Exhibit II.3

Report of the Audit Committee

In compliance with Section 359(6) of the Companies and Allied Matters Act, we have -

(a) reviewed the scope and planning of the audit requirements;

(b) reviewed the external Auditors’ Memorandum of Recommendations on Accounting Policies and Internal Controls together with Management Responses; and

(c) ascertained that the accounting and reporting policies of the Company for the year ended 30 June 2015 are in accordance with legal requirements and agreed ethical practices.

In our opinion, the scope and planning of the audit for the year ended 30 June 2015 were adequate and the Management Responses to the Auditors findings were satisfactory.

Mr. G.O. Ibhade

Chairman, Audit Committee

31 August 2015

Members of the Audit Committee

Mr. G. O. Ibhade	-	Shareholder/Chairman
Mr. C. O. Ajaegbu	-	Shareholder
Mr. M. O. Igbrude	-	Shareholder
Mr. P. J. Jenkins	-	Director
Mrs. Z. Abdurrahman	-	Director
Amb. S. T. Dogonyaro	-	Director

54       |  ANNUAL REPORT 2015

Statement of Directors Responsibilities

The Directors accept responsibility for the preparation of the financial statements set out on pages 57 to 96 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.

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

Babatunde A. Savage	Ronald Plumridge
FRC/2013/ICAN/00000003514	FRC/2015/IODN/000000012370
3 September 2015	3 September 2015

  |  ANNUAL REPORT 2015    55

	KPMG Professional Services	Telephone	234 (1) 271 8955
	KPMG Tower		234 (1) 271 8599
	Bishop Aboyade Cole Street	Fax	234 (1) 271 0540
	Victoria Island	Internet	www.kpmg.com/ng
	PMB 40014, Falomo
	Lagos

Independent Auditors Report

to the members of Guinness Nigeria Plc

We have audited the accompanying financial statements of Guinness Nigeria Plc (“the Company”), which comprise the statement of financial position as at 30 June 2015, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory information, as set out on pages 57 to 96.

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 Guinness Nigeria Plc (“the Company”) as at 30 June 2015, 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 Nigeria

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, income statement and the statement of comprehensive income are in agreement with the books of account.

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, income statement and the statement of comprehensive income are in agreement with the books of account.

Signed:

Oluwatoyin A. Gbagi, FCA

FRC/2012/ICAN/00000000565

For: KPMG Professional Services

Chartered Accountants

3 September 2015

Lagos, Nigeria

KPMG Professional Services, a Partnership established under Nigeria law, is a member of KPMG International Cooperative (“KPMG International”), a swiss entity. All rights reserved.	Abayomi D. Sanni	Adebisi O. Lamikanra	Adekunle A. Elebute	Adetola P. Adeyemi
	Adewale K. Ajayi	Ajibola O. Olomola	Akinyemi J. Ashade	Ayodele H. Othihiwa
	Ayo L. Salami	Chibuzor N. Anyanechi	Goodluck C. Obi	Ibitomi M. Adepoju
	Joseph O. Tegbe	Kabir O. Okunlola	Oladapo R. Okubadejo	Oladimeji I. Salaudeen
Registered in Nigeria No BN 986925	Olanike I. James	Olumide O. Olayinka	Olusegun A. Sowande	Oluseyi T. Bickersteth
	Oluwafemi O. Awotoye	Oluwatoyin A. Gbagi	Tayo I. Ogungbenro	Victor U. Onyenkpa

56       |  ANNUAL REPORT 2015

Statement of Financial Position

as at 30th June

	Notes		2015		2014
			N’000		N’000
ASSETS
Non-current assets
Property, plant and equipment		15(a)		87,754,074		90,683,405
Intangible assets		16(a)		942,887		608,138
Prepayments		18(a)		13,283		171,119
Other receivables		17		24,876		25,570
Total non-current assets				88,735,120		91,488,232
Current assets
Inventories		19		10,750,598		13,469,248
Trade and other receivables		20		15,503,824		19,218,236
Prepayments		18(b)		1,452,467		1,861,975
Cash and cash equivalents		21		5,804,623		6,290,582
Total current assets				33,511,512		40,840,041
Total assets				122,246,632		132,328,273
Equity
Share capital		22(b)		752,944		752,944
Share premium		22(c)		8,961,346		8,961,346
Share based payment reserve		22(d)		18,582		18,582
Retained earnings				38,608,504		35,328,845
Total equity				48,341,376		45,061,717
Liabilities
Non-current liabilities
Loans and borrowings		24(a)		12,250,754		27,429,985
Employee benefits		25		2,212,922		3,028,651
Deferred tax liabilities		27		13,341,236		12,559,441
Total non-current liabilities				27,804,912		43,018,077
Current liabilities
Bank overdrafts		21		1,471,762		4,680,225
Current tax liabilities		13(e)		2,275,704		1,585,320
Dividend payable		23(b)		3,903,005		4,110,475
Loans and borrowings		24(a)		6,967,560		3,148,882
Trade and other payables		28		31,482,313		30,723,577
Total current liabilities				46,100,344		44,248,479
Total liabilities				73,905,256		87,266,556
Total equity and liabilities				122,246,632		132,328,273

Approved by the Board of Directors on 3 September 2015 and signed on its behalf by:

Babatunde A. Savage (Chairman)	Ronald Plumridge (Ag. Managing Director)
FRC/2013/ICAN/00000003514	FRC/2015/IODN/000000012370

Additionally certified by:

Bolarinwa Lamidi (Financial Controller)

FRC/2013/ICAN/00000003511

The notes on pages 62 to 96 are integral parts of these financial statements.

  |  ANNUAL REPORT 2015    57

Income Statement

for the year ended 30th June

	Notes		2015			2014
			N’000			N’000
Revenue		8		118,495,882			109,202,120
Cost of sales				(62,604,362	)		(57,868,906	)
Gross profit				55,891,520			51,333,214
Other income		9		722,587			734,346
Marketing and distribution expenses				(27,113,449	)		(25,931,970	)
Administrative expenses		11(d)		(13,833,279	)		(10,012,212	)
Operating profit				15,667,379			16,123,378
Finance income		10(a)		705,443			319,741
Finance costs		10(b)		(5,577,720	)		(4,761,559	)
Net finance costs				(4,872,277	)		(4,441,818	)
Profit before taxation		11		10,795,102			11,681,560
Taxation		13(a)		(3,000,203	)		(2,108,080	)
Profit for the year				7,794,899			9,573,480
Earnings per share
Basic and diluted earnings per share (kobo)		14(a)		518			636

The notes on pages 62 to 96 are integral parts of these financial statements

58       |  ANNUAL REPORT 2015

Statement of Comprehensive Income

for the year ended 30th June

	Notes		2015			2014
			N’000			N’000
Profit for the year				7,794,899			9,573,480
Other comprehensive income
Items that will never be reclassified to income statement
Defined benefit plan actuarial gain/(loss)		25(a)		45,879			(111,358	)
Tax on other comprehensive income		27(b)		(13,764	)		33,408
Other comprehensive income for the year, net of tax				32,115			(77,950	)
Total comprehensive income for the year				7,827,014			9,495,530

