STATEMENT OF DIRECTORS’ RESPONSIBILITIES PLC 2013... · 2014-07-11 · 1 Arbico Plc 2013 Audited...

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Arbico Plc 2013 Audited Accounts

ARBICO PLC – AUDITED ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2013

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

In accordance with the provisions of the Companies and Allied Matters Act, CAP C20, LFN 2004, the

Directors are responsible for the preparation of annual financial Statements which give a true and fair

view of the state of affairs of the company as at year ended December 2013 and as well as complies with

the requirements of the Act.

These responsibilities include ensuring that:

i. Adequate internal control procedures are instituted to safeguard assets, prevent and detect

fraud and other irregularities

ii. Proper accounting records are maintained

iii. Applicable accounting standards are followed

iv. Suitable accounting policies are used and consistently applied

v. The financial statements are prepared on the going concern basis unless it is inappropriate to

presume that the company will continue in business.

vi. Judgment and estimates made are reasonable and prudent.

The Directors have made an assessment of the Company’s ability to continue as a going concern based

on the supporting assumptions stated in the financial statements, and have every reason to hold that the

Company will remain a going concern in the financial year ahead.

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REPORT OF THE DIRECTORS

FOR THE YEAR ENDED DECEMBER 31, 2013

The Directors present their report and the audited financial statements for the year ended 31 December,

20123

1 LEGAL FORM

The company was incorporated on 18 June 1958 as a private limited company in Nigeria and commenced

business thereafter. The company's shares were quoted on the Stock Exchange on January 25, 2001.

2 PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

The principal activity of the company is building construction. The major customers are Federal and State

Governments and their agency. The company also builds for viable private institutions.

The turnover for the year ended 31st December, 2013 increased to N3.35 billion from N1.86 billion

(179.62%) in the year ended 31st December, 2012.

3 MARKET SUMMARY 2013 2012

N’000 N’000

Turnover 3,350612 1,865,198

Profit attributed to company activities 133,456 (37,579)

Retained earnings (181,249) (438,982)

Proposed Dividend NIL NIL

4 DIRECTORS

The names of the Directors at the date of this report and those who held office during the year are as

follows:

N.C.U. Okoro - Nigerian - Chairman Adebisi Adebutu ( Mr) - Nigerian - A. Makaronidis - Greek - Managing Director Afolabi Adeola ( Mr) - Nigerian Eyo Asuquo (Mr) - Nigerian Chief Kesington Adebutu - Nigerian Otunba Ositade Aranmolate - Nigerian

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4B. REPORT OF DIRECTORS ATTENDANCE

Board meetings were held once every quarter making a total number of 3 meetings in the year 2013.

N.C.U. Okoro Chairman 3

A. Makaronidis Managing 3

Adebisi Adebutu ( Mr) Director 3

Afolabi Adeola ( Mr) Director 3

Eyo Asuquo (Mr) Director 3

Chief Kesington Adebutu Director 3

Otunba Ositade Aranmolate Director 2

5 DIRECTORS' INTEREST

The shareholdings of the Directors in the company are as follow:

Number of shares at 31st December

2013 2012

Adebisi Adebutu ( Mr) - -

A. Makaronidis - -

N.C.U. Okoro 107,360 107,360

Afolabi Adeola ( Mr) - -

Eyo Asuquo (Mr) - -

Chief Kesington Adebutu - -

Otunba Ositade Aranmolate - -

6 SIGNIFICANT CHANGES IN FIXED ASSETS

No significant change apart from normal additions and disposals in the ordinary course of business.

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7 SUBSTANTIAL SHARE HOLDING

As at 31 December 2013 the following held 5% or more of the issued capital of the company:

Unit %

R28 Limited 103,900,000 69.97

A.O.G Limited 14,850,000 10.00

Nigerians 29,750,000 20

148,500,000 100.00

7B Free Float Report Unit %

Strategic Share holder 118,750,000 80

Director Direct Shareholding 107,360 0

Free Float 29,642,640 20

148,500,000 100

7C. 2013 SHARE RANGE ANALYSIS

RANGE NUMBER OF PERCENTAGE OF

SHARES HOLDINGS

1 - 500 109,613 0.07

501 - 1000 164,718 0.11

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1001 - 5000 1,061,713 0.71

5001 - 10,000 705,539 0.48

10,001 - 25,000 883,198 0.59

25,001 - 100,000 2,413,123 1.62

100,001 - 500,000 4,439,484 2.99

500,001 - 1,000,000 1,874,862 1.26

1,000,0001 -and above. 136,847,750 92.15

TOTAL 148,500,000 100

8 HUMAN CAPITAL MANAGEMENT

A. EMPLOYMENT OF DISABLED PERSONS

The Company has a general policy of extending employment opportunities to disabled persons as and

when there are openings for such employees.

B. HEALTH, SAFETY AND WELFARE

In addition to medical insurance scheme given to members of staff in mostly private clinics and hospitals,

the company maintains well equipped first aid box. All essential safety regulations are being observed to

guarantee maximum protection of personnel and also to protect the company's assets.

C. TRAINING

The company is committed to ensuring that staff receives both in- house and external training to help

improve their skills.

9. AUDIT COMMITTEE

The members of the Statutory Audit Committee, appointed at the Annual General Meeting held in

September 2013, in accordance with CAMA were:

Engr Joe K. Onwaduegbo Chairman

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Elder Nathaniel C U Okoro Member

Mr. Azubuike Okpalaoka Member

Mr. Alkimos Makaronidis Member

The Committee met in accordance with the provisions of section 359 of CAMA and will present its report.

9B. REPORT OF AUDIT COMMITTEE ATTENDANCE

Name Designation Meetings Attended

Engr Joe K. Onwaduegbo Chairman 3

Elder Nathaniel C U Okoro Member 3

Mr. Azubuike Okpalaoka Member 3

Mr. Alkimos Makaronidis Member 3

10. AUDITORS

The Auditors, Messrs. Remi Oyekola & Co has indicated their willingness to continue in office. A

resolution will be proposed authorizing the Directors to determine their remuneration.

11. COMPLIANCE WITH REGULATORY REQUIREMENTS

The Directors confirm that they have reviewed the structures and activities of the Company in view of the

Code of Best Practices on Corporate Governance in Nigeria and acknowledge that the company had

constantly being in compliance with regulatory requirements of regulators

BY ORDER OF THE BOARD LAGOS, NIGERIA

COMPANY SECRETARY

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REPORT OF AUUDIT COMMITTE

We have examined the Auditors' Report for the year ended 31 December 2013 in accordance with

the provision of section 359(6) of the companies and Allied matter Act, CAP C20 LFN 2004.

In our opinion, the Audited Financial Statements of the Company, for the year ended December

31, 2013, and the reports thereon, confirm as follows:

1. The accounting and reporting policies of the Company are in accordance with legal

requirement and agreed ethical practices.

2. The scope and planning of audit requirement were in our opinion adequate.

3. We have reviewed the findings on Management matters, in conjunction with the external

Auditors and are satisfied with the response of Management thereon.

