pppnplc annual report 2015 reviewed final of hempel paints in nigeria. portland paints has a...

2015 ANNUAL REPORT& FINANCIALSTATEMENTS

2015 Annual Report and Financial StatementsPortland Paints & Products Nig. Plc 02

Very Durable Ideal for homes & OfficesHigh Quality Paints For Interior & Exterior Use

0817 7290 233

Contents

DetailsMission, Vision and Shared Values

Company Profile

General Information

Results at a Glance

Notice of Annual General Meeting

Chairman's Statement

Report of the Directors

Directors’ Profiles

Statement of Directors' Responsibilities

Report of the Independent Auditors

Report of Audit Committee

Statement of Profit or Loss and other

Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Statement of Value Added

Five-Year Financial Summary

Mandate of E-Dividend Payment

E-Dividend Mandate Replacement Form

E-Share Allotment Form

E-Share Registration Form

Proxy Form

Business Directory

04

05

06

07

08

09

12

20

23

26

27

28

29

30

31

33

67

68

69

70

71

72

73

74

Pages


Our VisionTo add value, colour and comfort to our

environment

Our Shared ValuesCustomer FocusRespect for IndividualIntegrityTeam SpiritInnovationOpenness & Communication

Our MissionTo be a dominant

player in our chosen line of business


Paints

Company Profile

We produce the widest range of decorative paints known as the SANDTEX PAINTS. Our brand gives the perfect finish on every surface where it is durable, thus giving to our customers the real value for their money. Our specially designed exterior finishes (Sandtex Trowel, Matt and Textured) have five years guarantee, which is legally enforceable.

Sandtex Biocote is an anti-microbial paint that reduces the level of bacterial contamination on wall surfaces and cross contamination between surfaces resulting in a more hygienic environment. It is suitable for Laboratory, Hospitals, Kitchens and Care Homes.

Crown Trade is a renowned professional coating from UK’s largest paint manufacturer - CROWN PAINT. With Crown Trade, Customers can mix and create any colour. Over 15,000 colours of paint is available to the customer in just two minutes using the computerized tinting machine paint technology. This brand of paint is available in our Sandtex Paints Colour Boutique.

We also represent Hempel Denmark, a renowned paint company for marine and protective coatings. Through a joint venture with the company, we now produce in our factory marine/protective coating for the Oil & Gas and Shipping industries for the protection of infrastructure exposed to corrosive and aggressive environments.

Portland Paints & Products Nigeria Plc is a renowned leader in the Nigeria Paints Industry. The company was incorporated as a limited liability on 3rd September 1985 and listed on the floor of the Nigeria Stock Exchange on 9th July, 2009. Portland Paints became a subsidiary of UAC of Nigeria Plc in June 2013 after UAC acquired 51% equity stake in the company.

Who we areWe are the most diversified paint Company in Nigeria and one of the few paint Companies that have followed up on the Federal Government initiative of local content programme in Nigeria, by signing a joint venture agreement with Hempel of Denmark for the local manufacturing of Hempel Paints in Nigeria. Portland Paints has a state-of-the-art factory with a 10,000 litre Mixer, Spectrophotometer and Modern Eiger Torrance Attrition Mills amongst others. Our paints are the best and most durable for exterior and interior finishes.

CertificationPortland Paints and Products Nigeria Plc has certification of ISO 14001: 2004 Quality Management System, ISO 9001:2008 Environmental Management System and MANCAP (Mandatory Assessment Conformity Program).

Our industrial paints also have the trade mark on quality. Our products for industrial coatings include the Red Oxide Primer, Road Marking Paint (reflective & non-reflective), Cellulose Paints, etc.

AUTOMOTIVE ANDINDUSTRIAL COATING

OUR PRODUCTS:


Mr. Larry Ettah Mr. Mukhtar Yakasai Mr. Olufemi Oguntade Mr. Bayo Osibo Mr. Abdul Bello Engr. Dipo Ashafa

- Chairman- Managing Director/Chief Executive- Director - Resigned- Director- Director- Director

Board of Directors

Registered Office

Factory

Sandtex House1O5A, Adeniyi Jones Avenue,Ikeja, Lagos State.

Km 36, Abeokuta — Lagos Expressway,Ewekoro, Ogun State.

Registered Number RC76075

FRCN Number FRC/2O12/OOOOOOOOO0221

Company Secretary

Auditors PricewaterhouseCoopers Landmark Tower, Plot 5B Water Corporation Road, Victoria Island, Lagos.

Adeleke Yusuff Esq,UAC of Nigeria PlcUAC House, Lagos, Nigeria.

Registrar Africa Prudential Registrars Plc (formerly called UBA Registrars Ltd) No. 220B, Ikorodu Road Palmgrove, Lagos.

Bankers Zenith Bank PlcUnited Bank for Africa PlcSkye Bank PlcEcobank Nigeria PlcFirst City Monument Bank Plc


GENERAL INFORMATIONFOR THE YEAR ENDED 31, DECEMBER, 2015


RESULTS AT A GLANCEFOR THE YEAR ENDED 31, DECEMBER, 2015

TURNOVER(Loss)/Profit Before Taxation

Taxation

(Loss)/Profit for the year

Proposed Dividend

(Loss)/Profit attributable to

Equity holders of the company

Total Equity and Liabilities

Shareholders' fund

(Loss)/ Earnings Per Share:Net Assets Per Share (Naira)

Market Price Per share as at 31 December

Market Capitalization as at 31 December

Dec-15

N'000

2,168,480 (258,369)

25,384

(232,985)

-

(232,985)

1,899,281

691,617

(58)

1.73

3.76

1,504,000.00

Dec-14

N'000

2,798,165 194,296

(45,654)

148,643

-

148,643

2,277,558

924,602

37

2.31

3.9

1,560,000.00

% Changes

inc/(Dec)

-23%-233%

-156%

-257%

-257%

-17%

-25%

-257%

-25%

-4%

-4%

Adeleke Yusuff, Esq.,Company Secretary


NOTICE IS HEREBY GIVEN THAT the next Annual General Meeting of the Members of Portland Paints and Products Nigeria Plc will be held at Silas Daniyan Hall, Golden Tulip Festac, Amuwo-Odofin, Lagos State on Tuesday, 7th June, 2016 at 10.00 o'clock in the forenoon in order to transact the following businesses:

Ordinary Business1. To lay before the Members the Report of the

Directors, the audited Statement of Financial Position of the Company, together with the Statement of Comprehensive Income for the for the year ended 31st December 2015 and the Reports of the Auditors and the Audit Committee thereon.

2. Re-election and election of Directors3. To Authorize the Directors to fix the remuneration

of the Auditors4. To Elect Members of the Audit Committee

Special Business5. To Fix the remuneration of the Directors

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.

Right 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 the 7th of June, 2016.

Dated this 24th day of March, 2016BY ORDER OF THE BOARD

Adeleke Yusuff, Esq.,Company SecretaryFRC/2014/NBA/00000007279

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

NOTESClosure of Register and Transfer BooksThe Register of Members and Transfer Books will be

closed on 3rd of June, 2016 for the purpose of updating the Register.

Audit CommitteeThe Audit Committee consisted of two (2) shareholders and two (2) Directors during the year in review. 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.

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 Registrars Plc) or call at the Registrar's Office at 220B, Ikorodu Road, Palmgrove, Lagos during normal business hours or call them on 07080606400.

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 the Annual Report for completion by shareholders to furnish the particulars of their accounts to the Registrar (Afr ica Prudential Registrars Plc) as soon as possible.

NOTICE OF ANNUAL GENERAL MEETING

mailto:[email protected]

mailto:[email protected]

Mr. Larry Ettah, Chairman


Despite the challenges and risks posed by the business environment, your company will continue to consolidate on the restructuring that we have started and seek growth opportunities to deliver returns to our shareholders.


Chairman’s Statement

istinguished Shareholders, Ladies and Gentlemen, I welcome you to the 2015 Annual General Meeting of our company, PORTLAND PAINTS AND PRODUCTS NIGERIA PLC and

pleased to present to you the Annual Report of the Company for the financial year ended 31st December 2015.

Before reporting on our 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 ENVIRONMENTThe Nigerian economy was significantly influenced by the 2015 general elections and election-related activity as well as by various macro-economic challenges that significantly led to reduced commercial activity. The current government assumed office in May 2015 with the benefit of a tremendous amount of goodwill, and the burden of a high level of expectations, from both within and outside the country. As a result, however, of what was thought to be a delay in constituting the federal cabinet, and the uncertainty created by that in relation to the economic policy direction of the Federal Government further slowed down business activities. The year was also characterized by the inability of most State Governments to meet their salary obligations, thus leading to depressed consumer purchasing power.

The National Bureau of Statistics reported that the growth rate of Nigeria's Gross Domestic Product (GDP) in 2015 was about 3%, which was well below the 6.2% growth rate achieved in 2014. Inflation rate rose to 9.6% in December in comparison to 7.9% in the previous year. In terms of the financial markets, the Nigerian Stock Exchange All-Share Index dropped by 17.4% and market capitalization, which

opened at N11.478 trillion at the beginning of the year, had declined by over N1.63 trillion at year end.

Although the Central Bank of Nigeria (CBN) was able to maintain a relative official foreign exchange market stability of about N200/ USD1.00, the prevailing average exchange rate for cash transactions at bureau de change for the US Dollar hovered above N300 to the US dollar. This was despite the various measures adopted by the CBN. The shortage of foreign exchange at official rates, and uncertainty over whether there would be an adjustment to the official exchange rate, was a major drag on business activity.

