Paints and Coatings Full Year Results 2013

PAINTS AND COATINGS MANUFACTURERS

NIGERIA PLC [RC 406117] Annual Reports and Accounts

For the Year Ended 31st December 2013

PAINTS AND COATINGS MANUFACTURERS NIGERIA PLC

CONTENTS Page

Director's Resonsibility For Financial Reporting 4

Independent Auditor's Report 5

Result At A Glance 6

Vision and Mission Statement 7

Directors, Professional advisers etc. 8

Notice of Annual General Meeting 9

Chairman's Statement 10

Report of the Directors 11

Report of the Audit Committee 15

Statement of Comprehensive Income 16

Statement of Financial Position 17

Statement of Change in shareholders equity 18

Statement of Cashflow 19

Statement of Earnings Per Share 20

Accounting policies and notes to the financial statements

1 Nature and Description of reporting entity 21

2 Statement of compliance 21

3 Foreign currency translation 21

4 Profit and ordinary activity before taxation 21

5 New and revised IFRSs in issue 22

6 Critical Accounting Judgements and Key Sources of estimation uncertainty 27

7 Revenue Recognition 29

8 Cost of goods sold and other expenses 29

9 Prepayments and accrued income 29

10 Accruals and deferred income 29

11 Change in accounting policies 29

12 Inventories 29

13 Cash and cash equivalent 30

14 Provisions, accruals and other current liabilities 31

15 Reimburseable 31

Page 2


16 Employee benefits 31

17 Segment information 32

18 Property, plant and equipment 33

19 Share capital 37

20 Share Premium 37

21 Retained Earnings 37

22 Revaluation reserve 38

23 Income tax 39

24 Events after the reporting date 40

25 Dividends paid and proposed 40

26 Trade and other receivables 40

27 Directors and employees 41

28 Related party transactions 42

29 Contingent liability 42

30 Loan favouring directors and officials 42

31 Comparatives 42

32 Approval of financial statements 42

Page 3


DIRECTORS'S STATEMENT OF RESPONSILITY FOR FINANCIAL REPORTING

The Directors of Paints and Coatings Manufacturers Nigeria Plc are responsible for preparation, presentation and

integrity of the accompanying financial statements and all other information in the Annual Report.

This responsibilty includes the following :

a Keeping proper accounting records that disclose, with reasonable accuracy that the financial position

of the company comply with the requirements of the Companies and Allied Matters Act CAP C20 LFN 2004.

b The selection and consistent application of appropriate accounting principles and methods in additions to making

judgements and estimates necessary to prepare the financial statements in accordance with International

Financial Reporting Standards (''IFRS'') as issued by the International Accounting Standards Board (''IASB'').

c To design a system of internal control to ensure that the assets of the company are safeguarded and that

relevant and reliable financial information is produced.

The Directors of the company accepts responsibility for the Annual Report and Financial Statements and the

accompanying notes, which have been prepared using appropriate accounting policies supported by reasonable and

prudent judgement and estimates and in conformity with International Financial Reporting Standards (''IFRS'') and the

requirements of the Companies and Allied Matters Act, CAP C20 LFN 2004.

Lagos, Nigeria

2 0 th March 2014

[signed] [signed]

Michael Thompson Wale Jubril

FRC/2014/CISN/00000006703

««««««««««« «««««««««««

Vice Chairman/(CEO) Executive Director (Finance)

Page 4


Independent Auditors' Report

To the Shareholders of Paints and Coatings Manufacturers Nigeria Plc :

We have audited the accompanying financial statements of Paint and Coating Manufacturers Nigeria Plc, which

comprise the Statement of Financial Position, Statement of Comprehensive income, Statement of change in equity and

statement of cashflow and notes, comprising a summary of significant accounting policies and other explanatory

information for the year ended 31st December 2013 set out on pages 17 to 20 which have been prepared on the basis

of accounting policies and notes set out on pages 20 to 37.

Respective responsibilities of Directors and Auditors

The Directors of the company are responsible for the preparation and fair presentation of these Financial

Statement in accordance with International Financial Reporting Standards (''IFRS''), and with the requirements

of the Companies and Allied Matters Act, CAP C20 LFN 2004. This responsibility also includes designing and

maintaining internal control relevant to the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;

and making accounting estimates that are reasonable in the circumstances.

Auditors responsibility

Our responsibility is to express an independent opinion on the financial statements based on our audit.

We conducted our audit in accordance with Nigeria Auditing Standards. Those standards requires that we

comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the

financial statement are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depends on our judgement, including the assessment of the

risks of material misstatement in the financial statement, whether due to fraud or error.

In making those risk assessments, we consider internal control relevant to the entity's presentation and fair

presentation of the financial statement inorder to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opionion on the effectiveness of the entity's internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made

by the directors, as well as evaluating the overall presentation of the financial statements.

We planned and performed our audit so as to obtain all the information and explanation which we considered necessary

in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from

material misstatements, whether caused by fraud or other irregularities or errors. We believe that the audit evidence we

have obtained during our audits is sufficent and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, and are in agreement with the books of accounts, it also gives a true

and fair view of the financial position of Paints and Coatings Manufacturers Nigeria Plc and its financial performance

and cash flows for the year then ended 31st December 2013,and in accordance with the Companies and Allied Matters Act,

CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No. 6, 2011 and the International Financial Reporting

Standards. Olumuyiwa Olokun & Co Olumuyiwa Olokun-Obafemi FCA/

FRC/2013/ICAN/00000001935

Lagos, Nigeria For: OOC Chartered Accountants

Dated: 25-03-2014

Page 5


RESULTS AT A GLANCE Year Ended Year Ended

31st Dec., 2013 31st Dec., 2012 Variance

=N= =N= %

Turnover 3,090,744,574 2,908,192,874 6%

Profit before Taxation 292,460,019 275,025,968 6%

Total Comprehensive Income 287,849,599 252,622,593 14%

Total assets 2,337,220,475 1,995,093,224 17%

Authorised Share Capital 600,000,000 600,000,000 -

Issued and fully paid Share Capital 396,457,128 396,457,128 -

Per 50K Share data based on 792,914,256 Ordinary shares of 50K each

(2012: 792,914,256 Ordinary shares of 50k each)

Net Assets Per Share 2.95 2.52 17%

Earnings Per Share (Basic) 0.36 0.32 14%

Dividend Per Share (Basic) 0.08 Kobo 0.12 Kobo

(2013 Proposed Dividend)

Stock Exchange quotation/(Share Price)

as at 31st December 2013 (Kobo) 1.9 1.96 -3%

Dividends Covers (times) 23.75 16.33

Number of employees 120 113 6%

Page 6


VISION AND MISSION STATEMENT

OUR VISION

To be the preferred world-class manufacturer and distributor of Paints & Coatings to the Nigerian Marketplace.

OUR MISSION

To produce and supply world class quality products efficiently to our customers through the teamwork of

highly skilled and motivated staff.

To be a good corporate citizen known for high ethical standards

OUR CORE VALUE

Integrity: - In all our dealings with one customers, service providers, staff and all stakeholders, we uphold

moral excellence, honesty, wholesomeness and sincerity.

We accept responsibilities and hold ourselves accountable.

Ingenuity: - we are constantly driven by a strong desire to create value through creative thinking, use

of technology and pragmatic approach to overcoming challenges to deliver value.

