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GREIF NIGERIA PLC Apapa, Nigeria
ANNUAL REPORT AND
AUDITED FINANCIAL STATEMENTS AND
SUPPLEMENTARY FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 OCTOBER 2018
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GREIF NIGERIA PLC REPORT OF THE DIRECTORS, AUDITED FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2018 CONTENTS PAGE Directors, Bankers, Professional Advisers, etc. 3 Results at a Glance 5 Chairman’s Statement 6 Corporate Governance 9 Report of Directors 11 Statement of Directors’ Responsibilities 15 Report of the Audit Committee 16 Independent Auditors Report 17 Statement of Financial Position 20 Statement of Profit & Loss & Comprehensive Income 21 Statement of Changes in Equity 22 Statement of Cash Flows 23 Notes to the Financial Statements 24 Statement of Value Added 68 Five Years Financial Summary 68
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GREIF NIGERIA PLC
FOR THE YEAR ENDED 31 OCTOBER 2018
DIRECTORS, PROFESSIONAL ADVISERS
DIRECTORS: Mr. Adedayo Abiodun Olowoniyi - Chairman Mr. Olukunle Adebayo Obadina Mr. Gaius Adetayo Omotayo Mr. Erik Maarten ‘t Sas - Dutch Mr. David Onabajo -Managing Director –Appointed on 01/11/2018
COMPANY Marina Nominees Limited SECRETARY: Aret Adams House 233 Ikorodu Road,
Ilupeju, Lagos Tel: 01-7740219, 0818-650-7567 Email: [email protected]
REGISTERED 1 Alapata Road. (Off Dockyard Road) OFFICE: Apapa, Lagos, Nigeria
Tel: +234 0 803 402 3903, +234 0 908 289 8377 Email: [email protected] Website: www.greif.com
AUDITORS: Ernst & Young
(Chartered Accountants) 10th & 13th Floor, UBA House 57 Marina, Lagos.
SOLICITORS: Irving and Bonnar
Akuro House (7th Floor) 24/26 Campbell Street P.O. Box 2578, Lagos.
PRINCIPAL EcoBank International Plc
BANKERS: First City Monument Bank Plc Stanbic IBTC Bank Plc Sterling Bank Plc United Bank for Africa Plc Zenith Bank Plc
REGISTRARS All Crown Registrars Limited AND TRANSFER 190 Ikorodu Road, Onipanu Bus Stop, OFFICE: Shomolu, Lagos,
P.M.B 12884, Marina, Lagos Email: aallcrownregistrarsltd.com AUDIT: Mr. David Oguntoye COMMITTEE Alhaji Kolawole Saka
Mr. G. A. Omotayo Mr. Erik Maarten ‘t Sas Mr. O. A Obadina Elder Lady A.A Shoewu, JP
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GREIF NIGERIA PLC RESULTS AT A GLANCE FOR THE YEAR ENDED 31 OCTOBER 2018
31-Oct
31-Oct
2018
2017
% change
N’000
N’000
incr/(decr)
Revenue 534,611
1,405,218
(62%)
Cost of Sales (649,287)
(1,153,758)
(43%)
(Loss)/profit before taxation (245,229)
77,554
210%
Tax Expense (17,360)
(28,130)
38%
(Loss)/profit for the year (262,589)
49,424
At Year End
Paid-up share capital - N'000 21,320
21,320
-
Shareholders’ funds - N'000 98,835
361,424
(73%)
Total No. of Shares - '000 42,640
42,640
-
Per –Share data
(Loss)/earnings per share (616) Kobo 116 Kobo (620%)
Net assets per share 232 Kobo 848 Kobo (71%)
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GREIF NIGERIA PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2018 Distinguished Shareholders, members of the Board of Directors, invited guests, ladies and gentlemen, I welcome you all to the 81st Annual General meeting of our Company. I hereby present to you the Annual Report and Accounts of Greif Nigeria Plc. for the financial year ended 31 October 2018. BUSINESS ENVIRONMENT For the first six months of 2018, the Nigerian economy recorded improvements that were engendered by increasing business activities, rising oil prices in the global market, increased oil output by the country, declining inflation and increased inflow of foreign exchange. Economic indicators have remained positive since the beginning of the year except for the equities market which saw a lot of volatility but still closed slightly positive, and the manufacturing sector which continued to complain of the lack of access to cheap finance. The late signing of the budget had slowed down activities as the annual Gross Domestic Product (GDP) growth rate had slowed from 2.11 per cent in the last quarter of 2017 to 1.94 per cent in the first quarter of the year. Purchasing Managers Index (PMI) which measures business activity in the country has been expanding faster hovering between 56 and 57 index points since the beginning of the year. Investor optimism over the recovery of Nigeria’s economy skyrocketed during the early parts of 2018 after the nation pulled itself out of recession. Available data suggests economic activity remained relatively weak in the final quarter of 2018, following a modest showing in Q3 which was propped up by higher oil production. The PMI edged down in December and brought the Q4 average below that of Q3’s, signaling waning momentum of business activity towards the end of the year. On the demand side, multi-year high unemployment in Q3 coupled with still-elevated inflationary pressures through year-end likely weighed on private consumption in Q4. This comes against the backdrop of the upcoming presidential election of 16 February which is set to be a two-horse race between incumbent President Muhammad Buhari and Atiku Abubakar, a businessman and former vice-president. Although both candidates take a similar stance on certain economic issues, they differ sharply over the management of the foreign exchange system and the vital oil industry. Thus, were Abubakar to win, the possibility arises that economic policy is reoriented going forward. OPERATING INDUSTRY The economy is expected to gain traction this year, on the back of stronger household consumption and public spending. The recent slide in oil prices and announced OPEC oil output cuts pose downside risks going forward, however. Political uncertainty over the outcome of next month’s general election also clouds the outlook. Focus Economics panelists see GDP increasing 2.4% in 2019, down 0.1 percentage points from last month’s estimate, and 2.9% in 2020. The economy continued to show signs of recovery from the 2016 recession. GDP growth was estimated at 0.8% in 2017, up from –1.5% in 2016. The outlook beyond is positive, with growth projected at 2.1% in 2018 and 2.5% in 2019. This outlook is anchored in higher oil prices and production, as well as stronger agricultural performance Specifically for the Companies in the steel drum business, the second half of 2018 witnessed a worldwide global steel demand surge in the market place caused by supply shortages as a result of scarcity of coking coal and China’s improved economy. This has led to shortage in steel availability in the international market place and increasing overall world prices of our basic raw material. Coupled with the challenges in domestic economy already highlighted above, 2018 was a very difficult year to navigate.
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GREIF NIGERIA PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2018
We have tried to navigate this difficult business terrain by recovering our costs through multiple price increases to our customers, cost reduction initiatives and improved efficiencies. However, we have not succeeded in that. We have lost our most important customer, halfway through the year and had to reduce prices to retain volumes, not fully recovering costs. OPERATING RESULTS The Company achieved a turnover of N534.611million for the year under review, a decrease of 62% over the prior year figure of N1.405billion. Total comprehensive loss in 2018 was N262m against N49m profit in the prior year. DIVIDEND
The Board did not recommend any dividend. GENERAL OUTLOOK In presenting his 2019 budget to the National Assembly the President, General Muhammadu Buhari articulated his objectives as stimulation of the economy and promotion of Import substitution and export. He presented N7.298trillion budget premised on a benchmark oil price of $42.5 per barrel and production of 2.2million barrels per day. With budgeted aggregate revenue at N4.94trillion, this leaves a budget deficit of N2.36trillion, to be sourced via foreign loans (external sources) and domestic borrowing (internal sources). Capex budget represents about 30% of the total. The budget focus was a GDP growth of 5.3% while strict discipline will ensure alignment of fiscal, monetary, trade and industrial policies. The World Bank and IMF have revised Nigeria’s estimated 2017 GDP growth rate downwards from 5.3% anticipated by government to about 2% growth. Macroeconomic variables still have to significantly improve in order for the country to come out of the current deep-rooted recession. Therefore, we still expect that the economic environment in 2018 will continue to be fluid, changing and uncertain and businesses have to be proactive and make clear-cut choices about how to compete and be unique in the market place. Businesses also need to make clear definition of strategy, business model and core operations in order to ensure income growth and profitability. COMPANY OUTLOOK
The trends that have started mid 2018 still continues in the first (fiscal) quarter of 2019. As a result of increased competition and a stagnant market for steel drums, we do not see an improvement happening in the near future. Greif Nigeria has been operating well below operating costs, even below direct material costs, and sees no signs of improved market conditions. Therefore, we have decided to stop operations with immediate effect. The coming months we will investigate on if and/or how we can continue with Greif Nigeria.
Adedayo Olowoniyi Chairman 31 January 2019
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GREIF NIGERIA PLC CORPORATE GOVERNANCE
FOR THE YEAR ENDED 31 OCTOBER 2018 Introduction
Greif Nigeria Plc recognizes the importance of good corporate governance as a means of sustaining viability of the business in the long term, and further believes that the attainment of business objectives is directly aligned to good corporate behavior. In the conduct of its business, Greif Nigeria has sought to comply with all statutory requirements, adopted tried and proven best practices to protect the environment and its employees, invested in the community in which it operates, and strove to enhance shareholder value in the process. Greif Nigeria adopts both medium and long term growth strategies, and allocates resources in order to guarantee the creation of wealth. Greif Nigeria promotes and recognizes excellence through its employee development programmes. The Company has put in place systems of internal controls in order to safeguard the interests of shareholders and stakeholders and ensure the reliability of its records. As indicated in the notes to the financial statements, the business adopts standard accounting practices to facilitate transparency in the disclosure of information and to give assurance to the reliability of the financial statements. Legal Structure of Greif Nigeria Plc
Greif Nigeria Plc ownership structure is as follows: Greif International Holding B.V. The Netherlands 51% The Van Leer Nigerian Education Trust 23% Other Nigerian Citizens & Associations 26% Board of Directors The responsibility of good corporate governance is placed on the Board of Directors and the Management Team. The Board of Directors is highly qualified and experienced in their professional areas of expertise. As at 31 October 2018, the Board had one full time Executive Director - the Managing Director of the company. The Board also has three other members who are non-Executive Directors, one of whom is the Chairman of the Board and the Greif group Business Regional Manager for Sub Sahara Africa with oversight responsibility for Greif Nigeria management team. The Board meets regularly to deliberate on policy matters, corporate strategy and implementation, review Company performance, operations, finances and set standards for ethical conduct of the Company’s business, amongst other critical activities. The Board met three times during the year under review and the attendance is presented in the table below:
P = Present A = Absent
No.