4. The Company's system of accounting and internal controls was adequate.

5. We have made the recommendations required to be made in respect of the external auditors.

ENGR. JOE K. ONWUADUEGBO

CHAIRMAN, AUDIT COMMITTEE

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STATEMENT OF COMREHENSIVE INCOME


Notes 2013

2012

%

N'000

N'000

Change

REVENUE 5

3,350,612

1,865,198

79.64

COST OF SALES

(2,595,853)

(1,413,094)

83.70

GROSS PROFIT/(LOSS)

754,759

452,104

66.94

OTHER INCOME 6

7,801

25,068

(68.88)

INCOME FROM CHANGE IN INVENTORY 6

957

(191)

599.61

OPERATING EXPENSES

(437,437)

(386,901)

13.06

STAFF COST AND EMPLOYEES BENEFIT 7

(195,200)

(110,445)

76.74

OPERATING PROFIT

130,880

(20,365)

742.68

MATERIAL NON - OPERATING ITEM REQUIRING SEPARATE

DISCLOSURE

FINANCE COST

(14,644)

(17,214)

(14.93)

DEFERRED TAX INCOME 8.2(b)

17,221

-

100

PROFIT (LOSS) BEFORE TAX

133,456

(37,579)

455.14

TAXATION 8.2(a)

(34,215)

(10,726)

218.99

(LOSS) FOR THE PERIOD FROM CONTINUING OPERATION

99,242

(48,305)

305.45

(LOSS) FROM DISCOUNTINUED OPERATIONS

-

-

10


OTHER COMPREHENSIVE INCOME:

Foreign currency translation differences

-

-

Tax effect of foreign currency translation differences

-

-

Revaluation of financial instruments

-

-

Tax effect of revaluation of financial instruments

-

-

IMPAIRMENT CHARGE 19

-

(124,612)

(100.00)

Share of other comprehensive income of associates

-

-

Tax effect of other comprehensive income of associates

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET TAX

158,492

-

100.00

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

257,733

(172,916)

249.05

PROFIT ATTRIBUTABLE TO:

Owners of the parent

257,733

(172,916)

249.05

Non-controlling interests

-

-

257,733

(172,916)

249.05

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

Owners of the parent

257,733

(172,916)

249.05

Non-controlling interests

-

-

257,733

(172,916)

249.05

EARNINGS PER SHARE

Basic (k) 9

2

(1.16)

249.05

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STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2013

ASSETS

2013 2012 %

Notes

N'000 N'000 Change

NON - CURRENT ASSETS:

PROPERTY PLANT AND EQUIPMENT 10

1,151,582

1,087,926 5.85

UNQUOTED INVESTMENT 12.1

2,000 2,000 -

OTHER INVESTMENT 12.2

51,066

73,200

(30.24)

INTANGIBLE ASSETS 11

5,480 5,521

(0.74)

TOTAL NON CURRENT ASSETS

1,210,127

1,168,646 3.55

CURRENT ASSETS:

INVENTORIES 13

2,640 3,637

(27.40)

STAFF ADVANCE 16

607 1,845

(67.12)

TRADE DEBTORS 15

697,207

768,691

(9.30)

CURRENT TAX RECEIVABLES 18

97,577

64,066 52.31

CONSTRUCTION CONTRACTS RECEIVABLE (UNCERTIFIED CLAIMS)

215,869

278,416

(22.47)

DEFERRED TAX 8.3

51,300 2,147 2,289.39

OTHER RECEIVABLES 16

3,352 6,225

(46.16)

PREPAYMENTS 17

894 483 84.84

CASH AND CASH EQUIVALENTS

201,395

259,735

(22.46)

ASSSET CLASSIFIED AS HELD FOR SALE

TOTAL CURRENT ASSETS

1,270,841

1,385,247

(8.26)

TOTAL ASSETS

2,480,968

2,553,893

(2.86)

LIABILITIES

NON - CURRENT LIABILITIES:

TRADE PAYABLES 20

8,231

91,311

(90.99)

LOANS AND BORROWINGS 22

1,143,204

453,045 152.34

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ADVANCE FROM CLIENTS 21

69,530

417,582

(83.35)

SERVICE AND OTHER PAYABLE 20

411,099

43,029 855.39

TOTAL NON CURRENT LIABILITY

1,632,065

913,656 77.73

CURRENT LIABILITIES:

SERVICE AND OTHER PAYABLE 20

64,270

108,164

(68.29)

LOANS AND BORROWINGS 22

305,881

690,159

(55.68)

ADVANCE FROM CLIENTS 21

383,397

866,756

(55.77)

RETIREMENT BENEFIT OBLIGATIONS 23

-

30,650

(100.00)

DEFERRED TAX

-

48,972

(100.00)

CURRENT TAX LIABILITY 8.4

61,169

27,772 120.26

`

TOTAL CURRENT LIABILITY

814,718

1,863,785

(55.85)

TOTAL LIABILITY

2,446,782

2,777,441

(11.91)

EQUITY

SHARE CAPITAL 24

74,250

74,250 -

SHARE PREMIUM 25

141,184

141,184 -

RETAINED EARNINGS 26

(181,249)

(438,982)

(58.71)

TOTAL EQUITY

34,185

(223,548) 115.29

TOTAL EQUITY AND LIABILITY

2,480,968

2,553,893

(2.86)

The financial statements on pages 5 to 40 were approved by the Board of Directors on 15TH APRIL 2014

and signed on behalf by:

Directors

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CASHFLOW STATEMENTS


Notes

2013

2012 %

N'000

N'000 Change

Cash flows from operating activities:

Cash receipts from contracts

3,547,144

960,193

269.42

Payment to suppliers and employees

(3,294,517)

(480,011)

586.34

Net cash provided by operating activities 27 252,627

480,182

(47.39)

Cash flows from financing activities:

Net cash consumed by financing activities

-

-

STATEM ENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEM BER 31, 2013

Share Capit al Share Premium Revaluat ion Reserve Ret ained Earnings Tot al

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

Balance 31/12/2012 74,250 141,184 861,934 (1 ,300,916) (223,549)

Tot al Comprehensive Income f or t he year - - - 257,733 257,733

Dividend paid t o shareholders - - - - -

Issue of ordinary shares - - - - -

Balance 31/12/2013 74,250 141,184 861,934 (1 ,043,183) 34,185

STATEM ENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEM BER 31, 2012

Share Capit al Share Premium Revaluat ion Reserve Ret ained Earnings Tot al

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

Balance 31/12/2011 74,250 141,184 861,934 (1 ,127,999) (50,631)

Tot al Comprehensive Income f or t he year - - - (172,917) (172,917)

Dividend paid t o shareholders - - - - -

Issue of ordinary shares - - - - -

Balance 31/12/2012 74,250 141,184 861,934 (1 ,300,916) (223,548)

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Cash flows from investing activities:

Purchase of property plant and equipment

(336,342)

(264,181) 27.32

Disposal of property plant and equipment

3,240

-

100.00

Disposal of Investment

22,134

100.00

Net cash consumed by investing activities

(310,968)

(264,181) 17.71

Net (decrease)/increase in cash and cash equivalents

(58,341)

216,001

(127.01)

Cash and cash equivalents at 1 January

259,735

43,734

493.90

Cash and cash equivalents at 31 December 28 201,394

259,735

(22.46)

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Notes to the

Financial Statements

For the Year Ended December 31, 2013

1. Corporate information

The consolidated financial statements of the company for the year ended 31 December 2013 were

authorized for issue in accordance with a resolution of the directors on 15th April 2014

Arbico Plc is a company incorporated on the 18 June 1958 in Nigeria and commenced business thereafter.