The year 2015 was also shaped by the insurgency of the Boko Haram terrorist group, which decimated entire communities in the North East of Nigeria displacing hundreds of thousands of people, while destroying lives and properties. Our business also had to grapple with the worsening public power supply, deteriorating roads and various other infrastructure challenges.

FINANCIAL PERFORMANCEAs a result of the difficult and challenging economic and business environment in 2015, your Company recorded a Revenue of N2.17 billion, which was lower by 23% compared to N2.8 billion of the previous year. This resulted into a Loss After Tax of N233 million, compared to N148.6m profit recorded in 2014.

During the year, we commenced a process of restructuring the business and reviewing our route to market model in a bid to ensure that we build a sustainable future for the business. After going through its rigorous renewal process, the company received the Standard Organisation of Nigeria NIS ISO 9001:2008 Quality Management System certification during the year.

D


Chairman’s Statement

OUTLOOK FOR 2016World economic growth for 2016 is projected at 3.4% and growth forecasts for China and India are put at 6.4% and 7.6%, respectively. The National Bureau of Statistics forecasts that the Nigerian economy will expand by 3.8% in 2016. The key issues that will continue to dominate the Nigerian economy are low crude oil prices, unsustainable exchange rate policy, rising interest rates, high inflation, the anti-corruption war and insecurity.

The challenge in the 2016 business environment will be further exacerbated by tight monetary policy, late passage of the National budget, agitation for wage increases from labour and increased regulatory compliance. Our industry has already witnessed unprecedented increases in prices of raw and packaging materials in the face of depressed demand, low consumer purchasing power and non-take-off of capital projects by governments.

Despite the challenges and risks posed by the business environment, your company will continue to consolidate on the restructuring that we have started and seek growth opportunities to deliver returns to our shareholders. We will apply the planned Rights proceeds to minimize the debt exposure risks of our business as well as carry out targeted expansion in our operations. The business will focus on its growth brands as well as make the necessary investment in marketing to improve its brands' awareness and visibility.

BOARD CHANGESSince the last Annual General Meeting, there have been some changes on the Board. The erstwhile Managing Director/CEO, Mr Olufemi Oguntade resigned from the Board with effect from the 23rd of October 2015, while Mr Mukhtar Yakasai was

appointed as the new Managing Director/CEO of the company. Mrs. Adeline Koyenum Ogunfidodo was also appointed to the Board on 24th March 2016. She is a seasoned Accountant, former Finance Director of CAP Plc and currently Finance Director of UAC Foods Limited.

In accordance with the law and Articles of Association of the Company, I will be retiring by rotation, while Mrs Adeline Koyenum Ogunfidodo is being presented for election at this meeting.

APPRECIATIONDistinguished shareholders, I wish to express the appreciation of the Board of Directors to the staff and management of our company for their contribution during what was a very challenging year, as well as implore them not to rest on their oars in the task ahead. My appreciation also goes to our valued customers for their continued patronage and loyalty to our brands and company. I also thank my colleagues on the Board for their support and co-operation. Finally I wish to thank you, our loyal shareholders, for keeping faith with our company and for your support over the years.

Thank you for your attention.

Mr Larry Ephraim Ettah C H A I R M A NFRC/2013/IODN/000000002692

Dec-15 Dec-14N'000 N'000

Revenue 2,168,480 2,798,165(Loss)/Profit before taxation (258,368) 194,297 Taxation 25,384 (45,656)Other Comprehensive Income net of tax - - Total Comprehensive (loss)/income net of tax (232,984) 148,641

Basic (Loss)/Earnings per share (58k) 37k

The directors have the pleasure in presenting their report and the audited financial statements for the year ended 31 December 2015.

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 sanitary wares, and manufacture and marketing of instant road repairs materials and 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 restructuring 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 Directors' ResponsibilitiesThe directors of Portland Paints & Products Nigeria Plc are responsible for the preparation of the financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and of the profit or loss and cash flows for that year. In preparing these financial statements, the directors have selected suitable accounting policies and applied them consistently, made judgements and estimates that are reasonable and prudent and in accordance with International Financial Reporting Standards (IFRS) and Companies and Allied Matters Act, CAP C2O Laws of the Federation of Nigeria, 2004.

The directors are responsible for ensuring that the Company keeps proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company. The directors are also responsible for safeguarding the assets of the Company and taking reasonable steps for the prevention and detection of fraud and other irregularities.

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

The directors do not recommend the payment of dividend for the financial year ended 31st December, 2015 (2014: Nil)

Dividend


REPORT OF THE DIRECTORSFOR THE YEAR ENDED 31, DECEMBER, 2015

Directors The Directors’ who served during the year are:1 Mr. Larry Ettah - Chairman 2 Mr. Mukhtar Yakasai - MD/CEO3 Mr. Olufemi Oguntade - Director - Resigned4 Mr. Bayo Osibo - Director 5 Mr. Abdul Bello - Director6 Eng. Dipo Ashafa - Director

In accordance with Section 256 of the Companies and Allied Matters Act, CAP C2O, Laws of the Federation of Nigeria 2004 and in line with Article 95 of the Company's Articles of Association, Mr. Larry Ettah is retiring by rotation while Mrs. Adeline Ogunfidodo would be presented for election at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election and election, respectively.

Records of Directors' AttendanceIn accordance with the provisions of Section 258(2) of the Companies and Allied Matters Act, 1990, the Record of Directors' Attendance at Board Meetings held in 2015 is available at the Annual General Meeting for inspection.

Directors' ShareholdingsThe direct and indirect interests of directors in the issued share capital of the Company as recorded in the Register of Directors' Shareholdings and as notified by the directors for the purposes of Sections 275 and 276 of the Companies and Allied Matters Act, 1990 and the Listing Requirements of the Nigerian Stock Exchange are as follows:


The Board of DirectorsThe matters reserved for the Board of Directors are as contained in the Memorandum and Articles of Association of the Company, the Companies & Allied Matters Act, LFN 2004 and the Code of Corporate Governance in Nigeria, 2011. The positions of the Board Chairman and Managing Director are held by different persons.

Directors' Induction and TrainingEvery newly appointed Director receives a comprehensive letter of appointment detailing the term of reference of the Board and its Committees, the Board structure, board plan for current year, his entitlements and demand on his time as a result of the appointment. The letter of appointment is accompanied with the Memorandum and Article of Association of the Company, previous year's Annual Report & Financial Statements and the Code of Corporate Governance for Public Companies in Nigeria.

This helps the Director to gain an understanding of the Company, its history, culture, core values, governance framework, business principles, people, operations, brands, projects, policies, processes, procedures and plans.

A new Director undergoes an induction/orientation program whereby he is introduced to the members of the Board of Directors and leadership team of the Company.

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

Board EvaluationA Board evaluation was undertaken in 2015 to renew the performance of the Board, Board Committees and individual Directors were adjudged satisfactory and necessary feedbacks were given to individual Directors arising from the exercise.


a) 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, 000,000

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 N2O, 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, N180, 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) Authorised, Issued and Fully Paid 400 million Ordinary shares of 50 kobo each:

Share Capital History

Number of Shareholders

198

48228

826

925

542

68,017 126,469 8,066,263 653,985 6,858,018 6,689,000 377,538,248 400,000,000

Units

0%0%2%0%2%2%94%100%

Units %

Analysis of Shareholdings According to the register of members as at 11 March, 2016 the spread of Shareholdings in the Company was as follows:

Number of Shares

Dec-15

238,877

Number of Shares

Dec-14

238,877 Engr. Dipo Ashafa

Range

1 – 1,0001,001 – 5,0005,001 – 50,00050,001 – 100,000100,001 – 500,000500,001 – 1,000,0001,000,001 – 250,000,000

Dec-15 Dec-14N'000 N'000

200,000

200,000

Number of Shares %

UAC of Nigeria Plc 258,837,400 64.71%

g) The shareholders who have more than 5% holding are as follows:



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.

Property, Plant and EquipmentInformation 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.

Corporate Governancei) The company is committed to best practice and procedures in corporate governance. Its business is

conducted in a fair, honest and transparent manner which conforms to high ethical standards.ii) The Board consists of six (6) Directors, made up of five non-Executive Directors and one Executive Director.

The company has a non-Executive Chairman and a Managing Director who is the Chief Executive Officer. During the year, the Managing Director resigned his appointment and Mr. Mukhtar Yakasai was appointed the substantive Managing Director / Chief Executive Officer with effect from 23rd October, 2015.

iii) Board meetings are held quarterly. However, special or emergency board meetings are convened whenever the need arises.

iv) The Board takes decisions on policy matters and directs the affairs of the Company, allocates resources, sets overall corporate targets and monitor strategies and plans.

15/12/15

P

R

AWP

AWP

P*

P

Board MeetingsAttendance at board meetings during the year were as follows:

Names 16/3/15 22/4/15 26/5/15 23/10/15Mr. Larry EttahChairman P P P P

Mr. Olufem i OguntadeManaging Director / CEO P P P R

Mr. Bayo OsiboMember AWP P P P

Mr. Abdul BelloNon- Executiv e Director P P P P

Mr. Mukhtar YakasaiNon-Executive Director P P P P*

Engr. Dipo AshafaNon-Executiv e Director P P P P



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;

Members of Committee No. of Meetings Held No. of meetings AttendedMr. Bayo Osibo (Chairman) 4 3Mr. Olufemi Oguntade 4 3Mr. Abdul Bello 4 4Mr. Mukhtar Yakasai 4 4Eng. Dipo Ashafa 4 4



P PresentAWP Absent with Apology

R ResignedP* Attending in the capacity of Managing Director.