Names of Directors
Dates of Board Meeting
08/12/2017 25/04/2018 30/08/2018
1. Mr. Adedayo Olowoniyi – Chairman P P P
2. Mr. Olukunle Obadina – Managing P P P
3. Mr. Erik Maarten ‘t Sas P P P
4. Mr. Gaius A. Omotayo Represented Represented Absent
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GREIF NIGERIA PLC CORPORATE GOVERNANCE Cont’d FOR THE YEAR ENDED 31 OCTOBER 2018 The Audit Committee
As at 31 October 2018, the Audit Committee consisted of five (5) members, two of whom are members of the Board of Directors and the other three members being independent shareholders. The Audit Committee is chaired by an independent shareholder member. The committee meets to review the adequacy of the internal and external audit plan, to receive and deliberate on the report of the external auditors, to review progress on recommendations made in both the internal and external audit reports, to review the adequacy of internal control systems and the degree of business compliance with laid down internal policies, laws, code of business principles and any other relevant regulatory framework. The Committee met three times during the year under review and the attendance is presented in the table below:
No.
Names of Audit Committee Dates of Audit Committee Meeting
Members 14/11/2017 29/01/2018 15/05/2018 29/08/2018
1. Mr. D.O. Oguntoye – Chairman P P P P
2. Elder Lady A. A. Shoewu, JP P P P P
3. Mr. Gaius A. Omotayo P A A A
4. Alhaji K. A. Saka P P P P
5. Mr. Erik Maarten ‘t Sas R R R P
P = Present; A = Absent; R = Represented The Management Team
The Management Team consists of six full time managers of the Company which include the Managing Director and five heads of functions namely Finance, Marketing, Production, Maintenance, and Human Resources. The Management team meets regularly to review the performance of the company and assess progress against the achievement of laid down objectives. It also reviews programmes and strategies, and assigns responsibilities and resources for achievement of set goals. Consequently, the Management Team is charged with the responsibility of identifying and assessing the risk profile within which the company is operating, with a view to eliminating or minimizing the impact of such risks to the achievement of set company objectives. Code of Business Principles
Greif has a documented code of business principles to guide all employees and business partners in the discharge of their duties all over the world, wherever Greif subsidiaries operate. Greif Nigeria as a member of the Greif Group of companies, subscribes to this code. The code sets the standard of professionalism and degree of integrity required for business operations. Among other things, the code covers the following areas: compliance with the law, conflicts of interest, public activities, environmental management, diversity in the workplace, accuracy and reliability of financial reporting, related and interested party transactions, etc. It also covers the procedure for handling breaches and instances of non-compliance. The company has adopted a code of conduct regarding securities transactions by its directors and other interested parties in accordance with Nigerian Stock Exchange rules governing transactions with related parties or interested parties and Greif group code of conduct. Specific enquiry of all Directors has been made on compliance or otherwise with the listing rules and in the company’s code of conduct regarding securities transactions by the Directors. There was no known non-compliance by the Directors at the time of reporting
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GREIF NIGERIA PLC REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 OCTOBER 2018 The Directors hereby submit their report together with the audited financial statements for the year ended 31st October 2018. PRINCIPAL ACTIVITIES The principal activities of the Company during the year continued to be the manufacturing and marketing of metal drums. STATE OF AFFAIRS In the opinion of the Directors, the state of the Company's affairs is satisfactory and there has been no material change since the reporting date. RESULT FOR THE YEAR 2018 2017
N’000 N’000 Revenue 534,611 1,405,218 ---------- ---------- (Loss)/profit before taxation (245,229) 77,554 Taxation (17,360) (28,130) ----------- --------- (Loss)/profit for the year (262,589) 49,424 ====== ===== DIVIDEND The Directors did not recommend a dividend for approval at the Annual General Meeting. EVENTS AFTER REPORTING PERIOD
There were no significant event after the reporting date, which have not been provided for in these financial statements. DIRECTORS
The names of the Directors at the date of this report and of those who have held office during the year are as follows: Mr. Adedayo Abiodun Olowoniyi - Chairman Mr. Olukunle A. Obadina -Retired as Managing Director on 31/10/2018 Mr. Gaius A. Omotayo Mr. Erik Maarten ’t Sas - Dutch Mr. David Onabajo - Appointed as Managing Director on 01/22/2018 DIRECTORS’ INTERESTS IN CONTRACTS
None of the Directors has notified the Company for the purpose of section 277 of the Companies and Allied Matters Act (CAP C20) Laws of the Federation of Nigeria 2004, of their direct or indirect interest in contracts or proposed contracts with the Company during the year. RECORD OF DIRECTORS’ ATTENDANCE AT BOARD MEETINGS In accordance with section 258 (2) of the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004, the record of the Directors’ attendance at Director’s meetings during 2017/2018 is available for inspection at the Annual General Meeting.
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GREIF NIGERIA PLC REPORT OF THE DIRECTORS – Cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
DIRECTORS’ SHAREHOLDINGS The Register of Directors’ interests in the share capital of the Company is available for inspection at the Annual General Meeting. The direct and indirect interest of Directors in the issued share capital of the Company as recorded in the Register of Directors’ Shareholdings and/or as notified by them for the purposes of sections 275 and 276 of Companies and Allied Matters Act (CAP C20) Laws of the Federation of Nigeria 2004, and the listing requirements of the Nigerian Stock Exchange are as follows: Number of Shares as at October 31 October 31 2018 2017 Mr. G.A. Omotayo 115,133 115,133 Mr. O.A. Obadina 72,333 72,333 SUBSTANTIAL INTEREST IN SHARES
The shares of the Company are beneficially held as follows: Number of shares as at
31 October, % 31 October, % 2018 2017
Greif International Holding B.V. The Netherlands 21,746,400 51 21,746,400 51 The Van Leer Nigerian Education Trust 9,807,200 23 9,807,200 23 Other Nigerian Citizens & Associations 11,086,400 26 11,086,400 26 ------------- ---- -------------- ----- 42,640,000 100 42,640,000 100 ====== === ====== ==
No individual shareholder other than Greif International Holdings B.V., and The Van Leer Nigerian Education Trust held more than 5% of the issued share capital of the Company as at 31 October 2018. SHAREHOLDER INFORMATION Analysis of shareholding as at 31 October, 2018
Range No. of
Shareholders Holder's
% Holders
Cum Units Units%
Units Cum
1 - 100 215 8.60% 215 14,895 0.03% 14895
101 - 1,000 1,410 56.42% 1,625 707,838 1.66% 722,733
1,001 - 10,000 763 30.53% 2,388 2,293,296 5.38% 3,016,029
10,001 - 100,000 101 4.04% 2,489 3,413,115 8.00% 6,429,144
100,001 - 1,000,000 16 0.64% 2,505 3,554,095 8.34% 9,983,239
1,000,001 - 99,999,999 3 0.12% 2,508 32,656,761 76.59% 42,640,000
Grand Total 2,508 100.36% 42,640,000 100.00%
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GREIF NIGERIA PLC REPORT OF THE DIRECTORS – Cont’d FOR THE YEAR ENDED 31 OCTOBER 2018 Analysis of shareholding as at October 31, 2017
Range No. of
Shareholders Holder's
% Holders
Cum Units Units%
Units Cum
1 - 100 215 8.60% 215 14,895 0.03% 14895
101 - 1,000 1,410 56.42% 1,625 707,838 1.66% 722,733
1,001 - 10,000 763 30.53% 2,388 2,293,296 5.38% 3,016,029
10,001 - 100,000 101 4.04% 2,489 3,413,115 8.00% 6,429,144
100,001 - 1,000,000 16 0.64% 2,505 3,554,095 8.34% 9,983,239
1,000,001 - 99,999,999 3 0.12% 2,508 32,656,761 76.59% 42,640,000
Grand Total 2,508 100.36% 42,640,000 100.00%
History of Share Capital
DATE № of
Shares
Authorised N Description
21st August, 1970 100,000 200,000 N200,000 divided into 100,000 shares of N2.00 each
24th November, 1970 150,000 300,000 N300,000 divided into 150,000 shares of N2.00 each
28th September, 1972 200,000 400,000 N400,000 divided into 200,000 shares of N2.00 each
29th September, 1976 500,000 1,000,000 N1,000,000 divided into 500,000 shares of N2.00 each
8th October, 1976 1,000,000 2,000,000 N2,000,000 divided into 1,000,000 shares of N2.00 each
30th November, 1977 1,500,000 3,000,000 N 3,000,000 divided into 1,500,000 shares of N2.00 each
8th February, 1979 6,000,000 3,000,000
Each of Existing 1,500,000 shares of N 2.00 each in the capital of the Company was sub-divided into four ordinary shares of 50 kobo each.
8th February, 1979 9,000,000 4,500,000 N 4,500,000 divided into 9,000,000 ordinary shares of 50 kobo each
2nd December, 1980 14,000,000 7,000,000 N 7,000,000 divided into 14,000,000 ordinary shares of 50 kobo each
31st July, 1990 30,000,000 15,000,000 N 15,000,000 divided into 30,000,000 shares of 50 kobo each
7th July, 1992 60,000,000 30,000,000 N 30,000,000 divided into 60,000,000 shares of 50 kobo each
As at 31 October, 2018 the called up and fully paid capital of the Company was N 21,320,000 divided into 42,640,000 shares of 50 kobo each SUPPLIERS
The Company's significant overseas suppliers are ArcelorMittal International, Greif Shanghai, China, Wuxi Jiushun Steel, China and Proseal India. DISTRIBUTORS
The Company has no distributors. All products are sold and delivered by the Company directly to the consumers.
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GREIF NIGERIA PLC REPORT OF THE DIRECTORS – Cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
PROPERTY, PLANT AND EQUIPMENT
Movements in Property, Plant and Equipment during the year are shown in Note 7 to the financial statements. In the opinion of the Directors, the market value of the Company's Property, Plant and Equipment is not lower than the value shown in the audited financial statements. CHARITABLE GIFTS AND DONATIONS The company made donations of N485,000 (2017: N400,000) as follows:
Associations 31October 2018 31 October 2017
1. So-Said Charity Home for the Safety of the Insane and Destitute
485,000 200,000.