The company’s shares were quoted on the Stock Exchange on November 30, 1978.

Its principal activities comprise construction and civil engineering as well as investment in and operation

of infrastructure. The registered office is located at Plot D Block 7 industrial crescent ILupeju Lagos.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with International Financial

Reporting Standards (IFRS) as issued by the International Accounting standards Board (IASB) and adopted

by the Financial Reporting Council of Nigeria (FRCN) and as applicable, the Companies Allied Matters Act

(CAMA), Cap C20, LFN 2004. The financial statements have been prepared on a historical cost basis,

except for:

(a) Land and buildings, derivative financial instruments and available-for-sale financial assets that have

been measured at fair value

(b) The carrying values of recognized assets and liabilities that are designated as hedged items in fair

value hedges that would otherwise be carried at amortized cost are adjusted to record changes in the fair

values attributable to the risks that are being hedged in effective hedge relationships

The consolidated financial statements are presented in Naira and all values are rounded to the nearest

million (N’000) except when otherwise indicated.

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3. Significant of accounting Policies

3.1 Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions. The functional currency is the currency of the primary

economic environment in which the entity operates, which is the Nigeria Naira. Foreign exchange gains

and losses resulting from the settlement of such transactions and from the transaction at year-end closing

exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in

profit or loss. The translation at year-end closing exchange rates of monetary assets and liabilities

denominated in foreign currencies are recognized in profit or loss.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated

at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in

foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined.

Non-monetary items that are measured in terms of historical cost in a foreign currency are not

retranslated.

3.2 Revenue recognition

3.2.1 Construction contracts

The company principally operates fixed price contracts, If the outcome of such a contract can be reliably

measured, revenue associated with the construction contract is recognized by reference to the stage of

completion of the contract activity at year end (the percentage of completion method).

The outcome of a construction contract can be estimated reliably when: (i) the total contract revenue

can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will

flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured

reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured

reliably so that actual

Contract costs incurred can be compared with prior estimates. When the outcome of a construction

cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognized

only to the extent of costs incurred that are expected to be recoverable.

In applying the percentage of completion method, revenue recognized corresponds to the total contract

revenue (as defined below) multiplied by the actual completion rate based on the proportion of total

contract costs (as defined below) incurred to date and the estimated costs to complete.

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3.2.2 Contract revenue — Contract revenue corresponds to the initial amount of revenue agreed in the

contract and any variations in contract work, claims and incentive payments to the extent that it is

probable that they will result in revenue; and they are capable of being reliably measured.

3.2.3 Contract costs — Contract costs include costs that relate directly to the specific contract and costs

that are attributable to contract activity in general and can be allocated to the contract. Costs that relate

directly to a specific contract comprise; site Labour costs (including site supervision); costs of materials

used in construction; costs of design, cost of depreciation on plant and machinery and technical

assistance that is directly related to the contract.

The company contracts are typically negotiated for the construction of a single asset or a group of assets

which are closely interrelated or interdependent in terms of their design, technology and function. In

certain circumstances, the percentage of completion method is applied to the separately identifiable

components of a single contract or to a group of contracts together in order to reflect the substance of a

contract or a group of contracts.

Assets covered by a single contract are treated separately when:

(a) The separate proposals have been submitted for each asset

(b) Each asset has been subject to separate negotiation and the contractor and customer have been able

to accept or reject that part of the contract relating to each asset

(c) The costs and revenues of each asset can be identified

A group of contracts are treated as a single construction contract when:

(a) The group of contracts is negotiated as a single package; the contracts are so closely interrelated that

they are, in effect, part of a single project with an overall profit margin

(b) The contracts are performed concurrently or in a continuous sequence

3.2.4 Interest income

Interest income is recognized using the effective interest rate method (EIR), which is the rate that exactly

discounts the estimated future cash payments or receipts through the expected life of the financial

instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or

liability

3.2.5 Income from Rentals of Equipment

In the course of business the company sometimes concedes to the use of its equipment by a third party

at an agreed fee. The agreed fee is usually recognized as revenue accruing to the company and in an

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event of damage the third party would be held liable for all repairs to bring the equipment to its

functional state

3.2.6 Income on Inventory

The company maintains a central store that holds certain essential materials. In other to avoid double

handling cost management makes it a priority that materials are delivered directly to site. However in the

event those essential materials cannot be stored on site then it is kept at the central stores in ILupeju.

Materials are then issued out using the weighted average method and the close of business the book

value of the materials are measured and compared with the fair value and the difference is recognized

either as income in the case of increase or charged as expenses in the case of a decrease.

3.2.7 Investment income

Investment income comprises realized and unrealized gains on investments, interest income and dividend

income. Interest income is accrued on a time basis, by reference to the principal outstanding and the

effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts

through the expected life of the financial asset to that asset’s net carrying amount. Dividend income is

recognized when the right to receive payment is established. As provided in IAS 18 under paragraph 30.

3.2.8 Recognition of expected loss

If it is probable that total contract costs will exceed total contract revenue, the expected loss shall be

recognized as an expense immediately. Standard - IAS 11 under paragraph 36

3.3 Gross amount due from customers

Gross amount due from customers represent work-in-progress (valued on the basis of quantity

surveyor’s estimate of the quantum of work done but not yet certified) plus recognized profits, less

recognized losses. Claims receivable arising on contracts are normally taken to income when agreed. In

the case of unprofitable contracts, full provision is made for anticipated future losses after taking into

account a prudent estimate of claims arising in respect of such contracts.

3.4 Advance payments received

Advanced payments received are amounts received before the related work is performed and are

assessed on initial recognition to determine whether it is probable that it will be repaid in cash or another

financial asset. In this instance, the advance payment is classified as a non-trading financial liability that is

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carried at amortized cost. If it is probable that the advance payment will be repaid with goods or services,

the liability is carried at historic cost.

3.5 Property and equipment

Property, Plant and Equipment are stated at historical cost less accumulated depreciation and

accumulated impairment losses except for buildings which are stated at revalued amount less

accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is

directly attributable to the acquisition of the items. (IAS 16 Paragraph 73).

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to

the company and the cost of the item can be measured reliably. All other repairs and maintenance is

charged to the profit or loss during the financial period in which they are incurred. Losses or gains on

disposals of assets are recognized in the Statement of Profit or Loss and Other Comprehensive Income

under other Income.

3.5.1 Capitalization Policy

Capitalization policies are those policies that guide the classification of a particular item as an asset. The

company policy states that any plant property and equipment whose cost is more than a N100,000.00

should be capitalized otherwise it should be written off to the Income and expenditure statement.

3.5.2 Category of Assets

The Company has divided its assets to the following category:

1) Motor Vehicle

2) Office Furniture and Equipment

3) Plant tools and Equipment

4) I.T infrastructures

5) Land and Building-

Each category of assets is further divided into separate components that can be identified and replaced

without necessarily replacing the whole assets. Each component is associated with a cost and depreciated

separately. Item that would be replaced within one year are classified as consumables and written off to

income and expenditure statement for the year.

