2013 7UP Financials- Final-30 July 8pmnse.com.ng/Financial_NewsDocs/2013 7UP Audited Financials2013... · Directors’ Report 3 Statement of Directors’ Responsibilities 8 Independent

Seven‐Up Bottling Company Plc

Financial Statements for the year ended 31 March 2013

Together with Directors' and Independent Auditor's Reports




ContentsPage

Directors and Other Corporate information 1

Results at a Glance 2

Directors’ Report 3

Statement of Directors’ Responsibilities 8

Independent Auditor's Report 9

Statement of Financial Position 10

Statement of Comprehensive Income 11

Statement of Changes in Equity 12

Statement of Cash Flows 13

Notes to the Financial Statements 14

Value Added Statement

Five Year Financial Summary




Directors and Other Corporate Information

Board of Directors: Mr Faysal El‐Khalil (Lebanese) ‐Chairman

Mr Sunil Sawhney (Indian) ‐Managing Director/ CEO

Chief Emmanuel N. Nwokoro

Alhaji Ahmadu Yaro

Mr Femi Mokikan

Mallam Mohammed Hayatu‐Deen O.O.N.

Otunba (Dr) A. Ojora O.F.R., C.O.N.

Alternate‐ Mrs Oluwatoyin Ojora Saraki

Mr Ziad A. El‐Khalil (Lebanese)

Chief Farid El‐khalil (Lebanese)

Company Secretaries Equity Services Limited

162, Ikorodu road (2nd floor), Onipanu

Lagos

Registered Office: 247, Moshood Abiola Way

Ijora

Lagos

Registrars: Union Registrars Limited

2, Burma Road

Apapa, Lagos

Independent Auditors: KPMG Professional Services

KPMG Tower

Bishop Aboyade Cole Street,

Victoria Island, Lagos

Members of the Evang. Peter Akinola Soares Chairman/ Shareholder Representative

Audit Committee Mr Obarinde I. Obatosho Shareholders Representative

Mr Kenneth N. Nwosu Shareholders Representative

Mr Femi Mokikan Directors' Representative

Mr Ziad El‐Khalil Directors' Representative

Otunba (Dr.) A. Ojora, C.O.N, O.F.R Directors' Representative

1




Results at a Glance

Increase

In thousands of naira 2013 2012 %

Revenue 64,088,879 59,864,385 7

Profit before taxation 3,262,719 2,558,644 28

Profit for the year 2,856,504 1,678,471 70

Share capital 320,295 320,295 ‐

Total equity 12,577,980 10,307,595 22

Data per 50k share‐ ( in naira per share )

Basic earnings 4.46 2.62 70

Diluted earnings per share 4.46 2.62 70

Declared dividend* 2.00 2.00 0

Net assets 19.63 16.09 22

Final dividend proposed** 2.20 2.00 10

Stock exchange quotation at 31 March

in Naira per share 49.00 41.75 17

Number of shares issued (‘000) 640,590 640,590 0

Market capitalisation at 31 March (N: million) 31,388,910 26,744,633 17

Dividend per 50k share in respect of current year

results only

Stock Exchange Information

* Declared dividend represents the final dividend proposed for the preceding year but declared during the current year.

** The directors recommend the payment of N 1,409,298,798 (2012: N1,281,180,725) representing N 2.20 (2012: N2) per

share, on the issued share capital of 640,590,364 (2012: 640,590,364) ordinary shares of 50k each, subject to approval by the

shareholders at the Annual General Meeting.

2




Directors’ Report

For the year ended 31 March 2013

1 Legal Form

2 Principal Activities

3 Operating Results

The following is a summary of the Company’s operating results:

2013 2012

N'000 N'000

Revenue 64,088,879 59,864,385

Results from operating activities 5,526,734 4,802,379

Profit before taxation 3,262,719 2,558,644

Profit for the year 2,856,504 1,678,471

Total comprehensive income for the year 2,928,875 1,678,471

Retained earnings, end of year 11,958,545 9,688,160

4 Dividend

5 Directors and their Interests

Interest in the Ordinary Shares of the Company

2013 2012

Otunba (Dr.) A. Ojora O.F.R, C.O.N 2,252,635 2,252,635

Chief Emmanuel N. Nwokoro 1,464,843 1,464,843

Alhaji Ahmadu Yaro 110,795 417,613

Mr. Femi Mokikan 26,700 21,400

Mallam Mohammed Hayatu‐deen O.O.N Nil Nil

Chief Farid EL‐Khalil Nil Nil

Mr. Sunil Sawhney Nil Nil

The directors present their annual report on the affairs of Seven Up Bottling Company Plc ("the Company") , together with the

financial statements and independent auditor's report for the year ended 31 March 2013.

The Company was incorporated as a private Limited liability Company on 25th June, 1959 under the name Seven‐Up Limited.

On 16th May 1960, the name was changed to Seven‐Up Bottling Company Limited and in 1978 it became a Public Company.

The name “Seven‐Up Bottling Company Plc” was adopted on 26th November 1991 in compliance with the provisions of the

Companies and Allied matters Act 1990. Currently, the Company’s shares are quoted on the floor of the Nigerian Stock

Exchange.

The Company is mainly engaged in the bottling and marketing of a wide variety of soft drinks and Aquafina premium table

water.

The directors recommend the payment of N 1,409,298,798 (2012: N1,281,180,725) representing 220 kobo (2012: 200 kobo)

per share, on the issued share capital of 640,590,364 (2012: 640,590,364 ) ordinary shares of 50k each. If the proposed final

dividend of N 1,409,298,798 is approved by the shareholders, it will be subject to deduction of withholding tax at the

applicable rate at the time of payment.

(a) The directors who served during the year and their interests in the shares of the Company at the year end were as follows:

3

Seven-Up Bottling Company PlcFinancial Statements for the year ended 31 March 2013


4

Mr. Ziad M.EL-Khalil Nil NilMr. Faysal El-Khalil Nil NilAlternate-Mrs Oluwatoyin Ojora Saraki Nil Nil

(b)

(c)

6 Board of Directors

Name of Directors No. of meetings heldNo. of meetings attended

Otunba (Dr.) A. Ojora O.F.R, C.O.N 4 4Chief Emmanuel N. Nwokoro 4 1Alhaji Ahmadu Yaro 4 0Mr. Femi Mokikan 4 4Mallam Mohammed Hayatu-deen O.O.N 4 1Chief Farid EL-Khalil 4 0Mr. Sunil Sawhney 4 4Mr. Ziad A.EL-Khalil 4 0Mr. Faysal El-Khalil 4 3

7 Analysis of ShareholdingsNumber of Number of

Shareholding Between shareholders % shares %1 1,000 18,882 56.9 9,456,342 1.5

1,001 5,000 11,387 34.2 23,654,372 3.75,001 10,000 1,582 4.8 11,167,606 1.7

10,001 50,000 1,036 3.1 20,208,252 3.250,001 100,000 142 0.4 9,828,047 1.5

100,001 500,000 142 0.4 30,053,238 4.7500,001 1,000,000 20 0.1 14,833,194 2.3

1,000,001 and above 17 0.1 521,389,312 81.433,208 100.0 640,590,363 100.0

As regards Alhaji Amadu Yaro, and Otunba (Dr.)Adekunle Ojora who are 85 and 81 years of age respectively, special notices have been received in accordance with section 256 of the Companies and Allied Matters Act 2004 to propose motions for their re-election.

The Board comprises seven Non-Executive Directors including the chairman and two Executive Directors. In line with global best practices in corporate governance, the positions of the Chairman and Chief Executive Officer are separate and held by different Directors.

The Board has overall responsibility for supervising the Company’s business, maintaining adequate and effective internal control system, adding value to shareholders and protecting the interests of other stakeholders.The Board of Directors held four meetings during the financial year ended 31 March, 2013 and a record of their attendance is as shown below;

(d) In accordance with the company’s Articles of Association, the following Directors: Alhaji Ahmadu Yaro, Otunba (Dr.) Adekunle Ojora, OFR, CON and Mr. Femi Mokikan will retire by rotation and being eligible, they offer themselves for re-election. Pursuant to section 258(2) of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria (LFN) 2004, the Directors’ attendances at Board Meetings during the year under review will be made available at the Annual General Meeting.

Except as disclosed in Note 26, none of the Directors has notified the Company of any declarable interest in contracts with which the Company was involved during the year ended 31st March, 2013 for the purpose of Section 277 of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004.

No share options were granted to the directors by Seven Up Bottling Company Plc.




8 Substantial Shareholders

9 Donations

The beneficiaries were as follows:

2013 2012

Lagos State Security Trust Fund 10,000,000 10,000,000

Elekahia Community Dev. Project‐Borehole Installation ‐ 935,000

Walk for Sight 750,000 ‐

Orphanage and Old People's Home 505,860 425,000

LAWAN 500,000 ‐

Rumuokwurush, Elekahia and Rumuodumaya Communities 450,000 ‐

Sponsorship of Lost in Lagos Event at Federal Palace Hotels 250,000 ‐

GCE Forms for 10 Abete Community Children 158,000 147,000

GAA Iman Community Students 200,000 ‐

Palace of Eze Rebisi 150,000 ‐

Ikeja Golf Club, Lagos 100,000 430,000

Others 260,000 1,044,000

13,323,860 12,981,000

10 Local Sourcing of Raw Materials

11 Product Distribution

12 Suppliers

The Company procures all of its raw materials on a commercial basis from overseas and local suppliers.

13 Acquisition of Own Shares

The Company did not acquire any of its own shares during the year under review.

14 Property, plant and equipment

15 Employment and Employees

(a) Employment of physically challenged persons:

As contained in the Register of Members, AFFELKA S.A held 467,458,626 ordinary shares representing 72.97% of the issued

share capital of the Company as at 31st March, 2013. No other shareholder held 5% or more of the share capital of the

Company as at that date.

In the year under review, the Company made donations to charitable institutions, bodies and individuals amounting to

N13,323,860 (2012:N12,981,000).

In compliance with Section 38(2) of the Companies and Allied Matters Act of Nigeria, the Company did not make any donation

or gift to any political party, political association or for any political purpose during the year.

On a continuing basis, the Company explores the use of local raw materials in its production processes and has successfully

introduced the use of locally produced items such as sugar, crown corks and chemicals in a number of its products.

The Company distributes products through key distributors and also maintains depots at various locations through which its

products are distributed nationwide.

Information relating to changes in property, plant and equipment is given in note 12 to the financial statements. In the

opinion of the Directors the fair value of the Company’s property, plant and equipment is not less than the value shown in the

financial statements.

Seven‐Up operates a non‐discriminatory policy on selection of applicants, including physically challenged persons, for

employment. Besides, the promotion and career development of the physically challenged persons, to a large extent, follow

the same pattern as those of their able‐bodied counterparts.

5




(b) Health and safety at work and welfare of employees:

( c) Employee involvement and training:

16 Management Committee

No. of meetings held

No. of meetings

attended

Mr. Sunil Sawhney 17 17

Mr. Ziad A.EL‐Khalil 17 17

Mr. Femi Mokikan 17 17

17 Audit Committee

No. of meetings held

No. of meetings

attended

Shareholders’ Representative3 3

Mr Obarinde I. Obatosho Shareholders’ '' 3 3

Mr Kenneth N. Nwosu Shareholders’ '' 3 3

Mr Femi Mokikan Directors’ '' 3 3

Mr Ziad El‐Khalil Directors’ '' 3 0

Directors’ ''3 0

18 Disclosures

a) Borrowings and maturity dates

The details of the borrowings and maturity dates are stated in Note 20 to the financial statements.

b) Risk Management and Compliance System

The Company has accident prevention measures in place and safety regulations are strictly enforced.

The Company continues to provide subsidized transport, housing and meals for its employees.

The Company recognizes that information exchange is crucial to promotion of team spirit, hence it holds joint meetings

regularly with its employees at both formal and informal levels. As much as possible, employees are informed about the

Company’s plans and achievements while their views are sought on issues affecting them as employees.

The Company considers its employees as its most valuable asset and their continuous development essential for achieving

enhanced efficiency and effectiveness . Toward this end, regular staff training and management development programmes

are carried out internally or externally through consultants.

The Management Committee is made up of three Directors and is chaired by the Managing Director/Chief Executive Officer.

The Committee is responsible for recommending strategic initiatives to the Board of Directors, monitoring and managing risks

facing the company, reviewing the terms and conditions of service of senior management and supervising the implementation

of the Board’s policies. The committee met seventeen times during the year under consideration with all members present.

Pursuant to section 359(3) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the company has an Audit Committee

in place whose functions are as stated in section 359(6) of the Act. The Committee consists of three Directors and three

shareholders’ representatives of the company including the chairman. The Committee members met three times in the year

under review and their attendance record is as shown below:

Evang. Peter Akinola Soares‐

Chairman

Otunba (Dr.) A. Ojora, C.O.N., O.F.R

The directors are responsible for the total process of risk management as well as expressing their opinion on the effectiveness

of the process. The risk management framework is integrated into the day‐to‐day operations of the business and provides

guidelines and standards for administering the acceptance and on‐going management of key risks such as operational,

reputational, financial, market, technology and compliance risk. The directors are of the view that effective internal audit

function exists in the Company.