2.. Komforta Schools 200,000
Total 485,000 400,000
EMPLOYMENT OF PHYSICALLY-CHALLENGED PERSONS The Company employed no physically-challenged person during the year. It is, however, the Company's policy to consider physically-challenged persons for employment if academically and medically qualified. HEALTH, SAFETY AND ENVIRONMENT Health, safety and environmental regulations are applied within the Company's premises and employees are aware of existing regulations. The Company provides subsidy to all categories of employees for medical, transport, housing, etc. EMPLOYEES' INTEREST AND TRAINING
The Company is committed to keeping employees fully informed as far as possible, regarding the Company's performance and progress. The Company also seeks their views wherever practicable on matters, which particularly affect them as employees. Management, professional and technical expertise are the Company's major assets, and investment in developing such skills continues. The Company's expanding skill base has extended to a range of training provided and has broadened opportunities for career development within the organization. Incentive schemes designed to meet the circumstances of each individual are implemented wherever appropriate and some of these schemes include bonus, promotion, wage increase, etc. AUDITORS Ernst & Young, having expressed their willingness, will continue in office as the Company’s auditors in accordance with section 357(2) of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004. A resolution will be proposed authorizing the Directors to fix their remuneration. BY ORDER OF THE BOARD MARINA NOMINEES LIMITED FRC/2015/00000000001506 LAGOS, NIGERIA 31 January 2019
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GREIF NIGERIA PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED 31 OCTOBER 2018 The Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004, requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the Company at the end of the year and of its profit or loss. The responsibilities include ensuring that the company: a) Keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the
Company and comply with the requirements of the Companies and Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004;
b) Establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and
other irregularities; and c) Prepares its financial statements using suitable accounting policies supported by reasonable and
prudent judgments and estimates, and are consistently applied. The Directors accept responsibility for the annual financial statements loss which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards issued by International Accounting Standards Board, Financial Reporting Council of Nigeria Act № 6, 2011 and the requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and of its profit for the year ended 31 October 2018. The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. To the best of our knowledge and ability we report no contravention or violation of any regulatory requirement(s) during the year. Nothing has come to the attention of the directors to indicate that the company will not remain a going concern for at least twelve months from the date of this statement. SIGNED ON BEHALF OF THE BOARD OF DIRECTORS ON 30TH JANUARY 2019 BY:
David Onabajo O. A. OBADINA Managing Director Director FRC/2018/IODN/00000018995 FRC/2013/ICAN/00000004254
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GREIF NIGERIA PLC REPORT OF THE AUDIT COMMITTEE
TO THE MEMBERS OF GREIF NIGERIA PLC
FOR THE YEAR ENDED 31 OCTOBER 2018
In accordance with the provision of Section 359(6) of the Companies and Allied Matters Act CAP C20 Laws of Federation of Nigeria 2004, members of the Audit Committee of Greif Nigera Plc report as follows:- We have exercised our statutory functions under section 359(6) of the Companies and Allied Matter, Act CAP C20 Laws of the Federation of Nigeria 2004, and we acknowledge the co-operation of the management and staff in the conduct of these responsibilities. We confirm that:
a) The accounting and reporting policies of the Company are consistent with legal requirements and agreed ethical practices.
b) The scope and planning of the external audit are in our opinion adequate c) The internal control system was in order d) The Independent Auditors’ Management Letter Comments were satisfactorily dealt with by
management. e) We have reviewed the audited financial statements prior to the board’s approval
MEMBERS OF THE AUDIT COMMITTEE
1. Mr. David O. Oguntoye, (Chairman) - Shareholders Representative 2. Mr. G. A. Omotayo - Non-Executive Director 3. Alhaji Kolawole Saka - Shareholders Representative
4. Mr. Erik Maarten ’t Sas -Non-Executive Director
5. Elder Lady A .Shoewu, JP - Shareholders Representative The additional director will be appointed at the next AGM to make up equal number as CAMA requires Mr. David O. OGUNTOYE FRC/2013/ANAN/00000002787 Chairman, Audit Committee 31 January 2019
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16
17
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GREIF NIGERIA PLC STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2018
Notes 31-Oct-18
31-Oct-17
Assets
N’000
N’000
Non-Current Assets Property, plant and Equipment 7 93,848
123,957
Intangible Assets 8 4,583
9,031
Deferred taxation 15c -
17,098
-------- ----------
Total Non-Current Assets
98,431
150,086
--------- ----------
Current Assets Inventories 9 63,874
182,126
Trade & Other Receivables 10 168,938
236,670
Prepayments 11 20,880
48,125
Cash at bank and in hand 12 123,608
169,657
----------- -----------
Total Current Assets
377,300
636,578
----------
----------
Total Assets
475,731
786,664
===== ======
Equity & Liabilities Equity 21,320
21,320
Retained earnings 13b 77,515
340,104
---------- -----------
Total Equity
98,835
361,424
- --------
----------
Current Liabilities Trade & other payables 17 376,896
376,265
Income Tax Payable 15b -
48,975
---------- ----------
Total Current Liabilities
376,896
425,230
----------
---------
Total Equity & Liabilities
475,731
786,664
====== ======
The account was approved by the Board of Directors on 30 th January 2019
_______________________ _____________________ __________________ Olukunle Obadina David Onabajo H. G. Omidiora Director Managing Director Chief Finance Officer FRC/2014/ICAN/00000004254 FRC/2018/IODN/00000018995 FRC/2013/ICAN/00000004092
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GREIF NIGERIA PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 OCTOBER 2018
Note 31-Oct-18
31-Oct-17
N’000
N’000
Revenue 18 534,611
1,405,218
Cost of Sales 19 (649,287)
(1,153,758)
------------ -------------
Gross (loss)/profit
(114,676)
251,460
Other operating income 19 19,755 3,876
Selling & Marketing Costs 19 (8,250)
(5,068)
General and Administrative Expenses 19 (150,426)
(174,105)
------------
-----------
Operating (loss)/profit
(253,597)
76,163
Finance Income 21 8,368
1,391
---------- ---------
(Loss)/profit before tax
(245,229)
77,554
Tax Expense 15a (17,360)
(28,130)
------------ -----------
(Loss)/profit for the year
(262,589)
49,424
Other Comprehensive income
-
-
----------- ------------
Total comprehensive(loss)/ income
(262,589)
49,424
=======
======
Total comprehensive income attributable to: Equity Holders of the Company
(262,588)
49,424
Earnings per share
N
N
Basic (loss)/earnings per share (Loss)/earnings from operations (616)
116
Diluted (loss)/earnings per share (Loss)/earnings from operations (616)
116
See notes to the financial statements
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GREIF NIGERIA PLC STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 OCTOBER 2018
For the year ended 31 October 2018
Notes Share Capital
Retained Earnings Total Equity
N’000 N’000 N’000
Balance as at 1 November 2017
21,320 340,104 361,424
Loss for year
- (262,589) (262,589)
21,320 77,515 98,835
Dividend Paid
- - -
Balance as at 31 October 2018 13b 21,320 77,515 98,835
For the year ended 31 October 2017
Share Capital
Retained Earnings Total Equity
N’000 N’000 N’000
Balance as at 1 November 2016
21,320 316,264 337,584
Profit for year
- 49,424 49,424
21,320 365,688 387,008
Dividend Paid
- (25,584) (25,584)
Balance as at 31 October 2017 13b 21,320 340,104 361,424
See notes to the financial statements
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GREIF NIGERIA PLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 OCTOBER 2018
Note 31-Oct-18
31-Oct-17
N’000
N’000
OPERATING ACTIVITIES Cash receipts from customers
649,344
1,487,141
Cash paid to suppliers and employees (661,813)
(1,332,639)
----------- -------------
Cash flow (used in)/ provided by operating activities 12a (12,469)
154,502
Tax Paid 15b (49,237)
(27,482)
----------
----------
Net cash flow (used in)/ provided by operating activities
(61,706)
127,020
INVESTING ACTIVITIES
Proceeds from sales of property and equipment 7,984
-
Purchase of property, plant and equipment 7 (695)
(5,959)
Interest received
8,368
1,391
-------- --------
Net cash flow provided/(used in) by investing activities
15,657
(4,568)
FINANCING ACTIVITIES
Dividend paid
-
(25,584)
--------- ----------
Net cash flow used in financing activities
-
(25,584)
----------
------------
Net(decrease)/increase in cash and cash equivalent
(46,049)
96,868
Cash and cash equivalent at the beginning of the year
169,657
72,789
---------- -----------
Cash and cash equivalent at the end of the year 10 123,608
169,657
======= ======
See notes to the financial statements
22
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2018
(1) REPORTING ENTITY GREIF Nigeria Plc (the "Company") is a manufacturing company incorporated as a limited liability company under the Company Ordinance (CAP 38) with the name Metal Containers of West Africa Limited on 20 January 1940. The name was subsequently , by a special resolution on 4th July 1969, changed to Van Leer Containers (Nigeria) Limited. The Company became “Van Leer Containers (Nigeria) Plc” in line with the Companies and Allied Matters Act (CAP 20), Laws of the Federation of Nigeria 1990. The Company’s name was eventually changed to “Greif Nigeria Plc” by a special resolution on 12 th May 2004. The authorized share capital is allotted to Greif International Holdings B.V. Netherlands (51%), The Van Leer Nigerian Educational Trust (23%) and other Nigerian investors (26%).
The Company is primarily involved in the manufacturing and marketing of steel drums.
(2) BASIS OF PREPARATION
(2a) Statement of compliance
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Standards Board (IASB).
The financial statements comprise the statement of financial position, stateme nt of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and the notes to the financial statements for the Company.
These financial statements were authorized by the Board of Directors on 31 January 2019 and there were no events subsequent to the year end. There is no material event after the reporting date which could have had a material effect on the state of affairs of the company as at 31 October 2018.
(2b) Functional and presentation currency
These financial statements are presented in Nigerian Naira, which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated
(2c) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis on each reporting date:.
(i) Inventory – Lower of cost and net realizable value (ii) Financial Instruments –Initially measured at fair value and subsequently at amortized cost (iii) Provision – Best estimate to settle the present obligations at the end of reporting period. (iv)
The accounting policies have been applied consistently throughout the period covered by the financial statements and comparative period.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
23
(2d) Use of judgements and estimates
The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of the reporting period . These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
The estimates and underlying assumptions are reviewed on an ongoing basis. Rev isions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
(2e) Current vs non-current classification
The Company presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is presented as current when it is:
- Expected to be realised or intended to sold or consumed in 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 All other assets are classified as non-current.
A liability is presented as current when:
- It is expected to be settled in 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. The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
24
2f) Fair value measurement The Company does not measure any asset or liability at fair value , subsequent to initial recognition. 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 to by the Company. (3) SIGNIFICANT ACCOUNTING POLICIES
(3a) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation (se e below) and impairment losses. Such cost includes the cost of replacing part of the property , plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognises such parts as individual assets with specific useful lives and depreciates them accordingly.
The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of directly attributable production overheads.
Where significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment in line with IAS 16 principle of componentization.