Protect People & The Environment:-The sustenance of good health and safety in the work place for our

staff and the protection and maintenance of our assets and the environment are matters of primary concern

to us.

Efficient Performance: - We are committed to excellence in everything we do and we strive to continually

improve in all our processes and we are passionate about ensuring a high standard of personal

hygiene amongst our staff as well as a sustained clean workplace.

Page 7


DIRECTORS, PROFESSIONAL ADVISERS ETC.

DIRECTORS Chief S.I.C. Okoli - C hairman

Michael Thompson (British) - V ice Chairman/CEO

Wale Jubril - E xecutive Director (Finance)

Ademola Laniyan - E xecutive Director

(Legal and Corporate)

Bassam Dina - D irector

Michelle Knupfer (British) - D irector

Olabanji Kazeem - A lternate Director

COMPANY SECRETARY Ademola Laniyan Esq

AND LEGAL ADVISERS 18/24 Ajisegiri Street, Shogunle Oshodi

Lagos State, Nigeria.

REGISTERED OFFICE 18/24 Ajisegiri Street, Shogunle Oshodi


REGISTRATION NO. 406117

REGISTRAR Meristem Registrars Limited

305, Herbert Macaulay Way, Yaba, Lagos.

P.O.Box 51585, Ikoyi, Lagos.

AUDITORS OOC Chartered Accountants

5 Oresola Close

Crystal Estate, Illupeju Lagos.

BANKERS Access Bank Plc

Citibank Nigeria Plc

Guaranty Trust Bank

Keystone Bank Plc

Zenith International Bank

CORPORATE HEAD OFFICE 18/24 Ajisegiri Street

Shogunle, Oshodi


Tel: (01) 740 4044, 740 5183, 740 5184

www.pcmnigeria.com

BRANCH Port harcourt branch

99 Rivoc Road, Trans Amadi Port Harcourt, Rivers State

Abuja Branch

Suite 1-2 Saham Plaza, 10 Alexandra Crescent

(Behind Banex Plaza), Wuse 11 Abuja.

Page 8

Notice of Annual General Meeting

Page 9

Chairman's Statement

Page 10


REPORT OF THE DIRECTORS

The Directors present to the distinguished members of the company this annual report together with the audited financial

statements of the company for the year ended 31st December 2013.

RESULTS

The company results at a glance for the year ended 31st December 2013 are set out on page 3.

LEGAL STATUS

The company was incorporated in Nigeria as a private limited liability company in 2001, and was converted to a Public

Limited Liability Company (Plc) in 2008. The name of the company was changed from Protective Coatings Distributors

Nigeria Limited (PCDN) to Paints and Coatings Manufacturers Nigeria Plc (PCMN Plc) on 21st November, 2008.

FINANCIAL REPORTING COUNCIL

The company has been registered with the financial reporting council of Nigeria with registration number

FRC/2013/0000000000563.

LISTING ON THE NIGERIA STOCK EXCHANGE

The Company was listed by introduction on the Nigeria Stock Exchange on 2nd November 2010.

PRINCIPAL ACTIVITIES

The company is engaged in carrying out Manufacture of Chemicals, Marine, Protective, industrial, Decorative and

Architectural coatings and paints and related products.

DIRECTORS AND DIRECTOR'S INTEREST

a) The Directors who held office during the year and to the date of this report are set out below :

NAME NATIONALITY DESIGNATION

Chief S.I.C. Okoli Chairman

Michael Thompson British Vice Chairman/CEO

Wale Jubril Executive Director (Finance)

Ademola Laniyan Executive Director (Legal and Corporate)

Bassam Dina Director

Michelle Knupfer British Director

Olabanji Kazeem Alternate Director

b) Directors' Interest in the Issued Share Capital of the Company

The Director's interest in the shares of the company as recorded in the Register of members as at 31st December 2013

are as follows :

Directors Direct Holding Indirect Holding Direct Holding Indirect Holding

Chief S.I.C. Okoli - 1 0 6 ,145,618 - 1 0 6 ,145,618

Michael Thompson (British) - 2 8 8 ,000,000 - 2 8 8 ,000,000

Wale Jubril 1 4 ,459,300 1 4 ,459,300

Ademola Laniyan 1 1 ,750,000 - 1 1 ,750,000 -

Bassam Dina 1 9 2 ,000,000 - 1 9 2 ,000,000 -

Olabanji Kazeem 2 ,000,000 - 2 ,000,000 -

Total Holdings 2 2 0 ,209,300 3 9 4 ,145,618 2 2 0 ,209,300 3 9 4 ,145,618

As at 31st Dec., 2013

No. of Shares

As at 31st Dec., 2012

No. of Shares

Page 11


c) Indirect holding

Chief S.I.C. Okoli has indirect interests in the shares of Jenete Iloabanafo Investment Ltd., who has 106,145,618 ordinary

shares (2012 : 106,145,618 ordinary shares) in the issued share capital of the company.

Mr. Michael Thompson has indirect interests in the shares of Semeli Limited BVI, who has 288,000,000 ordinary shares

(2012 : 288,000,000) in the issued share capital of the company.

DIRECTOR'S INTEREST IN CONTRACT

Mr Ademola Laniyan, the Executive Director Legal and Corporate Services a partner in Laniyan and Ibrahim and Co.

also acts as Legal Advisers/Company Secretary to the company.

Apart from the above, none of the Directors has notified the Company for the purpose of section 277 of the Companies and

Allied Matters Act, CAP C20 LFN 2004 of any declarable interest in contracts with which the Company was involved as

at 31st December 2013.

RECORDS OF DIRECTOR'S ATTENDANCE AT MEETINGS

Pursuant to and in accordance with section 258(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004 the records

of directors' attendance at Board meetings during the year under review will be made available for inspection at the

Annual General Meeting.

MAJOR SHAREHOLDERS

According to the Register of Members as at 31st December 2013, the following shareholders of the company held more

than 5% of the issued ordinary share capital of the company.

2013 2012

Name # of Shares # of Shares % Holding

Semeli Ltd (BVI) 2 8 8 ,000,000 2 8 8 ,000,000 3 6 .3 %

Bassam Dina 1 9 2 ,000,000 1 9 2 ,000,000 2 4 .2 %

Jenete Iloabanafo Investment Limited 1 0 6 ,145,618 1 0 6 ,145,618 1 3 .4 %

Stanbic Nom./AMCON/Intercontinental Bank 5 8 ,662,500 5 8 ,662,500 7 .4 %

ANALYSIS OF SHAREHOLDING

The analysis of shareholding is as stated below:

No. of holdings No. of Shareholders % of Shareholders No. of Holding % of Holding

0 - 5 0 0 ,000 554 9 0 .8 % 4 1 ,387,913 5 .2 %

5 0 0 ,001 - 1 ,000,000 30 4 .9 % 2 3 ,344,732 2 .9 %

1 ,000,001 - 1 0 ,000,000 20 3 .3 % 5 7 ,164,193 7 .2 %

1 0 ,000,001 - 100,000,000 3 0 .5 % 8 4 ,871,800 1 0 .7 %

1 0 0 ,000,001 - 288,000,000 3 0 .5 % 5 8 6 ,145,618 7 3 .9 %

Total 610 100% 7 9 2 ,914,256 100%

FIXED ASSETS

Information relating to changes in fixed assets during the year is shown in note 1 on page 35. In the opinion of the Directors,

the fair value of the company's properties is not substantially less than the value shown in the financial statements.