The Company operates its own clinics in all its plants supplemented by other health‐care centres it retains for the use of

employees and their families at Company’s expense.

The Company’s premises are certified by the Federal Fire Service to be prepared for emergency and the employees insured

against occupational hazards.

6




c) Related Party Transactions

19 Report on Social, Ethical, Safety, Health and Environmental Policies and PracticesCorporate Social Responsibility

20 Independent Auditors

Dated the 25th day of July, 2013.

BY ORDER OF THE BOARD

Samuel O. Uboh

Pp: Equity Services Limited

Company Secretary

FRC/2013/ICSAN/00000003001

162, Ikorodu road, Onipanu

Lagos

In accordance with Section 357(2) of the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004,

Messrs KPMG Professional Services have indicated their willingness to continue in office as Independent Auditors to the

Company.

The Company has contractual relationship with related companies in the ordinary course of business. The details of the value

of the transactions and outstanding balances arising from related party transactions are stated in Notes 17,22 and 26 to the

financial statements.

The Company is committed to discharging its responsibilities to the host communities and the public at large. Toward this

end, the Company established a Graduate Management and Manufacturing Trainee Scheme under which 40 university

graduates are selected annually and groomed for twelve months prior to being employed. Thus, the graduate trainees are

given the opportunity of building a dream career for themselves. The Company continued to award full scholarship (covering

tuition, boarding and travelling expenses each year) to one Nigerian to do an MBA programme at Harvard Business School in

the United States of America. In addition, the Company ardently supports the Pepsi Football Academy where talented players

are made to realize their full potential.

Messrs KPMG Professional Services served as the Independent Auditors during the year under review. The Independent

Auditor’s Report was signed by Patrick Adetola Adeyemi (Mr.), FCA, a Partner in the Firm.

7




Statement of Directors’ Responsibili esFor the year ended 31 March 2013

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

__________________________________

Sunil Sawhney (Managing Director/ CEO) Faysal El‐Khalil (Chairman)

25 July, 2013 25 July, 2013

The directors accept responsibility for the preparation of the annual financial statements set out on pages 10 to 55 that

give a true and fair view in accordance with the International Financial Reporting Standards (IFRS) and in the manner

required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011.

The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and

Allied Matters Act of Nigeria and for such internal control as the directors determine is necessary to enable the preparation

of financial statements that are free from material misstatement whether due to fraud or error.

The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to

believe the Company will not remain a going concern in the year ahead

8

INDEPENDENT AUDITOR’S REPORT

To the Members of Seven‐Up Bottling Company Plc

Report on the Financial Statements

We have audited the accompanying financial statements of Seven‐Up Bottling Company Plc (‘the Company’) which

comprise the statement of financial position as at March 31, 2013 and the statement of comprehensive income,

statement of changes in equity, and statement of cash flows for the year then ended, and a summary of significant

accounting policies and other explanatory information, as set out on in the pages xx to yy.

Directors' Responsibility for the Financial Statements

The directors are responsible for the preparation of financial statements that give a true and fair view in

accordance with International Financial Reporting Standards, and in the manner required by the Companies and

Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011, and for such internal control

as the directors determine is necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these 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 the audit to obtain reasonable assurance about whether 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 judgment, 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 that give a true and fair view 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 entity’s internal

control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness

of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial

statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, these financial statements give a true and fair view of the financial position of Seven‐Up Bottling

Company Plc (“the Company”) as at March 31, 2013, and of the Company’s financial performance and cash flows

for the year then ended in accordance with International Financial Reporting Standards and in the manner

required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act,

2011.

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of

In our opinion, proper books of account have been kept by the Company, so far as appears from our examination

of those books and the statement of financial position and the statements of comprehensive income are in

agreement with the books of accounts

25 J l 2013

9




Statement of financial positionAs at 31 March 2013

In thousands of naira

Note 2013 2012 1 April 2011

Assets

Property, plant and equipment 12 35,451,669 33,108,410 28,262,657

Intangible assets 13 58,402 46,901 6,839

Prepayment 229,858 187,304 193,446

Other receivables 14 133,815 137,552 173,214

Total non‐current assets 35,873,744 33,480,167 28,636,156

Inventories 16 8,729,497 8,271,687 5,617,417

Trade and other receivables 17 3,253,760 3,817,032 3,365,120

Prepayments 410,901 556,784 463,429

Cash and cash equivalents 18 3,102,268 2,359,992 5,549,536

Total current assets 15,496,426 15,005,495 14,995,502

Total assets 51,370,170 48,485,662 43,631,658

Equity

Share capital 19 320,295 320,295 320,295

Share premium 299,140 299,140 299,140

Retained earnings 11,958,545 9,688,160 9,280,183

Total Equity 12,577,980 10,307,595 9,899,618

Liabilities

20 4,997,584 2,313,776 7,617,778

Employee benefits 21 3,337,468 3,717,939 4,467,866

Deferred tax liabiliites 15 2,594,643 2,476,226 1,774,984

Total non‐ current lliabilities 10,929,695 8,507,941 13,860,628

Bank overdraft 18 835,003 777,634 873,562

Current tax liabililties 10 965,613 1,090,458 1,006,901

20 13,988,312 16,636,510 10,340,647

Trade and other payables 22 12,073,567 11,165,524 7,650,302

Total current liabilities 27,862,495 29,670,126 19,871,412

Total liabilities 38,792,190 38,178,067 33,732,040

Total equity and liabilities 51,370,170 48,485,662 43,631,658

Approved by the Board of Directors on the 25th of July, 2013 and signed on its behalf by:

________________________________ Faysal El‐Khalil (Chairman)

________________________________ Sunil Sawhney (Managing Director/ CEO)

Additionally certified by;

________________________________ Ali Jafri (CFO)

The accompanying notes and significant accounting policies form an integral part of these financial statements.

Loans and borrowings ‐ long term

Loans and borrowings ‐ short term

10




11




Statement of comprehensive incomeFor the year ended 31 March 2013


Continuing operations Note 2013 2012

Revenue 5 64,088,879 59,864,385

Cost of sales (41,199,890) (38,538,105)

Gross profit 22,888,989 21,326,280

Other income 6 45,870 53,287

Selling and distribution expenses (12,730,718) (11,388,608)

Administrative expenses (4,677,407) (5,188,580)


Finance income 7(a) 25,769 4,079

Finance expense 7(b) (2,289,784) (2,247,814)

Net finance cost (2,264,015) (2,243,735)

Profit before taxation 8 3,262,719 2,558,644

Income tax expense 10 (406,215) (880,173)


Other comprehensive income

Defined benefit plans actuarial gains 21 (a) 103,387 ‐

Tax on other comprehensive income (31,016) 72,371 ‐

Total comprehensive income for the year 2,928,875 1,678,471

Owners of the company 2,856,504 1,678,471

Owners of the company 2,928,875 1,678,471

Earnings per share

Basic earnings per share (kobo) 11 446 262

Diluted earnings per share (kobo) 11 446 262


Other comprehensive income for the year, net of income tax

Total comprehensive income for the year is attributable to:

Profit for the year is attributable to:

11




Statement of changes in equity

Attributable to equity holders of the company

For the year ended 31 March 2013


Note Share capital Share premium Retained earnings Total equity

Balance at 1 April 2011 28(a) 320,295 299,140 9,280,183 9,899,618

Comprehensive income for the year

Profit for the year ‐ ‐ 1,678,471 1,678,471

Other Comprehensive income ‐ ‐ ‐ ‐

Total comprehensive income for the year ‐ ‐ 1,678,471 1,678,471

Transactions with owners, recorded directly in equity

Dividend to equity holders 11(b) ‐ ‐ (1,281,181) (1,281,181)

Unclaimed dividend written back 22(b) ‐ ‐ 10,687 10,687

Total transactions with Equity owners ‐ ‐ (1,270,494) (1,270,494)

Balance at 31 March 2012 320,295 299,140 9,688,160 10,307,595

Balance at 1 April 2012 320,295 299,140 10,310,851 10,930,286


Other comprehensive income for the year

Defined benefit plan actuarial gain, net of tax 21(a) 72,371 72,371

Total comprehensive income for the year ‐ ‐ 2,928,875 2,928,875

Transactions with owners, recorded directly in equity

Dividend to equity holders 11(b) ‐ ‐ (1,281,181) (1,281,181)

Balance at 31 March 2013 320,295 299,140 11,958,545 12,577,980


12




Statement of cash flowsFor the year ended 31 March 2013


Note 2013 2012

Cash flows from operating activities


Adjustments for:

Depreciation 12 7,268,715 5,881,115

Amortisation of intangible assets 13 10,634 3,922

Finance income 7(a) (25,769) (4,079)

Finance cost 7(b) 2,289,784 2,247,814

Loss on foreign exchange transactions 7(b) (121,525) (7,292)

Employee benefit charge 21(a) 875,013 168,497

Loss/(gain) on sale of property, plant and equipment 4,776 (974)

Assets written off 209,482 404,819

Income tax expense 10(a) 406,215 880,173

13,773,829 11,252,466

Change in inventories (457,810) (2,654,270)

Change in trade and other receivables 567,009 (416,250)

Change in prepayments 103,329 (87,213)

2,529,080 4,875,742

Cash generated from operating activities 16,515,437 12,970,475

Value Added Tax (VAT) paid * (1,702,747) (1,444,387)

Income tax paid 10(c) (710,527) (454,533)

Employee benefit paid 21(a) (262,538) (559,265)

Net cash from operating activities 13,839,625 10,512,290

Cash flow from investing activities

Finance income 25,769 4,079

Proceeds from sale of property, plant and equipment 18,476 1,717

Acqusition of property, plant and equipment (9,762,998) (11,037,876)

Acqusition of Intangible assets (22,135) (43,984)

Net cash used in investing activities (9,740,888) (11,076,064)

Cash flow from financing activities

Proceeds from loans and borrowings 20 8,221,389 2,381,059

Repayment of loans and borrowings 20 (8,225,826) (1,424,237)

Interest paid (2,126,787) (2,212,775)

Dividends paid (1,281,181) (1,281,181)

Net cash used in financing activities (3,412,405) (2,537,134)

Net increase/(decrease) in cash and cash equivalents 686,332 (3,100,908)

Cash and cash equivalents at the beginning of the year 1,582,358 4,675,974

Effect of exchange rate fluctuations on cash held (1,425) 7,292

Cash and cash equivalents at the end of the year 2,267,265 1,582,358


Change in trade and other payables *

*Change in trade and other payables have been adjusted for the effect of Value added tax (VAT) paid shown separately on the

statement of cash flows.

13




14




Notes to the financial statement

Page Page

1 Reporting entity 15 16 Inventories 32

2 Basis of preparation 15 17 Trade and other receivables 32

3 Significant accounting policies 15 18 Cash and cash equivalent 32

4 Determination of fair values 23 19 Capital and reserves 33

5 Revenue 24 20 Loans and borrowings 33

6 Other income 24 21 Employee benefits 35

7 Finance income and finance cost 24 22 Trade and other payables 37

8 Profit before taxation 2423

Financial risk management and financial

instruments37

9 Personnel expenses 25 24 Operating leases 45

10 Taxation 27 25 Contingencies 45

11 Earnings and declared dividend per share 28 26 Related Parties 45

12 Property, plant and equipment 29 27 Subsequent events 47

13 Intangible assets 30 28 Explanation of transition to IFRSs 48

14 Other receivables 31

15 Deferred taxation 31

14




Notes to the financial statementsFor the year ended 31 March 2013

1 Reporting Entity

2 Basis of Preparation

(a) Statement of compliance

(b) Basis of measurement

(c) Functional and presentation currency

(d) Use of estimates and judgement

Note 10 Taxation

Note 12 Property, plant and equipment

Note 15 Deferred taxation

Note 21 Employee benefits

Note 23 Financial risk management and financial instruments

Note 25 Contingencies

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all years presented in these financial

statements and in preparing the opening IFRS statement of financial position at 1 April 2011 for the purposes of the

transition to IFRSs unless otherwise indicated.

These financial statements are presented in Naira, which is the Company’s functional currency. All financial

information presented in Naira have been rounded to the nearest thousand except where otherwise indicated.

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

recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about assumptions and estimation uncertainties and critical judgements in applying

accounting policies that have the most significant effect on the amounts recognised in the financial statements are

described in the following notes:

Seven‐Up Bottling Company Plc (“the Company”) is a company domiciled in Nigeria. The Company was incorporated in

Nigeria as a private Limited liability Company on 25th June, 1959 under the name Seven‐Up Limited. On 16th May 1960,

the name was changed to Seven‐Up Bottling Company Limited and thereafter to “Seven‐Up Bottling Company Plc” on

26th November 1991 in compliance with the provisions of the Companies and Allied matters Act 1990. Currently, the

Company’s shares are quoted on the floor of the Nigerian Stock Exchange. The majority shareholder of the company is

Afelka S.A, having 72.76% interest in the equity of Seven‐Up Bottling Company.

The address of the Company’s registered office is 247, Moshood Abiola Way, Ijora, Lagos.

The financial statements were authorized for issue by the Board of Directors on 25 July, 2013.