Risk and Governance Committee:

Attendance at audit committee meetings during the year were as follows:

In conformity with the Code of Best Practice in Corporate Governance, the following Committees were established:

Names 21/11/15 13/3/15 21/4/15 21/7/15 22/10/15Mr Shamsideen O. BalogunChairman P P P P P

Mr. Bayo OsiboMember P AWP P P P

Com rade Sulaim on B. AdenreleMember P P P P P

Mr. Mukhtar YakasaiMember P P P P P*

The Risk and Governance Committee consists of one Executive Director and four non-Executive Directors and 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.



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 ReportEmployee Involvement and TrainingThe company is committed to keeping employees fully informed as much as possible regarding its performance and progress and seeks their views wherever practicable on matters, which particularly affect them as employees.

Our people are our most important assets and we continue to make investments in developing their competencies. The company's expanding skill base has extended to a range of training provided and has broadened opportunities for career development within the organization.

Incentive schemes and awards designed to meet the circumstances of each individual are periodically implemented wherever appropriate and some of these include productivity bonus.

Employee WelfareThe Company provides heavily subsidized canteen services to employees in its various operations for health and motivation reasons. We pursue a number of programs aimed at ensuring that our employees enjoy work-life balance. Employees are encouraged to take their annual vacation when it becomes due.

The Company believes this will provide them opportunity to be refreshed and renewed to perform better on their jobs. It is the Company's policy not to allow accumulation of leave beyond one year and such must be at the instance of the Company under special circumstances. Work is organized to enable our employees work within official business hours in order to discharge their social life and family obligations.

Employee RelationsOur employees are fully involved in 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 and exchange ideas on critical business issues with one another and different levels of management. Periodic village meetings of employee and leadership team weekly meetings. These meetings are regularly complemented by circulars on Company policies and issues of current relevance to the business and employees.

Health, Safety at Work and Welfare of EmployeesWe attach utmost significance to the issues relating to the Health, Safety and Environment (HSE) of our premises and people. HSE policies, processes and procedures are in place in the Company in line with laws



and regulations in force in Nigeria. HSE is further entrenched in the minds of staff through monthly meeting where various aspects on staff wellbeing are discussed such as health talk on Cancer, Best Dietary Practices, Blood Pressure Management, Fire Drills etc.

Employment of Disabled PersonsApplications for employment by physically challenged persons are always fully considered. The Company does not discriminate against any person on grounds of physical disability bearing in mind the respective aptitudes and abilities of the applicants concerned.

Post Balance Sheet EventUAC of Nigeria Plc acquired additional 7% interest in Portland Paints & Products Nigeria Plc in February 2016.This takes the shareholdings of UAC of Nigeria Plc in Portland Paints & Products Nigeria Plc to 71.71%

AuditorsMessrs. PricewaterhouseCoopers, having indicated their willingness to continue in office pursuant to Section357 (2) of the Companies and Allied Matter Act, CAP C20 Laws of the Federation of Nigeria, 2004.

BY ORDER OF THE BOARD

Adeleke Yusuff, Esq.,Company SecretaryLagos Nigeria

Date: 24th March, 2016


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 (“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 acting 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 his current position as Chief Executive Officer and Group Managing Director of UACN Plc in January 2007.

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



Mukhtar Yakasai, Managing Director / Chief Executive Officer

Alhaji Mukhtar Yakasai obtained a bachelor's degree in Agricultural Economics and an MBA from Ahmadu Bello University, Zaria, in 1984 and 1998 respectively. He has attended various national and international courses and is an alumnus of Ashridge Business School, United Kingdom. He holds an honorary fellowship of the Institute of Administrative Management of Nigeria (“FIAMN”), and is also an associate member of the Nigerian Institute of Management.

He joined Chemical and Allied Products Plc, now a subsidiary of UACN Plc in July 1985,

where he served in various positions, including Regional Sales Manager, National Sales Coordinator, Business Manager-Flame Guard and CAP Decorators, General Manager Business Development, and General Manager Paints. He was appointed the Managing Director of Spring Waters Nigeria Limited (SWAN) in February 2005 and Managing Director of Warm Spring Waters Nigeria Limited (GOSSY) in July 2009. Before his recent appointment as Managing Director of Portland Paints, he was the Special Projects Manager at UACN Plc with the responsibility for Strategy and other strategic initiatives of the UACN Group.

Alhaji Yakasai was appointed to the Board of Portland Paints as a non-Executive Director in June 2013 and became the Managing Director / Chief Executive Officer on October 23, 2015.




Mr Bayo Osibo attained his Bachelor's degree in Biochemistry from the University of Ibadan in 1976, and an MBA from the University of Lagos in 1978. He is a Life Fellow of the Chartered Institute of Corporate Management as well as a fellow of the Institute of Marketing.

He joined Portland Paints Nigeria Limited, then a subsidiary of West Afr ica Portland Cement Plc (“WAPCO”), in 1984 as the National Sales Manager. While working at the Company, he served in various positions and was later appointed the Managing Director in March 2004. He served in this role for 9 years before his retirement in 2013. He was the Chairman of Paints Manufacturers Association of Nigeria from 1993 to 2003.

After his retirement, Mr Osibo was appointed as a Non-Executive Director of Portland Paints.

Mr. Bello is a fellow of the Institute of Chartered Accountants of N i g e r i a . H e h a s a t t e n d e d l e a d e r s h i p p ro g ra m m e s a t Cranfield University, The Wharton S c h o o l o f t h e U n i v e r s i t y o f Pennsylvania and Harvard Business School. He is an alumnus of Oxford University's Advanced Management and Leadership Programme.

He has worked variously as Chief A c c o u n t a n t , I n l a k s P l c ; Chief Accountant and Financial Controller, Grand Cereals Limited; Senior Group Accountant, UACN; Finance Director & Company Secretary and later Managing Director of CAP Plc. He was the Managing Director of UPDC Plc from November 2007 until his elevation to the Board of UAC as Chief Financial Officer in January 2010. He was appointed to the Board of PPPN PLC on 28th June 2013 as a Non-Executive Director.

Mr. Bayo Osibo Non Executive Director

Mr. Abdul BelloNon Executive Director

Engineer Dipo Ashafa completed his b a c h e l o r ' s d e g r e e i n C i v i l engineering at the University of Lagos in 1975, and obtained a Masters of Engineering degree in 1981 at the Cal i forn ia 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.

Engr. Dipo Ashafa Independent

Non Executive Director

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 include ensuring that the Company:

(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.

Mukhtar Yakasai (MD/CEO)FRC/2015/NIM/00000013278

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


STATEMENT OF DIRECTORS’ RESPONSIBILITIESFOR THE YEAR ENDED 31, DECEMBER, 2015

24th March, 2016

Financial Statements



REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF PORTLAND PAINTS AND PRODUCTS NIGERIA PLCReport on the financial statementsWe have audited the accompanying financial statements of Portland Paints and Products Nigeria Plc ("the company")- These financial statements comprise the statement of financial position as at 31 December 2015 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors' responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Companies and Allied Matters Act and for such internal control, as the directors determine necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor's responsibilityOur responsibility is to express an independent opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion the accompanying financial statements give a true and fair view of the state of the company's financial affairs at 31 December 2015 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act and the Financial Reporting Council of Nigeria Act.

Report on other legal requirementsThe Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) the company has kept proper books of account, so far as appears from our examination of those books and returns adequate for our audit have been received from branches not visited by us;

iii) the company's statements of financial position and comprehensive income are in agreement with the books of account.

For: PricewaterhouseCoopersChartered Accountants Lagos, Nigeria

Engagement Partner: Edafe Erhie FRC/2013/ICAN/00000001143

REPORT OF THE AUDIT COMMITTEETO THE MEMBERS OF PORTLAND PAINTS AND PRODUCTS NIGERIA PLC

"In compliance with Section 359(6) of the Companies and Allied Matters Act CAP C20, Laws of the Federation of Nigeria, 2004, we have reviewed the audited Financial Statements of the Company for the year ended 31st December, 2015 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 31st December, 2015 were, in our opinion adequate.

(c) We reviewed the findings and recommendations in the Internal Auditor's Report and the 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 31st December, 2015.