CORPORATE GOVERNANCE

The board is actively involved in the running of the company. The Directors are involved among other things, in keeping

proper accounting records which disclose with reasonable accuracy and transparency at anytime, the financial status

of the company and ensure that the accounts comply with the relevant provisions of the Laws.

The Board is also responsible for safeguarding the assets of the company by taking reasonable steps for the prevention

and detection of fraud and other irregularities.

Page 12


COMPANY QUALITY POLICY

The Company strives to be world-class supplier of Protective, Marine, Industrial, Decorative, Automotive Coating Systems,

Inks and Associated services in order to meet or exceed the expectations of it's customers.

The primary quality related objectives of the Company are to:

. Identify, understand and comply with and meet or exceed the requirements of our customer.

. Continually improve through the elimination of non - conformances;

. Comply with the relevant statutory and regulatory requirements;

. Eliminate or reduce all forms of wastages.

ISO STANDARDS CERTIFICATION

The company has attained the following ISO standards certification :

ISO 9001: 2008 - Quality Certification

ISO 14001:2004 - Environmental Management certification

ISO 18001:2007 - Health & Safety certification

DONATIONS

The following donations was made during the year under review :

=N=

Igbobi College Old Boys Association 1 0 0 ,000

Eket Youth Development projects 5 0 0 ,000

Other donations includes the followings:

a) paints to Nigeria Airforce Secondary School Ikeja to recoat the water tank stand. b) Public borehole water to the community.

SUPPLIERS

The following major suppliers used by the company are listed below:

International Paints UK

Avon Crown Caps

Chizzy Nigeria Limited

Comart Nigeria Ltd

Nycil Limited Otta

Regatta Industries

GUARANTEES AND OTHER FINANCIAL COMMITMENTS

a The Company did not charge any of its assets to secure liabilities to third parties.

b The Directors are of the opinion that all known liabilities and Commitments have been taken into consideration in the

preparation of the financial statements.

EMPLOYMENT AND EMPLOYEES

The company's employees are regularly provided with information on matters that are of concern to them as employees.

Such information is either passed to them through regular meetings with employees and/or through notices pasted on notice

board.

a Employment of disabled persons

It is the policy of the company that full and fair consideration be given to applications for employment by the company

including those from disabled person having regard to their particular aptitude, skills and ability.

Page 13


b Health, safety at work and welfare of employees.

Health and safety regulations are in force within the company's premises, warehouse and manufacturing floor.

The employees are aware of the existing regulations. The company provides medical insurance to all staff with

accredited health management organisations (HMOs).

c Employee Training

Management, professional and technical experience are the company's major assets and investment in developing

such skills continues.

AUDITORS

In accordance with Section 357(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004,our auditors, OOC Chartered

Accountants have indicated their willingness to continue in office.

A resolution will be proposed authorising the Directors to determine their remuneration.

BY ORDER OF THE BOARD

Ademola Laniyan Esq

FRC/2014/NBA/00000006853

Company Secretary

Page 14

Report of the Audit Committee

Page 15


STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st December 2013

2013 2012

NOTES =N= =N=

Revenue 6 3 ,090,744,574 2 ,908,192,874

Cost of goods sales 7 (1,991,460,220) (1,919,904,813)

GROSS PROFIT 1 ,099,284,354 9 8 8 ,288,061

Administrative expenses 7 (792,742,985) (699,769,005)

Selling and distribution expenses 7 (21,269,392) (18,490,414)

Trading operating profit 2 8 5 ,271,977 2 7 0 ,028,642

Other income 1 0 ,983,607 1 8 ,225,629

Finance cost (7,219,520) (19,613,995)

Bad debt recovered 2 ,108,548 4 ,986,423

Profit on disposal of fixed assets - 4 3 4 ,234

Interest received 1 ,315,407 9 6 5 ,035

PROFIT BEFORE TAXATION 2 9 2 ,460,019 2 7 5 ,025,968

Tax expenses 22 (4,610,420) (7,875,624)

Net Earnings 2 8 7 ,849,599 2 6 7 ,150,344

Other Comprehensive Loss

Capital Gain Tax on impairment - 1 ,824,089

Prior year income tax - (16,351,840)

Other Comprehensive Income/(loss) for the year - (14,527,751)

TOTAL COMPREHENSIVE INCOME 2 8 7 ,849,599 2 5 2 ,622,593

The accounting policies and notes to the accounts form part of these financial statements.

Page 16


STATEMENT OF FINANCIAL POSITION as at 31 December 2013

2013 2012

Assets NOTES =N= =N=

Current Assets

Cash and cash equivalents 12 8,831,618 67,554,078

Trade receivables 25 210,638,560 184,444,656

Inventory and Goods in Transit 11 909,739,286 1,134,921,261

Prepayments and accrued income 8 677,328,901 70,632,503

Total Current Assets 1,806,538,365 1,457,552,498

Non-Current Assets

Property, Plant and Equipment 17 295,458,415 324,931,554

Deferred Income Taxes 235,223,695 212,609,172

Total Non-Current Assets 530,682,110 537,540,726

Total Assets 2,337,220,475 1,995,093,224

Equity and Liabilities

Equity attributable to owners of the company

Share Capital 18 396,457,128 396,457,128

Share Premium 19 415,071,706 415,071,706

Revaluation Reserve 20 113,005,773 113,005,773

Retained Earnings 20 596,976,125 404,276,237

Total Equity 1,521,510,733 1,328,810,844

Non Current Liability

Provision for bad debt - 2,270,164

Deferred Tax liability 22 12,758,874 12,758,874

Total Non Current Liabilities 12,758,874 15,029,038

Current Liability

Trade payable 542,107,331 62,695,195

Sundry creditors and accruals 13 147,479,791 73,864,831

Other payable 13 57,119,920 44,663,104

Customer deposits 43,757,783 462,154,588

Taxation 22 12,486,044 7,875,624

Total Current Liabilities 802,950,869 651,253,342

Total Liabilities 815,709,743 666,282,380

Total Equity and Liabilities 2,337,220,475 1,995,093,224

The accounting policies and notes to the accounts form part of these financial statements.

Approved on Behalf of the Board

[signed] [signed]


FRC/2014/CISN/00000006703

««««««««««« «««««««««««

Vice Chairman (CEO) Executive Director (Finance)

Page 17


STATEMENT OF CHANGE IN SHAREHOLDER'S EQUITY For the year ended 31st December 2013

2012 Share Capital

Share

Premium

Retained

Earnings

Revaluation

Reserve Total Equity

N N N N N

Balance at January 1, 2012 3 9 6 ,457,128 4 1 5 ,071,706 2 3 5 ,302,392 1 3 1 ,246,664 1 ,178,077,890

Total comprehensive income for the year 2 5 2 ,622,593 2 5 2 ,622,593

Dividends declared/Paid (2011 ) (63,433,140) (63,433,140)

Capitalisation of Inventory cost (20,215,608) (20,215,608)

Impairment of Motor Vehicles (7,381,108) (7,381,108)

Inpairment of Furniture and Fittings (10,859,782) (10,859,782)

Balance at 31st Dec., 2012 3 9 6 ,457,128 4 1 5 ,071,706 4 0 4 ,276,237 1 1 3 ,005,773 1 ,328,810,844