The Company primarily is involved in the business of bottling and sale of a wide range of soft drinks across Nigeria.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).

These are the Company’s first financial statements prepared in accordance with IFRSs and IFRS 1 First‐time Adoption

of International Financial Reporting Standards has been applied.

The preparation of the financial statements in conformity with IFRSs requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,

liabilities, income and expenses. Actual results may differ from these estimates.

An explanation of how the transition to IFRSs has affected the reported financial position, financial performance and

cash flows of the Company is provided in note 28.

The financial statements have been prepared under the historical cost basis and the use of actuarial methods for

estimating certain employee benefits, which are based on the present value of anticipated future liabilities.

15




(a) Foreign currency

Foreign currency transactions

(b) Financial instruments

I. Non‐derivative financial assets

Cash and cash equivalents

II. Non‐derivative financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,

and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to

realise the asset and settle the liability simultaneously.

All financial liabilities are recognised initially on the trade date at which the Company becomes a party to the

contractual provisions of the instrument.

Transactions denominated in foreign currencies are translated and recorded in Naira at the actual exchange rates at

the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date

are retranslated to the functional currency at the rates of exchange prevailing at that date. The foreign currency gain

or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of

the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign

currency translated at the exchange rate at the end of the year.

Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the

exchange rate at the date of the transaction.

Foreign currency differences arising on translation are recognized in profit or loss, except for qualifying cash flow

hedges, which are recognized in other comprehensive income. Non‐monetary items that are measured in terms of

historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The Company initially recognizes loans and receivables and deposits on the date that they are originated. All other

financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual

provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it

transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially

all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial

assets that is created or retained by the Company is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,

and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to

realize the asset and settle the liability simultaneously.

The Company’s non‐derivative financial assets are classified as loans and receivables.

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active

market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent

to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less

any impairment losses. Loans and receivables comprise trade and other receivables.

Cash and cash equivalents comprise cash on hand, Cash balances with banks and call deposits with original

maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the

company’s cash management are included as a component of cash and cash equivalents for the purpose of the

statement of cash flows.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.

The Company has the following non‐derivative financial liabilities: loan and borrowings, bank overdrafts, trade and

other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction

costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective

interest method.

16




III. Share capital

(c) Property, plant and equipment

I. Recognition and measurement

II .Subsequent costs

III. Depreciation

The estimated useful lives for the current and comparative periods are as follows:

• Leasehold land Over lease period or 99 years, whichever is lower

• Buildings 20 years

• Plant and machinery

‐ moulds 3 years

‐ Other plant and machinery 7 years

• Motor vehicle 5 years

• Furniture and fittings 10 years

• IT equipment 4 years

• Returnable packaging materials

‐ Bottles 5 years

‐ Crates 7 years

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as

separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the

proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within

other income in profit or loss.

The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the

item if it is probable that the future economic benefits embodied within the part will flow to the Company and its

cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day‐to‐day

servicing of property, plant and equipment are recognized in profit or loss as incurred.

Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of

capital‐work‐in‐progress, from the date that the asset is completed and ready for use.

Depreciation is calculated to consume the cost of items of property, plant and equipment less their estimated

residual values using a straight‐line basis over their estimated useful lives. Depreciation is generally recognized in

profit or loss, unless the amount is included in the carrying amount of another asset. Leased assets are depreciated

over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain

ownership by the end of the lease term in which case the assets are depreciated over the useful life.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and

share options are recognised as a deduction from equity, net of any tax effects.

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated

impairment losses. For the purposes of application of IFRS 1, the cost of certain items of property, plant and

equipment, namely land and buildings and plant and machinery was determined by reference to previous

revaluation prior to the date of transition to IFRS. The Company elected to apply the optional exemption to use this

previous revaluation as deemed cost as 1 April 2011, the date of transition to IFRS.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of the

equipment.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Items of property, plant and

equipment under construction are disclosed as capital work‐in‐progress.

The cost of construction recognised includes the cost of materials and direct labour, any other costs directly

attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and

removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

17




(d) Intangible assets

I. Software

II. Subsequent expenditure

III. Amortisation

• Computer software 4 years

(e) Leases

I. Leased assets

II. Lease payments

(f) Inventories

Assets held under other leases are operating leases and the leased assets are not recognised in the Company’s

statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight‐line basis over the term of the

lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the

lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the

reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to

produce a constant periodic rate of interest on the remaining balance of the liability.

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognized in profit or loss on a straight‐line basis over the estimated useful lives of intangible

assets, other than goodwill, from the date that they are available for use, since this most closely reflects the

expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life

for the current and comparative periods is as follows:

Purchased software with finite useful life is measured at cost less accumulated amortisation and accumulated

impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific

asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is

recognised in profit or loss as incurred.

Raw and non‐retunable packaging materials

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure

incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to

their existing location and condition. In the case of manufactured inventories and work‐in‐progress, cost includes an

appropriate share of production overheads based on normal operating capacity. Cost incurred in bringing each

product to its present location and condition is based on:

purchase cost on a first‐ in, first ‐ out basis including

transportation and clearing costs

weighted average cost of direct materials and labour plus a

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

appropriate.

Assets held by the Company under leases for which the Company assumes substantially all the risks and rewards of

ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal

to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial

recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset..

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

appropriate.

Capital work‐in‐progress is not depreciated. The attributable cost of each asset is transferred to the relevant asset

category immediately the asset is available for use and depreciated accordingly

18




Engineering spares:

Goods‐in‐transit: purchase cost incurred to date

Allowance is made for obsolete, slow moving or defective items where appropriate.

(g) Impairment

I. Non‐derivative financial assets

II. Non‐financial assets

The recoverable amount of an asset or cash‐generating unit is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to

The carrying amounts of the Company’s non‐financial assets, other than inventories are reviewed at each reporting

date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s

recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not

yet available for use, the recoverable amount is estimated each year at the same time.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between

its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original

effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against

receivables. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When

a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed

through profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not

exceed the carrying amount that would have been determined, if no impairment loss had been recognised.

Objective evidence that financial assets are impaired can include; default or delinquency by a debtor, restructuring

of an amount due to the Company on terms that the Company would not consider otherwise, indications that a

debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an

investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective

evidence of impairment.

The Company considers evidence of impairment for receivables at both a specific asset and collective level. All

individually significant receivables are assessed for specific impairment. All individually significant receivables found

not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet

identified. Receivables that are not individually significant are collectively assessed for impairment by grouping

together receivables with similar risk characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of default, timing of

recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic

and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical

trends.

purchase cost on a weighted average cost basis, including

transportation and clearing costs

Weighted average cost and standard cost are reviewed periodically to ensure they consistently approximate

historical cost.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of

completion and selling expenses.

Engineering spares that are generic in nature are classified as inventory and are recognised in the profit or loss as

consumed.

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine

whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates

that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect

on the estimated future cash flows of that asset that can be reliably estimated.

Products‐ in‐ process and manufactured finished

goods

reasonable proportion of manufacturing overheads based

on normal levels of activity

19




(h) Employee benefits

I. Defined Contribution plans

II. Defined benefit plans

III.Other long term employee benefits

The Company's liability with respect to this scheme is determined by an independent actuarial valuation every year

using the projected unit credit method. Actuarial gains and losses arising from differences between the actual and

expected outcome in the valuation of the obligation are recognized in other comprehensive income. The effect of

any curtailment is also charged in full in profit or loss immediately when the curtailment occurs. The discount rate is

the yield on Federal Government of Nigeria issued bonds that have maturity dates approximating the terms of the

company’s obligation. Although the scheme is not funded, the Company ensures that adequate arrangements are in

place to meet its obligations under the scheme.

The discount rate is the yield at the reporting date on Federal Government of Nigeria issued bonds that have

maturity dates approximating the term of the Company’s obligation. The calculation is performed using the

Projected Unit Credit method. Any actuarial gains and losses are recognized in other comprehensive income.

The Company’s other long‐term employee benefits represent Long Service Awards scheme instituted for all

permanent employees. The Company’s obligation in respect of the Long Service Awards scheme is the amount of

future benefits that employees have earned in return for their service in the current and prior periods. The benefit is

discounted to determine its present value.

A defined benefit plan is a post‐employment benefit plan other than a defined contribution plan. The Company’s net

obligation in respect of defined benefit gratuity scheme is calculated by estimating the amount of future benefit that

employees have earned in return for their service in the current and prior years and that benefit is discounted to

determine its present value. In determining the liability for employee benefits under the defined benefit scheme,

consideration is given to future increases in salary rates and the Company's experience with staff turnover.

A defined contribution plan is a post‐employment benefit plan under which an entity pays fixed contributions into a

separate entity and has no legal or constructive obligation to pay further amounts in respect of all employee benefits

relating to employee service in current and prior periods.

In line with the provisions of the Pension Reform Act 2004, the Company has instituted a defined contribution

pension scheme for their permanent staff. Staff contributions to the scheme are funded through payroll deductions.

Obligations for contributions to the defined contribution plan are recognised as employee benefit expense in profit

or loss in the periods which related services are rendered by employees. Employees contribute 7.5% each of their

Basic salary, Transport & Housing allowances to the Fund on a monthly basis. The Company also contributes 7.5% of

each employee’s Basic salary, Transport & Housing allowances.

The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate

asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset

belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable

amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are

allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying

amounts of the other assets in the unit (group of units) on a pro rata basis.

In respect of other assets (excluding Goodwill for which impairment loss is not reversed), impairment losses

recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no

longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the

recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not

exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment

loss had been recognised.

the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into

the smallest group of assets that generates cash inflows from continuing use that are largely independent of the

cash inflows of other assets or groups of assets (the “cash‐generating unit, or CGU”).

20




IV.Termination benefits

V.Short‐term employee benefits

(i) Provisions

(j) Contingent liabilities

(k) Revenue

(l) Finance income and finance costs

Foreign currency gains and losses are reported on a net basis.

Finance income comprises interest income on funds invested and changes in the fair value of financial assets at fair

value through profit or loss where the Company holds such financial assets. Interest income is recognized as it

accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair

value of financial assets at fair value through profit or loss where the Company holds such financial assets and

impairment losses recognized on financial assets (other than trade receivables).

Borrowing cost that are not directly attributable to the acquisition, construction or production of a qualifying asset

are recognized in profit or loss.

Revenue is recognised when persuasive evidence exists that the significant risks and rewards of ownership have

been transferred to the buyer, recovery of the consideration is probable and there is no continuing management

involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discount will

be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as

the sales are recognised.

Transfer of significant risk and rewards of ownership is determined to be transferred to the buyer at the point of

delivery to the buyer.

Short‐term employee benefit obligations are measured on an undiscounted basis and are expensed as the related

service is provided.

A liability is recognised for the amount expected to be paid under short‐term cash bonus or profit sharing plans if the

Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the

employee, and the obligation can be estimated reliably.

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation

that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the

obligation. Provisions are determined by discounting the expected future cash flows at a pre‐tax rate that reflects

current market assessments of the time value of money and the risks specific to the liability. The unwinding of the

discount is recognised as finance cost.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only

by the occurrence or non‐occurrence of one or more uncertain future events not wholly within the control of the

company, or a present obligation that arises from past events but is not recognised because it is not probable that

an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the

obligation cannot be measured with sufficient reliability.

Contingent liabilities are only disclosed and not recognised as liabilities in the statement of financial position.

If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent

liability and no disclosure is made.

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration

received or receivable, net of value added tax, sales returns, trade discounts and volume rebates.

Termination benefits are recognised as an expense when the Company is committed demonstrably, without realistic

possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement

date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

Termination benefits for voluntary redundancies are recognised as an expense if the Company has made an offer of

voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be

estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are discounted

to their present value.

21




(m) Tax

I.Current tax

II.Deferred tax

(n) Earnings per share

(o) Dividends

Dividends are recognised as liability in the period they are declared.

(p) Related parties

Dividends which remained unclaimed for a period exceeding twelve (12) years from the date of declaration and

which are no longer actionable by shareholders in accordance with Section 385 of Companies and Allied Matters Act

of Nigeria are written back to retained earnings.

Related parties include the holding company and other group entities. Directors, their close family members and any

employee who is able to exert a significant influence on the operating policies of the Company are also considered

to be related parties. Key management personnel are also regarded as related parties. Key management personnel

are those persons having authority and responsibility for planning, directing and controlling the activities of the

entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated

by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number

of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by

adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary

shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates

statutorily enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The

Company is subject to the following types of current income tax;

• Company Income Tax‐ This relates to tax on revenue and profit generated by the Company during the year, to be

taxed under the Companies Income Tax Act Cap C21, LFN 2004 as amended to date.

• Tertiary Education Tax‐ Tertiary education tax is based on the assessable income of the Company and is governed

by the Tertiary Education Trust Fund (Establishment) Act LFN 2011

Income tax expense represents the sum of current tax expense and deferred tax expense.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities

for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable profit or loss;

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is provided for using the liability method, which represents taxation at the current rate of corporate tax

on all timing differences between the accounting values and their corresponding tax values. A deferred tax asset is

recognised only to the extent that it is probable that future taxable profits will be available against which the

amount will be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related

tax benefit will be realised.Deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items

recognized directly in equity or in other comprehensive income.