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3.5.3 Depreciation

For all depreciable assets:

The depreciable amount (cost less residual value) should be allocated on a systematic basis over the

asset's useful life (IAS 16.50).

The residual value and the useful life of an asset should be reviewed at least at each financial year-end

and, if expectations differ from previous estimates, any change is accounted for prospectively as a change

in estimate under IAS 8. (IAS 16.51).The depreciation method used should reflect the pattern in which the

asset's economic benefits are consumed by the entity (IAS 16.60).

The depreciation method should be reviewed at least annually and, if the pattern of consumption of

benefits has changed, the depreciation method should be changed prospectively as a change in estimate

under IAS 8. (IAS 16.61). Depreciation should be charged to the income statement, unless it is included in

the carrying amount of another asset [IAS 16.48].

Depreciation begins when the asset is available for use and continues until the asset is derecognized,

even if it is idle. (IAS 16.55).

3.5.4. Depreciation table

Motor Vehicle

Transmission

Engine Body Interior Gear Box PUMP/JACK Chassis Bucket Aix

% % % % % % %

Motor Car 25 20 20 25 - 20 - -

Ford 25 20 20 25 - 20 - -

Truck 25 20 20 25 25 20 20 -

Jeep 25 20 20 - - 20 - 25

Motor Cycle 50 50 - - - - - -

Plant Tools and Equipment Camaya Electrical Gear Pump Alter Operating Control

Water Engine Body Belt Sail Interior Motor Mixer Cable Box /jack Chassis Host Bucket nator Stand Roller Panel room tank

% % % % % % % % % %

%% % % % % %% %

JCB Machine 25 20 - - - - - - - 20 20 - - - - - -

- -

Mixer 25 - - - - - - - - - - - 15 - - 10 -

- -

Double Drum Roller 25 20 - - - - - - 25 - 20 - - - - - 20 - -

Genarator 25 - - - - - - - - - - - - 25 - - - - -

Levelling Instrument 50 25 - - - - - - - - - - - - - - - - -

Power Fluting Machine 50 25 - - - - - - - - - - - - - - - - -

Battery Chargine machine50 25 - - - - - - - - - - - - - - - - -

Scaffolding 20 - - - - - - - - - - - - - - - - - -

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Jack Hammer 25 - - - - - - - - - - - - - - - - - -

Vibrator Machine 25 - - - - - - - - - - - - - - - - - -

Dumber 25 20 - - - - - - 25 - 25 - 20 - - - - - -

Tower Crane - 20 - - - 25 - 25 - - - - - - - -

25 - -

Mobile Crane 25 20 - - 20 - - - 50 - - - - - - - - -

-

Batching Plant - - 25 20 - - 20 - - - - - - - 20 - - 25

25

I.T Infrastructures

Screen Monitor Mother Hard Memory Lamp Display Plating Main Heater

Board Drive Heater Panel Colour Board

% % % % % % % % % %

Desktop Computer - 25 25 25 25 - - - - -

Laptop Computer 25 0 25 25 25

Photocopy Machine - 25 - - - 25 25 25 25 25

Depreciation rate for Building

Components Useful Life Deprecation Rate

Roof 25 years 2.5%

Celling 20 years 5%

Civil Works (Wall) 50 years 2%

Floor/Tiles 20 years 5%

Doors/Window 20 years 5%

Fence 10 years 10%

Depreciation rate for Land

Components Useful Life Deprecation Rate

Land 100 years 1%

Office Furniture and Equipment

Office furniture is not componentized and it is depreciated at 20% for a useful life of 5years

3.5.5 Derecognition (retirements and disposals)

Assets are removed from the statement of Financial Position on disposal or when it is withdrawn from use

and no future economic benefits are expected from its disposal. The gain or loss on disposal is the

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difference between the proceeds and the carrying amount and should be recognized in the income

statement. (IAS 16.67-71)

3.5.6 Intangible assets

An intangible asset is an identifiable non-monetary asset that has no physical substance. An intangible

asset is recognized when it is identifiable and the company has control over the asset and also probable

that economic benefits will flow to the Company. The cost of the asset must be measured reliably.

3.5.7 Depreciation and De recognition of intangible assets

Intangible assets are depreciated at 25% annually using straight line methods. An intangible asset is

derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains

or losses arising from de recognition of an intangible asset, measured as the difference between the net

disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss when the

asset is derecognized.

3.6 Financial Instruments

3.6.1 Recognition and measurement

Financial assets and financial liabilities are recognized in the statement of financial position when the

company becomes a party to the contractual provisions of the instrument. On initial recognition, financial

assets and financial liabilities at fair value through profit or loss are normally measured at their value on

the date they are initially recognized. The initial measurement of other financial instruments is also based

on their fair value, but adjusted in respect of any transaction costs that are incremental and directly

attributable to the acquisition or issue of the instrument. Financial liabilities and equity instruments,

issued by the company, are classified according to the substance of the contractual arrangements entered

into and the definitions of a financial liability and an equity instrument. An equity instrument is any

contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Financial assets are derecognized when and only when:

• The contractual rights to the cash flows from the financial assets expire; or

• The company transfers the financial asset, including substantially all the risks and rewards of ownership

of the asset.

23


A financial liability is derecognized when and only when the liability is extinguished, that is, when the

obligation specified in the contract is discharged, cancelled or has expired. The difference between the

carrying amount of a financial liability (or part thereof) extinguished or transferred to another party

and consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in

profit or loss.

Investments made by the company which are classified as either held at fair value through profit or loss or

available-for-sale, and are measured at subsequent reporting dates at fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. The fair values of quoted investments

and unit trusts in active markets are based on current market prices. Since actual market prices are

available in determining fair values, no significant estimates or valuation models are applied in

determining the fair value of quoted financial instruments.

3.6.2 Fair value hierarchy

Fair values are determined according to the following hierarchy based on the requirements in IFRS 7

‘Financial Instruments: Disclosures’:

– Level 1: quoted market prices: financial assets and liabilities with quoted prices for identical instruments

in active markets.

– Level 2: valuation techniques using observable inputs: quoted prices for similar instruments in active

markets or quoted prices for identical or similar instruments in inactive markets and financial assets and

liabilities valued using models where all significant inputs are observable.

– Level 3: valuation techniques using significant unobservable inputs: financial assets and liabilities valued

using valuation techniques where one or more significant inputs are unobservable. The best evidence of

fair value is a quoted price in an active market. In the event that the market for a financial asset or liability

is not active, a valuation technique is used.

3.6.3 De-recognition of financial instruments

Financial assets are derecognized when the contractual right to receive cash flows from the investments

have expired or on trade date when they have been transferred and the Company has also transferred

substantially all risks and rewards of ownership. Non-cash financial assets pledged, where the

counterparty has the right to sell or re-pledge the assets to a third party, are classified as pledged assets.

24


Financial liabilities are derecognized when they are extinguished, that is when the obligation is

discharged, cancelled or expires.

3.6.4 Financial assets

Financial assets are classified into the following categories: financial assets at fair value through profit or

loss; loans and receivables, held-to-maturity and available-for-sale financial assets. Management

determines the classification of financial assets at initial recognition; this classification depends on the

nature and purpose of the financial asset.

