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Flour Mills of Nigeria PlcAnnual report31 March 2018

Flour Mills of Nigeria PlcAnnual report for the year ended 31 March 2018

Index

The reports and statements set out below comprise the annual report presented to the members:

Index Page

Report of The Directors 2

Directors' Responsibilities in Relation to the Financial Statements 12

Audit Committee Report 13

Independent Auditor's Report 14

Consolidated and Separate Statements of Financial Position as at 31 March 2018 20

Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income 21

Consolidated Statement of Changes in Equity for the year ended 31 March 2018 22

Separate Statement of Changes in Equity as at 31 March 2018 23

Consolidated and Separate Statements of Cash Flowsfor the year ended 31 March 2018

24

Notes to the Annual Report for the year ended 31 March 2018 25

Other National Disclosures 107

- Consolidated and Separate Statements of Value Added 108

- Five Year Financial Summary 110


Board of Directors, Officers and Other Corporate Information

Directors

John G. Coumantaros (Chairman) (U.S. Citizen)

Dr. (Chief) Emmanuel A. Ukpabi (KJW) (Vice- Chairman)

Paul Miyonmide Gbededo (Group Managing Director)

Alhaji Abdullahi A. Abba

Prof. Jerry Gana, CON

Alfonso Garate (Spanish)

Alhaji Rabiu M. Gwarzo, OON

Ioannis Katsaounis (Greek)

Thanassis Mazarakis (Greek)

Atedo N.A Peterside, CON

Foluso O. Philips

Alhaji Y. Olalekan A. Saliu

Folarin R. A. Williams

Mrs Salamatu Hussaini Suleman

Secretary Joseph Odion Umolu

Company registration number RC 2343

Date of incorporation September 29, 1960

Independent Auditors KPMG Professional Services

KPMG Tower

Bishop Aboyade Cole Street

Victoria Island

Lagos

Registered office / Business address 1, Golden Penny Place,

Wharf Road

Apapa,

Lagos

Registrars and Transfer office Atlas Registrars Ltd

34 Eric Moore Road,

Iganmu,

(Bagco Building)

P.O.Box 341, Apapa, Lagos

Bankers Access Bank Plc Skye Bank Plc

Citibank Nigeria Limited Stanbic IBTC Bank Plc

Diamond Bank Plc Suntrust Bank Limited

Ecobank Nigeria Limited Union Bank of Nigeria Plc

Fidelity Bank Plc United Bank for Africa Plc

First Bank of Nigeria Limited Wema Bank Plc

First City Monument Bank Zenith Bank Plc

Guaranty Trust Bank Plc

Heritage Bank Plc

Providus Bank Limited

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Report of The Directors

1. AccountsThe Directors are pleased to present the annual report together with the audited consolidated and separate financial statements of the Company and itssubsidiaries (together, “the Group”) for the year ended 31 March, 2018.

2. Legal formThe Company was incorporated in Nigeria on 29th September, 1960 as a private limited liability company and converted to a public liability company in

November, 1978. The shares are currently quoted on the Nigerian Stock Exchange.

3. Principal activitiesThe Group is primarily engaged in flour milling; production of pasta, noodles, edible oil and refined sugar; production of livestock feeds; farming and otheragro-allied activities; distribution and sale of fertilizer; manufacturing and marketing of laminated woven polypropylene sacks and flexible packagingmaterials; operation of Terminals A and B at the Apapa Port; customs clearing, forwarding and shipping agents and logistics.

4. ResultsGroup Company

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17N '000 N '000 N '000 N '000

Revenue 542,670,409 524,464,448 389,397,836 375,225,284Operating profit 48,422,925 41,439,897 29,284,977 29,948,911Profit before taxation 16,541,767 10,472,847 14,153,983 10,979,579Profit for the year 13,615,774 8,836,452 9,244,729 9,829,046Total comprehensive income for the year 13,048,227 9,598,943 8,783,629 10,473,401

5. DividendThe Directors are pleased to recommend to shareholders at the forthcoming annual general meeting the declaration of a total of N4.10 billion (2017: N2.62billion) representing a dividend of N1.00 (2017: N1.00) per ordinary share of 50 kobo each. This dividend, if approved, is subject to deduction of appropriatewithholding tax.

6. Directors and directors' interestsThe names of Directors who are currently in office are detailed on page 1.In accordance with the Company’s Articles of Association, the following Directors retire and, being eligible, offer themselves for re-election at the nextAnnual General Meeting:Retiring by rotation:Mr. John CoumantarosDr. (Chief) Emmanuel A. UkpabiProf. Jerry Gana, CONMr. Alfonso GarateNo Director has an interest in contracts with the Company.

7. Directors' interests in sharesThe Directors’ interests in the issued share capital of the Company as recorded in the Register of members and/or as notified by them for the purpose ofSection 275 of the Companies and Allied Matters Act,Cap C20 Laws of the Federation of Nigeria, 2004 are as follows:

Interests in shares31-Mar-18 31-Mar-17

Director Direct Indirect Direct IndirectAlhaji Abdullahi A. Abba 12,343 - 12,343 -Dr. (Chief) Emmanuel A. Ukpabi (KJW) 6,554,665 - 4,194,986 -Paul Miyonmide Gbededo 2,720,109 - 1,667,370 -Prof. Jerry Gana, CON 68,750 - 44,000 -Ioannis Katsaounis 3,241,950 - 2,570,765 -Folarin R. A. Williams 30,082 - 30,082 -Atedo N.A Peterside, CON - 2,500,000 - 2,500,000Alhaji Rabiu M. Gwarzo, OON 199,722 - 199,722 -Alhaji Y. Olalekan A. Saliu 1,668,985 - 1,608,985 -Foluso O. Philips - - - -Alfonso Garate - - - -Mrs Salamatu Hussaini Suleman - - - -

8. Profile of Directors seeking re-electionThe profile of Directors seeking re-election at the Annual General Meeting.

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Mr. John G. Coumantaros

Mr. Coumantaros with over 30 years’ experience in international trade, logistics, manufacturing, and industry was appointed to FMN’sBoard as a non-executive Director in 1990. He served as a Non-Executive Vice Chairman of the Company since 2012 before his presentappointment as Chairman of FMN Board of Directors on 10th September 2014. He graduated from Yale University with a B.A. Degree inHistory in 1984.He also sits on the Board of the Oxbow Carbon LLC, a leading international energy company and is a director of ELBISCO a fast-movingconsumer food business in Athens, Greece.Mr. John Coumantaros is passionately dedicatd to the economic development of Nigeria and welfare of Nigerians. He is an avid protagonistof the FMN mantra "Feeding the Nation ... everyday" in the evolution of FMN through its Golden Penny Food Brands as one of the leadingfast moving consumer food companies and largest agro-allied concerns in Nigeria and in Africa.

Dr. (Chief) Emmanuel A. Ukpabi (KJW)

Chief Ukpabi was the Group Managing Director, Flour Mills of Nigeria Plc from January 2002 to 31st March, 2013 when he retired and waselevated to the position of Non-Executive Vice Chairman.Chief Ukpabi studied at the University of Ibadan and proceeded to the University of Nigeria, Nsukka where he obtained a Bachelor’s Degreein Chemistry (1970). He further studied at Ashridge Management College and attended Advance Management Programme of the LagosBusiness School in 1996 as well as IESE Management Programme, Spain in 1998. He also participated in a good number of technical andmanagement training programmes in the UK, USA and Switzerland.Chief Ukpabi, a recipient of a number of awards, including a Doctor of Science Degree Honoris Causa, by Lautech University, Ogbomoso,Osun State, Nigeria in 2008. Chief Ukpabi is a knight of John Wesley and a Fellow of the Nigerian Institute of Marketing; Nigerian Institute ofManagement and Nigerian Institute of Food Science and Technology.

Prof. Jerry Gana, CON

Professor Jerry Gana (a Commander of the Order of the Niger), graduated from Ahmadu Bello University, Zaria in 1970 with a B.A. (Hons) degree, (Upper Division) in Geography, and proceeded to the University of Aberdeen, Scotland, for an M.sc Course in Rural Resources Planning, leading to a Ph.D thesis on Market Place Systems and Rural Development in 1974. He further obtained a Certificate in Education from the University of London, and taught at Ahmadu Bello University from 1974 to 1986, rising to the post of Professor in 1985. He was appointed to FMN's board as a non-executive director on 13th March 2013.Prof. Jerry Gana has served the nation in various capacities with distinction. These include: Senator of the Federal Republic; Consulting Director of the Directorate of Food, Roads and Rural Infrastructure (DFRRI); Chairman of MAMSER; Minister of Agriculture and Natural Resources; Information and Culture; Cooperation and Integration in Africa; and Information and National Orientation.He is presently the Pro-Chancellor and Chairman of Council of the University of Lagos, UNILAG.

Mr. Alfonso Garate

Mr. Alfonso Garate joined the Board of Flour Mills of Nigeria Plc. as a Non-Executive Director on Wednesday 11th March 2015.He holds a Bachelor of Economics and Business Administration Degree from University Pontificia Comillas – ICADE, Madrid, Spain (1992) and attended Harvard Business School – Advanced Management Program (2009). He is also an alumnus from IMD (International Institute for Management Development) Business School of Post Graduate Studies in Lausane, Switzerland (2005-2007).A very experienced professional in business development in emerging markets with strong capabilities in general management, business strategy, corporate finance, structured finance and international trading and shipping.

9. Directors' ResponsibilitiesThe Directors are responsible for the preparation of financial statements which give a true and fair view in accordance with International Financial ReportingStandards (IFRSs) and in the manner required by the Companies and Allied Matters Act of Nigeria, Cap C20 Laws of the Federation of Nigeria 2004 and theFinancial Reporting Council of Nigeria (FRCN) Act. In doing so, they ensure that:

proper accounting records are maintained;

applicable accounting standards are complied with;

suitable accounting policies are adopted and consistently applied;

judgments and estimates made are reasonable and prudent;

the going concern basis is used, unless it is inappropriate to presume that the Company will continue in business and;

Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets and also prevent and detect fraud and other

irregularities.

10. Corporate Governance Report

IntroductionThe Company is committed to the best practice and procedures in corporate governance. Its business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. This enables the board of directors and Management to accomplish the company’s strategic goals, ensure good growth and corporate stability for the benefit of all stakeholders.

Board compositionThe Company’s Articles of Association provides that the Company’s Board of Directors shall consist of not more than fifteen directors. Presently, the Boardhas a non-executive Chairman, a non-executive Vice Chairman, one executive director and eleven non-executive directors, two of whom are independentdirectors.The thorough process of selecting Board members gives premium to educational and professional background, integrity, competence, capability, knowledge,expertise, skills, experience and diversity.

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Board meetingsMembers of the Board of Directors hold a minimum of four quarterly meetings to approve the Company’s business strategy and objectives, decide on policy matters, direct and oversee the company’s affairs, progress, performance, operations, finances; and ensure that adequate resources are available to meet the company’s goals and objectives. Attendance of Directors at quarterly meetings is very good.It is noteworthy that the Company's Memorandum and Articles of Association allows for teleconferencing in order to ensure wide consultation and maximum participation by board members.In line with provisions of Section 258(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 Laws of the Federation of Nigeria 2004, record of Directors’ attendance at Board meetings is available for inspection at the Annual General Meeting.

Role of DirectorsThe highlights of the role of directors include:

Critical and regular examination of the company’s overall strategy with a view to ensuring that its goals, business plan and budget are inalignment.

Assign respective committees to consider and take appropriate decisions on issues requiring Board attention. Establish well-considered objectives for the company and monitor implementation, reviewing performance and ensure the deployment of

appropriate competencies. Ensure that adequate resources are available to meet the company’s goals and objectives. Oversee Board appraisal, training, succession planning, appointment and remuneration of members.

Board CommitteesThe Board of Directors has two principal board committees in line with Securities and Exchange Commission (SEC)’s Code of Corporate Governance. These are listed below indicating the summary of attendance at meetings held during the financial year ended 31 March 2018:

Remuneration/ Governance Committee

Members of the committee include:Mr. John G. CoumantarosDr. (Chief) Emmanuel A. Ukpabi (KJW)Mr. Thanassis MazarakisMr. Joseph Umolu - Company SecretaryRecord of attendance at Meetings (Yes - Present; No - Absent):

Name 19-Jul-17 06-Dec-17Mr. John G. Coumantaros Yes NoDr. (Chief) Emmanuel A. Ukpabi (KJW) Yes YesMr. Thanassis Mazarakis Yes YesMr. Joseph Umolu Yes Yes

Risk Management CommitteeMembers of the committee include:Mr. Paul Miyonmide GbededoMr. Thanassis MazarakisAlhaji Rabiu M. Gwarzo, OONAlhaji Y. Olalekan A. SaliuMr. Joseph Umolu - Company Secretary

Record of attendance at Meetings (Yes - Present; No - Absent):Name 19-Jul-17 06-Dec-17Mr. P. M. Gbededo Yes YesMr. T. Mazarakis Yes YesAlh R.M. Gwarzo, OON No YesAlh. Y. O. A. Saliu Yes YesMr. Joseph Umolu Yes Yes

Divisions and DirectoratesFor effective management, the Group is structured along the following Divisions and Directorates

Finance Corporate Services/Legal

Human Resources Technical

Marketing and Sales Supplies/Procurement

Logistics General Services

Internal Audit Bag Manufacturing

Pasta Production Agro Allied

Fertilizer Operations Flour Operations

Frequency and Attendance of Board Meetings

The Board held four (4) meetings during the financial year ended March 31, 2018. The notice for each meeting was in line with the Company’s Articles ofAssociation and Board papers were provided to directors in advance.Senior Executives of the Company are from time to time invited to attend Board meetings and make representations of their business units.A summary of record of attendance at Board meetings is presented below:

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Name 19-Jul-17 06-Sep-17 06-Dec-17 13-Mar-18Mr. John G. Coumantaros Yes Yes Yes YesDr. (Chief) Emmanuel Akwari Ukpabi (KJW) Yes Yes Yes YesMr. Paul M. Gbededo Yes Yes Yes YesAlhaji Abdullahi Ardo Abba Yes Yes Yes YesAlhaji Rabiu Muhammad Gwarzo, OON Yes Yes Yes YesMr. Ioannis Katsaounis Yes Yes Yes YesMr. Thanassis Mazarakis Yes Yes Yes YesMr. Atedo N. A. Peterside, CON Yes Yes Yes YesMr. Folarin Rotimi Abiola Williams Yes Yes Yes YesProf. Jerry Gana, CON Yes Yes Yes YesAlhaji Yunus Olalekan Saliu Yes Yes Yes YesMr. Folusho Olajide Phillips [Independent ] Yes Yes No NoMr. Alfonso Garate Yes Yes Yes YesMrs. Salamatu Suleiman [Independent ] Yes Yes Yes Yes

Yes - PresentNo - Absent

Board AppointmentThe Board of Directors is responsible for the overall direction, supervision and control of the company. The company’s Articles of Association, FMN Code ofConduct and the Securities and Exchange Commission’s (SEC) Corporate Governance Guidelines describe the responsibilities and authorities of the Board ofDirectors and set out rules and procedures for the composition, appointment and operations of the Board of Directors.The Remuneration and Governance Committee of the Board shall access and evaluate prospective candidates and make appropriate recommendation to theBoard with respect to appointments to the Board. A description of the desirable characteristics that the Remuneration and Governance Committee and theBoard should consider before recommending candidates for nomination/appointment as Directors are set out in the Board of Directors Charter and include:

Integrity, reputation, knowledge, competence and commitment

Familiarity with Nigerian commercial and economic environment

Regional balancing

Knowledge in FMN areas of business.The Remuneration and Governance Committee should review such qualities andcharacteristics at least annually and recommend any appropriate changes to the Board forconsideration.

Board Evaluation and Summary of Evaluation ResultsThe annual evaluation of the performance of the Board and that of its Committees, the Chairman and the individual directors as performed for the yearended 31st March 2018 in line with section 15.6 of the SEC Code of Corporate Governance by our External Consultants – Messrs Ernst & Young.The evaluation included the review of FMN’s Corporate Governance framework, with specific focus on the Board structure and composition, responsibilities,proceedings and relationships, individual director’s competencies and respective roles in the performance of the Board through surveys and one- on- oneinterviews with members of the Board and key personnel of the company.On the basis of the evaluation exercise, the Board of FMN demonstrated good understanding of the responsibilities as provided in the SEC Code of CorporateGovernance and largely complied during the year ended 31 March 2018.

Statutory Audit Committee

CompositionPursuant to section 359(3) of the Companies and Allied Matters Act of Nigeria, Cap C20 Laws of the Federation of Nigeria 2004, the Company’s AuditCommittee comprises three Directors and three shareholders as follows::

Mr. Kashimawo. A. Taiwo resigned on 6 September 2017

Mr. Ebenezer. O. Oladokun resigned on 6 September 2017

Mr. Sunday .O. Ogunnowo resigned on 6 September 2017

Mr. Ajani Babajide Adetunji appointed on 6 September 2017

Mr. Adesina Olalekan Oladepo appointed on 6 September 2017

Mr. Otukoya Oluwasesan James appointed on 6 September 2017

Dr (Chief) Emmanuel. A. Ukpabi (KJW)

Mr. Foluso Phillips

Alh. Yunus .O. Saliu

Mr. Joseph Umolu SecretaryThe functions of the Committee are laid down under section 359 (6) of theCompanies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria,2004.

MeetingsMembers of the Audit Committee receive regular reports and updates on financial matters and internal control reviews from internal and external auditors. Asummary of record of attendance at Statutory Audit Committee meetings held during the financial year ended 31 March 2018 is shown below:Name 22-Jun-17 28-Jun-17 08-Dec-17 20-Mar-18Mr. Kashimawo A. Taiwo Yes Yes N/a N/aMr. Ebenezer .O. Oladokun Yes Yes N/a N/a

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Mr. Sunday .O. Ogunnowo Yes Yes N/a N/aMr. Ajani Babajide Adetunji N/a N/a Yes YesMr. Adesina Olalekan Oladepo N/a N/a Yes YesMr. Otukoya Oluwasesan James N/a N/a Yes YesMr. Foluso Phillips No No No NoDr. (Chief) Emmanuel. A. Ukpabi (KJW) Yes Yes Yes YesAlh. Yunus. O. Saliu Yes Yes Yes YesMr. Joseph Umolu Yes Yes Yes Yes

Yes- PresentNo- AbsentN/A- Not applicable (not a member on this date)

The Corporate Governance Rating System CertificationWe are pleased to announce that our Company has passed the CGRS ratings process and has been duly certified and accorded the CGRS certification markwith effect from January 2018.The Highlights of the recently introduced Corporate Governance Rating System (CGRS) initiative of the Nigerian Stock Exchange (NSE) and the Convention ofBusiness Integrity (CBI) are as follows:

The NSE and CBI partnered to develop the Corporate Governance Rating System (CGRS) which is integral to the Premium Board and CGRS Index.

The CGRS concept was conceived as a process to help the regulatory function in the market, act sufficiently to improve standards, gather information on

the market and improve performance of capital market operators.

The CGRS process comprises three segments:

Independently verified self-assessment by the company

Directors’ Fiduciary Awareness Certification Test

Corporate Integrity assessment of the company, where perceptions of actual company behaviour are sought from internal and external stakeholdersCombinations of the three segments with attendant weighted scores are then collated and companies with a score of 70% and above are accorded the CGRScertification mark.The successful companies were celebrated at a certification ceremony in February 2018.

Internal Audit:The Company’s efforts to continuously ensure sound financial discipline and adherence to high ethical standards, as part of its robust corporate governancestrategy, have resulted in the setting up of a strong Group Internal Audit which is risk focused.The Internal audit function is currently manned by a team of professionals charged with the responsibility of ensuring that strategic business risks facing theGroup are promptly identified, effectively mitigated, recommendations proffered and continuously monitored. To ensure independence of this importantfunction, Internal Audit reports directly to the statutory Audit Committee on a quarterly basis and is supervised by the Risk Management Committee of theBoard.

Risk Management Policy

OverviewRisk to FMN is any event that has a potential of generating losses, unpleasant surprises and also gives room to anticipate opportunities. Risk in our business refers to probability that the outcome of events may differ from our expectations. Risk management is a process whereby the company methodically addresses the risks associated with its activities forthe purpose of achieving sustained benefits within each activity and across the portfolio ofall activities. Risk is an integral part of the Company's business. FMN will not seek to avoid risks, but will understand, manage and effectively evaluate them in the context of expected return. The Company’s priority is to produce and supply products of superior quality and value to the market, thereby, enriching the lives of all stakeholders. To achieve this, FMN has adopted the concept of enterprise risk management.Enterprise Risk Management (ERM) is a structured and disciplined approach to the management of risk that considers strategy, assets, liabilities, process, people, technology and resources within the business with purpose of continually evaluating and managing risks to business strategies and objectives on an enterprise basis. “ERM is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of the entity objectives” – COSO Enterprise Risk Management Integrated Framework.

Risk Management PhilosophyOur risk management philosophy and culture are the set of shared beliefs, values, attitudes and practices that govern how we consider the risk inherent inour business activities, from points of strategy development and implementation to our day-to-day activities. We believe that an efficient risk managementsystem across all lines of our business will ensure more efficient use of capital and resources and reduce the likelihood of operational losses.

Risk Management PrinciplesAs part of our drive to ensure a successful implementation of our ERM framework, we are guided by risk management principles

Embedding – ERM is fully embedded within the major functional and operational processes just as strategic planning and performance measurement

system.

Consistency – We adopt a consistent method for the identification, assessment monitoring, mitigation, control and communication of risks associated with

all of its activities, functions, processes, and events in an effort to efficiently and effectively achieve its corporate objectives.

Risk Awareness – We foster a result driven and risk awareness culture to move the company to a position where decisions are taken with full consideration

of relevant risks and their implications.

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Ownership – Specific risk owners within the Company’s workforce have sound understanding of the risk impacting their operations or areas of

responsibility and are able to respond with appropriate strategies and mechanisms to identify, assess, monitor, and control those risks.

Accountability – Risk owners within the Company’s workforce are accountable for the risk management actions in their respective areas of responsibility.

Authority – Risk owners have the required level of authority and flexibility to determine and execute the proper course of action to manage the risk in their

respective areas of responsibility.

Communication – The Company’s information system is continually updated to accommodate data output necessary for proper assessment and monitoringof risks.

Risk Management ObjectivesOur risk management objectives are as follows:

To ensure that threats to our major strategic plans and business investments are identified and well mitigated against;

To ensure that our business growth plans are consistent with our risk appetite and supported by an effective and efficient risk management function;

To identify any real and perceived risks exposures that may impact or be associated with the effective and efficient management and co-ordination of the

Company’s activities;

To integrate risk management into the culture and strategic decision making processes of the company;

Ensure that top management as well as individuals responsible for risk management possess the requisite expertise and knowledge to accomplish their

functions;

To comply with appropriate regulations and leading industry practices.

Risk Appetite and Tolerance

Our risk appetite articulates the amount and types of risk we are prepared to accept or reject while pursuing the achievement of our strategic objectives. Ourrisk appetite seeks to minimise erosion of earnings or capital that could arise from inadequate business strategy, changes in macroeconomic factors includingforeign exchange rates and operational inefficiencies. Our risk tolerance articulates the amount of uncertainty FMN is prepared to accept in total or morenarrowly within a certain business unit, a particular risk category or for a specific initiative. It is the level of variation the company is willing to accept aroundspecific objectives.

FMN Risk CategoriesOur strategy for managing risks is to establish and sustain a robust ERM framework that is embedded in our processes. Consequently, for effectivemanagement, risk in FMN have been divided into five categories. These include:

1. Business Risk

2. Financial Risk

3. Operational Risk

4. Reputational Risk

5. Compliance Risk

Risk Assessment

Risk assessment follows risk identification exercise. It involves analysing the risks to arrive at a level that describes FMN’s exposure. This is performed bydetermining the level of impact and the likelihood of occurrence of the risk crystalizing. The aim is to focus Management’s attention on the most importantrisks and possible opportunities. Risk assessment sets the groundwork for risk response and mitigations. The five (5) point scale have been categorised intothree (3) levels of risk (High, Medium and Low).

High: These comprise risks categorised as major and catastrophic. These risks pose significant challenge to the achievement of FMN’s objectives and couldpose a threat to the Company. Risks rated high are reported to Management for appropriate attention.

Medium: These comprise risks categorised as moderate. These risks could potentially affect the short-term goals of the Company. Depending on the goalthey affect, they could require the attention of Management, but could usually be handled by a senior staff.

Low: These comprise risks categorised as minor and insignificant. These risks are expected to happen in the normal course of business. The effect of suchrisks on the Company’s goals or objectives is usually minimal and they can be handled effectively by lower level staff.

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FMN Top Risks

Below are the company’s top strategic risks identified during the financial year. Management’s attention is focused on mitigating these risks to be within ourdesired risk appetite.

S/N Risk Description Mitigation

1 Raw Materials unavailability The risk that raw materials may not be sufficientoravailable to produce required volume of productsdue to:

Delays in supply of productsUnavailability of clearing papers

Unavailability of Foreign exchange which affects

purchase of raw materials

Unfavourable weather conditions which affects

the growth of raw materials

Efficient supply chain management including rawmaterial forecasts and sourcing Varieties of wheatare mixed to extend production in cases of rawmaterial shortage.Use of multiple suppliersAdequate local storage facilities

2 Importation Ban/increase in tariff The risk that there will be a ban or increase in tariffon the importation of key raw materials such aswheat.

Work with the government to help achieve the localproduction of wheat.Provide support and maintain relationships withlocal farmerrs to ensure an alternative source of rawmaterials in the event of importation ban.

3 Loss of market share The risk that FMN may lose customers/market share Diversified portfolio of products to ensure coverageof consumer trends.Rigorous processes of strategy developmentSystematic review of emerging consumer and route-to-market trendsCentralized market intelligence gathering andanalysis

4 Non compliance with laws andregulations

The risk that FMN will bepenalized/incur fines fornoncompliance with regulatory requirements orfailure to render regulatory/statutory returnspromptly.

