growing a colourful future - africa prudential · subsidiary of uac of nigeria plc in june 2013...

2 0 1 7 A N N U A L R E P O R T A N D F I N A N C I A L S T A T E M E N T S

Growing a colourful future

2017 Annual Report and Financial Statements 03

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EN

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PAGE

Company profile

General information

Results at glance

Notice of annual general meeting

Chairman's statement

Directors' report

Corporate Social Responsibilities

Directors’ Profile

Statement of directors' responsibilities

Report of the audit committee

Independent auditor's report

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Other information:

Statement of value added

Five years financial summary

5

6

7

8

10

12

24

25

29

30

32

36

37

38

39

40

81

82


Our Mission

To add value, colour and comfort to our

environment

Our Shared Values

Customer FocusRespect for the IndividualIntegrityTeam SpiritInnovationOpenness & Communication

Our Vision

To be a dominant player in our chosen

line of business

Company ProfilePortland Paints & Products Nigeria Plc.(PPPN PLC) is a leading paints Manufacturer in Nigeria. It became a subsidiary of UAC of Nigeria Plc in June 2013 after UAC

acquired 51% equity stake in the Company. PPPN PLC is amongst the most diversified paints manufacturing companies with decades of experience in producing Decorative, Automobile, Industrial and Marine/Protective Coatings for the Building / Construction and Oil and Gas industries in Nigeria. The flagship brand is SANDTEX; which has been distinguished for quality for decades and has been formulated to provide protection and aesthetics for various residential, commercial, corporate and industrial buildings.

CertificationPortland Paints and Products Nigeria Plc is certified with the NIS ISO 9001:2008 Quality Management System and conducts its business operations by promoting the safety of all employees, customers and other stakeholders.

Our Brands:Sandtex PaintsThe Sandtex brand offers the widest range of decorative paints in Emulsion, Satin, Gloss and textured finishes.

The brand name is established amongst professional and individual users and it is renowned for its strength, superior coverage and lasting beauty on surfaces. Sandtex is the first indigenous paint brand to deploy the retail tinting technology in 20 litres packaging through Point of sale (POS) offering variety of colours to customers.

Sandtex Anti-Microbial PaintIt is an anti-microbial paint that reduces the level of bacterial contamination on wall surfaces and decreases cross contamination between surfaces resulting in a more

hygienic environment. It is suitable for use in Restaurants, Laboratories, Hospitals, Kitchen, Care Homes and Schools. It is available in emulsion, gloss and satin finishes.

Crown TradeThis is one of our premium decorative paint products from Crown Paints, the No.1 exterior paint manufacturer in the UK. It offers over 15,000 colours and

it's available in Silk, Satin, Suede, Metallic Matt and Emulsion which can be tinted immediately at Sandtex Experience Centres. Also from the stable of Crown paints, is Sandtex Trade Xtreme Xposure, a superior durable, smooth masonry paints which provide protection against harsh weather conditions for the longer term.

Industrial CoatingsOur wide range of industrial coatings is suitable for protecting steel structures, industrial plant and machinery, etc. The industrial coatings include the Red Oxide Primer, Bright Aluminum paints, Floor paints, Primers, Road marking paints (reflective and non-reflective), Cellulose paints etc.

Hempel Marine/Protective CoatingsP o r t l a n d P a i n t s i s a n accredited representative of Hempel, a renowned Marine and Protective coatings company from Denmark

which provides coating solutions for the Shipping, Oil and Gas, Pipelines and related Industries for the protection of infrastructure exposed to corrosive and aggressive environments.


GENERAL INFORMATIONFOR THE YEAR ENDED 31st DECEMBER 2017

BOARD OF DIRECTORS Mr. Larry Ettah - Chairman

Mr. Adedamola Olusunmade - MD/CEO (Appointed 1/1/2018)

Mr. Mukhtar Yakasai - Non-Executive DirectorMr. Abdul Bello - Non-Executive DirectorEngr. Dipo Ashafa - Non-Executive DirectorMrs. Adeline Ogunfidodo - Non-Executive Director

Bayo Osibo - Non-Executive Director (Retired 4/10/2017)

REGISTERED OFFICE Sandtex House105A, Adeniyi Jones Avenue,Ikeja. Lagos State.

FACTORYKm 36, Abeokuta – Lagos Expressway

Ewekoro, Ogun State.

REGISTERED NUMBER RC76075

FRCN NUMBER FRC/2012/0000000000221

COMPANY SECRETARY Mrs. Bolanle Maryanne Oyekan UAC House1-5 Odunlami streetMarina,Lagos

AUDITORS PricewaterhouseCoopersLandmark Towers, Plot 5B Water Corporation Road,

Victoria Island, Lagos.

REGISTRAR Africa Prudential Plc220B, Ikorodu RoadPalmgrove, Lagos.

BANKERS Zenith Bank PlcUnited Bank for Africa PlcGuaranty Trust BankEcobank Nigeria PlcFirst City Monument Bank Plc


RESULTS AT A GLANCEFOR THE YEAR ENDED 31st DECEMBER 2017

Dec-17 Dec-16

N'000 N'000

Revenue 2,316,289 1,844,050

Profit before taxation 123,868 7,502

(Tax expense)/Tax Credit (65,698) 1,094

Profit net of tax attributale to equity holders of the Company 58,170 8,596

Dec-17 Dec-16

Total equity and liabilities 2,035,902 1,754,322

Share holders' fund 1,393,015 700,214

Earnings per share (kobo) 8 2

Net assets per share (Naira) 1.76 0.18

Market price per share as at December 2.20 1.72

Market capitalization as at December 1,745,514 688,000

Bolanle Oyekan (Mrs)

Company Secretary

FRC/2017/NBA/00000016315

The Directors hereby present the audited financial statements for the year ended 31 December 2017.

The Company is operating in a challenging economic environment and continues to take necessary steps to mitigate the impact.The financial statements have been prepared in accordance with International Financial Reporting Standards as required by the Financial Reporting Council of Nigeria.

Dated this 16th day of March, 2018By Order of the Board


Restated ChangesInc/(Dec)

%

26

(1,551)

(6,105)

(577)

16

99

(289)

903

28

154

NOTICE OF ANNUAL GENERAL MEETINGFOR THE YEAR ENDED 31st DECEMBER 2017


NOTICE IS HEREBY GIVEN THAT the next Annual General Meeting of the Members of Portland Paints and Products Nigeria Plc will be held at Golden Tulip Festac, Amuwo-Odofin, Lagos State on Friday, 20th July 2018 at 10.00 am in order to transact the following businesses:

Ordinary Business1) To lay before the Members the Report of the Directors, the audited Financial Statements of the Company, together with the Reports of the Auditors and the Audit Committee for the year ended 31st December 2017 thereon.2) To Elect and Re-elect Directors.3) To Authorize the Directors to fix the remuneration of the Auditors.4) To Elect Members of the Audit Committee.

Special Business5) To fix the remuneration of the Directors.6) To approve the general mandate authorizing the Company to enter into recurrent transactions with related parties or Companies.

ProxyA member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of him and such a proxy need not be a member of the Company. A proxy form is enclosed and if it is to be valid for the purposes of the meeting, it must be completed and deposited at the Registered Office of the Company not less than 48 hours before the time for holding the meeting.

Dated this 16th day of March, 2018 By Order of the Board

Bolanle Maryanne OyekanCompany Secretary FRC/2017/NBA/00000016315

Registered OfficeSandtex House,105A, Adeniyi Jones Avenue, Ikeja. Lagos State. Nigeria.

NOTES OF ANNUAL GENERAL MEETINGFOR THE YEAR ENDED 31st DECEMBER 2017


NOTESClosure of Register and Transfer BooksThe Register of Members and Transfer Books will be closed from Monday 9th of July to Friday 13thof July 2018 for the purpose of updating the Register.

Audit CommitteeThe Audit Committee consists of two (2) shareholders and two (2) Directors. Any member may nominate a shareholder as a member of the Committee by giving notice in writing of such nomination to the Company Secretary at least twenty-one days before the Annual general meeting. Nominators should please submit a brief profile of their nominees to the Company Secretary along with the nomination forms.

Rights of Securities Holders to Ask QuestionsSecurities holders have a right to ask questions not only at the meeting but also in writing prior to the meeting and such questions must be submitted to the Company on or before 18th of July, 2018.

Unclaimed Share Certificates and Dividend WarrantsShareholders are hereby informed that a sizeable quantity of share certificates and dividend warrants have been returned to the Registrars as unclaimed. Some dividend warrants have neither been presented to the Bank for payment nor to the Registrar for revalidation. Affected members are by the notice please advised to contact the Company Secretary or the Registrars (Africa Prudential Plc) or call at the Registrar's Office at 220B, Ikorodu Road, Palmgrove, Lagos during normal business hours or call them on 01-4606460.

Annual Report & Unclaimed Dividend ListShareholders who wish to receive electronic copies of the Annual Report & Accounts and Unclaimed Dividends list should please send their names and e-mail addresses to [email protected] and [email protected].

E-Dividend/BonusPursuant to the directive of the Securities and Exchange Commission notice is hereby given to all shareholders to open bank accounts, stock-broking accounts and CSCS accounts for the purpose of e-dividend/bonus. A form is attached to this Annual report for completion by shareholders to furnish the particulars of these accounts to the Registrar (Africa Prudential Plc) as soon as possible.

Record of Director's Attendance at Board MeetingsIn accordance with Section 258(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the record of Directors' attendance at Board Meetings during the year will be available for inspection at this Annual General Meeting.

Directors Retiring by RotationIn accordance with the Articles of Association of the Company, Mr. Abdul Bello and Mr. Mukhtar Yakasai are the Directors retiring by rotation at the meeting and being eligible offer themselves for re-election. Also, Mr. Adedamola Olusunmade who was appointed to the Board since the last Annual General Meeting would retire at the meeting and will be presented for election.

Dated this 16th day of March, 2018 By Order of the Board

Bolanle Maryanne Oyekan (Mrs)Company Secretary

mailto:[email protected]%20

mailto:[email protected]

CHAIRMAN'S STATEMENT

Distinguished Shareholders, Ladies and Gentlemen,It gives me great pleasure to welcome you to the 2018 Annual General Meeting of our company, Portland Paints and Products Nigeria Plc and to present to you the Annual Report of the Company for the financial year ended 31st December 2017.

Before reporting on the Company's performance, I would like to highlight some of the key issues in the business environment that impacted our operations during the year.

Economic and Business Environment in 2017The performance of the Nigerian economy improved during the year as the economy exited recession in Q2 2017, after five consecutive quarters of contraction.

According to the National Bureau of Statistics ('NBS'), Nigeria's GDP figure which was -1.58% in 2016 recorded real annual growth rate of 0.83% in 2017. The oil sector grew at 4.79%, higher than the previous year's growth of -14.45%. The non-oil sector recorded an annual growth of 0.47% compared to -0.22% in 2016. In real terms, the non-oil sector contributed 92.83 per cent to the nation's GDP.

Inflation dropped from 18.75% in January 2017 to 15.37% by December 2017. However, the country's foreign reserves which was at US$25.84bn at the beginning of 2017 closed the year at US$38.77bn. This was a major improvement from trend in the past 5 years.

Oil prices rebounded to an average of $52 per barrel (Brent crude) in 2017 and are projected to average $54 in 2018, up from $43 per barrel in 2016. Oil production also increased from 1.45 million barrels per day in the first quarter of 2017 to end the year at about 1.8 million barrels per day following de-escalation of hostilities in the Delta region and is expected to remain at the same level in 2018 and 2019, in tandem with the Organization of the Petroleum Exporting Countries production restrictions. The recovery in oil prices and production will help drive growth and provide fiscal space as the government pursues important structural reforms to diversify the economy.

Fiscal policy remained expansionary in 2017 as in 2016. Although total spending as a percentage of GDP declined from 13% in 2014 to 10.3% in 2017, revenues declined more sharply, from 11.4% to 5.6%. The budget deficit was estimated at 4.8% in 2017, up from 4.7% in 2016, and is projected to improve to 4.3% in 2018 and 4.1% in 2019, as revenue performance improves. At 14%, unemployment remained high in 2017, the same as in 2016, and is expected to decline only slightly in 2018, to 13.5%, as recovery eases production constraints in manufacturing and agriculture. Mr. Larry Ettah,

Chairman


believes that the company is still on recovery path and therefore not recommending the payment of dividend for the year 2017.

Outlook for 2018Our focus in 2018 will be to consolidate and build on the gains achieved in 2017, especially in the execution of our route to market strategy as well as new business development initiatives. We will also expand our footprint in the marine and protective coatings space in the Nigerian oil and gas sector. Although the operating environment may remain challenging in 2018, we are determined to ensure we optimize the opportunities therefrom to achieve our set business objectives.

Board ChangesSince the last Annual General Meeting, there have been some changes on the Board. Mr Bayo Osibo resigned from the Board with effect from the 4th of October 2017 and Mr. Adedamola Olusunmade was appointed as the new Managing Director/CEO of the company, whereas Mr. Mukhtar Yakasai has taken another appointment within the UACN group as the Deputy Managing Director of Grand Cereals Limited, Jos. Please join me in thanking Mr. Osibo whilst he served on the Board and Mr. Mukhtar Yakasai for his invaluable contribution whilst the Managing Director/CEO. Mr. Mukhtar Yakasai will remain as a non-Executive Director of the Company.

In accordance with the law and Articles of Association of the Company, Mr. Mukhtar Yakasai and Mr. Abdul Bello are the Directors retiring by rotation at this meeting.