Mr. Shamsideen O. Balogun FRC/2015/NIM/00000013086 Chairman, Audit Committee

Dated 23rd of March, 2016

Members of the Committee:Mr Shamsideen Balogun Chairman Mr Mukhtar Yakasai MemberComrade Sulaiman B. Adenrele MemberMr Bayo Osibo Member



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

Dec-15 Dec-14Note N'000 N'000

Revenue 3 2,168,480 2,798,165

Cost of sales 5 (a) (1,270,822) (1,492,342)

Gross Profit 897,658 1,305,823

Other Operating Income 4 53,300 102,469

Selling and distribution expenses 5 (a) (414,557) (486,580)

Administrative expenses 5 (a) (673,506) (617,216)

(Loss)/Profit from Operations (137,105) 304,496Finance Income 6 3,276 4,860

Finance Expenses 6 (124,540) (115,060)

Net Finance Expenses (121,264) (110,200)

(Loss)/Profit Before Taxation (258,369) 194,296Taxation 7 25,384 (45,654)

(Loss)/Profit for the year (232,985) 148,642

Other Comprehensive Income - -

Total Comprehensive Income/(loss) (232,985) 148,642

(Loss)/ Earnings Per Share:Basic & Diluted (Kobo) 8 (58k) 37k

The notes on pages 33 to 65 form an integral part of these financial statements


Abdul Wasiu Taiwo (Finance Manager) FRC/2013/ICAN/00000002588

Mukhtar Yakasai (MD/CEO) FRC No: FRC/2015/NIM/00000013278

Mr Larry E. Ettah (Chairman) FRC No: FRC/2013/IODN/00000002692

The audited financial statements on pages 28 to 68 was approved by the board of directors on 24 March 2016 and signed on its behalf by:

STATEMENT OF FINANCIAL POSITIONFOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

Note Dec-15 Dec-14N'000 N'000ASSETS:

Non - current assets:Property, plant and equipment 9 456,202 547,040 Intangible assets 10 124,685 164,159Prepayments 12 10,789 25,032 Total non - current assets 591,676 736,231

Current assets:Inventories 11 616,287 756,541Trade and other receivables 12 467,700 504,841 Prepayments 12 62,174 54,895 Cash and cash equivalents 14 161,444 225,050Total current assets 1,307,605 1,541,327

Total assets 1,899,281 2,277,558

EQUITY & LIABILITESEquity:Issued share capital 17 200,000 200,000 Revaluation Reserve 17 91,923 91,923 Retained earnings 399,694 632,680

Total Equity 691,617 924,603

Non current liabilities:Borrowings 13 101,571 237,407 Government grants 13 32,240 69,662Deferred tax liabilities 16 19,106 74,278Total non current liabilities 152,917 381,347

Current liabilities:Trade and other payables 15 885,194 728,008 Borrowings 13 124,297 162,384 Government grants 13 24,516 11,609 Income tax payable 16 20,741 69,608 Total current liabilities 1,054,748 971,609

Total liabilities 1,207,665 1,352,956

Total equity and liabilities 1,899,281 2,277,558

FRC No:


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

Share Capital Revaluation

ReserveRetained Earnings Total Equity

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

1 January, 2014 200,000 91,923 484,037 775,960

Profit for the year - - 148,642 148,642

31 December, 2014 200,000 91,923 632,679 924,602

1 January, 2015 200,000 91,923 632,679 924,602

Loss for the year - - (232,985) (232,985)

31 December, 2015 200,000 91,923 399,694 691,617

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

Dec-15 Dec-14Note N'000 N'000

Cash flows from operating activities:Cash generated from operations 18 328,026 205,381

Income Tax paid 16 (78,655) (29,485)

Net cash generated from operating activities 249,371 175,896

Cash flows from investing activities:Purchase of property, plant and equipment 9 (34,895) (121,495)

Proceeds from sale of property, plant and equipment 19,562 19,192

Finance income 6 3,276 4,860 Net cash flows generated from investing activities (12,057) (97,443)

Cash flows from financing activities:Proceeds from Borrowings - 458,206

Repayments of Borrowings (176,380) (196,402)

Interest paid 6 (124,540) (115,060)

Net cash used in/generated from financing activities (300,920) 146,744

Net (decrease)/increase in cash and cash equivalents (63,606) 225,197

Cash and cash equivalents at start of the year 225,050 (147)Cash and cash equivalents at end of the year 14 161,444 225,050



NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

1.O Corporate Information Portland 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 Sandtex House 105A, Adeniyi Jones Avenue, Ikeja, Lagos State.

The principal activities of the Company are manufacturing and sale of paints, marketing of sanitary ware, manufacture and marketing of Instant Road Repair materials. The main products of the Company are Sandtex high quality Decorative Industrial Paints and Hempel Marine Protective Coatings for Oil and Gas Sector.

2.0 Summary of significant accounting policies2.1 Basis of preparation The financial statements of Portland Paints and Products Nigeria Plc have been prepared in accordance

with International Financial Reporting Standards (IFRS), the provisions of the Companies and Allied Matters Act, CAP C2O Laws of the Federation of Nigeria 2004 and Financial Reporting Council of Nigeria Act, No 6, 2011.

The policies set out below have been consistently applied to all the years presented as approved by the Board of Directors. The financial statements have been prepared on a going concern basis.

2.1.1 Basis of Measurement The financial statements have been prepared on a historical cost basis modified by the revaluation of land

and building at a fair value. The 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.

2.2 Changes in accounting policy and disclosures(a) New and amended standards adopted by the Company A number of new annual improvements to IFRSs 2010-2012 and 2011-2013 cycles were effective for the first

time for financial reporting periods commencing on or after l January 2015. 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 and amended standards not yet adopted by the CompanyThe following relevant IFRS and IFRIC interpretations which are effective for the first time for the financial year

beginning on or after l January 2016 have not yet been adopted by the Company. The Company has not elected to early adopt and the impact of the new standards that are applicable to the Company is still being assessed.

I) IFRS 15, 'Revenue from contracts with customers' The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers

contracts for goods and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service

transfers to a customer - so the notion of control replaces the existing notion of risks and rewards. A new five-step process must be applied before revenue can be recognised: 1) identify contracts with customers 2) identify the separate performance obligation 3) determine the transaction price of the contract


4) allocate the transaction price to each of the separate performance obligations, and 5) recognise the revenue as each performance obligation is satisfied.

Key changes to current practice are:1) Any bundled goods or services that are distinct must be separately recognised, and any discounts or

rebates on the contract price must generally be allocated to the separate elements.2) Revenue may be recognised earlier than under current standards if the consideration varies for any reasons

(such as for incentives, rebates, performance fees, royalties, success of an outcome etc) - minimum amounts must be recognised if they are not at significant risk of reversal.

3) The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in time at the end of a contract may have to be recognised over the contract term and vice versa.

4) There are new specific rules on licenses, warranties, non-refundable upfront fees and, consignment arrangements, to name a few.

5) As with any new standard, there are also increased disclosures.

These accounting changes may have flow-on effects on the entity's business practices regarding systems, processes and controls, compensation and bonus plans, contracts, tax planning and investor communications.

Entities will have a choice of full retrospective application, or prospective application with additional disclosures.

ii) Disclosure Initiative - Amendments to IAS1 The amendments to IAS 1 Presentation of Financial Statements are made in the context of the IASB's

Disclosure Initiative, which explores how financial statement disclosures can be improved. The amendments provide clarifications on a number of issues, including:

1) Materiality - an entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance.

2) Disaggregation and subtotals - line items specified in IAS 1 may need to be disaggregated where this is relevant to an understanding of the entity's financial position or performance. There is also new guidance on the use of subtotals.

3) Notes - confirmation that the notes do not need to be presented in a particular order.4) OCI arising from investments accounted for under the equity method - the share of OCI arising from equity-

accounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income.

2.3 Significant accounting judgements, estimates and assumptions The 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.


(cont’d)



2.3.1 Accounts receivable The 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 12.

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 Impairment of non-financial assets. The company reviews other non-financial assets for possible impairment if there are events or changes in

circumstances that indicate that the carrying values of the assets may not be recoverable, or at least at every reporting date, when there is any indication that the assets might be impaired. If any such indication exists, the Company estimates the recoverable amount of the relevant assets.

2.3.4 Revaluation of land and building The Company has a revaluation policy for items of land and building. Management assesses the carrying

amount of these items at the end of each reporting period to ensure that the carrying amount represents the best estimate of fair value. As at 31 December 2015 no revaluation adjustments were deemed necessary due to the fact that the property is located in an area where fair value is not expected to fluctuate significantly.

2.3.5 Impairment of intangible assets with indefinite life Externally 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 cashflows from the use of the asset in perpetuity. There were no contractual commitment as at 31 December, 2015.

2.4 Summary of significant accounting policies2.4.1 Intangible Assets Intangible 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

(cont’d)



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 lives Trade Mark Indefinite Computer software 20%

2.4.2 Property Plant and Equipment Land and Building 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 prospectively, 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.

2.4.3 Assets on lease Finance 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

(cont’d)



a constant periodic rate of interest on the remaining balance of the liability Category Useful lives Long leasehold land Over the lease period Freehold buildings 2% Plant and machinery 10% Furniture, fittings and equipment 10% Motor vehicles 20% Computer equipments 33.33%

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 share Basic 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 Impairment of non-financial assets Property, 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 Pic 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.

2.4.6 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-ln-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 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 necessarv to make the sale.

(cont’d)



2.4.7 Financial instruments A 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.

2.4.7.1 Financial Asset Classification The 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 financial assets at initial recognition.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market.

Subsequent measurement Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective

interest rate method.

Derecognition of financial assets A 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 assets The 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 amortised cost For 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

(cont’d)



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 amortised 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.

2.4.7.2 Financial liabilities Classification The financial liabilities are at amortised 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 recignised initially at fair value and subsequently, measured at

amortised 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 liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or

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

2.4.7.3 Offsetting financial instruments Financial 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,insolvency or bankruptcy of the Company or the Counterparty.

2.4.8 Cash and cash equivalent Cash 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.

2.4.9 Taxes • Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be

recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount

(cont’d)



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 tax Deferred 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.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority and there is an intention to settle the balance on a net basis.

• Sales tax Revenues, 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 tax is 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.

2.4.10 Government grants Grants for expenditure are netted against the relevant expenditures as and when these are recognized in

profit and 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

(cont’d)



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.

2.4.11 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.

2.4.12 Revenue recognition Revenue 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 be met before revenue is recognised.