3a.i Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associates with the item will flow to the company and the cost of the item can be reliably measured. Repairs and maintenance costs are recognized in the profit or loss as incurred i
3a.ii Depreciation
Depreciation is charged to the profit or loss (except where it is required for recognition in another asset, based on another IFRS Standard e.g. IAS 2) on a straight-line basis over the estimated useful lives of each significant part of an item of property, plant and equipment. Depreciation on leased assets is charged over the shorter of the lease term and their useful life. Freehold land is not depreciated whilst leasehold land is depreciated over the lease period in the certificate of occupancy, usually 99years.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
25
The useful lives of the property, plant and equipment are as follows:
ASSET CLASS ECONOMIC USEFUL LIVES
Land NIL
Building - 20 – 30-Years
Equipment, Plant and Machinery - 5 – 15-Years
Motor vehicles - 3 – 5-Years
The residual values, useful economic lives and depreciation methods are reassessed annually and if expectations differ from earlier projections, the change is treated as a change in estimate in accordance with IAS 8. Assets under construction are not depreciated until they are available for use.
3a.iii Derecognition
An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in statement of profit or loss in the year the asset is de-recognised
3b. Intangible assets
3b.i Software
Software acquired by the Company is stated at cost less accumulated amortization (see below) and impairment losses.
Expenditure on internally generated goodwill and brands is recognised in the profit or loss as an expense as incurred.
3b.ii Amortization
Amortization is charged to the profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Software assets are amortized from the date they are available for use and over the license period. .
Classes of intangible assets Useful lives
IT Software 3 years
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
26
3c. Financial assets
3c.i Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair val ue through profit or loss, loans and receivables, held-to-maturity investments or available-for-sale financial assets.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
3c.ii Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows. Financial assets within the Company include trade and other receivables and cash and short-term deposits.
3c.iii Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment losses. 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 income in profit or loss. The company's financial assets that qualify as loans and receivables include trade receivables;VAT receivables,sundry receivables and cash and cash equivalent.
3c.iv Trade and other receivables
Trade and other receivables include trade receivables which are on trade terms and receivables from affiliated companies. Trade receivables are carried at original invoice amount less any allowance for impairment. When a trade receivable is determined to be uncollectible, it is written off firstly against any provision available and then to profit or loss..
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3c.v Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:
- The rights to receive cash flows from the asset have expired
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through 'arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the Company’s continuing involvement in it. In such case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained. 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 Company could be required to repay.
3c.vi Impairment of financial assets
The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the receivables or a group of receivables is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
3c.vii Financial assets carried at amortised cost
The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3d Financial liabilities
Financial liabilities are classified, at initial recognition, or payables, as appropriate. These financial liabilities are recognised initially at fair value, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables,
3d.i Trade and other payables Trade and other payables are obligations to pay for goods and services that have been acquired in the normal course of business. These amounts are classified as current because payment is expected in one year or less. Trade and other payables are initially recognised at fair value i.e. transaction cost less all discounts. Subsequent to initial recognition, they are measured at amortised cost using effective rate of interest. Normally they are due for payment within 12 -months from the reporting year end. In the event of a longer payment i.e. greater than 12 -months such balances are discounted using the effective interest rate.
3d.ii Bank overdrafts Bank overdrafts are initially recognised at fair value which is the proceeds received, net of directly attributable costs. These are subsequently measured at amortised cost using the effective interest rate method with finance costs being recognised in profit or loss and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Bank overdrafts are classified as interest -bearing loans and borrowings under current liabilities.
3d.iii Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. 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 costs in profit or loss.
3d.iv Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.
3d.v Offsetting of financial instruments Financial assets and financial liabilities are offset with the net amount reporte d in the statement of financial position only if there is a current enforceable legal right to offset the recognised amounts and the intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3e. Inventories
Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs to completion and of selling expenses.
The cost of inventories is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. The Company’s finished goods inventories cost includes an appropriate share of overheads based on normal operating capacity which were incurred in bringing the inventories to their present location and condition.
Costs incurred in bringing each product to its present location and conditions are accounted for as follows:
Raw materials: Purchase cost and weighted average cost basis
Materials Work-in-progress: On weighted average cost basis
Finished goods: Cost of direct materials, conversion costs and a proportion of manufacturing overheads based on normal operating capacity using the weighted average basis.3f. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of cash flow.
Greif Plc has chosen the policy of recognizing all interest received and dividend received under the ‘cash flow from investing activities’ in the Statement of cash flows. In a similar vein, interest paid and dividend paid shall be shown under ‘cash flow from financing activities’.
3g. Impairment of non-financial assets
3g.i Impairment review
The carrying amounts of the Company's assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss.
The Company 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 Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individua l asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
30
3g.i Impairment review-continued
When 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.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the assets in the cash generating unit (since goodwill arises only on consolidation and the Company does not have any subsidiary or associate) in the unit on a pro rata basis. A cash-generating unit is the group of assets identified that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The recoverable amount of assets or cash-generating units is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the ris ks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
3g.ii Conditions for reversals of impairments
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
3h. Foreign currency transactions
Transactions in foreign currency are recorded initially in Nigerian Naira which is the functional and presentation currency at the rate of exchange ruling at the date of the transaction. At each subsequent annual reporting date :
Foreign currency monetary amounts are reported using the closing rate
Non-monetary items carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange differences arising when monetary items are settled or when monetary items are translated at rates different from those at which they were translated when initially recognised or in previous financial statements are reported in profit or loss in the period
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3i. Share capital
3i.i Share capital
Share capital is classified as equity if it is non-redeemable and any dividends are discretionary, or is redeemable but only at the Company's option. Dividends on share capital classified as equity are recognised as distributions within equity. Non-equity share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in profit or loss as a finance charge.
3i.ii Dividends
Dividends on non-equity shares are recognised as a liability and accounted for on an accruals basis. Equity dividends are recognised as a liability in the period in which they are declared (appropriately authorized and not at the discretion of the Company).
3j. Pension schemes
The Company operates a defined contributory staff pension scheme in accordance with the provisions of the Pension Reforms Act 2014. The Company and each employee contribute 10% and 8% of annual emoluments (Basic, Housing and Transport) respectively. Staff contribution to the scheme is funded through the payroll deductions while the Company’s contributions are charged to profit or loss.
Obligations for contributions to defined contribution pension plans are recogn ised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Also the Company operates a defined end of service savings scheme wherein certain amounts are set aside monthly, charged to profit or loss and remitted to a fund manager to provide for lump sum payment to employee after the period of service. Only the amounts accrued and not yet transferred to the fund manager are recognised as liability at the end of every reporting period. The Company does not have any further obligation whatsoever after the monthly remittance. This scheme meets all the characteristics of defined contribution plan of IAS 19 – Employee Benefits
3k. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
3l. Provisions
A provision is recognised in the Statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, it can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability .
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3m. Revenue – Sales of goods
Revenue in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue is recognised when evidence exists in the form of delivery of, and delivery acknowledgment of goods to clients, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
3n. Income tax
Income tax on the profit or loss for the year comprises current and deferred taxation. Income tax is recognised in the of profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable/(recoverable) on the taxable income/(loss) for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable/(receivable) in respect of previous years. Current tax includes income tax, education tax etc.
Deferred taxation is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred taxation provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates that are expected to apply when the temporary difference reverses, based on rates that have been enacted or substantively enacted at the reporting date.
Deferred tax is not recognized from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferre d taxation assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.
3o. Segment reporting
The Company has determined that, in accordance with IFRS 8 "Operating Segments" and based on its internal reporting framework and management structure, it is a single product entity with one reportable segment. Such determination is necessarily judgmental in its nature and has been determined by management in preparing the Financial Statements. However, the following entity wide disclosure are relevant:
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
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3p. Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held if any. The Company does not have any potential ordinary shares with dilutive effect at the reporting date.
4. Standards issued but not yet effective
A number of new Standards and amendments to Standards are effective for annual
period beginning after the reporting period and earlier application is permitted;
however, the Company has not early applied the following new or amended
Standards in preparing these financial statements.
New or
amended
Standards
Summary of the requirements Possible impact on the
financial statements
IFRS 9
Financial
Instruments
IFRS 9 replaces the existing
guidance in IAS 39 Financial
Instruments: Recognition and
Measurement. Except for certain
trade receivables, an entity initially
measures a financial asset not at
fair value through profit/loss,the
transaction costs. debts instruments
are subsequently measured at fair
value through profit/loss
(FVOCI),on the basis of their
contractual cash flows and the
business model under which the
debt instruments are held. There is
a fair value option (FVO) that
allows financial assets on initial
recognition to be designated as
FVTPL if that eliminates or
significantly reduces an accounting
mismatch.
Equity instruments are generally
measured at FVTPL. However
entities that have an irrevocable
option on an instrument-by-
instrument basis to present changes
in the fair value of non-trading
instruments in other
comprehensive income (OCI)
without subsequent reclassification
to profit/loss. The amendments
The Company plans to adopt the new standard on the required effective date and will not restate comparative information. Shortly before finalising the October 2018 financial statements, the Company performed a detailed impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Company in 2019 when it will adopt IFRS 9. Overall, the Company expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of IFRS 9. The Company expects an increase in the loss allowance resulting in a negative impact on equity as discussed below. In addition, the Company will implement changes in classification of certain financial instruments. (a) Classification and measurement
The Company does not expect a significant impact on its
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
34
have an effective date of 1 January
2018.
statement of financial position or equity on applying the classification and measurement requirements of IFRS 9. Debt instruments classified as loans and receivables Under IAS 39, the Company has the following debt instruments which are classified under loans and receivables:
Trade receivables
Cash and Bank balances
These debt instruments are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. The Company analysed the contractual cash flow characteristics of those instruments and concluded that they meet the criteria for amortized cost measurement under IFRS 9. Therefore, reclassification of these instruments is not required. In addition, the measurement basis for these debt instruments will continue to be amortised cost, thus leading to no change in the current practice. (b) Impairment
IFRS 9 requires the Company to record expected credit losses on all of its debt instruments either on a 12-month or lifetime basis. The Company will apply the simplified approach and record lifetime expected losses on all trade receivables that do not have significant financing component. For all other debt instruments other than trade receivables, the Company will apply general approach under which financial assets are classified into three stages i.e. stage 1, stage 2 or stage 3 depending on whether or not the credit risk of the financial asset has increased significantly. The Company has determined
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
35
that, due to the unsecured nature of its receivables, the loss allowance will likely increase, this will lead to a corresponding related decrease in the deferred tax liability The Company will apply general
approach under which financial
assets are classified into three
stages i.e. stage 1, stage 2 or stage
3 depending on whether or not
the credit risk of the financial
asset has increased significantly.
Due to the fact that the financial
assets (cash and bank balances)
has not been tested for
impairment, the loss allowance to
be recognised will likely increase.
This will lead to adjustments in
the carrying value of the financial
assets and deferred tax liability.