Appreciation On behalf of the Board, I thank our esteemed customers for their loyalty even in these challenging times. I wish to express my appreciation to the staff and management of our company for the improved performance. My appreciation also goes to my colleagues on the board for their support and cooperation. Finally I wish to thank you, our loyal shareholders, for keeping faith with our company over the years.

Thank you for your attention.

Mr. Larry Ephraim EttahChairman FRC/2013/IODN/00000002692

Monetary policy continued to be contractionary in 2017 and is expected to remain so in 2018; the policy rate has been kept at 14% since July 2016 while the cash reserve ratio stood at 22.5% to support the Naira and control inflation. Activities at both the interbank and parallel market witnessed contrasting outlook as the Naira depreciated marginally by 0.38% on the interbank window while it appreciated by 8.52% at the parallel market bringing the exchange rate to the US dollar to N360 and N364 respectively.

The socio-political environment remained fragile due to security issues occasioned by events such as the recurring clashes between herdsmen and farming communities across the country, rising kidnapping and other insecurity cases. However, the Government had worked assiduously in the improvement of the security situation in the North-East against the Boko-Haram insurgents. The sustained fight against corruption by the government is also laudable.

Financial PerformanceThe year 2017 started with a challenging operating environment. In the 1st half of the year, the economy witnessed scarcity and high cost of forex which culminated into shortage and high cost of raw materials input, leading to inability of businesses to meet their customers' commitments. Despite these challenges, your company made some bold moves in expanding its customers' base, engaged and improved the relationship with industry professionals, as well as worked to get specified on new projects. We successfully accomplished the company's rights Issue with 65.6% subscription. This capital injection enabled the business to liquidate its major interest bearing loans as well as improve its working capital.

I am happy to report that our business repositioning drive has led to improved performance of your company in the year 2017. Your company recorded a revenue of N2.32b, which represents 26% growth over the N1.971b recorded in the previous year. The company's Profit after Tax was N58.17m, which is a major improvement on the N8.6m recorded in 2016. We are optimistic of maintaining this trend in 2018, which will further consolidate our company's resilient position.

DividendBased on this level of performance the Board still


DIRECTORS’ REPORTFOR THE YEAR ENDED 31st DECEMBER, 2017

The directors have the pleasure in presenting their report and the audited financial statements for the year ended 31 December 2017.

Legal StatusPortland Paints & Products Nigeria Limited was incorporated as a private limited liability Company on 3rd September, 1985.

The Company by a special resolution of 24th April, 2008 changed its name to Portland Paints & Products Nigeria Plc, consequent upon it becoming a Public limited Liability Company.

Principal ActivitiesThe Company is principally engaged in the business of manufacturing and sale of paints, marketing of Hempel marine and protective coatings for the oil and gas sector.

During the year, the Company continued to implement its strategies for enhancing the quality of its service delivery through continuous improvement of its operations, increased investment in technology infrastructure and enforcement of procedures and manpower development.

There was no change in the principal activities of the Company during the year.

Statement of Director’s Responsibilities

Operating ResultsThe following is a summary of the Company's results:

Dec-17Restated Dec

2016N'000 N'000

2,316,289 1,844,050 123,868 7,502

(65,698) 1,094 58,170 8,596

8 2 8.37 2

Dividend

The directors do not recommend the payment of dividend for the financial year ended 31 December, 2017 (2016: Nil)

Diluted Earnings per share

RevenueProfit before taxation(Tax expense)/Tax CreditTotal Comprehensive profit net of tax

Basic Earnings per share


Expenditure on property, plant and equipment

Information relating to changes in property, plant and equipment is given in Note 9 to the financial statements. In the opinion of the Directors, the market value of the Company’s properties is not less than the value shown in the Financial Statements.

DIRECTORS' REPORTFOR THE YEAR ENDED 31st DECEMBER, 2017

Corporate Governance ReportPortland Paints & Products Nigeria Plc is a company of integrity and high ethical standards. Our reputation for honesty, openness and dependable business conduct, built over the years, is as much an asset as our people, brands and factories. We conduct our business in full compliance with the laws and regulations of Nigeria and our Code of Business Conduct.

The Board of DirectorsUnder the articles of association of the company, the business of the company shall be controlled and managed by the Directors, who may exercise all such powers of the Company as are not by statute or the Articles to be exercised by the Company in General Meeting.

Composition of the Board of DirectorsThe Board of PPPN Plc was made of five (5) non-executive directors, one (1) of which is an independent non-executive director, and one (1) executive director during the year. All directors have access to the services of the Company Secretary. With the approval of the Chairman of the Board, they may take professional advice from third party professionals in areas where such advice will improve the quality of their contributions to Board deliberations.

Separation of Positions of Chairman and Managing DirectorThe Position of Chairman is distinct from that of the Managing Director/CEO. The Chairman is Mr. Larry Ettah while the Managing Director/CEO was Mr. Mukhtar Yakasai during the year under review. The other Executive Directors that served during the year are as listed in the on the General Information page at the beginning of the Annual Report.

The Roles and Responsibilities of the Board. The following matters are reserved for the Board of Directors of the Company:a. Formulation of policies, strategy and overseeing the management and conduct of the business;b. Formulation and management of risk management framework;c. Succession planning and appointment, training, remuneration and replacement of Board Members and Senior Management;d. Overseeing the effectiveness and adequacy of internal control systems;e. Overseeing the maintenance of the Company's communication and information dissemination policy;f. Performance appraisal and compensation of Board Members and senior executives;g. Ensuring effective communication with shareholders, other stakeholders, and the investing public;h. Ensuring the integrity of financial controls and reports;i. Ensuring that ethical standards are maintained;j. Ensuring compliance with the Company's Memorandum and Articles of Association, applicable laws, regulations, standards and Code of Corporate Governance by the Company;k. Definition of the scope of delegated Authority to Board committees and management and their accountabilities;l. Definition of the scope of corporate social responsibility through the approval of relevant policies;m. Approval and enforcement of a code of ethics and business practices for the Company and directors.

Board Appointment ProcessThe process of appointing Directors involves a declaration of a vacancy at a Board meeting. The Curriculum vitae of suitable candidates having regard to the required skills, competence and experience at any particular time are




referred to the Risk and Governance Committee for necessary background checks, informal interviews/interaction and a recommendation for Board’s consideration and approval. Changes on the Board are notified to timeously relevant regulatory authorities and the investing public. A Director appointed by the Board is presented to the next Annual General Meeting of the members of the Company for election in line with statutory requirement.

Directors' Induction and TrainingEvery newly appointed Director receives a comprehensive letter of appointment detailing the terms of reference of the Board and its Committees, the Board Structure, his/her entitlements and demand on his time as a result of his appointment and disclosure requirements. The letter of appointment is accompanied by significant Company documents and policies such as Memorandum and Articles of Association of the Company, latest Annual Report & Accounts and SEC Code of Corporate Governance for Public Companies in Nigeria. The Code of Business Conduct, previous year’s Board minutes to help the new Director to gain an understanding of the Company, its history, culture,core values, governance framework, business principles, people, operations, brands, projects, processes and plans.

A new Director undergoes an induction/ orientation process in order for him/her to get acquainted with the business operations, issues and brands of the company. As part of the induction process, he/she is introduced to the Board of Directors and leadership team of the Company. Periodic training programmes are organized for Board members from time to time.

Operational visits are also arranged for the new Directors to get acquainted with business operations.

Board MeetingsThe Board met 6 times during the 2017 financial year. The following table shows the list of directors and their attendance at the Board Meetings

P: PresentAWA: Absent with ApologyR: Resigned

Attendance at board meetings during the year were as follows:

Name 21/3/2017 20/4/2017 31/5/2017 27/7/2017 27/10/2017 4/12/2017

Mr. Larry Ettah

Chairman

Mr. Mukhtar Yakasai

Managing Director/CEO

Mr Bayo Osibo

Non-Executive Director

Mr. Abdul Bello


Engr. Dipo Ashafa


Mrs. Adeline Ogunfidodo

Non-Executive DirectorP

P

P P P AWA P

P

P P P P P

R

P P P P P

P

P P P P R

P

P P P P P

P P P P P



Directors Election/ Re-electionMr. Mukhtar Yakasai and Mr. Larry Ettah are directors retiring by rotation and seeking re-election at the meeting. The biographical details of the directors for re-election are on pages 27 and 28 of this annual report and financial statements. The Board is satisfied with their performance in the previous year. Also, Mr. Adedamola Olusunmade who was appointed to the Board as the Managing Director/CEO is being appointed since the last annual general meeting retire at the meetings and will be presented for election.

Board EvaluationThe Board evaluation was undertaken in 2017 to review the performance of the Board, Board Committees and individual Directors. The exercise was adjudged satisfactory and necessary feedbacks were given to individualDirectors arising from the exercise.

DirectorsThe Directors who served during the year are:1. Larry Ettah Chairman2. Mr Mukhtar Yakasai Managing Director/CEO3. Mr Bayo Osibo Non-Executive Director (resigned 4/10/2017)4. Mr Abdul Bello Non-Executive Director5. Engr. Dipo Ashafa Independent Non-Executive Director6. Mrs Adeline Ogunfidodo Non- Executive Director

In accordance with Section 256 of the Companies and Allied matters Act Cap C20, Laws of the Federation of Nigeria, 2004 and in line with Article 95 of the Company’s Articles of Association, Mr Larry Ettah and Mr. Mukhtar Yakasai are retiring by Rotation and being eligible, offer themselves for re-election.

Also, Mr Adedamola Olusunmade who was appointed since the last Annual General Meeting would retire and being eligible offers himself for election.

Register of Directors’ AttendanceIn accordance with the provisions of Section 258(2) of the Companies and Allied Matters Act 2004, the record of Directors Attendance at Board Meetings held in 2017 will be available at the Annual General Meeting for inspection.

Directors’ Shareholding The direct and indirect interests of directors in the issues share capital of the Company as recorded in the Register of Directors’ Shareholdings and as notified by directors for the purposes of Sections 275 and 276 of the Companies andAllied Matters Act 2004, and the Listing requirements of the Nigerian Stock Exchange are as follows:

DirectorNumber of Shares

Dec-17Number of Shares

Dec-16

Engr. Dipo Ashafa 776,347 238,877

Mrs Adeline Ogunfidodo 50,000 -



Major ShareholdingAccording to the Register of Members, the following shareholder of the company held more than 5% of the issued Share Capital of the Company as at 31 December 2017.

UAC OF NIGERIA PLC

Shareholder

1

Number of Shares

677,077,225

(%)

85.34%

Range Analysis

Range Analysis as at 31-12-2017

Range No. of

Holders Holders

% Holders Cum.

Units Units

%

Units Cum.

Grand Total

1

1,001

5,001

50,001

100,001

500,001

1,000,001

250,000,001

1,000

5,000

50,000

100,000

500,000

1,000,000

250,000,000

1,000,000,000

-

-

-

-

-

-

-

-

491

186

360

35

44

19

24

1

1,160

42.33%

16.03%

31.03%

3.02%

3.79%

1.64%

2.07%

0.09%

100%

491

677

1,037

1.072

1,116

1,135

1,159

1,160

174,368

542,783

10,048,394

2,742,630

10,019,831

14,103,851

78,706,546

677,077,225

793,415,628

0.02%

0.07%

1.27%

0.35%

1.26%

1.78%

9.92%

85.34%

100%

174,368

717,151

10,765,545

13,508,175

23,528,006

37,631,857

116,338,403

793,415,628

Share Capital Historya) The initial authorized, issued and paid up share capital as at 3 September 1985 was 4,000,000 shares of 50 kobo

each, that is, N2,ooo,ooo.b) On 26 August 2004 the authorized, issued and paid up share capital were increased from 4,000,000 to

40,000,000 shares of 50 kobo each that is, increased to N20, 000,000.c) On 24 April 2008 the authorized share capital was increased from 40,000,000 to 400,000,000 shares of 50 kobo

each that is, increased to N200, 000,000.d) On 30 June 2008 the Company distributed Bonus shares of 360,000,000 shares of 50 kobo each, that is, Ni8o,

000,000.e) On 9 July 2010 the Company's 400,000,000 shares of 50 kobo each were listed on the floor of the Nigerian Stock

Exchange.f) On October 20 2015 the authorised share capital increased to 1,000,000,000 ordinary shares of 5ok each.


Dec-17 Dec-16N'000 N'000

g)396,708

200,000

Issued and Fully Paid 793 million Ordinary shares of 50 kobo each:


ContractsNone of the Directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C2O Laws of Federation of Nigeria, 2004, of any interest in contracts made with the Company during the year under review.

TaxationAdequate provision has been made for all forms of taxes relevant to the activities carried out by the Company during the year.

Composition of Board CommitteesThe Board functions as a full Board and through the Risk and Governance Committee. The Committee makes recommendations for approval by the full board.

Risk & Governance Committee

RisksThe following are the committee’s terms of reference:1. Assist the Board in its oversight of risk management and monitoring the company’s performance with regards to risk management;2. Recommend for Board approval the risk policy of the company and review its implementation at all levels to achieve the company’s objective;3. Monitor that risk management policies are integrated into the Company’s culture;4. Review quarterly risk management reports and make recommendation to the board on appropriate actions;5. Periodically evaluate the company’s risk profile, action plans to manage high risks and progress on the implementation of these plans;6. Ensure that the company’s risk exposures are within the approved risk control limits;7. Undertake at least annually, a thorough risk assessment covering all aspects of the company’s business with a view to using the result of the risk assessment to update the risk management framework of the Company;8. Understand the principal risk to achieving the company’s strategy;9. Ensure that the business profile and plans are consistent with the company’s risk appetite;10. Make recommendation on the company’s risks management framework including responsibilities, authorities and control;11. Review the process for identifying and analyzing business level risks;



12. Review the structure for and implementation of risk measurement and reporting standard as well as methodologies;13. Review key control processes and practices of the company, including limit structures;14. Ensure that the company’s risk management practices and conditions are appropriate for the business environment;15. Assess new risk return opportunities.