2013 Share Capital

Share

Premium

Retained

Earnings

Revaluation

Reserve Total Equity

N N N N N

Balance at January 1, 2013 3 9 6 ,457,128 4 1 5 ,071,706 4 0 4 ,276,237 1 1 3 ,005,773 1 ,328,810,844

Total comprehensive income for the year 2 8 7 ,849,599 2 8 7 ,849,599

Dividends declared/Paid (2012 ) (95,149,711) (95,149,711)

Balance at 31st Dec., 2013 3 9 6 ,457,128 4 1 5 ,071,706 5 9 6 ,976,125 1 1 3 ,005,773 1 ,521,510,733

Notes 18 19 21 20

Page 18


STATEMENT OF CASHFLOW For the year ended 31st December 2013

2013 2012

N N

OPERATING ACTIVITIES

Cash receipts from customers 2 ,643,883,702 3 ,120,483,882

Cash paid to suppliers (2,568,406,398) (2,992,839,207)

Cash generated from operations 7 5 ,477,304 1 2 7 ,644,675

Interest Paid (7,219,520) (19,613,995)

Debt Debt Recovered 2 ,108,548 -

Income tax - (16,351,840)

Value added tax paid (5,011,601) (10,604,773)

Deferred Income Tax (22,614,523) (87,556,687)

Cash Flows from Operating Activities 4 2 ,740,208 (6,482,620)

INVESTING ACTIVITIES

Purchase of property, plant and equipments (18,611,971) (38,576,830)

Proceeds from sale of property, plant and equipment - 4 ,168,726

Net Interest received 1 ,315,407 9 6 5 ,035

Other Income 1 0 ,983,607 1 8 ,225,629

Cash Flows from Investing Activities (6,312,957) (15,217,440)

FINANCING ACTIVITIES

Dividends paid (95,149,711) (63,433,140)

Cash Flows from Financing Activities (95,149,711) (63,433,140)

Change in Cash and Cash Equivalents (58,722,460) (85,133,200)

Cash and Cash Equivalents, Beginning of Year 6 7 ,554,078 1 5 2 ,687,278

Cash and Cash Equivalents, End of Year 8 ,831,618 6 7 ,554,078

Page 19


STATEMENT OF EARNINGS PER SHARE

For the years ended December 31, 2013

2013 2012

N N

Revenue 3 ,090,744,574 2 ,908,192,874

Cost of goods sales (1,991,460,220) (1,919,904,813)

Selling, General and Administrative Expenses (814,012,377) (718,259,419)

Operating Income 2 8 5 ,271,977 2 7 0 ,028,642

Other Income 1 4 ,407,562 2 4 ,611,321

Net Interest expense and other financial charges (7,219,520) (19,613,995)

Earnings Before Income Taxes 2 9 2 ,460,019 2 7 5 ,025,968

Tax expenses (4,610,420) (7,875,624)

Net Earnings 2 8 7 ,849,599 2 6 7 ,150,344

No. of shares outstanding used to calculate Basic Earning per share 7 9 2 ,914,256 7 9 2 ,914,256

Net Earnings per Ordinary Shares

Basic 0 .3 6 0 .3 4

Diluted 0 .3 6 0 .3 4

Page 20


ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2013

1 Nature and description of the Reporting Entity

The financial statements of the company for the year ended 31 December 2013, were authorised for issue in

accordance with the resolution of the Directors on the 20th March, 2014

The company is a public limited liability company domiciled in Nigeria whose shares are publicly traded.

The registered office of the company is located at 18/24 Ajisegiri Street, Shogunle, Oshodi, Lagos State, Nigeria.

The principal activities of the company is carrying out manufacture of chemicals, marine, protective, industrial,

decorative and architectural coatings and paints and other related products.

2 Statement of Compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards

(''IFRS'') as issued by the International Accounting Standards Boards (''IASB'') and with the interpretations

issued by the International Financial Reporting Interpretations Committee (IFRIC).

The financial statements have been prepared on an accrual basis and under the historical cost convention,

unless stated overwise and using the accounting policies described therein.

3 Foreign Currency Translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment

in which the company operates ''functional currency''. The financial statements are presented in Nigeria Naira =N=,

which is the company's functional presentation currency.

Assets and Liabilities denominated in foreign currencies are translated into Nigeria Naira at the foreign currency

exchange rate in effect at the balance sheet date. Exchange gains or losses arising from the translation of these

balances denominated in foreign currencies are recognized in operating income.

Revenues and expenses denominated in foreign currencies are translated into Nigeria Naira at foreign currency

exchange rates in effect at the dates when such items are transacted.

4 Profit on Ordinary Activities before Taxation

Profit on ordinary activities before taxation is stated after charging /(crediting) the following :-

2013 2012

N N

Depreciation 4 8 ,085,109 4 9 ,235,304

Auditor's Remuneration 3 ,000,000 2 ,500,000

Page 21


ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS (Cont')

For the year ended December 31, 2013

5 ADOPTION OF NEW AND REVISED IFRS STANDARDS

Accounting standards and interpretations issued but not yet effective

The following revision to accounting standards and pronouncements that are applicable to the

company were issued but not yet effective. Where IFRSs and IFRIC iInterpretations listed below

permits, early adoption is permitted, the company has elected not to apply them in the

preparation of these financial statements.

The full impact of these IFRSs and IFRIC interpretations is currently being assessed by the

company, but none of these pronoucements are expected to result in any material adjustments to

the financial statements.

5 .1 IFRS 9 Financial Instruments

Effective date : 1st January 2015

IFRS 9 issue in november 2009 introduce new requirements for classification and measurement

of financial assets. IFRS 9 amended in October 2010 to includes the requirement for the

classification and measurement of financial liabilities and for derecognition.

Key requirements of IFRS 9 are described as follows :-

IFRS 9 requires all recognised financial assets that are within the scope of IAS 39

financial instruments.

Recongnition and measurement to be subsequently measured at amortised cost or fair value.

specifically, debt investments that are held within a business model whose objective is to collect

the contractual cash flows, and that have contractual cash flows that are solely payments in principal

and interest on the principal outstanding are generally measures at amortised cost at the end of

subsequent accounting periods.

IFRS 9 is effective for annual financial statements beginning on or after 1 January 2015, with earlier

application permitted.

The directors are of the view that the application of IFRS 9 will not be applicable to the company.

Page 22


5 .2 IFRS 10 Consolidated Financial Statements


IFRS 10, replaces the parts of IAS 27 Consolidated and separate Financial Statement that deal with

consolidated financial statement and SIC-12 Consolidation- Special Purpose Entities. Under IFRS 10,

there is only one basis for consolidation, that is control. In addition, IFRS 10 include a new definition

of control that contaion three elements:

(i) power over an investee,

(ii) exposure, or right, to variable returns from its involvement with the investee, and

(iii) the ability to use its power over the investee to affect the amount of the investor's returns.


5 .3 IFRS 11 Joint Arrangements


IFRS 11 replaces IAS 31 interest in joint ventures and SIC-13 Joint Controlled Entitied- Non-monetary

Contribution by ventures. IFRS 11 deals with how a joint arrangment of which two or more parties

have joint control should be classified. Under IFRS 11, joint arrangmnets are claasified as joint

operations or ventures, pending on the rights and obligations of the parties to the arrangments.