The notes on pages 62 to 96 are integral parts of these financial statements

  |  ANNUAL REPORT 2015    59

Statement of Changes in Equity

for the year ended 30th June

	Notes		Share capital		Share premium		Share based payment reserve			Retained earnings			Total equity
			N’000		N’000		N’000			N’000			N’000
Balance at 1 July 2013				752,944		8,961,346		18,582			36,306,239			46,039,111
Total comprehensive income
Profit for the year				—		—		—			9,573,480			9,573,480
Other comprehensive income				—		—		—			(77,950	)		(77,950	)
Total comprehensive income for the year				—		—		—			9,495,530			9,495,530
Transaction with owners, recorded directly in equity
Dividends to equity holders		23(b)		—		—		—			(10,541,217	)		(10,541,217	)
Unclaimed dividends written back		23(b)		—		—		—			68,293			68,293
Share based payment charge		26(c)		—		—		103,465			—			103,465
Share based payment recharge		26(c)		—		—		(103,465	)		—			(103,465	)
Total transactions with owners				—		—		—			(10,472,924	)		(10,472,924	)
Balance at 30 June 2014				752,944		8,961,346		18,582			35,328,845			45,061,717
Balance at 1 July 2014				752,944		8,961,346		18,582			35,328,845			45,061,717
Total comprehensive income
Profit for the year				—		—		—			7,794,899			7,794,899
Other comprehensive income				—		—		—			32,115			32,115
Total comprehensive income for the year				—		—		—			7,827,014			7,827,014
Transaction with owners, recorded directly in equity
Dividends to equity holders		23(b)		—		—		—			(4,818,842	)		(4,818,842	)
Unclaimed dividends written back		23(b)		—		—		—			271,487			271,487
Share based payment charge		26(c)		—		—		57,064			—			57,064
Share based payment recharge		26(c)		—		—		(57,064	)		—			(57,064	)
Total transactions with owners				—		—		—			(4,547,355	)		(4,547,355	)
Balance at 30 June 2015				752,944		8,961,346		18,582			38,608,504			48,341,376

The notes on pages 62 to 96 are integral parts of these financial statements.

60       |  ANNUAL REPORT 2015

Statement of Cash Flows

for the year ended 30th June

	Notes		2015			2014
			N’000			N’000
Cash flows from operating activities
Profit for the year				7,794,899			9,573,480
Adjustments for:
Depreciation		15(a)		11,215,213			10,525,929
Amortisation of intangible assets		16(a)		117,743			94,433
Share based payment credit/(charge)		26(c)		(33,607	)		75,809
Finance income		10(a)		(705,443	)		(319,741	)
Finance costs		10(b)		5,577,720			4,761,559
Impairment of inventories		19		1,099,852			733,940
Write-off of property, plant and equipment		15(i)		162,974			333,775
Loss on disposal of property, plant and equipment		15(i)		136,642			67,223
Long service awards charge		25(b)		151,884			37,893
Income tax expense		13(a)		3,000,203			2,108,080
				28,518,080			27,992,380
Changes in:
Inventories				1,618,798			(1,803,086	)
Trade and other receivables		20(b)		3,718,965			(4,056,051	)
Prepayments				567,344			(423,797	)
Trade and other payables		28(b)		5,263,588			5,398,746
Cash generated from operating activities				39,686,775			27,108,192
Income tax paid		13(e)		(1,520,648	)		(3,902,176	)
Gratuity paid		25(a)		(1,052,319	)		(353,833	)
Value added tax paid		28(b)		(4,374,215	)		(3,588,494	)
Long service awards paid		25(b)		(200,608	)		(106,487	)
Net cash generated from operating activities				32,538,985			19,157,202
Cash flows from investing activities
Finance income received		10(a)		700,822			268,582
Proceeds from disposal of property, plant and equipment		15(i)		73,269			14,828
Acquisition of intangible assets		16(a)		(35,676	)		(123,800	)
Acquisition of property, plant and equipment		15(h)		(9,192,991	)		(13,843,305	)
Net cash used in investing activities				(8,454,576	)		(13,683,695	)
Cash flows from financing activities
Proceeds from loans and borrowings		24(c)		1,273,052			21,796,544
Repayment of loans and borrowings		24(c)		(9,593,078	)		(3,249,756	)
Repayment of finance lease liabilities		24(c)		(3,096,902	)		(6,645,599	)
Finance costs paid		10(b)		(5,190,152	)		(4,356,801	)
Dividends paid		23(b)		(4,754,825	)		(10,849,192	)
Net cash used in financing activities				(21,361,905	)		(3,304,804	)
Net increase in cash and cash equivalents				2,722,504			2,168,703
Cash and cash equivalents at 1 July				1,610,357			(558,346	)
Cash and cash equivalents at 30 June		21		4,332,861			1,610,357

The notes on pages 62 to 96 are integral parts of these financial statements.

  |  ANNUAL REPORT 2015    61

Notes to the Financial Statements

for the year ended 30th June

S/N		Page
1	Reporting entity		63
2	Basis of preparation		63
3	Functional and presentation currency		63
4	Use of estimates and judgements		63
5	Basis of measurement		64
6	Changes in accounting policies		64
7	Significant accounting policies		64
8	Revenue		72
9	Other income		72
10	Finance income and finance costs		73
11	Profit before taxation		73
12	Personnel expenses		75
13	Taxation		76
14	Earnings and declared dividend per share		77
15	Property, plant and equipment		77
16	Intangible assets		79
17	Other receivables		80
18	Prepayments		80
19	Inventories		80
20	Trade and other receivables		80
21	Cash and cash equivalents		81
22	Share capital and reserves		81
23	Dividends		81
24	Loans and borrowings		82
25	Employee benefits		83
26	Share based payments		86
27	Deferred tax liabilities		88
28	Trade and other payables		88
29	Financial risk management and financial instruments		89
30	Operating leases		95
31	Contingencies		95
32	Related parties		95
33	Events after the reporting date		96

62       |  ANNUAL REPORT 2015

Notes to the Financial Statements

1. Reporting entity

Guinness Nigeria Plc, a public Company quoted on the Nigerian Stock Exchange was incorporated on 29 April 1950, as a trading company importing Guinness Stout from Dublin. The Company has since transformed itself into a manufacturing operation and its principal activities continue to be brewing, packaging, marketing and selling of Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Malta Guinness Low Sugar, Harp Lager, Smirnoff Ice, Smirnoff Ice-Double Black with Guarana, Satzenbrau Pilsner Lager, Dubic Lager, Dubic Dark Ale, Snapp, Orijin Spirit mixed drink, and Orijin Bitters. The address of the Company’s registered office is at 24 Oba Akran Avenue, Ikeja, Lagos.

2. Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). These financial statements were authorised for issue by the Board of Directors on 3 September 2015.

3. Functional and presentation currency

These statements are presented in Naira, which is the Company’s functional currency. All financial information presented in Naira has been rounded to the nearest thousand unless stated otherwise.

4. Use of estimates and judgements

The preparation of the financial statements in conformity with IFRS 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.

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

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:

(a) Assumptions and estimation uncertainties

Note 25	–	measurement of defined benefit obligations: key actuarial assumptions
Note 26	–	share-based payment
Note 31	–	recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources

(b) Judgements

No significant judgements were made in application of accounting policies that could have significant effects on the amounts recognised in the financial statements.

Measurement of fair values

Some of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

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

Level 1	–	quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2	–	inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. as derived from prices).
Level 3	–	inputs for the asset or liability that are not based on observable market data (unobservable inputs).

  |  ANNUAL REPORT 2015    63

Notes to the Financial Statements

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

Note 26	–	Share based payments
Note 29	–	Financial risk management and financial instruments

5. Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items which have been measured on an alternative basis on each reporting date.