Governance16. Oversee the company’s financial reporting, its policies and processes;17. Review the company’s operational performance;18. Make recommendations to the Board on capital expenditure, specific projects and their financing within the overall approved plan;19. Appraise the investment climate and recommend to the board where, when and what investment(s) to make with Company’s surplus funds;20. Make recommendations on management of company’s cash and debt exposure/borrowings;21. Monitor compliance with applicable laws and regulations by the Company;22. Review updates on implementation level of internal and external auditors recommendations by management from board representatives on the audit committee;23. Periodically review the manning level and adequacy of the resources with which internal audit and risk management functions discharge their duties;24. Monitor, benchmark and apply as appropriate, best practices with regard to governance and risk;25. Review accounting policies and reporting standards and ensure their adequacy for the company’s purposes;26. Make recommendations on the composition of the board;27. Recommend the appointment, remuneration and promotion of executive directors and senior management;28. Make recommendations to the Board on the adoption of a code of conduct (including the policy on trading in company shares) for directors and senior executives and to review same from time to time;29. Periodically review and make recommendations to the board on the compensation, performance and talent management, succession planning and retention for the company;30. Make recommendations on the whistle blowing process for the company.

The Committee met four (4) times during the year. The following shows the dates of the meetings and attendance of the members of the committee at such meetings:


P: Present

Name 16/3/2017 19/7/2017 17/10/2017 4/12/2017


Chairman

Mr. Shamsideen Balogun

Member

Comrade Suleimon Adenrele

Member

Mr. Bayo Osibo

Member

Engr.Dipo Ashafa

Member

R R

P P P P

NYA NYA NYA NYA

P P

P P

P P P P

P P


Attendance at Risk and Governance committee meetings during the year were as follows:

P: PresentAWA: Absent with ApologyR: Resigned

Name 21/3/2017 20/4/2017 27/7/2017 20/10/2017

Mr. Bayo Osibo

Chairman

Mr. Abdul Bello

Member

Engr. Dipo Ashafa

Member


Member

P P P P

P P AWA P

P P P R

P P P P

The Statutory Audit CommitteeThe Statutory Audit Committee consisted of four members made up of two representatives of shareholders elected at the previous Annual General Meeting for a tenure of one year and two representatives of the Board of Directors nominated by the Board. The Chairman of the Committee is Mrs Adeline Ogunfidodo, a Chartered Accountant. The Company Secretary is the Secretary to the Committee. The meetings of the Committee were attended by the Risk & Compliance Manager, representatives of KPMG Professional Services, our Internal Audit Service Provider, PwC, our Independent Auditors and UAC Head of Risk & Compliance. The operation and duties of the Committee have been aligned with the provisions of the Code of Corporate Governance for public companies in Nigeria.

The following table shows members' attendance at the four meetings the Committee held in 2017:

AWA: Absent with Apology

R: ResignedNYA: Not yet Appointed


Terms of Reference of the Audit CommitteeThe Committee is authorized by the Companies and Allied Matters Act, 2004 ('CAMA') to:a) Ascertain whether the accounting and reporting policies of the Company are in accordance with legal requirements and agreed ethical practices;b) Review the scope and planning of external audit;c) Review the findings as reported through the management controls report and management responses thereon;d) Keep under review the effectiveness of the Company's system of accounting and internal control;e) Make recommendation to the Board with regard to the appointment, removal and remuneration of the External Auditors of the Company;f) Authorize the Internal Auditor to carry out investigations into any activities of the Company, which may be of interest or concern to the Committee.g) Receive quarterly/periodic reports from the Internal Audit Unit.

In addition, 2011 SEC Code of Corporate Governance also assigns specific responsibilities to the Committee.

a. To oversee internal audit and internal control; and to document and review the roles, responsibilities, authority and scope of operations of the internal audit function; approve the annual internal audit plan;b. Assist in the oversight of the integrity of the company’s financial statements, compliance with legal and other regulatory requirements, assessment of qualifications and independence of external auditor and performance of the company’s internal audit function as well as that of external auditors;c. Establish an internal audit function and ensure that there are other means of obtaining sufficient assurance of regular review or appraisal of the system of internal controls of the company;d. Ensure the development of a comprehensive internal control framework for the company; obtain assurance and report annually in the financial report, on the operating effectiveness of the Company’s internal control framework;e. Oversee management’s process for the identification of significant fraud risks across the company and ensure that adequate prevention, detection and reporting mechanisms are in place;f. At least on an annual basis, obtain and review a report by the internal auditor, describing the strength and quality of internal controls including any issues or recommendations for improvement, raised by the most recent control review of the company;g. Discuss the annual audited financial statements and half yearly unaudited statements with management and external auditors;h. Discuss policies and strategies with respect to risk assessment and external auditors;i. Meet separately and periodically with management, internal auditors and external auditors;j. Review and ensure the adequate whistle-blowing procedures are in place.

A summary of issues reported are highlighted to the Chairman;k. Review with the external Auditor, any audit scope limitations or problems encountered and management’s responses to same;



l. Review the independence of the external auditors and ensure that where non-audit services are provided by the external auditors, there is no conflict of interest;m. Preserve auditor independence, by setting clear hiring policies for employees or former employees of independent auditors;n. Consider any related party transactions that may arise within the company or group;o. Invoke its authority to investigate any matter within its terms of reference and the company must make available resources, including internal audit and access to external advice where necessary, to carry out this function; and report to the members of the company at annual general meeting and to the board of directors, when necessary.

Trading in Security PolicyIn compliance with Clause 14 of the Nigerian Stock Exchange amended Rules, we have a Security Trading Policy in place to guide our Board, Employees, External Advisers and Related Parties on trading in securities of the Company within the closed period. Under the policy, the closed period is when no Director, Employee, External Adviser and related parties with insider information can trade in the company's securities. The closed period is 15 days prior to the date of meeting or from the date of circulation of agenda papers pertaining to a Board meeting on any of the following matters up to 24 hours after the price sensitive information is submitted to the exchange:

a) Declaration of financial results (quarterly, half-yearly and annual);b) Declaration of dividends (interim and final);c) Issue of securities by way of public offer or rights or bonus etc;d) Any major expansion plans or winning of bid or execution of new projects/disposal of the whole or a substantial part of the undertaking;e) Any changes in policies, plans or operations of the Company that are likely to materially affect the prices of the securities of the company;f ) Disruption of operations due to natural calamity, Litigation/dispute with a material impact;h) Any information which if disclosed in the opinion of the person discharging the same is likely to materially affect the price of the securities of the Company.

We hereby confirm that no Director traded in the securities of the Company within the closed period.

Shareholders Complaints Management Policy:We have put in place a Complaints Management policy to handle and resolve complaints from our shareholders and investors. The policy was defined and endorsed by the company's senior management, who is also responsible for its implementation and for monitoring compliance. The policy has been posted on the Company's website and shall be made available to shareholders of the company at the Annual General Meeting.


Human Resources Report1. Employee Engagement and Learning Initiatives The Company is committed to keeping employees informed as far as possible regarding its performance and

progress by seeking their views wherever practicable on matters, which particularly affect them as employees.

Our employees are our most valuable asset and are constantly exposed to learning initiatives aimed at developing their competencies.

In order to promote learning among employees, a continuous learning framework is in place to provide employees the opportunity to acquire learning, on and off the job. The framework focuses on specific areas of development in accordance with the mission, vision, strategy, and objectives of the Company.

2. Employee Relations Our employees are fully involved in the strategy formulation and execution. This we do to achieve business plan

ownership at all levels. Regular meetings are held at different levels of the organization for employees to interact with each other and exchange ideas on critical business issues. Some of these meetings include annual business retreat, periodic village and weekly leadership team meetings.

3. Employment of Physically Challenged Persons The company does not discriminate against any employee on the basis of physical disability. Applications for employment by the physically challenged are always fully considered bearing in mind the

respective aptitudes and abilities of the applicants concerned.

The company places a huge priority on the wellbeing of its employees and in the event of members of staff becoming disabled, every effort is made to ensure their continued employment with the company. It is the policy of the company that training, career development and promotion of disabled persons should, as far as possible, be identical with those of other employees.

4. Health, Safety and Welfare of Employees The company has a Safety, Health and Environment policy in force within the company's premises in line with

laws and regulations of Nigeria, and employees are aware of existing regulations. Protective clothing and firefighting equipment are provided in the production facility, warehouses and offices. The company maintains a Health Insurance Scheme for members of staff and their families. The company also operates a statutorily defined contributory pension scheme for all employees. The company operates a work-site clinic at its production facility which serves as a first response center for any work related hazard. The company provides education required to enable employees comply with relevant statutory provisions and regulations on health, safety and welfare matters through fire drill, training and knowledge sharing sessions anchored by HSE professionals and employees.





5. Corporate Social Responsibility Also, the Company was not left behind in the area of Corporate Social responsibility. Paints were donated for

the repainting of Ewekoro Police Station. In addition, large quantity of exercise books were donated to the children and youths of Ewekoro Community to empower them educationally.

6. Post Balance Sheet Events There are no material post balance sheet events to date, which could have had a material effect on the financial

statements of the Company as at 31 December, 2017 and the profit for the year ended on that date which have not been adequately provided for or recognized.

AuditorsMessrs. PricewaterhouseCoopers, having indicated their willingness to continue in office pursuant to Section 357 (2) of the Companies and Allied Matter Act, CAP C20 Laws of the Federation of Nigeria, 2004.

BY ORDER OF THE BOARD

BOLANLE MARYANNE OYEKANCOMPANY SECRETARY

Lagos, Nigeria Date: 16 March, 2018

2017 CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

PPPNPLC team members and Ewekoro Community members during presentation of exercise book to Ewekoro Community

Mr Adewale Adegbite; Operation's Manager, PPPNPLC , Research and Development Chemist; Mr. Kolawole Akinrinola with the DPO and officials of Ewekoro Police station during the appreciation visit to the factory on the donation of paints

To foster good relationship between the host community in Ewekoro, FRSC the security outfit and PPPNPLNC, the underlisted initiatives were executed during the year


1. D onation of Notebooks ( Exercise books and Higher Education) to Ewekoro Community through Ewekoro Youth Association

2. In support of “ember month safety awareness campaign” for road users, PPPNPLC donated branded Tshirts (Uniforms) to FRSC (Itori unit Command) Ogun State

3. Donation of paints for re-decoration of Ewekoro Police Station, Ogun State

4. Cash Donation as support for Winifred Awosika Foundation for children

5. Donation of paints to Artisan School of painting and Decoration (Technical school of Painting in Ikorodu)

Mr. Larry Ettah holds a bachelor's degree in Industrial Chemistry and an MBA, both from the University of Benin, which he attained in 1985 and 1988 respectively. He is a graduate of the renowned Executive Programme of Ross School of Business, University of Michigan and has attended Executive Education Programmes at Graduate School of Business, Stanford University, Harvard Business School, USA, and IMB Lausanne, Switzerland. He is currently the President of Nigeria Employers Consultative Association on (“NECA”).

He started his career in 1988 as a Management Trainee in UACN Plc where he served in various capacities; he was the Divisional Meal and Meal Components Director and the Divisional Snacks and Meals Director at UAC Foods Limited, the ac ng Divisional Managing Director and the pioneer Divisional Managing Director of then Mr. Bigg's Division, Executive Director of UACN Plc amongst others, before being appointed to the position of Chief Executive Officer and Group Managing Director of UACN Plc in January 2007 which he retired from effective 31st December 2017.

Mr. Ettah holds non-executive roles in other prominent companies; he is the Chairman of Chemical and Allied Products Plc, one of the leading companies in the chemical and paints industry in Nigeria; the Chairman of the Board of Livestock Feeds Plc, the pioneer company in the manufacturing of animal feeds in Nigeria; and the Chairman of UACN Property Development Company Plc, a real estate company that provides solutions in the area of property development and management in Nigeria.

Mr. Ettah was appointed to the Board of Portland Paints in June 2013 as a Non-Executive Director and appointed Chairman in August 2013.

Mr. Larry Ettah Chairman

DIRECTORS’ PROFILES


Adedamola OlusunmadeManaging Director / Chief Executive Officer


Mr. Adedamola Olusunmade, a graduate of Chemical Engineering from the University of Benin started his career as an Assistant Production Manager with CAP Plc in 1999. He worked in different capacities as Plant Manager, Site/Utilities Engineer, Marketing Manager, Corporate Responsibility and Strategy Manager and also had oversight functions for Quality Assurance, Research & Development, and Business Process & Efficiency. He assumed the position of Technical Operations Manager in 2009 before proceeding to UACN Plc Head Office as Special Duties Manager on the integration project of the UACN/Tiger Brands JV.

Damola had a brief stint in Paints and Coatings Manufacturers Nigeria Plc where he was the Escravos Project Lead. He was appointed as Country Manager in 2012 for Beckers Industrial Coatings Nigeria Ltd a subsidiary of Beckers Group owned by Lindéngruppen, Sweden. At Beckers, Damola was fully responsible for setting up the manufacturing facility for coil and industrial coatings and management of the business. He also had oversight function for the West African sub region. Damola is an alumni of Lagos Business School and The Business School , Netherlands and has attended several courses both locally and internationally. A great sports enthusiast, Damola enjoys supporting his favourite football team Manchester United. He was appointed as the Managing Director of Portland Paints & Products Nigeria Plc on 1st January 2018.