22




(q) Segment reporting

(r) New standards and interpretations not yet adopted

(i) IFRS 9 Financial Instruments (2010), IFRS 9 Financial Instruments (2009)

(ii) IFRS 13 Fair Value Measurement (2011)

4 Determination of fair values

(a) Trade and other receivables

(b) Non‐derivative financial liabilities

When applicable, further information about the assumptions made in determining fair values is disclosed in the

notes specific to that asset or liability.

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the

market rate of interest at the measurement date. Fair value for short‐term receivables with no stated interest rate

are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at

initial recognition and for disclosure purposes, at each annual reporting date.

A number of new standards, amendments to standards and interpretations are effective for annual periods

beginning after 31 March, 2013 and beyond, and have not been applied in preparing these financial statements.

Those which may be relevant to the Company are set out below.

A number of the Company’s accounting policies and disclosures require the determination of fair value, for both

financial and non‐financial assets and liabilities. Fair values have been determined for measurement and/or

disclosure purposes based on the following methods.

IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9

(2009), financial assets are classified and measured based on the business model in which they are held and the

characteristics of their contractual cash flows. IFRS 9 (2010) introduces additions relating to financial liabilities. The

IASB currently has an active project to make limited amendments to the classification and measurement

requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge

accounting.

IFRS 9 (2010 and 2009) is effective for annual periods beginning on or after 1 January 2015 with early adoption

IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement

guidance that is currently dispersed throughout IFRS. Subject to limited exceptions, IFRS 13 is applied when fair

value measurements or disclosures are required or permitted by other IFRSs. The company is currently reviewing its

methodologies in determining fair values. IFRS 13 is effective for annual periods beginning on or after 1 January 2013

with early adoption permitted.

An operating segment is a distinguishable component of the Company that earns revenue and incurs expenditure

from providing related products or services (business segment), or providing products or services within a particular

economic environment (geographical segment), and which is subject to risks and returns that are different from

those of other segments.

The Company’s primary format for segment reporting is based on business segments. The business segments are

determined by management based on the Company’s internal reporting structure.

All operating segments’ operating results are reviewed regularly by the Executive Committee, which is considered to

be the chief operating decision maker for the Company to make decisions about resources to be allocated to the

segment and assess its performance, and for which discrete financial information is available.

Where applicable, Segment results that are reported include items directly attributable to a segment as well as

those that can be allocated on a reasonable basis.

The extent of the impact of the above standards has not been determined and the Company does not plan

to adopt these early.

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal

and interest cash flows, discounted at the market rate of interest at the reporting date.

23




24




25




26




27




28




29




30




31




32




5 Revenue

Revenue for the year comprises:

In thousands of naira Note 2013 2012

Local 63,919,189 59,812,538

Export 169,690 51,847

Total Revenue 64,088,879 59,864,385

6 Other income

In thousands of naira 2013 2012

Sale of scrap 45,870 53,287

7 Finance income and finance cost

a.Finance income comprises:


Interest on staff loans 29 875

Interest income on bank deposit 25,740 3,204

25,769 4,079

b. Finance cost comprises:


Interest on overdraft (190,443) (105,972)

(1,976,391) (2,141,842)

Loss on foreign exchange transactions (122,950) ‐

(2,289,784) (2,247,814)

Net finance cost (2,264,015) (2,243,735)

8 Profit before taxation

Profit before taxation is stated after charging:


Depreciation of property, plant and equipment 12 7,268,715 5,881,115

Amortisation of intangible assets 13 10,634 3,922

Auditor’s remuneration 33,000 28,000

Directors’ remuneration 9 (c) 40,146 32,333

Personnel expenses 9 (a) 8,387,826 7,437,176

Assets written off 209,482 404,819

Loss/(gain) on sale of property, plant and equipment 4,776 (974)

Net foreign exchange loss 122,950 ‐

Operating lease cost 24 400,551 313,900

Management service fee 26(iv) 97,882 97,673

Interest expense on financial liabilities measured at amortised

cost

24




9 Personnel expenses

(a) Personnel expenses for the year comprise of the following:


Salaries, wages and allowances 6,248,406 6,169,236

Expenses related to defined benefit plans (Note 21a) 875,013 168,497

Contribution to defined contribution plan (Note 22a) 530,758 496,402

Other personnel expenses 733,649 603,041

8,387,826 7,437,176

2013 2012

N N Number Number

380,000 ‐ 400,000 ‐ 3

400,001 ‐ 450,000 1 20

450,001 ‐ 500,000 7 19

500,001 ‐ 550,000 12 139

550,001 ‐ 600,000 20 1,034

600,001 ‐ 650,000 655 544

650,001 ‐ 700,000 754 174

700,001 ‐ 800,000 499 261

800,001 ‐ 1,000,000 352 307

1,000,001 ‐ 1,200,000 274 256

1,200,001 ‐ 1,400,000 194 260

1,400,001 ‐ 1,600,000 262 172

1,600,001 ‐ 1,800,000 193 115

1,800,001 ‐ 2,000,000 65 58

2,000,001 ‐ 2,500,000 153 103

2,500,001 ‐ 3,000,000 78 65

3,000,001 ‐ 3,500,000 64 27

3,500,001 ‐ 4,000,000 51 23

4,000,001 ‐ 4,500,000 23 20

4,500,001 ‐ 5,000,000 10 17

5,000,001 ‐ 7,000,000 17 12

7,000,001 and above 17 14

3,701 3,643

Employees of the Company, whose duties were wholly or mainly discharged in Nigeria, received remuneration

(excluding pension costs and certain benefits) in the following ranges:

(b)

25




The number of full‐time persons employed per function as at 31 March was as follows:

2013 2012

Number Number

Manufacturing 1,464 1,501

Distribution 1,631 1,630

Finance 170 174

Human Resources/ Administration 404 306

Information Technology 32 32

3,701 3,643

(c) Directors' remuneration

Remuneration paid to directors of the Company was as follows:


Fees:

Non‐executive directors 700 700

39,446 31,633

40,146 32,333

The directors’ remuneration shown above includes:


Chairman 3,400 3,085

Highest paid director 31,606 24,738

2013 2012

N N Number Number

100,000 3,000,000 7 7

3,000,001 4,500,000 1 1

8 8

The number of other directors (excluding the Chairman and highest paid director) who received emoluments

excluding pension contributions and certain benefits were within the following ranges:

Executive directors including chairman (excluding pension

contribution and certain other benefits)

26




10 Taxation

(a) Income tax expense


Current tax expense

Current period income tax 422,790 384,354

Current period tertiary education tax 182,632 153,736

605,422 538,090

Prior year over provision (19,740) ‐

585,682 538,090

Deferred tax expense

Origination and reversal of temporary differences (179,467) 342,083

Total income tax expense 406,215 880,173

20,195

(b) Income tax recognised directly in other comprehensive income


Charges to other comprehensive income before tax 103,387 ‐

Tax benefit (31,016) ‐

72,371 ‐

(c) Tax payable


Movement in tax payable account during the year was as follows

At 1 April 1,090,458 1,006,901

Charge for the year 585,682 538,090

Payments in the year (710,527) (454,533)

At 31 March 965,613 1,090,458

i Can products produced at the Company's Lagos Plant

ii

The tax charge for the year has been computed after adjusting for certain items of expenditure and income, which are not

deductible or chargeable for tax purposes, and comprises:

In 2012, the Nigerian Investment Promotion Council (NIPC) granted the Company a pioneer status for a five year period

with respect to the following production activities of the Company.

PET products produced at the Lagos, Enugu and Abuja plant locations, with a retrospective effective commencement

production date of 1 September 2011.

The effective commencement production date was certified by the Industrial Inspectorate Department of the Federal

Ministry of Commerce and Industry on 23 November 2012. In accordance with the provision of the Industrial

Development (Income Tax Relief) Act, the Company's profit attributable to the pioneer line of business is therefore not

liable to income taxes for the duration of the pioneer period.

27




(d) Reconciliation of effective tax rate

2013 2013 2012 2012



Taxation 406,215 880,173

Profit before tax 3,262,719 2,558,644

30.0% 978,816 30.0% 767,593

Impact of Tertiary education tax 5.6% 182,632 6.0% 153,736

Non‐deductible expenses 3.3% 106,823 4.4% 112,690

Tax exempt income ‐2.4% (79,013) ‐6.9% (175,786)

Pioneer status incentive ‐23.4% (763,303) ‐ ‐

‐ ‐ 0.9% 21,940

Prior year under/(over) provision ‐0.6% (19,740) ‐ ‐

Tax expense 12.5% 406,215 34.4% 880,173

11 Earnings and declared dividend per share

(a)

(b)

Income tax using the Company’s domestic tax rate

Diluted earnings per share of 446 kobo (2012: 262 kobo) is based on profit attributable to the owners of the Company

for the year of N2,856,505,000 (2012: N1,678,471,000), and on the 640,590,364 ordinary shares of 50 kobo each,

being the weighted average number of ordinary shares in issue during the year (2012: 640,590,364).

Declared dividend per share of 200 kobo (2011:200 kobo) is based on dividend declared on 21 June, 2012 of

N1,281,180,725 (2011: N1,281,180,725 (Note 22(b)) on 640,590,364 ordinary shares of 50 kobo each, being the

ordinary shares in issue during the year.

Basic earnings per share of 446 kobo (2012: 262 kobo) is based on profit attributable to the owners of the Company

for the year of N2,856,505,000 (2012: N1,678,471,000) and on 640,590,364 ordinary shares of 50 kobo each in issue

at the end of the year (2012: 640,590,364).

Change in recognized deductible temporary

differences

28




12 Property, plant and equipment (PPE)

(a) The movement on these accounts during the year was as follows:


Cost

Balance at 1 April 2011 87,027 7,639,287 18,663,829 7,333,673 3,782,830 7,859,035 55,024 45,420,705

Additions ‐ 80,594 3,983,372 1,135,297 445,989 2,560,192 2,926,986 11,132,430

Transfers from capital work in progress ‐ 44,201 1,938 2,723 ‐ (48,862) ‐

Disposals ‐ ‐ (3,570) (11,656) ‐ ‐ (15,226)

Write‐off ‐ ‐ ‐ (97,343) (1,111,089) (1,208,432)

Balance at 31 March 2012 87,027 7,719,881 22,687,832 8,361,909 4,231,542 9,308,138 2,933,148 55,329,477

Balance at 1 April 2012 87,027 7,719,881 22,687,832 8,361,909 4,231,542 9,308,138 2,933,148 55,329,477

Additions ‐ 53,266 1,078,540 296,598 336,545 2,680,218 5,399,541 9,844,708

Transfers from capital work in progress ‐ 4,522,982 1,608,705 335,217 ‐ ‐ (6,466,904) ‐

Disposals ‐ ‐ (115,547) (100,097) ‐ (215,644)

Write‐off ‐ ‐ ‐ ‐ ‐ (1,091,979) (1,091,979)

Balance at 31 March 2013 87,027 12,296,129 25,259,530 8,893,627 4,568,087 10,896,377 1,865,785 63,866,562

Depreciation and impairment

Balance at 1 April 2011 3,458 1,233,037 8,101,187 3,992,714 1,874,614 1,953,038 ‐ 17,158,048

Depreciation for the year 1,212 385,398 2,412,014 1,062,677 394,067 1,625,747 ‐ 5,881,115

Disposals ‐ (3,570) (10,913) ‐ ‐ (14,483)

Write‐off ‐ (73,973) (729,640) (803,613)

Balance at 31 March 2012 4,670 1,618,435 10,509,631 4,970,505 2,268,681 2,849,145 ‐ 22,221,067

Balance at 1 April 2012 4,670 1,618,435 10,509,631 4,970,505 2,268,681 2,849,145 ‐ 22,221,067

Depreciation for the year 1,212 553,130 2,951,050 1,206,185 635,421 1,921,717 7,268,715

Disposals ‐ ‐ (96,156) (96,236) (192,392)

Write‐off ‐ (882,497) (882,497)

Balance at 31 March 2013 5,882 2,171,565 13,364,525 6,080,454 2,904,102 3,888,365 ‐ 28,414,893

Carrying amounts

At 1 April 2011 83,569 6,406,250 10,562,642 3,340,959 1,908,216 5,905,997 55,024 28,262,657

At 31 March 2012 82,357 6,101,446 12,178,201 3,391,404 1,962,861 6,458,993 2,933,148 33,108,410

At 1 April 2012 82,357 6,101,446 12,178,201 3,391,404 1,962,861 6,458,993 2,933,148 33,108,410

At 31 March 2013 81,145 10,124,564 11,895,005 2,813,173 1,663,985 7,008,012 1,865,785 35,451,669

‐

Returnable

packaging

materials

PPE Under

Construction Total Leasehold land Buildings

Plant and

Machinery Motor Vehicles Office Equipment

29




(b) Property, plant and equipment under construction

Expenditure on capital work in progress during the year is analysed as follows:


Plant and machinery 2,527,616 835,168

Software 48,511 ‐

Land and buildings 2,641,897 1,887,118

Motor Vehicle 181,517 204,700

5,399,541 2,926,986

(c) Assets held on finance lease

(d) Capital commitments

2013 2012 1 April 2011

Approved and contracted 268,469 ‐ ‐

Approved but not contracted 2,274,810 6,868,951 6,800,056

2,543,279 6,868,951 6,800,056

13 Intangible assets

The movement on this account during the year was as follows:


Cost 2013 2012

Balance at 1 April 73,738 29,754

Additions 22,135 43,984

Balance at 31 March 95,873 73,738

Amortisation and impairment losses


Amortisation for the year 10,634 3,922


Carrying amounts



No borrowing costs were capitalised in current year (2012: Nil)

The Company holds various pieces of land under finance lease arrangements. The maximum tenor of the lease arrangements

is 99 years in line with the Land Use Act. The lease amounts were fully paid at the inception of the lease arrangements.