Automated monitoring of statutory and regulatoryreturns.Regular interface with regulators through liaisonofficersCode of Business Conduct and supporting frameworkof policies set out compliance requirements.

5 Cyber security risks The risk of attack on IT systems throughunauthorized access to Company’s IT infrastructure.

Strengthened IT security controls.Vulnerability assessment and penetration testing.IT controls policiesMobile devices and privileged accounts monitoringPerimeter fencingEnd user awareness training

6 Liquidity risk The risk that the business will be unable to meet itsshort term debt obligations due to limited access tocapital/funds.

Use of long-term debts with lower interest rates asagainst short term.80% cash sales as against credit sales.Implementation of credit control policy whichincludes bank guarantees.Good treasury managementUse of International treasury solution which helpsmanage assets and liabilities

7 Interest rate risk The risk of loss of profitability as a result of increasein interest rates.

Leverage Group level bargaining power based on thevolume of the business, negotiate competitiveinterest rateEvaluation of different sources of funds, evaluatecriteria and choose with lower interest rateTaking advantage of subsidized loan fromgovernment which results in fixed and lower ratecompared to commercial banks

ENTERPRISE RISK MANAGEMENT AT FMN

Board of Directors

Understand and approve risk appetite statements

Assign “deep dive” responsibility to risk committees

Consider risk appetite in strategy approval

Board Risk Committee

Approve ERM charter

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Provide ERM governance oversight

Review and approve corporate ERM reports

Engage full board regarding relevant risk areas

Deep dive on specific risk areas

Internal Audit

Evaluate ERM program effectiveness periodically

Consider ERM results for corporate internal audit plan

Management Committee

Establish risk management culture

Implement risk management process through ERM office

Communicate results & process effectiveness to board

ERM Office

Implement ERM Framework

Design & facilitate ERM framework & process

Liaise with and engage Risk Owners & Champions

Business Units & Departments

Department Leaders

Maintain risk management culture

Review and approve department level risk reports

Integrate risk management into business via Risk Champions

Risk Owners

Accountable for mitigation and monitoring of individual risks

Provide risk reporting data to Risk Champions

Risk Champions

Act as ERM subject matter specialist for all departments

Facilitate ERM process within departments

Code of Business ConductIn demonstration of strong commitment to best practices in corporate governance, integrity and high ethical standards in all aspects of our business, FMNhas a Code of Conduct in place. Apart from being in line with current global trends, FMN’s Code of Conduct also aligns with the requirements of regulatoryauthorities.Through the provisions of the Code, FMN instills in its Directors and Employees the need to maintain high standard of corporate values, transparency,accountability, professionalism and promote good corporate governance.

Whistle BlowingUnder the Company’s whistle blowing policy and procedures, employees and other stakeholders including third parties are encouraged to report anyobserved or suspected acts of fraud, corruption or other irregularities, orally or anonymously contact the independent helpline by telephone or onlinewithout fear of reprisal or recrimination.The company guarantees that the identity of the reporting individual or organization shall be accorded utmost protection and the report timeouslyinvestigated and treated.The robust system has been embraced by all employees and stakeholders and it is producing good results.

11. Regulatory mattersIn July 2017, the Nigerian Stock Exchange penalized the company for the unauthorised publication on its key business investments without prior expressapproval from the Exchange. The company has complied with and paid the penalty issued by the Exchange to the company on this contravention in the sumof N1,617,000.00 (One Million, Six hundred and Seventeen Thousand Naira only) and has taken strict measures in ensuring non- recurrence of similar eventsin future.

12. Security trading policyFlour Mills of Nigeria Plc has put in place a Code of Conduct which aligns with section 14 of the Amendment to the Listing Rules of the Nigeria StockExchange.During the financial year under review, the Directors and employees of the company complied with the Nigerian Stock Exchange Rules relating to securitiestransactions and the provisions of the FMN Code on Insider Trading.

13. Complaint management policyIn line with the Securities and Exchange Commission (SEC) Rules relating to the Complaints Management Framework of the Nigerian Capital Market, FMNhas established and maintained a clearly defined Complaints Management Policy to handle and resolve complaints within the purview of the Framework.The framework as established by FMN involves the maintenance of an electronic complaints register by the Registrars and the Policy is available on thecompany’s website and copies had in the past been distributed at the Annual General meeting.

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The electronic complaints register is updated on a daily basis by the Registrars with complaints received from shareholders. Steps taken towards theresolution of the matter(s) and the duration of communicating to the Shareholders are also maintained on the Register. Returns on Complaints managementare sent by the Registrars on quarterly basis to the Securities and Exchange Commission.

14. Substantial Interest in sharesThe Registrar has advised that according to the Register of Members on 31 March 2018, apart from Excelsior Shipping Company Limited with 2,242,727,780(2017: 1,369,231,166), representing 54.70% of the paid up share capital respectively, no other individual shareholder held up to 5% of the issued sharecapital of the Company.

15. Analysis of Shareholding Structure

As at 31 March, 2018:Share Range No of

shareholdersPercentage (%) No of shares

heldPercentage (%)

1-1,000 27,773 34.68 11,514,300 0.281,001-5,000 39,214 48.97 93,582,639 2.285,001-10,000 5,831 7.28 41,177,004 1.0010,001-50,000 5,419 6.77 114,860,860 2.8050,001-100,000 795 0.99 57,592,565 1.40100,001-500,000 813 1.02 174,427,095 4.26500,001-1,000,000 108 0.13 77,480,457 1.891,000,001 and above 131 0.16 3,529,760,686 86.08

80,084 100.00 4,100,395,606 100.00

16. Donations and Charitable GiftsNo donation was made to any poltical party or organization during the year.Donations and charitable gifts amounting to N20.7 million were made during the year (2017: N16 million):

Donations

31-Mar-18N

2,000,0005,000,0005,000,000

250,0002,000,0001,000,000

500,000500,000

1,000,000

500,0002,500,000

FED Nigeria Society for the BlindKano Economic SummitEdo State Invesment SummitAfrican Students Union Parliament Sponsorship Manufacturers Association of NigeriaPolymer Institute of NigeriaApapa Economic Summit2018 Armed Forces Remembrance Day Celebration Chartered Institute of Personnel Management Kidney FoundationOgun State Investor's Forum

Dividen Payment Awards 2018 450,000

20,700,000

17. Post balance sheet eventsThere were no significant developments since the balance sheet date which could have had a material effect on the state of affairs of the Company at 31March 2018 and the profit for the year ended on that date which have not been adequately provided for or recognized in the financial statements.

18. Company's distributorsThe Company does not have registered distributors.

19. SuppliersThe Company obtains its materials from overseas and local suppliers. Amongst its main overseas and local suppliers are Star Trading Company Limited,Buhler A.G, First Blend Limited, Vitachem Nigeria Limited, Montizen Limited and Wahum Packaging Limited.

20. Property, plant and equipmentMovements infixed assets during the year are shown under Note 17 to the Accounts. In the opinion of the Directors, the market value of the value of theCompany’s properties is not less than the value shown in the audited financial statements.

10


Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Incomefor the year ended 31 March 2018

Group Company*

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17Note(s) N '000 N '000 N '000 N '000

Revenue 5 542,670,409 524,464,448 389,397,836 375,225,284

Cost of sales 6 (473,895,352) (457,775,380) (337,820,842) (324,918,838)

Gross profit 68,775,057 66,689,068 51,576,994 50,306,446

Selling and distribution expenses 9 (6,180,092) (5,341,148) (5,595,264) (4,981,999)

Administrative expenses 10 (20,115,372) (18,419,807) (11,707,308) (12,013,415)

Net operating gains and (losses) 8 5,943,332 (1,488,216) (4,989,445) (3,362,121)

Operating profit 48,422,925 41,439,897 29,284,977 29,948,911

Investment income 12 816,319 1,562,304 9,810,954 3,230,407

Finance costs 13 (32,697,477) (32,529,354) (24,941,948) (22,199,739)

Profit before taxation 16,541,767 10,472,847 14,153,983 10,979,579

Net income tax expense 14 (2,925,993) (1,636,395) (4,909,254) (1,150,533)

Profit for the year 13,615,774 8,836,452 9,244,729 9,829,046

Other comprehensive income:

34 (898,629) 1,153,011 (735,088) 979,281

Items that will not be reclassified to profit or loss: Remeasurements of defined benefit liability Related tax 15 292,322 (368,964) 235,228 (313,370)

Remeasurements of defined benefit liability, net of tax (606,307) 784,047 (499,860) 665,911

Items that may be reclassified to profit or loss:

Gain/(loss) on available-for-sale financial assets 38,760 (21,556) 38,760 (21,556)

Other comprehensive income for the year net of taxation (567,547) 762,491 (461,100) 644,355

Total comprehensive income for the year 13,048,227 9,598,943 8,783,629 10,473,401

Profit (loss) attributable to :

Owners of the Company 12,675,321 7,961,484 9,244,729 9,829,046

Non-controlling interest 22 940,453 874,968 - -

13,615,774 8,836,452 9,244,729 9,829,046

Total comprehensive income attributable to:

Owners of the Company 12,129,511 8,712,032 8,783,629 10,473,401

Non-controlling interest 22 918,716 886,911 - -

13,048,227 9,598,943 8,783,629 10,473,401

Earnings per share

Per share information

Basic earnings per share (kobo) 16 483 303 352 375

Diluted earnings per share (kobo) 16 483 303 352 375

The notes on pages 25 to 106 form an integral part of the financial statements.

*Due to the merger of the Company with a subsidiary during the year (Note 21), the 2018 Company numbers are those of the mergedentities while the 2017 numbers are those of the Company prior to the merger.

21

Flour Mills of Nigeria Plc

Consolidated Statement of Changes in Equity for the year ended 31 March 2018Share capital Share premium Fair value

reserveRetainedearnings

Equityattributable toowners of the

Company

Non-controllinginterest

Total equity

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

Group

Balance as at April 1, 2016 1,312,126 36,812,540 (89,760) 54,900,934 92,935,840 2,829,934 95,765,774

Profit for the year - - - 7,961,485 7,961,485 874,967 8,836,452Other comprehensive income - - (21,556) 772,103 750,547 11,944 762,491

Total comprehensive income for the year - - (21,556) 8,733,588 8,712,032 886,911 9,598,943

Transactions with owners recorded directly in equityAcquisition of NCI without a change in control (Note 22) - - - (581,996) (581,996) 363,464 (218,532)Transfer to reserve from unclaimed dividends (Note 38) - - - 22,412 22,412 - 22,412Dividend declared (Note 38 - - - (2,624,253) (2,624,253) - (2,624,253)

Total contributions by and distributions to owners of the company recogniseddirectly in equity

- - - (3,183,837) (3,183,837) 363,464 (2,820,373)

Balance as at March 31, 2017 1,312,126 36,812,540 (111,316) 60,450,685 98,464,035 4,080,309 102,544,344

Balance as at April 1, 2017 1,312,126 36,812,540 (111,316) 60,450,685 98,464,035 4,080,309 102,544,344

Profit for the year - - - 12,675,321 12,675,321 940,453 13,615,774Other comprehensive income - - 38,760 (584,570) (545,810) (21,737) (567,547)

Total comprehensive income for the year - - 38,760 12,090,751 12,129,511 918,716 13,048,227

Transactions with owners recorded directly in equityIssue of shares 738,071 38,564,904 - - 39,302,975 - 39,302,975Acquisition of NCI without a change in control (ROM Oil Limited) (Note 22) - - - (2,041,863) (2,041,863) 358,863 (1,683,000)Transfer to reserves from unclaimed dividends (Note 38) - - - 28,415 28,415 - 28,415Dividends declared (Note 38) - - - (2,624,253) (2,624,253) - (2,624,253)

Total contributions by and distributions to owners of the company recogniseddirectly in equity

738,071 38,564,904 - (4,637,701) 34,665,274 358,863 35,024,137

Balance as at March 31, 2018 2,050,197 75,377,444 (72,556) 67,903,735 145,258,820 5,357,888 150,616,708

Note(s) 32 32

The notes on pages 25 to 106 form an integral part of these financial statements.

22


Separate Statement of Changes in Equity for the year ended March 31, 2018Share capital Share premium Fair value

reserveRetainedearnings

Totalattributable toequity holders

of the Company

Total equity

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

Company

Balance as at April 1, 2016 1,312,126 36,812,540 (89,760) 62,209,233 100,244,139 100,244,139

Profit for the year - - - 9,829,046 9,829,046 9,829,046Other comprehensive income - - (21,556) 665,911 644,355 644,355

Total comprehensive income for the year - - (21,556) 10,494,957 10,473,401 10,473,401

Transactions with owners recorded directly in equityTransfer to reserve from unclaimed dividends (Note 38) - - - 22,412 22,412 22,412Dividend declared (Note 38) - - - (2,624,253) (2,624,253) (2,624,253)

Total contributions by and distributions to owners of the Company recognised directly in equity - - - (2,601,841) (2,601,841) (2,601,841)

Balance as at March 31, 2017 1,312,126 36,812,540 (111,316) 70,102,349 108,115,699 108,115,699

Balance as at April 1, 2017 1,312,126 36,812,540 (111,316) 70,102,349 108,115,699 108,115,699

Profit for the year - - - 9,244,729 9,244,729 9,244,729Other comprehensive income - - 38,760 (499,860) (461,100) (461,100)

Total comprehensive income for the year - - 38,760 8,744,869 8,783,629 8,783,629

Transactions with owners recorded directly in equityIssue of shares 738,071 38,564,904 - - 39,302,975 39,302,975Transfer to reserves from merger (Note 21) - - - (2,160,169) (2,160,169) (2,160,169)Transfer to reserves from unclaimed dividends (Note 38) - - - 28,415 28,415 28,415Dividend declared (Note 38) - - - (2,624,253) (2,624,253) (2,624,253)

Total contributions by and distributions to owners of Company recognised directly in equity 738,071 38,564,904 - (4,756,007) 34,546,968 34,546,968

Balance as at March 31, 2018 2,050,197 75,377,444 (72,556) 74,091,211 151,446,296 151,446,296

Note(s) 32 32


23


Consolidated and Separate Statements of Cash Flowsfor the year ended 31 March 2018

Group Company

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17Note(s) N '000 N '000 N '000 N '000

Cash flows from operating activities

Cash (generated from)/used in operating activities 31 81,141,794 (7,183,833) (27,256,362) (7,881,387)

Income tax paid 14 (1,306,617) (621,269) (226,542) (1,263)

Long service award benefit paid 35 (191,385) (99,174) (167,736) (88,048)

Retirement benefit paid 34 (341,159) (229,726) (275,391) (203,909)

Realised foreign exchange loss 1,283,163 (5,795,397) 1,516,224 (6,154,270)

Net cash (used in)/ generated from operating activities 80,585,796 (13,929,399) (26,409,807) (14,328,877)

Cash flows from investing activities

17 (21,398,545) (21,016,212) (8,456,517) (6,842,793)

2,790,863 222,446 1,864,147 156,46719 (13,219) (42,492) (13,219) (42,491)18 - (9,564) - -24 544,670 674,345 - -

(27,398) - - -

- - 52,919,527 (23,813,415)12 816,319 1,562,304 9,810,954 3,230,407

Acquisition of property, plant and equipment

Proceeds from sale of property, plant and equipment Acquisition of intangible assets

Acquisition of investment property

Proceeds from biological assets sold/ harvested Purchase of biological assets

Net loans received from / (granted to) related companies Finance income

Net cash (used in)/ generated from investing activities (17,287,310) (18,609,173) 56,124,892 (27,311,825)

Cash flows from financing activities

Proceeds on share issue 32 39,302,975 - 39,302,975 -

Proceeds from borrowings 33 300,731,571 176,925,100 261,643,908 113,195,929

Repayment of borrowings 33 (360,013,797) (133,183,965) (296,036,810) (69,657,393)

Consideration paid for acquisition of NCI (1,683,000) - (1,683,000) (229,532)

Dividends paid 38 (2,838,587) (2,971,314) (2,838,587) (2,971,314)

Unclaimed dividend received 216,465 - 192,403 -

Finance costs paid 13 (32,697,477) (29,036,615) (24,941,948) (19,230,685)

Net cash generared from/ (used in) financing activities (56,981,850) 11,733,206 (24,361,059) 21,107,005

Net cash movement for the year 6,316,636 (20,805,366) 5,354,026 (20,533,697)

Cash at the beginning of the year (4,005,309) 16,800,057 (5,519,945) 15,013,752

Cash increase through merger - - 145 -

Net cash at end of the year 30 2,311,327 (4,005,309) (165,774) (5,519,945)


24

21

22


Notes to the Annual Report for the year ended 31 March 2018

1 General information

1.1 Reporting entity

Flour Mills of Nigeria Plc (The Company) was incorporated in Nigeria as a private limited liability Company on 29 September 1960 and wasconverted to a public liability company in November 1978. Its registered head office is located at 1 Golden Penny Place, Apapa, Lagos. Theseconsolidated financial statements comprise the Company and its subsidiaries (together referred to as the "Group").

1.2 Principal activities

The Group is primarily engaged in flour milling, production of pasta, noodles, edible oil and refined sugar, production of livestock feeds,farming and other agro-allied activities, distribution and sales of fertilizer, manufacturing and marketing of laminated woven polypropylenesacks and flexible packaging materials, operation of terminals A and B at the Apapa Port, customs clearing, forwarding agents, shippingagents and logistics.

1.3 Going concern status

The financial statements have been prepared on a going concern basis. The Directors believe that there is no intention or threat from anysource to curtail significantly the Company's lines of business in the foreseeable future.

1.4 Ownership structure

Name of shareholder No. of sharesheld

Percentage ofshare capital

Excelsior Shipping Company Limited 2,242,727,580 54.70Other individuals and institutional shareholders 1,857,668,026 45.30

4,100,395,606 100

The ultimate holding company is Excelsior Shipping Company Limited, a company registered in Liberia. The beneficial owner of ExcelsiorShipping Company is a trust established by the late Mr. John S. Coumantaros.

1.5 Financial period

These consolidated and seperate financial statements cover the financial year from 1 April 2017 to 31 March 2018, with comparatives foryear ended 31 March 2017.

1.6 Statement of compliance

The consolidated and seperate financial statements have been prepared in accordance with International Financial Reporting Standardsissued by the International Accounting Standard Board (IASB) and the interpretations issued by the International Financial ReportingInterpretation Committee (IFRIC) and the requirements of the Companies and Allied Matters Act Cap C.20 Laws of Federation of Nigeria,2004 and the Financial Reporting Council (FRC) of Nigeria Act, 2011 . The financial statements were authorised for issue by the board on 28June 2018.

1.7 Basis of Preparation

The financial statements have been prepared on the historical cost basis except for the following:

Agricultural produce: Fair value less cost to sell.

Non-bearer plant biological assets: Fair value where possible and cost where it is impossible to determine the fair value.

Financial instruments: Initially measured at fair value and subsequently measured at amortised cost.

Inventories: Lower of cost and net realisable value

Defined benefits obligations: Present value of the obligation

Available for sale financial assets: Fair value through other comprehensive income

Derivative financial assets and liabilties: Fair value

25



1.8 Functional and presentation currency

For the purpose of these financial statements, the results and financial position of the Company and its subsidiaries are expressed in Naira,which is the functional currency of the Company, and the presentation currency for the Company and the Group financial statements.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

2. Significant accounting policies

The following accounting policies have been applied consistently to all periods presented in these financial statements except otherwiseindicated:

2.1 Consolidation

2.1.1 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent Company and its subsidiaries. The Group haspower to exercise control over these subsidiaries. Control is exposure (right) to variable returns from an involvement with an investee andan ability to affect those returns through power over the investee. This is generally accompanied by a share of more than 50% of the votingrights.

The financial information of the subsidiaries are prepared as of the same reporting date and consolidated using consistent accountingpolicies. Subsidiaries are consolidated from the date on which control is transferred to the group and are included until the date on whichthe group ceases to control them.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the group's interesttherein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controllinginterest even if this results in a debit balance being recognised for non-controlling interest.

Transactions which result in changes in ownership levels, where the group has control of the subsidiary both before and after thetransaction are regarded as equity transaction and are recognised directly in the statement of changes in equity.

2.1.2 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition ismeasured at the aggregate of the fair values (at the date of exchange) of assets given and the liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss asincurred.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingentconsideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of theconsideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurementperiod adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments areadjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from theacquisition date) about facts and circumstances that existed at the acquisition date.

Contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets thedefinition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity.Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value ofthe contingent consideration are recognised in profit or loss.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement periodadjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is notremeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that isclassified as an asset or a liability is remeasured at subsequent reporting dates in accordance with the Group's accounting policy on financialinstruments or, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

26



2.1 Consolidation (continued)

Where a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity are remeasured at fairvalue at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognized in profit or loss.Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensiveincome are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, Businesscombinations are recognized and measured at their fair value at the acquisition date, except:

deferred tax assets or liabilities arising from the assets acquired and liabilities assumed are measured in accordance with theGroup's accounting policy on taxation.

liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with the Group'saccounting policy on employee benefits; .

assets (or disposal groups) that are classified as held for sale in accordance with the Group's accounting policy on Non-currentAssets Held for Sale and Discontinued Operations are measured in accordance with the applicable Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree,and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair value ofthe identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiableassets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in theacquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit orloss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets inthe event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of therecognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transactionbasis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, theGroup reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted duringthe measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstancesthat existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

2.1.3 Business combination of entities under common control

Business combinations in which all of the entities or businesses are ultimately controlled by the Group both before and after thecombination and that control is not transitory are recognised as common control transactions. Where the transaction takes the form of amerger in which individual assets are acquired and liabilities assumed rather than the shares in the business being acquired, the acquireraccounts for such assets and liabilities at book value and the difference between the carrying value of the investments and the net assetsacquired is recognised in retained earnings.

The result of the merged subsidiary is included in the separate financial statements of the existing entity as if the merger occured at thebeginning of the financial year.

2.1.4 Interests in subsidiaries in Company separate annual report

In the company’s separate financial statements, investment in subsidiaries are carried at cost less any accumulated impairment. The cost ofan investment in a subsidiary is the aggregate of:

the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus

any costs directly attributable to the purchase of the subsidiary.

Investments in subsidiaries are eliminated on consolidation in the Group Financial Statements.

2.1.5 Loss of Control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary and any related non-controllinginterest and other component of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the formersubsidiary is measured at fair value when control is lost.

2.2 Revenue

Revenue represents amount received and receivable for goods supplied to customers and for services rendered. Revenue is measured atthe fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of tradediscounts, volume rebates, and value added tax.

27



2.2 Revenue (continued)

Sale of goods

Revenue is recognised when the following conditions are met; the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective

control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Group; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction isrecognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction canbe estimated reliably when all the following conditions are satisfied:

the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Group: the stage of completion of the transaction at the end of the reporting period can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only tothe extent of the expenses recognised that are recoverable.

Advance payments received for goods yet to be delivered and services yet to be rendered by the Group/Company are recognised ascustomer deposit liabilities on the statement financial position and revenue is recognised as soon as goods have been delivered or serviceshave been rendered.

When an intangible asset is expressed as a measure of revenue, for example a service concession, the expiry of the contract might be basedon a fixed amount of total revenue to be generated from the service concession contract. Provided that the contract is a fixed amount ofrevenue to be generated on which amortisation is to be determined, the revenue that is to be generated might be an appropriate basis foramortising the intangible asset or when it can be demonstrated that revenue and the consumption of the economic benefits of theintangible asset are highly correlated.

2.3 Investment Income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established by approval ofdividend at the annual general meeting of the investee (provided that it is probable that the economic benefits will flow to the Group andthe amount of revenue can be measured reliably).

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can bemeasured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to thatasset’s net carrying amount on initial recognition.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income from theordinary business of the group is recognised as revenue, while rental income from activities other than the ordinary business are recognisedas other operating income.

2.4 Goodwill

Goodwill represents the excess of the consideration over the fair value of the net identifiable assets of the acquired entity at the date of theacquisition. Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business lessaccumulated impairment losses, if any.

The excess of the purchase price over the carrying amount of non-controlling interest, when the Group increases its interest in an existingsubsidiary, is recognised in equity. Goodwill is tested annually for impairment. Impairment losses on goodwill are not reversed. Gains andlosses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating unitsor groups of cash-generating units that are expected to benefit from the business combination.

28



2.5 Non-current assets held for sale

Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than throughcontinuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available forimmediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups).

2.6 Foreign currency translation

Foreign currency transactions

Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailingon the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreigncurrencies are translated at the rates prevailing at that date. Non-monetary items that are measured based on historical cost in foreigncurrency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreigncurrency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences on monetary items are recognised in the profit or loss in the period in which they arise.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at whichthey were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the periodin which they arise.

When a gain or loss on a non-monetary item is recognised in other comprehensive income and accumulated in equity, any exchangecomponent of that gain or loss in recognised in other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

Cash flows arising from transactions in a foreign currency are recorded in naira by applying to the foreign currency amount the exchangerate between the naira and the foreign currency at the date of the cash flow.

Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included inthe cost of those assets are regarded as an adjustment to interest costs on those foreign currency borrowings.

2.7 Employee benefits

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paidas cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by theemployee and the obligation can be estimated reliably.

Defined contribution plans

The Group and Company operate a defined contribution based retirement benefit scheme for its staff, in accordance with the PensionReform Act of 2014 with employee contributing 8% and the employer contributing 10% each of the employee’s relevant emoluments (basicsalaries, housing and transport allowances). Payments to defined contribution retirement benefit plans are recognised as an expense whenemployees have rendered the service entitling them to the contributions. Employees contributions are deducted through payroll.

Defined benefits

The Group also operates a gratuity scheme for its qualified staff. Benefits are related to the employees' length of service and remuneration.The gratuity obligation is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of eachreporting period by an independent actuary. All actuarial gains and losses are recognised immediately through other comprehensiveincome. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability. TheCompany's obligation in respect of the scheme is the amount of future benefits that employees have earned in return for their service in thecurrent and prior periods.

The benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on Federal Government ofNigeria issued bonds that have maturity dates approximate to the term of the company's defined benefits obligation. Defined benefit costsare categorised as follows:

Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) Net interest expense Remeasurement (actuarial gains and losses)

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2.7 Employee benefits (continued)

The service cost and net interest expense are charged to the profit or loss while the gains and loss due to remeasurement are charged toother comprehensive income.

Although the fund is not funded the Group ensures that adequate arrangements are in place to meet its obligations under the scheme.

Long service award

In addition, the Group operates long service award for its qualified staff. The benefits are graduated depending on the employees numberof years in service to the group. The Group's obligation in respect of the scheme is the amount of future benefits that employees haveearned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The discountrate is the yield at the reporting date on Federal Government of Nigeria issued bonds that have maturity dates approximate to the term ofthe Group's defined benefits obligation. The obligation is determined by an independent actuary at each reporting period.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gainor loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a definedbenefit plan when the settlement occurs. Gains or losses due to remeasurement of long service awards are recognised in profit or loss

Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Grouprecognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they arediscounted.

2.8 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax, including adjustments in respect of prior periods.

Current tax

The current tax is based on taxable profit for the year and any adjustment in respect of previous years. Taxable profit differs from profit asreported in the consolidated and separate statement of profit or loss and other comprehensive income because of items of income orexpense that are taxable or deductible in future years and items that are never taxable or deductible. The amount of current tax is the bestestimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. The Group andCompany's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reportingperiod. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax assets and liabilities

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated and separatefinancial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generallyrecognised for all taxable temporary differences. Deferred tax assets are generally recognised for unused tax losses and for all deductibletemporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporarydifferences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill orfrom the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither thetaxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, andinterests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differencesassociated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxableprofits against which the benefits of the temporary differences will be utilised and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the asset to be recovered.

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2.8 Taxation (continued)

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or theasset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Themeasurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Groupexpects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensiveincome or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly inequity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect isincluded in the accounting for the business combination.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets andliabilities on a net basis.

2.9 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when: it is probable that future economic benefits associated with the item will flow to the company; and the cost of the item can be measured reliably.

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost includesexpenditure that is directly attributable to the acquisition of the items, including the capitalisation of borrowing costs on qualifying assets.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable thatfuture economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carryingamount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period inwhich they are incurred.

Depreciation is calculated on a straight-line basis at rates deemed appropriate to write off the cost of the assets less their residual valuesover their expected useful lives.

Depreciation is recognised so as to write off the cost of assets (other than properties under construction) less their residual values over theiruseful lives, using the straight-line method, on the following bases:

Item Average useful lifeLeasehold land and buildings 50 yearsPlant and machinery 5-25 yearsFurniture and equipment 3-10 yearsMotor vehicles 4-5 yearsMature bearer plants 25-35 yearsFreehold land IndefiniteBerth rehabilitation Over the lease period

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of anychanges in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise fromthe continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Assets in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includesprofessional fees and for qualifying assets borrowing costs capitalised in accordance with the Group's accounting policy. Assets in thecourse of construction are not depreciated until they get to the stage of intended use.

Immature bearer plants are carried at cost and represents bearer plants that have been planted but have not reached a matured stage andhave not started yielding biological assets. They are not depreciated.

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2.10 Investment property

Investment property are properties held for long term rental yields. Investment properties are carried in the Group statement of financialposition at cost less accumulated depreciation. Cost includes transaction costs on initial recognition.

Investment property is initially measured at cost and depreciated on a straight line basis to allocate cost less residual values of the assetsover their estimated useful lives.

Depreciation of Investment property is calculated on a straight line basis to allocate cost less residual values of the assets over theirestimated useful lives.

Investment property (building) is depreciated over a useful life of 50 years.

Investment property is derecognised in the event of transfer of the investment property or the disposal of the investment property. Anygain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carryingamount of the item) is recognised in profit or loss.

2.11 Borrowing costs

Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds. These include interestexpenses calculated using the effective interest rate method, finance charges in respect of finance leases and exchange differences arisingfrom foreign currency borrowings. Where a range of debt instruments is used to borrow funds, or where the financing activities arecoordinated centrally, a weighted average capitalisation rate is applied.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarilytake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as theassets are substantially ready for their intended use or sale. The Group defines a qualifying asset as an asset that takes more than a year toprepare for its intended use.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deductedfrom the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

2.12 Government grants

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediatefinancial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference betweenproceeds received and the fair value of the loan based on prevailing market interest rates.

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to themand that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses therelated costs for which the grants are intended to compensate.

2.13 Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life andamortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on aprospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairmentlosses.

Amortisation is recognised so as to write off the cost of finite intangible assets over their useful lives, using the straight-line method, on thefollowing bases:

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Item Useful lifeComputer software 3 yearsBerth rehabilitation Over the lease period

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or lossesarising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amountof the asset, are recognised in profit or loss when the asset is derecognised.

2.14 Impairment of tangible and intangible assets excluding goodwill, inventories, deferred tax assets and financial assets.

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whetherthere is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assetis estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount ofan individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonableand consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise theyare allocated to the smallest Group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, andwhenever there is an indication that the asset may be impaired. Whenever such indication exists, the assets recoverable amount isestimated. The impairment is the carrying amount less the recoverable amount of the assets.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flowsare discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money andthe risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of theasset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss,unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revisedestimate of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have beendetermined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment lossis recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal ofthe impairment loss is treated as a revaluation increase.

2.15 Inventories

Inventories are measured at the lower cost and net realisable value. Cost comprises direct materials and, where applicable, direct labourcosts and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable valuerepresents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

The basis of costing of the different inventory types are as follows:

Raw and packaging materials: Purchase cost including transportation and other incidental cost on a First In First Out (FIFO) basis.

Goods in transit: Purchase cost incurred to date

Finished products: Purchase cost of direct materials, labour and a reasonable allocation of overheads based on normal operating capacityon a weighted average basis.

Harvested agricultural produce: Fair value less cost to sell at the point of harvest

Engineering spares: Weighted average cost

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the periodthe write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value,are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

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2.16 Biological assets

Biological asset or agriculture produce is recognised only when the Group controls the asset as a result of past events, it is probable thatfuture economic benefits will flow to the entity, and the fair value or cost of the asset can be measured reliably.

Biological assets comprise growing sugar cane, oil palm fresh fruit bunches and cassava as well as poultry. Biological assets are measured oninitial recognition and subsequently at fair value less cost to sell.

Agricultural produce at the point of harvest are measured at fair value less cost to sell and are subsequently reclassified from agriculturalproduce to inventory and measured in accordance with the accounting policy on inventories.

Fair value gains or losses on initial and subsequent recognition are recognised in profit or loss.

2.17 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions, bank overdrafts and highly liquidinvestments generally with maturities of three months or less. They are readily convertible into known amounts of cash and have aninsignificant risk of changes in value.

2.18 Deposit for imports

Foreign currencies applied to fund of letters of credit in respect of imported raw materials, spare parts and machinery are recognised asdeposit for imports on the statement of financial position.

2.19 Provisions and contingencies

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that anoutflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of thereporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the timevalue of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable isrecognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measuredreliably.

Restructurings

A restructing provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a validexpectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features tothose affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring,which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.Future operating losses are not provided for.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arisesfrom past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will berequired to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities areonly disclosed and not recognised as liabilities in the statement of financial position. If the likelihood of an outflow of resources is remote,the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

2.20 Leases

Arrangement that contains a lease

At inception of an arrangement, the Group determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the Group separates payments and other consideration requiredby the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes fora finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal tothe fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the

liability is recognised using the Group's incremental borrowing rate.

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2.20 Leases (continued)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to thelessee. All other leases are classified as operating leases.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basisis more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arisingunder operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregatebenefit of incentives is recognised as a reduction of rental expense on a straight line basis except where another systematic basis is morerepresentative of the time pattern in which economic benefits from the leased assets are consumed.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income arerecognised in investment income in the Group financial statement.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the consolidated and seperate statement of financial position at amounts equal tothe fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessoris included in the consolidated and separate statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocatedto each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases - lessor

Operating lease income is recognised as an income on a straight-line basis over the lease term.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset andrecognised as an expense over the lease term on the same basis as the lease income.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amountsrecognised as an expense and the contractual payments are recognised as an operating lease asset.

Any contingent rents are expensed in the period they are incurred.

2.21 Financial instruments

Classification

The Group classifies financial assets and financial liabilities into the following categories based on their nature and categories: Loans and receivables Available-for-sale financial assets At fair value through profit or loss: derivatives Financial liabilities measured at amortised cost

Loans and receivables include trade and other receivables as well as loans given to group companies.

Financial liabilities include trade and other payables, bank overdraft and borrowings.

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2.21 Financial instruments (continued)

Initial recognition and measurement

All financial instruments are measured initially at fair value plus directly attributable transaction costs and fees, except for those financialinstruments that are subsequently measured at fair value where such transaction costs and fees are immediately recognized in profit orloss. Financial instruments are recognized (derecognized) on the date the group commits to purchase (sell) the instruments (trade dateaccounting).

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or anequity instrument in accordance with the substance of the contractual arrangement.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of theinstrument.

Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss.

Subsequent measurement

Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changesin fair value being included in profit or loss for the period.

Dividend income is recognised in profit or loss as part of other income when the group's right to receive payment is established.

Loans and receivables are measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Available-for-sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is notdeterminable, which are measured at cost less accumulated impairment losses.

Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in equity until the assetis disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method isrecognised in profit or loss as part of other income. Dividends received on available-for-sale equity instruments are recognised in profit orloss as part of other income when the group's right to receive payment is established.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Borrowings for which the Group has an unconditional right to defer settlement of the liability for at least twelve(12) months after thestatement of financial position date, are classified as non-current liabilities.

The group offsets financial assets and financial liabilities when and only when the following conditions are satisfied:

The group currently has a legally enforceable right to set off the recognised amounts of the assets and liabilities.

The group intends to settle on a net basis, or to realise the assets and settle the liablities simultaneously.

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers thefinancial asset and substantially all the risks and rewards of ownership of the asset to another party. If the entity neither transfers norretains substantially all the risks and rewards of ownership and continues to control the transferred asset, the entity recognises its retainedinterest in the asset and an associated liability for amounts it may have to pay. If the entity retains substantially all the risks and rewards ofownership of a transferred financial asset, the entity continues to recognise the financial asset and also recognises a collateralisedborrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the considerationreceived and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated inequity is recognised in profit or loss.

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On derecognition of a financial asset other than in its entirety (e.g. when the entity retains an option to repurchase part of a transferredasset), the entity allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuinginvolvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. Thedifference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for thepart no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income isrecognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between thepart that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

The group derecognises a financial liability only when its obligation is settled, cancelled or expired

Impairment of financial assets

At each reporting date the Group assesses all financial assets, other than those at fair value through profit or loss, to determine whetherthere is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the Group, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default ofpayments are all considered indicators of impairment.

The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significantassets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that hasbeen incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment.Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, andmakes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser thansuggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cashflows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account.When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amountof impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment wasrecognised, then the previously recognised impairment loss is reversed through profit or loss.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its costis considered an indicator of impairment. The Group considers a decline of 20% to be significant and a period of 6 months to be prolonged.If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisitioncost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equityas a reclassification adjustment to other comprehensive income and recognised in profit or loss.

Impairment losses are recognised in profit or loss.

Impairment losses are reversed when an increase in the financial asset's recoverable amount can be related objectively to an eventoccurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that theimpairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair valuewas not determinable.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss withinoperating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveriesof amounts previously written off are credited against operating expenses.

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Financial instruments designated as available-for-sale

Listed equities held by the Group that are traded on the Nigerian Stock Exchange are classified as available-for-sale and are stated at fairvalue at the end of each reporting period. Changes in the carrying amount of available-for-sale financial assets are recognised in othercomprehensive income and accumulated in equity. When the investment is disposed of or is determined to be impaired, the cumulativegain or loss previously accumulated in the reserve is reclassified to profit or loss.

Available-for-sale assets are classified as non current financial assets unless management intends to dispose of it within 12 months of theend of the reporting period. In that case it would be accounted for as short term investment.

Derivative financial instruments and hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency risk exposure. Embedded derivatives are separated fromthe host contract and accounted for separately if the following criteria are met.

(a) The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risksof the host contract

(b) A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and

(c) The hybrid (combined) instrument is not measured at fair value with changes in fair value recognised in profit or loss (i.e., aderivative that is embedded in a financial asset or financial liability at fair value through profit or loss is not separated).

Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred.Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognise in profit or loss.

2.22 Ordinary share capital and reserves

The Company has only one class of shares, ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they arerecorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve. Theuse of the share premium account is governed by S.120(3) of CAMA. All ordinary shares rank equally with regard to the Company's residualassets. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at generalmeetings of the Company.

Incremental cost directly attributable to the issue of Ordinary shares are recognised as deduction from equity

Fair value reserve comprises the cummulative net change in the fair value of available for sale financial assets until the assets arederecognised or impaired.

2.23 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during theperiod, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and theweighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinaryshares.

2.24 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. Thechief operating decision-maker is responsible for monitoring, allocating resources and assessing performance of the operating segmentsand has been identified as the Board of Directors of Flour Mills of Nigeria Plc.

The Group's primary format for segment reporting is based on business operating segments. Where applicable, segment results, assets andliabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

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2.25 Statement of cash flows

The Group applies the indirect method for preparation of the statement of cash flows. In prior year, the Group applied the Direct method inpreparing its statement of cashflow. Changes in statement of financial position items that have not resulted in cash flows such as translationdifferences, fair value changes and other non-cash items have been adjusted for the purpose of preparing the statement. Dividends paid toordinary shareholders are included in financing activities. Interest paid is also included in financing activities while finance and dvidendincome is included in investing activities.

2.26 Dividends

Dividends which remain unclaimed for a period exceeding twelve(12) years from the date of declaration and which are no longer actionableby shareholders in accordance with section 385 of the Companies and Allied Matters Act Cap C.20 Laws of the Federation of Nigeria, 2004are written back to retained earnings.

3 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group accounting policies, the Directors are required to make judgements, estimates and assumptions about thecarrying amounts of the assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actualresults may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the periodin which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revisionaffects both current and future periods.

The following are the areas of estimation uncertainties and critical judgements, that the directors have made in the process of applying theGroup’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements:

Biological assets

Fair value of biological assets is measured with reference to the estimated price in an active market at the point of harvest adjusted for itspresent location and stage of maturity/condition. Judgement is involved in the determination of the adjustment required to the marketprice to reflect the stage of maturity/condition of the biological assets.

Allowance for credit losses

The Company periodically assesses its trade and other receivables for probability of credit losses. Management considers several factorsincluding past credit record, current financial position and credibility of management. Judgment is exercised in determining the allowancesmade for credit losses.

Impairment allowance are made for receivables that have been outstanding for 365 days, in respect of which there is no firm commitmentto pay by the customer.

Furthermore all balances are reviewed for evidence of impairment and provided against once recovery is doubtful. These assessments aresubjective and involve a significant element of judgment by management on the ultimate recoverability of amounts receivable.

Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Group, accounting for about 61% of the Group’stotal assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation are critical to theGroup’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 expectedresidual value at the end of its life. Increasing an asset’s expected life or its residual value would result in the reduced depreciation charge inprofit or loss.

The Group reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There were no changesin the useful lives of Property, plant and equipment in the current year.

39



3 Critical accounting judgements and key sources of estimation uncertainty (continued)

Contingencies

Judgements and assumptions are made about the likelihood and magnitude of an outflow of resources with respect to ongoing litigationand claims and regulatory audits.

Valuation of financial liabilities

As at the end of the reporting period, the Group was granted some government assisted loans at below market rates. In accordance withIAS 20, the government grant which is the difference between the proceeds of the loans and their fair value should be accounted for. Basedon IAS 39, all financial liabilities should be initially recognized at fair value. In computing the fair value of these loans, the imputed interestrate used in discounting the cash flows associated with the loans is based on management judgement of best estimate of its borrowing costat the time the loans were granted.

Provision for gratuity

The Company operates an unfunded defined benefit scheme which entitles staff who put in a minimum qualifying working period of fiveyears to gratuity upon leaving the employment of the Company. IAS 19 requires the application of the Projected Unit Credit Method foractuarial valuations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employeeturnover etc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

Provision for long term service award

A provision for Long term service award is granted at first to employees that have spent a minimum of ten years in service and for everymultiple five years an employee remains in service. IAS19 requires the application of the Projected Unit Credit Method for actuarialvaluations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnoveretc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

Taxation

The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Group’s totaltax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finallydetermined until resolution has been reached with the relevant tax authority.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the recoverable amount of the cash generating units to which goodwillhas been allocated. The value in use calculations requires directors to estimate the future cashflows expected to arise from the cashgenerating unit and use a suitable discount rate to calculate the present value. The determination of the expected future cashflows requiresjudgement to be made by management. Where the actual future cashflows are less than expected, an impairment loss may arise.

Measurement of fair value

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financialassets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notesspecific to that asset or liability. Significant valuation issues are reported to the Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorisedinto different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

In some cases, if the inputs used to measure the fair value of an asset or a liability is categorised in different levels of the fair valuehierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level inputthat is significant to the entire measurement.

40



3 Critical accounting judgements and key sources of estimation uncertainty (continued)

The Group/Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which thechange has occurred.

Further information about the basis of determination of fair values are as follows:

i Property, plant and equipment

The fair value of property, plant and equipment recognized as a result of a business combination is based on the quoted market prices forsimilar items when available and depreciated replacement cost based on independent valuation when appropriate.

ii Intangible assets

The fair value of intangible assets acquired in a business combination is based on the discounted cash flows expected to be derived from theuse and eventual sale of the assets.

iii Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course ofbusiness less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sellthe inventories.

iv Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interestat the reporting date. This fair value is determined for disclosure purposes. For short term trade receivables, no disclosure of fair value ispresented when the carrying amount is a reasonable approximation of fair value due to the insignificant impact of discounting.

v Non-derivative financial instruments

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,discounted at the market rate of interest at the reporting date.

Further information about the assumptions made in measuring fair value is included in the following notes: Financial instruments - Financial risk management and fair values (note 42)

41



4. New Standards and Interpretations

4.1 Standards and interpretations effective and adopted in the current year

In the current year, the group has adopted the following standards and interpretations that became effective in the current financial yearand that are relevant to its operations:

Amendments to IAS 7: Disclosure initiative

The amendment requires entities to provide additional disclosures for changes in liabilities arising from financing activities. Specifically,entities are now required to provide disclosure of the following changes in liabilities arising from financing activities:

changes from financing cash flows; changes arising from obtaining or losing control of subsidiaries or other businesses; the effect of changes in foreign exchanges; changes in fair values; and other changes.

The effective date of the amendment is for years beginning on or after January 1, 2017.

The group has adopted the amendment for the first time in the 2018 annual report.

The impact of the amendment is not material.

Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses

In terms of IAS 12 Income Taxes, deferred tax assets are recognised only when it is probable that taxable profits will be available againstwhich the deductible temporary differences can be utilised.

If tax law restricts the utilisation of losses to deductions against income of a specific type, a deductible temporary difference is assessed incombination only with other deductible temporary differences of the appropriate type.

Additional guidelines were prescribed for evaluating whether an entity will have sufficient taxable profit in future periods. The entity isrequired to compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from thereversal of those deductible temporary differences. This comparison shows the extent to which the future taxable profit is sufficient for theentity to deduct the amounts resulting from the reversal of those deductible temporary differences.

The amendment also provides that the estimate of probable future taxable profit may include the recovery of some of an entity’s assets formore than their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this.


The group has adopted the amendment for the first time in the 2018 annual report.

The impact of the amendment is not material.

4.2 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for thegroup’s accounting periods beginning on or after April 1, 2018 or later periods:

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

If a parent loses control of a subsidiary which does not contain a business, as a result of a transaction with an associate or joint venture,then the gain or loss on the loss of control is recognised in the parents' profit or loss only to the extent of the unrelated investors' interest inthe associate or joint venture. The remaining gain or loss is eliminated against the carrying amount of the investment in the associate orjoint venture. The same treatment is followed for the measurement to fair value of any remaining investment which is itself an associate orjoint venture. If the remaining investment is accounted for in terms of IFRS 9, then the measurement to fair value of that interest isrecognised in full in the parents' profit or loss.

The effective date of the amendment is to be determined by the IASB.

42



4. New Standards and Interpretations (continued)

It is unlikely that the amendment will have a material impact on the group's annual report.

Uncertainty over Income Tax Treatments

The interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over incometax treatments. Specifically, if it is probable that the tax authorities will accept the uncertain tax treatment, then all tax related items aremeasured according to the planned tax treatment. If it is not probable that the tax authorities will accept the uncertain tax treatment, thenthe tax related items are measured on the basis of probabilities to reflect the uncertainty. Changes in facts and circumstances are requiredto be treated as changes in estimates and applied prospectively.

The effective date of the interpretation is for years beginning on or after January 1, 2019.

The group expects to adopt the interpretation for the first time in the 2020 annual report.

It is unlikely that the interpretation will have a material impact on the group's annual report.

IFRS 16 Leases

IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee accounting model. The main changes arisingfrom the issue of IFRS 16 which are likely to impact the group are as follows:

Group as lessee: Lessees are required to recognise a right-of-use asset and a lease liability for all leases, except short term leases or leases where

the underlying asset has a low value, which are expensed on a straight line or other systematic basis. The cost of the right-of-use asset includes, where appropriate, the initial amount of the lease liability; lease payments made

prior to commencement of the lease less incentives received; initial direct costs of the lessee; and an estimate for any provisionfor dismantling, restoration and removal related to the underlying asset.

The lease liability takes into consideration, where appropriate, fixed and variable lease payments; residual value guarantees tobe made by the lessee; exercise price of purchase options; and payments of penalties for terminating the lease.

The right-of-use asset is subsequently measured on the cost model at cost less accumulated depreciation and impairment andadjusted for any re-measurement of the lease liability. However, right-of-use assets are measured at fair value when they meetthe definition of investment property and all other investment property is accounted for on the fair value model. If a right-of-use asset relates to a class of property, plant and equipment which is measured on the revaluation model, then that right-of-useasset may be measured on the revaluation model.

The lease liability is subsequently increased by interest, reduced by lease payments and re-measured for reassessments ormodifications.

Re-measurements of lease liabilities are affected against right-of-use assets, unless the assets have been reduced to nil, in whichcase further adjustments are recognised in profit or loss.

The lease liability is re-measured by discounting revised payments at a revised rate when there is a change in the lease term or achange in the assessment of an option to purchase the underlying asset.

The lease liability is re-measured by discounting revised lease payments at the original discount rate when there is a change inthe amounts expected to be paid in a residual value guarantee or when there is a change in future payments because of achange in index or rate used to determine those payments.

Certain lease modifications are accounted for as separate leases. When lease modifications which decrease the scope of thelease are not required to be accounted for as separate leases, then the lessee re-measures the lease liability by decreasing thecarrying amount of the right of lease asset to reflect the full or partial termination of the lease. Any gain or loss relating to thefull or partial termination of the lease is recognised in profit or loss. For all other lease modifications which are not required tobe accounted for as separate leases, the lessee re-measures the lease liability by making a corresponding adjustment to theright-of-use asset.

Right-of-use assets and lease liabilities should be presented separately from other assets and liabilities. If not, then the line itemin which they are included must be disclosed. This does not apply to right-of-use assets meeting the definition of investmentproperty which must be presented within investment property. IFRS 16 contains different disclosure requirements compared toIAS 17 leases.

Group as lessor: Accounting for leases by lessors remains similar to the provisions of IAS 17 in that leases are classified as either finance leases or

operating leases. Lease classification is reassessed only if there has been a modification.

43



4. New Standards and Interpretations (continued) A modification is required to be accounted for as a separate lease if it both increases the scope of the lease by adding the right

to use one or more underlying assets; and the increase in consideration is commensurate to the stand alone price of theincrease in scope.

If a finance lease is modified, and the modification would not qualify as a separate lease, but the lease would have been anoperating lease if the modification was in effect from inception, then the modification is accounted for as a separate lease. Inaddition, the carrying amount of the underlying asset shall be measured as the net investment in the lease immediately beforethe effective date of the modification. IFRS 9 is applied to all other modifications not required to be treated as a separate lease.

Modifications to operating leases are required to be accounted for as new leases from the effective date of the modification.Changes have also been made to the disclosure requirements of leases in the lessor's financial statements.

Sale and leaseback transactions: In the event of a sale and leaseback transaction, the requirements of IFRS 15 are applied to consider whether a performance

obligation is satisfied to determine whether the transfer of the asset is accounted for as the sale of an asset. If the transfer meets the requirements to be recognised as a sale, the seller-lessee must measure the new right-of-use asset at

the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The buyer-lessor accountsfor the purchase by applying applicable standards and for the lease by applying IFRS 16

If the fair value of consideration for the sale is not equal to the fair value of the asset, then IFRS 16 requires adjustments to bemade to the sale proceeds. When the transfer of the asset is not a sale, then the seller-lessee continues to recognise thetransferred asset and recognises a financial liability equal to the transfer proceeds. The buyer-lessor recognises a financial assetequal to the transfer proceeds.

The effective date of the standard is for years beginning on or after January 1, 2019.

The group expects to adopt the standard for the first time in the 2020 annual report and is currently assessing the impact.

The expected impact of the standard on the group based on preliminary assessment is as follows:

IFRS 16 will result in an increase in total property, plant and equipment and lease liability resulting from a recognition of the lease asset andthe corresponding lease liability. Operating profit would marginally decrease as a result of the net impact of the amortization of the leaseassets and the interest expense on the lease liabilities. The Group is currently finalizing the precise impact of this new standard.

Transfers of Investment Property: Amendments to IAS 40

The amendment deals specifically with circumstances under which property must be transferred to or from investment property. Theamendment now requires that a change in use of property only occurs when the property first meets, or ceases to meet, the definition ofinvestment property and that there is evidence of a change in use. The amendment specifies that a change in management's intentions foruse of the property, do not, in isolation, provide evidence of a change in use.