Mukhtar Yakasai is a graduate of Agriculture with Agricultural Economics option from Ahmadu Bello University, Zaria. He also holds an MBA from the same university. He is an alumnus of Ashridge Business School, United Kingdom. He is an Associate member of the Nigerian Institute of Management (AMNIM) and holds an honorary fellowship of the Institute of Administrative Management of Nigeria (FIAMN).

He joined Chemical and Allied Products Plc (CAP Plc), a subsidiary of UACN Plc in July 1985. He held various roles as National Sales Coordinator in 2001, Business Manager Flame Guard and CAP Decorators in 2002, General Manager Business Development and General Manager, Paints in 2003.

In February 2005, he was appointed the Managing Director of Spring Waters Nigeria Limited (SWAN) Jos and in July 2009 he was also Managing Director of Warm Spring Waters Nigeria Limited (Gossy) Ikogosi-Ekiti. Mukhtar was appointed Special Projects Manager, UACN Plc in November 2011, with responsibility for Strategy and other strategic initiatives of the Group.

Mr. Yakasai was appointed to the Board of Portland Paints and Products Nigeria Plc as a non-Executive Director in June 2013 and subsequently its Managing Director on 23rd October 2015. He was appointed to the Board of Grand Cereals Limited as its Deputy Managing Director on 1st January 2018 and remains a non-Executive Director of Portland Paints and Products Nigeria Plc.

Engineer Dipo Ashafa completed his bachelor's degree in Civil Engineering at the University of Lagos in 1975, and obtained a Masters of Engineering degree in 1981 at the California State Polytechnic University, Pomona, USA. He is a fellow of the Nigerian Society of Engineers.

He started his career at Sswed Associates in 1976. He has also served in various governmental roles; he served in the Federal Ministry of Works and Housing from 1988 to 1994 and became a Commissioner and Member of the Lagos State Government Executive Council in 1994 where he was accountable for agricultural, rural development & environment. He was appointed Sole Administrator, Lagos State Development and Property Corporation in 1996.

Engineer Ashafa is the Chairman of Solid Homes Limited, a company involved in the construction and sales of houses.

He was appointed to the Board of Portland Paints as non-Executive Director in 2004.



Mr Mukhtar YakasaiNon Executive Director

Engr. Dipo Ashafa Independent

Non Executive Director

Mr. Bello was appointed to the Board of Portland Paints and Products Nigeria Plc as a non-executive Director on 28th June 2013. He is a fellow of the Institute of Chartered Accountants of Nigeria. He has attended leadership programmes at the Wharton School of the University of Pennsylvania, Harvard Business School and IMD Global Board Centre, Switzerland. He is an alumnus of Oxford University's Advanced Management and Leadership Programme. Mr. Bello has worked variously as Chief Accountant, Inlaks Plc; Chief Accountant and Financial Controller, Grand Cereals Limited; Senior Group Accountant, UAC of Nigeria PLC; Finance Director and Company Secretary and later Managing Director of CAP Plc; Managing Director of UPDC Plc and Executive Director/Chief Financial Officer, UAC of Nigeria Plc. He was appointed the Group Managing Director/CEO of UAC of Nigeria PLC in January 2018.

Adeline Ogunfidodo obtained a BSC (Hons.) Agric. Economics Degree from the University of Calabar in 1987 and is a Fellow of both the Institute of Chartered Accountants of Nigeria (ICAN) and the Chartered Institute of Taxation of Nigeria (CITN).

She joined UACN Plc in February 1996 as Group Auditor and has held several management positions since then which include; Financial Accountant UPDC PLC, Divisional Commercial Director MDS, Finance Director GM Nigeria Ltd, Group Treasurer UACN PLC. She was the Finance Director of CAP Plc from March, 2011 till October 2015 when she was transferred to UAC Foods Limited. Adeline became the Finance Director of UAC Foods Limited on 16th December, 2015. She is also the Finance Director of Spring Waters Nigeria Limited (a subsidiary of uac Foods Limited) and joined the Board of Portland Paints & Products Nigeria Plc as non-executive director on 24th March, 2016. Prior to joining UACN Plc, Adeline trained with Coopers & Lybrand (Chartered Accountants) and worked briefly with a Mortgage Bank as Head of Internal Audit.

Adeline has attended various local and overseas courses which include the Ashridge Leadership Process, Strategy & Finance in Ashridge Business School, Berkhamsted, United Kingdom and Negotiation skills & tools course in Lagos Business School.



Adeline Koyenum Ogunfidodo (Mrs)

Non Executive Director

Mr Abdul BelloNon Executive Director

STATEMENTS OF DIRECTORS' RESPONSIBILITIESFOR THE YEAR ENDED 31st DECEMBER, 2017

The Companies and Allied Matters Act requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of financial affairs of the Company at the end of the year and of its profit or loss.The responsibilities includes:

a). ensuring that the Company keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and comply with the requirements of the Companies and Allied Matters Act;

b). designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and

c). preparing the company's financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, that are consistently applied.

The directors accept responsibility for the financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act.

The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and of its profit or loss. The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.

Nothing has come to the attention of the directors to indicate that the Company will not remain a going concern for at least twelve months from the date of this statement.

Olusunmade Adedamola Managing Director / CEO FRC/2018/IODN/oooooo18o35

16-Mar-18

Larry E. EttahChairmanFRC/2013/IODN/00000002692


REPORT OF THE AUDIT COMMITTEEFOR THE YEAR ENDED 31st DECEMBER, 2017

In compliance with Section 359(6) of the Companies and Allied Matters Act CAP C2O, Laws of the Federation of Nigeria, 2004, we have reviewed the audited Financial Statements of the Company for the year ended 31 December, 2017 and report as follows:(a) The accounting and reporting policies of the Company are consistent with legal requirements and agreed ethical

practices.(b) The scope and planning of the external audit for the year ended 31 December, 2017 were in OUT opinion

adequate.(c) We reviewed the findings and recommendations in the Internal Auditor's Report and External Auditor's

Management Controls Report and we were satisfied with the management responses thereto.(d) The Company maintained effective systems of accounting and internal control system during the year in review.

We have deliberated with the External Auditors, who confirmed that all necessary cooperation was received from management and that they had issued a clean report in respect of the year ended 31 December, 2017.

Mrs. Adeline Ogunfidodo Chairman, Audit Committee FRC/2012/ICAN/00000000525

Dated 13 March 2018

Members of the Commitee:Mrs. Adeline Ogunfidodo ChairmanMr. Shamsideen Balogun Member Mr. Bayo Osibo Member (resigned 04/10/2017)Comrade Sulaiman B. Adenrele MemberEngr.Dipo Ashafa Member (WEF 04/12/2017)


INDEPENDENT AUDITOR'S REPORT


STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31st DECEMBER, 2017

(All amounts are in thousands of naira, unless otherwise stated)

Dec-17Restated

Dec- 2016

Note N'000 N'000

Revenue 3 2,316,289

1,844,050

Cost of sales 5 (1,620,269)

(1,160,316)

Gross Profit 696,020

683,734

Other operating income 4 147,665

145,294

Selling and distribution expenses 5 (203,475)

(237,994)

Administrative expenses 5 (489,521)

(479,050)

Profit from Operations 150,689

111,985

Finance income 6 10,488

870

Finance expenses 7 (37,309)

(105,353)

Net finance expenses (26,820)

(104,483)

Profit before taxation 123,868 7,502

(Tax expense)/Tax credit 8 (65,698) 1,094

Profit from continuing operations 58,170 8,596

Profit from discountinued operations - -

Other comprehensive income - -

Total comprehensive income 58,170 8,596

Earnings Per Share for profit attributable to owners of the company during the year:

Basic (kobo) 16 8

2

Diluted (kobo) 16 8

2

The notes on pages 40 to 80 form an integral part of these financial statements


STATEMENT OF FINANCIAL POSITIONAS AT 31st DECEMBER 2017

(All amounts are in thousands of naira, unless otherwise stated) Notes Dec-17 Dec-16N'000 N'000

ASSETS:

Non - current assets:

Property, plant and equipment 9 420,955

438,083

Intangible assets 10 93,945

49,025

Prepayments 12 3,245

13,402

Total non - current assets 518,145

500,510

Current assets:

Inventories 11 900,430

717,429

Trade and other receivables 12 406,813

463,168

Prepayments 12 16,307

39,135

Cash and short term deposit 13 194,207

34,080

Total current assets 1,517,757

1,253,812

Total assets 2,035,902

1,754,322

Equity and liabilities

Equity:

Issued share capital 16 396,708

200,000

Share premium 437,923

-

Other capital reserve 16 91,923

91,923

Retained earnings 466,461

408,292

Equity attributable to owners of the parent 1,393,015

700,215

Non current liabilities:

Interest bearing loans and borrowings 13 -

43,492

Government grants 13 -

7,728

Deferred tax liabilities 15 (a) 22,056

9,095

Total non current liabilities 22,056

60,315

Current liabilities:

Trade and other payables 14 497,755

845,354

Interest bearing loans and borrowings 13 43,742

96,122

Government grants 13 7,742

24,516

Income tax payable 15 (a) 71,592

27,801

Total current liabilities 620,831

993,792

Total liabilities 642,887

1,054,107

Total equity and liabilities 2,035,902

1,754,322

Abdulwasiu Taiwo (Finance Manager) FRC/2013/ICAN/00000002588

Olusunmade Adedamola (Managing Director) FRC/2018/IODN/00000018035

Mr Larry E. Ettah (Chairman) FRC/2013/IODN/00000002692

The audited financial statements on pages 36 to 82 was approved by the board of directors on 16th March,2018 and signed on its behalf by:


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31st DECEMBER, 2017

Share capital

Share Premium

Revaluation Surplus

Retained earnings Total equity

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

1 January 2016 200,000 -

91,923

399,695 691,618

Profit for the year -

-

-

8,597

8,597

31 December 2016 200,000 -

91,923

408,292

700,215

1 January 2017 200,000 -

91,923 408,292 700,215

Rights issue 196,708 437,923 -

-

634,631

Profit for the year -

-

-

58,170

58,170

31 December 2017 396,708 437,923 91,923 466,461 1,393,015




STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31st DECEMBER, 2017

Notes Dec-17 Dec-16N'000 N'000

Cash flows from operating activities:

Cash (utilised) / generated from operations 17 (256,526) 97,935

Income tax paid 15 (1,061) (1,861)

Net cash (used in) / generated from Operating activities (257,587) 96,074

Cash flows from investing activities:

Purchase of Property, Plant and Equipment 9 (53,925) (40,303)

Purchase of intangible assets 10 (51,276) -

Proceeds from sales of PPE (Property,Plant and Equipment) 10,977 7,601

Finance income 6 10,488 870

Net cash used in Investing activities (83,736) (31,832)

Cash flows from financing activities:

Repayments of borrowings (95,872) (86,254)

Interest paid (37,309) (105,353)

Proceeds from rights issue 634,631 -

Net cash generated from/ (used in) financing activities 501,450 (191,607)

Net increase/(decrease) in cash and cash equivalents 160,127 (127,364)

Cash and cash equivalents brought forward 34,080 161,444

Cash and cash equivalents 13 194,207 34,080




1.o Corporate InformationPortland Paints and Products Nigeria Plc (The Company) was incorporated as a Limited Liability Company on 3 September 1985 and became a Public Company on 24 April 2008. The Company was listed on the floor of the Nigerian Stock Exchange on 9 July 2009.

The registered office is located at 105A, Adeniyi Jones Avenue, Ikeja, Lagos in Nigeria.

The principal activities of the Company are manufacturing and sale of paints. The main products of the Company are Sandtex range of decorative and industrial coatings and Hempel marine & protective coatings for Oil and Gas Sector.

2.0 Summary of significant accounting policies2.1 Basis of preparationThe financial statements of Portland Paints and Products Nigeria Plc ("the Company") have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS 1C) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB).

The financial statements are presented in the functional currency, Nigerian naira (N), rounded to the nearest thousand, and prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.3

2.1.1 Basis of MeasurementThe financial statements have been prepared on a historical cost basis. The company's financial statements are presented in naira, which is also the company's functional currency. Transactions in foreign currency are recognized in naira at the official spot rate at the date of transaction.

2.2 Changes in accounting policy and disclosures(a) New and amended standards adopted by the CompanyA number of new improvements to IFRSs 2010-2012 and 2011-2013 cycles were effective for the first time for financial reporting periods commencing on or after 1 January 2017.However,none of the amended standards were adopted by the company in the period as they were not applicable in the preparation of the financial statements.

(b) New standards, amendments and interpretations not yet adoptedThe following relevant IFRS and IFRIC interpretations which are effective for the first time for the financial year beginning on or after 1 January 2017 have been adopted by the Company. The company has not elected to early adopt and the impact of new standards that is applicable to the company is still being assessed.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31st DECEMBER, 2017


Amendments to IAS 12 Income taxesThe amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset's tax base. They also clarify certain other aspects of accounting for deferred tax assets.

The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for the recognition of deferred tax assets. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is not permitted.

Amendments to IAS 7 Cash flow statementsIn January 2016, the International Accounting Standards Board (IASB) issued an amendment to IAS 7 introducing an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities.

The amendment responds to requests from investors for information that helps them better understand changes in an entity's debt. The amendment will affect every entity preparing IFRS financial statements. However, the information required should be readily available. Preparers should consider how best to present the additional information to explain the changes in liabilities arising from financing activities. The standard is effective for annual periods beginning on or after i January 2017 and earlier application is not permitted.