Items	Measurement basis
Non-derivative financial instruments	Initially measured at fair values and subsequently measured at amortised cost.
Employee benefits	Present value of defined benefit obligation
Share-based payment transactions	Event day fair value of the equity instrument issued.

6. Changes in accounting policies

Except for the changes below, the Company has consistently applied the significant accounting policies as set out in Note 7 to all periods presented in these financial statements.

The Company has adopted the following new standards with a date of initial application for periods starting on or after 1 January 2014:

(i) IAS 32 - Amendments to o setting financial Assets and financial liabilities.

(ii) IAS 19 - Amendments to Defined Benefit Plans

These standards do not have material effect on the financial statements.

(iii) IFRIC 21 - Levies

The Company adopted IFRIC 21 -Levies with a date of initial adoption of 1 July 2014. The standard based on the clarification provided required that the Company is not expected to recognise a levy until the obligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid the obligation. The standard does not have a material effect on the financial statements.

7. Significant accounting policies

Except for the changes explained in Note 6, the Company has consistently applied the following accounting policies to all periods presented in these financial statements.

(a) Foreign currency transactions

Transactions denominated in foreign currencies are translated and recorded in Naira at the actual exchange rates as of the date of the transaction.

64       |  ANNUAL REPORT 2015

Notes to the Financial Statements

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in income statement. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

(b) Financial instruments

i. Non-derivative financial assets

The Company initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises 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 recognised as a separate asset or liability.

The Company has the following non-derivative financial assets:

Cash and cash equivalents

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 statement of cash flows.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise trade and other receivables.

Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables with short-term maturities and no stated rates of interest are measured at original invoice amounts where the effect of discounting is not significant.

ii. Non-derivative financial liabilities

All financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

The Company has the following non-derivative financial liabilities: loans 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 amortised cost using the effective interest method.

iii. Share capital

The Company has one class of shares, ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve.

Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

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.

  |  ANNUAL REPORT 2015    65

Notes to the Financial Statements

(c) Property, plant and equipment

i. Recognition, measurement and derecognition

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Property, plant and equipment under construction are disclosed as capital work-in-progress. The cost of self-constructed asset 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 including, where applicable, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

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

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.

The carrying amount of an item of property, plant and equipment shall be derecognised on disposal or when no future economic benefits are expected from its use or disposal.

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 in income statement.

ii. Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised 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 derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in income statement as incurred.

iii. Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset less its residual value. Depreciation is recognised in income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment which reflects the expected pattern of consumption of the future economic benefits embodied in the 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.

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

Leasehold land	–	lease period
Buildings	–	50 years
Plant and machinery	–	2 to 37 years
Furniture and equipment	–	3 to 5 years
Motor vehicles	–	4 years
Returnable packaging materials	–	5 to 10 years

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.

66       |  ANNUAL REPORT 2015

Notes to the Financial Statements

(d) Intangible assets

Software and concession right

Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses. The Company’s intangible assets with finite useful life comprises computer software and concession right. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific intangible asset to which it relates.

Amortisation is calculated over the cost of the asset, or other amount substituted for cost less its residual value. Amortisation is recognised in income statement on a straight-line basis over the estimated useful lives of intangible assets. The estimated useful life for the current and preceding period is as follows:

Computer software- SAP	—11 years
Computer software-others	— 3 years
Concession right	—10 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

An intangible asset is derecognised where it is certain that there would be no future flow of economic benefit to the Company as a result of holding such asset.

(e Leases

Determining whether an arrangement contains a lease

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

At inception or on re-assessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Company’s incremental borrowing rate.

Leased assets

Leases in terms of 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.

Other leases are operating leases and the leased assets are not recognised in the Company’s statement of financial position.

Lease payments

Payments made under operating leases are recognised in income statement 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.

  |  ANNUAL REPORT 2015    67

Notes to the Financial Statements

(f) Inventories

Inventories are measured at the lower of cost and net realisable 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. The basis of costing is as follows:

Raw materials, non-returnable packaging materials and consumable spare parts	–	purchase cost on a weighted average basis including transportation and applicable clearing charges.
Finished products and products-in-process	–	average cost of direct materials and labour plus the appropriate amount attributable to production overheads based on normal production capacity.
Inventory-in-transit	–	purchase cost incurred to date.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs to completion and selling expenses. Inventory values are adjusted for obsolete, slow-moving or defective items.

(g) Impairment

i. Non-derivative financial assets

A financial asset not measured at fair value through income statement, including an equity accounted investee, 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.

Objective evidence that financial assets (including equity securities) 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.

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 recognised in income statement and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised 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 income statement.

ii. Non financial assets

The carrying amount 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 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. The recoverable amount of an asset 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 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”).

68       |  ANNUAL REPORT 2015

Notes to the Financial Statements

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 recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in income statement. Impairment losses recognised 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.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its 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 amortisation, if no impairment loss had been recognised.

(h) Employee benefits

i. Defined contribution plan

A defined contribution plan is a post-employment benefit plan (pension fund) 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 line with the provisions of the Pension Reform Act 2004, the Company has instituted a defined contribution pension scheme for its management and non-management employees. Employee contributions to the scheme are funded through payroll deductions while the Company’s contribution is charged to income statement. The Company contributes 10% and 12% for management and non-management employees respectively while employees contribute 8% of their insurable earnings (basic, housing and transport allowance).

ii. Gratuity

• Defined benefit gratuity scheme

Lump sum benefits payable upon retirement or resignation of employment are fully accrued over the service lives of management and non-management staff under the scheme. Employees under the defined benefit scheme are those who had served a minimum of 5 years on or before 31 December 2008 when the scheme was terminated. Independent actuarial valuations are performed periodically on a projected unit credit basis. Actuarial gains/losses arising from valuations are charged in full to other comprehensive income. The Company ensures that adequate arrangements are in place to meet its obligations under the scheme.

• Defined contribution gratuity scheme

The Company has a defined contribution gratuity scheme for management and non-management staff. Under this scheme, a specified amount is contributed by the Company to third party fund managers and recognised as an employee benefit expense to income statement over the service life of the employees.

iii. Other long-term employee benefits

The Company’s other long-term employee benefits represents Long Service Awards payable upon completion of certain years in service and accrued over the service lives of the employees. Independent actuarial valuations are performed periodically on a projected unit credit basis. Actuarial gains/losses and curtailment gains or losses arising from valuations are charged in full to income statement.

iv. Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, then they are discounted.

v. Short-term employee benefits

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 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.

  |  ANNUAL REPORT 2015    69

Notes to the Financial Statements

vi. Share-based payment transactions

The fair value of equity settled share options and share grants is initially measured at grant date based on the binomial or Monte Carlo models and is charged in income statement over the vesting period. For equity settled shares, the credit is included in retained earnings in equity whereas for cash settled share-based payments a liability is recognised in the statement of financial position, measured initially at the fair value of the liability.

For cash settled share options and share grants, the fair value of the liability is remeasured at the end of each reporting period until the liability is settled, and at the date of settlement, with any changes in the fair value recognised in income statement. Cancellations of share options are treated as an acceleration of the vesting period and any outstanding charge is recognised in operating profit immediately.

(i) Provisions and contingent liabilities

Provisions

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 provision for restructuring is recognised when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

Contingent liabilties

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.

(j) Revenue

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, excise duties, sales returns, trade discounts and volume rebates. Toll revenue represents income from operation of toll road which is the amount of tolls collected during the period. 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 discounts 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.