3.6.4.1 Financial assets at fair value through profit or loss

This category has two components: those held for trading, and those designated at fair value through

profit or loss at inception. A financial asset is classified in this category if acquired principally for the

purpose of generating a profit from short-term fluctuations in price or dealer’s margin, or a security is

included in a portfolio in which a pattern of short-term profit taking exists or if so designated by

management at inception as held at fair value through profit or loss. Financial assets designated at fair

value through profit or losses at inception are those that are:

• Held to match liabilities that are linked to changes in fair value of these assets. The designation of these

assets at fair value through profit or loss eliminates or significantly reduces a measurement or recognition

inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from

measuring assets or liabilities or recognizing gains and losses on them on different bases; or

• managed and whose performance is evaluated on a fair value basis. Information about these financial

assets is provided internally on a fair value basis to the company’s key management personnel.

The company’s investment strategy is to invest in equity and debt securities, and to evaluate them with

reference to their fair values. Assets that are part of these portfolios are designated upon initial

recognition at fair value through profit or loss.

3.6.4.2 Loans and receivables

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

quoted in an active market. These arise when the company billed the customer for work done less the

progress payment received from the customer. Loans and receivables are measured at fair value after the

initial recognition and where there is evidence that a financial instrument is impaired such impairment will

25


be deducted from the caring amount to arrive at the fair value at the end of the reporting period.

3.6.4.3 Available-for-sale

Available-for-sale instruments are those intended to be held for an indefinite period of time, which may

be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.

Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value

on the statement of financial position. IFRS 5 under paragraph 6

3.6.4.4 Held-to-maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and

fixed maturities that management has both the positive intent and ability to hold to maturity. Was the

group to sell more than an insignificant amount of held-to-maturity investments, the entire category

would be tainted and reclassified as available-for-sale assets with the difference between amortized cost

and fair value being accounted for in OCI. Held-to-maturity investments are carried at amortized cost,

using the effective interest method, less any impairment losses.

3.6.5 Financial liabilities

The advance received from customer in respect of contract work that is yet to be performed is recognized

as liability until the work in respect of which the advance was given has been performed.

3.6.6 Gains and losses

Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit

or loss’ category are included in profit or loss in the period in which they arise. Gains and losses arising

from changes in the fair value of available-for-sale financial assets are recognized in comprehensive

income, until the financial asset is derecognized or impaired at which time the cumulative gain or loss

previously recognized in comprehensive income is recognized in profit or loss. Interest income, calculated

using the effective interest method, is recognized in profit or loss except for short term receivables where

the recognition of interest would be immaterial. Dividends on available-for-sale equity instruments are

recognized in the profit or loss when the company’s right to receive payment is established.

26


3.6.7 Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of

allocating interest income over the relevant period. The effective interest rate is the rate that exactly

discounts estimated future cash receipts (including all fees on points paid or received that form an

integral part of the effective interest rate, transaction costs and other premiums or discounts) through the

expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount

on initial recognition.

3.6.8 Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial

position when there is a legally enforceable right to offset the recognized amounts and there is an

intention to settle on a net basis or, realize the asset and settle the liability simultaneously. As provided by

IAS 32 Paragraph42

3.6.9 Impairment of financial assets:

3.6.9.1 Assets carried at amortized cost

At each reporting date, the company assesses whether there is objective evidence that a financial asset or

group of financial assets are impaired. A financial asset or a group of financial assets is impaired and

impairment losses are recognized if, and only if, there is objective evidence of impairment as a result of

one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss

event (or events) has an impact on the estimated future cash flows of the financial asset or group of

financial assets that can be reliably estimated.

The company first assesses whether objective evidence of impairment exists individually for financial

assets that are individually significant, and individually or collectively for financial assets that are not

individually significant. If the company determines that no objective evidence of impairment exists for an

individually assessed financial asset, whether significant or not, it then includes the asset in a group of

financial assets with similar credit risk characteristics and collectively assesses them for impairment. IAS 39

under paragraph 58- 65.

Assets that are individually assessed for impairment and for which an impairment loss is or continues to

be recognized are not included in the collective assessment of impairment. If there is objective evidence

that an impairment loss on loans and receivables has been incurred, the amount of the loss is measured

27


as the difference between the assets’ carrying amount and the present value of estimated future cash

flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of

the loss is recognized in profit or loss. If a loan has a variable interest rate, the discount rate for measuring

any impairment loss is the current effective interest rate determined under the contract.

When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans

are written off after all the necessary procedures have been completed and the amount of the loss has

been determined. Subsequent recoveries of amounts previously written off decrease the amount of the

provision for loan impairment in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognized (such as an improvement in the

debtor’s credit rating), the previously recognized impairment loss is reversed by adjusting the allowance

account. The reversal shall not result in a carrying amount of the financial asset that exceeds what the

amortized cost would have been had the impairment not been recognized at the date the impairment is

reversed. The amount of the reversal is recognized in profit or loss.

3.6.9.2 Assets carried at fair value

At each reporting date, the company assesses whether there is objective evidence that a financial asset or

a group of financial assets is impaired. In the case of investments classified as available-for-sale, a

significant or prolonged decline in the fair value of the security below its cost is considered in

determining whether the assets are impaired. If any such evidence exists for available-for-sale financial

assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair

value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed

from comprehensive income and recognized in profit or loss. Impairment losses recognized in profit or

loss on equity instruments classified as available-for-sale are not subsequently reversed through profit or

loss, any increase in fair value subsequent to an impairment loss is recognized in other comprehensive

income. However, if in a subsequent period the fair value of a debt instrument classified as available-for-

sale increases and the increase can be objectively related to an event occurring after the impairment loss

was recognized in profit or loss, the impairment loss is reversed through profit or loss.

3.7 Employees Benefits

3.7.1 Pension Fund Obligations

28


A defined contribution plan is a pension plan under which the company pays fixed contributions into a

separate entity. The company has no legal or constructive obligations to pay further contributions if the

fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the

current and prior periods. In compliance with IAS 19 Paragraph 50

The Company in line with the provisions of the Pension Reform Act, 2004 has instituted a defined

contribution pension scheme for its employees. Employees contribute 7.5% of their basic annual salary,

housing and transport allowances. The Company's contribution which is charged to the profit and loss

account is 7.5% of employee’s total emoluments.

3.7.2 Short-term employee benefits

The cost of short-term employee benefits (those payable within 12 months after service is rendered) such

as paid vacation, leave pay, sick leave and bonuses are recognized in the period in which the service is

rendered and is not discounted. The expected cost of short-term accumulating compensated absences is

recognized as an expense as the employees render service that increases their entitlement or, in the case

of non-accumulating absences, when the absences occur. The expected cost of bonus payments is

recognized as an expense when there is a legal or constructive obligation to make such payments as a

result of past performance. Provisions for leave pay and bonuses are recognized as a liability in the

financial statements. IAS 19 paragraph 9 - 16

3.8 Taxation

The tax expense represents the sum of the current tax payable and deferred tax.

3.8.1 Current Tax

The current tax payable is based on taxable profit for the year. Taxable profit differs from net profit as

reported in the statement of comprehensive income because it excludes items of income or expense that

are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The company’s liability for current tax is calculated using tax rates that have been enacted or

substantively enacted by the end of the reporting period.