Sale of goods Revenue 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 services Revenue from painting services is recognised as income from special 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.

2.4.13 Interest income All financial instruments measured at amortised 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.

2.4.14 Borrowing cost Specific 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

(cont’d)



are capitalized by applying the weighted average cost of the borrowing cost proportionate to the expenditure on the asset.

2.4.15 Foreign currency The 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).

2.4.16 Segment reporting The 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.

2.4.17 Employees' benefits Employees' 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 18%,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.

3 Segment Information: 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. - Portland Bathroom segment, which markets and distributes ranges of sanitary ware products.

No other segment has been aggregated to form the above listed reportable operating segments. The chief operating decision maker (CODM) has been identified as the Managing Director. The Managing

Director 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 net profit or loss and is measured consistently with net profit or loss in the combined financial statements. However, the segment liabilities are absorbed by the decorative segment having the highest segment profit.

(cont’d)



(i) Income Decorative Marine PaintsPortland

Bathrooms TotalDec-15 Dec-15 Dec-15 Dec-15N'000 N'000 N'000 N'000

Revenue:Total Revenue 1,598,993 544,716 24,771 2,168,480 Inter-segmental revenue - - -

Total Revenue From External Customers 1,598,993 544,716 24,771 2,168,480Company's Revenue per Statement of Comprehensive Income 1,598,993 544,716 24,771 2,168,480

Depreciation (64,429) (20,317) - (84,746)Amortisation (30,395) (9,079) - (39,474)

Segment Profit 1,504,169 515,320 24,771 2,044,260

Operating Expenses (1,685,634) (529,935) (15,509) (2,231,078)Depreciation on Factory Building (3,587) - - (3,587)Finance Income 37,230 (20,615) (13,339) 3,276 Finance Expense (95,896) (28,644) - (124,540)Other Income 53,073 - 227 53,300 Company's Loss Before Tax (190,645) (63,874) (3,850) (258,369)

Decorative Marine PaintsPortland


Revenue:Total Revenue 2,173,526 427,670 196,969 2,798,165

Total Revenue From External Customers 2,173,526 427,670 196,969 2,798,165

Company's Revenue per Statement of Comprehensive Income 2,173,526 427,670 196,969 2,798,165

Depreciation (57,127) (20,020) (6,964) (84,111)Amortisation (27,237) (9,079) (3,158) (39,474)

Segment Profit 2,089,162 398,571 186,847 2,674,580

Operating Expenses (1,987,191) (331,079) (151,350) (2,469,620)Depreciation on Factory Building (2,933) - - (2,933)Finance Expense (79,391) (26,464) (9,205) (115,060)Finance Income 4,860 - - 4,860 Other Income 102,469 - - 102,469

Company's Profit Before Tax 126,976 41,028 26,292 194,296

(cont’d)



Production activities in the factory are 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.

(cont’d)

Sale (N'000) Segment % of saleCustomer 1 272,595 MarineCustomer 2 246,620 MarineTotal 519,215

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

Two customers accounted for 24% of total sales in the period. Below are the details;

1311

24



(ii) Assets & Liabilities Decorative Marine PaintsPortland


Reportable Segment Assets:Addition to Non-current Assets 34,895 - - 34,895 Inventories 400,587 123,257 92,443 616,287 Other Segment Assets 596,138 256,599 192,449 1,045,186 Factory Office Property 202,913 - - 202,913

Total Company Assets 1,234,534 379,856 284,892 1,899,282

Reportable Segment Liabilities:Loans and Borrowings 225,868 - - 225,868 Defined Contribution Pension Scheme 7,395 - - 7,395 Government Grant 56,756 - - 56,756 Deferred Tax Laibilities 19,106 - - 19,106 Other Liabilities 898,540 - - 898,540

- Total Company Liabilities 1,207,665 - - 1,207,665

Decorative Marine PaintsPortland


Reportable Segment Assets:Addition to Non-current Assets 121,495 - - 121,495 Inventories 491,752 151,308 113,481 756,541 Other Segment Assets 667,917 304,204 228,153 1,200,274 Factory Office Property 199,249 - - 199,249

Total Company Assets 1,480,412 455,512 341,634 2,277,558

Reportable Segment Liabilities:Loans and Borrowings 399,791 - - 399,791 Defined Contribution Pension Scheme 10,014 - - 10,014 Government Grant 81,271 - - 81,271 Deferred Tax Laibilities 74,278 - - 74,278 Other Liabilities 787,602 - - 787,602

Total Company Liabilities 1,352,955 - - 1,352,955

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

(cont’d)



Dec-15 Dec-144 Other Operating (Loss) / Income: N'000 N'000

Government grants 24,516 24,534 Profit on sale of property, plant & equipment 3,092 4,205 Sale of scrap 1,827 3,412 Insurance claim received 535 1,483 Income from executed projects 2,024 18,747 Exchange gain - 4,294 Franchisee Fee 15,949 42,614 Toll Manufacturing 229 1,894 Rental Income - 749 Container Deposit Refund 1,095 - Other income 4,033 537 Total 53,300 102,469

5 (a) Expense by functionCost of sales 1,270,822 1,492,342Selling & distribution expenses 414,557 486,580 Adminstrative expenses 673,506 617,216

2,358,885 2,596,138

5 (b) Expenses by natureChange in inventories of finished goods and work in progress 1,270,822 1,492,342Amortization of intagible assets 39,474 39,474Depreciation on property, plant and equipment 109,258 115,326Staff costs 284,830 304,616Marketing Support 131,755 176,415Distribution costs 142,133 107,436Repairs and maintenance 29,608 69,311Advert and promotional expenses 31,510 54,384Management fee 21,685 28,194Auditors' fees 10,735 10,000Bad debt provision 111,664 22,437Information technology 49,570 37,604Rent & rates 8,635 30,512Legal fees 43,451 27,960Travelling expenses 42,814 41,114Exchange loss 4,695 - Other expenses 26,246 39,013

2,358,885 2,596,1386 Finance income:

Interest received on bank deposits 3,276 4,860 Total 3,276 4,860

Finance costs:Interest on debts and borrowings 124,540 110,480 Finance charges payable under finance lease -

4,580 Total 124,540 115,060

7 Taxation(i) Tax on profits for the year:

Company income tax 8,209 49,589 Education tax 852 5,729

9,061 55,318 Deffered tax (55,172) (9,664)Additional tax liability - back duty 20,727 - Total current tax (25,384) 45,654

(cont’d)



(ii) Reconciliation of tax charge:Profit / (Loss) before tax (258,369) 194,296

Tax at Nigerian's statutory income tax rates (77,511) 58,289 Disallowable expenses 100,878 44,178 Disallowable income (10,586) (16,535)Balancing charge 3,949 5,757 Tax effect of capital allowance (8,520) (42,100)Education tax @2% of assessable profit 852 5,729 Total tax charge for the year 9,061 55,318

8 Earnings per share

Net (Loss)/profit attributable to ordinary equity holders (232,985) 148,642

Weighted average number of ordinary shares for basic earnings per share 400,000 400,000

Basic (Loss)/earnings per share (in kobo) (58k) 37k

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

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

(cont’d)



9 Property, plant and equipment

COSTAt 1 January 2014AdditionsTransfersDisposal

At 31 December 2014

At 1 January 2015AdditionsDisposal

At 31 December 2015

DEPRECIATIONAt 1 January 2014AdditionsDisposal

At 31 December 2014

At 1 January 2015AdditionsDisposal

At 31 December 2015

NET BOOK VALUE

At 31 December 2015At 31 December 2014

Land

N'000

40,000 - - -

40,000

40,000 - -

40,000

- -

-

- - -

-

40,000 40,000

Factory Building

N'000

146,492 19,420

- -

165,912

165,912 7,252 -

173,164

3,730 2,933

6,663

6,663 3,587

10,250

162,914 159,249

Plant and Machinery

N'000

344,032 55,487 16,445 (10,910)

405,054

405,054 5,955 (15,849)

395,160

190,767 27,732

(5,732)

212,767

212,767 32,634

(15,848)

229,553

165,607 192,287

Furniture & Fittings

N'000

184,749 16,245 4,500

(4,462)

201,032

201,032 22,582 (82,835)

140,779

97,959 34,278

(2,628)

129,609

129,609 40,062

(72,021)

97,650

43,129 71,423

Computer Equipments

N'000

26,587 2,612

- (2,358)

26,841

26,841 -

26,841

18,472 6,388

(1,903)

22,957

22,957 -

22,957

3,884 3,884

Motor Vehicles

N'000

238,053 13,732

- (24,778)

227,007

227,007 2,471 (31,869)

197,609

134,229 43,995

(17,415)

160,809

160,809 32,975 (26,209)

167,575

30,034 66,197

Work-in-Progress

N'000

20,945 13,999 (20,945)

-

13,999

13,999 (3,365)

-

10,634

- -

-

- - -

-

10,634 13,999

Total

N'000

1,000,858 121,495 -

(42,508)

1,079,845

1,079,845 34,895

(130,553)

984,187

445,157 115,326

(27,678)

532,805

532,805 109,258 (114,078)

527,985

456,202 547,040

Fair Value of land and building: The company land and buildings were fair valued as at 31 December 2012 by Obosi Eleh & Co. (Estate

Valuer), an accredited independent professional valuer who holds relevant professional qualifications and have recent experience in the location and categories of the properties valued. The fair value measurement is based on its "highest and best use" and its represents the price that would be received to sell the property

in an orderly transaction between market participant. Fair value is determined by reference to market-based evidence, based on active market prices, adjusted for any difference in the nature, location or condition of the specific property and falls within level 2 fair value hierarchy which are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Management is of the opinion that the value represents the value as at 31 December, 2015 as the property is situated in Ewekoro village where prices are not expected to fluctuate significantly year on year. Other items of PPE were carried at cost, duly reviewed for impairment as at 31 December, 2015, no impairment provision is deemed necessary.