(k) Government grants

Government grants that compensate the Company for expenses incurred are recognised in income statement as a reduction to cost of sales in the periods in which the expenses are recognised if the Company will comply with the condition attaching to them and it is probable that the grants will be received from the government.

(l) Finance income and finance costs

Finance income comprises interest income on funds invested, gains on the disposal of available-for-sale financial assets. Finance income is recognised as it accrues in income statement, using the effective interest method.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, interest expense on factoring of trade receivables recognised on financial assets except finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset which are capitalised as part of the related assets, are recognised in income statement using the effective interest method.

70       |  ANNUAL REPORT 2015

Notes to the Financial Statements

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

(m) Income and deferred taxation

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in income statement except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

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.

Deferred tax is recognised in income statement account except to the extent that it relates to a transaction that is                              recognised directly in equity. 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 is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised¹simultaneously.

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 the following temporary differences:

i. the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income statement

ii. differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future

iii. temporary differences arising on the initial recognition of goodwill.

(n) Earnings per share

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

(o) Statement of cashflows

The statement of cash flows is prepared using the indirect method. Changes in statement of financial position items that have not resulted in cash flows such as translation differences, fair value changes, equity-settled share- based payments and other non-cash items, have been eliminated for the purpose of preparing the statement. Dividends paid to ordinary shareholders are included in financing activities. Finance cost paid is also included in financing activities while finance income received is included in investing activities.

(p) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Guinness Leadership Team.

Segment information is required to be presented in respect of the Company’s business and geographical segment, where applicable. The Company’s primary format for segment reporting is based on geographical segments. The geographical segments are determined by management based on the Company’s internal reporting structure. Where applicable, segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

  |  ANNUAL REPORT 2015    71

Notes to the Financial Statements

(q) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have not been applied in preparing these financial statements. Those which may be relevant to the Company are as follows:

IFRS 9 – Financial instruments (effective for the financial statements for the year ending 30 June 2019) removes the multiple classification and measurement models for financial assets required by IAS 39 – Financial Instruments: Recognition and measurement and introduces a model that has only two classification categories: amortised cost and fair value. Classification is determined by the business model used to manage the financial assets and the contractual cash flow characteristics of the financial assets.

The accounting and presentation of financial liabilities and for derecognising financial instruments has been transferred from IAS 39 without any significant changes. The amendment to IFRS 7 – Financial instruments: Disclosures requires additional disclosures on transition from IAS 39 to IFRS 9.

IFRS 15 – Revenue from contracts with customers (effective for the financial statements for the year ending 30 June 2018). IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

The extent of the impact has not been determined and the Company does not plan to adopt these standards early.

(r) Service concession charges

Service concession charges represent fixed annual amounts payable to the grantor in respect of concession right to the concession asset. These amounts are charged to the income statement throughout the concession period.

8. Revenue

	2015		2014
	N’000		N’000
Nigeria		116,218,787		106,893,928
Export		2,277,095		2,308,192
		118,495,882		109,202,120

Nigeria is the Company’s primary geographical segment as over 98% of the Company’s revenue is earned from sales in Nigeria. All of the Company’s revenue is derived from sale of similar products with similar risks and returns. Additionally, none of the Company’s customers accounts for more than ten percent of the Company’s total revenue. Accordingly, no further business or geographical segment information is reported.

9. Other income

	2015		2014
	N’000		N’000
Operating lease income (Note 15(c))		591,975		562,555
Sale of by-products		130,612		171,791
		722,587		734,346

72       |  ANNUAL REPORT 2015

Notes to the Financial Statements

10. Finance income and finance costs

(a) Finance income and finance income received are as follows:

(i)     Finance income per income statement
	2015			2014
	N’000			N’000
Interest income on bank deposits		411,046			314,324
Other interest income		126,225			5,417
Total interest income arising from financial assets not measured at fair value through income statement		537,271			319,741
Net gain on foreign exchange transactions		168,172			—
		705,443			319,741
(ii)    Finance income in the statement of cash flows
Finance income per income statement		705,443			319,741
Accrued finance income		(4,621	)		(51,159	)
		700,822			268,582

(b) Finance costs comprise the following:

(i)     Finance costs per income statement
	2015		2014
	N’000		N’000
Finance expense on loans and borrowings		3,470,540		2,278,492
Interest expense on overdraft		1,350,744		1,457,830
Unwinding of discount on employee benefits		331,193		345,163
Other interest expense		425,243		487,936
Total interest expense arising from financial liabilities not measured at fair value through income statement		5,577,720		4,569,421
Net loss on foreign exchange transactions		—		192,138
		5,577,720		4,761,559

(ii)    Finance costs in the statement of cash flows
	2015			2014
	N’000			N’000
Finance costs per income statement		5,577,720			4,761,559
Unwinding of discount on employee benefits		(331,193	)		(345,163	)
Accrued finance costs		(56,375	)		(59,595	)
		5,190,152			4,356,801

11. Profit before taxation

(a) Profit before taxation is stated after charging:

	2015		2014
	N’000		N’000
Depreciation of property, plant and equipment (Note 15(a))		11,215,213		10,525,929
Write-off of property plant and equipment		162,974		333,775
Amortisation of intangible assets (Note 16(a))		117,743		94,433
Auditors’ remuneration		35,144		33,470
Personnel expenses (Note 12(a))		12,728,213		9,527,408
Directors’ remuneration (Note 11(b))		245,223		219,096
Loss on disposal property, plant and equipment		136,642		67,223
Lease rental expenses (Note 30(a))		1,188,346		3,526,638
Royalty and technical service fees (Note 32)		2,508,268		2,260,167

  |  ANNUAL REPORT 2015    73

Notes to the Financial Statements

(b) Directors’ remuneration

Remuneration, excluding certain benefits of directors of the Company, who discharged their duties mainly in Nigeria, was as follows:

	2015		2014
	N’000		N’000
Fees paid to Non-executive Directors		9,995		10,204
Fees and remuneration paid to the Chairman		24,917		24,210
Remuneration paid to Executive Directors		210,311		184,682
		245,223		219,096

The remuneration (excluding pension contributions and certain benefits) of the highest paid director amounted to N54.1 million (2014: N105.1 million).

The table below shows the number of Directors of the Company (excluding the Chairman) whose remuneration excluding certain benefits, gratuity and pension contributions (in respect of services to the Company) fell within the bands shown below:

	2015		2014
	Number		Number
Below N1,000,001		—		1
N2,000,001 - N4,000,000		5		4
N20,000,000 and above		4		2
		9		7

(c) Analysis of expenses by nature

	2015		2014
	N’000		N’000
Raw materials and consumables		38,931,904		34,840,325
Freight		15,283,122		13,455,762
Advertising and promotion		9,838,783		9,938,508
Personnel costs (Note 12(a))		12,728,213		9,527,408
Depreciation		11,215,213		10,525,929
Amortisation		117,743		94,433
Lease rental expenses		1,188,346		3,526,638
Royalty and technical service fees		2,508,268		2,260,167
Repairs and maintenance		2,350,618		2,407,565
Travel and entertainment		2,002,432		1,965,996
Professional costs		993,677		918,596
External labour costs		851,962		928,835
Facilities		1,232,011		1,114,404
IT Services costs		1,283,275		1,050,392
Impairment/(recovery) of doubtful receivables		890,904		(33,825	)
Utilities		586,714		499,132
Others		1,547,905		792,823
Total cost of sales, marketing, distribution and administrative expenses		103,551,090		93,813,088

(d) Administrative expenses for the year include restructuring costs of N1,141 million (2014: N609 million) comprising of termination benefits of N663 million (2014: N79 million) and other organisational review costs of N478million (2014: N530 million).