(c) Hedge accounting
Although IFRS 9 does not change the general principles of how an entity accounts for effective hedges, the Company does not engage in any financial or economic hedge. As such, this aspect of IFRS 9 will not have impact on the company..
IFRS 15
Revenue
from
Contracts
with
Customers
IFRS 15 replaces all existing revenue
requirements in IFRS 11,construction
contracts, IAS 18,revenue,IFRIC 13
Customers loyalty programmes;
IFRIC 15 Agreements for the
construction of real estate, IFRIC
18,Transfers of asset from customer.
The standard outlines the principle
an entity must apply to measure and
recognize revenue at an amount that
reflects the consideration to which
the entity expects to be entitled in
exchange for transferring goods or
services to a customer.
The principle in IFRS 15 must be
Before finalizing the October 2018 financial statements, the Company performed a detailed assessment of IFRS 15 and the outcome of this assessment is described below.; These are based on the Company’s current interpretation of IFRS 15 and may be subject to change as interpretations evolve. Furthermore, the Company is considering and will continue to monitor any further development. The following issues has been identified by the Company and require consideration:
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
36
applied using a five-step model. The
standard requires entities to exercise
judgement, taking into consideration
all of the relevant facts and
circumstances when applying each
step of the model to contracts with
their customers
The standards also specifies how to
account for the incremental cost of
obtaining a contracts and the costs
directly related to fulfilling a
contracts.
IFRS 15 is effective for annual
reporting periods beginning on or
after 1 January 2018.
Combining contracts and
portfolio expedient
Under the current revenue
standard, contracts are not
required to be combined for the
purpose of recognising revenue.
On adoption of IFRS 15, the
Company will not be combining
its currently existing contracts
with the same customer because
the contracts do not meet the
requirements of IFRS 15:17.
However, contracts with similar
characteristics and different
customers may be combined by
applying the portfolio approach
practical expedient. The
expedient allows an entity to
apply the five-step model to a
portfolio of contracts (or
performance obligations) with
similar characteristics if the entity
reasonably expects that the effects
on the financial statements of
applying the Standard to the
portfolio would not differ
materially from applying the
Standard to the individual
contracts (or performance
obligations) within that portfolio.
The IASB recognized that there
may be situations in which it may
be more practical for an entity to
combine contracts for revenue
recognition purposes rather than
attempt to account for each
contract separately.
Significant financing component
The Company normally gives varying credit period between 30-
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
37
60days to customers for payment to be made after sales and rendering of services. Using the practical expedient in IFRS 15, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. Unbundling of performance
obligations
The Company currently does not assess its products being sold in a contract for distinctiveness either by themselves or as part of a bundle. The Company’s principal remains the manufacturing and marketing of steel drums, the Company operates a sales level agreement with its customers.. IFRS 15 requires that an entity must identify the promised goods and services within a contract and determine which of the goods and services are separate performance obligations. Promised goods or services represent separate performance obligations if the goods or services are distinct (by themselves, or as part of a bundle of goods and services) or if the goods and services are part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that, together, is distinct. An entity is required to account for all the
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
38
goods or services promised in a contract as a single performance obligation if the entire bundle of promised goods and services is the only performance obligation identified From the Company’s assessments, the Company has determined that sales level agreements contracts have one (1) performance obligations which is the supply of steel drums.
The Company intends to
implement a process for
analysing all promises stated in a
contract in order to guide it in
accurately identifying its
performance obligations. The
Company is equally working
towards developing clear
accounting policies that will
guide the identification of
performance obligations.
Sale of Goods
Greif Nigeria Plc is into the production and marketing of steel drums. Revenue is recognized at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods. The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated (e.g., warranties, customer loyalty points). In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration and the existence of significant financing components.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
39
Revenue recognition at a point in
time
For sale of motor vehicles and non-routine servicing of motor vehicles, revenue is recognized at a point in time once delivery has been made to the customer.
Determining the transaction
price
The Company currently does not consider the impact of significant financing component in the determination of transaction price. IFRS 15 requires that an entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. The Company normally gives between 30-60days to its customers for payment to be made after services have been rendered. The Company has assessed the effect of financing component on the transaction price with its customer and determined to take advantage of the practical expedient in IFRS 15 which requires that an entity need not adjust the transaction price for the effects of significant financing component since the period between when it sells to a customer and when the customer pays for that good or service is less than a year.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
40
Allocation of transaction price to
performance obligation
Under the current revenue
standard, the company is not
required to determine
performance obligations and
therefore does not allocate
transaction price to performance
obligations.
However, IFRS 15 states that the objective when allocating the transaction price is for an entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer. Determining the transaction price is an important step in applying IFRS 15 because this amount is allocated to the identified performance obligations and is recognised as revenue when (or as) those performance obligations are satisfied. IFRS 15 also requires that once the separate performance obligations have been identified and the transaction price has been determined, an entity is expected to allocate the transaction price to the performance obligations in proportion to their stand-alone selling prices. IFRS 15 indicates that the observable price of a good or service sold separately provides the best evidence of stand-alone selling price. However, in many situations, stand-alone selling prices will not be readily observable. In those cases, an entity must estimate the stand-alone selling price.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
41
IFRS 15.35 states that an entity transfers control of a good or service over time if one of the following criteria are met:
a. As the entity performs,
the customer
simultaneously receives
and consumes the
benefits provided by the
entity’s performance.
b. The entity’s performance
creates or enhances an
asset (e.g., work in
progress) that the
customer controls as the
asset is created or
enhanced.
c. The entity’s performance
does not create an asset
with an alternative use to
the entity and the entity
has an enforceable right
to payment for
performance completed
to date.
The Company expects that the
adoption of IFRS 15 is not
expected to have an impact on
the Company’s revenue, profit or
loss because the method of
measuring progress currently is
still available under the output
method of IFRS 15 and the
application will produce the same
result.
IFRS 15 explains that when an
entity has determined that a
performance obligation is
satisfied over time, the standard
requires the entity to select a
single revenue recognition
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
42
method for the relevant
performance obligation that
faithfully depicts the entity’s
performance in transferring
control of the goods or services.
In addition, the entity is required
to apply the selected method
consistently to similar
performance obligations. Hence,
at the end of each reporting
period, an entity is required to re-
measure its progress towards
completion of the performance
obligation.
On adoption of IFRS 15, the
Company does not expect that
measuring progress in line with
the requirements of IFRS 15 will
have an impact on the revenue
and profit or loss because
measuring progress using output
method (as anticipated) is not
expected to be significantly
different from revenue
recognized under the current
standard. However, the
Company is working towards
developing a clear accounting
policy initiative for determining
the appropriate method of
measuring progress.
Presentation and disclosure
requirements
The presentation and disclosure requirements in IFRS 15 are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in the Company’s financial statements.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
43
Many of the disclosure requirements in IFRS 15 are new and the Company has assessed that the impact of some of these disclosures requirements will be significant. In particular, the Company expects that the notes to the financial statements will be expanded because of the disclosure of significant judgements made: when determining the transaction price of contracts and stand-alone price of performance obligations. In addition, as required by IFRS 15, the Company will disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. It will also disclose information about the relationship between the disclosure of disaggregated revenue and revenue information disclosed for each reportable segment. The Company is finalizing appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information. Other adjustments
In addition to the major adjustments described above, on adoption of IFRS 15, other items of the primary financial statements such as deferred taxes, profit or loss after tax for the year will be affected and adjusted as necessary. The recognition and measurement requirements in IFRS 15 are also applicable for recognition and measurement of any gains or losses on disposal of
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
44
non-financial assets (such as items of property and equipment and intangible assets), when that disposal is not in the ordinary course of business.
IFRS 16
LEASES
IFRS 16 requires leases to account
for all leases under a single- on the
balance sheet model in a similar way
to finance leases under IAS 17.The
standard includes two recognition
exemptions for leases-leases of
“low-value” assetss (e.g. personal
computers) and short-term leases
(i.e. leases with a lease term of 12
months or less).At the
commencement date of a lease, the
lessee will recognise a liability to
make lease payment(i.e. the lease
liability) and an asset representing
the right to use the underlying
assets during the lease term (i.e. the
right of use asset).
Lessee will be required to separately
recognize the interest expenses in
the lease liability and the
depreciation expense on the right-on
use asset.
Lessor accounting is substantially
unchanged from current accounting
under IAS 17. Lessor will continue
to classify all leases using the same
classification principle as in IAS 17
and distinguish between two types
of leases, operating and finance
leases.
This is effective for annual period
beginning on or after 1 January 2019
The Company does not have any lease arrangement in place. Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.
IFRIC 22
Foreign
currency
Transactions
and
Advance
Considerati
The interpretation of this standard
clarifies that in determining the spot
exchange rate to use on initial
recognition of the related asset,
expense or income( or part of it) on
the derecognition of a non-monetary
asset or non-monetary asset or non-
The Company has carried
out a detailed impact
assessment. It had
ascertained and
documented the level of
the new standard will
have on its financial
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
45
on monetary liability relating to
advance consideration, the date of
the transaction is the date in which
an entity initially recognizes the
non-monetary asset or non-
monetary liability arising from the
advance consideration. If there are
multiple payments or receipts in
advance, then the entity must
determine a date of the transactions
for each payment or receipt of
advance.
The standard is effective for annual
period beginning on or after 1
January 2018.
statements
IFRIC 23
Uncertainty
over income
tax
treatment
This standard clarifies application of
the recognition and measurement
requirements in IAS 12 income taxes
when there is uncertainty over
income tax treatment
The interpretation addresses the
accounting for income taxes when
tax treatments involve uncertainty
that affects the application of IAS 12.
The interpretation does not apply to
taxes or taxes outside the scope of
IAS 12,nor does it specifically
include requirements relating to
interest and penalties associated
with uncertain tax treatments.
The standard says that an entity has
to determine whether to consider
each uncertain tax treatment
separately or together with one or
more other uncertain tax treatment.
The approach that better predicts
the resolution of the uncertainty
should be followed.
Whether an entity consider
uncertain tax treatment separately.
The assumption an entity makes the
examination of tax treatment by
taxation authorities.
How an entity considers uncertain
tax treatment separately.
The assumption an entity makes
The Company has carried
out a detailed impact
assessment. The company
has determined to
consider each tax
uncertain tax treatment
separately and together
with one or more other
uncertain tax treatment.
The company plans to
interpret the standard
from its effective date.
Since the company does
not operate in a complex
tax environment, applying
the interpretation may not
have significant impact on
its financial statement.
Also the company needs
to establish processes and
procedures to obtain
information that is
necessary to apply the
interpretation of the
standards
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
46
about the examination of tax
treatments by taxation authorities.
How an entity determines taxable
profit (tax loss),tax bases, unused
tax losses ,unused tax credits and
tax rates.