Included in motor vehicles is the carrying amount of the leased vehicles that was completely liquidated in 2014.

Depreciation amounting to N109m (Dec 2014-N115m) was charged to income statement, which consist of N33m (Dec 2014-N35m) charged to cost of sales, N57m (2014- N53) to administrative expenses and N19m (2014-N27m) to selling and distribution expenses.

(cont’d)



Trade MarkComputer Software Total

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

COSTAt 1 January 2014 49,024 197,368 246,392

At 31 December 2014 49,024 197,368 246,392

At 1 January 2015 49,024 197,368 246,392

At 31 December 2015 49,024 197,368 246,392

AMORTIZATIONAt 1 January 2014 - 42,760 42,760 Charge for the year - 39,473 39,473

At 31 December 2014 - 82,233 82,233

At 1 January 2015 - 82,233 82,233 Charge for the year - 39,474 39,474

At 31 December 2015 - 121,707 121,707

NET BOOK VALUE

At 31 December 2015 49,024 75,661 124,685

At 31 December 2014 49,024 115,135 164,159

The Company's intangible asset represents the N49m trade mark purchased from Blue Circle Industries Pic adjudged to have an indefinite life. N197m relates to investment on licence and technical agreement on oracle ERP applications. The oracle ERP application was acquired in year 2012 and put to use December 2012, to be amortised to income statement over a period of five years. The trade mark is carried at cost to be tested annually for impairment, at present no impairment is deemed required and there is no contractual commitment as at 31 December, 2015.

Intangible assets amortization charged to income statement amounts to N39m (2014-N39m) included as part of administrative expenses.

(cont’d)



Dec-15 Dec-14 N'000 N'000

11 Inventories:Raw Materials 96,179 103,854 Packaging Materials 22,389 25,978 Work in progress 6,940 13,813 Goods In Transist 3,294 11,350 Finished Goods 504,369 599,328 Spare Parts 15,888 17,948 Diesel 3,180 3,887 Stock Impairment (35,952) (19,617)

Total 616,287 756,541

Dec-15 Dec-14N'000 N'000

12 Trade and Other Receivables(i) Trade receivables 560,140 493,550

Less: Allowance for impairment of trade receivables - (Note 12iii) (204,841) (93,177)Net receivables 355,299 400,373 Receivables from related parties 701 8,383 Witholding tax receivable 16,968 24,220 VAT receivable 32,411 28,073 Other receivables 62,321 43,792

467,700 504,841

(ii) PrepaymentsPrepayments - Current 62,174 54,895 Prepayments - Non Current portion 10,789 25,032 Total prepayments 72,963 79,927

The amount of write-down on inventories to net realizable value recognised as an expense is N36m (2014:19.6m). This represents provision 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.

The balance on prepayment represents rent, medical 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-15 Dec-14N'000 N'000

Trade receivables 355,299 400,373 Receivables from related parties (Note 19) 701 8,383 Witholding tax receivable 16,968 24,220 VAT receivable 32,411 28,073 Other receivables 62,321 43,792 Total 467,700 504,841

(cont’d)


Dec-15 Dec-14N'000 N'000

(iii) Allowance for impairment of trade receivables:As at 1 January 93,177 70,740 Additional allowance for receivable impairment 111,664 22,437 As at 31 December 204,841 93,177


Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 31 December 2015 were reviewed for impairment test and additional impairment charge of N111.7m was booked for the period (2014: N22.4m).

13 Borrowings: Dec-15 Dec-14N'000 N'000

(i) Non-Current Borrowings:Bank loans:Long term liabilities - Note 13(iii) 101,571 237,407 Non Current Borrowings 101,571 237,407

(ii) Current Borrowings:Bank loans:Long term liabilities due within one year 124,297 162,384 Current Borrowings 124,297 162,384

Total Borrowings 225,868 399,791

The borrowings were secured with the followings:

Current Borrowings: The bank loans and import finance facility were secured with the following: - Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at

December 2011, by Ubosi Eleh & Co. estate surveyors - Execution of trust receipts by the borrower. - Ownership of assets financed - Promissory note of the Company for principal and interest - Sales collection agreement

(iii) Long Term BorrowingsNon Current Liabilities 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. After bifurcation of the government grant, in the form of a low interest rate loan, the loan bears an effective interest rate of 15%. As at 31 December 2015, interest on BOI facility of N25m (2014:N25m) was charged to income statement.

(cont’d)



Lender Total Facility Dec-15 Dec-14N'000 N'000

Bank of Industry (BOI) Intervention funds Through Ecobank Nigeria Plc N300m 73,852 104,389

Bank of Industry (BOI) Intervention Funds Through FCMB Nigeria Plc N255m 152,016 202,107

Zenith Bank Plc N100m

36 months equal instalment - 93,295

Total Facility 225,868 399,791 Current Portion of Term-Loans (124,297) (162,384)Due After One Year 101,571 237,407

Carrying Value - 60 equal monthly installments with 12 months moratorium

Repayment

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

(iv) Government grants:Dec-15 Dec-14N'000 N'000

As at 1 January 81,271 105,805

Total Government Grant for the year 81,271 105,805 Amortised to the income statement (24,516) (24,534)As at 31 December 56,756 81,271

Current 24,516 11,609 Non current 32,240 69,662

56,756 81,271

Government grants relates to loan granted by Central Bank of Nigeria Intervention Fund through Bank of Industry with 6% interest rate which was below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. There are no unfulfilled conditions or contingencies attached to these grants.

(cont’d)



14 Cash and Cash Equivalent: For the purpose of the statement of cash flow, cash and cash equivalents comprise the following as at 31

December 2015:

Dec-15 Dec-14N'000 N'000

Cash in hand and bank 115,124 151,248 Short Term / Fixed deposit 46,320 73,802 Cash and cash equivalents 161,444 225,050

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits 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.

As at 31 December 2015, the Company had available N36.6 million (2014: N36.6 million) of undrawn committed borrowing facilities on behalf of its former associates (Portland Construction Limited) in respect of which all conditions precedent had been met. The fixed deposit of N46m (2014: N74) is used as collateral to the extent of the guarantee.

15 Trade and Other Payables Dec-15 Dec-14N'000 N'000

Trade payables 157,031 210,034 Other payables 15,594 14,338 Witholding tax payable 8,467 21,582 Customer Deposits 60,056 24,303 Accruals 117,149 122,416

Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost 358,297 392,674 Intercompany Payable 526,897 335,334 Total trade and other payables 885,194 728,008

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.

Included in intercompany payable are working capital loan facilities of N350m from UAC of Nigeria and N100m from UAC Food Ltd. (2014:N300m from UAC of Nigeria only).

The working capital loan facilities are at an interest rate of 14.5% (UACN) and 13.5% (UAC Food Ltd), payable on demand and with no fixed repayment terms.

(cont’d)



16 Corporate Tax LiabilityDec-15 Dec-14N'000 N'000

Balance at Beginning of the yearCompany Income Tax 63,879 36,525 Education Tax 5,729 7,250

69,608 43,775 Current Tax ExpenseCompany Income Tax 8,209 49,589 Education Tax 852 5,729 Additional tax liability - back duty 20,727 -

99,396 99,093

Payment During the year (78,655) (29,485)

Income tax payable at end of the year 20,741 69,608

(cont’d)

Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate of 30% (2014: 30 %).The analysis of deferred tax liabilities is as follows:

Deferred tax liabilities/(assets)- Deferred tax liability to be settled after more than 12 months- Deferred tax assets to be settled within 12 months Deferred tax liabilities/(assets)

Dec-152012

N'ooo82,436

(63,328)19,108

Dec-142014

N'ooo106,830 (32,550)

74.280

As at 1 January (Credit) to profit or loss As at 31 December

Dec-15N'ooo

74,280 (55,172)19,108

Dec-14N'ooo

83,944 (9,664)74,280

Deferred Taxes

The movement in deferred tax liabilities during the year without taking into consideration the offsetting of balances within the same tax jurisdiction is as follows:

Deferred tax liabilities/(assets)As at 1 January 2015 (Credited)/charge to profit or loss As at 31 December 2015

Provisions N'000

(33,838) (38,400)(72,238)

Total N'00074,280

(55,172)19,108

1,288 7,6228,910

106,830 (24,394)

82,436

Property, Plant &

EquipmentN'000

Unrealised Exchange

(Gain)/LossN'000



17 Share capital

Dec-15 Dec-15 Dec-14 Dec-14Number N'000 Number N'000

Ordinary shares of 50 kobo each 400,000,000 200,000 400,000,000 200,000

Total 400,000,000 200,000 400,000,000 200,000

Issued and Fully Paid


Dec-15 Dec-15 Dec-14 Dec-14Number N'000 Number N'000

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

At end of the year 400,000,000 200,000 400,000,000 200,000

(ii) Nature and purpose of reserves:Dec-15 Dec-14

Revaluation Reserve N'000 N'000As at 1 January 91,923 91,923 Revaluation during the year - - As at 31 December 91,923 91,923

Authorised Authorised



(cont’d)

Deferred tax liabilities/(assets)As at 1 January 2014 (Credited)/charge to profit or loss As at 31 December 2014

Provisions N'000

(24,853) (8,985)

(33,838)

Total N'00083,942 (9,662)74,280

(44) 1,332

1,288

108,839 (2,009)

106,830

Property, Plant &

EquipmentN'000

Unrealised Exchange

(Gain)/LossN'000

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.