There are three types of joint arrangment:

(i) joint controlled entities,

(ii) jointly controlled assets

(iii) jointly controlled operations.

and In addition, joint ventures under

In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method

of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the

equity method of accounting or proportionate accounting.


Page 23


5 .4 IFRS 12 Disclosures of Interest in other entities


This IFRS is applicable to companies that have interests in subsidiaries, joint arrangements,

associates, and/or unconsolidated structure entities.

The directors are of the view that the application of IFRS 9 in the future will not have any impact

on the company.


5 .5 IFRS 13 Fair value measurement


IFRS 13 establishes a single sourse of guidance for fair value measurement and disclosures about

fair value measurements.

The standard defines fair value, establishes a framework for measuring fair value and requires

disclosures about fair value measuremnets. The scope of IFRS 13 is broad;

it applies to both financial instrument items and non- financial instrumnet items for which other

IFRSs require or permit fair value measurement and disclosurs about fair value measurements.

IFRS 13 are more extensive than those required in the current standards. For example, quantitative

and qualitative disclosures based on the three-level fair value hierarchy currentlyb required for

financial instruments only under IFRS7 Financial Instrumnets: Disclosures will be extended by

IFRS 13 to cover all asset and liabilities within the scope.

IFRS 13 is effective for annual periods beginning on or after 1 january 2013. with the earlier application

permitted. The director anticipate that IFRS 13 will be adopted in the company financial Statement

fot the annual period beginning I January 2013 and that the application for the new Standard may

affect the amounts reported in the Financial Statements and result in more extensive disclosure

in the financial statements.

The directors have adopted IFRS 13 in the financial statements for the year ended 31 December

2 0 1 3 . The application does not significantly affect the amounts stated in the financial statements.

Page 24


5 .6 IAS 19 Employee Benefits


The amendments to IAS 19 change the accounting for the defined benefit plan and termination

benefits. The most significant change related to the accounting of changes is defined benefit

obligations and plan assets. The amendment required recognition of changes in the defined benefit

obligations and a fair value of the plan assests when they occur, and hence eliminate the

corridor approach' permitted under the previous version of IAS 19 and accelerate the recognition

of the past service cost. The amendments required all actualrial gains and losses to be recognised

immediately through other comprehensive income in order for the net pension asset or liability

recognised in the statement of financial position to reflect the value of the plan deficit or surplus.

the amendments to IAS 19 are effective for the annual periods beginning on or after 1 january 2013

and required retrospective application and certain exceptions. The director anticipant that the

amendments to the IAS 19 will be adopted in the company's financial statements for the annual

period beginning 1 January 2013 and that the application of the amendments to IAS 19 may have

impact on amounts reported in respect of the company's defined benefit plans. However, the

directors have not yet performed a detailed analysis of the application of the amendments and

hence have yet quantified the extent of the impact.

5 .7 IAS 16 Amendments to IAS 16 Property, Plant and Equipment

The amendments to IAS 16 require that spare parts, standby equipment and servicing equipment

should be classified as property, plant and equipment when they meet the definition of property

plant and equipment in IAS 16.

The directors are of the view that the amendments to IAS 16 will not have significant effect on the

financial statements.

5 .8 IAS 36 Amendments to IAS 36

Recoverable Amount Disclosures for Non-Financial Assets

Applicable to annual periods beginning on or after 1st January 2014

The amendment reduces the circumstances in which the recoverable amount of assets or

cash-generating units is required to be disclosed, clarifies the disclosures required,

and to introduce an explicit requirement to disclose the discount rate used in determining impairment

(or reversals) where recoverable amount (based on fair value less costs of disposal) is determined

using a present value technique.

Page 25


5 .9 IAS 39 Amendments to IAS 39

Novation of Derivatives and Continuation of Hedges Accounting


Amends IAS 39 Financial Instruments: Recognition and Measurement make it clear that there

is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain

criteria are met.

5 .1 0 Offsetting Financial Assets and Financial Liabilities


The amendment clarify certain aspects because of diversity in application of the requirements on

offsetting, focused on four main areas: the meaning of 'currently has a legally enforceable right

of set-off', the application of simultaneous realisation and settlement, the offsetting of collateral

amounts and the unit of account for applying the offsetting requirements.

5 .1 1 IFRIC 21 Levies


Provides guidance on when to recognise a liability for a levy imposed by a government,

both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities

and Contingent Assets and those where the timing and amount of the levy is certain.

The liability is recognised progressively if the obligating event occurs over a period of time.

If an obligation is triggered on reaching a minimum threshold, the liability is recognised when

that minimum threshold is reached.

Page 26



For the year ended December 31, 2013

6 Critical accounting judgements and key sources of estimation uncertainty

6 .1

6 .2

6 .3

6 .4

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the

reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year, are discussed below.

Useful lives of property, plant and equipment

The Company reviews the estimated useful lives of property, plant and equipment at the end of each

reporting period. During the current year, the useful lives of property, plant and equipment remained

constant.

In the application of the CRPSaQ\¶V accounting policies, the directors are required to make

judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are

not readily apparent from other sources. The estimates and associated assumptions are based on

historical experience and other factors that are considered to be relevant. Actual results may differ

from these estimates.

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

estimates are recognised in the year in which the estimate is revised if the revision affects only that

year, or in the year of the revision and future years if the revision affects both current and future years.

Critical judgements in applying accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with

separately below), that the directors have made in the process of applying the CRPSaQ\¶V accounting

policies and that have a significant effect on the amounts recognised in the financial statements.

Revenue recognition

In making its judgment, management considered the detailed criteria for the recognition of revenue

from the sale of goods set out in IAS 18 Revenue and in particular, whether the entity had transferred

to the buyer the significant risks and rewards of ownership of the goods. Based on the acceptance by

the customer of the liability of the goods sold, the directors are satisfied that the significant risks and

rewards have been transferred and that recognition of the revenue in the current year is appropriate.

Page 27


6 .5

6 .6 Allowance for Obsolete Inventory

6 .7 Valuation of Financial Liabilities

The Company reviews its inventory to access loss on account of obsolescence on a regular basis. In

determining whether an allowance for obsolescence should be recorded in profit or loss, the Company

makes judgements as to whether there is any observable data indicating that there is any future

sellability of the product and the net realizable value of such products. Accordingly, allowance for

impairment, if any, is made where the net realisable value is less than cost based on best estimates by

the management.

Financial liabilities have been measured at amortised cost. The effective interest rate used in

determining the amortised cost of the individual liability amounts has been estimated using the

contractual cash flows on the loans. IAS 39 requires the use of the expected cash flows but also

allows for the use of contractual cash flows in instances where the expected cash flows cannot be

reliably determined. However, the effective interest rate has been determined to be the rate that

effectively discounts all the future contractual cash flows on the loans including processing,

management fees and other fees that are incidental to the different loan transactions.

Impairment losses on receivables

The Company reviews its receivables to access impairment at least on an annual basis. The

Company's credit risk is primarily attributable to its trade receivables. In determining whether

impairment losses should be reported in profit or loss, the Company makes judgements as to whether

there is any observable data indicating that there is a measureable decrease in the estimated future

cash flow. Accordingly, an allowance for impairment is made where there are identified loss events or

condition which, based on previous experience, is evident of a reduction in the recoverability of the

cash flows.