How an entity considers changes in
facts and circumstances
The interpretation is effective for
annual reporting period beginning
on or after 1 January 2019.
.
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: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application 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.
The Company is assessing the potential effect of the amendments on its financial statements.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
47
5. Significant accounting judgments, estimates and assumptions
The preparation of the financial statements require management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities, at the end of the reporting
period. However, 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.
5a. Judgments
In the process of applying the Company’s accounting policies, management has made the
following judgments, which have the most significant effect on the amounts recognised in
the financial statements:
5a-i Estimates and assumptions
Going concern: The Company’s management has made an assessment of its ability
to continue as a going concern and is satisfied that it has the resources to continue
in business for the foreseeable future. Furthermore, management is not awar e of
any material uncertainties that may cast significant doubt upon the Company’s
ability to continue as a going concern. Therefore, the financial statements continue
to be prepared on the going concern basis.
5a-ii Impairment of non-financial assets
The company assesses assets or group of assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. If any such indication of impairment exists, the Company makes an
estimate of the asset’s recoverable amount. Individual assets are grouped for
impairment assessment purposes at the lowest level (Cash generating unit) at
which there are identifiable cash flows that are largely independent of the cash
flows of other group of assets. An assets recoverable amount is the higher of its fair
value less costs to sell and its value in use. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use, the estimated future
cash flows are adjusted for the risks specific to the asset and are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money. Impairment losses are recognized in profit
& loss.
Impairment losses recognized in prior periods can be reversed up to the original
carrying amount, had the impairment loss not been recognized. Such reversal is
recognized in profit or loss. After such a reversal, the depreciation charge is
adjusted in future periods to allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining useful life.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
48
5a-iv Property, plant and equipment
The company carries its property, plant and equipment at cost in the Statement of
financial position. Estimates and assumptions made to determine their carrying
value and related depreciation are critical to the company’s financial position and
performance. The charge in respect of periodic depreciation is derived after
determining an estimate of an asset’s expected useful life and the expected residual
value at the end of its life. The useful lives and residual values of the assets are
determined by management at the time the asset is acquired and reviewed
periodically. The lives are based on historical experience with similar assets as well
as anticipation of future events, which may impact their life, such as changes in
technology. The carrying amount of the property, plant and equipment at the
reporting date is disclosed in Note 7.
5a-iv Taxes
Uncertainties exist with respect to the interpretation of tax regulations and the
amount and timing of future taxable income. Differences arising between the
actual results and the assumptions made, or future changes to such assumptions,
could necessitate future adjustments to tax income and expense already recorded.
The Company establishes provisions, based on reasonable estimates, for possible
consequences of audits by the tax authorities in the country. The amount of such
provisions is based on various factors, such as experience of previous tax audits
and differing interpretations of tax regulations by the taxable entity and the
responsible tax authority. Deferred tax assets are recognised for unused tax losses
to the extent that it is probable that taxable profit will be available against which
the losses can be utilised. Significant management judgment is required to
determine the amount of deferred tax assets that can be recognised, based upon the
likely timing (note 13) and the level of future taxable profits together with future
tax planning strategies.
5a-v Fair value of financial instruments
Where the fair values of financial instruments recorded on the Statement of
financial position cannot be derived from active markets, they are determined
using valuation techniques including the discounted cash flow model. The inputs
to these models are derived from observable market data where possible, but
where this is not feasible, a degree of judgment is required in establishing fair
values. The judgments include considerations of model inputs regarding forward
prices, credit risk and volatility that are not supported by observable market data.
Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
49
6 FINANCIAL RISK MANAGEMENT 6a Overview
The company has exposure to the following risk from its use of financial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the GREIF Nigeria Plc’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these financial statements. 6b Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of Greif Nigeria Plc’s risk management framework. Executive Management is responsible for developing and monitoring Greif Nigeria Plc’s risk management policies and reporting regularly to the Board of Directors on its activities. The Company’s risk management policies are established to identify and analyze the risks faced by the business, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in the business environment. The Company, through management standards, procedures and training, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the business. The Audit Committee is assisted in its oversight role by the Management. Management undertakes both regular and ad -hoc review of risk management controls and procedures, the results of which are reported to the Audit Committee of the Board of Directors and possible escalation to the Group designated officer in South Africa. 6c Credit risk Credit risk is the risk of financial loss to GREIF Nigeria Plc if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the GREIF Nigeria Plc’s receivables from customers.
6c.i Trade and other receivables The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, Management considers the profile of individual customer, including the default risk of the industry and the specific antecedents of the customer and Management’s intrinsic knowledge of the customer. During the year ended 31 October 2018, approximately 98% (corresponding period 31 October 2017: 98%) of GREIF Plc’s revenue is attributable to sales transactions to the oil and gas sector of the Nigerian economy. Additionally, a particular customer accounted for about 40% of the Company’s sales on the average (October 2017 comparative 42%).
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
50
The Company has established a credit policy under which each new customer is analyzed individually for credit worthiness before the Company’s standard payment and delivery terms and conditions are offered. Management review includes external ratings, when available, and in some cases bank references. Credit purchase limits are established for each customer, which represents the maximum open amount without requiring approval from the Board of Directors; these limits are reviewed annually. Customers that fail to meet the Company’s benchmark credit worthiness may transact business on a cash-on-delivery basis.
More than 98% of GREIF Plc’s customers have been transacting with the company for over 10years, and no impairment loss has been recognised against these customers except for the ECL of IFRS 9 charged in 2018 financial year.
In monitoring customer credit risk, customers are grouped according to their credit characteristics. Trade receivables relate mainly to the Company’s end-user customers. The Company provides for doubtful debts, calculated at 30% of the amounts
between 90days and 180days, and 100% of amounts over 180days in the age
analysis, excluding related party balances. In addition, Company establishes an
allowance for impairment that represents its estimate of incurred losses in respect of
trade and other receivables. The schedule below shows the schedule of trade and
other receivables at the end of the tagged reporting periods.
31-Oct-18
31-Oct-17
N’000
N’000
Trade Receivables - Local
77,185
138,333 Impairment
(7,753)
(994)
69,437
137,339
6d Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial asset. The
Company's approach to managing liquidity is to ensure, as far as practicable, that it would always
have sufficient liquidity to meet its maturing obligations when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company's
reputation.
Excessive risk concentration Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Company’s policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
51
6d.i Maturity schedule for Financial Liabilities
The following are the contractual maturities of financial liabilities:
31-Oct-18
Due Within One Year
Due After One Year
Total
Financial Liabilities
N’000
N’000
N’000
Trade Payables – Local
5,351
-
5,351
Trade Payables – Greif SA
324,612
-
324,612
Accrued Professional Fees
12,006
-
12,006
Other Accruals 3,520 - 3,520
-------------- ------------ --------------
345,489
-
345,489
====== ====== ======
31-Oct-17
Due Within One Year
Due After One Year
Total
Financial Liabilities
N'000
N'000
N'000
Trade Payables – Local
14,410
-
14,410
Trade Payables – Greif SA
321,496
-
321,496
Due to Greif USA
7,857
-
7,857
Other Accruals 1,024 - 1,024
Accrued Professional Fees
7,019
-
7,019
------------- -----------
351,806 351,806
====== - =====
The carrying amounts of trade and other payables for period ended October 31, 2018 and 2017
respectively approximate to their true fair values.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
52
6e Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates,
interest rates and equity prices will affect the Company’ income or the value of its holdings
of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
6f Currency risk
The Company is exposed to currency risk on purchases of raw materials that are
denominated in United States Dollars, or a currency other than the functional currency of the
Company. Confirmed letters of credit are opened for such offshore purchases and officia l
bids for Dollars are made at the Central Bank of Nigeria official rates.
Besides, the company is exposed to foreign exchange volatility on account of the group
loan. Such foreign currency denominated loans are revalued at the rate of exchange ruling at
the end of every reporting period, with exchange gains or/and losses recognised in the profit
or loss.
Below is the effect on profit & Equity of a +/-5% change in exchange rate:
Sensitivity Analysis
6g Interest rate and Equity price risk
The company is not exposed to interest rate risk and equity price risk at the end of 31 October
2018. 2017(Nil)
Description
31-Oct-18
31-Oct-17
N’000
N’000
Due to GSA US$
(895)
(898)
Due to Greif International US$
-
-
Due to Greif USA US$
-
(22)
Dollar Denominated Bank US$
13
98
Balance Due from GSA US$
-
-
Net Foreign Balances A US$
(822)
(822)
Closing rate at period-end B N/$
362.637
358
Naira Equivalent of Net Foreign Balances C=AxB Naira
(319,869)
(294,407)
5% Change in Closing rate D N/$
380.77
376
Naira Equivalent of change on Closing rate F=AxD Naira
(335,862)
(309,127)
Net Effect of Change in Naira G=F-C +/-
(15,993)
(14,720)
Net loss/profit for year H Naira
(257,730)
49,424
Net Effect as % of (loss)/ profit I=G/H% %+/-
(6.2%)
42.84%
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
53
7. PROPERTY, PLANT AND EQUIPMENT – ACQUISITION, DISPOSAL, DEPRECIATION.
31-Oct-18 31-Oct-17
PROPERTY, PLANT AND EQUIPMENT Cost
Accumulated Depreciation
Carrying Value Cost
Accumulated Depreciation
Carrying Value
N’000 N’000 N’000 N’000 N’000 N’000
Land & Building 47,676 17,204 30,472 50,557 17,387 33,170
Plant, Machinery & Equipment 220,170 158,091 62,079 243,102 160,869 82,233
Motor Vehicles 11,784 10,487 1,297 14,831 12,236 2,595
Capital Work-in-progress - - - 5,959 - 5,959
--------- ---------- --------- --------- ------------ --------
Total 279,630 185,782 93,848 314,449 190,492 123,957
During the year ended 31 October 2018, the Company acquired assets with a cost of N0.695 million (31 October 2017: N5.959million). During the year the Company disposed of items of property, plant and equipment with a carrying cost of N 14.527 Million ( 31 October 2017: N0.527Million). Any profit or loss as a result of disposal is recognized in the profit or loss at the year end.