74       |  ANNUAL REPORT 2015

Notes to the Financial Statements

12. Personnel expenses

(a) Personnel expenses including the provision for gratuity liabilities and other long term employee benefits comprise:

	2015			2014
	N’000			N’000
Salaries, wages and allowances		10,963,749			8,348,242
Contributions to defined contribution plans		983,600			986,455
Share based payments (credit)/expense (Note 26)		(33,607	)		75,809
Charge for other long term employee benefits		151,884			37,893
Termination benefits (Note 11(d))		662,587			79,009
Total personnel expenses		12,728,213			9,527,408

(b) The average number of persons employed as at 30 June were:

	2015		2014
	Number		Number
Operations and Technical		759		780
Sales		442		414
Marketing		50		47
Finance, IT and Human Resources		104		109
Legal & Corporate Affairs		16		18
		1,371		1,368

(c) Number of employees of the Company as at 30 June, whose duties were wholly or mainly discharged in Nigeria, received annual remuneration (excluding pension contributions and certain benefits) in the following ranges:

	2015		2014
	Number		Number
N500,001 – N1,000,000		1		—
N1,000,001 – N1,500,000		19		15
N1,500,001 – N2,000,000		94		84
N2,000,001 – N2,500,000		60		52
N2,500,001 – N3,000,000		51		60
N3,000,001 – N3,500,000		34		125
N3,500,001 – N4,000,000		185		154
N4,000,001 – N4,500,000		145		134
N4,500,001 – N5,000,000		131		117
N5,000,001 – N5,500,000		101		99
N5,500,001 – N6,000,000		90		84
N6,000,001 – N6,500,000		62		71
N6,500,001 – N7,000,000		57		54
N7,000,001 – N7,500,000		54		42
N7,500,001 – N8,000,000		34		32
N8,000,001 – N8,500,000		25		26
N8,500,001 – N9,000,000		32		25
N9,000,001 – N9,500,000		17		21
N9,500,001 – N10,000,000		11		21
N10,000,001 and above		168		152
		1,371		1,368

  |  ANNUAL REPORT 2015    75

Notes to the Financial Statements

13. Taxation

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:

(a) Amounts recognised in income statement

	2015			2014
	N’000			N’000
Current tax expense:
Income tax		1,888,148			1,395,224
Tertiary education tax		387,556			379,813
Effect of pioneer status on preceding periods (Note 13(b))		—			(304,133	)
Adjustment for prior periods		(43,532	)		—
		2,232,172			1,470,904
Deferred tax expense:
Origination and reversal of temporary differences (Note 27(b))		768,031			637,176
Total tax expense		3,000,203			2,108,080

(b) In September 2013, the Nigerian Investment Promotion Council (NIPC) granted the Company a pioneer status for a five year period with respect to the Company’s production of Malta Guinness Low Sugar.

The effective commencement production date was certified by the Industrial Inspectorate Department of the Federal Ministry of Commerce and Industry as 1 May 2012. In accordance with the provisions of the Industrial Development (Income Tax Relief) Act, the Company’s profit attributable to the pioneer line of business was therefore not liable to income taxes for the duration of the pioneer period.

The company income tax for the fourteen month period (1 May 2012 - 30 June 2013) was re-estimated and recognised in prior year and adjusted accordingly. The impact of the change in estimate amounted to a credit of N304.1 million in the income statement.

(c) Tax recognised in other comprehensive income

	2015		2014
	N’000		N’000
Remeasurement of defined benefit liability (Note 27(b))		13,764		(33,408	)

(d) Reconciliation of effective tax rate

				2015						2014
	%			N’000			%			N’000
Profit before taxation					10,795,102						11,681,560
Income tax using the statutory tax rate (30%)		30.0			3,238,531			30.0			3,504,468
Adjusted for:
Impact of tertiary education tax		3.6			387,556			3.3			379,813
Effect of tax incentives and exempted income		(5.5	)		(589,925	)		(17.0	)		(1,984,527	)
Non-deductible expenses		0.1			7,573			1.8			208,326
Adjustment for prior periods		(0.4	)		(43,532	)		—			—
Total income tax expense in income statement		27.8			3,000,203			18.0			2,108,080

76       |  ANNUAL REPORT 2015

Notes to the Financial Statements

(e) Movement in current tax liability

	2015			2014
	N’000			N’000
Balance at 1 July		1,585,320			4,050,356
Payments during the year		(1,520,648	)		(3,902,176	)
Charge for the year (Note (a))		2,232,172			1,470,904
Withholding tax credit notes utilised		(21,140	)		(33,764	)
Balance at 30 June		2,275,704			1,585,320

14. Earnings and declared dividend per share

(a) Basic and diluted earnings per share

Basic earnings per share of 518 kobo (2014: 636 kobo) is based on the profit attributable to ordinary shareholders of N7,794,899,000 (2014: N9,573,480,000) and on the 1,505,888,188 ordinary shares of 50 kobo each, being the weighted average number of ordinary shares in issue during the year (2014: 1,505,888,188).

There were no dilutive ordinary potential shares during the year.

(b) Declared dividend per share

Dividend declared per share of 320 kobo (2014: 700 kobo) is based on total declared dividend of N4,818,842,000 (2014: N10,514,217,000) on 1,505,888,188 (2014: 1,505,888,188) ordinary shares of 50 kobo each, being the ordinary shares in issue at the date the dividend was declared.

15. Property, plant and equipment (PPE)

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

	Lesasehold Land		Buildings			Plant and Machinery			Furniture and Equipment			Motor Vehicles			Returnable Packaging Materials			Capital Work-in- Progress			Total
	N’000		N’000			N’000			N’000			N’000			N’000			N’000			N’000
Cost
At 1 July 2013		636,291		19,141,123			73,968,242			1,418,372			5,846,325			24,509,844			8,022,670			133,542,867
Additions		—		—			1,385,068			—			7,110			195,451			11,924,679			13,512,308
Transfers		—		1,473,895			12,207,722			12,504			693,298			5,052,386			(19,439,805	)		—
Disposals/Write-offs		—		—			(254,281	)		(1,434	)		(165,781	)		(2,469,270	)		—			(2,890,766	)
At 30 June 2014		636,291		20,615,018			87,306,751			1,429,442			6,380,952			27,288,411			507,544			144,164,409
At 1 July 2014		636,291		20,615,018			87,306,751			1,429,442			6,380,952			27,288,411			507,544			144,164,409
Additions		164,446		—			220,783			7,766			1,661,620			3,811,980			3,208,988			9,075,583
Transfers		—		145,265			3,058,953			—			—			—			(3,204,218	)		—
Reclassification to intangible assets (Note (g))		—		(485,611	)		—			—			—			—			—			(485,611	)
Disposals/Write-offs		—		—			(361,479	)		(241	)		(701,415	)		(930,809	)		—			(1,993,944	)
At 30 June 2015		800,737		20,274,672			90,225,008			1,436,967			7,341,157			30,169,582			512,314			150,760,437
Depreciation and impairment
At 1 July 2013		82,365		1,892,313			26,598,209			926,774			3,394,382			12,535,972			—			45,430,015
Charge for the year		12,726		411,749			5,514,209			272,379			1,079,646			3,235,220			—			10,525,929
Disposals/Write-offs		—		—			(238,591	)		(1,065	)		(150,710	)		(2,084,574	)		—			(2,474,940	)
At 30 June 2014		95,091		2,304,062			31,873,827			1,198,088			4,323,318			13,686,618			—			53,481,004
At 1 July 2014		95,091		2,304,062			31,873,827			1,198,088			4,323,318			13,686,618			—			53,481,004
Charge for the year		18,639		442,852			6,230,665			49,852			1,077,116			3,396,089			—			11,215,213
Reclassification to intangible assets (Note (g))		—		(68,795	)		—			—			—			—			—			(68,795	)
Disposals/Write-offs		—		—			(216,547	)		(124	)		(660,880	)		(743,508	)		—			(1,621,059	)
At 30 June 2015		113,730		2,678,119			37,887,945			1,247,816			4,739,554			16,339,199			—			63,006,363
Carrying amount
At 1 July 2013		553,926		17,248,810			47,370,033			491,598			2,451,943			11,973,872			8,022,670			88,112,852
At 30 June 2014		541,200		18,310,956			55,432,924			231,354			2,057,634			13,601,793			507,544			90,683,405
At 30 June 2015		687,007		17,596,553			52,337,063			189,151			2,601,603			13,830,383			512,314			87,754,074