Page 28



7 Revenue recognition

Revenue represents amounts received or receivable from third parties for goods supplied to the customer

and for services rendered. Revenue from sale of goods is recognised in the income statement

when significant risks and rewards of ownership of the goods have been transferred to the buyer.

It is measured at list price applicable to the goods supplied or services rendered after dedcution

of returns, value added tax, pricing allowances and other trade discount.

Hence the following must apply to qualifies as a revenue :

(a) the significant risks and rewards of ownership of the goods have passed to the buyer.

(b) managerial involvement and effective control over the goods have been transferred.

(c) the amount of revenue is reliably measurable.

(d) the economic benefits are probable; and

(e) the costs are reliably measurable.

Interest income, services fees and other revenue related to financial services are recognised on an accrual

basis.

8 Cost of goods sold and other expenses

Cost of goods sold is determined on the basis of the cost of production or or purchase and any variation

in inventories. All other expenses are recognised when the company receives the risks and rewards of

ownership or when it receives the services.

9 Prepayments and accrued income

Prepayments and accrued income comprises payments made in advance relating to the following year,

and income relating to the current year, which will not be invoiced until after the balance sheet date.

10 Accruals and deferred income

Accruals and deferred income comprise expenses relating to the current year, which will not be invoiced

until after the balance sheet date, and income received in advance relating to the following year.

11 Change in accounting policies

The accounting policies are the same as those applied in the Financial Statements for the year ended

3 1 December 2012.

12 Inventories 2013 2012

=N= =N=

Finished goods (at cost or net realisable value) 33 9,044,078 41 9,665,592

Raw materials (at cost) 56 6,112,492 65 4,495,872

Work in progress 2,739,570 -

Goods in transit 1,843,146 60 ,759,797

TOTAL 90 9,739,286 1,134,921,261

Page 29


Inventories held for sale in the ordinary course of business, held in the process of production for such sales,

and held in form of raw material and for packaging to be consumed in the production process.

The company values inventories at the lower of cost and net realisable value. Cost include cost of

purchases plus other costs, such as transportation etc. that are directly incurred to bring inventories to their

present location and condition.

Raw material inventories, finished goods and other inventoriesare accounted for weighted average method.

Inventories are written down to net realizable value when the cost of inventories is estimated to be

unrecoverable due to obsolescense, damage or declining selling price.

When circumstances that previously inventories to be written down below cost no longer exit or when there

is clear evidence of an increase in selling price, the amount of the written down previously recorded is

reversed.

The net realisable value of inventory is re-assessed at each financial reporting date and reduction may be

necessary to write down to net realisable value.

The write down of value of inventory over the net realisable value, unallocated production overheads and

abnormal production cost are classified as the cost of sales.

Storage costs, indirect administrative overhead and certain selling costs related to inventories are expensed

in the period that these costs are incurred.

Finished goods and work in progress

Cost of direct materials and labour and a proportion of manufacturing overheads based on normal capacity

of the production facilities.

Normal operating capacity is the average production volume expected over a number of periods under

normal circumstances, taking down time for planned maintenance into account.

In periods of abnomally high production volumes, the actual volume is used as the denominator so that

cost is not higher than actual cost.

13 Cash and cash equivalent 2013 2012

=N= =N=

Cash at banks and on hand 8,831,618 32 ,903,273

Bank terms deposits - 34 ,650,805

TOTAL 8,831,618 67 ,554,078

Cash and cash equivalent consist of cash in hand and in bank and other highly liquid marketable

investments with an original maturity date of 90 days or less from the date of acqusition.

The bank terms deposits is a short term investment with maturity of three months or less from the initial

recognition.

Page 30


14 Provisions

Provisions comprise liabilities of uncertain timing or amount that arise from known and unknown risks.

Provisions are recognised when there exists a legal or constructive obligation arising from a past event

and when the future cash outflows can be reliably estimated.

Provision are recognised in these financial statements when:

(a) an entity has a present obligation (legal or constructive) as a result of a past events; A present legal

obligation is derivable from a contract, legislation or other operation of laws whereas a constructive obligation

is derivable by an established pattern of past practice, published policies.

(b) it is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation;

The amount recognized as a provision is the present value of the best estimate of the consideration required

to settle the present obligation at the end of the reporting period, taking into account the risks and

uncertainties surrounding the obligation.

1 4 .1 Onerous contracts

Present obligations arising under onerous contract are recognised and measure as provisons.

An onerous contract is considered to exist when the compnay has a contract under which the

unavoidable cost of meeting the obligations under the contract exceed the economics benefits

expected to be received from the contract.

1 4 .2 Warranties

Provisions for the expected cost of warranty obligations under sales of goods contract are recognised

at the date of sale of the relevant products at the director's best estimate of the amount of warranties.

The directors are of the view that no such exposure exist.

15 Reimbursements

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another

party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement

will be received.

Provisions shall be reviewed at the end of each reporting period and adjusted to reflect the current best

estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be

required to settle the obligation, the provision shall be reversed.

16 Employee Benefits

Post Employment Benefit Plans

The company in line with Pension Reform Act, 2004, has a defined contribution plan whereby the company

pays fixed contributions into an approved Pension Fund Administrators (approved PFAs).

The fixed contribution rate is 7.5% of gross salary payable by the employee and employer to the pension

plan, the companys' contribution are accrued and charged to the income statement.

The obligation of the company for the period is limited to the contribution required for the period.

Page 31


The fund is being managed by Pension Funds Administrators (PFA) listed below:

1 ) Stanbic IBTC Pension Managers Limited

2 ) ARM Pension

3 ) IEI Anchor Pension Manager

4 ) Pensions Alliance Limited (Pal Pension)

5 ) Trustfund Pensions Plc

6 ) AIICO Pension Managers Limited

The defined contribution plan paid by the company during the year is as listed below :-

2013 2012

=N= =N=

Key Management Staff 1 8 ,086,420 1 8 ,086,420

Other Staff 1 7 ,041,214 1 7 ,129,363

Total pension paid 3 5 ,127,634 3 5 ,215,783

17 Segment Information

The company is organised into business units based on the products manufactured.

- P rotective Coating and marine and related

- Decoratives and related

- O ther related products

Management measure the operating results of its business units seperately for the

purpose of decision making.

Page 32



18 PROPERTY, PLANT & EQUIPMENT

Property, plant and equipment are recognised and subsequently measured at cost less accumulated depreciation and any

accumulated impairment losses. Cost include expenses that are directly attributable to the acqusition of the asset to prepare

the asset for its intended use.

Property, plant and equipment are tangible items that are held for use in the production of goods and for administrative purposes

and are expected to be used during more than one year.

To qualify as an item of Property, plant and equipment, the following criteria must be met:

(a) It is probable that future economic benefits associated with the items will flow to the company,

(b) the cost of the item can be measured reliably.

The company adds to the carrying amount of an item of property, plant and equipment the cost of replacing parts of such an item

when that cost added is expected to provide future benefits to the company.

All other day to day servicing is expensed as repairs and Maintenace.