Reconciliation of property, plant and equipment - 31-October-2018
Opening Balance Additions
Disposal Cost
Write-off Transfers Depreciation
Disposal Depreciation
Assets Written off Total
N’000 N’000 N’000 N’0000 N’0000 N’000
N’000 N’000
Land & Building 33,170 - (101) (2,779) - (1,297) 89 1,390 30,472
Plant, Machinery & Equipment 82,233 350 (13,147) (16,438) 6,304 (12,934) 6,658 9,053 62,079
Motor Vehicles 2,595 - (1,279) (1,767) - (1,298) 1,279 1,767 1,297
Capital Work-in-progress 5,959 345
(6,304) - - - -
---------- --------- ---------- ----------- --------- ----------- ---------- --------- ----------
Total 123,957 695 (14,527) (20,984) - (15,529) 8,026 12,213 93,848
Reconciliation of property, plant and equipment - 31-October-2017
Opening Balance Additions
Disposal Cost
Transfers Depreciation
Disposal Depreciation
Assets written off Total
N'000 N'000 N'000 N'000 N'000
N'000 N'000
Land & Building 34,714 - - - (1,544) - - 33,170
Plant, Machinery & Equipment 86,149 - (527) 12,057 (15,973) 527 - 82,233
Motor Vehicles 3,892 - - - (1,297) - - 2,595
Capital Work-in-progress 31,263 5,959 - (5,728) (25,535) - - - 5,959
Total 156,018 5,959 (527) (5,728) (13,478) (18,814) 527
123,957
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
54
8. INTANGIBLE ASSETS
Greif Plc has Intangible Assets representing software with which the company processes its financial and operational transactions. The cost of Additional ERP Software acquired during the year was Nil as against N13.478million same period last year.
31-Oct-18
31-Oct-17
Software
Software
N’000
N’000
Cost as at 1 November
18,316
4,837
Additions
-
13,479
---------
-----------
Cost as at 31 October
18,316
18,316
Amortization as at 1 November
(9,285)
(4,837)
Amortised During Year
(4,448)
(4,448)
---------
---------
Amortization as at 31 October
(13,733)
(9,285)
Balance as at 31 October
4,583
9,031
9. INVENTORIES 31-Oct-18 31-Oct-17
N'000
N'000
Raw Materials (Note 9a)
55,111
129,908
Work-in-Progress
2,395
10,562
Finished Goods
1,627
36,211
Goods-in-Transit
4,741
5,445
63,874
182,126
The cost of inventory recognized as expense and included in cost of sales at 31 October 2018 amounted to N354.887million (31 October 2017: N953.173million).
9a Raw Materials 31-Oct-18 31-Oct-17
N'000
N'000
Raw Materials
55,111
129,908
-
55,111
129,908
During the period ended 31 October 2018 there was no additional allowance for slow moving materials.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
55
10. TRADES AND OTHER RECEIVABLES
31-Oct-18
31-Oct-17
N'000
N'000
Trade receivables 69,432
137,339
VAT Recoverable
94,916
92,957
Sundry Receivables
4,588
6,374
--------- ----------
168,936
236,670
====== ====== Trade receivables are non-interest bearing and are generally on a term of 30 to 90 days.
VAT receivable consists of amounts recoverable from FIRS in respect of 5% VAT deducted at source from our invoices and paid over to FIRS by our customers in the Oil marketing industry.
No receivable is pledged as security for borrowings
10b. Impairment - Individually impaired During the year trade receivables with an initial carrying value of N 7,753 were impaired and fully provided for as at 31 October 2018. See below for the movements in the allowance for impairment of receivables:
31-Oct-18 31-Oct-17
N’000 N’000
At the beginning of the year
994
-
Trade receivable impairment
7,753 994
Recovered during the year (994) -
Written off as uncollectible during year
-
-
7,753
994
11. PREPAYMENT
31-Oct-18
31-Oct-17
N’000
N’000
Advance to suppliers
18,472
39,603
Employees advances
1,146
771
Prepayment
1262
7,751
--------- ----------
20,880
48,125
Prepayment consists of amounts in respect of advance payment for imports on confirmed letters of credit, to local suppliers, prepaid employee payroll and other operational prepayments
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
56
12. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash balances and call deposits. The schedules below show the balances at the current period (and at the comparative period)
31-Oct-18
31-Oct-17
N’000
N’000
Cash in hand
87
1,007
Bank Balances
27,216
157,989
Short Term Bank Deposit
96,305
10,661
123,608
169,657
Cash at banks earns interest based on daily bank deposit rates determined by the banks. These deposits have an average maturity of between 60-90 days. For the purposes of the Statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents at the end of the reporting period as shown in the Statement of cash flows is same as in the Statement of financial position. 12a. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
31-Oct-18
31-Oct-17
N’000
N’000
(Loss)/profit before tax
(245,229)
77,554
Adjustment to reconcile net income to net cash provided:
Depreciation of PPE
15,529
18,814
Amortisation of Intangibles
4,448
4,448
Asset written off
8,774
5,728
Gain on disposal of assets
(1,483)
-
Interest received
(1,483)
(1,391)
Allowance for doubtful debt 6,759 994
-------------- ------------
(219,570)
106,147
Changes in Assets & Liabilities: Decrease/(increase) in Inventories
118,252
(55,161)
Decrease in Receivables & Prepayment
88,218
80,929
Increase Payables & Accruals
631
25,087
Decrease in provision for Litigation
-
(2,500)
(12,469)
154,502
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
57
13. SHARE CAPITAL AND RESERVES No issue of additional shares was made during the period ended 31 October 2018 (no similar issue was made during the period ended 31 October 2017). Details of equity at the reporting date are as follows:
13a. Share Capital
31-Oct-18
31-Oct-17
Authorised:
N’000
N’000
60,000,000 ordinary shares of 50kobo each
30,000
30,000
Called up and fully paid:
N’000
N’000
42,640,000 ordinary shares of 50kobo each
21,320
21,320
13a.i Dividend 31-Oct-18 31-Oct-17 N'000 N'000 Proposed dividend for 2018: Nil per share (2017: Nil) - - ===== ===== Proposed dividends on ordinary shares are subject to approval at the annual general meeting and are not recognised as a liability as at 31 October 2018 13b. Retained earnings
31-Oct-18
31-Oct-17
N’000
N’000
Balance at the beginning of the year
340,104
316,264
340,104 316,264
(Loss)/profit for the year
(262,589)
49,424
Dividend paid during the year
-
(25,584)
Balance at the end year
77,515
340,104
14 RELATED PARTIES’ DISCLOSURES 14a. Related Party Transactions with the Greif Group
The shares of the Company are beneficially held as follows: Description Shareholdings (%) Unit in shares Greif International Holding B.V. The Netherlands 51 21,746,400 The Van Leer Nigerian Education Trust 23 9,807,200 Other Nigerian Citizens & 26 11,086,400
The Company enters into transactions with related parties and sister Companies within the Greif group in the course of its business. These transactions include, but are not limited to, technical advises, investment advisory services, IT related suppo rt, logistics support, personnel support and the purchase of certain production materials and spares. Amounts owed to and due from related parties are transaction based. No allowances for doubtful debts has been made against amounts outstanding and no expenses have been recognised during the year in respect of bad or doubtful debts due from related parties. The Company currently has no technical or management services agreement with Greif group in place.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
58
14a. Related Party Transactions with the Greif Group- cont’d
Summary of Related Party Transactions with the Greif Group:
Years
Sales to related parties
Purchases from
related parties
Amount of intercompan
y loans
Amounts owed by
related parties
Amounts owed to related parties
N’000 N’000 N’000 N’000 N’000
Greif International Holding B.V.
2018 - - - - -
the Netherlands 2017 - - - - -
Greif South Africa 2018 - - - - 324,612
2017 - - - - 321,496
Greif International USA 2018 - - - - -
2017 - - - - 7,857
14a.i Due to Greif South Africa
31-Oct-18 31-Oct-17
N’000 N’000
Due To Greif South Africa (Note 14)
324,612 321,496
The company has an intercompany trade payable balance of US$895,142 (2017: US$897,833) due to its sister company, Greif South Africa.