IFRS 9 Financial instrumentsIFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new rules for hedge accounting

In July 2014, the IASB made further changes to the classification and measurement rules and also introduced a new impairment model. These latest amendments now complete the new financial instruments standard.

Following the changes approved by the IASB in July 2014, the Company no longer expects any impact from the new classification, measurement and derecognition rules on the Company's financial assets and financial liabilities.

The new requirements will not have any impact on the Company's financial assets.

The new hedging rules align hedge accounting more closely with the Company's risk management practices. As a general rule it will be easier to apply hedge accounting going forward as the standard introduces a more principles-based approach. The new standard also introduces expanded disclosure requirements and changes in presentation.

The new impairment model is an expected credit loss (ECL) model which may result in the earlier recognition of credit losses. The company currently does not have any hedging arrangements and hence would not be affected by the new rules.



IFRS 15: Revenue from contract with customers.This standard is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency in the recognition and presentation of revenue. Revenue is recognized based on the satisfaction of performance obligations, which occurs when control of good or service transfers to a customer. The company is still assessing the impact of this standard on the financial statements.

IFRS 16 LeasesIFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short term and low-value leases. The accounting for lessors will not significantly change.

The standard is effective for annual periods beginning on or after i January 2019 and earlier application is not permitted. The Company is still assessing the impact of IFRS 16.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the company.

2.3 Significant accounting judgements, estimates and assumptionsThe preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Material estimates in the financial statements include the following:

2.3.1 Accounts receivableThe allowance for doubtful accounts involves management judgment and review of individual receivable balances based on an individual customer's prior payment record, current economic trends and analysis of historical bad debts of a similar type. Additional information on impaired receivables is included in note 13.

2.3.2 Useful life and residual value of property, plant and equipment and definite life intangible assets.Property, plant and equipment and intangible assets with definite life are depreciated over their useful life. The Company estimates the useful lives of PPE and intangible assets based on the period over which the assets are expected to be available for use. The estimation of the useful lives of plant and machinery are based on technical



evaluations carried out on the assets. Estimates could change if expectations differ due to physical wear and tear and technical or commercial obsolescence.

It is possible however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the plant and machinery would increase expenses and decrease the value of non-current assets.

2.3-3 Income TaxThe Company is subject to income tax under the Nigerian tax legislation. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain.

2.3.4 Impairment of intangible assetsExternally acquired intangible assets that have indefinite useful lives are initially recognized at cost and are subsequently tested for impairment at each financial year end and stated at their recoverable amount. The impairment loss where the carrying amount is greater than the recoverable amount is charged to the profit or loss or income statement.

Management is of the opinion that the trademark is adjudged to have an indefinite life as the ownership had been transferred to the Company in perpetuity and the Company expects to generate cash flows from the use of the asset in perpetuity.

2.4 Summary of significant accounting policies2.4.1 Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on tangible assets with finite lives is recognised in the income statement as the expense category that is consistent with the function of the intangible assets. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

Intangible assets include purchased trade mark and computer software.Trade mark is externally acquired with indefinite useful lives. It is recognized at cost and are subsequently tested for impairment at each financial year end and stated at their recoverable amounts. The impairment loss, where the carrying amount is greater than the future economic benefits, is charged to the income statement.



Purchased software with finite useful lives are recognised as assets if there is sufficient certainty that future economic benefits associated with the item will flow to the entity. Amortisation is calculated using the straight-line method over 5 years.

Computer software primarily comprises external costs and other directly attributable costs.

Category Useful livesTrade Mark IndefiniteComputer software 5 years

2.4.2 Property Plant and EquipmentLand and buildings are initially recognized at cost but subsequently recognized at fair value less cost to sell based on the valuations by the independent valuers less accumulated depreciation and accumulated impairment loss for building All other property, plant and equipments are initially recognized at historical cost less accumulated depreciation and accumulated impairment loss.

Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is available for use. In the case of assets of own construction, cost comprises direct and indirect costs attributable to the construction work, including salaries and wages, materials, components and work performed by subcontractors.

Replacement or major inspection costs are capitalised when incurred and if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.

The depreciation base is determined as cost less any residual value. Depreciation is charged on a straight-line basis over the estimated useful lives of the assets and begins when the assets are available for use.

The assets' residual values, and useful lives and method of depreciation are reviewed and adjusted, if appropriate, at each financial year end and adjusted prespectively, if appropriate.

Impairment reviews are performed when there are indicators that the carrying value may not be recoverable. Impairment losses are recognised in the income statement as an expense.

On revaluation of property, plant and equipment, the surplus thereon is transferred to the revaluation surplus account in the statement of changes in equity and recognized as other comprehensive income in the comprehensive income statement.

2.4.3 Assets on leaseFinance leases are recognized at amount equal to the fair value of the leased property or if lower the present value of the minimum lease property, each determined at the inception of the lease.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability.



The finance charge is allocated to each period during the lease terms so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Category Useful livesLong leasehold land Over the lease periodFreehold buildings up to 99 yearsHeavy Plant and machinery 5 - 10 years Furniture, fittings and equipment 3 - 5 yearsMotor vehicles 2 - 4 yearsComputer equipments 3 - 5 years

An item of property and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

2.4.4 Earnings per shareBasic earnings are determined by dividing the profit attributable to share holders by the weighted average number of shares on issue during the year.

2.4.5 Diluted Earnings per shareDiluted Earnings per share is calculated by dividing the profit attributable to shareholders by the total number of shares (inclusive of diluted shares)

2.4.6 Impairment of non-financial assetsProperty, plant and equipment and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, or in the case of indefinite life intangibles, then the asset's (CGU's) recoverable amount is estimated. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash-generating units (CGUs). The recoverable amount is the higher of an asset's fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGUs). An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Portland Paints & Products Nigeria Plc evaluates impairment losses for potential reversals when events or circumstances may indicate such consideration is appropriate. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

2.4.7 Inventories



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

• Raw materials:Purchase cost on weighted average basis

• Goods-In-Transit, Work-in-progress and Finished goods:Goods in transit are valued at invoice price together with other attributable charges.

Work-in-progress cost consist of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

The cost of finished goods comprises overheads, suppliers' invoice prices, and, where appropriate, freight, printing costs and other charges incurred to bring the materials to their location and condition.

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

2.4.8 Financial instrumentsA financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party.

2.4.8.1 Financial AssetClassificationThe Company's financial assets include cash, trade and other receivables, all of which are classified as loans and receivables. This classification is based on the purpose for which the financial assets were acquired. Management determines the classification of finanancial assets at initial recognition.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Subsequent measurementSubsequent to initial recognition, loans and receivables are measured at ammortised cost using the effective interest rate method.

Derecognition of financial assetsA financial asset (or, when applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised when:a) The rights to receive cash flows from the asset have expired or



b) The Company retains the right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either:

c) The Company has transferred substantially all the risks and rewards of the asset or the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its right to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company's continuing involvement in the asset.

Impairment of financial assetsThe Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the Company of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at ammortised costFor financial assets carried at amortised cost, the Company first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a Company of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on assets carried at ammortised cost has been incurred, the amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset's original effective interest rate.

2.4.8.2 Financial liabilitiesClassificationThe financial liabilities are at ammortised cost. The classification is based on the purpose for which the financial liabilities were incurred. Management determines the classification of financial liabilities at initial recognition.Subsequent measurement



The Company's financial liabilities are recognised initially at fair value and subsequently, measured at ammortised cost using the effective interest rate method.

These includes borrowings and trade and other payables. They are classified as current liabilities except for those with maturities greater than 12 months after the reporting period and these are classified as non-current liabilities.

Derecognition of financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

2.4.8.3 Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.4.9 Cash and cash equivalentCash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less in the statement of financial position.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdraft.

2.4.10 Taxes•Current income taxCurrent income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date in Nigeria. Current income tax assets and liabilities also include adjustments for tax expected to be payable or recoverable in respect of previous periods.

Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the income statement.

• Deferred taxDeferred tax is provided using the liability method in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits.



No deferred tax is recognised when relating to temporary differences that arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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

2.4.10 Taxes (continued)• Sales taxRevenues, expenses and assets are recognised net of the amount of sales tax, except:• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales taxis recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

• Receivables and payables are stated with the amount of sales tax included

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

2.4.11 Government grantsGrants for expenditure are netted against the relevant expenditures as and when due and these are recognized in profit or loss in the statement of comprehensive income.

Where retention of a government grant is dependent on the Company satisfying certain criteria, it is recognized as deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to the statement of comprehensive income (when related to expenses) or netted against the asset purchased (when specific to an asset).

When loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant.

2.4.12 Provisions



Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.4.13 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent.

The Company has concluded that it is acting as a principal in all of its revenue transactions. The following specific recognition criteria must also be met before revenue is recognised:

Sale of goodsRevenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Where a buyer has a right of return, the Company defers recognition of revenue until the right to return lapsed.

Rendering of servicesRevenue from painting services is recognised as income from project by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

2.4.14 Interest incomeAll financial instruments measured at ammortised cost and interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the income statement.

2.4.15 Borrowing costSpecific Borrowing costs on qualifying assets are capitalized from the date the actual costs on the qualifying asset are incurred. Where such borrowed amount, or part thereof, is invested, the income earned is netted off the borrowing costs capitalised.



Where the entity does not specifically borrow funds to construct a qualifying asset, general borrowing costs are capitalized by applying the weighted average cost of the borrowing cost proportionate to the expenditure on the asset.

2.4.16 Foreign currencyThe Company's financial statements are presented in naira, which is also the Company's functional currency. Transactions in the foreign currency are recognized in Naira at the official spot rate at the date of transaction.

Monetary assets and liabilities denominated in a foreign currency are translated into Naira at the spot rate of exchange ruling at reporting date. Differences arising on settlement or translation of monetary items are recognised in income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the item (i.e. the translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

2.4.17 Segment reportingThe reportable segments are identified on the basis of Strategic Business Units (SBU) and the threshold of recognition is a contribution of not less than 10% of the revenue, assets, profits or losses of all the operating segments. Where the board and management is of the opinion that a strategic business unit is important to the growth initiative of the Company such SBU may be reported as a reportable segment even though it is not meeting the threshold of a reportable segment. The Managing Director (CEO) is the Chief Operating Decision Maker (CODM) of the Company whom the segment information is presented to.

2.4.18 Employees' benefitsEmployees' benefits both legal and constructive which are long and short term in nature are adequately recognized in the income statement.

The Company operates a defined contribution pension scheme in line with the Pension Reform Act 2014. The total contribution rate is i8%,where the employees contributes 8% and the Company contributes 10% of basic salary, housing and transport allowances. The Company's contributions are accrued and charged to the income statement as and when the relevant service is provided by employees. The Company has no further payment obligations once the contributions have been paid.

For management purpose, the Company is organised into Strategic Business Units (SBU) based on products categories and has three reportable segments as follows:



- Portland Decorative Paints segment, which manufactures and market various ranges of decorative paints. - Portland Marine Segment, which manufactures and markets various ranges of marine protective paints.

No other segment has been aggregated to form the above reportable operating segments.

The chief operating decision maker (CODM) has been identified as the executive management The Executive Management monitors the operating results of each business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on gross profit or loss and is measured consistently with gross profit or loss in the combined financial statements.

(i) Income Decorative

Marine & Industrial

PaintsSanitary

Wares Total

Dec-17 Dec-17 Dec-17 Dec-17N'000 N'000 N'000 N'000

Revenue:

Total revenue 1,641,439

673,739

1,111

2,316,289

Inter-segmental revenue -

-

-

-

Total revenue from external customers 1,641,439 673,739 1,111 2,316,289

Company's revenue per statement of comprehensive income 1,641,439 673,739 1,111 2,316,289

Segment Gross Profit 470,335 224,820 865 696,020

Operating Expenses 622,468

Depreciation 64,171

Amortisation 6,356

Finance Income (10,488)

Finance Expense 37,309

Other Income (147,665)

Sub-total 572,151

Company's Profit Before Tax 123,868




DecorativeMarine

PaintsSanitary

Wares Total

Dec-16 Dec-16 Dec-16Restated

Dec- 2016N'000 N'000 N'000 N'000

Revenue:Total revenue 1,449,162

380,312

14,575

1,844,049

Total revenue from external customers 1,449,162 380,312 14,575 1,844,049

Company's revenue per statement of comprehensive income 1,449,162 380,312 14,575 1,844,049

Segment Gross Profit 552,794 126,458 4,481 683,734

Operating expenses 630,838

Depreciation 10,543

Amortisation 75,662

Finance income (870)

Finance expense 105,353

(Other income)/loss (145,294)

Sub-total 676,232

Company's Profit Before Tax 7,502

The operating segments did not transact with each other and as such there are no transfer prices between operating segments.

Production activities in the factory is mainly production of decorative paints. Hence the relevant costs are absorbed by Decorative Business Unit. This accounts for the depreciation on Factory building wholly absorbed by Decorative Business Unit. Other Income is generated from the application of paints in addition to the sales and marketing of paint products.

The amounts provided to the chief operating decision maker (CODM) with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segments and the physical location of the assets.

During the year, it was established that the revenue balance disclosed in the December 2016 accounts was the gross revenue balance. The balance excluded the commissions of N127,12O,ooo paid to customers during the year. The prior year balances have been restated to correct this error. The December 2016 revenue balance has been decreased by N127,12O,ooo and the cost of sales balance has been decreased by the same amount. This adjustment does not have an impact on the profit before tax balance for the year ended 31 December 2016. The directors have not presented a third column on the group balance sheet because the restatement does not have any impact on the opening 2016 reserves.




