdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.Thegroup’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,without incurring unacceptable losses or risking damage to the Company’s reputation. Recent times have proventhecreditmarketssituationcouldbesuchthatitisdifficulttogeneratecapitaltofinancelong-termgrowthoftheCompany.Thegrouphasaclearfocusonfinancinglong-termgrowthandtore-financematuringdebt obligation. Financing strategies are under continuous evaluation.

The table below shows the maturity analysis and has been prepared on an undiscounted cash flow.

The Company

As at 31 December 2016

Carrying amount

Contractual cashflows

On demand

Less than 3 months 3-12 months 1-5 Years

N’000 N’000 N’000 N’000 N’000 N’000Short-term borrowings 99,730 99,730 99,730 - - -

Trade and other payables 5,960,329 5,960,329 - - 5,960,329 -

---------------6,060,059

========

---------------6,060,059

========

------------99,730

======

--------------

=======

----------------5,960,329

========

--------------

=======As at 31 December 2015

On demand


N’000 N’000 N’000 N’000Short-term borrowings 178,118 178,118 178,118 - - -

Letters of credit 232,611 232,611 - 232,611 - -Trade and other payables 5,711,451 5,711,451 - - 5,711,451 -

---------------6,122,180

========

---------------6,122,180

========

------------178,118

=======

-------------232,611======

----------------5,711,451======

--------------

=======


91


The Group


On demand


N’000 N’000 N’000 N’000Short-term borrowings 69,696 69,696 - - 69,696 -

Bank overdraft 99,730 99,730 99,730 - - -Trade and other payables 6,293,599 6,293,599 - 6,293,599 189,006 -

---------------6,463,025

========

---------------6,463,025

========

-----------99,730

======

--------------6,293,599=======

-------------258,702

=======

----------=====


On demand


N’000 N’000 N’000 N’000Short-term borrowings 72,997 72,997 - - 72,997 -

Bank overdraft 178,118 178,118 178,118 - - -Letters of credit 232,611 232,611 - 232,611 - -Trade and other payables 6,012,085 6,012,085 - - 6,012,085 -

---------------6,495,811

========

---------------6,495,811

========

-------------178,118

=======

-------------232,611

=======

----------------6,012,085

========

-------------

=======

30. CAPITAL MANAGEMENT

Capital includes equity attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, or issue new shares.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2016 and 2015.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash



equivalents. The Group’s capital structure and debt-equity ratio is shown below:


2016 2015 2016 2015

N’000 N’000 N’000 N’000Trade and other payables 10,238,421 6,501,165 9,897,269 6,191,608Short-term loans and borrowings 169,426 251,115 99,730 178,118Less: cash and cash equivalents (1,806,651) (821,589) (1,643,838) (755,416)

----------------- ----------------- ----------------- -----------------Net debt 8,601,196 5,930,691 8,353,161 5,614,310

======== ======== ========Equity 3,186,387 3,062,841 3,342,057 3,312,213

Total capital----------------3,186,387

========

----------------3,062,841

========

----------------3,342,057

========

----------------3,312,213

========Debt to equity ratio 271% 194.2% 249% 169.0%

31. EVENTS AFTER THE REPORTING PERIOD

Noeventortransactionhasoccurredsincethereportingdatewhichwouldhaveamaterialeffectuponthesefinancialstatementsatthatdateorwhichwouldneedtobementionedinthefinancialstatementsinordertomakethemnotmisleading.


93


VALUE ADDED STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016


Turnover 10,165,971 15,613,282 8,558,821 13,888,580Cost of services- Local

(8,651,010) (16,011,586) (7,296,565) (14,454,667)

--------------1,514,961

---------------(398,304)

----------------1,262,256

----------------(566,087)

Other income 435,313 392,383 391,759 298,850

Value added/(consumed)

--------------1,950,274

========

-------------(5,921)

======

----------------1,654,015

========

----------------(267,237)

========Applied as follows: % % % %

To employees:-Wages, salaries and otherbenefits

1,462,457 75 1,266,009 (21382) 1,288,864 78 1,155,003 (432)

To providers of capital:

-Interest 152,757 7 170,131 2873 144,753 9 154,011 (58)

To pay government: as company taxes

14,329 1 48,849 (825) - - - -

To provide for replacement of assets and expansion of business:

Depreciation & amortization 193,056 10 304,937 (5,150) 188,311 11 299,849 (112)

Retainedprofit 142,004 7 (1,795,846) 3,0330 32,087 2 (1,876,099) 702-------------1,950,274

========

-----100===

-------------(5,921)

======

--------100===

---------------1,654,015

========

-----100===

---------------(267,237)

========

-------100

====

The value added represents the wealth created through the use of the Company’s assets by its own and its employees’ efforts. This statement shows the allocation of wealth amongst employees, capital providers, government and that retained for future creation of wealth.