Capital expenditure commitments at the year‐end authorised by the Board of Directors comprise:

30




31




14 Other receivables

15 Deferred taxation

Recognised deferred tax liabilities

Deferred tax liabilities are attributable to the following:

In thousands of naira 31‐Mar‐13 31‐Mar‐12 1 April 2011 31‐Mar‐13 31‐Mar‐12 1 April 2011 31‐Mar‐13 31‐Mar‐12 1 April 2011

‐ ‐ ‐ 3,614,922 3,612,783 3,440,188 3,614,922 3,612,783 3,440,188

Employee benefits (972,223) (1,115,382) (1,591,771) ‐ ‐ ‐ (972,223) (1,115,382) (1,591,771)

Unrealised exchange (loss)/gain (26,881) ‐ (32,063) ‐ ‐ ‐ (26,881) ‐ (32,063)

Loans and borrowings (21,175) (21,175) (41,370) ‐ ‐ ‐ (21,175) (21,175) (41,370)

Tax (asset)/liabilities (1,020,279) (1,136,557) (1,665,204) 3,614,922 3,612,783 3,440,188 2,594,643 2,476,226 1,774,984

Set off of tax 1,020,279 1,136,557 1,665,204 (1,020,279) (1,136,557) (1,665,204) ‐ ‐ ‐

Net tax liabilities ‐ ‐ ‐ 2,594,643 2,476,226 1,774,984 2,594,643 2,476,226 1,774,984

Movement in temporary differences during the year


Property, plant and equipment 3,440,188 172,595 ‐ 3,612,783 2,139 3,614,922

Employee benefits (1,591,771) 117,230 359,159 (1,115,382) (154,725) 297,884 (972,223)

Unrealised exchange difference (32,063) 32,063 ‐ (26,881) (26,881)

Loans and borrowings (41,370) 20,195 (21,175) ‐ (21,175) ‐

1,774,984 342,083 359,159 2,476,226 (179,467) 297,884 2,594,643

Balance 1

April 2011

Recognised in

profit or loss

Recognised in

profit or loss

Recognised in

retained

earnings

Balance 31

March 2013

Balance 31

March 2012

Recognised in

retained

earnings

Non‐current other receivables represent loans granted to the Company’s employees, which are secured by the employees’ retirement benefit obligations.

Property, plant and equipment and

intangible asset

Assets Liabiliities Net

31




11‐Jan

#######

32




16 Inventories

In thousands of naira 2013 2012 1 April 2011

4,836,410 4,336,619 2,995,838

Product in process 177,471 ‐ ‐

Finished products 682,193 687,515 410,098

Engineering spares 1,971,841 1,944,213 2,137,141

Goods in transit 1,061,582 1,303,340 74,340

8,729,497 8,271,687 5,617,417

17 Trade and other receivables

In thousands of naira Note 2013 2012 1 April 2011

Trade receivables 341,142 263,885 350,422

Staff loans and advances 44,816 58,941 97,624

Due from related parties 23(a(i)) 2,159,000 2,771,290 2,546,497

Other receivables 420,763 536,776 281,762

Deposit with Company registrars for dividend 288,039 186,140 88,815

3,253,760 3,817,032 3,365,120

18 Cash and cash equivalents


Cash and bank balances 2,283,869 2,146,329 1,698,314

Deposit for Imports 818,399 213,663 3,851,222

Cash and cash equivalents 3,102,268 2,359,992 5,549,536

Bank overdrafts used for cash management purposes (835,003) (777,634) (873,562)

Cash and cash equivalents in the statement of cash flows 2,267,265 1,582,358 4,675,974

The value of raw materials, non‐returnable packaging materials, spare parts, changes in finished products and products in process

recognised in cost of sales during the year amounted to N32.7 billion (2012: N31.1 billion).

In current year, write‐down of inventory to net realisable value amounted to N910 million (2012: N861 million) these were included

in cost of sales on the statement of comprehensive income.

The Company’s exposure to credit and currency risks, and impairment losses related to trade and other receivables are disclosed in

note 23.

The Company’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in note 23.

Raw materials, consumables and non‐returnable

packaging materials

Included in cash and cah equivalents are amounts denominated in USD and Euro amounting to N845 million and N0.8 million (2012

:N222 million and N0.8 million)

32




2,293,433 2,274,203.00

2,560,192.00 2,502,337,000

(266,759) (2,500,062,797)

(2,507,747,930)

10581896 8125165

(5,410,930.00)

(2,310,209) 2,507,748

2,280,329,000

2,278,018,791

(2,285,739,900.96)

8301567 5622828

(5,410,901)

33



Together with Directors' and Independent Auditor's Reports19 Capital and reserves

(a) Ordinary shares

(i) Authorised ordinary shares of 50k each

In number of shares 2013 2012 1 April 2011

640,590,364 640,590,364 640,590,364

(ii) Issued and fully paid ordinary shares of 50k each

In number of shares 2013 2012 1 April 2011

640,590,364 640,590,364 640,590,364

Nominal value (In thousands of naira) 320,295 320,295 320,295

20 Loans and borrowings

(a)

Loans and borrowing as at 31 March is as follows:


At 31 March


Non‐ current liabilities

(i) Secured bank loans 4,997,584 2,313,776 7,617,778

Current liabilities

Secured bank loans 13,988,312 16,636,510 10,340,647

18,985,896 18,950,286 17,958,425

(ii) Movement in the loans and borrowings

Non‐ current liabilities

Secured bank loans

2013 2012

Opening balance 18,950,286 17,958,425

Increase in borrowings 8,261,436 2,416,098

Repayment (8,225,826) (1,424,237)

18,985,896 18,950,286

This note provides information about the contractual terms of the Company’s interest‐bearing loans and borrowings,

which are measured at amortised cost. For more information about the Company’s exposure to interest rate, foreign

currency and liquidity risks, see note 23.

33




Terms and debt repayment schedule

(b) Terms and conditions of outstanding loans were as follows:

In thousands of naira Facility limit Currency Face Value Face Value Face Value

United Bank for Africa =N=1,500,000 NGN 13% 2012 ‐ ‐ 563,776 563,776 ‐ ‐

Zenith Bank Plc =N=5,000,000 NGN 9% 2012 1,500,000 1,521,530 1,500,000 1,554,120

Zenith Bank Plc " NGN 9% 2012 ‐ 3,000,000 3,034,944 3,000,000 3,031,280

Standard Chartered =N=3,000,000 NGN 10% 2012 ‐ ‐ 2,250,000 2,291,139 3,000,000 3,074,198

Stanbic IBTC =N=500,000 NGN 11% 2012 ‐ ‐ 166,667 169,009 390,000 394,792

United Bank for Africa =N=3,000,000 NGN 13% 2012 3,000,000 3,000,000 3,500,000 3,500,000

First bank =N=1,500,000 NGN 13% 2012 666,098 666,098 ‐

Zenith Bank Plc =N=10,000,000 NGN 13%‐15% 2012 6,000,000 6,000,000 7,000,000 7,000,000 5,500,000 5,500,000

United Bank for Africa =N=500,000 NGN 15% 2012 500,000 500,000

Standard Chartered USD 10,700 USD 4% 2012 1,695,799 1,792,422

Zenith Bank Plc USD 5,000 USD 4% 2012 805,511 805,511

CITI bank USD 10,400 USD 4% 2012 1,878,491 1,878,491

Stanbic IBTC =N= 1,000,000 NGN 7% 2015 500,000 502,944 700,000 703,790 900,000 904,036

Standard Chartered USD 12,000 USD 4% + 90 day Libor 2015 1,530,757 1,523,299 ‐ ‐ ‐ ‐

Standard Chartered USD 38,000 USD 4% + 90 day Libor 2015 5,996,780 5,983,289 ‐ ‐ ‐ ‐

Total Interest bearing liabiliites 18,907,338 18,985,956 18,846,541 18,950,286 17,790,000 17,958,426

* The face value of the short term loans approximate their carrying amounts.

The bank loans are secured by a negative pledge on the Company’s assets in line with their relative exposures.

31 March 2013 31 March 2012 1 April 2011

Nominal interest

rate

Year of

maturity

Carrying amount Carrying

amount

Carrying

amount

34




21 Employee benefits


Present value of unfunded obligation for gratuity 2,910,898 3,354,356 4,104,283

Long service awards benefit plan 426,570 363,583 363,583

Total employee benefit liabilities (Note (a)) 3,337,468 3,717,939 4,467,866

(a) Movement in present value of the defined benefit obligation and long service award

In thousands of naira Note 2013 2012

Defined benefits obligations as at 1 April 3,717,939 5,305,905

Prior year adjustment (net of tax) (i) (622,691) (838,039)

restated balance 3,095,248 4,467,866

Benefit paid by the plan (262,538) (559,265)

Current service costs 313,637 60,396

Interest costs on obligation 561,376 108,101

Tax impact on prior year adjustment (266,868) (359,159)

3,440,855 3,717,939

Actuarial gain recognised in other comprehensive income (103,387) ‐

3,337,468 3,717,939

Expense recognised in profit or loss and other comprehensive income

In thousands of Naira 2013 2012

Current service costs 313,637 60,396

Interest costs on obligation 561,376 108,101

9(a) 875,013 168,497

Actuarial gain recognised in other comprehensive income (103,387) ‐

771,626 168,497

(b) Actuarial assumptions

Financial Assumptions

2013 2012

Long term average Discount rate (p.a.) 12% 12%

Average Pay Increase (p.a.) 10% 10%

The Company operates an unfunded annualized defined benefit gratuity scheme for its employees. The benefits under which are

related to the employees' length of service and remuneration. Under the annualized defined benefit plan, gratuity is calculated on

an annual basis using the salaries for each year to determine the benefits using projected unit credit method.

Lump sum benefit payable upon retirement or resignation of employment are fully accrued over the service lives of the

employees. Gratuity and other long term employee benefit provisions are based upon independent actuarial valuation by B.A

Adigun and Associates.

Current service cost and interest cost are recognised in administrative expenses and cost of sales in the statement of

comprehensive income.

Principal actuarial assumptions at the reporting date (expressed as weighted averages) fall under two broad categories. These

assumptions depict management’s estimate of the likely future experience of the Company.

Defined benefits obligations at 31 March

The Prior year adjustment relates to the retrospective recalculation of the defined benefit obligation in line with the annualized

salary method, which is in line with the agreement between the company and union. In the previous year, the liability was

calculated using the final salary system, which was not in line with the rules of the entity. The impact of this correction is set out

in the note above.

35




Demographic assumptions

Assumptions regarding future mortality are based on published statistics and mortality tables.

Mortality in service

Sample age

2013 2012

20 22 22

30 23 23

40 34 34

50 101 101

(c) Sensitivity Analysis

rate Gratuity Long service awards

‐1% 221,180 30,160

1% (189,005) 27,449

‐1% (164,107) 12,712

1% 179,572 13,636

‐1% ‐ ‐

1% ‐ ‐

‐1 year (1,031) 687

+1 year 1,131 778

Below is the sensitivity analysis of the principal actuarial assumptions adopted in determining the employee benefit liabilities:

Salary increase

rate

Inflation rate

Mortality rate

Discount rate

The rates of mortality assumed for employees are the rates published in the A49/52 Ultimate Tables, published jointly by the

Institute and Faculty of Actuaries in the UK. This is due to unavailability of published reliable demographic data in Nigeria.

36




22 Trade and other payables


Trade creditors 3,831,806 3,973,886 3,087,746

Other creditors and accruals 2,107,251 1,522,144 1,266,854

Amount due to related parties 1,173,266 1,288,102 178,239

Dividend payable 450,230 367,970 276,085

Liability for returnable packaging material 4,511,014 4,013,422 2,841,378

12,073,567 11,165,524 7,650,302

a. Movement in pension payable


Obligation at 1 April 288,675 328,342

Contributions during the year (Note 9(a)) 530,758 496,402

Payments (565,289) (536,069)

Obligation at 31 March 254,144 288,675

b. Movement in dividend payable


At 1 April 367,970 276,085

Declared dividend (Note 11(a)) 1,281,181 1,281,181

Unclaimed dividend at year end (bi) 82,260 102,572

Unclaimed dividend transferred to retained earnings ‐ (10,687)

Payments (1,281,181) (1,281,181)

At 31 March 450,230 367,970

23 Financial risk management and financial instruments

∙ Credit risk

∙ Liquidity risk

∙ Market risk

∙ Interest rate risk

∙ Operational risk.