(ii) Assets & Liabilities DecorativeMarine Paints

Sanitary Wares Total

Dec-17 Dec-17 Dec-17 Dec-17N'000 N'000 N'000 N'000

Addition to Non-current Assets 54,325

54,325

Reportable Segment Assets 1,467,479

304,491

13,718

1,785,687

Factory Office Property 195,890

-

-

195,890

Total Company Assets 1,717,693

304,491

13,718

2,035,902

Reportable Segment Liabilities:

Loans and Borrowings (Excluding Leases and Overdrafts) 43,742

-

-

43,742

Defined Contribution Pension Scheme 9,595

-

-

9,595 Financial Liabilities 7,273

-

-

7,273

Deferred Tax Laibilities 22,056

-

-

22,056

Other Unallocated and Central Liabilities 560,221 - - 560,221

Total Company Liabilities 642,886 - - 642,886

DecorativeMarine Paints

Sanitary Wares Total

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

Addition to Non-current Assets 40,303

40,303

Reportable Segment Assets 1,120,317

367,395

13,143

1,500,855

Factory Office Property 213,164

-

-

213,164

Total Company Assets 1,373,783 367,395 13,143 1,754,322

Reportable Segment Liabilities:Loans and Borrowings (Excluding Leases and Overdrafts) 139,614

139,614

Defined Contribution Pension Scheme 7,395

-

-

7,395

Financial Liabilities 32,239

-

-

32,239

Deferred Tax Laibilities 9,095

-

-

9,095

Other Unallocated and Central Liabilities 865,760

-

-

865,760

Total Company Liabilities 1,054,103

-

-

1,054,103

Items of Property, Plant and Equipment are directly allocated to the SBU enjoying the economic benefits of the assets.




Dec-17 Dec-16

N'000 N'000

4 Other Operating Income:

Government grants 24,504 24,515

Profit on sale of fixed assets 4,097

6,182

Sale of scrap 5,512 651

Discount received - 1,158 Insurance claim received 874 2,384

Income from executed projects 23,543 25,503

Exchange gain 28,053 51,810

Toll manufacturing - 381

Franchisee/management fee 8,526 27,411

Sundry income 50,773 3,531

Container deposit refund 1,783 1,768

Total 147,665 145,294

5a Expense by function

Cost of sales 1,620,269 1,160,316

Selling & distribution expenses 203,475 237,994

Adminstrative expenses 489,521 479,050

2,313,265 1,877,359

Sundry income is majorly made up of:refund from excess bank charges (N26million), refund from gratuity for unqualified exited staff (N3.7million); Franchisee fee (N5.1million);Recoup of rent from franchisee (N1.8million);Sale of excess material (N5.4million)




5b Expenses by nature

Change in inventories of finished goods and work in progress 1,402,416 1,054,657

Amortization of intangible assets 6,356 75,662

Depreciation on property, plant and equipment 63,712 54,308

Staff costs 415,846 324,076

Distribution costs 58,652 46,598

Repairs and maintenance 59,212 45,723

Energy consumption 34,806 29,477

Advert and promotional expenses 45,688 40,504

Commercial service fee 22,307 22,859

Auditors' fees 11,880 10,800

Bad debt provision 23,000 28,935

Information technology 47,841 40,593

Rent & rates 15,795 22,837

Bank Charges 3,990 4,389

Legal & professional fees 38,707 24,893

Travelling expenses 50,126 40,217

Directors fees 2,490 2,321

Telephone & stationery 7,437 4,056

Other expenses 3,004 4,455

2,313,265 1,877,360

6 Finance Income:

Interest received on bank deposits 10,488 870

Total 10,488 870

7 Finance costs:

Interest on debts and borrowings 37,309 105,353

Finance charges payable under finance lease - -

Total 37,309 105,353




8 Taxation:

(i) Current tax on profits for the period:

Company income tax 46,947

7,860

Education tax 5,787

1,061

52,734 8,921

Deferred tax ( Note 15b) 12,964

(10,015)

Total current tax 65,698 (1,094)

(ii)Reconciliation of tax charge:

Profit before tax 123,868

7,502

Tax at Nigerian's statutory income tax rates (Minimum Tax) 37,161

2,251

Disallowable expenses 24,346

46,082

Exempt income (1,229)

(32,415)

Temporary differences not recognised - 2,554 Allowance giving rise to permanent difference (367) (10,612)

Education tax @2% of assessable profit 5,787 1,061

Total tax charge for the period 65,698 8,921




LandFactory building

Plant and machinery

Computer Equipmen

ts

Furniture and

fittingsMotor

vehicles

Work-in-progres

s Total

9Property, plant and equipment N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000Cost

At 1 January 2016 40,000

173,164

395,160

140,779

26,841

197,609

10,634

984,187

Additions -

-

10,704

803

-

28,396

400

40,303

Reclassification -

-

10,484

150

-

-

(10,634)

-

Disposal - - (6,920) (1,973) - (26,290) - (35,183)

At 31 December 2016 40,000 173,164 409,428 139,759 26,841 199,716 400 989,306

At 1 January 2017 40,000 173,164 409,428 139,759 26,841 199,716 400 989,306 Additions - - 12,270 16,465 1,961 21,257 2,372 54,325 Write off - - - - - - (400) (400) Disposal - - (4,068) (121) (24,462) - (28,651)At 31 December 2017 40,000 173,164 417,630 156,103 28,802 196,510 2,372 1,014,581

DepreciationAt 1 January 2016 - 10,251 229,553 97,650 22,957 167,575 - 527,986

Charge for the Year - 3,561 31,029 13,954 - 8,631 - 57,176

Disposal - (6,518) (2,283) - (25,135) - (33,936)

At 31 December 2016 - 13,812 254,064 109,321 22,957 151,071 - 551,226

At 1 January 2017 -

13,812

254,064

109,321

22,957

151,071

-

551,226

Charge for the Year -

3,462

29,917

15,183

2,494

12,657

-

63,712

Disposal -

-

(673)

(64)

-

(20,576)

-

(21,312)

At 31 December 2017 - 17,274 283,308 124,440 25,451 143,152 - 593,625

Net book Value as at:

At 31 December 2017 40,000 155,890 134,322

31,663 3,351 53,358 2,372 420,955

At 31 December 2016 40,000 159,352 155,364 30,437 3,884 48,644 400 438,080

Fair Value of land and building

Land and building held for use in the production or supply of goods and services, or for administrative purposes are stated at cost less any accumulated impairment losses (for land and buildings) and accumulted depreciation (for buildings).Land and building comprise mainly of factories and offices.

Depreciation amounting to N64.1m (2016-N57m) has been charged to income statement, N33.6m (2016-N29m) charged to cost of sales, N22.6m (2016- N10m) to administrative expenses and N12.6m (2016-N15m) to selling and distribution expenses.




Trade MarkComputer Software Total

10 Intangible Assets N'000 N'000 N'000

CostAt 1 January 2016 49,025

197,368

246,393

Additions -

-

-

At 31 December 2016 49,025

197,368

246,393

At 1 January 2017 49,025

197,368

246,393

Additions - externally acquired during the year -

51,276

51,276

At 31 December 2017 49,025

248,644

297,669

Amortization:

At 1 January 2016 - 121,707 121,707 Charge for the year - 75,661 75,661 At 31 December 2016 - 197,368 197,368

At 1 January 2017 - 197,368 197,368 Charge for the year - 6,356 6,356

At 31 December 2017 - 203,724 203,724

Net Book values at:

At 31 December 2017 49,025 44,920 93,945

At 31 December 2016 49,025 - 49,025




The Company's intangible asset represents the N49 million trade mark purchased from Blue Circle Industries Plc adjudged to have an indefinite life. The trade mark is carried at cost to be tested annually for impairment.

The trade mark was reviewed for impairment as at 31 December, 2017 and at present no impairment is deemed required and there are no contractual commitment that may have impact on the carrying value of the trade mark.

Following challenges with oracle ERP utilization dating back to implementation phase, management decided to discontinue the use of Oracle ERP and switch over to SAP ERP. The addition of N51 million to computer software represents the cost of migration to SAP.

Intangible assets amortization charged to income statement amounts to N6.4m (2016-N76m) has been included as part of administrative expenses.

Dec-17 Dec-16N'000 N'000

11 Inventories:

Raw Materials 299,514

141,367

Packaging Materials 32,170

20,507

Work in progress 6,974

1,539

Finished Goods 607,633

621,698

Spare Parts 15,008

13,356

Diesel 4,093

9,031

Stock Impairment (64,961)

(90,069)

Total 900,431

717,429

The amount of write-down on inventories to net realizable value is N64.9m (2016: N90m). This represents impairment for slow moving, obsolete and damaged inventories. All inventory with the exception of finished goods are stated at cost. Finished goods are stated at their net realisable values.

Year end stock count was conducted across all Company's stock holding locations. The quantity counted was valued using Weighted Average Costing model as per the Company's policy and agreed as stated herein.

The value of finished goods include N395m (Dec 2016: N413m) imported merchandizing products.




Dec-17 Dec-16

12 Trade and Other Receivables N'000 N'000

(i) Trade receivables 433,811

535,173

Less: Provision for impairment of trade receivables - (Note 13iii) (176,905)

(171,765)

Net trade receivables 256,906

363,408

Other receivables 14,545

37,672

Less: Provision for impairment of other receivables -

(20,745)

Net other receivables 14,545

16,927

Receivables from related parties (note 18a) 13,171

3,168

Withholding tax receivable 66,990

40,526

VAT receivable 55,202

39,139

Total trade and other receivables 406,813

463,168

(ii) PrepaymentsPrepayments - Current 16,307

39,136

Prepayments - Non Current portion 3,245

13,402

Total prepayments 19,552

52,538

The balance on prepayment represent rent,medical,education and insurance paid in advance which will be charged against earnings in periods it relates.

The fair values of trade and other receivables classified as loans and receivables are as follows:

Dec-17 Dec-16N'000 N'000

Trade receivables 256,906

363,408

Receivables from related parties (Note 18d) 13,171

3,168

Withholding tax receivable 66,990

40,526

VAT receivable 55,202

39,139

Other receivables 14,545

16,927

Total 406,813

463,168




Dec-17 Dec-16

(iii) Allowance for impairment of trade receivables: N'000 N'000

As at January 1st 2017 171,765 188,444

Additional allowance for receivable impairment 23,000

28,684

194,765

217,128

Un-utilised amounts reversed / (amount written off) (17,860)

(45,363)

Total as at 31 December, 2017 176,905

171,765

Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 31 December, 2017 were reviewed for impairment test.

13 Interest bearing loans and borrowings:

Dec-17 Dec-16N'000 N'000

(i) Non-Current Borrowings:Bank loans:Long term liabilities - Note 14(iii) -

43,492

Total Non Current Borrowings -

43,492

(ii) Current Borrowings:Bank loans:Long term liabilities due within one year 43,742

96,122

Total Current Borrowings 43,742 96,122

Total Loans and Borrowings 43,742 139,614

Current borrowings:

- Execution of trust receipts by the borrower.- Ownership of assets financed- Promissory note of the Company for principal and interest- Sales collection agreement

The movement in Loan and Borrowings represent principal repayment as at 31 December 2017

The bank loan is secured with the followings:- Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at August 2016, by Steve Akhigbemidu & Co Estate Surveyors &Valuers




(iii) Long term borrowingsNon current liabilities

LenderTotal

Facility Dec-17

31 December

2016

Bank of Industry (BOI) Intervention funds Through Ecobank Nigeria Plc

N300m -

39,364

Bank of Industry (BOI) Intervention Funds Through FCMB Nigeria Plc

N255m 43,742 100,250

Total Long Term Facility 43,742 139,614

Current Portion of Term-Loans (43,742) (96,122)

Due After One Year -

43,492

Repayment Terms

Carrying Value - 28 equal quarterly installments from date of draw down

Carrying Value - 60 equal monthly installments with 12 months moratorium

The secured loan is a Central Bank of Nigeria (CBN) intervention fund through Bank of Industry (BOI). The applicable interest rate is 6% per annum subject to review by the BOI from time to time in line with the prevailing market conditions. The loan is repayable in instalments at various dates between January 2011 to 2018. The loan bears an effective current interest rate of 22%.

N24million (2016:N24million) interest on BOI facility was charged to income statement as at 31 December, 2017.




(v) Government grants:

Dec-17 Dec-16N'000 N'000

As at January 01 2017 32,246 56,762

Total Government Grant for the period 32,246 56,762Released to the income statement (24,504) (24,516)

7,742 32,246

Current 7,742 24,516Non current -

7,730At 31 December 2017 7,742 32,246

(iv) Cash & Cash Equivalent:

N'000 N'000Cash in hand and bank 74,207 34,080

Treasury Bills 120,000 -

Cash & short term deposit 194,207 34,080

Cash and Cash Equivalents 194,207 34,080

For the purpose of the statement of cash flow, cash and cash equivalents comprise the following as at 31 December,2017

Cash at bank earns interest at floating rates based on daily bank deposit rates. Treasury bills are made for varying periods of between one month and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

Government grants relates to loan granted by an Agency of the Nigeria Government (Central Bank of Nigeria) with 6% interest rate which is below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. There are no unfulfilled conditions or contigencies attached to these grants.