The group expects to adopt the amendment for the first time in the 2019 annual report.

It is unlikely that the amendment will have a material impact on the group's annual report.

Foreign Currency Transactions and Advance Consideration

The interpretation applies to circumstances when an entity has either paid or received an amount of consideration in advance and in aforeign currency, resulting in a non-monetary asset or liability being recognised. The specific issue addressed by the interpretation is how todetermine the date of the transaction for the purposes of determining the exchange rate to use on the initial recognition of the relatedasset, expense or income when the non-monetary asset or liability is derecognised. The interpretation specifies that the date of thetransaction, for purposes of determining the exchange rate to apply, is the date on which the entity initially recognises the non-monetaryasset or liability.

The effective date of the interpretation is for years beginning on or after January 1, 2018.

The group expects to adopt the interpretation for the first time in the 2019 annual report.

It is unlikely that the interpretation will have a material impact on the group's annual report.

44




IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurements of financial assets. IFRS 9 wassubsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and forderecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 wasissued in July 2014 mainly to include a)impairment requirements for financial assets and b) limited amendments to the classification andmeasurement requirements by introducing a "fair value through other comprehensive income" (FVTOCI) measurement category for certainsimple debt instruments.

Key requirements of IFRS 9: All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are

required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within abusiness model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solelypayments of principal and interest on the outstanding principal are generally measured at amortised cost at the end ofsubsequent reporting periods. Debt instruments that are held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on outstanding principal, are measured atFVTOCI. All other debt and equity investments are measured at fair value at the end of subsequent reporting periods. Inaddition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equityinvestment (that is not held for trading) in other comprehensive income with only dividend income generally recognised inprofit or loss.

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred creditloss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes inthose expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. It is therefore nolonger necessary for a credit event to have occurred before credit losses are recognised.

IFRS 9 does not prescribe a single method to measure ECLs. Rather, it acknowledges that the methods used to measure ECLsmay vary based on the type of financial asset and the information available. The standard allows the use of practical expedientswhen estimating ECLs, to the extent that its measurement reflect an unbiased and probability weighted amount, time value ofmoney and reasonable and supportable information that is available without undue cost or effort. The standard contains asimplified approach that uses provision matrix to measure lifetime ECLs for trade receivables, contract assets and leasereceivables.


The group expects to adopt the standard for the first time in the 2019 annual report.

In determining the estimated impact of IFRS 9 on 1 April 2018, the Group applied the simplified model to estimate ECLs, adopting aprovision matrix to determine the lifetime ECLs for its trade and other receivables. The provision matrix estimates ECLs on the basis ofhistorical default rates, adjusted for current and future economic conditions (expected changes in default rates) without undue cost andeffort.

Based on assessments undertaken to date, the total estimated adjustment of the adoption of the ECL impairment requirements on theCompany’s trade receivables is approximately N294 million, indicating an increase of 19% over the impairment recognized under IAS 39.

The table below provides information about the estimated impact of adoption of IFRS 9 on the Company’s equity on 1 April 2018;

Figures in N'millionAs reported at 31 March 2018 151,446Estimated adjustment due TO adoption of IFRS 9 (294)

Estimated adjusted opening balance on 1 April 2018 151,152

The above assessment is preliminary as not all transition work has been finalised. The actual impact of adopting IFRS 9 on 1 April 2018 maychange due to the following reasons:

the Company is refining and finalising its provision matrix (model) for ECL calculations; and

45




the new accounting policies, assumptions, judgements and estimation techniques employed are subject to change until the Company

finalises its first financial statements that include the date of initial application.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction contracts; IAS 18 Revenue; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for theconstruction of Real Estate; IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving AdvertisingServices.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entityrecognises revenue in accordance with that core principle by applying the following steps:

Identify the contract(s) with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognise revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 also includes extensive new disclosure requirements.


The group expects to adopt the standard for the first time in the 2019 annual report.

The Group has undertaken a review of the main types of commercial arrangements with customers under the new five-step model and hastentatively concluded that the application of IFRS 15 will not have a material impact on the profit or loss and financial position of theGroup.

46


Notes to the Annual Report for the year ended 31 March 2018Group Company


5. Revenue541,279,193 523,917,783 387,935,003 373,620,053Sales of goods

Rendering of services 1,391,216 546,665 1,462,833 1,605,231

542,670,409 524,464,448 389,397,836 375,225,284

Analysis by segment

Sale of goodsFood 431,889,637 422,709,578 348,138,791 328,285,470Agro Allied 90,683,960 80,514,710 18,027,096 24,641,088Packaging 18,705,596 20,693,495 21,769,116 20,693,495Provision of servicesPort operation and logistics 1,201,141 414,439 1,462,833 1,605,231Real estate- rental income 190,075 132,226 - -

542,670,409 524,464,448 389,397,836 375,225,284

6. Cost of sales (by nature)

Group Company


Cost of raw and packaging materials 418,672,241 403,152,026 304,632,475 293,055,239Production employee cost 13,229,208 12,100,810 9,754,894 8,743,861Depreciation 14,813,393 12,778,252 7,481,096 6,691,951Fuel, gas and oil 14,156,619 18,581,494 8,851,545 11,547,077Factory rents and rates 2,403,237 4,648,532 1,526,899 961,971Factory repairs and maintenance 7,000,058 4,958,453 4,417,949 3,400,302Insurance 274,610 216,166 139,811 127,969Other production expenses 3,345,986 1,339,647 1,016,173 430,468

473,895,352 457,775,380 337,820,842 324,958,838

7. Segment information

Information reported to the chief operating decision makers (board of directors) for the purposes of resource allocation and assessment ofsegment performance focuses on types of goods or services delivered or provided.

Basis of Segmentation

The Group has the following five strategic divisions, which are its reportable segments. These divisions offer different products and services,and are managed separately because they require different operational and marketing strategies.

Inter-segment pricing is determined on an arm's length basis.

The following summary describes the operations of each reportable segment:

Food Milling and sales of flour and rice and production and sales ofpasta, snacks, sugar and noodles.

Agro Allied Farming of maize, cassava, soya, sugar cane and oil palm andproduction and sales of fertilizer, edible oils and livestock feeds.

Packaging Manufacturing and marketing of laminated wovenpolypropylene sacks and flexible packaging materials.

Port operations and logistics Port terminal operations, customs clearing and forwarding,shipping and haulage services

Real Estate Leasing of investment property

47



7. Segment information (continued)

`

The Board of Directors of Flour Mills of Nigeria Plc reviews the internal management reports of each division on a periodic basis.

There are varying levels of integration between the Food and the Agro allied segments and the packaging and port operations and logistics

segments. This integration includes transfer and sale of raw and packaging materials and shared distribution services respectively.

All non-current assets of the group are domiciled in Nigeria.

Group

Segment revenue and profit or loss

The following is an analysis of the Group's revenue and results from continuing operations by reportable segment:

31 March 2018Group

RevenueN '000

Cost of salesN '000

Gross profitN '000

Food 431,889,637 373,808,701 58,080,936Agro Allied 90,683,960 74,647,737 16,036,223Packaging 18,705,596 24,073,312 (5,367,716)Port operations and logistics 1,201,141 1,065,988 135,153Real Estate 190,075 299,614 (109,539)

542,670,409 473,895,352 68,775,057

31 March 2017Group

RevenueN '000

Cost of salesN '000

Gross profitN '000

Food 422,709,578 364,984,425 57,725,153Agro Allied 80,514,710 73,720,099 6,794,611Packaging 20,693,495 18,365,025 2,328,470Port operation and logistics 414,439 367,806 46,633Real Estate 132,226 338,025 (205,799)

524,464,448 457,775,380 66,689,068

Group Group31-Mar-18

N '00031-Mar-18

N '00031-Mar-17

N '00031-Mar-17

N '000Segmentrevenue

Segmentprofit/(loss)

Segmentrevenue

Segmentprofit/(loss)

Food 467,810,173 26,269,749 483,645,898 15,154,732Agro Allied 116,296,919 (20,516,458) 117,549,142 (4,216,970)Packaging 21,769,116 3,546,170 27,919,473 2,022,118Port operations and logistics 10,019,739 3,726,116 12,237,472 3,408,186Real Estate 287,675 (734,604) 180,995 (5,375,870)Elimination of Inter-segment revenue (73,513,213) - (117,068,532) -Elimination of Inter-segment profit/loss - 4,250,794 - (519,349)

542,670,409 16,541,767 524,464,448 10,472,847

Revenue from customers domiciled in Nigeria amounted to N532.8 billion (2017: N510.7 billion), while revenue from foreign customers(export revenue) amounted to N9.89 billion (2017: N13.78 billion).

The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 2. Segment profit represents the profit earned by each segment without allocation of income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

48




Segment assets and liabilities - Group

31-Mar-18N '000

31-Mar-17N '000

Segment assetsFood 404,057,056 427,881,785Agro Allied 123,625,381 142,636,113Packaging 25,526,737 30,464,163Port operations and logistics 20,794,222 19,497,088Real Estate 2,342,427 2,911,258Elimination of Inter-segment Assets (167,997,906) (140,787,150)

Total assets 408,347,917 482,603,257

31-Mar-18N '000

31-Mar-17N '000

Segment liabilitiesFood 247,077,650 319,272,125Agro Allied 94,400,322 153,005,889Packaging 7,120,813 18,703,408Port operations and logistics 7,806,881 11,055,848Real Estate 10,102,519 9,935,105Elimination of Inter-segment Liabilities (108,776,976) (131,913,462)

Total liabilities 257,731,209 380,058,913

Major customer

Revenues from one customer of the Group’s food segments represented approximately N23 billion (2017: N28 billion) of the Group’s total revenues.

49




Other material items

Group

March 31, 2018 Food Agro Allied Packaging Port operationsand logistics

Real estate Reportablesegment totals

Adjustments Consolidatedtotal

N '000 N '000 N '000 N'000 N '000 N '000 N'000 N'000Interest income (10,604,420) (94,250) (143,549) (1,032,626) (1,459) (11,876,304) 11,059,985 (816,319)Interest expense and fair valuelosses on derivatives

29,108,281 12,388,200 461,505 122,574 1,305,273 43,385,833 (10,688,356) 32,697,477

Capital expenditure 10,414,064 9,364,639 992,619 632,434 8,008 21,411,764 - 21,411,764Depreciation and amortisation 11,062,890 3,860,456 813,132 1,374,265 282,597 17,393,340 - 17,393,340Impairment losses on non-financial assets

- 12,303 - - - 12,303 - 12,303

Reversal of impairment losseson non-financial assets

- - - - - - - -

39,980,815 25,531,348 2,123,707 1,096,647 1,594,419 70,326,936 371,629 70,698,565

March 31, 2017 Food Agro Allied Packaging Port operationsand logistics

Real estate Reportablesegment totals

Adjustments Consolidatedtotal

N '000 N '000 N '000 N '000 N '000 N '000 N '000 N '000Interest income (3,323,754) (175,357) 437,678 - (266) (3,937,055) 2,374,751 (1,562,304)Interest expense and fair valueloss on dervatives

23,189,549 8,575,078 571,762 226,133 953,183 33,515,705 (986,351) 32,529,354

Capital expenditure 8,974,256 12,813,264 771,046 153,774 23,136 22,735,476 - 22,735,476Depreciation and amortisation 9,218,165 3,316,239 1,414,227 1,507,329 384,191 15,840,151 - 15,840,151Reversal of impairment losseson non-financial assets

(1,468,381) - - - - (1,468,381) - (1,468,381)

36,589,835 24,529,224 3,194,713 1,887,236 1,360,244 66,685,896 1,388,400 68,074,296

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8. Net operating gains and (losses)

Group Company


Insurance claim 241,268 242,220 57,664 239,927Sundry income 1,518,535 418,972 500,213 196,274Rental income 158,221 219,841 198,367 156,047Reversal of/ (allowance) impairment of property, plant andequipment

- 509,846 - 1,581,368

Impairment - investments (Note 22) - - (3,259,383) -Impairment - Long term receivables (Note 25) - - (798,926) -Fees earned 1,806 329,851 - 305,222Government grants (Note 36) 2,151,749 885,956 442,933 287,346Bad debts recovered 74,169 86,532 74,169 86,532Fair value gain on derivative 440,383 755,516 440,383 387,814Gain/(loss) on exchange differences 1,238,163 (5,742,096) (2,721,492) (6,653,268)Profit or (loss) on disposal of property, plant and equipment (52,715) 77,823 76,627 50,617Fair value changes in biological asset 171,753 727,323 - -

5,943,332 (1,488,216) (4,989,445) (3,362,121)

9. Selling and distribution expenses (analysed by nature)

Employee costs 1,834,540 1,697,205 1,652,348 1,574,648Advertisement 671,638 375,710 636,399 371,142Selling expenses 3,673,914 3,268,233 3,306,517 3,036,209

6,180,092 5,341,148 5,595,264 4,981,999

10. Administrative expenses (analysed by nature)

Bad debts 313,040 389,604 155,217 291,474Bank charges 1,383,368 2,552,401 915,147 1,726,677Legal and professional fees 789,035 661,822 488,498 447,907Depreciation and amortisation 2,802,102 2,379,083 1,096,412 1,837,244Salaries, wages and other staff costs 5,649,303 4,607,074 3,626,284 3,269,535Computer related expenses 733,693 959,618 546,289 826,290Insurance 242,801 218,747 117,012 59,870Medical, canteen and welfare expenses 834,048 670,027 752,021 606,288Motor vehicle expenses 165,827 92,732 129,328 77,151Penalties, fines and non recoverable taxes 678,730 806,672 327,574 528,063Fuel,gas and oil 821,036 380,866 295,245 174,815Auditors remuneration 366,672 296,900 192,820 166,600Postages, telephone and cables 164,132 42,417 118,430 12,684Printing and stationery 82,348 86,623 48,676 58,004Rent and rate 778,117 409,799 285,104 381,173Repairs and maintenance 1,885,842 964,296 380,418 787,311Subscriptions and donations 441,387 185,322 262,815 161,984Security services 287,469 255,015 89,004 61,492Travelling expenses 370,449 707,816 132,390 386,037General administrative expenses 1,325,973 1,752,973 1,748,624 152,816

20,115,372 18,419,807 11,707,308 12,013,415

51




11. Employee information

11.1 Employee costs

Employee cost comprise:

Salaries, wages and other benefits 18,586,532 15,810,357 12,444,521 11,504,161Pensions 595,806 1,536,028 1,355,269 1,207,953Long service awards 570,813 77,360 484,977 62,037Gratuity 959,900 981,344 748,759 813,893

20,713,051 18,405,089 15,033,526 13,588,044

Total employee costs have been recognised in profit or lossas follows:Cost of sales 13,229,208 12,100,810 9,754,894 8,743,861Selling and distribution expenses 1,834,540 1,697,205 1,652,348 1,574,648Administrative expenses 5,649,303 4,607,074 3,626,284 3,269,535

20,713,051 18,405,089 15,033,526 13,588,044

11.2 Number of employees

The number of persons employed as at year end was as follows:

Group Company31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17

Number Number Number NumberManagerial 1,180 1,182 918 893Non-managerial staff 6,125 6,102 2,602 2,562

7,305 7,284 3,520 3,455

The number of employees in receipt of emoluments (excluding certain benefits allowances and pension/gratuity) within the followingranges were:

Group Company=N= 31-Mar-18

Number31-Mar-17

Number31-Mar-18

Number31-Mar-17

Number100,001 - 200,000 2,005 2,274 - -200,001 - 300,000 53 788 11 11300,001 - 400,000 228 437 82 80400,001 - 500,000 238 524 103 102500,001 - 600,000 340 169 261 270600,001 - 700,000 423 72 262 256700,001 - 800,000 295 67 217 158800,001 - 900,000 466 118 278 245900,001 - 1,000,000 807 212 293 324

Over 1,000,001 2,450 2,623 2,013 2,009

7,305 7,284 3,520 3,455

52




12. Investment income

Interest incomeInterest income from short term investments and bankdeposits

816,319 1,562,304 679,728 855,655

Interest income from related companies - - 9,131,226 2,374,752

Interest received per statement of cash flows 816,319 1,562,304 9,810,954 3,230,407

13. Finance costs

Interest expense on related parties transactions - - 1,931,320 607,557Interest on bank loans and overdrafts 35,697,677 29,036,615 25,591,867 18,623,128Fair value loss on derivatives (3,000,200) 3,492,739 (2,581,239) 2,969,054

32,697,477 32,529,354 24,941,948 22,199,739

14. Taxation

Per profit or loss

Income tax charged 1,785,999 1,442,825 - -Education tax 984,385 291,746 770,431 112,739Capital gains tax 2,889 - 2,530 -Under/(over) provision in prior year (14,640) - - -

Current tax expense 2,758,633 1,734,571 772,961 112,739Deferred taxation 167,360 (98,176) 4,136,293 1,037,794

Net income tax expense as per profit or loss 2,925,993 1,636,395 4,909,254 1,150,533

Corporation tax is calculated at 30% (2017: 30%) of the estimated taxable profit for the year while tertiary education tax is calculated at 2%(2017: 2%) of the estimated assessable profit for the year.

Per statement of financial positionAt 1 April 2,136,490 1,336,015 550,633 439,157Charge for the year 2,758,633 1,734,571 772,961 112,739Payment during the yearCash (1,306,617) (621,269) (226,542) (1,263)Witholding tax utilized (437,189) (312,827) - -

Current tax payable 3,151,317 2,136,490 1,097,052 550,633

53




14. Taxation (continued)

Reconciliation of effective tax rateProfit before tax on continuing operations (A) 16,541,767 10,472,847 14,153,983 10,979,579

Tax at the statutory corporation tax rate of 30% (2017:30%) 4,962,530 3,227,780 4,246,195 3,293,874Effect of income that is exempt from taxation (120,982) (4,702,913) (170,185) (425,124)Effect of expenses that are not deductible in determiningtaxable profit

958,585 568,802 1,193,877 440,986

Effect of investment allowance and similar tax incentives (1,205,035) (898,390) (451,213) (214,886)Effect of pioneer status* (6,032,458) (1,192,890) (726,873) (1,192,890)Education tax at 2% of assessable profits 984,385 288,817 770,431 112,739Capital gains tax 2,889 - 2,530 -Fair value adjustment of biological asset (126,211) - - -Minimum tax 139,059 149,821 - -Under/ (over) provision in prior years 86,811 (156,613) - -Change in recognised deductible temporary differences - (878,775) 469,617 (864,166)Unrecognised deferred tax assets 3,830,107 5,230,756 - -Adjustments recognised in the current year in relation to thedeferred tax of prior years

(553,687) - (425,125) -

Income tax expense recognized in profit or loss (relating tocontinuing operations) (B)

2,925,993 1,636,395 4,909,254 1,150,533

Effective tax rate (B/A) %18 %16 %35 %10

15. Deferred tax

Analysis of deferred tax balances

Deferred tax asset 6,459,761 1,846,674 - -Deferred tax liability (12,307,605) (7,819,480) (9,805,335) (5,904,270)

Net deferred tax liability (5,847,844) (5,972,806) (9,805,335) (5,904,270)

The Group has unrecognised capital allowances and unused tax losses amounting to N31.1 billion and N12.4 billion (2017: N53.9 billionand N14 billion) respectively. No deferred tax asset has been recognised in respect of these amounts due to the unpredictability of theamount and timing of future taxable profit against which they would be utilised. The capital allowances and tax losses can be carriedforward indefinitely.

54



15. Deferred tax (continued)

Deferred tax assets and liabilities

The following are the major deferred tax liabilities and assets recognised by the Group and Company and movements thereon during thecurrent and prior reporting periods.

Group

2018Deferred tax (assets)/liabilities in relation to:

Opening balanceN '000

Recognised inprofit or loss

N '000

Recognised inother

comprehensiveincomeN '000

Closing balanceN '000

Property, plant and equipment 5,165,177 8,993,927 - 14,159,104Tax losses (70,576) (2,015,061) - (2,085,637)Exchange difference 3,763,201 (5,300,146) - (1,536,945)Employee benefits (1,770,260) (102,663) (292,322) (2,165,245)Allowances for bad debts, obsolete stocks and other impairmentallowances

(1,114,736) (1,408,697) - (2,523,433)

5,972,806 167,360 (292,322) 5,847,844

March 31, 2017Deferred tax (assets)/liabilities in relation to:

Opening balanceN '000


N '000

Recognised inother

comprehensiveincome

N '000Closing balance

N '000Property, plant and equipment 8,783,047 (3,617,870) - 5,165,177Tax losses (547,287) 476,711 - (70,576)Exchange difference 5,046 3,758,155 - 3,763,201Employee benefits (1,500,018) (639,206) 368,964 (1,770,260)Allowances for bad debts, obsolete stocks and other impairmentallowances

(1,038,770) (75,966) - (1,114,736)

5,702,018 (98,176) 368,964 5,972,806

Company


Openingbalance


Recognised inother

comprehensiveincome

Closingbalance

N '000 N '000 N '000 N '000Property, plant and equipment 5,523,162 10,066,568 - 15,589,730Exchange difference 2,854,690 (4,380,843) - (1,526,153)Employee benefits (1,710,369) 18,719 - (1,691,650)'Allowances for bad debts, obsolete stocks and other impairmentallowances'

(765,623) (1,568,151) - (2,333,774)

Arising on actuarial (gains)/losses on staff retirement benefit 2,410 - (235,228) (232,818)

5,904,270 4,136,293 (235,228) 9,805,335


Openingbalance


Recognised inother

comprehensiveincome

Closingbalance

N '000 N '000 N '000 N '000Property, plant and equipment 7,073,563 (1,550,401) - 5,523,162Tax losses (469,391) 469,391 - -Exchange difference 160,252 2,694,438 - 2,854,690Employee benefits (1,327,223) (383,146) - (1,710,369)Allowances for bad debts, obsolete stocks and other impairmentallowances

(573,136) (192,487) - (765,623)

55



15. Deferred tax (continued)Arising on actuarial (gains)/losses on staff retirement benefit (310,960) - 313,370 2,410

4,553,105 1,037,795 313,370 5,904,270

16. Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the Company by the weightedaverage number of ordinary shares outstanding during the year.

Group Company


Reconciliation of profit or loss for the year to earnings pershareProfit or loss for the year attributable to equity holders of theparent

12,675,321 7,961,484 9,244,729 9,829,046

Weighted average number of shares ('000)* 2,624,253 2,624,253 2,624,253 2,624,253

Basic earnings per shareKobo per share 483 303 352 375

Diluted earnings per share

In the determination of diluted earnings per share, profit or loss attributable to the equity holders of the Company and the weightedaverage number of ordinary shares are adjusted for the effects of all dilutive potential ordinary shares.

Where there is a discontinued operation, diluted earnings per share is determined for both continuing and discontinued operations.

Group Company


Reconciliation of profit or loss for the year to earnings pershareProfit or loss for the year attributable to equity holders of theparent

12,675,321 7,961,484 9,244,729 9,829,046

Weighted average number of shares ('000) 2,624,253 2,624,253 2,624,253 2,624,253

Diluted earnings per shareFrom continuing operations (kobo per share) 483 303 352 375

The Company has no potentially dilutive instruments as at year year end

* The rights issue was only finalised on 29 March 2018, consequently, the additional shares issued have an immaterial impact on theweighted average number of shares during the year.