∙ Capital management.

The Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 23.

The Company has exposure to the following risks from its use of financial instruments:

(i)No unclaimed dividend was transferred to reserves in current year (2012:10.7 million). This represents dividend which have

remained unclaimed for over twelve (12) years and are therefore no longer recoverable or actionable by the shareholders in

accordance with section 385 on the Companies and Allied Matters Act , cap. C20, laws of the Federal Republic of Nigeria,

2004

(ii) The directors propose a dividend of 220k per share (2012:200k per share) on the issued shares of 640,590,364 ordinary

shares of 50k each. The dividend if approved by members will be paid subject to deduction of withholding tax at the

Included in other creditors and accruals is pension payable to the pension fund administrators which was yet to be remitted

at the year end. The movement on this account during the year was as follows:

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies

and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures

are included throughout these financial statements.

37




Risk management framework

(a) Credit risk

i. Exposure to credit risk


Other receivables (non‐current) 133,815 137,552 173,214

Trade and other receivables 17 3,253,760 3,817,032 3,365,120

Cash and cash equivalents 18 2,267,265 1,582,358 4,675,974

5,654,840 5,536,942 8,214,308

The maximum exposure to credit risk for Trades and receivables at the reporting date by type of counterparty was:


Trade receivables

Key customers 472,346 272,605 190,672

Others 90,517 141,342 235,257

562,863 413,947 425,929

Impairment (221,721) (150,062) (75,507)

341,142 263,885 350,422

Due from related parties 26(d(i)) 2,159,000 2,771,290 2,546,497

Others 753,618 781,857 468,201

3,253,760 3,817,032 3,365,120

The Board of Directors' have overall responsibility for the establishment and oversight of the Company’s risk management

framework. The Board has established a Management Committee, which is responsible for developing and monitoring the

Company’s risk management policies. The committee reports regularly to the Board of Directors on its activities. The

Committee is assisted in its oversight role by Internal Audit.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set

appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are

reviewed regularly by the Management Committee to reflect changes in market conditions and the Company’s activities.

The Company’s Audit Committee oversees how management monitors compliance with the Company’s risk management

policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the

Company. Internal Audit undertakes both regular and ad hoc reviews of compliance with established controls and

procedures, the results of which are reported to Senior Management of the Company at Management meetings.

Credit risk is the risk of financial loss to the Company if a customer or a counterparty to a financial instrument fails to meet its

contractual obligations and arises principally from the Company's receivable from customers or investment in securities.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the

reporting date was:

Carrying amount

Carrying amount

38




Trade and other receivables

ii. Impairment losses

The ageing of trade receivables at the reporting date was:

Impairment Gross Impairment

In thousands of naira 2013 2012 1 April 2011 1 April 2011

Not pass due 0‐30 days ‐ ‐ 240,882 ‐

Past due 31‐90 days (166,699) (76,413) 179,537 (69,997)

Past due 91‐180 days (55,023) (73,649) 5,510 (5,510)

Past due 181‐365 days ‐ ‐ ‐ ‐

More than 365 days ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐

(221,722) (150,062) 425,929 (75,507)

The Company’s most significant customer accounts for N 26 million of the loans and receivables carrying amount at 31

March, 2013 (2012: N 15 million; 1 April 2011: N 11 million).

Management has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. Under the credit

policies all customers requiring credit over a certain amount are reviewed and new customers analysed individually for

creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s

credit assessment process includes specified cash deposits by new customers. Credit limits are established for qualifying

customers and these limits are reviewed regularly by the Credit control unit. Customers that fail to meet the Company’s

benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Credit control unit is charged with the review of each customer’s credit limit in line with the customers’ performance in

the preceding quarter and perceived risk factor assigned to the customer.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they

are an individual or legal entity, whether they are a key distributor or retail distributor, geographic location, and existence of

previous financial difficulties. Trade and other receivables relate mainly to the Company’s wholesale customers. Customers

with no trading activities for a period of up to one year are placed on a dormant customer list, and future sales are made on a

prepayment basis only with approval of management.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and

other receivables. The main components of this allowance are a specific loss component that relates to individually significant

exposures, customers with outstanding amounts but have not placed orders/traded for a prolonged period of time (usually

one year) and a collective loss component established for groups of similar assets in respect of losses that have been incurred

but not yet identified. The collective loss allowance is determined based on historical data of payment statistics.

Amount due from related parties as at year end represents advance to the Companies key suppliers’ with respect to

purchases of packaging materials and funds required to boost their working capital requirements.

Other receivables represent unclaimed dividends with the registrars, staff advances and receivables.

39




The movement in the allowance for impairment in respect of loans and receivables during the year was as follows:



Impairment loss recognized 92,581 74,555

Amounts written off (20,921) ‐


The ageing of amount due from related parties at the reporting date was:

Gross Impairment Gross Impairment Gross Impairment

In thousands of naira 2013 2013 2012 2012 1 April 2011 1 April 2011

‐ ‐ ‐ ‐ ‐ ‐

Not pass due 0‐30 days 694,391 ‐ 1,635,420 ‐ 1,310,598

Past due 31‐90 days 196,005 ‐ 930,694 ‐ 603,466

Past due 91‐180 days 297,415 ‐ 205,176 ‐ 648,363

Past due 181‐365 days 970,842 ‐ ‐

More than 365 days 347 ‐ ‐

‐ ‐ ‐ ‐ ‐

2,159,000 ‐ 2,771,290 ‐ 2,562,427 ‐

Cash and cash equivalents

(b) Liquidity risk

The Company uses standard costing to cost its products, which assist it in monitoring cash flow requirements and optimizing its cash

return on investments. The Company aims to maintain the level of cash and cash equivalents at an amount in excess of expected cash

outflows on financial liabilities (other than trade payables) over the succeeding 60 days. The Company also monitors the level of

expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. At 31 March

2013, the expected cash flows from trade and other receivables maturing within two months were N694 million (2012: N1,635 million).

This excludes potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

In addition, the Company maintains the various lines of credits as listed in note 20(b).

The impairment loss as at 31 March 2013 relates to several customers that are not expected to be able to pay their outstanding balances,

mainly due to economic circumstances. The Company believes that the unimpaired amounts that are past due are still collectible, based

on historical payment behaviour and extensive analysis of the underlying customers’ credit ratings.

Based on historic default rates, the Company believes that, apart from the above, no impairment allowance is necessary in respect of

trade receivables not past due by up to 30 days.

The Company held cash and cash equivalents of N2.26 billion at 31 March 2013 (2012: N1,58 billion), which represents its maximum

credit exposure on these assets.

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that

are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible,

that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring

unacceptable losses or risking damage to the Company’s reputation.

40




31 March 2013


Non‐derivative financial

liabilities

Secured bank loans 18,985,956 18,954,921 (12,488,486) (1,482,153) (2,964,305) (2,019,977) ‐

Unsecured intercompany loans 1,173,266 1,173,266 (189,801) (983,465) ‐ ‐

Trade and other payables 10,900,301 10,900,301 (10,900,301) ‐ ‐ ‐ ‐

Bank overdraft 835,003 835,003 ‐ (835,003) ‐ ‐

31,894,526 31,863,491 (23,578,588) (3,300,621) (2,964,305) (2,019,977) ‐

31 March 2012


Non‐derivative financial

liabilities

Secured bank loans 18,950,286 18,846,541 (11,836,741) (4,635,000) (200,000) (2,174,800) ‐

Unsecured intercompany loans 1,288,102 1,176,333 (385,000) (791,333) ‐ ‐ ‐

Trade and other payables 8,355,278 8,355,278 8,355,278 ‐ ‐ ‐

Bank overdraft 777,634 777,634 ‐ (777,634) ‐ ‐ ‐

29,371,300 29,155,786 (3,866,463) (6,203,967) (200,000) (2,174,800) ‐

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amountContractual cash

flows6 months or less 6‐12 months 1‐2 years 2‐5years More than 5 years

More than 5 yearsCarrying amountContractual cash

flows6 months or less 6‐12 months 1‐2 years 2‐5years

41




(c) Market risk

I. Currency risk

Amounts in thousands Euro USD Euro USD Euro USD

Cash and cash equivalent 4 5,353 4 1,406 16 25,194

Trade and other receivables 0 304 0 40 0 15

Trade and other payables 0 ‐102 0 ‐99 0 1241

Bank Loan 0 ‐48 0 0 0 0

Net exposure 4 5,507 4 1,347 16 26,450

Forward exchange contracts ‐ ‐ ‐ ‐ ‐ ‐

Net exposure 4 5,507 4 1,347 16 26,450

The following significant exchange rates applied during the year;

Year end spot rate

2013 2012 1 April. 2011 2013 2012 1 April 2011

Euro 202.50 213.73 199.47 202.01 210.24 217.53

United States Dollar (USD) 155.79 153.71 149.26 157.81 158.07 152.86

Average rate

Exposure to currency risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect

the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to

manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company is exposed to currency risk on sales and purchases and borrowings that are denominated in a currency other than

the functional currency of the Company, primarily the Naira. The currencies in which these transactions primarily are

denominated are Euro, US Dollars (USD) and Pounds Sterling (GBP). The currency risk is the risk that the fair value or future cash

flows of a financial instrument will fluctuate due to the changes in foreign exchange rates.

The Company's policy is to ensure that its net exposure in respect of monetary assets and liabilities denominated in foreign

currencies are kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short

term imbalances.

The summary quantitative data about the Group’s exposure to currency risk as reported to the Management of the Group based

on its risk management policy was as follows:


42




II. Sensitivity analysis

Effect in thousands of Naira Equity Profit or (loss)

31 March 2013

USD (5% strengthening) ‐ 43,455

USD (5% weakening) ‐ (43,455)

Euro (5% strengthening) ‐ 40

Euro (5% weakening) ‐ (40)

31 March 2012

USD (5% strengthening) ‐ 10,646

USD (5% weakening) ‐ (10,646)

Euro (5% strengthening) ‐ 42

Euro (5% weakening) ‐ (42)

(d) Interest rate risk

At the reporting date the interest rate profile of the Company’s interest‐bearing financial instruments was:


Fixed rate instruments

Financial assets 214,369 191,258

214,369 191,258

Variable rate instruments

Financial liabilities 7,506,588 ‐

7,506,588 ‐

Fair value sensitivity analysis for fixed rate instruments

Cash flow sensitivity analysis for variable rate instruments

100 BP 100 BP 100 BP 100 BP

increase decrease increase decrease

31 March 2013

Variable rate instruments 15,836 (15,836) ‐ ‐

Cash flow sensitivity (net) 15,836 (15,836) ‐ ‐

Profit or loss Equity

A strengthning of the naira, as indicated below, against the USD would have affected the meaurement of financial

instruments denominated in foreign currency and decreased equity and profit or loss by the amounts shown below. This

analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at

the end of the reporting period. The analysis assumes that all other variables, in particular interest and inflation rates,

remain constant and ignores any impact of forecast sales and purchases.

The analysis is performed on the same basis for 2012, albeit that the reasonably possible foreign exchange rate variances

were different, as indicated below:

In managing interest rate risk, the Company aims to reduce the impact of short‐term fluctuations in earnings. Dividend pay‐

out practices seek a balance between giving good returns to shareholders on one hand and maintaining a solid debt/equity

ratio on the other hand.

Carrying Amount

The Company does not account for any fixed financial assets and liabilities at fair value through profit or loss. Therefore a

change in interest rates at the reporting date would not affect profit or loss.

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or

loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates,

remain constant. The analysis is performed on the same basis for 2012.

43




(e) Operational risk

• documentation of processes, controls and procedures

• training and professional development of employees

• appropriate segregation of duties, including the independent authorization of transactions

• monitoring of compliance with regulatory and other legal requirements

• requirements for reporting of operational losses and proposed remedial action

• development of contingency plans for various actions

• reconciliation and monitoring of transactions

• development, communication and monitoring of ethical and acceptable business practices

• risk mitigation, including insurance when this is effective.

(f) Capital management

In thousands of Naira 2013 2012 1 April 2011

Total liabilities 38,792,190 38,178,067 33,732,040

Less: cash and cash equivalents (3,102,268) (2,359,992) (5,549,536)

Net debt 35,689,922 35,818,075 28,182,504

Total equity 12,577,980 10,307,595 9,899,618

Net debt to equity ratio 2.84 3.47 2.85

(g) Fair values

Fair values versus carrying amount

In thousands of Naira

Assets carried at amortised cost

Other receivables (non‐current) 133,815 133,815 137,552 137,552 173,214 173,214

Trade and other receivables 3,253,760 3,253,760 3,817,032 3,817,032 3,365,120 3,365,120

Cash and cash equivalents 3,102,268 3,102,268 2,359,992 2,359,992 5,549,536 5,549,536

6,489,843 6,489,843 6,314,576 6,314,576 9,087,870 9,087,870

Liabilities carried at amortised cost

Secured bank loans 18,985,956 19,054,590 18,950,286 18,846,541 17,958,426 17,790,000

Trade and other payables 12,073,567 12,073,567 11,165,524 11,165,524 7,650,302 7,650,302

Bank overdraft 835,003 835,003 777,634 777,634 873,562 873,562

31,894,526 31,963,160 30,893,444 30,789,699 26,482,290 26,313,864

The basis for determining fair values is disclosed in Note 4.