14 Trade and Other PayablesDec-17 Dec-16N'000 N'000

Trade payables 227,150

210,137

Other payables 17,558

9,577

Withholding tax payable 2,705

5,127 Customer Deposits 10,882

12,846

Accruals 107,942

93,753 Total financial liabilities, excluding loans and

borrowings, classified as financial liabilities measured at amortised cost 366,237

331,440

Intercompany Payable ( note 18d) 111,509

493,905

Dividends payable 20,009

20,009

Total trade and other payables 497,755 845,354

15 (a) Corporate Tax LiabilityDec-17 Dec-16N'000 N'000

Balance at beginning of the yearCompany Income Tax 26,739

19,889

Education Tax 1,061

852

27,800

20,741

Current tax expenseCompany Income Tax 46,947

7,860

Education Tax 5,787

1,061

corporate tax Provision -

80,534

29,662

Payment (8,942)

(1,861)

Income tax payable 71,592

27,800

At 31 December 2017

The analysis of tax payment during the year is as follows:

Cash payment 1,061

1,630

Withholding tax credit 7,881

231

8,942

1,861

Terms and conditions of the above financial and non-financial liabilities.

Trade payables are non-interest bearing and normally settled on 30 day term.Other payables and accruals are non-interest bearing and have an average term of 90 days. Dividend payable represents the total unclaimed dividend as at 31 December 2017,the company has not declared dividend since 2012 financial year.




15 (b)

Deferred tax

Dec-17 Dec-16N'000 N'000

At 1 January 2017 9,093

9,093

Recognised in profit and lossTax expense 12,963

-

At 31 December 2017 22,056

9,093

Deferred tax (assets)/liabilities

Provisions Property,

plant & equipment

Unrealised Exchange

(Gain)/LossTotal

N'000 N'000 N'000 N'000At 1 January 2016 (72,238)

82,436

8,910

19,108

(Credited)/Charge to profit and loss (7,324)

(7,698)

5,007

(10,015)

At 31 December 2016 (79,562)

74,738

13,917

9,093

N'000 N'000At 1 January 2017 (79,562)

74,738

13,917

9,093

Charged/(Credited) to profit and loss 5,991

20,889

(13,917)

12,963

At 31 December 2017 (73,571)

95,627

-

22,056

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate 30% (2016:30%).

Deferred income tax assets and liabilities, deferred income tax charge/(credit) in profit or loss are attributable to the following items:




16 Share capital

(i)

Dec-17 Dec-17 Dec-16 Dec-16Number'000 N'000 Number'000 N'000

Ordinary shares of 50 kobo each 1,000,000

500,000

1,000,000

500,000

Total 1,000,000 500,000 1,000,000 500,000

Issued and Fully Paid



Issued and Fully

Paid

Dec-17 Dec-17 Dec-16 Dec-16Number'000 N'000 Number'000 N'000

Ordinary shares of 50kobo each at the beginning of the year 400,000 200,000 400,000 200,000

Rights Issue 393,416

196,708 -

-

As at 31 December 2017 793,416 396,708 400,000 200,000

(ii) Nature and purpose of reserves:

Dec-17 Dec-16Other capital reserve (Revaluation Reserve) N'000 N'000At 1 January 2017 91,923

91,923Revaluation during the year -

-As at 31 December 2017 91,923 91,923

Authorised Authorised




Dec-17 Dec-16

N'000 N'000Net profit attributable to ordinary equity holders

58,170

8,596

Weighted average number of ordinary shares for basic earnings per share

695,062

400,000

Basic earnings per share (in kobo)

8

2

Weighted average number of ordinary shares for diluted earnings per share

695,062

400,000

Diluted earnings per share (in kobo)

8

2

The following reflects the income and share data used on the basic and diluted earnings per share computations:

Asset revaluation reserve: The asset revaluation reserve is used to record increases in the fair value of property, plant and equipment and

decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity. The revaluation was carried out on land and building in December 2010 and 2012 by Ubosi Eleh & Co., a professional firm of Chartered Surveyors on an open market basis. However due to change in company policy, no further revaluation was recognized into the account for the year under review.

(iii) Earnings per share Basic earnings per share amounts is calculated by dividing net profit for the period attributable to ordinary equity

holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Basic earnings per share is calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding (inclusive of diluted shares) during the period.

The following reflects the income and share data used on the basic and diluted earnings per share computations:




Dec-17 Dec-16N'000 N'000

17 Reconciliation of net profit to net cash

provided by operating activities

Profit before tax 123,868

7,502

Adjustments to reconcile net income to net cash provided

by operating activities: Dec-17 Dec-16

N'000 N'000

Interest payable 37,309

105,353

Finance income (10,488)

(870)

Depreciation charges 64,171 57,176 WHT Credit notes utilized (7,881) - Amortization of government grant (24,504) (24,517)

Profit on disposal of fixed assets (4,097) (6,182)

Amortisation of intangible assets 6,356 75,661

60,866

206,621

Changes in assets and liabilities:Decrease in Trade debtors and prepayments 89,340

24,793

Increase in Inventories (183,001)

(101,142)

Decrease in Trade creditors & Accruals (347,599)

(39,840)

(441,260)

(116,189)

Net Adjustment (380,395)

90,432

Net cash provided by operating activities (256,526)

97,934




18 Related party transactions

The following transactions were carried out with related parties:

(a) Sales of goods and services Relationship Dec-17 Dec-16N'000 N'000

UACN Property Dev. Company Plc Sister Company 10,210

3,845

UAC Foods Ltd Sister Company -

1,451

GCL Sister Company 2,961

-

13,171 5,296

(b) Purchases of goods and servicesDec-17 Dec-16

N'000 N'000

UAC of Nigeria Plc: Service fee Principal Shareholder 22,307

22,859

UAC of Nigeria Plc: Interest on Working Capital Finance Facility

Principal Shareholder -

47,399

MDS Logistics Ltd. Sister Company -

7,428


13,160

22,307 90,846

The parent, ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies that are related to Portland Paints & Products Nigeria Plc through common share holdings and directorship.




(c) Other transactions with related parties Dec-17 Dec-16

N'000 N'000

UAC of Nigeria Plc: Working Capital Finance Loan -

350,000

UAC Foods Ltd: Working Capital Finance Loan -

50,000

UAC of Nigeria Plc: Bills settled on behalf of Portland Paints 89,202

-

89,202 400,000

(d) Intercompany payable: N'000 N'000

UAC of Nigeria Plc Principal Shareholder 111,475

440,737

UAC Foods Ltd (UFL): Working Capital Finance Facility Sister Company -

53,167

GCL Sister Company 34

-

111,509 493,905

(e) Intercompany receivable: N'000 N'000

UACN Property Dev. Company Plc Sister Company 10,210

3,845

MDS Logistics Limited Sister Company -

3,168

GCL Sister Company 2,961


1,451

13,171 8,464

All trading balances will be settled in cash.

All related party transactions were carried out on commercial terms and conditions.

There were no provisions for doubtful related party receivables as at 31 December 2017, (N2016:Nil) and no charges to the income statement in respect of related party receivables.

Dec-17 Dec-16N'000 N'000

19 Compensation to key management personnel:

Short-term employee benefits 11,733 10,956

Long-term employee benefits 939 1,096

12,672 12,052




Dec-17 Dec-16N'000 N'000

The emoluments of the highest paid Director 12,672 12,052

Emolument of Non-executive Directors:

Fee 1225 1,275

Sitting Allowance 1,175 9152,400 2,190

Directors' mix Dec-17 Dec-16Number Number

Executive Director 1 1Non-executive Directors 5 5

6 6

20 Staff Numbers:

Dec-17 Dec-16Number Number

Production 37 38

Sales, marketing and depot 52 39

Administration 29 37118 115

The number of employees in respect of emoluments within the following ranges was:

Dec-17 Dec-16Number Number

N10,000 - N500,000 - -

N500,001 - N1,000,000 63 57

Above N1,000,001 55 58

118 115

The average number of persons employed by the Company during the year, including Director, is as follows:

The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel (The Directors). The Executive Director is paid salaries and housing allowance, transportation is also provided for them. While the Non-executive Directors are only entitled to Directors Fees and sitting allowance. As at 31 December,2Ol7 an amount of N2.4 million (2016: N2.2 million) was paid to Non-executive Directors as Directors Fees and sitting allowance. The Executive Director is entitled to a defined contribution plan (pension) in accordance with Pension Reform Act 2004. But Non-executive Directors are not entitled to any form of pension or post employment benefits.




21 Financial risk managementPortland Paints & Products Nigeria Plc's principal financial assets comprise trade and other receivables, cash and short term deposits that arise directly from its operations. The Company's principal financial liabilities comprise of interest bearing loans and borrowing and trade and other payables. The main purpose of these financial liabilities is to finance and to provide guarantee to support the Company's operations.

Portland Paints & Products Nigeria Plc is exposed to credit risk, liquidity risk and market risk. The company's board has overall responsibility to oversee the management of these risks. The company's board of director's is supported by a risk management and governance committee that is responsible for developing the Company's Corporate Governance policies and practices and to consider the nature, extent and category of risks facing the Company.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below:

21.1 Credit riskThis is the risk of financial loss to the Company if a customer or counterparty to financial instrument fails to meet its Contractual obligations. The Company is mainly exposed to credit risk from credit sales. It is Company policy, implemented locally, to assess the credit risk of new customers before entering contracts.




The concentration of Company credit risk is as follows:

Item

Total gross

amount Fully performing

Past due but

not impaired Impaired

Trade receivables 433,811 205,181 51,724 176,905

Receivables from related companies 13,171 13,171 - -

Other receivables 136,737 136,737 - -

Cash and cash equivalent 194,207 194,207 - - 777,925 549,296 51,724 176,905

Item

Total gross

amount Fully performing

Past due but

not impaired Impaired

Trade receivables 535,173 257,705 105,703 171,765

Receivables from related companies 3,168 3,168 - -

Other receivables 117,255 96,510 - 20,745

Advances to staff 82 82 - -

Cash and cash equivalent 34,080 34,080 - - 689,758 391,545 105,703 192,510

Age analysis of past due but not impaired receivables Dec-17 Dec-16

72,239 72,239 33,464 33,464 105,703 105,703

Dec-16

91 - 180 days181 - 360 days

Dec-17

(a) Trade receivablesCredit quality of the customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored by the credit committee comprising of sales, finance and internal audit and the Company intends to explore issuing of issurance certificates to major distributors and customers.

The entity has adopted a policy of only dealing with credit worthy counter-parties and a credit committee is instituted which comprises of sale, finance and internal audit department to review the outstanding balances on customers' account Insurance certificate is required before credit is granted to key distributors. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. On-going credit evaluation is performed on the financial conditions of account receivable and where appropriate, credit guarantee insurance cover is purchased.




Apart from Satkay Nig. Ltd. and Damsu Nigeria Ent. the largest customers of the entity with an outstanding balance of N86 million and N45 million respectively, the entity does not have significant credit risk exposure to any single counterparts or any group of counterparties having similar characteristic. Concentration of credit risk to any other counterparty did not exceed 5% of gross monetary assets at any time during the year.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-rating assigned by international credit-rating agencies.

Counterparties with external credit ratings:

Dec-17 Dec-16 173,525 189,744 151,833 187,667 108,452 157,762 433,810 535,173

Trade receivablesGroup 1Group 2Group 3Total

The Company defines the rating as follows:Group 1 - These are balances with Blue Chip, Listed and other large entities with a low chance of default.Group 2 -These are balances with small - medium sized entities with no history of defaults.Group 3 - These are balances with small - medium sized entities with history of defaults or late payments.

(b) Cash and short term depositCredit risk from balances with banks and financial institutions is managed by the Portland Paints' treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counter party.

Counterparty credit limits are reviewed by the Company's Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Managing Director. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty's failure. Portland Paints' maximum exposure to credit risk for the components of the statement of financial position at 31 December 2017 and 2016 is the carrying amounts.




Counterparties without external credit ratings:

Dec-17 Dec-16-

14,303

2,344

9,352

-

7,721

11

-

-

148

-

227

-

1,960

B 3,936

-

B- 187,442

-

474

369

194,207

34,080

Bbb+Bbb-B-B

UnratedTotal

Cash and short term depositsAaaAa-A+A

'Aaa' A financial institution of impeccable financial condition and overwhelming capacity to meet obligations as and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) are unlikely to lead to a deterioration in financial condition or an impairment of the ability to meet its obligations as and when they fall due.

'Aa' A financial institution of very good financial condition and strong capacity to meet its obligations as and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a slight increase the risk attributable to an exposure to this financial institution. However, financial condition and ability to meet obligations as and when they fall due should remain strong.

'A' A financial institution of good financial condition and strong capacity to meet its obligations. Adverse changes in the environment (macro-economic, political and regulatory) will result in a medium increase in the risk attributable to an exposure to this financial institution. However, financial condition and ability to meet obligations as and when they fall due should remain largely unchanged.

'Bbb' A financial institution of satisfactory financial condition and adequate capacity to meet its obligations as and when they fall due. It may have one major weakness which, if addressed, should not impair its ability to meet obligations as and when due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a medium increase in the risk attributable to an exposure to this financial institution.

'Bb' Financial condition is satisfactory and ability to meet obligations as and when they fall due exists. May have one or more major weaknesses. Adverse changes in the environment (macro-economic, political and regulatory) will increase risk significantly.




'B' Financial condition is weak but obligations are still being met as and when they fall due. Has more than one major weakness and may require external support.

The modifiers "+" or "-" may be appended to a rating to denote comparative position within the rating categories.This is based on Augusto & Co Ltd risk ratings.

21.2 Liquidity riskThis is the risk arising from the Company's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.

The Company policy is to ensure that it will always have sufficient cash to allow it meet its liabilities when they become due. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the entity's short, medium and long-term funding and liquidity requirement. The entity manages liquidity risk through the use of bank overdrafts and bank loans. The company has agreement with our bankers to provide overdraft facilities for short term funds requirement and long-term borrowing facilities, by continuously monitoring forecast and actual cash flow and matching the maturity profile of financial assets and liabilities.