56



17. Property, plant and equipmentGroup Land and building Plant and

machineryFurniture and

equipmentVehicles Bearer plants Berth Rehabilation Capital work-in-

progressTotal

N '000 N '000 N '000 N '000 N '000 N '000 N '000 N '000CostBalance at April 1, 2016 53,784,996 182,385,528 6,018,768 10,664,334 534,139 - 46,652,783 300,040,548Additions 289,658 2,835,526 217,902 225,099 - - 17,448,027 21,016,211Disposals (22,278) (307,738) (9,676) (698,255) - - (13,850) (1,051,797)Transfer to inventory - - - - (16,500) - - (16,500)Transfer from intangible assets - - - - - 763,547 - 763,547Transfer to intangible assets - - - - - - (201,880) (201,880)Transfer - capital work in progress 20,851,757 23,541,078 250,699 128,955 396,621 - (45,169,110) -Write off - (78,653) - (18,379) - - (1,881,195) (1,978,227)

Balance at March 31, 2017 74,904,133 208,375,741 6,477,693 10,301,754 914,260 763,547 16,834,775 318,571,903

Balance at April 1, 2017 74,904,133 208,375,741 6,477,693 10,301,754 914,260 763,547 16,834,775 318,571,903Additions 321,764 4,641,598 371,992 1,588,643 41,687 - 14,432,861 21,398,545Disposals - (2,065,190) (25,850) (563,011) - - (1,030,020) (3,684,071)Transfer from inventory - 1,169,250 - - - - - 1,169,250Transfer to investment property (Note 18) - - - - - - (14,465) (14,465)Transfer to intangible assets (Note 19) - - - - - - (991,410) (991,410)Transfer from CWIP 1,669,453 14,642,621 165,671 23,195 635,998 - (17,136,937) -Write-off (18,941) (396,111) (675) (216) - - (179,519) -

Balance at March 31, 2018 76,876,409 226,367,909 6,988,831 11,350,365 1,591,945 763,547 11,915,285 335,854,291

6,610,605 69,279,950 3,717,544 7,437,643 30,378 - 1,376,352 88,452,4722,245,231 10,903,003 981,534 1,306,284 67,104 41,068 - 15,544,224

(8,916) (240,359) (8,936) (648,962) - - - (907,173)- - - - - 147,526 - 147,526- (44,570) - (18,379) - - - (62,949)

Accumulated depreciationBalance at April 1, 2016Charge for the yearDisposalsTransfer from intangible assets (Note 19) Impairment (Note) (a)Reversal of impairment 53,909 (1,247,953) - - - - (274,337) (1,468,381)

Balance at March 31, 2017 8,900,829 78,650,071 4,690,142 8,076,586 97,482 188,594 1,102,015 101,705,719

Balance at April 1, 2017 8,900,829 78,650,071 4,690,142 8,076,586 97,482 188,594 1,102,015 101,705,719Charge for the year 2,128,374 13,100,804 867,765 1,013,464 124,591 40,660 - 17,275,658Disposals - (308,609) (23,824) (508,062) - - - (840,495)

Impairment - 12,303 - - - - - 12,303Write-off (14,883) (185,307) - (104) - - - (200,294)

Balance at March 31, 2018 11,014,320 91,269,262 5,534,083 8,581,884 222,073 229,254 1,102,015 117,952,891

Carrying amountBalance as at March 31, 2018 65,862,089 135,098,647 1,454,748 2,768,481 1,369,872 534,293 10,813,270 217,901,400

Balance as at March 31, 2017 66,003,304 129,725,670 1,787,551 2,225,168 816,778 574,953 15,732,760 216,866,184

57



CompanyLand and building

Plant andmachinery

Furniture andequipment Vehicles

Capital work-in-progress Total

N '000 N '000 N '000 N '000 N '000 N '000CostBalance at April 1, 2016 30,465,189 96,727,188 4,097,430 8,384,946 9,699,852 149,374,605Additions 53,275 1,842,057 93,052 74,590 4,779,819 6,842,793Disposals (22,278) (255,077) (6,580) (630,223) (31,499) (945,657)Transfer - capital work in progress 316,195 2,726,701 70,074 78,269 (3,191,239) -Transfer to intangible assets (Note 19) - - - - (201,880) (201,880)Write-off - - - - (28,064) (28,064)

Balance at March 31, 2017 30,812,381 101,040,869 4,253,976 7,907,582 11,296,989 155,311,797

Balance at April 1, 2017 30,812,381 101,040,869 4,253,976 7,907,582 11,296,989 155,311,797Additions - 709,097 211,945 1,296,964 6,238,511 8,456,517Disposals - (2,057,868) (15,879) (458,790) - (2,532,537)Transfers - capital work in progress 471,188 9,401,823 38,493 17,637 (9,929,141) -Transfer - inventory (Note 27) - 1,169,250 - - - 1,169,250Transfer to Intangible assets (Note 19) - - - - (991,410) (991,410)Transer to investment property (Note 18) - - - - (14,465) (14,465)Acquisiiton through Merger (Note 21) - - 1,968 10 - 1,978Write-off - - - - (14,620) (14,620)

Balance at March 31, 2018 31,283,569 110,263,171 4,490,503 8,763,403 6,585,864 161,386,510

Accumulated depreciationBalance at April 1, 2016 3,970,353 50,663,674 2,998,506 5,755,364 524,337 63,912,234Charge for the year 973,850 5,947,822 484,873 988,709 - 8,395,254Disposals (8,916) (211,242) (6,262) (581,889) - (808,309)Reversal of impairment - (1,307,031) - - (274,337) (1,581,368)

Balance at March 31, 2017 4,935,287 55,093,223 3,477,117 6,162,184 250,000 69,917,811

Balance at April 1, 2017 4,935,287 55,093,223 3,477,117 6,162,184 250,000 69,917,811Charge for the year 1,080,774 6,120,567 417,091 758,035 - 8,376,467Disposals - (306,548) (14,851) (423,618) - (745,017)

Balance at March 31, 2018 6,016,061 60,907,242 3,879,357 6,496,601 250,000 77,549,261

Carrying amountBalance as at March 31, 2018 25,267,508 49,355,929 611,146 2,266,802 6,335,864 83,837,249

Balance as at March 31, 2017 25,877,094 45,947,646 776,859 1,745,398 11,046,989 85,393,986

58



Analysis of bearer plants

31-Mar-18 CostN '000

Accumulateddepreciation

N '000

Carrying amountN '000

Mature bearer plants 635,998 (222,073) 413,925Immature bearer plants 955,947 - 955,947

1,591,945 (222,073) 1,369,872

31-Mar-17 CostN '000

Accumulateddepreciation

N '000

Carrying amountN '000

Mature bearer plants 665,157 (97,482) 567,675Immature bearer plants 249,103 - 249,103

914,260 (97,482) 816,778

Included in the group property, plant and equipment movement schedule is berth rehebilitation, which represents the cost of leaseholdimprovement at Apapa Bulk Terminal Limited.

(a) Impairment losses/ (reversal)

In prior year, impairment on previously idle plant and machinery amounting to N1.5 billion was reversed by the Group as the assets wereput to use in the prior year. The reversal of impairment is recognised in net operating gains and losses in the consolidated and separateStatement of profit or loss and other comprehensive income.

(b) Pledged as security

As at 31 March 2018, specific properties with carrying amount of about N2.04 billion (2017: N3 billion) were pledged as security for bankloans. There are also negative pledges over the other Group's property, plant and equipment and floating assets, which have been given inrelation to the group's borrowings.

(c) Capital commitment

The total capital commitment of the Group as at 31 March 2018 amounted to N4.07 billion (2017: N3.5 billion) in respect of various capital projects.

(d) Capital work in progress

Capital work in progress comprises Building and Plant and Machinery under construction during the year. Included in the amount are capitalised borrowing cost of approximately N357 million (2017: N1.4 billion) calculated using an average capitalization rate of 14%. Major projects included in the Group Capital work in progress relates to capital projects of about N3 billion for farm land improvements at Sunti Golden Sugar Estate, N2.3 billion for power projects at Agbara plant, N376 million for overhaul of process lines at Golden Penny spagheti and N237 million for Construction of Waste water plant in Iganmu.

Group Company


Closing Capital WIP is analysed as follows:Buildings 4,638,366 1,321,441 691,193 1,321,441Plant and machinery 6,174,904 14,411,319 5,644,671 9,725,548

10,813,270 15,732,760 6,335,864 11,046,989

59



18. Investment propertyGroup

BuildingN'000

CostBalance at April 1, 2016 2,165,028Addition 9,564

Balance at March 31, 2017 2,174,592

Balance at April 1, 2017 2,174,592Addition -Transfer from property, plant and equipment (Note 17) 14,465


Accumulated depreciationBalance at April 1, 2016 141,649Charge for the year 103,747

Balance at March 31, 2017 245,396

Balance at April 1, 2017 245,396Charge for the year 101,684


Carrying amountBalance as at March 31, 2018 1,841,977

Balance as at March 31, 2017 1,929,196

Company BuildingN '000

CostBalance at April 1, 2016 73,285Addition -


Balance at April 1, 2017 73,285Addition -Transfer to Property, plant and equipment (Note 17) 14,465


Accumulated depreciationBalance at April 1, 2016 23,581Charge for the year 1,567




Carrying amountBalance as at March 31, 2018 60,954

Balance as at March 31, 2017 48,137

The Company applies the cost model in accounting for its investment property.

60



18. Investment property (continued)

Measurement of fair value- fair value heirarchy

The fair value of the Group's and Company 's investment property as at 31 March 2018 is N4.3 billion (2017: N4.2 billion) N521.1 million(2017: N505.9 million) respectively. The fair value of the Group's investment property has been arrived at on the basis of valuation carriedout on the respective date by Messrs. Jide Taiwo & Co. Independent Valuer (FRC registration number: FRC/2012/0000000000254), notrelated to the Group. Messrs, Jide Taiwo & Co. are members of the NIgeria Institute of Estate Surveyors and Valuers. The fair value wasdetermined based on market comparable approach that reflects recent transaction price of similar properties within a reasonable timeframe.

There has been no change in the valuation technique during the year.

Fair value Level 3


N '000 N '000 N '000 N '000Abuja residential property 376,100 364,817 376,100 364,817Ibadan residential property 145,000 141,157 145,000 141,157Lagos residential property 3,772,300 3,672,300 - -

4,293,400 4,178,274 521,100 505,974

Investment property comprise of a number of commercial properties that are leased to third parties. Each of the leases contains the

lease period as well as the rental charge for the duration of the lease. Rental income earned by the Group amounted to N190 million

(2017: N181 million) and direct operating expenses amounted to N397 million (2017:387 million).

Details of valuation

Valuation techniques Significant unobservable inputs

Inter-relationship between keyunobservable inputs and fair value

measurement

The valuation has been done using themarket comparison approach. The fairvalues are based on market price ofsimilar properties adjusted for relevantestimated costs of construction. This isbased on the economic principle that abuyer will pay no more for an asset thanwhat it will cost the buyer to own anequivalent asset of equal utility eitherthrough purchase or outrightconstruction.

Adjusted cost of construction per floorarea N1.468 million per square meter(2017: N1.424 million per square meter)

:The estimated fair value will increase(decrease) if:

- estimated adjusted cost of constuctionper square meter were higher (lower)

The cost of construction is determinedby reference to the current constructionrate of a similar property to the grossfloor area including other associatedcosts which is further depreciated toreflect present physical conditions,functional and economic obsolescenceon the property before including thevalue of the bare site at the date of thevaluation.

Adjusted forced sale cost of constructionper floor area N1.028 million per squaremeter (2017: N0.983 million per squaremeter)

The estimated fair value will increase(decrease) if:

- estimated adjusted forced sale cost ofof constuction per square meter werehigher (lower)

61



19. Intangible assetsGroup Computer software Berth rehabilitation Total

N'000 N'000 N'000

602,141 763,547 1,365,68842,491 - 42,491

201,880 (763,547) (561,667)

CostBalance at April 1, 2016AdditionTransfer from/(to) Property, plant and equipment (Note 17) Write-off (38,056) - (38,056)

Balance at 31 March 2017 808,456 - 808,456

Balance at 1 April 2017 808,456 - 808,456Addition 13,219 - 13,219Transfer from Property, plant and equipment (Note 17) 991,410 - 991,410

Balance at 31 March 2018 1,813,085 - 1,813,085

482,832 147,526 630,358155,310 - 155,310

- (147,526) (147,526)

Accumulated amortisationBalance at April 1, 2016Charge for the yearTransfer to Property, plant and equipment (Note 17)Write-off (38,056) - (38,056)

Balance at March 31, 2017 600,086 - 600,086

Balance at April 1, 2017 600,086 - 600,086Charge for the year 117,682 - 117,682

Balance at March 31, 2018 717,768 - 717,768

Carrying amountBalance as at March 31, 2018 1,095,317 - 1,095,317

Balance as at March 31, 2017 208,370 - 208,370

Computer software relates to acquired software license and other development costs directly attributable to the preparation ofthe computer software for its intended use. Amortization of computer software is calculated based on useful life of 3 years.

Berth Rehabilitation cost previously classified as an intangible asset was reclassified to Property Plant and Equipment asleasehold improvement in prior years.

62



19. Intangible assets (continued)Company Computer

softwareN'000

406,40342,491

CostBalance at April 1, 2016AdditionTransfer from/(to) Property, plant and equipment (Note 17) 201,880


Balance at April 1, 2017 650,774Addition 13,219Transfer from Property, plant and equipment (Note 17) 991,410


Accumulated amortisationBalance at April 1, 2016 319,968Charge for the year 139,298




Carrying amountBalance as at March 31, 2018 1,088,440

Balance as at March 31, 2017 191,508

Computer software relates to acquired software license and other development costs directly attributable to the preparation of thecomputer software for its intended use. Amortization of computer software is calculated based on useful life of 3 years.

Amortisation of intangible assets is recognised in administrative expenses in profit or loss.

20. Goodwill

Group 31-Mar-18 31-Mar-17

Cost Accumulatedimpairment

Carrying value Cost Accumulatedimpairment

Carrying value

Goodwill 4,148,022 - 4,148,022 4,148,022 - 4,148,022

31-Mar-18 31-Mar-17N '000 N '000

Goodwill on acquisition of ROM Oil Mills Limited 1,351,067 1,351,067Goodwill on acquisition of Thai Farms Limited 920,139 920,139Goodwill on acquisition of Quilvest through New Horizon Flour Mills Limited 1,876,816 1,876,816

4,148,022 4,148,022

Goodwill has been assessed for impairment as part of the annual mandatory impairment testing in line with the requirements of theInternational Financial Reporting Standards. Goodwill was apportioned to identified Cash Generating Units (CGUs) expected to benefit fromthe respective business combinations on the basis of management expectation of the benefit to be derived from their synergies.

As at 31 March 2018, the adjusted carrying values of the assets of the CGUs to which the Goodwill was allocated were lower than theirrecoverable amounts, As a result, no impairment loss on Goodwill has been recognized (31 March 2017; None).

Allocation of goodwill to cash generating units (CGU)

Goodwill was apportioned to CGUs that are expected to benefit from the synergies of the respective business combinations on the basis oftheir net asset values.

Goodwill has been allocated for impairment test purposes to the following cash-generating units: Flour Mills of Nigeria Plc.

63



20. Goodwill (continued) Premier Feed Mills Company Limited Nigerian Eagle Flour Mills Limited

The carrying amount of goodwill was allocated to the cash generating units as follows:

Allocation of Goodwill 31 March 2018

Cash Generating Units ROM OIL THAI FARM QUILVEST TotalN '000 N '000 N '000 N '000

Flour Mills of Nigeria Plc 769,754 801,153 1,876,816 3,447,723Premier Feed Mills Company Limited 581,313 - - 581,313Nigerian Eagle Flour Mills Limited - 118,986 - 118,986

1,351,067 920,139 1,876,816 4,148,022

Company 31-Mar-18 31-Mar-17

Cost Accumulatedimpairment

Carrying value Cost Accumulatedimpairment

Carrying value

Goodwill (Note 20) 1,876,816 - 1,876,816 1,876,816 - 1,876,816

Cash Generating Units

For identified CGUs, the recoverable amount of the cash generating units was determined based on a value in use calculation which usescash flow projections based on five (5) year projections of current year free cash flows from operations and a weighted average cost ofcapital (WACC) of 17% per annum (2017: 15% per annum).

Key forecast assumptions

The key inputs and assumptions used in the value in use calculations for the cash generating units are as follows. Discount rate (WACC): 17% (2017: 15%) Net cash flow: The Net cash flow is based on 5-year forecast using 2018 as the base year. Terminal growth rate of 3%. Inflation rate: Inflation rate is based on forecast consumer price indices during the period for the country. An inflation rate of

13% has been applied for the current year (2017: 18%). The value assigned to the key assumption is consistent with externalsources of information.

The discount rate was based on computed WACC using the Capital Asset Pricing Model (CAPM). The net cash flows were thendiscounted using this rate to estimate their present values inclusive of a terminal growth value discounted to its present valuethereafter. The terminal growth rate was determined based on the average Gross Domestic Product (GDP) rate of Nigeria for the pastthree (3) Decades.

Revenue growth was projected taking into account the average growth levels experienced over the past five (5) years and the estimatedsales volume and price growth for the next five years. It was assumed that sales prices would grow at a constant margin above forecastinflation over the next five years.

The estimated recoverable amounts of all CGU's exceeded their carrying amount in the period under review (2017; same). Managementhas identified that a reasonably possible change in one (1) key assumption, the discount rate of 17% utilized in the period under reviewcould cause the carrying amount to exceed the recoverable amount. The following shows the amount in percentages by which this keyassumption would need to change per CGU for the estimated recoverable amount to equal the carrying amount:

FMN Company (11%), Nigerian Eagle Flour Mills(6%), Premier Flour Mills(2%).

In the prior period, management had assessed that any reasonably possible change in the key assumptions on which the recoverableamount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of each CGU.

64



21. Merger

(a) During the reporting year, the Company sought and obtained shareholders' and regulatory approval to merge Golden Penny RiceLimited. The merger was effected during the year and the integration of the entities has been completed. The subsidiary which wasmerged was under the same control prior to the date of the merger, consequently, this is a business combination of entities undercommon control.

The assets and liabilities acquired through the merger (at book values) were as follows: N '000

Property, plant and equipment 1,978Trade receivables 1,628Cash and cash equivalents 145

Total Assets 3,751

N '000Borrowings 1,966,692Trade payables 185,987Advance payments by Customers 1,241

Total liabilities 2,153,920

Net liabilities (2,150,169)Derecognition of investment in subsidiaries at cost (10,000)

Transfer to reserves from merger (2,160,169)

(b) In the current year, the Board of directors of two subsidiaries, Olympic Towers Limited and Apapa Bulk Terminal Limited passed aresolution to facilitate the merger of Olympic Towers Limited with Apapa Bulk Terminal Limited subject to requisite regulatory approval.

22. Investment in subsidiaries

(a) Investment in subsidiaries are stated at cost and analysed as follows:

Group Company

31-Mar-18

N'000

31-Mar-17

N'000

31-Mar-18

N'000

31-Mar-17

N'000UnquotedApapa Bulk Terminal Limited - - 50,000 50,000Golden Shipping Company Nigeria Limited - - 26,000 26,000Golden Sugar Company Limited - - 10,000 10,000Kaboji Farms Limited - - 5,030,000 30,000Premier Feed Mills Company Limited - - 12,750 12,750Nigerian Eagle Flour Mills Limited - - 510,000 510,000Golden Penny Rice Limited - - - 10,000Crestview Towers Limited - - 10,000 10,000Olympic Towers Limited - - 10,000 10,000ROM Oil Mills Limited - - 23,598,729 1,915,728Thai Farm International Limited - - 2,878,597 878,598Agri Palm Limited - - 2,010,000 10,000Agri Estates Limited - - 10,000 10,000Agro Allied Farms Sunti Limited - - 1,010,000 10,000Agro Allied Syrups Limited - - 2,010,000 10,000Best Chickens Limited - - 10,000 10,000Golden Agri Input Limited - - 1,050,000 50,000

- - 38,236,076 3,563,076QuotedNorthern Nigeria Flour Mills Plc - - 303,441 303,441

- - 38,539,517 3,866,517Impairment (Note 8) - - (3,259,383) -

- - 35,280,134 3,866,517

65


Notes to the Annual Report for the year ended 31 March 2018 for the year endedMarch 31, 2018

22. Investment in subsidiaries (continued)

During the year, the board of directors approved the conversion of certain long term loans receivable balances from subsidiares to equity (Note 40). The loans were converted to equity at a rate of N5.00 per share for all the subsidiaires. The value of loans converted to equity in the subsidiaries are analyzed as follows:

N'000ROM Oil Mills Limited 20,000,000Golden Agri Input 1,000,000Thai Farms International Limited 2,000,000Kaboji Farms Limited 5,000,000Agri Palm Limited 2,000,000Agro Allied Syrup 2,000,000Agro Allied Farm Sunti 1,000,000

33,000,000

66




(b) ShareholdingShareholding (%)

Subsidiaries Ordinary shares 31-Mar-18 31-Mar-17 Principal Activity

Apapa Bulk Terminal Limited 380,000,000 ordinary sharesof 50 kobo each

100 100 Port operations

Golden Agri Inputs Limited 300,000,000 ordinary sharesof 50k each

100 100 Agriculture

Golden Shipping Company Nigeria Limited 26,000,000 ordinary sharesof N1 each

100 100 Shipping agency

Golden Sugar Company Limited 20,000,000 ordinary sharesof 50k each

100 100 Manufacturingof sugar

Northern Nigeria Flour Mills Plc 178,200,000 ordinary sharesof 50k each

53 53 Flour milling

Kaboji Farms Limited 1,030,000,000 ordinaryshares of N1 each

100 100 Farming

Premier Feed Mills Company Limited 50,000,000 ordinary sharesof 50k each

62 62 Livestock feeds

Nigeria Eagle Flour Mills Limited 510,000,000 ordinary sharesof N1 each

51 51 Flour milling

Golden Penny Rice Limited 20,000,000 ordinary sharesof 50k each

- 100 Importation andbagging of rice

Crestview Towers Limited 20,000,000 ordinary sharesof 50k each

100 100 Real estate

Olympic Towers Limited 20,000,000 ordinary sharesof 50k each

100 100 Real estate

Agri Palm Limited 420,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agri Estates Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agro Allied Farms Sunti Limited 220,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agro Allied Syrups Limited 420,000,000 ordinary sharesof 50k each

100 100 Agriculture

ROM Oil Mills Limited 4,010,000,000 ordinaryshares of 50k each

99.98 90 Manufacturingof edible oil.

Thai Farm international Limited 749,650,135 Ordinary sharesof 50k share

100 100 Manufacturingof cassava flour

Best Chickens Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Golden Penny Power Limited (*) 2,000,000 ordinary shares of50k each

100 100 Powergeneration

Premier Poultry Processors Limited (*) 20,000,000 ordinary sharesof 50 kobo each

100 100 Livestockfarming

Premier Chicks Limited (*) 10,000,000 ordinary sharesof 50 kobo each

100 100 Livestockfarming

Iganmu Power Company Limited (*) 2,000,000 ordinary shares of50 Kobo each

100 100 Powergeneration

The shareholdings in the subsidiaries above represents the Company's voting rights in the subsidiaries.

* These are dormant companies. The share capital for these subsidiaries have not been issued or paid up by the Company, hence noinvestment has been recorded as at 31 March 2018.

* Golden Penny Power limited and Iganmu Power Company limited were incorporated to carry out independent power projects, whilePremier Poultry processors limited and Premier Chicks limited were incorporated for livestock farmng and processing.

The place of business of the subsidiairies is Nigeria.

67




Group Company


- - 3,866,517 3,636,985- - 1,683,000 229,532- - 33,000,000 -- - (10,000) -

(c) Movement in investment in subsidiary At 1 AprilAdditions in the yearLoan receivable converted to equity Dercognition due to merger (Note 21) Impairment recognised (i) (Note 8) - - (3,259,383) -

At 31 March - - 35,280,134 3,866,517

Movement of impairment of investment in subsidiaryAt 1 April - - - -Impairment loss recognised (Note 8) - - (3,259,383) -

- - (3,259,383) -

i) The impairment relates to investment in a subsidiary within the Agro-allied segment. During the year, investments in subsidiaries wereassessed for impairment considering the future cashflows and net assets of each subsidiary. Impairment indicators were identifiedrelating to the carrying value of the Company’s investment in subsidiaries. For the purpose of impairment testing, the subsidiariesidentified for impairment testing have been identified as a cash generating unit (CGU).

The recoverable amounts of the identified subsidiaries have been determined on a value-in-use basis.

The key inputs and assumptions used in the value in use calculations for the cash generating units are as follows.

Discount rate (WACC): 17% (2017: 15%).

Net cash flow: The Net cash flow is based on 5-year forecast using 2018 as the base year.

Terminal growth rate of 3%.

Inflation rate: Inflation rate is based on forecast consumer price indices during the period for the country. An inflation rate of 13% has

been applied for the current year (2017: 18%). The value assigned to the key assumption is consistent with external sources of

information.

The discount rate was based on computed WACC using the Capital Asset Pricing Model (CAPM). The net cash flows were then discountedusing this rate to estimate their present values inclusive of a terminal growth value discounted to its present value thereafter. The terminalgrowth rate was determined based on the average Gross Domestic Product (GDP) rate of Nigeria for the past three (3) Decades.

Revenue growth was projected taking into account the average growth levels experienced over the past five (5) years and the estimatedsales volume and price growth for the next five years. It was assumed that sales prices would grow at a constant margin above forecastinflation over the next five years.

The estimated recoverable amounts of all CGU's exceeded their carrying amount in the period under review (2017; same). Management hasidentified that a reasonably possible change in one (1) key assumption, the discount rate of 17% utilized in the period under review couldcause the carrying amount to exceed the recoverable amount.

The estimated recoverable amount of some CGUs exceeded their carrying amount by approximately N15.6 billion.

68




For some CGUs however, the recoverable amount was less than the carrying amount and an impairment loss of N3.2 billion has beenrecognised in the year. Following the impairment loss recognized in the carrying amount of the CGUs the recoverable amount was equal toits carrying amount. Therefore, any adverse movement in a key assumption would lead to further impairment. The impairment loss hasbeen recognised in Net operating gains and losses in the profit or loss account.

(ii) Acquisition of NCI

In current year, via a share acquisition, the Company acquired an additional 5% interest in ROM Oil Mills Limited (ROM Oil) for aconsideration of N1.68 billion. Subsequently, the Company and ROM Oil entered into a debt to equity conversion arrangement resultinginto conversion of related party loans and receivables balances due to the Company from ROM Oil to equity. Hence, the Company's interestin the issued share capital of ROM Oil increased to 99.98%. The carrying amount of ROM Oil's nets liabilities in the Group's consolidatedfinancial statements was N3.58 billion. Consequently, the Group recognised an increase of N358 million in NCI and a decrease of N2.0 billionin retained earnings attributable to owners of the Company.

In prior year, the Group acquired 25% interest in Thai Farms Limited for N218 million increasing its ownership from 75% to 100%). Thecarrying amount of Thai Farm net liability in the Group consolidated financial statements was N1.45 billion. Subsequently, the Grouprecognized an increase of N363 million in NCI and a decrease of N582 billion in retained earnings attributable to owners of the company.

ROM Oil MillsLimited

31-Mar-18N '000

Net Liabilities in the Group's consolidated financial statements (358,863)Consideration paid to NCI (1,683,000)

A decrease in equity attributable to owners of the company (2,041,863)

Thai FarmsInternational

Limited31-Mar-17

N '000Net Liabilities in the Group's consolidated financial statements (363,464)Consideration paid to NCI (218,532)

A decrease in equity attributable to owners of the company (581,996)

(d) Subsidiaries with material non-controlling interests

The following information is provided for subsidiaries with non-controlling interests which are material to the reporting company. Thesummarised financial information is provided prior to intercompany eliminations.

Subsidiaries% Ownership interest held by

non-controlling interest31-Mar-18 31-Mar-17

Northern Nigeria Flour Mills Plc. %47 %47Premier Feed Mills Company Limited. %38 %38Nigerian Eagle Flour Mills Limited %49 %49

69




March 31, 2018

Summarised consolidated and separate statement offinancial position

In thousands of Naira

NCIpercentage

Non currentassets

Current assets Total assets Non currentliabilities

Currentliabilities

Totalliabilities

Net assets Carrying amountof non-controlling

interest

Northern Nigeria Flour Mills Plc %47 2,201,907 3,715,732 5,917,639 1,369,065 3,374,312 4,743,377 1,174,262 551,903Premier Feed Mills Company Limited %38 9,165,793 10,873,537 20,039,330 2,451,605 15,343,600 17,795,205 2,244,125 852,768Nigerian Eagle Flour Mills Limited %49 3,721,180 7,535,568 11,256,748 1,147,628 2,196,007 3,343,635 7,913,113 3,877,425

15,088,880 22,124,837 37,213,717 4,968,298 20,913,919 25,882,217 11,331,500 5,282,096

75,792Intra-group eliminations - - - - - - - -

Non-controlling interest per consolidated statement offinancial position

5,357,888

The difference between the carrying amount of non-controlling interest and the non-controlling interest's proportionate share of the net assets of the subsidiary is represented by goodwill.