FIVE -YEAR FINANCIAL SUMMARY - GROUP FOR THE YEAR ENDED 31 DECEMBER 2016

31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12

N’000 N’000 N’000 N’000 N’000NON-CURRENT ASSETSGoodwill 814,088 814,088 814,088 814,088 814,088Property, plant & equipment 423,225 479,180 552,655 659,238 1,355,115Intangible assets 119,324 135,388 79,761 111,831 104,032Availableforsalefinancialassets 67,548 69,791 78,768 19,275 14,837

Net current asset 1,762,202 1,666,023 3,438,470 3,504,972 2,284,391

-----------------3,186,387

----------------3,062,841

-----------------4,963,742

---------------5,109,404

---------------4,572,463

Convertible loan stocks - - - - (1,460,000)Deferred tax liabilities - - - (67,215) (67,215)

---------------3,186,387

========

---------------3,062,841

========

----------------4,963,742

========

----------------5,042,189

========

----------------3,044,252

========

FINANCED BY:Share capital 1,262,413 1,262,413 1,262,413 1,262,413 1,000,000Share premium 1,852,748 1,852,748 1,852,748 1,852,748 410,883,Retained earnings 48,535 (79,140) 1,767,202 1,849,170 1,356,323,Convertible loan reserve - - - 244,253Available for sale reserve (846) 1,397 17,274 10,888 6,451Foreign currency translation reserve 23,537 25,423 64,105 65,974 26,342

---------------3,186,387

========

---------------3,062,841

========

---------------4,963,742

========

---------------5,042,189

========

---------------3,044,252

========


N’000 N’000 N’000 N’000 N’000REVENUE

10,165,971========

15,613,282=======

15,356,280=======

20,669,298========

18,760,741========

Profit/(Loss)beforetax 142,004 (1,746,997) 57,636 618,456 686,696Income tax (14,329) (48,849) 62,381 (5,609) (221,574)

Profit/(Loss)/aftertax-------------127,675

========

-------------(1,795,846)========

------------102,017======

--------------612,847

=======

----------------465,122

========

PER SHARE:Earnings /(Loss)per share N 0.05 (N 0.71) N0.05 N0.24 N0.23Net Assets per share N1.27 N1.21 N1.94 N2.07 N1.52


95


FIVE -YEAR FINANCIAL SUMMARY - GROUP FOR THE YEAR ENDED 31 DECEMBER 2016


N’000 N’000 N’000 N’000 N’000NON-CURRENT ASSETSGoodwill 814,088 814,088 814,088 814,088 814,088Property, plant & equipment 401,790 473,695 545,087 649,369 1,340,468Intangible assets 119,324 135,388 79,761 111,831 104,032Investment in subsidiaries 273,284 273,284 30,610 30,307 30,307Availableforsalefinancialassets 67,548 69,791 78,768 19,275 14,837

Net current asset 1,666,023 1,545,967 3,706,371 3,717,392 2,521,969--------------3,342,057

--------------3,312,213

--------------5,254,685

---------------5,342,262

-----------------4,285,701

Convertible loan stocks - - - - 1,460,000Deferred tax liabilities - - - 67,215 67,215

-------------3,342,057-------------

---------------3,312,213---------------

---------------5,254,685---------------

---------------5,275,047---------------

-----------------3,298,486

-----------------FINANCED BY:Share capital 1,262,413 1,262,413 1,262,413 1,262,413 1,000,000Share premium 1,852,748 1,852,748 1,852,748 1,852,748 410,883Retained earnings 227,742 195,655 2,122,250 2,148,002 1,635,904Convertible loan reserve - - - 244,253Available for sale reserve (846) 1,397 17,274 11,884 7,446

--------------3,342,057=======

--------------3,312,213

========

--------------5,254,685

========

---------------5,275,047

========

-----------------3,298,486

=========


N’000 N’000 N’000 N’000 N’000Turnover

8,558,821========

13,888,598========

14,595,482========

20,055,736=======

18,312,163========

Profit/(Loss)beforetax 32,087 (1,876,099) 109,018 632,099 444,064Income tax - 67,215 - -

Profit/(Loss)aftertax------------32,087

======

---------------(1,876,099)========

------------176,233======

-------------632,099

=======

------------444,064

=======PER SHAREBasic/Diluted earnings/(Loss) per share N 0.01 (N 0.74) N 0.07 N 0.25 N 0.22

Net assets per share N1.32 N 1.31 N2.08 N2.09 N1.65



FINANCIAL SUMMARY

About 52% of the Group’s turnover was attributed to revenue from managed services which is focused on internal and external clients outsourcing services and provides related accessories for equipment and service maintenance.The IT infrastructure services contributed about 32% to the revenue through the installation and support of Computer hardware, operating and middle ware systems, Automated Teller Machines “ATM” etc.Software and Communications & Integrated services contributed about 16% of the revenue

Though there was a downward trend in revenue compared to the previous year, the company recorded the highest gross margin in5years.Thegrossprofitmarginincreasedfrom16%in2015to 24% in 2016. This is attributable to the Group’s strategic focus on profitable IT Solutions, less exposure to foreign exchange fluctuationsandpredictablerecurrentrevenues.TheGrouplaidemphasis on closing business deals with lower cost of sales and also avoided dollar based transaction deals with high forex exposure.


97





99





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