The summary of the fixed assets is as listed below:

Leasehold Land

Construction in

Progress

Furniture and

Equipment Motor Vehicles

Leasehold

Improvement

Plant &

Machinery Total

Costs/Revaluation N N N N N N N

Balance, beginning of year 2 1 0 ,000,000 1 4 ,174,200 2 9 ,686,793 5 2 ,118,892 3 7 ,896,064 6 7 ,571,455 4 1 1 ,447,403

Additions - 8 ,849,994 2 ,307,934 2 ,300,000 - 5 ,154,043 1 8 ,611,971

Balance, end of year 2 1 0 ,000,000 2 3 ,024,194 3 1 ,994,727 5 4 ,418,892 3 7 ,896,064 7 2 ,725,498 4 3 0 ,059,374

Depreciation

Balance, beginning of year 2 ,153,846 - 1 2 ,076,065 1 7 ,490,626 3 7 ,896,054 1 6 ,899,259 8 6 ,515,850

Charge for the year 2 ,165,064 - 1 0 ,330,873 1 7 ,871,086 - 1 7 ,718,086 4 8 ,085,109

Balance, end of year 4 ,318,910 - 2 2 ,406,938 3 5 ,361,712 3 7 ,896,054 3 4 ,617,345 1 3 4 ,600,959

Carrying amount as at:

3 1 st Dec., 2013 2 0 5 ,681,090 2 3 ,024,194 9 ,587,789 1 9 ,057,180 10 3 8 ,108,153 2 9 5 ,458,415

3 1 st Dec., 2012 2 0 7 ,846,154 1 4 ,174,200 1 7 ,610,728 3 4 ,628,266 10 5 0 ,672,196 3 2 4 ,931,553

The depreciation charge for the year is analysised as follow:

2013 2012

=N= =N=

Cost of sales 1 9 ,883,150 1 9 ,053,105

Adminitrative cost 2 8 ,201,959 3 0 ,182,199

Total 4 8 ,085,109 4 9 ,235,304

Page 33


LEASEHOLD LAND

The details of the land is as listed below:

Location : Within 2KLM off Lagos/Ibadan Expressway, Kenta Oyewolu Village, Ogun State.

Size of Property : 4.138 Hectares per plan no. L.C. 2690 (OG).

Title of Property : Ogun State of Nigeria Certificate of Occupancy No. 026092 dated 17th May

20 09 for a term of Ninety - Nine (99) years commencing 1st January 2009.

Current Value : The value is based on historical cost value.

Debt secured on property : None

1 8 .1 FIXED ASSETS COMMITMENTS

As at December 31, 2013, the company has not entered into any capital commitments for the construction of the leasehold land.

1 8 .2 REVALUATION OF PROPERTY, PLANT AND EQUIPMENT

The company use revaluation model of measurement of property, plant and equipment by engaging the services of Ubosi Eleh and Co.,

Estate Surveyors and Valuers an accredited independent valuer, to determine the fair value of its property, plant and equipment.

The valuation is based on Open Market Capital Value. The date of the most recent valuation was December 2011.

The surplus in cost over the historical value is transferred to the revaluation reserve.

The book values of the revalued assets were adjusted to the revaluation and the resultant surplus were credited to the revalaution

reserves in shareholder's equity.

If the property, plant and equipment were measured using cost model the carrying amount will be as follows:-

Year Ended 31st December 2011 Leasehold Land

Furniture and


Leasehold

Improvement

Plant &

Machinery

N N N N N

Cost 1 0 5 ,231,625 4 7 ,120,495 6 4 ,480,500 3 7 ,896,064 1 0 5 ,930,946

Accumulated Depreciation 3 ,158,534 3 2 ,220,122 2 9 ,439,580 3 7 ,896,064 4 6 ,209,557

Net Carrying Amount 1 0 2 ,073,091 1 4 ,900,373 3 5 ,040,920 - 5 9 ,721,389

Year Ended 31st December 2012 Leasehold Land

Construction in

progress

Furniture and


Leasehold

Improvement

Plant &

Machinery

N N N N N N

Cost 1 0 5 ,231,625 1 4 ,174,200 5 5 ,044,670 6 5 ,930,500 3 7 ,896,064 1 1 6 ,609,401

Accumulated Depreciation 5 ,312,380 - 4 4 ,296,187 4 6 ,930,206 3 7 ,896,064 6 3 ,108,816

Net Carrying Amount 9 9 ,919,245 1 4 ,174,200 1 0 ,748,483 1 9 ,000,294 - 5 3 ,500,585

Revaluation will be carried out every three to five years based on fair value and as determined by independent appraisal,

unless material changes are identified that warrant revaluation.

Any increase in revaluation will be in revaluation surplus account whereas any decrease in value will be recognized in other

comprehensive income.

Page 34


1 8 .3 DEPRECIATION

Depreciation commences when the assets are available for use and is recognized on a straight line basis to depreciate the cost

of these assets to their estimated residual value over their estimated useful lives.

Depreciation methods, useful lives and residual values are reviewed at each financial year end and are adjusted if appropriate,

such review takes into consideration the nature of the assets, their intended use and the evolution of new technology.

Estimated useful lives are as follows :

Leasehold Land : Over the lease period of 99 years from 2009

Plant & machinery : 4 - 10 Years

Office equipment and furniture : 3 - 8 Years

Motor Vehicle : 3 - 5 Years

1 8 .4 Derecognition of property, plant and building

An item of property, plant and equipment and any significant parts initially recognised is derecognised when :

(a) on disposal; or

(b) when no future economic benefits are expected from its use;

The gain or loss arising from the derecognition of an item of property, plant and equipment (calculated as difference between the net

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

1 8 .5 Construction in progress

Construction work-in- progress represents assets under construction which are not subject to depreciation, these assets after

completion of construction will be reclassified to the appropriate class of property, plant and equipment.

Page 35


1 8 .6 Impairment of tangible and intangible assests excluding goodwill and financial assets.

At the end of each reporting period,the company reviews the carrying amount of the tangible

and intagible assets to determine whether there is any indicator that those assets have suffered

an impairment loss. If any such indication exists, the recoverable amountof the assest is estimated

in order to determine the extent of the impairment loss ( if any). When it is not possible to estimate

the recoverable amount of an individual assets, the company estimate the recoverable amount of

the cash - generating unit to which the assets belong. When a reasonable and consistent basis of

allocation can be identified, corporate assets are also allocated to individual cash- generating unit,

or otherwise they are allocated to the smallest group of cash -generating units for which a

reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested

for impairment at least annually, and whenever there is an indication that asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In asssessing

vaule in use, the estimated future cash flows are discounted to their present value in use.

The estimated future cash flows are discounted to their present value using a pre-tax

discount rate to reflect current market assessments of the time value of money and the risks specific

to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of the assets( or cash-generating unit) is estimated to be less than its

carrying amount, the carrying amount of the asset(or cash-generating unit)is reduced to the

recoverable amount, an impairment loss is recognised immediatelly in the income statement.

unless the relevant asset is carried at a revalued amount, in which cases the impairment loss is

treated as a revaluation decrease.

When an impairment loss is subsequently reverses, the carrying amount of ther assets

(or a cash-generating unit) is increased to the revised estimate of its recoverable amount so

that the increased carrying amount does not exceed the carrying amount that would have been

determined has no impairment loss been recognised for the asset (or cash-generating unit) in

prior years. A reversal of an impairmentloss is treated as a revaluation increase.

Page 36



2013 2012

19 SHARE CAPITAL N'000 N'000

Authorised :

1,200,000,000 ordinary shares of 50 Kobo per share 6 0 0 ,000 6 0 0 ,000

Issued and Fully Paid

7 9 2 ,914,256 ordinary shares of 50 Kobo per share 3 9 6 ,457 3 9 6 ,457

The share capital did not change during the financial year.