Summarised statement of profit or loss andother comprehensive income


NCIpercentage

Revenue Profit/(loss)before tax

Tax expense Profit/(loss)for the year

Othercomprehensive

income

Totalcomprehensive

income

Profit (loss)allocated to non-

controllinginterest

OCIattributable

to NCI

Totalcomprehensive

incomeattributable to

NCI

Northern Nigeria Flour Mills Plc %47 2,861,752 (113,187) 52,199 (60,988) (4,328) (65,316) (28,664) (2,034) (30,699)Premier Feed Mills Company Limited %38 51,646,895 (850,533) 227,943 (622,590) (34,439) (657,029) (236,585) (13,087) (249,671)Nigerian Eagle Flour Mills Limited %49 27,731,173 3,757,150 (1,296,534) 2,460,616 (13,503) 2,447,113 1,205,702 (6,616) 1,199,086

82,239,820 2,793,430 (1,016,392) 1,777,038 (52,270) 1,724,768 940,453 (21,737) 918,716

Total profit or loss allocated to non-controlling interest

940,453 (21,737) 918,716

70




Summarised statement of cash flowsIn thousands of Naira

NCI percentage Cash flow fromoperatingactivities

Cash flow frominvestingactivities

Cash flow fromfinancingactivities

Net increase(decrease) in

cash flow

Northern Nigeria Flour Mills Plc %47 (290,439) (268,819) 623,605 64,347Premier Feed Mills Company Limited %38 12,544,044 (1,278,550) (7,168,453) 4,097,041Nigerian Eagle Flour Mills Limited %39 1,549,226 (659,343) (1,182,973) (293,090)

Total 13,802,831 (2,206,712) (7,727,821) 3,868,298

No dividend was paid to shareholders with non controlling interest during the year.

March 31, 2017

Summarised statement of financial position


NCI percentage Non currentassets

Current assets Total assets Non currentliabilities

Currentliabilities

Total liabilities Net assetsCarrying amountof non-

controllinginterest

Norther Nigerian Flour Mills Plc %47 2,045,646 1,854,326 3,899,972 2,535,858 124,538 2,660,396 1,239,576 582,601Premier Feed Mills Company Limited %38 22,830,657 8,615,987 31,446,644 25,275,365 3,270,578 28,545,943 2,900,701 1,102,266Nigerian Eagle Flour Mills Limited %49 3,761,808 6,254,051 10,015,859 1,196,063 3,353,798 4,549,861 5,466,000 2,678,340Total

28,638,111 16,724,364 45,362,475 29,007,286 6,748,914 35,756,200 9,606,277 4,363,207Other individually immaterial subsidiaries %10 19,852,955 14,953,725 34,806,680 9,382,523 29,012,789 38,395,312 (3,588,632) (358,863)Intra-group eliminations 75,965

Non-controlling interest per consolidatedstatement of financial position

4,080,309

The difference between the carrying amount of non controlling interest and the non controlling interest's proportionate share of the net assets of the subsidiary is represented by goodwill.

71




Summarised statement of profitor loss and other comprehensiveincome


NCI percentage Revenue Profit before tax Tax expense Profit/ (loss) Othercomprehensive

income

Totalcomprehensive

income

Profit/ (loss)allocated to

non-controllinginterest

OCI attributableto NCI

Totalcomprehensive

incomeattributable to

NCI

Northern Nigeria Flour Mills Plc %47 902,349 7,367 (15,902) (8,535) - (8,535) (4,011) - (4,011)Premier Feed Mills CompanyLimited

%38 48,743,270 536,773 (104,031) 432,742 8,626 441,368 164,444 3,278 167,722

Nigerian Eagle Flour Mills Limited %49 27,021,352 2,695,747 (813,850) 1,881,897 17,039 1,898,936 922,130 8,348 930,478Total

76,666,971 3,239,887 (933,783) 2,306,104 25,665 2,331,769 1,082,563 11,626 1,094,189Profit or loss allocated to non-controlling interest of othersubsidiaries

37,971,931 (1,993,648) (82,306) (2,075,954) (3,170) (2,079,124) (207,596) 318 (207,278)

Total profit or loss allocated tonon-controlling interest

874,967 11,944 886,911

Summarised statement of cash flowsIn thousands of Naira

NCIpercentage

Cash flow fromoperating activities

Cash flow frominvesting activities

Cash flow fromfinancing activities

Net increase/(decrease) in cash

flow

Northern Nigeria Flour Mills Plc %47 (865,134) (1,439,291) 2,388,092 83,667Premier Feed Mills Company Limited %38 140,202 (422,336) (2,007,308) (2,289,442)Nigerian Eagles Flour Mills Limited %49 3,797,194 (4,110,995) 675,585 361,784

Total 3,072,262 (5,972,622) 1,056,369 (1,843,991)

No dividend was paid to shareholders with non controlling interest during the year (2017: Nil).

72




23. Available for sale investments

Available for sale investments (unquoted)Maiduguri Flour Mills Limited 5,956 5,956 5,956 5,956Newport Tradings Limited 2,000 2,000 2,000 2,000

7,956 7,956 7,956 7,956

Available for sale investments (Quoted)Transnational Corporation Plc 127,500 127,500 127,500 127,500Less fair value gain/(loss) (72,556) (111,316) (72,556) (111,316)

54,944 16,184 54,944 16,184

62,900 24,140 62,900 24,140

The Group's investment in Transnational Corporation Plc was fair valued using the market price of N1.85 per share (2017: N0.71) as at yearend which resulted in fair value increase of N38.76 million (31 March 2017: fair value decrease of N(21.56) million). The fair value changeshave been recognised in other comprehensive income with no income tax impact. The valuations have been categorised as Level 1 in thefair value hierarchy as there are no unobservable input to the valuation. The valuation was done on the same basis as in prior year andthere has been no transfers between levels during the year. The available for sale investments in unquoted entities have been carried atcost as the fair value cannot be reliably measured. Management does not have any immediate plan to dispose off these investments.

24. Biological assets

Group Livestock (a) Oil palm (b) Cassava (c) Sugar cane (d) TotalN'000 N'000 N'000 N'000 N'000

Balance at April 1, 2016 62,152 9,882 172,731 289,868 534,633Addition - - - - -Harvested during the year (24,322) (373,813) (58,733) (217,477) (674,345)Fair value changes 14,945 370,110 91,170 251,098 727,323

Balance at March 31, 2017 52,775 6,179 205,168 323,489 587,611

Balance at April 1, 2017 52,775 6,179 205,168 323,489 587,611Addition 4,320 - 23,078 - 27,398Harvested during the year (30,943) (322,753) (15,009) (175,965) (544,670)Fair value gain on initial recognition - 342,355 - 26,201 368,556Fair value gain/(loss) due to remeasurement 11,559 - (170,624) (37,738) (196,803)Impairment loss - - - (24,729) (24,729)

Balance at March 31, 2018 37,711 25,781 42,613 111,258 217,363

73



24. Biological assets (continued)

31-Mar-18 31-Mar-17N '000 N '000

Analysed into:Current 179,653 558,480Non-current 37,710 29,131

217,363 587,611

(a) Livestock relates to poultry used for poultry eggs production at Best Chickens Limited and are stated at fair value less estimated point-of-sale costs, with any resultant gain or loss recognised in the profit or loss. Point-of-sale costs include all costs that will be necessary tosell the assets. The fair value of livestock is determined based on valuations using the market prices of livestock of similar age, breedand generic merit.

(b) Oil palm refers to growing fresh fruit bunches at Agri Palm Limited and are stated at fair value less cost-to-sell with any resultant gain orloss recognised in profit or loss. Selling costs include all costs that would be necessary to sell the fresh fruit bunches (including cost ofharvest). The fair value is determined based on valuations using the market prices of fresh fruit bunches of similar weight and quality.

(c) Cassava is cultivated at Agro Allied Syrups Limited and Kaboji Farms Limited and the harvested cassava tubers are used for starchextraction and production of high quality cassava flour. They are stated at fair value less estimated cost-to-sell. Cost-to-sell include coststhat would be necessary to sell the cassava tubers (including the cost of harvest). Fair value is determined based on valuation usingmarket prices of cassava tubers of similar weight and quality, adjusted for stage of maturity.

(d) Growing sugarcane refers to sugarcane plants at the plantation owned by Sunti Golden Sugar Estates Limited. The initial sugarcanesuckers has a cane-production life of seven years. The cost of the suckers, the related land preparation cost and other directlyassociated cost such as those of fertilizer have been capitalised as bearer plants and are being depreciated over seven years. The caneswhich are harvested from the suckers annually for sugar miling are classified as biological assets. The biological assets are carried at fairvalue less estimated cost to sell. The fair value is based on market prices of sugarcane per tonne and stage of maturity.

Methods and assumptions used in determining fair value

Fair value is determined using market-based evidence by appraisal. Valuation of biological assets is carried out at sufficient regularityto identify any material movement and any material differences are adjusted accordingly to ensure that the carrying value of the assetsdoes not differ materially from the fair values determined as at the reporting date.

Measurement of fair values

Fair value hierarchy

The fair value measurement for the palm, fresh fruit bunch, the sugarcane and cassava have been categorised as Level 3 fair values basedon the inputs to the valuation techniques used. The fair value measurements of livestock have been categorised as Level 2 fair values basedon observable market sales data.

74



24. Biological assets (continued)The following table shows the valuation techniques used in measuring fair values as well as the valuation variables used:

Type Valuation techniques Valuation variables

Inter-relationship between keyvaluation variables and fair value

measurement

Oil palm Market comparism technique: Thefair values are based on marketprice of palm fruit bunches ofsimilar age, weight and marketvalue.

Estimated plantation size 4,342hectares (2017: 4,342)

Estimated market price per bunch -N500 (2017: N563)

Estimated number of trees - 240,606 .(2017: 343,903)

Estimated yield per tree -4 bunches per year (2017: 4).

Estimated cost-to-sell per bunch - N120 (2017: N120).

The estimated fair value wouldincrease/(decrease) if:

a. the estimated price per fresh fruitbunch were higher/(lower).

b. if the estimated number of treeswere higher/ (lower).

c. If the estimated yield per treewere higher/(lower).

d. If the estimated cost to sell werelower/(higher)

Livestock Market comparism technique: Thefair values are based on marketprice of livestock of similar age,weight and breed.

Estimated number of birds as at 2018; .45,497 (2017: 60,968). Average age ranges between 21 and 90 weeks. Average price per bird is N1,000 (2017:N900).

The estimated fair value wouldincrease/(decrease) if:a. the estimated price per birdswere higher/(lower)

b. the estimated number of birdswere higher/ (lower)

Cassava Market comparism technique: Thefair values are based on marketprice of cassava tubers of similarage, weight and yield.

There was no hectares of cultivatedland in the year (2017: Nil). Also theestimated yield per hectare was Niltonnes (2017: Nil).

Estimated market price N8,372 permetric tonne (2017: N8,372 per metrictonne).

The estimated fair value wouldincrease/(decrease) if:a. the estimated price per tonnewere higher/ (lower)

b. If the estimated yield per hectarewere higher/(lower)

Sugarcane Market comparison technique: Thefair values are based on marketprice of similar cane sugar per tonneadjusted for estimated cost to selland stage of maturity.

Estimated price per metric tonne -N7,710 (2017: N10,710).

Estimated yield per hectre 19.64tonnes (2017: 45.5 tonnes).

The total planted area as at year endwas 2,259 hectares 2017: 1,371hectares).

The estimated fair value wouldincrease/ decrease if:

(a) Price per metric tonne werehigher/ (lower)

(b) Estimated yield per hectre werehigher/ (lower).

Risk management strategy related to agricultural activities

The Group is exposed to the following risks relating to its biological assets:

a Regulatory and environmental risks

The Group is subject to laws and regulations in the states in which it operates. The Group has established environmental policies andprocedures aimed at compliance with local environmental and other laws.

b Supply, demand and yield risks

The Group is exposed to risks arising from fluctuatioins in the prices of birds and seedlings for cultivation as well as yield volumes. Whenpossible, the Group manages these risks by aligning its harvest volume to market supply and demand. Management performs regularindustry trend analyses for projected harvest volumes and pricing. The Group manages yield volume risks by employing latest technologyand sourcing for optimally viable seedlings.

75



24. Biological assets (continued)

c Climate, disease and other risks

The Group's biological assets are exposed to the risks of damage from climatic conditions, diseases, forest fires and other natural forces.The Group has processes in place aimed at monitoring and mitigating those risks, including insurance, regular health inspections for thepoultry, poultry vaccinations, use of environmentally friendly pesticides for the crops and leveraging on industry pest and disease surveys aswell as other agricultural best practices.

25. Long term loan receivables

Group Company


- - 372,692 433,303- - 429,480 556,851- - - 1,966,692- - 1,211,079 10,450,576

924,067 975,578 - -- - 11,140,083 5,013,489- - 1,004,515 2,418,106- - 631,254 2,183,509- - 6,717,572 2,030,527- - 20,571,131 -- - 205,888 -- - 518,044 -- - 2,385,009 -- - 53,947 -

20,405 13,444 - -

Thai Farm International Limited Agri Palm LimitedGolden Penny Rice LimitedROM Oil Mills LimitedPort Harcourt Flour Mills Limited Sunti Golden Sugar Estate Northern Nigerian Flour Mills Plc Golden Agri InputsPremier Feeds Mills Limited Golden Sugar Company Limited Agri Estate LimitedBest Chickens LimitedOlympic Tower LimitedKaboji Farms LimitedReceivable from ABCML Impairment of Long term receivables (Note 8) - - (798,926) -

944,472 989,022 44,441,768 25,053,053

Credit quality on long term receivables

The Company granted intercompany loans with a carring amount of N45.24 billion as at 31 March 2018 to related parties within the Group. The loan is receiveable in tranches within Seven years, with the possibility of early refund (partial; or whole) with 30 days notice, without penalty payments and the loans are unsecured. The Company and the Group are faced with the risk that there might be a shortfall in the repayment of these receivables. Hence, adequate agreements are put in place as well as ensuring that the business activities of these entities are monitored closely on a monthly basis and interest are charged based on the weighted average cost of group borrowing facilities.

Movement in Long term loan receivable

Group Company


Opening balance 989,022 989,022 25,053,053 2,551,592Additions during the year 20,405 - 22,632,996 25,666,126Transfer from trade and other receivables - - 106,107,166 -

1,009,427 989,022 153,793,215 28,217,718- - (33,000,000) -

(64,955) - (75,552,521) (3,164,665)Debt to equity conversion Repayments in the year Impairments in the year (Note 8) - - (798,926) -

Closing balance 944,472 989,022 44,441,768 25,053,053

76



26. Derivative financial instruments

The following information relates to derivative financial instruments arising from outstanding foreign exchange forwards and futurescontracts as at year end:

Group

31 March 2018 31 March 2017Assets Liabilities Assets LiabilitiesN'000 N'000 N'000 N'000

Foreign exchange forward contracts - - 13,712 (3,492,739)Foreign exchange futures contracts - - 741,804 -

- - 755,516 (3,492,739)

Company

31 March 2018 31 March 2017AssetsN'000

LiabilitiesN'000

AssetsN'000

LiabilitiesN'000

Forward foreign exchange contracts - - - (2,969,054)Foreign exchange futures contracts - - 387,814 -

- - 387,814 (2,969,054)

The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the derivative is more than 12months and, as a current asset or liability, if the maturity of derivative is less than 12 months.

The fair value of the futures and forward contracts have been determined using market-related inputs as follows: Exchange rate of N311/USD in 2017 (average rate for all outstanding contract at year end) Discount rate of 17.84% in 2017 determined based on the NIBOR and LIBOR rates.

There are no significant unobservable inputs, thus the valuation is categorised as level 2 in the fair value hierarchy.

Holding all other variables constant, a change by 100 basis point in the NIBOR and LIBOR rates will resulting in the following variations in thederivative assets and liabilities;

Group 31 March 2018 31 March 2017N'000 N'000 N '000 N '000

Base derivative (liability)/asset - - (3,479,026) 741,804

Figures in thousands of Naira Derivativeforward net

liability

Derivativefutures net

asset

Derivativeforward net

liability


asset100 basis point increase in NIBOR Rates - - (3,462,318) 741,024100 basis point increase in USD LIBOR Rates - - (3,491,317) 741,804100 basis point decrease in NIBOR Rates - - (3,495,779) 742,585100 basis point decrease in USD LIBOR Rates - - 3,466,698 741,804

Company 31 March 2018 31 March 2017N'000 N'000 N '000 N '000

Base derivative (liability)/asset - - (2,969,054) 387,814

Figures in thousands of Naira Derivativeforward net

liability


asset

Derivativeforward net

liability


asset100 basis point increase in NIBOR Rates - - (2,957,491) (387,538)100 basis point increase in USD LIBOR Rates - - (2,977,292) 387,814100 basis point decrease in NIBOR Rates - - (2,980,646) 388,091100 basis point decrease in USD LIBOR Rates - - (2,960,791) 387,814

77



27. Inventories

Group Company


Raw and packaging materials 83,919,590 85,805,895 54,122,828 49,020,649Work in progress 1,371,238 1,799,258 1,360,801 1,755,701Finished goods 10,366,253 15,817,193 6,742,467 5,003,375Consumable stores and maintenance spares 17,554,024 15,674,466 10,345,958 9,215,066

113,211,105 119,096,812 72,572,054 64,994,791Write-downs (1,837,696) (1,800,650) (816,816) (1,397,120)

111,373,409 117,296,162 71,755,238 63,597,671

The cost of inventories recognised as an expense during the year in the Group was N419 billion (2017: N403 billion), while in theCompany it was N305 billion (2017: N293 billion).

Inventory write down during the period for the Group was N1.84 b illion (2017: N1.80 b illion), Company N0.82 b illion (2017: N1.40 billion).

28. Trade and other receivables

Group Company


Trade receivables 15,424,028 17,664,260 7,563,916 7,812,156Allowance for doubtful trade receivables (2,215,775) (1,632,172) (1,881,029) (1,462,855)

13,208,253 16,032,088 5,682,887 6,349,301Staff debtors 472,597 612,049 381,629 488,666Amount due from related parties - - 41,703,869 70,694,757Short term loan receivable (a) - 1,912,272 - 1,912,272Sundry debtors 5,402,235 2,846,723 1,778,540 1,378,659

19,083,085 21,403,132 49,546,925 80,823,655

Trade and other receivables

(a) Short- term loan receivables represents a loan of N4.3 billion to a third party at an interest rate of 3 months NIBOR plus 1.5%. The loan isrepayable quarterly and was fully repaid on 30 June, 2017.

The average credit period on sale of goods is 30 days. The Group has recognised an allowance for doubtful debts of 100% against allreceivables over 365 days because historical experience has been that receivables that are past due beyond 365 days are not recoverable.Allowances for doubtful debts are recognised against trade receivables between 30 and 365 days based on estimated irrecoverableamounts determined by reference to past default experience of the counterparty and an analysis of the counterparty's current financialposition and credit analysis.

Before accepting a new customer the Group initially trades with the customer on cash basis to assess the customer’s ability and alsodetermine the customer’s transaction volumes. This enables a reasonable credit limit to be set. Once these are determined the customer isthen allowed to apply for a credit facility from the company through a rigorous process with several levels of approval. Also certaincategories of credit customers provide bank guarantees before being accepted as credit customers of the Group.

Credit sales form a small portion of overall sales. The concentration of credit risk is limited due to this fact and the large and unrelatedcustomer base. The Group has pledged no trade receivables during the year.

78



28. Trade and other receivables (continued)

Trade receivables neither past due nor impaired

Group Company


0 - 30 days 7,925,556 5,433,532 4,276,253 1,662,007

Trade receivables past due but not impaired

The ageing of amounts past due but not impaired is as follows:

31-60 days 2,259,157 6,182,491 952,673 2,734,25561-180 days 589,982 2,649,639 170,499 1,171,823181-365 2,433,558 1,766,426 283,462 781,216

5,282,697 10,598,556 1,406,634 4,687,294

13,208,253 16,032,088 5,682,887 6,349,301

Trade receivables impaired

Past due and impaired 2,215,775 1,632,172 1,881,029 1,462,855

Movement in the allowance for doubtful receivables

Opening balance 1,632,172 1,557,556 1,462,855 1,476,933Amount written off during the year (24,769) (26) - (26)Amounts recovered during the year (83,661) (75,023) (74,275) (87,977)Increase in allowance recognised in profit or loss 692,033 149,665 492,449 73,925

2,215,775 1,632,172 1,881,029 1,462,855

In determining the recoverability of trade receivables, the Group and Company consider any change in the credit quality of the tradereceivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited because of thecustomer base being large and unrelated and large credit risks are covered by bank guarantees. Accordingly, the Directors believe thatthere is no further credit allowance required in excess of the allowance for doubtful debts already made.

The creation and release of provision for impaired receivables have been included in operating expenses in the statement of profit or lossand other comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation ofrecovering additional cash.

The group does not hold any collateral as security other than bank guarantees from certain customers.

79



29. Prepayments and deposits for imports

Group Company


Deposit for imports (Letters of credit) 7,593,817 26,247,241 5,971,131 26,247,241Deposit for FX relating to forward and futures contracts 2,019,364 30,679,360 1,003,014 20,815,339Advance Payment to Suppliers 6,240,212 7,831,005 5,054,944 1,103,414Prepaid rent on operating premises 1,594,115 1,679,252 1,575,533 1,604,444Prepaid expenses 5,527,331 5,093,867 4,749,110 4,069,931

22,974,839 71,530,725 18,353,732 53,840,369

Analysed into:Current 21,364,109 69,851,473 16,778,199 52,235,925Non-current 1,610,730 1,679,252 1,575,533 1,604,444

22,974,839 71,530,725 18,353,732 53,840,369

29.1 Operating lease

Commitment for future rentals on Operating lease

The property to which the operating lease relates is the land at 311 Apapa Road, Apapa, Lagos State which has been leased from RailwayProperty Management Company Limited. The property was inherited from Brossette Nigeria Limited on the acquisition of QuilvestProperties Limited in June 2012 with a residual lease period of 11 years. Quilvest merged with the Company in 2016. The lease term wasextended to a period of 21 years with effect from 1 January 2014. In addition to the lump sum prepaid on the leased asset, the leasecontract stipulates annual rent of N6.25 million over the lease period.

The commitment for the future rentals for Group and Company is analysed below

Group Company


Minimum annual rent - within one year 6,250 6,250 6,250 6,250 - in second to fifth year inclusive 25,000 25,000 25,000 25,000 - later than five years 75,000 81,250 75,000 81,250

106,250 112,500 106,250 112,500

30. Cash and cash equivalents

Cash and cash equivalents consist of:Cash on hand 749,483 594,325 714,358 569,165Bank balances 21,495,889 44,424,178 15,586,068 28,260,326

Cash and cash equivalents per statement of financial position 22,245,372 45,018,503 16,300,426 28,829,491Bank overdraft (Note42) (19,934,045) (49,023,812) (16,466,200) (34,349,436)

Cash and cash equivalents per statement of cash flows 2,311,327 (4,005,309) (165,774) (5,519,945)

Cash and cash equivalents comprise cash and bank balances, net of outstanding bank overdrafts. The carrying amount of these assetsapproximate their fair values. See note 42 for additional information on exposure to credit and currency risk.

80




31. Cash generated from (used in) operations

Profit (loss) for the year 13,615,774 8,836,452 9,244,729 9,829,046Adjustments for:Depreciation of property, plant and equipment 17 17,275,658 15,544,224 8,376,467 8,395,254Amortisation of intangible assets 19 117,682 155,310 107,697 139,298Depreciation of investment property 18 101,684 103,747 1,649 1,567(Gain)/(loss) on disposal of property, plant and equipment 52,715 (77,823) (76,627) (50,617)Impairment - investments in subsidiary - - 3,259,383 -Impairment - long term receivable - - 798,926 -Interest income 12 (816,319) (1,562,304) (9,810,954) (3,230,407)Finance costs 13 32,697,477 32,529,354 24,941,948 22,199,739Reversal of impairment loss on property, plant andequipment

17 12,303 (1,468,381) - (1,581,368)

Write-off of property, plant and equipment 17 395,167 1,915,278 14,621 28,064Changes in biological assets 8 (171,753) (727,323) - -Impairment loss on biological assets 24,729 - - -Net loss on foreign currency exchange transactions 8 (1,283,163) 5,742,096 2,721,493 6,653,268Derivative gain on forwards and futures 26 (440,383) (755,516) (440,383) (387,814)Provision for long service award 35 570,813 77,360 484,977 62,037Provision for retirement benefit 34 959,900 981,344 748,759 813,893Income tax charge/(credit) 14 2,925,993 1,636,395 4,909,254 1,150,533

66,038,277 62,930,213 45,281,939 44,022,493Changes in working capital:Inventories 4,753,503 (58,597,394) (9,326,818) (26,339,988)Trade and other receivables 1,882,858 (3,425,986) (74,828,809) (14,319,416)Prepayments and deposits for imports 48,555,886 (56,201,536) 35,486,637 (39,956,462)Trade and other payables (39,870,479) 44,150,256 (22,239,533) 26,755,451Deferred income 988,757 2,537,381 (442,933) (287,346)Long term receivables 44,550 - - 1,311,954Customer deposits (1,251,558) 1,423,233 (1,186,845) 931,927

81,141,794 (7,183,833) (27,256,362) (7,881,387)

(a) The changes in Trade and other payables and customer deposit have been adjusted for non-cash items arising from merger of GoldenPenny Rice as disclosed in note 21.