3.8.2 Deferred Tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying

amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the

computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax

liabilities are generally recognized for all taxable temporary differences and deferred tax assets are

29


recognized to the extent that it is probable that taxable profits will be available against which deductible

temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary

difference arises from the initial recognition (other than in a business combination) of other assets and

liabilities in a transaction that affects neither the tax profit nor the accounting profit. In accordance with

IAS 12 Pargraph 22.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in

subsidiaries and associates, and interests in joint ventures, except where the company is able to control

the reversal of the temporary difference and it is probable that the temporary difference will not reverse

in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated

with such investments and interests are only recognized to the extent that it is probable that there will be

sufficient taxable profits against which to utilize the benefits of the temporary differences and they are

expected to reverse in the foreseeable future

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of

the asset to be recovered.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period

when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted

or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities

and assets reflects the tax consequences that would follow from the manner in which the company

expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and

liabilities.

Deferred tax is charged or credited to profit or loss for the period, except to the extent that the tax arises

from (1) a transaction or event which is recognized, in the same or a different period, outside profit or

loss, either in other comprehensive income or directly in equity or (2) a business combination. Deferred

tax is charged or credited outside profit or loss if the tax relates to items that are recognized, in the same

or a different period, outside profit or loss.

3.9 Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and other short term, highly liquid,

investments that are convertible to a known amount of cash which are subject to insignificant risk of

changes in value, all of which are available for use by the company unless otherwise stated. In the

statement of financial position, bank overdrafts are included in current liabilities. Standard -IAS 7 under

paragraph 7.

30


3.10 Leasing

Leases are classified as finance leases whenever the terms of the lease transfers substantially all the risks

and rewards of ownership to the lessee. All other leases are classified as operating leases. Rentals payable

under operating leases are charged to profit or loss on a straight-line basis over the term of the lease.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a

straight-line basis over the lease term.

3.11 Segment Reporting

The Company's business segments that are subject to similar risks and returns, are presented by group of

projects in compliance with IFRS 8

3.12 Inventory

Stocks which comprise construction materials are recognized at lower of cost and net realizable value

after making adequate provision for obsolescence and damaged item. Standards- IAS 2 paragraph 9.

3.13 Provision and Contingency Liability

Provisions are recognized when the company has a present obligation (legal or constructive) as a result

of a past event, it is probable that an outflow of resources embodying economic benefits will be required

to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the

company expects some or all of a provision to be reimbursed, for example under an insurance contract,

the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate

that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase

in the provision due to the passage of time is recognized as a finance cost.

3.14 Impairment

Management reviews the carrying amounts of its tangible and intangible assets to determine whether

there is any indication that those assets have suffered an impairment loss at the end of each reporting

period. If any such indication exists, the recoverable amount of the asset is estimated in order to

determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable

amount of an individual asset, the company estimates the recoverable amount of the Cash generating

31


unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified,

corporate assets are also allocated to individual Cash generating units, or otherwise they are allocated to

the smallest Group of Cash generating units for which a reasonable and consistent allocation basis can be

identified. Where an impairment loss subsequently reverses, the carrying amount of the asset (or a Cash

generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased

carrying amount does not exceed the carrying amount that would have been determined had no

impairment loss been recognized for the asset (or the Cash generating unit) in prior years. A reversal of an

impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a

revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

4. Judgments, estimates and assumptions

The preparation of the company financial statements requires management to make judgments,

estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities,

and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about

these assumptions and estimates could result in outcomes that require a material adjustment to the

carrying amount of the asset or liability affected in future periods.

Judgments other than estimates

In the process of applying the company’s accounting policies, management has made the following

judgments, which have the most significant effect on the amounts recognized in the financial

statements:

4.1 Revenue recognition

When a contract is judged to be a construction contract, then revenue is recognized using the percentage

of completion method. The percentage of completion method is made by reference to the stage of

completion of projects determined based on the proportion of contract costs incurred to data and the

estimated costs to complete. The percentage of completion and the revenue to recognize are determined

on the basis of a large number of estimates. Consequently, the company has implemented an internal

financial budgeting and reporting system.

In particular, the reviews each quarter the estimates of contract revenue and contract costs as the contract

progress.

32


4.2 Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable

amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs

to sell calculation is based on available data from binding sales transactions in an arm’s length

transaction of similar assets or observable market prices less incremental costs for disposing of the asset.

The value in use calculation is based on a discounted cash flow model. The cash flows are derived from

the budget for the next five years.

4.3 Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and

the amount and timing of future taxable income. Given the wide contract relationships and the long-term

nature and complexity of existing contractual agreements, differences arising between the actual results

and the assumptions made, or future changes to such assumptions, could necessitate future adjustments

to tax income and expense already recorded. The company establishes provisions, based on reasonable

estimates, for possible consequences of audits by the tax authorities of the respective bodies. The amount

of such provisions is based on various factors, such as experience of previous tax audits and differing

interpretations of tax regulations by the taxable entity and the responsible tax authority.

Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable

profit will be available against which the losses can be utilized. Significant management judgment is

required to determine the amount of deferred tax assets that can be recognized, based upon the likely

timing and the level of future taxable profits together with future tax planning strategies.

4.4 Review of the useful lives of tangible

Another major assumption made by directors in the preparation of the financial statements id the

determination of the useful life of the plant property and equipment. These estimates are made from

judgments based on past experience with similar assets, technological obsolescence and declining

residual values.

33


5. Revenue

Analysis of Revenue:

Construction remains the company core business interest.

Revenue

Total

Total

Revenue

Revenue

2013

2012

N'000

N'000

Revenue from Project

3,158,529

1,586,782

Revenue from Uncertified Claims

192,083

278,416

3,350,612

1,865,198

6. Other Income

6.1 Income from Fixed bank deposit

2013 2012

Interest from Bank Deposit 1,719 674

Other Financial Assets - -

1,719 674

6.2 Other Income generated

2013 2012

Sale of Scraps 1,847 5,007

Rent Income 3,800 5,883

Sale of Assets (1,015) 708

Income From rental of Equipment 1,450 3,130

Income From Change in Inventory (Note 13) 957 (191)

Bank Interest 9,666

Total 7,039 24,203

Total other Income 8,758 24,877

34


7. Staff cost and Employee Numbers

7.1 Staff cost

2013 2012

Wages and Salaries

175,126 95,815

Social Security Cost

6,332 5,626

Medical

4,185 3,620

Staff training

2,746 44

Staff Welfare

6,810 5,341

Amount Charged to P & L

195,200 110,446

7.2 Employee

7.2.1 The average number of persons employed during the year:

Number Number

Management 10 9

Construction 240 144

Administrative Staff 20 48

270 201

7.2.2

Numbers of employees remunerated at higher rates are:

2013 2012

N

90001 - 100,000 0 0

100001 - 110,000 0 0

110001 - 120,000 0 0

120001 - 130,000 0 0

130001 - 150,000 0 1

150001 - 200,000 0 0

35


200001 - 350,000 63 53

350001 - 400,000 25 27

400000 - 420,000 2 0

420001 - 500,000 12 19

500001 - 600,000 45 20

600001 - 650,000 9 6

650001 - 750,000 16 8

750001 - 1,200,000 46 20

1200001 - 2,000,000 26 26

2000001 -2,600,000 17 15

2600001 - 3,500,000 9 6

270 201

8. Taxation

8.1 Profit before taxation

2013

2012

This is stated after charging / (crediting):