  |  ANNUAL REPORT 2015    77

Notes to the Financial Statements

(b) Included in property, plant and equipment are assets purchased under finance lease arrangements as follows:

	Motor Vehicles			Plant & Machinery			Total
	N’000			N’000			N’000
Cost		1,384,100			12,572,763			13,956,863
Accumulated depreciation		(1,103,349	)		(5,486,778	)		(6,590,127
Carrying amount		280,751			7,085,985			7,366,736

The leased assets serve as security for the lease obligations (Note 24(e)).

(c) Included in property, plant and equipment are plant and machinery and motor vehicles, which the Company has leased out to third parties under operating lease arrangements. The cost of these assets was N3,738 million (2014: N2,794 million) with corresponding accumulated depreciation charges of N2,789 million (2014: N2,319 million). Income realised from these assets is included in other income (Note 9).

(d) Capital work-in-progress

Additions to capital work-in-progress during the year is analysed as follows:

	2015		2014
	N’000		N’000
Plant and machinery		3,186,097		11,828,980
Buildings		22,891		95,699
		3,208,988		11,924,679

(e) Included in property, plant and equipment are assets purchased during the year amounting to N1,516 million that had not been paid for, which are included in creditors and accruals (2014: N1,633 million).

(f) Capital expenditure commitments at the year end authorised by the Board of Directors comprise:

	2015		2014
	N’000		N’000
Contracted		596,477		1,608,974
Not contracted		10,400,539		14,239,929
		10,997,016		15,848,903

(g) In prior year, the Company invested an amount of N486 million on the reconstruction of Iyoha Road (“the Road”) in the host community of the Benin factory in Edo State and applied to the Edo State Government for a concession right over the Road.

In the current year, the concession right was granted to the Company with the execution of a concession agreement between the Company and Edo State Government with effect from 1 June 2015 for a period of ten (10) years. The concession agreement gives the Company the right to build, operate, maintain, repair, control and ensure public access to the Iyoha Road for a period of ten (10) years from 1 June 2015 after which control of the Road reverts to the Government. As at year end, the carrying amount of the Road has been reclassified to intangible asset.

(h) Cash paid on acquisition of property plant and equipment

	2015			2014
	N’000			N’000
Additions during the year (Note 15(a))		9,075,583			13,512,308
Payments on prior year acquisitions		1,633,052			1,964,049
Accruals on current year acquisitions		(1,515,644	)		(1,633,052	)
		9,192,991			13,843,305

(i) PPE disposed/written off in the statement of cash flows

	2015			2014
	N’000			N’000
Cost of PPE disposed/written off		1,993,944			2,890,766
Accumulated depreciation on PPE disposed/written off		(1,621,059	)		(2,474,940	)
Carrying amount of PPE disposed/written off		372,885			415,826
Proceeds from disposal of property, plant and equipment		(73,269	)		(14,828	)
		299,616			400,998
Analysed as:
Write-off of property, plant and equipment		162,974			333,775
Loss on disposal of property, plant and equipment		136,642			67,223
		299,616			400,998

(j) No borrowing costs were capitalised during the year (2014: N467.9 million)

78       |  ANNUAL REPORT 2015

Notes to the Financial Statements

16. Intangible assets

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

	Concession Rights		Computer software		Total
	N’000		N’000		N’000
Cost
Balance at 1 July 2013		—		2,089,123		2,089,123
Additions		—		123,800		123,800
Balance at 30 June 2014		—		2,212,923		2,212,923
Balance at 1 July 2014		—		2,212,923		2,212,923
Reclassifications from PPE (Note 15(a))		485,611		—		485,611
Additions		—		35,676		35,676
Balance at 30 June 2015		485,611		2,248,599		2,734,210
Amortisation
Balance at 1 July 2013		—		1,510,352		1,510,352
Charge for the year		—		94,433		94,433
Balance at 30 June 2014		—		1,604,785		1,604,785
Balance at 1 July 2014		—		1,604,785		1,604,785
Reclassifications from PPE (Note 15(a))		68,795		—		68,795
Charge for the year		4,047		113,696		117,743
Balance at 30 June 2015		72,842		1,718,481		1,791,323
Carrying amount
At 1 July 2013		—		578,771		578,771
At 30 June 2014		—		608,138		608,138
At 30 June 2015		412,769		530,118		942,887

(b) Reclassifcations from Property, plant and equipment

On 1 June 2015, the Company entered into a concession agreement (“the Agreement”) with the Edo State Government (“the Grantor”). Under the terms of the agreement, the Company was granted the right to build, operate, maintain, repair, control and ensure public access to the Iyoha Road for a period of ten (10) years from 1 June 2015 after which control of the Road reverts to the Grantor. Based on the concession agreement, N417 million which represents the carrying amount of the construction work on the Road as at 1 June 2015, has been recognised as an intangible asset. The intangible asset represents the Company’s right over the Road for the concession period.

Under the Agreement, the Company has obligations to operate, maintain, repair, control, charge and collect tolls for its accounts only from the trucks utilising the Road for the Company’s logistics operation, together with the payment of concession fee of five million naira (N5,000,000) per annum. At the end of the concession period, the toll road will become the property of the Grantor and the Company will have no further involvement in its operation or maintenance requirements.

The Agreement contains an option for renewal at the instance of both parties. Either party to the Agreement reserves the right to terminate the Agreement if the other party commits a material breach in respect of the performance of its material obligations or is in material breach of any warranty given by it under the Agreement.

No toll revenue was earned during the current year.

(c) The amortisation charge of all intangible assets is included in administrative expenses.

  |  ANNUAL REPORT 2015    79

Notes to the Financial Statements

17. Other receivables

Non-current other receivables represent the long term portion of loans granted to employees of the Company. No interest is charged on these loans.

The loans are secured by the employees’ retirement benefits. The current portion of other receivables is included in Trade and other receivables reported in current assets.

Change in prepayments presented in the statement of cashflows have been adjusted for the movement of N157,836 in non-current prepayments.

18. Prepayments

(a) Non current prepayments mainly represent the long-term portion of prepaid rent by the Company.