(b) The changes in inventory have been adjusted for transfers to property, plant and equipment has disclosed in Note 17.

(c) The changes in investment in subsidiaries and long-term receivables have been adjusted for loan amount converted to equity during theyear as disclosed in note 22 and Note 25 respectively.

32. Share capital and share premium

Authorised5,000,000,000 (2017: 4,000,000,000) ordinary shares of 50kobo each

2,500,000 2,000,000 2,500,000 2,000,000

Issued and fully paid:4,100,395,606 (2017: 2,624,253,188) ordinary shares of 50kobo each

2,050,197 1,312,126 2,050,197 1,312,126

2,050,197 1,312,126 2,050,197 1,312,126

Share premiumShare premium (a) 75,377,444 36,812,540 75,377,444 36,812,540

81



32. Share capital and share premium (continued)

(a) Right issue

At the Board meeting held on 6 December 2017, the Board of Flour Mills of Nigeria Plc resolved to issue 1,476,142,418 ordinary shares of 50kobo each at a price of N27 per share. In January 2018, documents pertaining to the rights issue were approved by Securities and ExchangeCommission (SEC). The rights issue opened on 15 January 2018 and closed on 21 February 2018.

The rights issue was on the basis of nine (9) new ordinary shares for every sixteen (16) existing ordinary shares held. At the conclusion of theoffer, the rights issue was 100% subscribed. The Board of directors passed the resolution to approve the allotment of the shares on 29March 2018.

The Company received the net offer proceeds of N39,302,975,000 after deducting the cost of the issue which amounted to N552,910,286.

33. Borrowings

Group Company


Unsecured borrowingsBank of Industry Loan - CBN intervention fund (a) 29,206,842 36,641,687 3,143,017 4,716,646Commercial Agricultural Credit Scheme- Agricultural loans (b) 8,518,645 11,869,917 - -RSSF-Real Sector Support Facility (c) 7,795,298 2,877,551 - -Other Bank Loans ( e,f) 78,775,786 131,545,710 70,227,530 107,391,128Intra Group Loan (d) - - 12,996,709 5,039,247Power and Airline Intervention fund (g) 1,802,513 - - -

126,099,084 182,934,865 86,367,256 117,147,021

Secured BorrowingsTerm loan 1 (h) 7,200,000 8,000,000 - -Term loan 2 (i) - 1,646,445 - 1,646,445

7,200,000 9,646,445 - 1,646,445

133,299,084 192,581,310 86,367,256 118,793,466

Analysed intoCurrent 103,922,863 141,702,267 71,382,864 111,429,573Non-current 29,376,221 50,879,043 14,984,392 7,363,893

133,299,084 192,581,310 86,367,256 118,793,466

Bank loan movementOpening balance 192,581,310 148,840,175 118,793,466 75,254,930Additions 300,731,571 176,925,100 261,643,908 113,195,929Arising from merger (Note 21) - - 1,966,692 -Repayment (360,013,797) (133,183,965) (296,036,810) (69,657,393)

Closing balance 133,299,084 192,581,310 86,367,256 118,793,466

Details of Borrowings

(a) Flour Mills of Nigeria Plc obtained funds from the CBN/BOI Power and Aviation Intervention Fund and Manufacturing Intervention Fundin different tranches, with tenures of 6 to 10 years. Principal repayment commenced in September 2011. Principal and interest arerepaid quarterly in arrears. The facilities have fixed interest rates between 7% and 10% per annum. The loans were granted to finance orrefinance the construction of the group's power plants and expansion of existing manufacturing plants.

82



33. Borrowings (continued)

(b) N8.5 billion (2017: 11.8 billion) outstanding in Central Bank of Nigeria-Commercial Agricultural Credit Scheme - Agricultural loans were

obtained by some subsidiaries at interest rate ranging from 5% -12% interest rate per annum. The moratorium periods for these loans are between 18 months and 24 months. Loan tenures ranged between 6 and 7 years. Principal and interest are also payable quarterly in arrears.

(c) The Central Bank of Nigeria, as part of the efforts to unlock the potential of the real sector to engender output growth, value addedproductivity and job creation established a N300 billion Real Sector Support Facility (RSSF). Various subsidiaries obtained funds from this facility at 7% - 9%, with quarterly repayment of principal and interest.

Loans obtained under (a), (b) and (c) were obtained at below market interest rate and were hence recorded at their fair value atinception using the appropriate market rate at date of draw down. Due to the nature of the lending and the providers, the benefit ofthe below market rate has been treated as government grants and included in deferred income (Note 36).

(d) This loan relates to the borrowings provided by other subsidiaries in the Flour Mills Group to Flour Mills of Nigeria Plc. These are NigeriaEagle Flour Mill and Apapa Bulk Terminal Limited. The relevant interest rate is the prevailing interest rate on short term loans provided by commercial banks. During the year, this ranged from 13%-23% (2017: 13%-25%).

(e) Other terms loans (unsecured) were obtained by the group from various commercial banks in Nigeria. The facilities were used tofinance the importation of raw materials. The interest bearing facilities were granted at average interest rates of 18% with tenors of less than one year.

(f) The balance of the other bank loans amounting to N78.7 billion and N70.2 billion (for the Group and Company) with tenors ranging from 90 days to 5 years are repayable by instalments at various dates between 2014 and 2022 with interest rate varying between 13% to 15%.

(g) In a bid to catalyze financing of the real sector of the Nigerian economy, the Central Bank of Nigeria has set aside N300billionto fast-track the development of electric power projects and provide leverage for additional private sector investments in the power and aviation sectors. The group obtained the loan to acquire and construct a combined heat and power system with two 15MW gas turbines each connected to its own waste heat system generator. The funds from this facility was obtained at 7%, with quarterly repayment of principal and interest.

(h) Term loan 1: This loan relates to an amount of USD20 million obtained in prior periods by a subsidiary company to finance theconstruction of residential tower. The loan has a tenor of 5 years and is currently under a moratorium period for principal and interestrepayment. The loan is secured by legal mortgage on the residential complex . The loan is priced at 12.5% interest per annum.

(i) Term loan 2: Credit facility amounting to N3 billion was obtained in 2013 to finance the construction of the office complex at GoldenPenny Place, Wharf Road. Apapa. The tenor of the loan is 7 years with 18 months moratorium on principal. Effective interest rate was16.57%. Interest is paid quarterly. The loan is secured by legal mortgage on the office complex. This was fully repaid during the year.

34. Retirement benefit obligation

Defined benefit plan

The employees of the Group are members of a government approved Pension scheme (Pension reform act, 2014) which is managed byseveral private sector service providers. The Group is required to contribute a specified percentage of payroll costs to the retirement benefitscheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specifiedcontributions.

The Group also operates unfunded defined benefit plans for qualifying employees of the Group. Under the plans, the employees areentitled to retirement benefits on attainment of a retirement age ranging from 50 to 60 years.

The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at March 31, 2018 by EYprofessional services firm (FRC resgistration number: FRC/2012/00000000738). The present value of the defined benefit obligation, and therelated current service cost, were measured using the Projected Unit Credit Method.

83




34. Retirement benefit obligation (continued)

Carrying value

The amount included in the statement of financial position arising from the Group’s obligations in respect of its defined benefit retirementbenefit schemes is as follows:

Group Company


Present value of the defined benefit obligation-whollyunfunded

(5,193,788) (3,676,418) (4,293,331) (3,084,875)

Movements for the year

Movements in the present value of defined benefit obligations were as follows:

At beginning of the year 3,676,418 4,077,811 3,084,875 3,454,172Benefits paid during the year (341,159) (229,726) (275,391) (203,909)Net expense recognised in profit or loss and othercomprehensive income

1,858,529 (171,667) 1,483,847 (165,388)

At end of the year 5,193,788 3,676,418 4,293,331 3,084,875

Net expense recognised in profit or loss and other comprehensive income

Current service cost 400,861 462,967 264,018 372,355Interest cost 578,513 518,056 484,741 441,538Curtailment (19,474) 321 - -

Recognised in profit or loss 959,900 981,344 748,759 813,893Actuarial (gains)/losses recognised in other comprehensiveincome

898,629 (1,153,011) 735,088 (979,281)

1,858,529 (171,667) 1,483,847 (165,388)

Actuarial gains and losses due to:Changes in assumptions 844,516 (1,137,491) 693,039 (940,143)Changes in experience 54,113 (15,520) 42,049 (39,138)

898,629 (1,153,011) 735,088 (979,281)

Key financial assumptions used

The principal assumptions for the purpose of the actuarial valuations were as follows:


Interest credit %6.50 %6.50 %6.50 %6.50Discount rates (per annum) %14.00 %16.00 %14.00 %16.00Average rate on inflation (per annum) %12.00 %12.00 %12.00 %12.00Expected increase in salaries (per annum) %12.00 %12.00 %12.00 %12.00Average duration of the plan (years) 11.54 11.20 11.31 11.41

84




Demographic assumption

Mortality in service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Instituteand Faculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives

Withdrawalfrom Service(Age band)

Withdrawalfrom Service

(Rate)25 7 </=30 2.5 %30 7 31 - 39 1.5 %35 9 40 - 44 1.0 %40 14 45 - 50 0.0 %45 26

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant,would have affected the defined benefits obligation by the amount shown below:

Group

N '000Base 5,193,788Discount rate +1%

-1%4,733,8425,725,111

Salary increase +1%-1%

5,467,8094,949,397

12 months deposit rate (Central Bank of Nigeria) +1%-1%

500,401427,277

Mortality experience Age rated up by 1 yearAge rated down by 1 year

5,195,6445,192,112

2017 N '000Base 3,676,418Discount rate +1%

-1%3,356,1104,043,918


3,862,2183,509,421


369,932315,047


3,674,9903,677,414

Company


-1%3,912,1284,733,340


4,507,9634,101,483


500,401427,277


4,294,8604,291,942

85





-1%2,814,6993,395,760


3,236,8542,948,909


369,932315,047


3,083,2753,086,847

35. Long service award

Long term service award is granted at first to employees that have spent a minimum of ten years in service and for every multiple five yearsthe employee remains in service. Payments to employees are both in cash and in kind.

Carrying value

The amount included in the statement of financial position arising from the Group’s obligations in respect of its long service awards is asfollows:

Group Company


Long service awards 1,948,287 1,568,859 1,720,629 1,403,388

The movement in the account during the year was as follows:

At the begining of the year 1,568,859 1,593,819 1,403,388 1,426,602Transfer from merger - (3,146) - 2,797Net expense recognised in profit or loss 570,813 77,360 484,977 62,037Benefits paid (191,385) (99,174) (167,736) (88,048)

At the end of the year 1,948,287 1,568,859 1,720,629 1,403,388

Net expense recognised in profit or lossService cost 194,146 206,092 166,828 183,038Interest cost 236,910 200,636 210,941 180,277Plan Amendment 14,094 - - -Actuarial (gains)/ losses 125,663 (329,368) 107,208 (301,278)

570,813 77,360 484,977 62,037

The actuarial gains and losses on long service awards areanalyzed as follows: Change in economic assumption 226,440 (312,258) 201,393 (281,040)Change in demographic assumption (100,777) (17,110) (94,185) (20,238)

At 31 December 125,663 (329,368) 107,208 (301,278)

The principal assumptions used for the purpose of the actuarial valuations were as follows:

86



35. Long service award (continued)

Group

Valuation at31-Mar-18 31-Mar-17

Discount rate (per annum) 14% 16%Expected rate(s) of salary increases (per annum) 12% 12%Average rate on inflation (per annum) 12% 12%Benefit inflation rate (per annum) 6% 6%Average duration of the plan (years) 7.53 7.18

Company

Valuation at31-Mar-18 31-Mar-17

Discount rate (per annum) 14% 16%Expected rate(s) of salary increases (per annum) 12% 12%Average rate on inflation (per annum) 12% 12%Benefit inflation rate (per annum) 6% 6%Average duration of the plan (years) 7.95 7.44

Demographic assumptions

Mortality in service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Institute andFaculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives Age bandWithdrawalfrom service

25 7 </= 30 2.5%30 7 31 - 39 1.5%35 9 40 - 44 1.0%40 14 45 - 50 0.0%45 26 0.0%


Reasonbly possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, wouldhave affected the long service awards obligation to the amount shown below.

Group


-1%1,827,8352,083,277


1,806,6581,592,297

Benefit escalation rate 1%-1%

360,687325,896

12 Months deposit rate (CBN) - 1,612,786- 1,600,069


1,941,9991,954,698

87



35. Long service award (continued)2017 N '000Base 1,568,859Discount rate +1%

-1%1,480,1141,666,720


1,666,2571,479,500

Inflation increase +1%-1%

1,573,9621,563,188


1,563,2701,573,112

Company


-1%1,614,7941,840,128


1,713,7861,509,116

Benefit escalation rate +1%-1%

122,321107,887

12 Months deposit rate (CBN) - 1,612,786- 1,600,069

Mortality experience Age rated down by 1 yearAge rated up by 1 year

1,714,9051,726,558


-1%1,323,5871,491,325


1,490,6171,323,301

Inflation increase +1%-1%

1,408,0681,398,124

Mortality experience Age rated down by 1 yearAge rated up by 1 year

1,398,3531,407,143

88




36. Deferred income

At 1 April 10,707,371 8,169,990 870,090 1,157,436Additions 3,140,506 3,423,337 - -Release of deferred income from government grant (2,151,749) (885,956) (442,933) (287,346)

At 31 March 11,696,128 10,707,371 427,157 870,090

Non-current liabilities 9,117,232 8,618,213 280,073 648,432Current liabilities 2,578,896 2,089,158 147,084 221,658

11,696,128 10,707,371 427,157 870,090

The deferred income relates to government grants arising from the benefit received from below-market-interest rate government assistedloans (BOI, CACS and RSSF loans) granted to date. The income is recognised in profit or loss over the tenor of the loan. In the current year, amore systematic approach was used for the recognition of deferred income in the profit or loss.

37. Trade and other payables

Group Company


Trade payables 46,586,370 82,735,408 34,580,478 48,765,271Statutory payables 2,815,044 2,681,632 607,339 1,377,889Due to related parties (Note 40) - - 581,345 2,087,414Accruals 6,472,117 6,707,617 3,347,778 2,226,319Sundry creditors 1,120,002 2,442,513 1,009,602 1,344,619

56,993,533 94,567,170 40,126,542 55,801,512

The average credit period on purchases is 28 days. No interest is charged on trade payables. The Group and Company have financial riskmanagement policies in place to ensure that all payables are paid within a reasonable time of the credit time frame.

The Group's major supplier accounts for over 70% of the inventory purchases and the Group does not default in the payment to thesupplier.

38. Dividend payable

Group Company


At 1 April 2,032,098 1,936,869 2,032,098 1,936,869Declared during the year 2,624,253 2,624,253 2,624,253 2,624,253Payment during the year (2,838,587) (2,971,314) (2,838,587) (2,971,314)Unclaimed dividends transferred to reserves (28,415) (22,411) (28,415) (22,411)Unclaimed dividends returned 216,465 464,701 192,403 464,701

At 31 March 2,005,814 2,032,098 1,981,752 2,032,098

89



38. Dividend payable (continued)

As at 31 March 2018, N363.4 million (2017:N291.9 million) of the total dividends payable was held with the Company's Registrar, Atlas Registrars Limited (formerly FMN Registrars Limited). In the year, N216.5 million of the total payments made by FMN to settle declared dividends remained unclaimed and form a part of the dividend balance held by the Company's registrars. Of the total unclaimed dividends, N159.9 million (2017: N464.7 million) represents dividends which remained unclaimed for a period of fifteen (15) months and above which have been returned to the Company by the Registrar and are held in a separate interest yielding bank account. Of the total dividends payables by the group, N24 million (2017: Nil) represents Northen Nigeria Flour Mills Plc dividends declared in 2015 which remained unclaimed for a period of fifteen (15) months as above.

Unclaimed dividends transferred to retained earnings represent dividends which have remained unclaimed for over twelve (12) yearsand are therefore no longer recoverable or actionable by the shareholders in accordance with section 385 of the Companies and AlliedMatters Act, Cap.C20, laws of the Federal Republic of Nigeria, 2004.

Recognised dividends per share during the year amounted to 1.00 Naira per share (2017: 1.00 Naira per share).

39. Customer deposits

Group Company


Advance payments by customers for products 11,201,608 12,453,166 8,873,032 10,058,636

40. Related parties transactions

`

Name of related party Nature of relationship Nature of transactionApapa Bulk Terminal Limited Subsidiary Cargo handling services to the CompanyGolden Shipping Company Nigeria Limited Subsidiary Custom clearing and forwarding services for the

CompanyGolden Sugar Company Limited Subsidiary Purchase of packaging materials from the CompanyNorthern Nigeria Flour Mills Plc Subsidiary Purchase of wheat grain from the CompanyKaboji Farms Limited Subsidiary Purchase of fertilizer from the CompanyPremier Feed Mills Company Limited Subsidiary Purchase of packaging materials from the CompanyNigerian Eagles Flour Mills Limited Subsidiary Purchase of packaging materials from the CompanyCrestview Towers Limited Subsidiary Sold residential apartments to the CompanyOlympic Towers Limited Subsidiary Rental of residential apartments to the CompanyAgri Palm Limited Subsidiary Purchase of fertilizer from the CompanyAgri Estates Limited Subsidiary Purchase of fertilizers from the CompanyAgro Allied Farms Sunti Limited Subsidiary Purchase of fertilizers from the CompanyAgro Allied Syrups Limited Subsidiary Purchase of fertilizers from the CompanyROM Oil Mills Limited Subsidiary Sale of edible oil to the CompanyThai Farm International Limited Subsidiary Purchase of packaging materials from the CompanyBest Chickens Limited Subsidiary Provision of business support servicesSunti Golden Sugar Estates Limited Sub-subsidiary Purchase of fertilizers from the CompanyGolden Agri Inputs Limited Subsidiary Provision of business support servicesEastern Premier Feeds Limited Sub-subsidiary Purchase of raw and packaging for the companyWest Africa Investment Limited Shareholder Guarantee of Subsidiary intercompany loan balances

90




40. Related parties transactions (continued)

Related party balances

Trade and other receivablesGolden Shipping Company Nigeria Limited - - 1,870,940 2,386,218Apapa Bulk Terminal Limited - - 662,851 923Agri Estates Limited - - 938 165,229Golden Sugar Company Limited - - 29,148,331 30,675,526Kaboji Farms Limited - - 78,393 3,938,226Nigerian Eagle Flour Mills Limited - - 231,422 464,876Premier Feed Mills Company Limited - - 290,209 4,537,204Northern Nigeria Flour Mills Plc - - 19,495 39,352Thai Farm International Limited - - 7,653 414,237Olympic Towers Limited - - - 1,398,606Crestview Towers Limited - - 167 -ROM Oil Mills Limited - - 6,808,403 2,460,211Agri Palm Limited - - 13,955 1,788,260Agro Allied Syrups Limited - - 55,243 1,881,881Agro Allied Farms Sunti Limited - - 4,315 501,976Best Chickens Limited - - 755 4,843Sunti Golden Sugar Estate Limited - - 277,485 16,548,404Golden Agri Inputs Limited - - 66,090 929,266Golden Penny Rice Limited - - - 112,574Eastern Premier Feed Mills Company Limited - - 480,898 2,445,631Premier Poultry Company Limited - - - 710Agro Allied Terminals Limited - - - 604Other related parties (ii) - - 1,686,326 -

- - 41,703,869 70,694,757

Total (Note 28) - - 41,703,869 70,694,757

Trade and other payablesROM Oil Mills Limited - - 91,601 113,702Apapa Bulk Terminal Limited - - 3,296 1,685,877Premier Feeds Mills Company Limited - - 17,463 -Crestview Tower Limited - - 8,747 9,907Golden Shipping Company Nigeria Limited - - 42 23,202Golden Sugar Company Limited - - 41,837 -Northern Nigerian Flour Mills Plc - - 337,061 254,726Agro Allied Syrups Limited - - 81,298 -

Total (Note37) - - 581,345 2,087,414

Long term loans receivables (Note 25) - - 44,441,768 25,053,053

i) West Africa Investment Limited, a Shareholder of the Company has guaranteed long term loan receivables totalling N6.6 billion.

ii) Other related parties balance comprise expense reimbursements due from the ultimate parent Company.

91





The following transactions were carried out with related parties during the year:Purchase of goods and servicesGolden Shipping Company Nigeria Limited 173,235 176,172ROM Oil Mills Limited 3,296,298 3,008,733Thai Farm International Limited 75,387 52,091Apapa Bulk Terminal Limited 5,867,442 6,106,264Golden Sugar Company Limited 5,674,270 8,972,548Nigerian Eagle Flour Mills Limited 11,045,713 10,027,714Olympic Towers Limited 97,599 48,768Northern Nigeria Flour MIlls Plc* 1,005,605 404,530

27,235,549 28,796,820

* Included in the value of purchase of goods and services is an amount of N692 million (2017: N390 million) relating to milling fees.

Sale of goods and servicesGolden Agric Input Limited 62,676 925,726Eastern Premier Feed Mills Limited 488,271 1,358,442Premier Feed Mills Company Limited 3,777,565 2,506,751Golden Shipping Company Limited 2,126,831 -Northern Nigeria Flour Mills Plc 97,821 71,403Nigerian Eagle Flour Mills Limited 17,993,644 22,978,537Golden Sugar Company Limited - 2,237,466Kaboji Farms Limited 270,803 239,484Sunti Golden Sugar Estates 299,218 153,159Agro Allied Syrups Limited 27,367 54,584ROM Oil Mills Limited 3,836,242 218,293Agri Palm Limited 44,653 23,340Thai Farm International Limited 61,314 57,060Apapa Bulk Terminal Limited 34,000 144,000

29,120,405 30,968,245

Related party transactions disclosed is inclusive of the relevant Value Added Tax applicable on the transactions.

Interest income from related partiesAgri Estate Limited 32,814 -Agri Palm Limited 256,826 116,729Agro Allied Farms Sunti Limited 116,776 -Agro Allied Syrup Limited 187,120 -Best Chicken Limited 43,638 -Crestview Tower Limited 504 1,844Eastern Premier Feeds Mill Limited 68,639 -Golden Agri Input Limited 882,259 60,211Golden Sugar Company Limited 1,741,801 -Kaboji Farm Limited 640,131 -Northern Nigeria Flour Mills Limited 243,042 247,934Olympic Towers Limited 424,199 197,219Premier Feed Mills Limited 1,788,830 33,919Sunti Golden Sugar Estate Limited 2,470,456 745,124Thai Farm International Limited 234,191 99,176Golden Penny Rice Limited - 318,357ROM Oil Mills Limited - 554,239

9,131,226 2,374,752

92





Interest expense to related partiesApapa Bulk Terminal Limited 1,032,626 135,993Crestview Tower Limited 1,459 266Eastern Premier Feed Mills Limited 7,781 -Nigeria Eagle Flour Mills Limited 889,454 471,298

1,931,320 607,557

Related party transactions disclosed is inclusive of the relevant Value Added Tax applicable on the transactions.

Compensation of key management personnelShort term benefits 378,375 368,375Long term benefits (Post- employment benefit) 38,118 38,118

416,493 406,493

The members of the executive management team and all directors are considered to be the key management personnel of the Group.

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance ofindividuals and market trends.

Directors' emoluments

The remuneration paid to Directors was:Fees 2,600 2,200 2,600 2,200Salaries and other emoluments 87,265 86,468 87,265 86,468

89,865 88,668 89,865 88,668

Fees and other emoluments disclosed above include amount paid to:

Chairman 2,750 2,750 2,750 2,750Other directors 87,115 85,918 87,115 85,918

89,865 88,668 89,865 88,668

The number of Directors excluding the Chairman whose emoluments (excluding certain benefits) were within the following ranges:


190,000 - 200,000 12 12 12 12 19,000,001 - 20,000,000 1 1 1 1

13 13 13 13

Highest paid Director received 32,915 31,718 32,915 31,718

Loan to key management personnel

No loan was given to any to key management personnel during the year (2017: Nil).

93



41. Categories of financial instruments

GroupCarrying amount

CompanyCarrying amount


Non- derivative financial assetsLoans and receivablesCash and cash equivalents (Note 30) 22,245,372 45,018,503 16,300,426 28,829,491Trade and other receivables (Note 28) 19,083,085 21,403,132 49,546,925 80,823,655Loans to related party (Note 25) 944,472 989,022 44,441,768 25,053,053Available for saleAvailable for sale investment (Note 23) 62,900 24,140 62,900 24,140Derivative financial assetsDerivative financial assets (Note 26) - 755,516 - 387,814

42,335,829 68,190,313 110,352,019 135,118,153

Other Financial liabilitiesBank overdraft (Note 30) 19,934,045 49,023,812 16,466,200 34,349,436Borrowings (Note 33) 133,299,084 192,581,310 86,367,256 118,793,466Trade and other payables (excluding statutory deductions)(Note 37)

54,178,489 91,885,538 39,519,203 54,423,623

Derivative financial liabilitiesDerivative Liabilities (Note 26) - 3,492,739 - 2,969,054

207,411,618 336,983,399 142,352,659 210,535,579

94



42. Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and commodityprice risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors.Management identifies and evaluates the financial risks in co-operation with the Group's operating units. The board provides writtenprinciples for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk,credit risk and liquidity risk. The Group's overall risk management program seeks to minimize potential adverse effects on the Company'sfinancial performance.

Financial risk management is an integral part of the way the Group is managed. The Board of Directors establishes the Group’s financialpolicies and the Group Managing Director establishes objectives in line with these policies. The Chief Financial Officer is then responsiblefor setting financial strategies, which are executed by the Centralised Treasury department.

The risk management activities are supervised by the Internal Audit Department and they provide an independent assurance of the riskframework. The Internal Audit assesses compliance with established controls and recommendations for improvement in processes areescalated to relevant management, Audit Committee and Board of Directors.