(iii) Earnings Per Share Basic earnings per share is calculated by dividing profit after tax for the year attributable to ordinary equity

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

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



Dec-15 Dec-14N'000 N'000

Net (loss)/profit attributable to ordinary equity holders (232,985) 148,642

Weighted average number of ordinary shares for basic earnings per share 400,000 400,000

Basic earnings per share (in kobo) (58) 37

Dec-15 Dec-14N'000 N'000

18 Reconciliation of net (loss)/profit to net cash provided by operating activities(Loss)/Profit before tax (258,369) 194,296

Adjustments to reconcile net income to net cash provided by operating activities:Interest paid 124,540 115,060 Finance income (3,276) (4,860)Depreciation Charges 109,258 115,326 Amortization of government grant (24,516) (24,534)Additional interest based on amortised cost 2,462 8,352 Profit on disposal of fixed assets (3,092) (4,205)Amortisation of intangible assets 39,474 39,474

244,850 244,613 Changes in assets and liabilities:Decrease/(Increase) in Trade debtors and prepayments 44,105 (28,016)Decrease/(Increase) in Inventories 140,254 (68,691)(Decrease)/Increase in Trade creditors & Accruals 157,186 (136,821)

341,545 (233,528)

Net Adjustment 586,395 11,085

Net cash provided by operating activities 328,026 205,381

(cont’d)

19. Related Party Transactions 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.

The following transactions were carried out with related parties:

(a) Sales of goods and services Relationship Dec-15 Dec-14N'000 N'000

UACN Property Dev. Company Plc Fellow Subsidiary 6,594 - UAC Foods Ltd (UFL) Fellow Subsidiary 863 - MDS Logistics Ltd. Fellow Subsidiary 701 913

8,158 913



(b) Purchases of goods and services Dec-15 Dec-14N'000 N'000

UAC of Nigeria Plc: Service fee Parent 76,616 35,053 UAC Foods Ltd (UFL): Personnel cost Fellow subsidiary 281 281

76,897 35,334

Outstanding balances as at year end:Dec-15 Dec-14

(d) Intercompany Receivables N'000 N'000MDS Logistics Ltd 701 913 UACN Property Development Companny (UPDC) - 7,470 Total receivables from related parties 701 8,383

Dec-15 Dec-14(e) Intercompany Payables N'000 N'000

UAC of Nigeria Plc 426,616 335,053 UAC Foods Ltd (UFL) 100,281 281 Total payables to related parties 526,897 335,334

Dec-15 Dec-14N'000 N'000

20 Compensation to key management personnel:Short-term employee benefits 12,479 18,895Post employment benefits 954 978

13,433 19,873

All trading balances will be settled in cash. There were no provisions for doubtful related party receivables as at 31 December 2015, (2014: nil) and no

charges to the income statement in respect of related party receivables.

All related party transactions were carried out on commercial terms and conditions. See also disclosures in Note 15.

(cont’d)

(c ) Other transactions with related parties Dec-15 Dec-14N'000 N'000

UAC of Nigeria Plc: Working Capital Finance Loan Parent UAC Foods Ltd (UFL): Working Capital Finance Loan Fellow Subsidiary 100,000 -

150,000 300,000

50,000 300,000



The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel (The Directors). The Executive Directors are paid salaries and a housing allowance, transportation is also provided for them. While the nonexecutive Directors are only entitled to Directors Fees and sitting allowance. As at 31 December 2015, an amount of N2.4million (2014: N2.841 million) was paid to Non-executive Directors as Directors Fees and sitting allowance. Executive Directors are entitled to a defined contribution plan (pension) in accordance with Pension Reform Act 2014. But non-executive Directors are not entitled to any form of pension or post employment benefits.

Dec-15 Dec-14N'000 N'000

The emoluments of the highest paid Director 3,387 19,873

Emolument of Non-executive Directors:Fee 1300 1,170Sitting Allowance 1,100 1,671

2,400 2,841

Directors' mix Dec-15 Dec-14Number Number

Executive Directors 1 1Non-executive Directors 4 5

5 6

21 Staff Numbers:

Dec-15 Dec-14Number Number

Production 28 33Sales, marketing and depot 54 72Administration 30 52

112 157

The number of employees in respect of emoluments within the following ranges was: Dec-15 Dec-14

Number Number

N10,000 - N500,000 56 99N500,001 - N1,000,000 56 58Above N1,000,001 112 157

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

(cont’d)



22 Financial risk management Portland 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's 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:

22.1 Credit risk This 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:

ItemTotal Gross

AmountFully

PerformingPast due but not impaired Impaired

Trade receivables 560,140 179,112 176,187 204,841 Receivables from related companies 701 701 - - Other receivables 62,321 - - Advances to staff 311 311 - - Cash and cash equivalent 161,444 161,444 - -

784,916 403,888 176,187 204,841

Item ImpairedTrade receivables 493,550 264,577 135,796 93,177 Receivables from related companies 8,383 8,383 - - Other receivables 43,792 43,792 - - Advances to staff 600 600 - - Cash and cash equivalent 225,050 225,050 - -

771,375 542,402 135,796 93,177

Age analysis of past due but not impared receivables Dec-15 Dec-14 30,246 42,219 145,941 93,577 176,187 135,796

Dec-15

Dec-14

91 - 180 days181 - 360 days

Total Gross Amount

Fully Performing

Past due but not impaired

(cont’d)

Other receivables excludes Withholding Tax and VAT receivable (See Note 12) as these are non-financial instruments.

62,321



(a) Trade Receivables Credit 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. Ongoing 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 Chevron Nig. Ltd. the largest customers of the entity with an outstanding balance of N95 million and N67 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.

Analysis of Credit Quality

Dec-15 Dec-14 168,291 102,164 178,061 355,427 213,788 35,959 560,140 493,550

The Company defines the rating as follows:

Trade receivablesGroup 1

Group 3Total

Group 2

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 default.Group 3: These are balances with small-medium sized entities with history of default or late payment.

(b) Cash and short term deposit Credit 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 2015 and 2014 is the carrying amounts.

(cont’d)



Analysis of Credit Quality

Dec-15 Dec-1425,546 45,031

298 - 21,329 40,414

12,653

8,500

47,927

82,590

8,147

2,552

44,970

45,136

574

827

161,444

225,050

Cash and short term deposits

A+A

AaaAa-

BBBb+ & Bbb-

B-BUnratedTotal

'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.

'A1' 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 Agusto & Co Ltd risk ratings.

(cont’d)



22.2 Liquidity risk This 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, bank loans, and finance leases. 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.

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

31-Dec-15Less than 3 months

Between 3 months

and 1 yearBetween 1

and 5 years Over 5 yearsBorrowings - 106,607 149,468 - Trade and other payables 816,671

- - -

Total 816,671 106,607 149,468 -

31-Dec-14Borrowings - 106,607 253,741 - Trade and other payables 682,123 - - - Total 682,123 106,607 253,741 -

22.3 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.

22.4 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.

(cont’d)

Other payables excludes withholding tax payable and customer deposits (see note 15) as these are non financial instruments



Concentration of Interest Risks is as follows:

Weighted Average Interest Rate (%)

Interest Bearing Balance (NGN) Non Interest

BearingFixed rate N'000 N'000

Financial assets: Trade and other receivables - 545,011 Cash and bank balances - 115,124 Short term deposits 22 46,320 - Total 46,320 660,135

Financial liabilities:Borrowings 16 225,868 - Trade and other payables - 816,671Total 225,868 816,671

Dec-15

Weighted Average Interest Rate (%)

Interest Bearing Balance (NGN)

Fixed Rate Non Interest

BearingN'000 N'000

Financial assets: Trade and other receivables - 584,768 Cash and bank balances - 151,248 Short term deposits 9 73,802 - Total 73,802 736,016

Financial liabilities:Borrowings 16 399,790 - Trade and other payables - 682,123Total 399,790 682,123

Dec-14

22.5 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.

(cont’d)



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

Financial assets:Trade and other receivables 444,233 96,430 - 540,663 Cash and short term deposits 118,324 43,120 161,444 Total 562,557 139,550 - 702,107

Financial liabilities:Long term borrowings 133,811 - - 133,811 Current portion of long term borrowing 148,813 - - 148,813 Trade and other payables 340,698 16,006 1,592 358,297 Inter-company payables 526,897 - - 526,897

1,150,219 16,006 1,592 1,167,818

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

Financial assets:Trade and other receivables 392,004 192,764 - 584,768 Cash and short term deposits 200,024 25,026 - 225,050 Total 592,028 217,790 - 809,818

Financial liabilities:Long term borrowings 307,069 - - 307,069 Current portion of long term borrowing 173,992 - - 173,992 Trade and other payables 250,836 141,838 - 392,674 Inter-company payables 335,334 - - 335,334

1,067,232 141,838 - 1,209,070

Dec-15

Dec-14

Dec-15 Dec-14 675,868 699,790 691,617 924,603 1,367,485 1,624,393

49% 43%

ItemInterest bearing debtEquityTotal capitalGearing ratio

23 Capital Management Management 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 2015. 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%.