(b) Current prepayments comprise:

	2015		2014
	N’000		N’000
Prepaid rent		445,579		379,198
Prepaid advertising expense		—		388,388
Other prepaid expenses		1,006,888		1,094,389
		1,452,467		1,861,975

19. Inventories

Inventories comprise:

	2015		2014
	N’000		N’000
Finished products		2,600,261		4,929,607
Products in process		1,311,086		1,270,493
Raw materials and packaging materials		5,658,267		6,039,501
Engineering spares		954,057		562,575
Inventory in transit		226,927		667,072
		10,750,598		13,469,248

The value of raw and packaging materials, spare parts, changes in finished products and products in process recognised in cost of sales during the year amounted to N38.93 billion (2014: N34.84 billion).

During the year, impairment of inventory amounted to N1,100 million (2014: N733.94 million). This write-down is included in cost of sales.

20. Trade and other receivables

(a) Trade and other receivables comprise:

	2015		2014
	N’000		N’000
Trade receivables (Note 29(a))		12,310,899		15,491,921
Other receivables		1,610,086		3,329,543
Due from related parties (Note 32(b))		1,582,839		396,772
		15,503,824		19,218,236

(b) Changes in trade and other receivables in the cash flows

	2015			2014
	N’000			N’000
Change in non-current receivables		694			6,041
Change in current receivables		3,714,412			(4,079,487	)
Accrued finance income		4,621			51,159
Withholding tax credit notes applied for tax settlement		(21,140	)		(33,764	)
Equity settled share based payment (Note 26 (c))		20,378			—
		3,718,965			(4,056,051	)

80       |  ANNUAL REPORT 2015

Notes to the Financial Statements

21. Cash and cash equivalents

	2015			2014
	N’000			N’000
Bank balances		1,950,283			3,061,648
Short-term deposits		3,854,340			3,228,934
Cash and cash equivalents		5,804,623			6,290,582
Bank overdrafts		(1,471,762	)		(4,680,225	)
Cash and cash equivalents in the statement of cash flows		4,332,861			1,610,357

Included in cash and cash equivalents are unclaimed dividends amounting to N3,822 million (2014: N3,200 million) held in a separate bank account in accordance with guidelines issued by the Securities and Exchange Commission (SEC). Under the SEC guidelines, these amounts are restricted from use by the Company.

22. Share capital and reserves

(a) Authorised ordinary shares of 50k each

in thousands of shares	2015		2014
At 30 June		2,500,000		2,500,000

(b) Issued and fully paid-up ordinary shares of 50k each

	2015		2014
At 30 June		1,505,889		1,505,889
Share value in thousands of Naira
At 30 June		752,944		752,944

All shares rank equally with regard to the Company’s residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

(c) Share premium

Share premium represents the consideration received in excess of the nominal value of ordinary shares of the Company.

(d) Share based payment reserve

The share based payment reserve comprises the cumulative weighted average fair value of executive share option and executive share award plans granted by Diageo Plc to Directors and employees of the Company which have not vested at year end.

23. Dividends

(a) Declared dividends

The following dividends were declared and paid by the Company during the year:

	2015		2014
	N’000		N’000
320 kobo per qualifying ordinary share (2014: 700k)		4,818,842		10,541,217

  |  ANNUAL REPORT 2015    81

Notes to the Financial Statements

After the respective reporting dates, the following dividends were proposed by the directors. The dividends have not been provided for and there are no income tax consequences.

	2015		2014
	N’000		N’000
320kobo per qualifying ordinary share (2014: 700k)		4,818,842		4,818,842

(b) Dividend payable

	2015			2014
	N’000			N’000
At 1 July		4,110,475			4,486,743
Declared dividend		4,818,842			10,541,217
Unclaimed dividend transferred to retained earnings		(271,487	)		(68,293	)
Payments during the year		(4,754,825	)		(10,849,192	)
At 30 June		3,903,005			4,110,475

(c) As at 30 June 2015, N0.080 billion (2014: N0.91 billion) of the total dividend payable is held with the Company’s registrar, Veritas Registrars Nigeria Limited. The balance of N3.82 billion (2014: N3.20 billion) represents unclaimed dividends, which have been returned to the Company by its Registrar and are held in seperate interest yielding bank accounts in line with Securities and Exchange Commission (SEC) guidelines.

24. Loans and borrowings

(a) Loans and borrowings comprise:

	2015		2014
	N’000		N’000
Non-current liabilities
Unsecured term loans		11,131,333		21,599,983
Finance lease liabilities		1,119,421		5,830,002
Total non-current		12,250,754		27,429,985
Current liabilities
Unsecured commercial papers (Note (b))		1,273,052		—
Unsecured term loans		987,539		52,368
Finance lease liabilities		4,706,969		3,096,514
Total current		6,967,560		3,148,882
Total loans and borrowings		19,218,314		30,578,867

(b) During the year, the Company opened a 180-day Commercial Paper (CP) financing line with a total financing value of N10 billion for working capital purpose. The notes issued under this scheme are unsecured and discounted at a nominal rate of 13.31% per annum.

As at the end of the year, the Company has sold CP notes amounting to N1,273 million with a corresponding discounted value of N1,189 million.

82       |  ANNUAL REPORT 2015

Notes to the Financial Statements

(c) Movement in loans and borrowings

	2015			2014
	N’000			N’000
At 1 July		30,578,867			17,353,242
Proceeds from loans and borrowings obtained during the year (Note 24 (c)(i))		1,273,052			23,061,385
Accrued finance costs		56,375			59,595
Loans repaid during the year		(9,593,078	)		(3,249,756	)
Finance lease repaid during the year		(3,096,902	)		(6,645,599	)
At 30 June		19,218,314			30,578,867

(i) Included in proceeds from loans and borrowing in 2014 was an amount of N1.26 billion representing loan provided by related party for financing the acquisition of certain items of property plant and equipment in prior year. This amount has been adjusted under proceeds of loans and borrowings of the 2014 column in the statement of cash flows.

For more information about the Company’s exposure to interest rate, foreign currency and liquidity risks, see Note 29.

(d) Terms and conditions of the outstanding loans and borrowings were as follows:

	Nominal Interest Rate			Year of Maturity		Carrying Amount 2015		Face Value 2015		Carrying Amount 2014		Face Value 2014
						N’000		N’000		N’000		N’000
Unsecured term loan 1		16.0	%		2019		3,466,500		3,466,500		13,000,000		13,000,000
Unsecured term loan 2		15.0	%		2019		3,600,000		3,600,000		3,589,923		3,589,923
Unsecured term loan 3		NIBOR +1%			2019		5,000,000		5,000,000		5,010,060		5,010,060
Finance lease liabilities		13-16	%		2013-2018		5,822,388		5,815,164		8,919,289		8,919,289
							17,888,888		17,881,664		30,519,272		30,519,272

(e) Finance lease liabilities

Finance lease liabilities are payable as follows:

	Present value of Minimum Lease Payments 2015		Interest 2015		Future Minimum Lease Payments 2015		Present value of Minimum Lease Paym’t 2014		Interest 2014		Future Minimum Lease Payments 2014
	N’000		N’000		N’000		N’000		N’000		N’000
Less than one year		4,748,645		653,681		5,402,326		3,089,287		959,523		4,048,810
Betweeen 1-2 years		697,799		85,632		783,431		4,737,817		556,499		5,294,316
Betweeen 2-3 years		375,944		14,648		390,592		718,734		78,853		797,587
Betweeen 3-4 years		—		—		—		373,451		16,733		390,184
		5,822,388		753,961		6,576,349		8,919,289		1,611,608		10,530,897

The lease assets serve as security for the finance lease liabilitiy (Note 15(b)).