Capital risk management

The Group and Company manage their capital to ensure that it is able to continue as a going concern in order to provide returns forshareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimise the cost of capital.

In order to maintain the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares by way ofright-issue or sell investments to reduce debt. The Group monitors capital on the basis of the debt to equity ratio. This ratio is calculated asnet debt divided by total equity. Net debt is calculated as total borrowings (including overdrafts, bonds and other bank loans as shown inthe consolidated statement of financial position) less cash and cash equivalents. Total equity is the equity attributable to owners of FlourMills of Nigeria Plc. in the consolidated statement of financial position.

The Group and Company are not subject to any externally imposed capital requirements.

Group operates a centralised procurement department in order to take advantage of the benefits of bulk purchase and also the logistics andtransportation of products are handled by the Transport division and this creates more efficiency in delivery and thereby reducing cost.

The Group’s risk management committee reviews the capital structure of the Group on a semi-annual basis. As part of this review, thecommittee considers the cost of capital and the risks associated with each class of capital.

Ratios

The debt: equity ratio at 2018 and 2017 respectively were as follows:

Group Company


Total borrowingsDebt (Note 33) 133,299,084 192,581,310 86,367,256 118,793,466Less: Cash and cash equivalents (Note 30) 2,311,327 (4,005,309) (165,774) (5,519,945)

Net debt 130,987,757 196,586,619 86,533,030 124,313,411Total equity 145,258,820 98,464,035 151,446,296 108,115,699

Total capital 276,246,577 295,050,654 237,979,326 232,429,110

Debt equity ratio %90 %200 %57 %115

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market pricessuch as interest rate, exchange rates and other prices.

95



42. Financial risk management (continued)

The Group's activities expose it primarily to financial risks of changes in foreign currency exchange rates, interest rates, equity prices andcommodity prices. Market risks exposures are measured using sensitivity analysis. There has been no change to the manner in which theserisks are managed and measured.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in marketinterest rates. The Group maintains a centralised treasury department and Group borrowing is done in order to obtain lower interest rates.The Group negotiates long term credit facilities and obtains subsidised loans from the Government in order to reduce the risk associatedwith high cost of borrowing. The Group also takes advantage of the Central Bank of Nigeria intervention funds and grants from the FederalGovernment at below market rate in order to mitigate this risk.

The Group is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The sensitivity analysis belowhave been determined based on the exposure to interest rates for borrowings at the end of the reporting period. For floating rate liabilities,the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the wholeyear. 1000 basis points (BP) increase or decrease are used when reporting NIBOR risk internally to key management personnel and theserepresent management's assessment of the reasonably possible change in interest rates.

Sensitivity analysis of variable rate instrument

If NIBOR had been 1000 basis points (i.e. 10%) higher/lower and all other variables were held constant, the Group 's profit or loss will beaffected as follows:

GroupProfit/(loss) after tax

CompanyProfit/(loss) after tax

If NIBOR is 1000 BP lower:

2018N'000

2017N'000

2018N'000

2017N'000

Borrowings 7,864,030 3,154,755 4,263,035 1,999,661

If NIBOR is 1000 BP higherBorrowings (7,864,030) (3,154,755) (4,263,035) (1,999,661)

Interest rate profile and tenor of borrowings

Group

CurrencyNominal

interest rate Maturity31-Mar-18

N '00031-Mar-17

N '000Bank overdraft Naira 14%-22% On demand 19,934,045 49,023,812Bank of industry loan- CBN Intervention fund Naira 7%-12% 2018-2025 29,206,842 36,641,687Commercial Agricultural Credit Scheme loans Naira 7%-9% 2018-2022 8,518,645 11,869,916Term loan Naira 22%-24% 2018-2020 85,975,785 141,192,155RSSF-Real Sector Support Facility Naira 7%-9% 2018-2027 7,795,298 2,877,553Power and Airline Intervention fund Naira 7% 2022 1,802,513 -

153,233,128 241,605,123

Company

CurrencyNominal

interest rate Maturity31-Mar-18

N '00031-Mar-17

N '000Bank overdraft Naira 14%-22% On demand 16,466,200 34,349,436Bank of industry loan- CBN Intervention fund Naira 5%-10% 2018-2026 3,143,017 4,716,646Term loans Naira 17%-25% 2019 70,227,530 109,037,572Intra group loan Naira 13% - 23% On demand 12,996,710 5,039,247

102,833,457 153,142,901

96




Foreign exchange risk

The Group is mainly exposed to fluctuation in the exchange rate of the American Dollar (USD).

The Group is currently involved in the backward integration of Agro Allied products in order to reduce the foreign exchange risk associatedwith the high dependence on imported raw materials. The Group has also commenced the export of products to neighbouring AfricanCountries in order to get more inflow of the USD.

Effective closing rate as at 31 March 2018 is N360/ US Dollar (2017: 400/ US Dollar).

The following table details the Group and Company's sensitivity to a 10%, increase and decrease in the value of Naira against USD.Management believes that a 10% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analysisbelow include outstanding balances of USD denominated assets and liabilities. A positive number indicates an increase in profit where Nairastrengthens by 10% against the USD. For a 10% weakening of Naira against the USD there would be an equal and opposite impact on profit,and the balances below would be negative.

Foreign currency exposure at the end of the reporting period

Group Company

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17USD'000 USD'000 USD'000 USD'000

In thousandsCash and bank balance 18,056 48,018 16,378 46,636Trade receivables 2,405 5,180 2,268 1,982Trade payables (101,396) (196,866) (77,969) (106,463)Borrowings (20,000) (52,332) - (32,132)

Net exposure (100,935) (196,000) (59,323) (89,977)


Group Company

31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17Profit/ (loss) after tax Profit/ (loss) after tax

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

Naira strengthens by 10% against the USD 2,913,655 7,832,022 2,135,659 3,599,068

Naira weakens by 10% against the USD (2,913,655) (7,832,022) (2,135,659) (3,599,068)

Price risk

The Group is further exposed to commodity price risk. The risk arises from the Group’s need to buy specific quantities and qualities of rawmaterials to meet its milling requirements. These raw materials include wheat, rice and cassava flour. The risk is partly mitigated by buyingthese raw materials 3 months in advance of use. This is based on management past experience with price movements.

Equity price risk

The group is exposed to equity price risk which arises from available-for-sale equity instruments. The management of the group monitorsthe proportion of equity securities based on market indices. The primary goal of the group's investment strategy is to maximize its return ingeneral. The maximum exposure to equity price risk at the reporting date is N62.9 million (2017: N24.1 million).

97





All the group's listed equity investments are classified as available-for-sale. A 10% increase/ (decrease) in the equity prices at the reportingdate would have increased or (decreased) equity by N6.2 million after tax (2017: an increase/ (decrease) of N2.4 million with no impact onprofit or loss.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Grouphas adopted a policy of only dealing with creditworthy counterparties and credit limits are set, where appropriate, as a means of mitigatingthe risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above.This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly availablefinancial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of itscounterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

Trade and other receivables consist of a large number of customers, spread across diverse industries and geographical areas. It also includesreceivables from related parties. Ongoing credit evaluation is performed on the financial condition of custometrs in respect of tradereceivable and, where appropriate, bank credit guarantee is obtained.

The Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similarcharacteristics. The Group defines counterparties as having similar characteristics if they are related entities.

Group Company


Financial assets and other credit exposuresTrade receivables (Note 28) 13,208,253 16,032,088 5,682,887 6,349,301Related party receivables (Note 28) - - 41,703,869 70,694,757Staff receivables (Note 28) 472,597 612,049 381,629 488,666Bank balances (Note 30) 21,495,889 44,424,178 15,586,068 28,260,326Short term loan receivable (Note 28) - 1,912,272 - 1,912,272Sundry debtors 5,402,235 2,846,723 1,778,540 1,378,659Derivative assets (Note 26) - 755,516 - 387,814

40,578,974 66,582,826 65,132,993 109,471,795

Staff receivables are recovered through payroll deductions. Accordingly, management does not consider any credit risk on staff receivables.

The directors consider the amounts due from related parties as recoverable as the Group has not suffered significant impairment losses inthe past on related party receivables.

The Group/ Company mitigates its credit risk exposure of its bank balances and derivative financial asset by selecting and transacting withreputable banks with good credit ratings and a history of strong financial performance.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled bydelivering cash or another financial asset.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity riskmanagement framework for the management of the Group’s short-, medium- and long-term funding and liquidity managementrequirements. The Group and Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowingfacilities, by continuously monitoring forecast and actual cashflows, and by matching the maturity profiles of financial assets and liabilities.

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Maturity analysis of financial liabilities

The following tables detail the Group and Company’s remaining contractual maturity for its non-derivative financial liabilities with agreedrepayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest dateon which the Group can be required to pay. The table includes both interest and principal cash flows.

Group

Contractual cash flows

March 31, 2018Carryingamount Total

Less than 1month 1-3 month

Between 3months to 1

yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 19,934,045 19,934,045 - - 19,934,045 - -Borrowings 133,299,084 198,635,267 3,881,768 26,474,798 89,713,056 60,314,692 18,250,951Trade payables 46,586,370 46,586,370 - - 46,586,370 - -

199,819,499 245,926,821 3,881,768 26,474,798 156,233,471 60,314,692 18,250,951



Less than 1month 1-3 months

Between 3months and 1

yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 49,023,812 49,414,938 - - 49,414,938 - -Borrowings 192,581,310 220,434,522 37,708,293 45,768,336 59,306,902 51,092,171 26,558,820Trade payables 82,735,408 88,274,937 - - 88,274,937 - -Derivativefinancialliabilities

3,492,739 3,492,789 2,470,912 239,288 782,589 - -

327,833,269 361,617,186 40,179,205 46,007,624 197,779,366 51,092,171 26,558,820

CompanyContractual cash flows




yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 16,466,200 16,466,200 - - 16,466,200 - -Borrowings 86,367,256 119,182,942 1,104,710 19,775,308 75,712,003 21,873,110 717,809Trade payables 34,580,478 34,580,478 - - 34,580,478 - -

137,413,934 150,232,040 1,104,710 19,775,308 126,758,681 21,873,110 717,809

99








yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 34,349,436 34,740,562 - - 34,740,562 - -Borrowings 118,793,466 120,731,132 37,026,863 44,335,262 33,750,522 4,623,728 994,757Trade payables 48,765,271 48,765,271 48,765,271 - - - -Derivative financialliabilities

2,969,054 2,969,054 2,295,846 208,165 465,043 - -

204,877,227 207,206,019 88,087,980 44,543,427 68,956,127 4,623,728 994,757

100



43. Fair value information of financial instruments

Accounting classification and fair values

The following table shows the carrying amount and fair values of financial assets and liabilites, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial libailities notmeasured at fair value if the carring amount is a reasonable approximation of fair value.

GroupCarrying amount Fair value

31 March 2018In thousands of Naira Note Fair value-

hedginginstruments

Loans andreceivables

Available- for-sale

Other financialliabilites

Total Level 1 Level 2 Level 3 Total

Financial assets measured at fair valueEquity securities 23 - - 54,944 - 54,944 54,944 - - 54,944

- - 54,944 - 54,944 54,944 - - 54,944

25 - 944,472 - - 944,472 - 689,949 - 689,94928 - 19,083,085 - - 19,083,085 - - - -30 - 22,245,372 - - 22,245,372 - - - -

Financial assets not measured at fair value Long term receivableTrade and other receivables*Cash and cash equivalents*Equity securities 23 - - 7,956 - 7,956 - - 7,956 7,956

- 42,272,929 7,956 - 42,280,885 - 689,949 7,956 697,905

30 - - - (19,934,045) (19,934,045) - (19,934,045) - (19,934,045)- - - - - - - - -

33 - - - (7,200,000) (7,200,000) - 4,495,468 - 4,495,46833 - - - (126,099,084) (126,099,084) - (111,526,387) - (111,526,387)

Financial liabilities not measured at fair valueBank overdraftsForward and futures exchange contracts used for hedging Secured bank loansUnsecured bank loansTrade and other payables (excluding non-income and other related taxes)*

- - - (54,178,489) (54,178,489) - - - -

- - - (207,411,618) (207,411,618) - (126,964,964) - (126,964,964)

101

* These are short term instruments payables or receivables on demand and theri fair value approximates the carrying value.



43. Fair value information of financial instruments (continued)

Carrying amount Fair value31 March 2017In thousands of Naira Note Fair value-

hedginginstruments


Available- for-sale



Financial assets measured at fair valueForward and futures exchange contracts used for hedging 26 755,516 - - - 755,516 - 755,516 - 755,516Equity securities 23 - - 16,184 - 16,184 16,184 - - 16,184

755,516 - 16,184 - 771,700 16,184 755,516 - 771,700

28 - 21,403,132 - - 21,403,132 - - - -25 - 989,022 - - 989,022 - 296,059 - 296,05930 - 45,018,503 - - 45,018,503 - - - -

Financial assets not measured at fair value Trade and other receivables*Long term receivableCash and cash equivalents*Equity securities 23 - - 7,956 - 7,956 - - 7,956 7,956

- 67,410,657 7,956 - 67,418,613 - 296,059 7,956 304,015

26 (3,492,739) - - - (3,492,739) - (3,492,739) - (3,492,739)(3,492,739) - - - (3,492,739) - (3,492,739) - (3,492,739)

30 - - - (49,023,812) (49,023,812) - (49,023,812) - (49,023,812)33 - - - (9,646,445) (9,646,445) - (9,587,149) - (9,587,149)33 - - - (182,934,865) (182,934,865) - (169,168,323) - (169,168,323)

Financial liabilities not measured at fair valueBank overdraftsSecured bank loansUnsecured bank loansTrade and other payables (excluding non-income and other related taxes)*

- - - (91,885,538) (91,885,538) - - - -

- - - (333,490,660) (333,490,660) - (227,779,284) - (227,779,284)

102

Financial liabilities measured at fair valueForward and futures exchange contracts used for hedging





Company Carrying amount Fair value31 March 2018In thousands of Naira Note Fair value-

hedginginstruments


Available- for-sale



Financial assets measured at fair valueEquity securities 23 - - 54,944 - 54,944 54,944 - - 54,944

- - 54,944 - 54,944 54,944 - - 54,944

25 - 44,441,768 - - 44,441,768 - 20,634,785 - 20,634,78528 - 49,546,925 - - 49,546,925 - - - -30 - 16,300,426 - - 16,300,426 - - - -

Financial assets not measured at fair value Long term receivablesTrade and other receivables*Cash and cash equivalents*Equity securities 23 - - 7,956 - 7,956 - - 7,956 7,956

- 110,289,119 7,956 - 110,297,075 - 20,634,785 7,956 20,642,741

30 - - - (16,466,200) (16,466,200) - (16,466,200) - (16,466,200)33 - - - - - - - - -33 - - - (86,367,256) (86,367,256) - (62,595,572) - (62,595,572)

Financial liabilities not measured at fair valueBank overdraftsSecured bank loansUnsecured bank loansTrade and other payables (excluding statutory deductions)* - - - (39,519,203) (39,519,203) - - - -

- - - (142,352,659) (142,352,659) - (79,061,772) - (79,061,772)

103





Carrying amount Fair value31 March 2017In thousands of Naira Note Fair value-

hedginginstruments


Available- for-sale



Financial assets measured at fair valueForward and futures exchange contracts used for hedging 26 387,814 - - - 387,814 - 387,314 - 387,314Equity securities 23 - - 16,184 - 16,184 16,184 - - 16,184

387,814 - 16,184 - 403,998 16,184 387,314 - 403,498

28 - 80,823,655 - - 80,823,655 - - - -25 - 25,053,053 - - 25,053,053 - 6,114,567 - 6,114,56730 - 28,829,491 - - 28,829,491 - - - -

Financial assets not measured at fair value Trade and other receivables*Long term receivableCash and cash equivalents*Equity securities 23 - - 7,956 - 7,956 - - 7,956 7,956

- 134,706,199 7,956 - 134,714,155 - 6,114,567 7,956 6,122,523

Financial liabilities measured at fair valueForward and futures exchange contracts used for hedging

(2,969,054) - - - (2,969,054) - (3,492,739) - (3,492,739)

(2,969,054) - - - (2,969,054) - (3,492,739) - (3,492,739)

30 - - - (34,349,436) (34,349,436) - (34,349,436) - (34,349,436)33 - - - (1,646,445) (1,646,445) - (1,587,149) - (1,587,149)33 - - - (117,147,021) (117,147,021) - (113,417,686) - (113,417,686)

Financial liabilities not measured at fair valueBank overdraftsSecured bank loansUnsecured bank loansTrade and other payables (excluding non-income and other related taxes) *

- - - (54,423,623) (54,423,623) - - - -

- - - (207,566,525) (207,566,525) - (149,354,271) - (149,354,271)

104





Measurement of fair values

Financial instruments in level 1

The fair value of financial instruments traded in active markets (quoted equity) is based on quoted market prices at the reporting date. A market is regardedas active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and thoseprices represent actual and regularly occurring market transactions on an arm’s length basis.

The quoted market price used for financial assets held by the Company is the bid price at the reporting date. These instruments are included in level 1. Therewere no transfers between levels during the year.


The fair value of financial instruments that are not traded in an active market (loans and borrowings) is determined by using discounted cash flow valuationtechniques. This valuation technique maximize the use of observable market data by using the market related interest rate for discounting the contractualcash flows. There are no significant unobservable inputs. There were no transfers between levels during the year. The basis of measurement has remainedthe same between current and prior years.

The fair value of future and forward exchange contracts is determined using quoted forward exchange rates at the reporting date and present valuecalculations based on high credit quality yield curves in the respective currencies.


The available for sale information in unquoted equity has been carried at cost as the fair value cannot be reliably measured.

Financial instruments not measured at fair value

The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate.

44. Non-audit fees paid to the Auditors

In the current year the total amount of non-audit fees paid to our auditors amounted to N95.1 million (2017: N60.5 million). This is inrespect of Tax and IT project advisory services rendered during the year.

45. Substantial interest in shares

Excelsior Shipping Company Limited has 2,242,727,580 (2017: 1,369,231,166) ordinary shares of 50k each, representing 54.70 (2017:52.18%) of the issued and paid-up share capital of the Company.

46. Commitments

Guarantees and other financial commitments

Financial commitments

The Company has committed itself to providing continued financial support to all subsidiaries in the Group with net liability position. TheCompany also had commitments arising from unconfirmed letters of credit amounting to N33.3 billion (2017: N33.3 billion).

The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the Company's state of affairshave been taken into consideration in the preparation of the financial statements under review.

Gas agreement

The long term gas purchase agreement signed by the Company for the supply of natural gas to Apapa Factory in April 2005 for twenty yearscame into effect during the last quarter of 2006. This commits the Company to taking up a specified minimum quantity of gas over theduration of the purchase agreement.

105



47. Contingencies

Contingent Liabilities

The Group and the Company are involved in litigation suits in the ordinary course of business. In addition, the Group and Companyundergoes periodic tax regulatory reviews in the normal course of business. The total amount claimed in the cases and contingencies fromthese tax regulatory reviews against the Group and Company are estimated at N15.99 billion and N5.91 billion respectively (March 2017:Group - N10.97 billion and Company - N4.67 billion). The actions are being contested and the Directors are of the opinion that none of theaforementioned cases or tax regulatory review are likely to have a material adverse effect on the Group and Company. The Directors arealso not aware of any other pending or threatened claims and litigations.

48. Statutory penalty

During the year the Company was required to pay a penalty of N1.617 million by the Nigerian Stock Exchange (NSE) for unauthorisedinformation disclosure. This amount has been paid and necessary steps for compliance have been put in place .

49. Events after the reporting period

There were no events after the reporting date that could have had a material effect on the financial statements of the Group that have notbeen provided for or disclosed in these financial statements.

106

Other National Disclosures


Other National Disclosures

Consolidated and Separate Statements of Value Added31-Mar-18 31-Mar-18 31-Mar-17 31-Mar-17

N '000 % N '000 %

Group

VALUE ADDED

Revenue: 542,670,409 524,464,448Investment income 816,319 1,562,304Gain on disposal of investment in associate - -Net operating gains and losses 5,943,332 (1,488,216)

Bought - in materials and services(46,199,226)

- Local (45,056,864) - Foreign (405,511,780)

Total Value Added 87,437,802 100 73,969,895 100

VALUE DISTRIBUTED

To Pay Employees and directorsSalaries, wages, medical and personnel costs 20,713,051 15,810,357

20,713,051 24 15,810,357 24

To Pay Providers of CapitalFinance costs 32,697,477 32,529,354

32,697,477 37 32,529,354 42

To Pay GovernmentIncome tax 2,758,633 1,734,571

2,758,633 3 1,734,571 2

To be retained in the business for expansion and future wealth creation:

Depreciation and amortisation 17,615,495 15,157,335Deferred tax 37,372 (98,176)Non-controlling interest 940,453 874,968Retained profit 12,675,321 7,961,484

31,268,641 36 23,895,611 31

Total Value Distributed 87,437,802 100 73,969,895 100

Value added represents the additional wealth which the group has been able to create by its own and employees efforts.

108

(415,793,033)


Consolidated and Separate Statements of Value Added31-Mar-18 31-Mar-18 31-Mar-17 31-Mar-17

N '000 % N '000 %

Company

VALUE ADDED

Turnover: 389,397,836 375,225,284Investment income 9,810,954 3,230,407Gain on disposal of investment in associate - -Net operating gains and losses (4,989,445) (3,362,121)

Bought - in materials and services - Local

(33,154,005)(32,192,090)

- Foreign (298,386,046) (289,728,806)

Total Value Added 62,679,294 100 53,172,674 100

VALUE DISTRIBUTED

To Pay EmployeesSalaries, wages, medical and other personnel costs 15,033,526 11,504,161

15,033,526 24 11,504,161 25

To Pay Providers of CapitalFinance costs 24,941,948 22,199,739

24,941,948 40 22,199,739 40

To Pay GovernmentIncome tax 772,961 112,739

772,961 1 112,739 -

To be retained in the business for expansion and future wealth creation:

Depreciation and amortisation 8,577,508 8,489,195Deferred tax 4,108,622 1,037,794Retained profit 9,244,729 9,829,046

21,930,859 35 19,356,035 35

Total Value Distributed 62,679,294 100 53,172,674 100

Value added represents the additional wealth which the company has been able to create by its own and employees efforts.

109


Five Year Financial Summary31-Mar-18 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14

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

Group

Consolidated and Seperate Statement of Financial Position

AssetsNon-current assets 234,102,289 227,719,991 220,662,484 219,656,664 195,717,504Current assets 174,245,628 254,883,266 124,685,842 123,604,166 100,843,743

Total assets 408,347,917 482,603,257 345,348,326 343,260,830 296,561,247

LiabilitiesNon-current liabilities 57,943,133 72,562,013 66,543,351 76,636,231 84,342,937Current liabilities 199,788,076 307,496,900 183,039,201 179,214,204 128,658,878

Total liabilities 257,731,209 380,058,913 249,582,552 255,850,435 213,001,815

Total equity 150,616,708 102,544,344 95,765,774 87,410,395 83,559,432

Total equity and liabilities 408,347,917 482,603,257 345,348,326 343,260,830 296,561,247

Profit and loss account

Revenue 542,670,409 524,464,448 342,586,459 308,756,526 362,156,081Profit before taxation 16,541,767 10,472,847 11,489,278 7,672,321 7,686,943Taxation (2,925,993) (1,636,395) 2,931,006 738,292 (3,317,643)

Profit from continuing operations 13,615,774 8,836,452 14,420,284 8,410,613 4,369,300Discontinued operations - - - 11,280 -

Profit for the year 13,615,774 8,836,452 14,420,284 8,421,893 4,369,300Non-controlling interest (940,453) (874,968) 200,037 542,203 -

Retained income for the year 12,675,321 7,961,484 14,620,321 8,964,096 4,369,300

Per share data

Earnings per share (Kobo) 483* 303 557 3 2Net assets per share (Naira) 37 39 3,649 33 35

Earnings per share is based on profit for the year and the number of issued and fully paid ordinary shares at the end of each financial year.

Net assets per share is based on net assets and the number of issued and fully paid ordinary shares at the end of each financial year.

110

*The rights issue was only finalised on 29 March 2018, consequently, the additional shares issued have an immaterial impact on the

weighted average number of shares during the year.


Five Year Financial Summary31-Mar-18 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14

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

Company

Statement of Financial Position

AssetsNon-current assets 168,223,794 118,058,601 95,683,538 90,024,782 113,108,927Current assets 154,380,788 225,874,557 137,613,069 141,505,096 107,036,628

Total assets 322,604,582 343,933,158 233,296,607 231,529,878 220,145,555

LiabilitiesNon-current liabilities 31,083,760 18,404,858 18,543,783 18,762,765 39,308,867Current liabilities 140,074,526 217,412,600 114,508,685 116,115,447 81,893,577

Total liabilities 171,158,286 235,817,458 133,052,468 134,878,212 121,202,444

Total equity 151,446,296 108,115,700 100,244,139 96,651,666 98,943,111

Total equity and liabilities 322,604,582 343,933,158 233,296,607 231,529,878 220,145,555

Profit and loss account*

Revenue 389,397,836 375,225,284 247,876,504 229,777,869 251,479,752Profit before taxation 14,153,983 10,979,579 6,248,497 867,207 12,457,541Taxation (4,909,254) (1,150,533) 4,177,289 1,508,560 (2,257,664)

Profit from continuing operations 9,244,729 9,829,046 10,425,786 910,984 10,199,877

Profit for the year 9,244,729 9,829,046 10,425,786 910,984 10,199,877

Retained income for the year 9,244,729 9,829,046 10,425,786 910,984 10,199,877

Per share data

Earnings per share (Kobo) 352* 375 397 35 428Net assets per share (Naira) 37 41 38 37 41

Earnings per share is based on profit for the year and the number of issued and fully paid ordinary shares at the end of each financial year.

Net assets per share is based on the net assets total and the number of issued and fully paid ordinary shares at the end of each financialyear.

* The rights issue was only finalised on 29 March 2018, consequently, the additional shares issued have an immaterial impact on theweighted average number of shares during the year.

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