Directors' remuneration:

- Fee

- As executives

Audit fee

2,268

2,268

Finance Charges

14,644

17,214

Other income

7,801

25,068

Depreciation of property, plant & equipment

77,045 82,902

8.2 Taxation

(a) Per comprehensive income

Income tax

28,623

2,876

Education tax

5,592

858

Capital Gain tax

21

34,215

3,755

Deferred taxation ( Notes 8.3)

6,971

Charged to P & L

34,215 10,726

36


(b) Deferred Tax Income ( Note 8.3)

17,221

-

8.3 Deferred Taxation

(a) At 1 January

48,972

42,000

Arising during the year (Note 8.2.1 a and b)

(17,221)

6,971

31,751

48,972

Paid during the Year

(80,904)

-

At 31 December

(49,153)

48,972

(b)

Deferred Tax Assets

Balance Brought Forward

2,147

-

Arising during the year

49,153

2,147

51,300 2,147

Tax paid during the year was in excess of deferred tax

liability brought forward by N31.933M

8.4 (b) Per financial position

Balance brought forward

15,721

11,966

Charge for the year (Note 8.2.1)

34,215

3,755

Tax paid during the year

(816)

Balance brought down

49,118

15,721

Withholding Tax payable

12,051

12,051

61,169 27,772

9. Earnings per Share

Basic and diluted earnings per share are shown on the face of the Statement of Profit or Loss

and Other Comprehensive Income. The earnings and weighted average number of ordinary

shares used in the calculation of basic and diluted earnings per share are as follows:

Group

37


Earnings 2013 2012

Earnings for the purpose of basic

earnings and diluted earnings per 257,733

(172,917)

share being net profit attributable

to equity holders of the Company

Number of shares

Weighted average number 148,500 148,500

of ordinary shares for the purpose

of basic and diluted earnings

per share

Earnings per 50 Kobo share (N=) – 1.74

(1.16)

basic and diluted

10. Property, Plant & Equipment

2012

Disposals net

2013

Carrying

of

Carrying

Value Additions

of

accumulated Depreciation Value

Depreciation

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

Leasehold Land & Building 733,500 - - 22,005 711,495

Plant, Tools & Equipment 189,556 209,694 72,328 81,175 245,747

Furniture and Fittings 188 222 82 67 261

IT Infrastructures 14,099 6,890 4,749 5,033 11,207

Motor Vehicles 150,283 119,537 37,006 49,940 182,874

1,087,626 336,343 114,165 158,220 1,151,582

2011

Disposals net

2012

38


Carrying

of

Carrying

Value Additions

of

accumulated Depreciation Value

Depreciation

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

Leasehold Land & Building 733,500 - - - 733,500

Plant, Tools & Equipment 133,229 128,655 24,502 47,826 189,556

Furniture and Fittings 270

28 54 188

IT Infrastructures 14,039 4,809 144 4,605 14,099

Motor Vehicles 58,455 130,716 8,171 30,718 150,283

939,493 264,180 32,845 83,203 1,087,625

10.2 Contractual commitment for capital expenditure

As at year ended 31st December 2013 there are no material capital commitments for the purchase of any

assets

11. Intangible Assets

Intangible Assets Carrying Value

Amortization Carrying Value

1st Jan 2013 Additions

31st Dec 2013

N'000

N'000 N'000

8403 2,244 5,167 5,480

12. Investment

12.1 Unquoted Investment

This represents 2,000,000 units Ordinary Shares of N1 each per share invested in Home Trust Limited on

28th December, 2006 based on ordinary resolution passed and certified by Corporate Affairs Commission.

39


2013 2012

Home Trust 2,000

2,000

12.2 Other Investment

As at reporting date the company maintains fixed deposit with some commercial banks.

2013 2012

Fixed deposit with commercial Bank 51,066

73,200

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

deposits are made for varying periods of between one day and three months, depending on the

immediate cash requirements of the company, and earn interest at the respective short-term

deposit rates.

13. Inventories

Inventories are construction materials held in ILupeju central stores as at reporting date. Materials have

been valued at current market rate net of allowances for obsolescence. Materials meant for immediate

site use are taken directly to site. This measure is to reduce handing and transportation cost.

2013 2012

Opening stock as at 1st January 3,637 1,612

Additions 11,753 34,003

Movement during the year P & L (13,707) (31,787)

Adjustments (Note 6.2) 957 (191)

Balance as at 31st December 2,640 3,637

14. Amount Due from clients. 2013

Construction costs incurred

3,350,612

plus recognized profits less

40


recognized losses to date

Less progress billing

(3,134,743)

Amount due from customers

215,869

15. Trade and Other receivable

15.1 Trade receivable:

The company recognizes an allowance for doubtful debts against all receivables over five years because

management’s continuous efforts to recover these debts would have become uncertain. Allowances for

doubtful debts are recognized against trade receivables based on Management’s assessment of the

credit quality of individual customers, receivables that in dispute, financial standing of customers and the

willingness of thecustomers to pay. Trade receivable to be recovered within one year after reporting date

stand at N615M.

15.2 Age Analysis of Trade Receivable

2013 2012

0 - 1 Year

615,202 416,880

2 - 5 Years

82,005 368,151

Impairments

- (16,340)

Balance as at 31 St December

697,207 768,691

2013 2012

Contract receivables

470,410 504,639

Retention Receivable

226,797 280,392

Less allowances for doubtful debts/

impairments

-

( 16,340)


697,207 768,691

41


16.1 other Receivables

2013 2012

Staff Advance

607 1,845

Service debtors

3,352 6,225

less allowances for doubtful debts

-


4,099 8,070

16.2 Age Analysis of other receivables

2013 2012

0 - 1 Year

4,099 8,070

2 - 5 Years

-

Impairments

-

Balance as a 31 St December

4,099 8,070

17. Prepayment

2013

Opening Balance

483

Payment made during the year

15,070

Amount charged to P & L

(14,659)

Balance as at 31st December

894

42


18. Withholding tax receivable Group 31/12/2012

2013 2012

Opening Balance

64,066 34,030

withholding Tax deducted during the year

69,415 30,035

Less Utilized withholding Tax

(35,904) -

Balance as at 31st December

97,577 64,066

18.1 Age Analysis of withholding receivable

2013 2012

Receivable within one year with

4,160 30,035

Receivable after one year

93,416 34,030

impairments

- -

97,577 64,066

N =000

Tax receivable includes credit notes confirmed by the Federal Inland Revenue Service of ₦ 35.9 million

(2012: Nil) relating to deductions of withholding tax on approved certificates made by our various clients.

The remaining balance represents deductions on withholding tax for which the credit notes have not been

received and thus not confirmed by the Federal Inland.

19. Impairment

The assets have been assessed at the year-end in accordance with the IAS 36 Paragraph 9 and there were

no indications that assets of the Company are impaired.