The Company enters into transactions with related parties and sister Companies within the Greif group in the course of its business. These transactions include, but are not limited to, technical advises, investment advisory services, IT related support, logistics support, personnel support and the purchase of certain production materials and spares. Amounts owed to and due from related parties are transaction based. The receivable and payable from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year -end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables 14a.ii Due to Greif International USA
31-Oct-18 31-Oct-17
N’000 N’0000
Due To Greif International USA (Note 14)
- 7,857
The above represents quarterly IT-related costs billed against the Company still outstanding as at period-ended 31-October 2018. This liability has been reflected profit or loss while the invoiced amount which still remained unpaid as at 31-October-2018 is reflected in other payables
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
59
14b Related Party Transactions - Key Management Personnel Compensation
(14b.i) Key management compensation – Staff 31-Oct-18
31-Oct-17
N’000
N’000
Salaries and other short-term employment benefits
3,982
15,166 Management Incentive Program
-
932
Pension Costs - Defined Contribution Scheme
328
1,264 End Of Service Savings Scheme - Defined Contribution
337
1,347
4,647
18,709
Short term employee benefit
3,982
16,098 Post-employment benefit
665
2,611
4,647
18,709
(14b.ii) Key management compensation - Audit Committee shareholders representative
31-Oct-18
31-Oct-17
N’000
N’000
Sitting Allowance for the year
828
840
(14b.iii) Key management compensation - Directors 31-Oct-18
31-Oct-17
DIRECTORS’ EMOLUMENTS
N’000
N’000
Fees – Chairman
105
210 Fees - Other Directors
645
540
750
750
Emolument as non-executives
-
60
Emolument as executives
1,856
8,078
Total Directors Emoluments
2,606
8,888
Emolument of highest paid Director 1,946
8,258
Key management personnel includes executive directors, non-executive directors, shareholders
representatives on audit committee, the functional heads of Finance and accounts, Sales and
Marketing, Plant Management, Maintenance and Human Resources Management. No transaction
in respect of sale of goods or services was entered into with any key management personnel or
shareholder representatives of the audit committee
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
60
15 INCOME TAX EXPENSE
31-Oct-18
31-Oct-17
15a Profit and Loss:
N’000
N’000
Company income tax provision
-
45,695
Educational Tax provision
-
3,280
Company Income Tax ( Note 15b)
-
48,975
Under/(over) provision of income taxes
262
(64)
Deferred Tax for period (Note 15c)
17,098
(20,781)
---------- ------------
Income Tax Expense
17,360
28,130
15b Income tax payable
31-Oct-18
31-Oct-17
Balance as at 1 November 2017
48,975
27,546
Current period charge (Note 15a)
-
48,975
Under/(over) provision of income taxes 262 (64)
Payment during period
(49,237)
(27,482)
--------- -----------
Balance as at 31 October 2018
-
48,975
15c Deferred Tax N’000 N’000
Balance at 1 November 2017
(17,098)
3,683
Provision for the year (Note 15a)
(20,781)
Reversal 17,098
---------- ----------
Balance as at 31 October 2018
-
(17,098)
16a. Income tax reconciliation - IAS 12P.81c
31-Oct-18
31-Oct-17
N’000
N’000
(Loss)/profit before income tax
(253,597)
77,554
Tax thereon at 30% (2017: 30%)
760,791
23,266
Impact of disallowable expense for tax purpose
-
1,648
Utilization of previously recognised tax credit
(760,791)
-
Tertiary education tax at 2% of assessable profit
-
3,280
Effect of under/(over)-provision in prior year
262
(64)
-------- ----------
Total income tax expense
262
28,130
Effective tax rate %deduction based on realization of these differences
(0.11%)
36.27%
16b. Deferred tax reconciliation - IAS 12P.81c N’000
N’000
Accelerated depreciation for tax purpose
17,098
33,180
Trade and other receivables
-
(50,278)
Reversal
(17,098)
-
---------- ---------
-
(17,098)
====== =======
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
61
17. TRADE AND OTHER PAYABLES
31-Oct-18
31-Oct-17
N’000
N’000
Trade Payables – Local 5,351 14,410
Payables to related parties-Greif SA (Note 14a.i) 324,612 321,496
Payable to related party-Greif USA (Note 14a.ii)
-
7,857
Accrued professional fees
12,006
7,019
Other accruals 3,520 1,024
--------- ---------
345,489 351,806
Dividend Unclaimed 13,004 10,004
ESB Staff Savings Scheme 1,150 2,421
Accrued payroll benefits 679 790
Other taxes payable 16,574 11,244
---------- ---------
376,372
376,265
===== =====
Terms and conditions of the above financial liabilities: • Trade payables are non-interest bearing and are normally settled on a 30-60 day terms • Other payables are non-interest bearing and have an average term of three months. It comprises of
VAT, WHT and PAYE • Accruals are liabilities to pay for goods or services that have been received or supplied but have
not been invoiced or formally agreed with the supplier. They have an average term of three months. • For terms and conditions with related parties, refer to Note 13 • The carrying amounts of trade and other payables for the year ended 31 October 2018 and 2017
respectively approximate to their fair values. 18 REVENUE
The analysis of Turnover which was all achieved in Nigeria by product Lines is as follows:
31-Oct-18
31-Oct-17
Product Lines
N'000
N'000 Steel Drums
534,611
1,405,218
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
62
19 COST OF SALES, SELLING/MARKETING EXPENSES, OTHER OPERATING EXPENSES
31-Oct-18 31-Oct-17
Items charged/(credited) in arriving at operating profit: N’000 N’000
Operating Expenses 807,963 1,329,055
Included in Other Operating income:
Gain on asset disposed 1,482 -
Sales of scrap 2,694 1,176
Rent 8,010 2,700
Services rendered to related party 7,569 -
---------- ----------
19,756 3,876
====== =====
Direct Material Cost 477,984 957,049
Direct Line Costs 52,638 75,034
General Administration Employees Benefits (Note 22b) 24,062 30,804
Indirect Factory Labor/employee benefits (Note 22b) 8,909 11,573
Depreciation on Property, Plant & Equipment 12,405 16,108
Indirect Factory/Production Costs 73,092 63,190
--------- ------------
Total Cost of Sales 649,287 1,153,758
====== =======
Publicity 40 45
Commercial Presents 8,210 5,023
Total Selling & Marketing Costs 8,250 5,068
==== -=====
General Administration Employees Benefits 39,032 29,238
Depreciation on Property, Plant & Equipment 3,124 2,706
Amortization of Intangible Assets 4,448 4,448
Assets written off 8,774 5,728
Auditors' Remuneration 6,000 6,000
Repairs & Maintenance 10,142 5,927
Personnel expenses 6,632 7,342
Travelling expenses 14,038 11,170
Director expenses 648 781
Insurance 2,185 1,555
Professional fees 11,769 7,970
Donation 485 400
Bank charges 716 908
Subscription 1,906 1,726
Sundry IT expenses 12,857 14,501
Impairment of receivables 6,759 994
Office expenses 6,663 5,665
Annual general Meeting expenses 2,360 2,846
Director fees 750 750
Exchange Loss 11,138 63,450
--------- -------
Total General and Administrative Expenses 150,426 174,105
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
63
19 COST OF SALES, SELLING/MARKETING EXPENSES, OTHER OPERATING EXPENSES - cont’d
20 COST CLASSIFICATION BY NATURE OF EXPENSES
31-Oct-18 31-Oct-17
N’000 N’000
Depreciation 15,529 18,814
Direct material 477,984 957,049
Employee benefits (Note 22a) 72,004 71,615
Amortization of Intangible Assets 4,448 4,448
Assets written off 8,774 5,728
Auditors Remuneration 6,000 6,000
Repairs & Maintenance 10,142 5,927
Factory/Production Expenses 125,926 138,224
Publicity and Advertisement 8,250 5,068
Personnel expenses 6,632 7,342
Travelling expenses 14,038 11,170
Director expenses 648 781
Insurance 2,185 1,555
Professional fees 11,769 7,970
Donation 485 400
Bank charges 716 908
Subscription 1,906 1,726
Sundry IT expenses 12,857 14,501
Impairment of receivables 6,759 994
Office expenses 6,663 5,665
Annual general Meeting expenses 2,360 2,846
Director fees 750 750
Exchange Loss/Gain 11,138 63,450
---------- ----------
807,963 1,332,931
======= =======
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
64
31-Oct-18 31-Oct-17 N’000 N’000 21 INTEREST INCOME
Interest Income 8,368 1,391 This represents interest received on placement of excess funds in short term treasury deposits 22 EMPLOYEE BENEFITS
31-Oct-18 31-Oct-17
N’000 N’000
22a The following items are included within employee benefits expense:
Short term employee benefits 61,569 65,393
Employee & Management Incentive Programs 1,528 3,300
Pension Costs - Defined Contribution Scheme 4,096 1,064
End Of Service Savings Scheme - Defined Contribution 4,811 1,858
72,004 71,615
22b This is reflected in Profit and Loss accounts as follows:
Direct Labour/employee benefits (Note 18) 24,062 30,804
Indirect Factory Labor/employee benefits (Note 19) 8,909 11,573 General Administration Employees Benefits (Note 19) 39,032 29,238
72,004 71,615
22c Staff Categories and Number Total full time employees at the Company as at 31-October-2018 and as compared to corresponding period in 2018 are as follows:
Category
31-Oct-18 31-Oct-17
Managerial
6 6
Senior Staff
6 8
Junior Staff
10 14
Total
22 28
23. CONTINGENT LIABILITY
The Company had no known contingent liabilities as at the period ended 31-October-2018.
24. EARNINGS PER SHARE
31-Oct-18 31-Oct-17
(Loss)/profit attributable to equity holders of the Company (N'000) (262,589)) 49,424
Weighted average number of ordinary shares in issue ('000) 42,640 42,640
Basic (loss/) earnings per share (Kobo) (616) 116 Diluted (loss) earnings per share (kobo) (616) 116
Basic (loss)/earnings per share are calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. There were no potential ordinary shares outstanding as at 31-October-2018 (2017; Nil) diluted(loss)/ earnings per share are therefore the same as basic (loss) earnings per share.
GREIF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENT-cont’d FOR THE YEAR ENDED 31 OCTOBER 2018
65
25. Capital management
The directors consider that capital includes net debt, convertible preference shares and equity attributable to the equity holders of the parent.
The primary objective of the Company’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 Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 October 2018 and 31 October 2017.
The Company monitors capital using a gearing ratio, which is total capital divided by net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables less cash and cash equivalents.
2018 2017 N'000 N'000 Trade and other payables (Note 17) 376,896 376,265 Less cash and short-term deposits (Note 12) (123,608) (169,657) ------------ ------------ Net debt 253,288 206,608 Equity 98,835 361,424 ---------- ----------- Capital and net debt 352,123 568,032 ====== ====== Gearing ratio (%) 72 36 == ==
26. EVENTS AFTER REPORTING DATE
There is no material event after the reporting date which could have had a material effect on the state of affairs of the Company as at 31 October 2018.
66
GREIF NIGERIA PLC STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 OCTOBER 2018
31-Oct-18 % 31-Oct-17 %
N’000
N’000
Turnover
534,611 1,405,218
Bought in materials and duty- local
(708,439) (1,076,335)
Bought in materials and duty- foreign
(7,543) (161,719)
----------- -------------
(181,371) 167,164
Other Income
28,123 5,267
----------- -------------
Value (consumed)/added
(153,248) 172,431
=======
=======
Applied as follows:
To pay employees Salaries, Wages & Other Benefits
72,004 (47) 71,615 42
To government Taxation
262 - 48,911 28
To providers of finance Interest Paid
- - - -
To provide for maintenance & expansion of business
Depreciation & Amortization
19,977 (13) 23,262 13
Deferred taxation
17,098 (11) (20,781) (12)
(Loss)/profit for the year
(262,589) 171 49,424 29
----------- ---------
(153,248) 100 172,431 100
====== ======
Value (consumed)/added represents the additional wealth, which the Company (consumed) created by its own, and its employees' efforts. This statement shows the allocation of that wealth between employees, government, providers of finance, and that retained for future creation of more wealth.
GREIF NIGERIA PLC FIVE-YEAR FINANCIAL SUMMARY
67
5-YEAR SUMMARISED IFRS FINANCIAL SUMMARY
AS AT: 31-Oct-18 31-Oct-17 31-Oct-16 31-Oct-15 31-Oct-14
N’000 N’000 N’000 N’000 N’000
TOTAL ASSETS Non-Current Assets 98,431 150,086 156,018 148,432 162,480
Current Assets 377,300 636,578 566,472 567,282 501,293
475,731 786,664 722,490 715,714 663,772
TOTAL EQUITY Equity Share Capital 21,320 21,320 21,320 21,320 21,320
Retained Earnings 77,515 340,104 316,264 314,742 315,702
98,835 361,424 337,584 336,062 337,022
NON-CURRENT LIABILITIES - - 3,683 20,739 35,536 CURRENT LIABILITIES 376,896 425,230 381,223 358,913 291,215 TOTAL EQUITY & LIABILITIES 475,731 786,664 722,490 715,713 663,772
TURNOVER 534,611 1,405,218 999,150 805,370 787,582
(Loss)/profit before tax (245,229) 77,554 37,597 40,149 58,029 Tax Expense (17,360) (28,130) (10,491) (15,525) (14,586) Profit for the year (262,589) 49,424 27,106 24,624 43,443 Other Comprehensive income - - - - -
Total comprehensive (loss)/income (262,589) 49,424 27,106 24,624 43,443
Per Share Information Basic earnings per share (616) 116 64 58 102 Kobo
Net Assets per Share 232 848 792 788 790 Kobo
Dividend Declared - - 60 60 30 Kobo