(cont’d)

The Company's exposure to foreign currency risk as at each reported period is deemed immaterial, therefore no sensitivity analysis has been presented



24 Events after the reporting period UAC of Nigeria Plc acquired additional 7% interest in Portland Paints & Products Nigeria Plc in February

2016. This takes the shareholdings of UAC of Nigeria Plc in Portland Paints & Products Nigeria Plc to 71.71%.

25 Commitments and contingencies Capital commitments At 31 December 2015, the Company did not have any capital commitments (Dec 2014: Nil). Legal Claim Contingency There is litigation and claim against the Company as at 31 December 2015 amounting to N50 million (Dec

2014: N50 million). The company has been advised by its legal counsel that it is only probable, but not possible, that the action

will succeed. Accordingly, no provision for any liability has been made in these financial statements.

Guarantees The company has provided financial guarantee contracts on behalf of Portland Construction Ltd to

maximum amount of N36.6 million (Dec 2014: N36.6 million). See note 14.

(cont’d)


STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31, DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

Dec-15 Dec-14N'000 % N'000 %

Revenue 2,168,480 2,798,165 Non trading items 86,276 107,329

2,254,756 2,905,494 Bought-in-material and services:- Local (1,555,709) (1,700,074)- Imported (438,790) (479,508)

Value added 260,257 100% 725,912 100%

Applied as follows:-To pay employees:Salaries and labour related expenses 284,830 110% 301,230 41%

To pay Government:Corporate tax (25,384) -10% 45,654 6%

To pay provider of capital:Interest charges 124,540 48% 115,060 16%

To pay shareholdersas dividend - 0% - 0%

To provide for replacement of assetsdividend to shareholders and 0%development of business- Depreciation 109,258 42% 115,326 17%- Deferred tax - 0% - 0%- Profit for the year (232,985) -90% 148,642 20%

260,257 100% 725,912 100%

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


FIVE YEARS FINANCIAL SUMMARYFOR THE YEAR ENDED 31ST DECEMBER, 2015(All amounts are in thousands of Naira, unless otherwise stated)

2015 2014 2013 2012 2011Statement of financial position:Property, plant & equipment 456,202 547,040 555,701 650,086 642,359 Intangible asset 124,685 164,160 203,633 243,103 189,989 Investment in associate - - - 2,842 3,345 Non-current prepayments 10,789 25,032 26,518 38,008 -Net current assets 252,857 556,689 612,221 255,839 654,799 Non-current liabilities:Borrowings (101,571) (237,407) (302,200) (140,473) (163,485)Government grants (32,240) (56,633) (81,272) (55,389) (69,237)Employee benefit - - (46,619) (134,837) (87,880)Deferred taxation (19,106) (74,278) (83,944) (82,613) (91,158)

691,617 924,603 884,038 776,566 1,078,732

Issued share capital 200,000 200,000 200,000 200,000 200,000 Other capital reserve 91,923 91,923 91,922 91,923 69,945 Retained earnings 399,694 632,680 592,116 484,643 808,787

691,617 924,603 884,038 776,566 1,078,732

Statement of Comprehensive IncomeRevenue 2,168,480 2,798,165 2,771,147 2,865,581 2,584,183

(Loss)/profit before taxation (258,369) 194,297 123,591 (199,166) 253,188 Taxation 25,384 (45,654) (16,118) (29,199) (79,336)

(Loss)/profit after taxation (232,985) 148,643 107,473 (228,365) 173,852

Dividend declared - - - - (80,000)

Per share data (kobo)(58) 37 27 (56) 48

Dividend per share - - - - 20

Note:1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary share

at the end of each financial year.

2. Dividends per share are based on the dividend declared and the number of issued and fully paid ordinary shares at the end of each financial year.

Earning Per Share - Basic


MANDATE FOR E-DIVIDEND PAYMENT


PROXY FORM

PORTLAND PAINTS AND PRODUCTS NIGERIA PLC

Annual General meeting to be held at 10:00 a.m on Tuesday

7th June, 2016 at Silas Daniyan Hall, Golden Tulip Hotel,

Festac, Amuwo Odofin, Lagos State.

Please indicate your wish by placing ‘X’ in the appropriate square

Being a member/members of PORTLAND PAINTS AND

PRODUCTS IN NIGERIA PLC do hereby appoint

or Failing him the chairman of the meeting as my/our proxy

to vote for me / us on our behalf at the general meeting of the

company to be held on Tuesday the 7th June 2016 and at

every adjournment thereof.

Put the ‘’x’’ beside the motion before meeting and not any of the others

Signature of member/proxy ..........................................

Date ..........................................

Date this ........................ day of .................................. 2016

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

NOTES1. A member (shareholder) who is unable to attend an annual general meeting is allowed by law to attend by proxy, The above form has being prepared to enable you to excise your vote if you can personally attend.2 Provision has being made on this form for the chairman of the meeting to act as your proxy, but if you wish you may insert in on 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 the chairman of the meeting.3. Please sign the above proxy form and post it to reach the address shown over leaf not later than 5:00 pm on Friday 3rd June, 2016. If executed by a corporation, the proxy form should be sealed with the Common Seal or signed.4. The proxy must produce the admission form sent with the report and accounts to obtain entrance to the meeting.5. The proxy form should not be completed and sent to the address if the member will be attending the meeting in person.

(a) Write the name of your proxy (if any) where marked (b) Ensure the form is signed by you and stamped with COMMISSIONER OF STAMP DUTIES.(c) Tear the proxy form along the perforated lines and post so as to reach the address shown overleaf not less than 48 hours before the time of holding the meeting.

IF YOU ARE UNABLE TO ATTEND, PLEASE

Annual General meeting Admission card

Please admit

ADMISSION FORMPORTLAND PAINTS AND PRODUCTS NIGERIA PLC

to the annual general meeting of PORTLAND PAINT AND PRODUCT PLC which will be held at Silas Daniyan Hall, Golden Tulip Hotel, Amuwo Odofin, Lagos state on Tuesday 7th June, 2016 at 10:00 a.m.

1. This admission must be provided by a share holder or by his proxy in order to obtain entrance to the Annual General Meeting2. Shareholders or their proxies are requested to sign the admission card in the appropriate place before attending the meeting.

IMPORTANT NOTICE

Adeleke Yusuff, EsqCompany Secretary

PORTLAND PAINTS AND PRODUCTS NIGERIA PLC

Name and Address of ShareholderAnnual General Meeting Admission CardSignature of person attending SHAREHOLDER ..................................PROXY ..................................................

FOR AGAINST ABSTAINRESOLUTIONSORDINARY BUSINESSTo re-elect Mr. Larry Ettah as a Director

To elect Mrs. Adeline Ogunfidodoas a Director

To authorize the directors tofix Auditor’s remunerations

To elect members of the Audit Committee

To fix remuneration of Directors.

SPECIAL BUSINESS

I/We


E-mail: [email protected] | Customer Service Lines: +234 1 774 0413, 291 8507, 0817 729 0233

Ikeja15 Aromire Street, Ikeja,Lagos.

Ifako- Gbagada1 Omobule Street, Ifako B/stop,Oworonsoki-Ogudu Expressway,Ifako- Gbagada,Lagos.

Lekki Km 20 Lagos-Epe Expressway,Igbon-Efon Bus-stop,Agungi Village, Lekki,Lagos.

Festac 32/34 Old Ojo Road, Amuwo Kuje, Mazamaza,Lagos.

Mushin 280 Agege Motor Road,Olorunsogo Bus stop, Mushin,Lagos.Ibadan Opposite Bishop Philips Academy, Iwo Road, Ibadan.

Ilorin 221 Ibrahim Taiwo Road,By Oko-Erin Junction, Ilorin.

Akure 131 Oyemekun Road, Akure. Benin45 Muritala Muhammed Way,Benin City.

Warri I80 Effurun-Sapele Road, Warri.

Warri II300A Effurun Sapele Road, Refinery Junction, Warri.

Abuja (Gwarimpa)Anfara Plaza, Suite Ff6, Opp. IBB Polo Club, Gwarimpa, Abuja.

Abuja (Karu) Plot MF 6 Opposite Water Board, By Noble High Academy, Karu, Abuja.

Kaduna 5 Y. Ahmed House,Ahmadu Bello Way, Kaduna.

Kano83 Ibrahim Taiwo Road,Oceanic Bank Compound, Kano.

Jos 40 Murtala Muhammed Way, Jos.

Abuja (Zone 5)Sheik Tijani Plaza, Opposite Ibro Hotel, Off Michael Okpara Street, Zone 5, Wuse, Abuja.

Onitsha 91 Limca Road,Nkpor Junction, Onitsha.

Port- Harcourt ( Trans- Amadi)14A Trans- Amadi Layout,Rumubiakani, Port- Harcourt.

UyoPlot 49 Unit B, Tunde Ogbeha Drive, Ewet Housing Estate, Uyo.

Port- Harcourt (Stadium Road)30 Stadium Road, Port-Harcourt.

Abuja ( Zone 3)Shop 23 Wuse Shopping Centre,Maputo Str. Zone 3, Wuse, Abuja.

Sokoto 30 Ahmadu Bello Way, Sokoto.

Sandtex House105A Adeniyi Jones, Avenue, Ikeja P.M.B. 21782, Ikeja, Lagos. +234 1 7740413+234 1 2918507 +234 1 [email protected]/sandtexpaints; @sandtex paintswww.portlandpaintsng.com

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