31-Dec-17

Less than 3

months

Between 3

months and 1

year

Between 1

and 5 years Over 5 years

Borrowings - 43,742 -

-

Trade and other payables 505,932

- - - Total 505,932 43,742 - -

31-Dec-16Borrowings - 96,122 43,492 -

Trade and other payables 827,381 - - - Total 827,381 96,122 43,492 -

The balances below are undiscounted amounts and are based on contractual cashflows.

Other payables excludes withholding tax payable and customer deposits (see note 14) as these are non financial

instrument




21.3 Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The activities of the entity are exposed primary to the following market risks; interest rate risk, foreign currency risk and commodity price risk.

21.4 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The company's exposure to the risk of changes in market interest rates relates primarily to the company's short-term debt obligations with floating interest rates.

The company interest rate risk arises from short term deposits and borrowings held at fixed rates. The company's policy is to keep all of its borrowings at fixed rates of interest and has been achieved by converting the short term funds to long term fund through the BOI which has fixed and single digit effective interest rate and more flexibility in repayments. The Company does not carry any borrowings at fair value and as such is not exposed to fair value risk.

Concentration of Interest Risks is as follows:

Weighted

average interest

rate (%)

Interest

bearing

balance

Non interest

bearing

%

Fixed rate

N'000 N'000Financial assets: Trade and other receivables - 406,813

Cash and bank balances - 194,207 Total - 601,020

Financial liabilities:Borrowings 16 43,742 -

Trade and other payables - 505,932 Total 43,742 505,932

Dec-17




Weighted

average interest

rate (%)

Interest

bearing

balance

Non interest

bearing

%

Fixed rate

N'000 N'000Financial assets: Trade and other receivables - 463,168

Cash and bank balances - 34,080

Short term deposits 10 - - Total - 497,248

Financial liabilities:Borrowings 16 139,614 -

Trade and other payables - 827,381 Total 139,614 827,381

Dec-16

21.5 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in foreign exchange rates. The company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a different currency from the Company's functional currency). In preparing the financial statement of the entity, transactions in currencies other than the entity's functional currency [foreign currencies] are recognized at the rates of exchanges prevailing at the date of the transactions. The company is not managing its foreign currency risk by hedging because the entity's dealing in foreign currencies is minimal and will not have material effect on the financial statements of Portland Paints & Products Nigeria Plc.

Naira USD GBP TotalN'000 N'000 N'000 N'000

Financial assets:Trade and other receivables 398,870 7,943 - 406,813

Cash and short term deposits 159,858 34,323 25 194,207 Total 558,729 42,266 25 601,020

Financial liabilities:Long term borrowings - - - -

Current portion of long term borrowing 43,742 - - 43,742

Trade and other payables 495,517 2,139 99.56 497,755

Inter-company payables 493,905 - - 493,905 1,033,163 2,139 100 1,035,402

Dec-17




Naira USD GBP TotalN'000 N'000 N'000 N'000

Financial assets:Trade and other receivables 316,500 146,668 - 463,168

Cash and short term deposits 33,800 225 56 34,080 Total 350,299 146,893 56 497,248

Financial liabilities:Long term borrowings 43,492 - - 43,492

Current portion of long term borrowing 96,122 - - 96,122

Trade and other payables 285,815 65,634 - 351,449

Inter-company payables 493,905 - - 493,905 Total 919,335 65,634 - 984,968

Dec-16

22 Capital managementManagement considers capital to consist only of equity as disclosed in the statement of financial position. The primary objective of the Portland Paints capital management is to ensure that it maintains a healthy capital ratio that support its business and maximize shareholder value. The company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 December 2017. In order to ensure an appropriate return for shareholder's capital invested in the company, management thoroughly evaluates all material projects and potential acquisitions before approval. The company is not subject to any capital restriction requirements.

The company monitors capital using a gearing ratio, which is interest bearing debt divided by total capital plus interest bearing debt. The company's policy is to keep the gearing ratio between 20% and 50%.

Dec-17 Dec-16 43,742 539,614 1,393,015 700,214 1,436,757 1,239,828

3% 44%

Interest bearing debtEquityTotal capital

Gearing ratio

Item

23 Commitments and contingenciesCapital commitmentsAt 31 December 2017, the Company did not have any capital commitments (Dec 2016: Nil).




Value added represents the additional wealth which the company has been able to create by its own and itsemployees' efforts. This statement shows the allocation of that wealth to employees, providers of capital,government and the portion retained for the future creation of more wealth.

Dec-17 Dec-16N'000 % N'000 %

Turnover 2,316,289 1,844,050

Non trading items 158,154 146,164

2,474,443

1,990,214

Bought-in-material and services:- Local (1,429,933)

(1,240,560)

- Imported (403,314)

(349,902)

Value added 641,196 100% 399,752 100%

Applied as follows:-

Salaries and labour related expenses 415,846

64% 247,386

62%

To pay Government:Corporate tax 52,734

8% (1,094)

0%

To pay provider of capital:Interest charges 37,309

6% 105,353

26%

To pay shareholdersas dividend -

0% -

0%

To provide for replacement of assetsdividend to shareholders and 0%development of business- Depreciation 64,171

10% 39,512

10%- Deferred tax 12,964

3% -

0%- Profit for the period 58,170

9% 8,596

2%

641,194 100% 399,752 100%

STATEMENT OF VALUE ADDED FOR THE YEAR ENDEDFOR THE YEAR ENDED 31st DECEMBER, 2017


FIVE YEAR FINANCIAL SUMMARYFOR THE YEAR ENDED 31st DECEMBER, 2017

2017 2016 2015 2014 2013

N’000 N’000 N’000 N’000 N’000Statement of financial position:Property, plant & equipment 420,955 438,083 456,202 547,040 555,701 Intangible asset 93,945 49,025 124,685 164,160 203,633 Non-current prepayments 3,245 13,402 10,789 25,032 26,518 Net current assets 896,926 260,019 252,858 556,689 612,221 Non-current liabilities:Borrowings - (43,492) (101,571) (237,407) (302,200)Government grants - (7,728) (32,240) (56,633) (81,272)Employee benefit - - - - (46,619)Deferred taxation (22,056) (9,095) (19,106) (74,278) (83,944)

1,393,016 700,214 691,617 924,603 884,038

Shareholders’ funds:Issued share capital 396,708 200,000 200,000 200,000 200,000 Share premium 437,923 - - - - Other capital reserve 91,923 91,923 91,923 91,923 91,922 Retained earnings 466,461 408,292 399,694 632,680 592,116

1,393,014 700,214 691,617 924,602 884,039

Statement of comprehensive incomeRevenue 2,316,289 1,844,050 2,168,480 2,771,147 2,865,581

Profit/(loss) before taxation 123,868 7,502 (258,369) 194,297 123,591 Taxation (65,698) 1,094 25,384 (45,654) (16,118)

Profit/(Loss) after taxation 58,170 8,596 (232,985) 148,643 107,473

Dividend declared - - - -

Per share data (kobo)Earnings /(loss) per share – Basic 8 2 (58) 37 27Diluted earnings per share 8.37 2 - - -

Note: Earnings per share is based on profit after taxation and the number of issued and fully paid ordinary shares at the end of each financial year.



PROXY AND ADMISSION FORMPORTLAND PAINTS AND PRODUCTS NIGERIA PLC (RC 76075 )

ANNUAL GENERAL MEETING to be held at

10.00 a.m. on Friday, 20th July, 2018 at the Golden Tulip Festac, Lagos

Being a member/members of PORTLAND PAINTS AND PRODUCTS

NIGERIA PLC do hereby appoint

or failing him, or the Chairman of the meeting as my/our proxy to vote on my/our

behalf at the Annual General Meeting of the Company to be held on 20th July, 2018

and at any adjournment thereof.

Please indicate with an 'X' in the appropriate square how you wish your

votes to be cast on the resolutions set out above. Unless otherwise instructed,

the proxy will vote or abstain from voting at his discretion.Date this ........................ day of .................................. 2018

Shareholder’s Signature ..........................................

FOR AGAINSTORDINARY BUSINESS

1.

To approve the general mandate authorizing the Company to enter into recurrent transactions with related parties or Companies.

I/We……………………………………………….

…………………………………………………….

of…………………………………………………..

F YOU ARE UNABLE TO ATTEND THE MEETING PLEASE NOTE:

A member (shareholder) who is unable to attend the Annual General Meeting is allowed to attend by proxy. The above form has been prepared to enable you to exercise your right to vote,

in case you cannot personally attend the meeting.

Following the normal practice, the chairman of the meeting has been entered on the form to ensure that someone will be at the meeting to act as your proxy, but if you wish, you may insert in the

blank space on the form (marked**) the name of any person, whether a Member of the Company or not, who will attend the meeting and vote on your behalf instead of one of the directors.

If executed by a corporation, the Proxy Form should be sealed with the Common Seal. The Proxy must produce the admission card sent with the Report and Accounts to obtain entrance to the meeting.

Please sign this proxy form and send it, so as to reach the address shown overleaf not later than 11.00am on Wednesday, 18 July 2018.

IMPORTANT(a) The name of the Shareholder must be written in BLOCK CAPITALS on the proxy form where marked.(b) This admission form must be produced by the Shareholder or his proxy.(c) Shareholders or their proxies are requested to sign the admission form before attending the meeting._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ __ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Please admit

ADMISSION FORM

To the Annual General meeting of PPPN Plc which will be held at Golden Tulip FESTAC, on Friday 20th July 2018IMPORTANT NOTE 1. This admission card must be produced by the shareholder or the proxy to obtain admission to the Annual General Meeting. 2. Shareholders or their proxies are requested to sign the admission card in the appropriate place before attending the meeting.

Bolanle Maryanne Oyekan (Mrs.)Company Secretary

Name of Shareholder:

Signature of the person attending:

AFFIXPOSTAGESTAMP

THE REGISTRARAfrica Prudential Plc,220B Ikorodu Road,Palm GroveLagos.

If undelivered please return to

THE REGISTRARAfrica Prudential Plc220B Ikorodu RoadPalm GroveLagosTel: 01-4548118, 4548120

2.

To elect Mr Adedamola Olusunmade as a Director

3.

Re-election of Directors:To re-elect Mr. Abdul Bello as a DirectorTo re-elect Mr. Mukhtar Yakasai as a Director

4.To elect members of the Audit Committee

5.SPECIAL BUSINESSTo fix the remuneration of Directors for 2018.

6.

Election of Directors:

To Authorize Directors to fix remuneration of the Auditors for 2018

Our Loca�ons

Sandtex House105A Adeniyi Jones, Avenue, Ikeja P.M.B. 21782, Ikeja, Lagos. (234) 01 – 631 1271 0817 729 [email protected]/sandtexpaints @sandtex paints/sandtexpaintswww.portlandpaintsng.com

CORPORATE HEADQUARTERS

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IKEJA15 Aromire street, Ikeja Lagos.

IFAKO-GBAGADA1, Onabule Street, Ifako-B/stop, Along Oworosoki Express Road, Lagos.

ILUPEJU10 Majolate StreetIlupeju

LEKKIKm 20, Lagos – Epe Expressway, Igbo Efon Bus-stop, Agungi Village, Lekki Lagos

MUSHIN280 Agege Motor Road, Olorunsogo Bus Stop Mushin Lagos

IBADANOpposite Kamarise House, Bishop Philips Academy, Iwo Road, Ibadan, Oyo State.

ILORIN221, Ibrahim Taiwo Road, By Oko Erin Junc�on,Ilorin, Kwara State.

AKURE131 Oyemekun RoadAkure, Ondo state.

BENIN45 Muritala Mohammed Way, Benin City, Edo State.

WARRI I 107 Effurun/Sapele Road, Beside Mul�line ParkEffurun-Warri, Delta State

WARRI II300A Effurun/ Sapele road,Refinery junc�on, Warri, Delta State.

ONITSHA91 Limca Road Nkpor,Onitsha, Anambra State.

CALABAR75 Egerton street,Calabar, Cross-River State.

PORTHARCOURT 6, Nnamdi Azikwe Road, Leven�s Building, Beside GTBank, Port Harcourt, Rivers State.

ABUJA (ZONE 3)Suite 16, Zone 3 Shopping complex,Maputo Street, Wuse, FCT, Abuja.

ABUJA (ZONE 5)2nd Floor, Sheikh Ahmed Tijani Plaza, Off Micheal Opara Street, Opposite Ibro Hotel, Zone5, Wuse, FCT, Abuja.

ABUJA (GWARIMPA)SUITE FF6 Anafara plaza, Beside MIB Plaza, Opp. Oando filling sta�on, 1st Avenue Gwarimpa ,FCT, Abuja.

ABUJA (JABI)Plot 22 I. T. Igbani Street, Off Awolowo Way, Jabi Business District, Abuja

ABUJA (GUDU)Shop 006, MKK Plaza Abdulsalami Abubakar Road, Gudu, FCT, Abuja.

KANO (Zaria Road)10, Zaria Road, Phone Market Bus/stop, Kano

KANO (Gwarzo Road)237 Dorayi Babba Quarters, Gwarzo, Kano.

JOS40, Murtala Muhammed way,Jos, Plateau State.

SOKOTO5 Ahmadu Bello Way, Sokoto

KADUNA8/9, Cons�tu�on road, Opposite Leadway Assurance, Kaduna


...at the home of quality we go beyond delivering just your paint needs;

we consider and understand your taste, class and lifestyle.

We make your wallsbold, bright and beautiful

[email protected] www.portlandpaintsng.com /SandtexPaints /SandtexPaints @SandtexPaint +234 1 – 631 1271 +234 817 729 0233 Å

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