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes, personnel,

technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory

requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Company’s operations.

The Company’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Company’s reputation

with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the

development and implementation of controls to address operational risk is assigned to management and the executive committee. This

responsibility is supported by the development of overall Company standards for the management of operational risk in the following areas:

• periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified by the risk

management committee

• monitoring of business process performance and development and implementation of improvement mechanisms thereof

Compliance with the Company’s standards, established procedures and controls is supported by periodic reviews undertaken by Internal Audit.

The results of Internal Audit reviews are discussed with management to which they relate with summaries submitted to senior management of the

Company .


Fair value

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future

development of the business. Management monitors the return on capital, which the Company defines as result from operating activities divided

by total shareholders’ equity. Management also monitors the level of dividends to all shareholders.

Carrying amount Fair valueCarrying

amountFair value Carrying amount

The Company’s debt to adjusted capital ratio at the end of the reporting period was as follows:

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

44




2013 2012

Secured bank loans 4%‐15% 4%‐15%

24 Operating leases

25 Contingencies

(a) Pending litigation and claims

(b) Guarantees

(c) Financial commitments

26 Related parties

(a) Parent and ultimate controlling party

(b) Transactions with key management personnel

Loan to key management personnel

During the year ended 31 March 2013, an amount of N 401 million (2012: N 314 million) was recognized as an expense in profit or loss

in respect of operating leases.

The major shareholder of the Company is Afelka S.A with 72.97 % shareholding. The ultimate controlling party of the Group is Mak

holdings (Lebanon) SAL.

Unsecured loans with key management personnel as at year end amounted to N25 million (2012: N25 million). These are mostly non‐

interest bearing facilities. At 31 March 2013, the balance outstanding is included in trade and other receivables. (See note 17)

Contingent liabilities in respect of guarantees provided to Stanbic IBTC in respect of loans obtained by related parties (Sunglass

and Green eagles) from the banks amounted to N320 million.

The HQ, Ibadan and Ilorin land leases were entered into many years ago. The Company determined that the land elements of these

warehouse and office leases are operating leases. The rent paid to the landlord is increased to market rent at regular intervals, and the

Company does not participate in the residual value of the land. As a result, it was determined that substantially all the risks and

rewards of the land and buildings are with the landlord.

Trade and other receivables, deposit for imports, Secured bank loans and bank overdrafts are the Company’s short term financial

instruments. Accordingly, management believes that their fair values are not expected to be materially different from their carrying

values.

The interest rates used to discount estimated cash flows, where applicable are based on external sources and were as follows:

The Company leases equipments, offices, warehouse and accommodation facilities under operating leases. The leases typically run for

a period of one to five years, with an option to renew the lease after that date. Lease payments are usually increased at the expiration

of the lease term and consequent renewal to reflect market rentals. Lease rentals are paid upfront and included in prepayments, which

are amortised to the profit and loss over the life of the lease on a straight line basis and therefore there are no future lease payment

payable in relation to these lease. Lease rental payment in current year amounted to N363 million (2012: N359 million).

The Company is engaged in lawsuits that have arisen in the normal course of business. The contingent liabilities in respect of

pending litigation and other possible claims amounted to N 681 million as at 31 March 2013 (2012: N 672 million). In the opinion

of the directors, and based on independent legal advice, the Company is not expected to suffer any material loss arising from

these claims. Thus no provision has been made in these financial statements.

The directors are of the opinion that all known liabilities and commitments, which are relevant in assessing the state of affairs of

the Company, have been taken into consideration in the preparation of these financial statements.

45




Other transactions with key management personnel

(c) Key management personnel compensation

Key management personnel compensation comprised:


Short‐term employee benefits 213,233 174,381

Contribution to compulsory pension fund scheme 12,350 9,884

225,583 184,265

(d) Other related party transactions

(i) Intercompany receivables


Related Party 2013 2012 2013 2012 1 April 2011

Sunglass Limitedi

Advance payment/

supply of glass 2,875,000 2,065,596 971,000 1,075,955 1,178,346

ii Advance payment/

supply of corks 3,255,000 2,388,400 1,146,000 1,691,350 1,102,737

SBC Ghana Limited Sale of finished goods 170,000 37,525 42,000 3,985 4,055

iiiCash advance/ Services 43,884 ‐ ‐ ‐ 261,359

6,343,884 4,491,521 2,159,000 2,771,290 2,546,497

Green Eagle, Cork Seal

Nigeria Limited

M. El Khalil Properties

Limited

In addition to their salaries, the Company also provides non‐cash benefits to directors and executive officers, and contributes to a post‐

employment defined contribution plan on their behalf. In accordance with the terms of the plan, directors and executive officers are

entitled to access the fund when they retire.

Executive officers also participate in the Company’s long service awards programme. This programme awards a certain sum of cash

benefit which accrues to the recipient on graduated periods of uninterrupted service.

Payment for warehouse rental of N0.3 million was made during the year to one of the company’s directors, Otunba Adekunle Ojora, for

a period of 24 months. Payment made is disclosed as part of the lease rental paid in current period

Transaction value year

ended 31 MarchNature of transaction

Balance outstanding as at

31 March

Balance

outstanding

Related parties include the parent company, Afelka, S.A and other Seven‐Up entities and entities under common control with Seven‐Up

. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the

Company are considered as related parties. Key management personnel are also regarded as related parties. Key management

personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,

directly or indirectly, including any director (whether executive or otherwise) of that entity.

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or

significant influence over the financial or operating policies of the entities. During the year, a number of these entities transacted with

the Company. The total amounts due to related parties by nature of their transaction are shown below.

46




(ii) Intercompany payables


Related Party 2013 2012 2013 2012 1 April 2011

iii Cash advance/ Services ‐ 1,500,000 937,995 1,176,333 ‐

iv Services 97,882 97,673 235,271 111,769 178,239

97,882 1,597,673 1,173,266 1,288,102 178,239

(i) Sunglass Limited:

(ii) Green Eagle, Cork Seal Nigeria Limited:

(iii) M. El Khalil Properties Limited:

(iv) Continental Beverages SAL (Offshore):

27 Subsequent events

Continental Beverages SAL (Offshore), provides management services to Seven‐up Bottling Company Plc. A consideration of 3% of

profit before tax (or 1% of net sales, in a year where Seven‐up does not make profit) but not exceeding N218,610,360, shall be

paid as management service fees to Continental Beverages on a quarterly basis in arrears.

Green Eagle, Cork Seal Nigeria Limited whose principal activity is the manufacturing and marketing of Corks, Seals and Crates for

bottling companies and breweries, is a major supplier of crowns and crates to Seven‐Up Bottling Company Plc.. Green Eagle, Cork

Seal Nigeria Limited is related to the Company through common shareholding.

The Company also advances money to Green Eagles to boost their working capital and assist in the procurement of materials

required for production. These advances are subsequently recovered from future transactions with the company for the supply of

corks and crates.

Sunglass Limited whose principal activity is the manufacturing of glass and glass wares is a major supplier of bottles to Seven‐Up

bottling Company Plc "the Company". Sunglass is related to the Company through common shareholding, as the majority

shareholders in Seven‐Up also have majority shares in Sunglass limited.

The Company advances money to Sunglass Limited to boost their working capital and assist in the procurement of materials

required for production. These advances are subsequently recovered from future transactions from the supply of bottles.

The Company also occupies properties owned by M. El‐Khalil & Sons (Properties) Limited. M. El‐Khalil & Sons (Properties) Limited

is related to the Company through common shareholding. In prior year M. El‐ Khalil advanced funds to Seven‐Up to assist in

funding the operations the business. Seven‐Up Bottling Company also provides management services (mainly legal advice) to M.

El‐Khalil.

Balance

outstanding

M. El Khalil Properties

Limited:

Continental Beverages

SAL (Offshore):

Balance outstanding as at

31 March

There are no significant subsequent events, which could have had a material effect on the state of affairs of the Company as at 31st

March 2013 that have not been adequately provided for or disclosed in the financial statements.

All outstanding balances with these related parties are usually settled within twelve months of the reporting date. None of the

balances are secured nor bear interest.

Transaction value year

ended 31 MarchNature of transaction

47




28 Explanation of transition to IFRSs

As stated in note 2(a), these are the Company’s first financial statements prepared in accordance with IFRSs.

In preparing its opening IFRS statement of financial position, the Company has adjusted amounts reported previously in financial

statements prepared in accordance with Nigerian GAAP. An explanation of how the transition from the Nigerian GAAP to IFRSs has

affected the Company’s financial position, financial performance and cash flows is set out in the following tables and the notes that

accompany the tables.

The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended 31 March 2013,

the comparative information presented in these financial statements for the year ended 31 March 2012 and in the preparation of an

opening IFRS statement of financial position at 1 April 2011 (the Company’s date of transition).

48




Reconciliation of Nigerian GAAP statements to IFRS

(a) Reconciliation of statement of financial position


Note

Assets

Property, plant and equipment B (i)(ii) 22,332,636 5,930,021 28,262,657 26,626,605 6,481,805 33,108,410

Intangible assets 6,839 6,839 46,901 ‐ 46,901

Prepayments D ‐ 193,446 193,446 187,304 ‐ 187,304

Other receivables C 173,214 173,214 137,552 137,552

Total non‐current assets 22,339,475 6,296,681 28,636,156 26,860,810 6,619,357 33,480,167

Inventories B (i) 8,125,165 (2,507,748) 5,617,417 10,581,896 (2,310,209) 8,271,687

Trade and other receivables C 4,217,815 (852,695) 3,365,120 4,527,707 (710,675) 3,817,032

Deposit for Imports E 3,851,222 (3,851,222) ‐ 213,663 (213,663) ‐

Cash at bank and in hand E 1,698,314 (1,698,314) ‐ 2,146,329 (2,146,329) ‐

Prepayments D ‐ 463,429 463,429 ‐ 556,784 556,784

Cash and cash equivalents E ‐ 5,549,536 5,549,536 2,359,992 2,359,992

Total current assets 17,892,516 (2,897,014) 14,995,502 17,469,595 (2,464,100) 15,005,495

Total assets 40,231,991 3,399,667 43,631,658 44,330,405 4,155,257 48,485,662

1 April 2011 31 March 2012

Nigerian GAAP (SAS)

Effect of Transition

to IFRSsIFRSs

Nigerian GAAP (SAS)


to IFRSsIFRSs

49




Reconciliation of statement of financial position (continued)


Note

Equity

Share capital 320,295 ‐ 320,295 320,295 ‐ 320,295

Share premium 299,140 ‐ 299,140 299,140 ‐ 299,140

Reserves A 4,993 (4,993) ‐ 4,993 (4,993) ‐

Retained earnings H 8,790,823 489,360 9,280,183 9,588,863 99,297 9,688,160

Total equity 9,415,251 484,367 9,899,618 10,213,291 94,304 10,307,595

Liabilities

Loans and borrowings 7,617,778 7,617,778 2,313,776 ‐ 2,313,776

Employee benefits 4,467,866 ‐ 4,467,866 3,717,939 ‐ 3,717,939

Provisions ‐ ‐ ‐ ‐ ‐ ‐

Deferred tax liabilities G 1,816,354 (41,370) 1,774,984 2,497,401 (21,175) 2,476,226

Total non‐ current liabilities 13,901,998 (41,370) 13,860,628 8,529,116 (21,175) 8,507,941

Bank overdraft 873,562 ‐ 873,562 777,634 ‐ 777,634

Current tax liabililties 1,006,901 ‐ 1,006,901 1,090,458 ‐ 1,090,458

Loans and borrowings G 10,172,222 168,425 10,340,647 16,532,765 103,745 16,636,510

Amount payable to related parties F ‐ ‐ ‐ 1,176,333 (1,176,333) ‐

Trade and other payables F 3,087,746 4,562,556 7,650,302 3,973,886 7,191,638 11,165,524

Other creditors and accurals F 1,498,226 (1,498,226) ‐ 1,668,952 (1,668,952) ‐

Dividends F 276,085 (276,085) ‐ 367,970 (367,970) ‐

Provisions ‐ ‐ ‐ ‐ ‐

Total current liabilities 16,914,742 2,956,670 19,871,412 25,587,998 4,082,128 29,670,126

Total liabilities 30,816,740 2,915,300 33,732,040 34,117,114 4,060,953 38,178,067

Total equity and liabilities 40,231,991 3,399,667 43,631,658 44,330,405 4,155,257 48,485,662

1 April 2011 31 March 2012

Nigerian GAAP (SAS)

Effect of Transition to

IFRSsIFRSs

Nigerian GAAP (SAS)

Effect of Transition to

IFRSsIFRSs

50




(b) Reconciliation of statement of comprehensive income for the year ended 31 March 2012

In thousands of naira Note Nigerian GAAP (SAS)


to IFRSsIFRSs

Continuing operations

Revenue 59,864,385 ‐ 59,864,385

Cost of sales B(i) (38,116,595) (421,510) (38,538,105)