17

43


111111111111111117

173120. Trade and other payables

2013 2012

Trade Payable (20.1)

8,231 91,311

Staff Payable

- 3,668

Service and other Payable (20.2)

475,369 151,193

Total

483,600 246,172

2013 2012

Current Non-Current Current Non-Current

Trade Payable (20.1)

- 8,231

- 91,311

Staff Payable

- -

- 3,668

Service and other Payable (20.2)

64,270 411,099 103,028 48,165

Total

64,270 419,330 103,028 143,144

44


20.1 Trade Payable

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The

average credit period taken for trade purchases is 180 days. Management has however managed to

operate with minimal trade debts from suppliers. Trade payable outstanding are Legacy debts for with

management have demanded adequate document so that payments could be effected for all the

suppliers. No interest is charged on the trade payables. The Company has Financial Risk Management

policies in place to ensure that all payables are paid within the pre agreed credit terms.

20.2 Service and Other Payables

Service and other payable are service, taxation and social security costs deductions yet to be remitted to

the appropriate agencies. The Directors consider that the carrying amount of trade payables

approximates to their fair value. Directors have however agreed that all payable exceeding six years for

which no adequate claims have been made should be impaired and Witten off.

21. Advance from Clients

Gross amounts due to customers from construction contracts include advances received from clients.

22. Loans and Borrowings

2013 2012


Chief F A Mebude

4,000

- 4,000

2013 2012


Mobilization

383,397 69,530 688,296 417,582

Amount Due from clients

-

- 178,460 .

Total

383,397 69,530 866,756 417,582

45


Biswal Ltd

305,881 831,258 690,159 141,787

R28 Limited

307,258

- 307,258

Total

305,881 1,143,204 690,159 453,045

22.1 At the start of the re-engineering process in August 2010, the Board of directors approved that

intervention fund be received from Messer Biswal Ltd and R28 both being related parties companies. The

Board decision was based on the fact that at that time the company lacked pedigree and goodwill to

approach financial institutions and the capital market was not an option because the company was then

on technical suspension. However there was urgent need to procure modern equipment to meet current

trends in the construction industry. By the end of 2012, total intervention fund received as purchase of

equipment and settlement of bank loans from both parties stood at N1,139B. The Audit committee

insisted that the board must define the interest rate for the loan even when it was agreed that the Interest

would not immediately be booked. The board agreed that current CBN lending rate be used to provide

interest for the intervention fund. As at reporting date, 31st December 2013 total intervention fund stood

at N1,413B. However intervention is still continuing and the level together with related terms are to be

determined.

23. Retirement benefits Obligations

23.1 Retirement benefits for members of staff are structured through a defined contributory pension

scheme, which is independent of the company finances and is managed by private pension fund

administrators. The scheme, which is funded by contributions from both employees and employer at 7.5

% each of relevant emoluments, is consistent with the Pension Reform Act 2004.

2013

Balance as at 1st Jan 2013 29,808

Pension during the year 6,332

Payment during the Year (6,332)

Balance as at 31st December 29,808

The balance represent legacy outstanding for staff that are yet to conclude their registration process with

their Pension fund administrators. The balance is as part of Note 19.2

46


23.2 Defined benefit plan – discontinued scheme

Before the year 2011 the company had a retirement benefit plan for which provisions have been made in

the financial statement for estimated liabilities due at the reporting date in respect of employees’

terminal gratuities based on qualifying years of service and applicable emoluments as per operating

collective agreement. The provisions are reviewed at each reporting date to reflect the current best

estimate. However In 2011, an agreement was reached between the construction industry and the

National Joint Industrial Council to liquidate the accumulated staff retirements benefits. As at reporting

date the company had liquidated all outstanding to it staff in accordance with the agreement.

23.3 Directors Remuneration

Directors

Directors' emoluments comprise:

Fees

-

-

Others

-

-

-

-

The Directors were not remunerated during the year under review.

24. Share Capital

2013 2012

N’000 N’000

Authorized:

150,000,000 ordinary shares of 50 kobo each 75,000 75,000

Issued:


Issued and fully paid:


47


25. Share Premium

2013 2012

N’000 N’000

At 31 December 141,184 141,184

2013 2012

N’000 N’000

26 Reserves

Revenue Reserves

At 1 January (1,300,916) (1,127,999)

Statement of comprehensive income 257,733 (172,917)

At 31 December (1,043,183) (1,300,916)

Capital Reserves

Property, Plant & Equipment revaluation reserve

861,934

861,934

(181,249)

(438,982)

27 Reconciliation of net income to net cash

provided by operating activities

Profit/(Loss) before tax

133,456

(37,579)

48


Adjustment to reconcile net income to

cash provided:

Depreciation

160,506

82,902

Provision for doubtful debt

-

-

Other comprehensive Income

158,492

-

Impairment Charge

-

124,612

452,455

169,936

Changes in assets and liabilities:

(Increase)/ Decrease in debtors

71,485

(299,865)

(Increase)/ Decrease in other debtors

(16,416)

519,288

(Increase)/ Decrease in stocks

996

334,251

Increase/ (Decrease) in trade creditors

(83,080)

(229,753)

(Decrease)/Increase in taxation

33,398

3,987

Increase/ (Decrease) in other creditors and accruals

(206,212)

(17,661)

Total adjustments

(199,829)

310,246

Net cash provided by operating activities

252,627

480,182

28

Reconciliation of Cash and Cash Equivalents

2013

2012

N'000

N'000

Cash at bank and in hand

201,395

259,735

Bank overdrafts

-

-

Cash and cash equivalents

201,395

259,735

49


FINANCIAL SUMMARY

2013

2012

2011

ASSETS

N'000

N'000

N'000

NON CURRENT ASSETS

1,210,127

1,168,646

788,613

CURRENT ASSETS

1,270,841

1,385,247

917,567

TOTAL ASSETS

2,480,968

2,553,893

1,706,180

NON CURRENT LIABILITIES

1,623,833

913,656

1,517,259

CURRENT LIBILITIES

822,949

1,863,785

-

TOTAL LIABILITY

2,446,782

2,777,439

1,517,259

EQUITY

SHARE CAPITAL

74,250

74,250

74,250

SHARE PREMIUM

141,184

141,184

141,184

RETAINED EARNINGS

(181,249)

(438,982)

(26,513)

TOTAL EQUITY

34,185

(223,548)

188,921

TOTAL EQUITY AND LIABILITY

2,480,968

2,553,893

1,706,180

50


VALUE ADDED STATEMENTS


2013

%

2012

%

N'000

N'000

Turnover

3,350,612

1,865,198

Cost of goods and other services

(2,778,247)

(1,874,099)

Value added by trading operations

572,364

(8,901)

Other income

8,758

24,877

581,122

100

15,976

100

Applied as follows:

To employees:

To pay employees' salaries wages

and other benefits

195,200

33.59

110,445

691.31

To pay providers of capital:

Interest on loans and overdrafts

14,644

2.52

17,214

107.75

To pay government:

Taxes

34,215

5.89

7,877

49.31

To provide for enhancement of

assets and expansion:

Depreciation of fixed assets

79,330

13.65

53,358

333.98

Profit/(Loss) for the year

257,733

44.35

(172,917)

(1,082.34)

581,122

100

15,976

100

51


Note:

"Value added" represents the additional wealth

which the company has been able to create

by its employees' efforts. This statement shows

the allocation of the wealth amongst

employees, capital providers, government

and that retained for future creation of wealth.

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