20 SHARE PREMIUM

Share Premium Account 4 1 5 ,072 4 1 5 ,072

The share premium represents the premium on the sales of shares sold during the private placement net of

associated cost of placement, listings and bonus issued.

21 Retained Earnings 5 1 0 ,201,542 4 0 4 ,276,237

Retained earnings represent the cumulative profits attributable to shareholders of the company.

The dividend related to 2012 and paid during this financial year in conformity with the decision taken at the

Annual General Meeting on 23rd May 2013. Shareholders approved the proposed dividends of '=N=0.12

per share, resulting in total dividends of '=N=95,149,711.

Dividend payable is not accounted for until it has been ratified at the Annual General Meeting.

In the next Annual General Meeting the Board is proposing a dividend of eight kobo (8 Kobo) per share.

The financial statements for the year ended 31 December 2013 do not reflect this proposed distribution,

which will be treated as an appropriation of profit in the year ending 31 December 2014.

Page 37


22 REVALUATION RESERVE

The Leasehold Land, Furniture, Fittings and Office Equipment, Plant and Machinery and Motor Vehicles were

revalued in December 2011 by an independent valuer UBOSI ELEH + Co. a Estate Surveyors and Valuers on

the basis of open Market Capital Value. The revaluation surplus are as stated belew:

2013 2012

=N= =N=

Leasehold land 1 0 7 ,926,909 1 0 7 ,926,909

Furniture and Equipment 1 7 ,722,027 1 7 ,722,027

Motor Vehicles 2 3 ,009,080 2 3 ,009,080

Plant and Machinery (2,828,389) (2,828,389)

1 4 5 ,829,627 1 4 5 ,829,627

Less: Impairment in 2012

Furniture and Equipment (10,859,782) (10,859,782)

Motor Vehicles (7,381,108) (7,381,108)

Revaluation Surplus as at 31st December 2013 1 2 7 ,588,737 1 2 7 ,588,737

Page 38



23 Income Taxes a Pionner Status

The company has been granted pioneer certificate by the Nigerian Investment Promotion Commission, the

Pioneer Certificate under the provisions of Industrial Development Tax Relief Act No. 22 of 1971 as amended and

the Nigeria Investment Promotion Commission Act No. 16 of 1995.

This certificate exempts the company from paying income taxes.

In view of the pioneer certificate no provision has been made for deferred taxation, company income tax

and education tax.

b Deferred Tax Assets (Withholding Tax)

Deferred tax assets relates to unused tax credits that the company can carry forward and deduct from its future

company income taxes liabilities.

Deferred tax assets are recognised to the extent that future taxable profit will be available against which the

temporary differences can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable

that the related tax benefit will be realised.

c Deferred Tax Liabilities

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases

of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined by

using tax rate per the companies income tax act.

The deferred tax liability relates to the deferred capital gain tax on the revaluation surplus account (net of the

deferred capital gain tax on impairment cost during the year).

d Taxation -Per Balance sheet

2013 2012

=N= =N=

Balance brought forward 7,875,624 71,204,847

Payment during the year - (20,221,355)

Withholding tax credit notes - (67,335,332)

Provision for prior years - 16,351,840

Provision for the year 4,610,420 7,875,624

TOTAL 12,486,044 7,875,624

Page 39



24 EVENTS AFTER THE REPORTING PERIOD

This relates to events, favourable or unfavourable, that occurs between the end of the reporting period

and the date when the financial statements are authorised for issue.

25 DIVIDENDS PAID AND PROPOSED

2013 2012

Proposed for approval at the annual general meeting =N= =N=

(not recognised as a liability at 31 December). 6 3 ,433,140 95 ,149,711

Dividend Payable 63 ,433,140 95 ,149,711

The dividend related to 2012 and paid during this financial year in conformity with the decision taken at the

Annual General Meeting on 23rd May 2013. Shareholders approved the proposed dividends of '=N=0.12

per share, resulting in total dividends of '=N=95,149,711.

Since after the year end of the company, the Board of Directors have proposed to declare a dividend of

=N=0.08 per share (2012 N0.12 per share) subject to approval of shareholders at the Annual General

Meeting.

The financial statements for the year ended 31 December 2013 do not reflect this proposed distribution,

which will be treated as an appropriation of profit in the year ending 31 December 2014.

26 TRADE AND OTHER RECEIVABLE

The trade receivable are not interest bearing and are generally on 30-120 days terms.

There are no indication of impairment at the end of the financial period, and the directors are of the oponion that

allowance for impairment is not necessary, therefore no impairment was recognised.

The age of receivable that are past due but not impaired :

=N=

45 - 90 days 12 9,548,072

> 90 days 81 ,090,488

Total 21 0,638,560

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27 DIRECTORS AND EMPLOYEES 2013 2012

=N= =N=

Emoluments :- Chairman 3,000,000 1,250,000

Directors' Fees 18 ,000,000 6,250,000

Emoluments as executives 68 ,310,000 68 ,310,000

86 ,310,000 74 ,560,000

Highest paid director 22 ,785,000 21 ,285,000

Number of Directors and Employee No. No.

Executive Directors 3 3

Management 27 18

Non Management 90 92

120 113

Employees remuneration range

2013 2012

=N= Number Number

3 3 0 ,001 - 350,000 0 14

3 5 0 ,001 - 360,000 0 10

3 6 0 ,001 - 390,000 28 9

3 9 0 ,001 - 400,000 0 2

4 0 0 ,001 - 410,000 0 4

4 1 0 ,001 - 420,000 0 1

4 2 0 ,001 - 440,000 0 3

4 4 0 ,001 - 450,000 0 1

4 5 0 ,001 - 520,000 8 10

5 2 0 ,001 - 550,000 7 3

5 5 0 ,001 - 650,000 6 3

6 5 0 ,001 - 700,000 11 3

7 0 0 ,001 - 900,000 5 3

9 0 0 ,001 - 1,000,000 4 5

1 ,000,001 - 1,500,000 8 7

1 ,500,001 - 2,500,000 13 15

2 ,500,001 - 3,500,000 3 5

3 ,500,001 - 7,000,000 14 6

7 ,000,001 - 25,000,000 13 9

Total 120 113

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28 RELATED PARTY TRANSACTIONS

The company is an indigenous Nigeria Company and does not have a subsidiary or a parent company.

29 CONTINGENT ASSETS AND LIABILITIES

Contingent assets and liabilities are possible rights and obligations that arise from past events and whose

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

events not fully within the control of the company.

(a) Claims

There is no claim to any liability against the company.

(b) Guarantees

The company has not made any guarantee to any company.

30 LOANS FAVOURING DIRECTORS AND OFFICERS

(a) The company did not grant or guarantee any loan or credit in favour of any Director during the year.

(b) No loan was made to any of the Director for the purchase of the company's shares during the year.

31 COMPARABLES

Where necessary, comparative figues have been adjusted to conform with changes in the presentation in

the current year.

32 APPROVAL OF FINANCIAL STATEMENTS

The financial statements for the year ended 31 December 2013 (including comparatives) were approved by

the board of Directors on 20 March 2014.

[signed] [signed]


FRC/2014/CISN/00000006703

««««««««««« «««««««««««

Vice Chairman/(CEO) Executive Director (Finance)

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Documents

Paints and Coatings Full Year Results 2013