Gross Profit 21,747,790 (421,510) 21,326,280

Other Income 53,287 53,287

Selling and distribution expenses (11,388,608) ‐ (11,388,608)

Administrative expenses B(i) (5,187,368) (1,212) (5,188,580)

Results from operating activities 5,225,101 (422,722) 4,802,379

Finance income 4,079 ‐ 4,079

Finance costs I(i) (2,300,668) 52,854 (2,247,814)

Net finance costs (2,296,589) 52,854 (2,243,735)

Profit before income tax 2,928,512 (369,868) 2,558,644

Income tax expense (859,978) (20,195) (880,173)

Profit for the period 2,068,534 (369,868) 1,678,471

Profit attributable to:

Owners of the company 2,068,534 (369,868) 1,678,471

Profit for the year 2,068,534 (369,868) 1,678,471

Total comprehensive income for the year 2,068,534 (369,868) 1,678,471

Earnings per share

Basic earnings per share (kobo) 323 262

Diluted earnings per share (kobo) 323 262

51




(c) Reconciliation of statement of cash flows for the year ended 31 March 2012


Note

Cash flows from operating activities

Profit for the year 2,068,534 (390,063) 1,678,471

Adjustments for:

Depreciation B(i) 4,254,156 1,626,959 5,881,115

Amortisation of intangible assets 3,922 ‐ 3,922

Interest expense I(i) 2,300,668 52,854 2,247,814

Interest income (4,079) ‐ (4,079)

Gain on foreign exchage transactions ‐ (7,292) (7,292)

Employee benefit charge 168,497 ‐ 168,497

Gain on sale of property, plant and equipment (974) ‐ (974)

Assets written off 23,370 381,449 404,819

Income tax expense 859,978 20,195 880,173

9,674,072 1,684,102 11,252,466

Change in inventories (2,456,731) (197,539) (2,654,270)

Change in trade and other receivables (309,892) (106,358) (416,250)

Change in prepayments (187,304) 100,091 (87,213)

Change in trade and other payables * 3,780,158 1,095,584 4,875,742

Cash generated from operating activities 826,231 2,575,880 12,970,475

Value Added Tax Paid (1,444,387) ‐ (1,444,387)

Income Tax paid (454,533) ‐ (454,533)

Other long term employee benefit paid (559,265) ‐ (559,265)

(2,458,185) ‐ (2,458,185)

Net cash flow from operating activities 8,042,118 2,575,880 10,512,290

Cash flow from investing activities

Finance Income 4,079 ‐ 4,079

Proceeds from sale of property, plant and equipment 1,717 ‐ 1,717

Acqusition of property, plant and equipment (8,572,238) (2,465,638) (11,037,876)

Acqusition of property, plant and equipment (43,984) ‐ (43,984)

Net cash used in investing activities (8,610,426) (2,465,638) (11,076,064)

Cash flow from financing activities

Increase in borrowings/Proceeds from borrowing 1,056,541 1,324,518 2,381,059

Repayment of loans and borrowings ‐ (1,424,237) (1,424,237)

Finance cost (2,300,668) 87,893 (2,212,775)

Dividends paid (1,281,181) ‐ (1,281,181)

Net cash used in financing activities (2,525,308) (11,826) (2,537,134)

Net decrease in cash and cash equivalents (3,093,616) 98,416 (3,100,908)

Cash and cash equivalent at January 1 4,675,974 ‐ 4,675,974

Effect of flunctuation on cash held ‐ ‐ 7,292

Cash and cash equivalent at March 31 1,582,358 98,416 1,582,358

Nigerian GAAP

(SAS)


to IFRSs

IFRSs

52




A Deemed Cost

B Property, plant and equipment

(i) Treatment of returnable packaging materials

(ii) Depreciation of land

The impact arising from the changes are summarized below:

31 March 2012 1 April 2011N’000 N’000

Bi Statement of financial position

Adjustment to NBV of Property, plant and equipment 6,458,993 5,905,997

RPM reclassified from inventories (2,310,210) (2,507,748)

RPM in trades recognized in PPE‐ (Note F) (4,013,422) (2,841,378)

Net impact on Retained earnings (Note H) (135,362) (556,872)

31 March 2012 1 April 2011N’000 N’000

Bii Statement of financial position

Property, plant and equipment 22,812 24,024

Net impact on retained earnings from adjustment on land (Note B(ii)) (22,812) (24,024)

Biii Statement of comprehensive income

Depreciation of RPM (included in cost of sales) 1,625,747

Reversal of previous write‐down of RPM (included in cost of sales) (762,873)

Reclasisifcation of breakages from cost of sales (441,364)

421,510

Impact of depreciation on land (included in Administrative expenses) 1,212

Adjustment before income tax 422,722

C Trade and other receivables

31 March 2012 1 April 2011N’000 N’000

Debtors and prepayments 4,527,707 4,217,815

Prepayments (Note D) (573,122) (679,481)

Other receivables (non‐ current) (137,552) (173,214)

Trade and other receivables 3,817,033 3,365,120

Under the previous Nigerian GAAP, certain items of property, plant and equipment were carried at their revalued amounts less

accumulated depreciation. On transition to IFRSs the Company elected to apply the optional exemption to use the previous

valuation as deemed cost under the previous Nigerian GAAP for all items of property plant and equipment. The Company’s

revaluation reserve of N4.9 million at 1 April 2011, was reclassified to retained earnings (Note H). Except for the

reclassification, this had no other impact on the financial statement.

As part of the accounting policies under the previous Nigerian GAAP, short term prepayments and trade and other receivables

were jointly classified as Debtors and prepayments. Also, gratuity part payment which represents portion of gratuity given in

advance to employees was classified as current receivables. However, in order to align the financials with expected IFRS

reporting format, management has reclassified the portion of prepaid expenses under a separate heading “prepayment”. The

advance gratuity was also recorded as ”other receivables” and classified as non‐current.

Under the previous Nigerian GAAP, the Company’s returnable packaging materials (RPM) were classified as inventories and

stated at the lower of cost and net realisable value (deposit rate). Accordingly, RPM were written down to their deposit rates

which were lower than their costs. On transition to IFRS, the previous write‐down of RPM to deposit rates was reversed and

the RPM were reclassified from inventories to property, plant and equipment (PPE). Deposits made by customers in respect of

RPM held by them have been recognized as a liability in the financial statements.

Under the previous GAAP, the Company’s leasehold land were included as part of land and building and depreciated over a

period of twenty (20) years.

Under IFRS, leasehold land have been disclosed seperately from buildings and depreciated over the remaining period of the

lease. In substance, the Company only has right of occupancy with a tenure of 99 years from the government.

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D Prepayments

31 March 2012 1 April 2011N’000 N’000

Reclassified from Debtors and Prepayments (Note C) 573,122 679,481

Reclassified to loans and borrowings (Note G) (16,338) (22,606)

Reclassified to long term Prepayments ‐ (193,446)

Prepayments disclosed on the statement of financial position 556,784 463,429

E Cash and cash equivalents

The impact of the above is summarized as follows:

31 March 2012 1 April 2011N’000 N’000

Cash at bank and in hand 2,146,329 1,698,314

Deposit for Imports 213,663 3,851,222

Cash and cash equivalents 2,359,992 5,549,536

F Trade and other payables


31 March 2012 1 April 2011N’000 N’000

Trade Creditors 3,973,886 3,087,746

Other creditors and accurals 1,668,952 1,498,226

Dividends 367,970 276,085

Amount payable to related parties 1,176,333 ‐

Deposit liability on RPMs (Note B(i)) 4,013,422 2,841,378

Accrued interest on loans (Note G) (35,039) (53,133)

Trade and other payables 11,165,524 7,650,302

Under the previous Nigerian GAAP, cash and cash equivalents were disclosed under the heading "Cash at bank and in hand".

However, in order to align the financials with expected IFRS reporting format, this has been reclassified as "Cash and Cash

equivalents".

In addition, deposit for imports which represents foreign currencies purchased for onward remission to overseas suppliers in

respect of imported raw materials, spare parts and machinery were also reclassified as "Cash and Cash equivalents".

Under the previous Nigerian GAAP, the arrangement fee on loan was classified as a prepaid interest and amortized over the life

of the loan. On transition to IFRS, this has now been charged against the loan amount. The impact of the above on

prepayment is summarized as follows:

Under the previous Nigerian GAAP, dividend payable, other creditors and accruals, amount payable to related parties and

trade creditors were separately disclosed. However, in order to align the financials with expected IFRS reporting format,

management has reclassified these amounts as part of "Trade and other payables".

In order to state loans and borrowings at amortised cost, accrued interest on loans which was previously classified as "other

creditors and accruals" has also been reclassified to loans and borrowings.

In addition, the Net liability recognized in the financial statements for deposits made by customers in respect of returnable

packaging materials as at year end has been presented under the heading "trade and other payables".

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G Loans and borrowings

31 March 2012 1 April 2011N’000 N’000

Impact of amortized cost on loans and borrowings (103,745) (168,425)

Prepaid interest on loans (Note D) (16,338) (22,606)

Accrued interest on loans (Note F) 35,039 53,133

Tax impact 21,175 41,370

Net impact on retained earnings 63,870 96,528

H Retained earnings

31 March 2012 1 April 2011N’000 N’000

Reversal of write‐down of RPM cost to NRV (4,095,596) (2,509,910)

Accumulated depreciation on RPM 3,960,234 1,953,038

Impact of Reclassification of RPM to PPE (Note B(i)) (135,362) (556,872)

Impact of depreciation on land (Note B(ii)) (22,812) (24,024)

Impact of loans at amortized cost (Note G) 63,870 96,528

Reclassification of revaluation reserves (Note A) (4,993) (4,993)

Net impact on retained earnings (99,297) (489,360)

I Finance Cost

Finance Cost

31 March 2012N’000

Finance cost as previously stated (2,300,668)

Net foreign exchange loss reclassified from administrative cost (106,876)

Reduction in loan liability 32,658

Finance costs restated (2,374,886)

J Cost of sales

31 March 2012N’000

Reversal of write‐down of RPM cost (1,585,686)

Depreciation Charge on RPM 2,007,196

Impact of Reclassification of RPM to PPE 421,510

Net impact on cost of sales 421,510

Under the previous Nigerian GAAP, loans are stated at face value. On transition to IFRS loans are stated at amortized cost using

the effective interest rate. The impact of the above is summarized as follows:

The above changes decreased/(increased) retained earnings (each net of related tax) as follows:

Under the previous GAAP, net foreign exchange loss on loans was classified as part of administrative expenses. On transition

to IFRS, this has been classified as part finance cost.


The impact on cost of sales of the capitalization of RPMs and engineering spares and the write‐back of deposit liability on

RPMs, is summarized as follows:

55




Other information

56




Value Added StatementFor the year ended 31 March 2013

2013 % 2012 %

N'000 N'000

Revenue 64,088,879 59,864,385

Brought in materials and services

‐ Local (29,074,932) (30,284,384)

‐ Imported (13,793,537) (11,508,696)

21,220,410 18,071,305

Other income 45,870 53,287

Finance Income 25,769 4,079

Value Added 21,292,049 100 18,128,671 100

Distribution of Value Added:

To Government as:

Taxes and duties

‐ Goverment as taxes 406,215 2 880,173 5

To Employees:

‐ Employees as wages and salaries

and end of service benefits 8,387,826 39 7,437,176 41

To Providers of Finance:

‐ Finance Costs 2,289,784 11 2,247,814 13

Retained in the business:

To maintain and replace

‐ Property, plant and equipment 7,268,715 34 5,881,115 32

‐ Intangible assets 10,634 0 3,922 0

To augment reserves 2,928,875 14 1,678,471 9

Value added 21,292,049 100 18,128,671 100

57




Financial Summary

Statement of comprehensive income 31 March 2013 31 March 2012 1 April 2011


Revenue 64,088,879 59,864,385


Profit before taxation 3,262,719 2,558,644


Comprehensive income for the year 2,928,875 1,678,471

Ratios

Per 50k share data:

Basic earnings per share 446 262

Diluted earnings per share 446 262

Declared dividend per share 200 200

Share price at year end (Naira) 49 42

Net assets per share 1,963 1,609

Statement of financial position

In thousands of naira 31 March 2013 31 March 2012 1 April 2011

Employment of Funds

Share Capital 320,295 320,295 320,295

Share Premium 299,140 299,140 299,140

Retained Earnings 11,958,545 9,688,160 9,280,183

Shareholder's Fund 12,577,980 10,307,595 9,899,618

Current Liabilities 27,862,495 29,670,126 19,871,412

Long Term Liabilities 10,929,695 8,507,941 13,860,628

51,370,170 48,485,662 43,631,658

Asset Employed

Non Current assets 35,873,744 33,480,167 28,636,156

Current assets 15,496,426 15,005,495 14,995,502

51,370,170 48,485,662 43,631,658

The financial information presented above reflects historical summaries based on International Financial Reporting

Standards. Information related to prior periods has not been presented as it is based on a different financial reporting

framework (Nigerian GAAP) and is therefore not directly comparable.

58

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