25. Employee benefits

	2015		2014
	N’000		N’000
Present value of gratuity obligation (Note 25(a))		1,182,760		2,068,945
Present value of long service awards benefit obligation (Note 25(b))		1,030,162		959,706
		2,212,922		3,028,651

  |  ANNUAL REPORT 2015    83

Notes to the Financial Statements

(a) Movement in the present value of the defined benefit gratuity obligation

	2015			2014
	N’000			N’000
Defined benefit obligations at 1 July		2,068,945			2,079,061
Benefits paid by the plan		(1,052,319	)		(353,833	)
Interest expense on obligation		212,013			232,359
Actuarial (gains)/losses in other comprehensive income		(45,879	)		111,358
		1,182,760			2,068,945

The defined benefit gratuity obligation was discontinued and frozen with effect from 31 December 2008. Consequently, there are no current service costs (2014: Nil). Interest cost on the plan for the year amounts to N212 million (2014: N232 million).

(b) Movement in the present value of the long service awards benefit plan during year was as follows:

	2015			2014
	N’000			N’000
Defined benefit obligations at 1 July		959,706			915,496
Charge for the year		271,064			150,697
Benefits paid by the plan		(200,608	)		(106,487	)
Defined benefit obligations at 30 June		1,030,162			959,706

Defined benefit expense recognised in the income statement for long service award benefit obligation:

	2015		2014
	N’000		N’000
Current service costs		118,116		223,346
Past service costs		1,012		—
Actuarial losses/(gains)		32,756		(185,453	)
Net charge excluding interest on obligation		151,884		37,893
Interest on obligation		119,180		112,804
		271,064		150,697

(c) Movement in the defined contribution gratuity plan during year was as follows:

	2015			2014
	N’000			N’000
At 1 July		—			—
Charge for the year		458,687			459,016
Payments		(458,687	)		(459,016	)
At 30 June		—			—

(d) Pension payable

The balance on the pension payable account represents the amount due to the Pension Fund Administrators which is yet to be remitted at the year end. The movement on this account during the year was as follows:

	2015			2014
	N’000			N’000
At 1 July		89			187
Charge for the year		1,042,617			1,058,548
Payments during the year		(1,041,808	)		(1,058,646	)
At 30 June		898			89

Pension payable is recognised as part of trade and other payables.

84       |  ANNUAL REPORT 2015

Notes to the Financial Statements

(e) Actuarial gains and losses are recognised in other comprehensive income

	2015			2014
	N’000			N’000
At 1 July		(579,522	)		(501,572	)
Gains/(losses) recognised during the year		45,879			(111,358	)
Tax charge		(13,764	)		33,408
At 30 June		(547,407	)		(579,522	)

(f) Actuarial assumptions

Principal actuarial assumptions at the reporting date (expressed as weighted averages):

	2015			2014
Long term average discount rate (p.a.)		14	%		13	%
Notional interest rate on accrued gratuity (p.a.)		5	%		5	%
Average pay increase (p.a.)		11	%		11	%
Average rate of inflation (p.a.)		9	%		8	%
Average length of service for current employees (years)		6.11			9.06

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

Due to unavailability of published reliable demographic data in Nigeria, the demographic assumptions regarding future mortality are based on the rates published jointly by the Institute and Faculty of Actuaries in the United Kingdom (UK) as follows:

	2015			2014
Mortality in service	Number of deaths in year out of 10,000 lives
Sample age
25		7			7
30		7			7
35		9			9
40		14			14
45		26			26
Withdrawal from service
Age band	Rate			Rate
1 - 30		12.0	%		12.0	%
31 - 39		8.5	%		10.0	%
40 - 44		5.0	%		5.5	%
45 - 50		3.5	%		5.5	%
51 - 55		2.5	%		5.5	%

The estimated weighted average liability duration were 2.63 years (2014: 8.27 years) and 6.11 years (2014: 4.12 years) for the long service award and gratuity obligations respectively.

(g) Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions holding other assumptions constant would have affected the defined benefit obligation by the amounts shown below.

			Gratuity			Long service awards			Net periodic benefit cost
			N’000			N’000			N’000
Discount rate	+1	%		(45,372	)		(48,587	)		13,748
	-1	%		49,844			52,992			(14,076	)
Inflation rate	+1	%		—			7,050			1,710
	-1	%		—			(6,392	)		(1,551	)
Salary increase	+1	%		—			49,766			12,154
	-1	%		—			(46,298	)		(11,308	)
Mortality improvement	+10	%		2,594			1,781			797
	-10	%		(2,587	)		(1,777	)		(796	)

Sensitivity to each actuarial assumption was determined while other assumptions were held constant. There has not been a change from the sensitivity approach adopted in prior years. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

  |  ANNUAL REPORT 2015    85

Notes to the Financial Statements

26. Share based payments

(a) Diageo Plc, has a number of executive share option and executive share award plans for directors and key management staff including directors and employees of Guinness Nigeria Plc. A recharge arrangement exists between Diageo Plc and Guinnesss Nigeria Plc whereby vested shares awards/share options delivered to employees by Diageo Plc are recharged to Guinness Nigeria Plc. The recharge transaction is recognised as an intercompany liability with a corresponding adjustment in the share-based payment reserve for the capital contribution recognised in respect of the share-based payment. The recharge process accomodates adjustments to the cummulative value of share based payment expense recharged by Diageo Plc to the Company.

(b) The Company has a share appreciation rights scheme for senior management and other staff under which employees are granted the right to receive, at the date the right is exercised, cash equal to the appreciation in the Company’s share price since the grant date. All the rights vest 3 years after the grant date. The rights have a contractual life of 10 years.

(c) The employee benefit expense recognised in the respect of equity and cash settled share based payments is as follows:

	2015			2014
	N’000			N’000
Equity-settled share based payment transactions
Executive share option plans		29,884			69,404
Executive share award plans		27,180			34,061
		57,064			103,465
Net refund on recharges		(77,442	)		—
		(20,378	)		103,465
Cash-settled share based payment transactions
Expense arising from SARS		—			—
Effect of changes in the fair value of SARs		(13,229	)		(27,656	)
		(13,229	)		(27,656	)
Total expense/(credit) recognised as employee costs		(33,607	)		75,809

The principal executive share awards/options are as follows

Diageo executive long term incentive plan (DELTIP)

Awards made to executives under the plan are in the form of shares and share options at the market value at the time of grant. Share awards vest/are released on the third anniversary of the grant date. Share options granted under this scheme may normally be exercised between three and ten years after the grant date. There are no performance conditions to be satisfied.

Performance share plan (PSP)

Under the PSP, share awards can take a number of different forms. No payment is made for awards. To date, participants have been granted conditional rights to receive shares. Awards normally vest after a three-year period, the ‘performance cycle’, subject to achievement of three equally weighted performance tests;

(i) a comparison of Diageo’s three-year total shareholder return (TSR) with a peer group of 17 companies including Diageo. The vesting range is 25% if Diageo’s TSR produces a median ranking compared with the TSR of the peer group companies, up to 100% if Diageo is ranked first, second or third in the peer group;

(ii) compound annual growth in organic net sales over three years;

(iii) total organic operating margin improvement over three years.

86       |  ANNUAL REPORT 2015

Notes to the Financial Statements

Targets for net sales and operating margin are set annually by the remuneration committee. The vesting range is 25% for achieving minimum performance targets, up to 100% for achieving the maximum target level. Re-testing of the performance condition is not permitted. Dividends are accrued on awards and are given to participants to the extent that the awards actually vest at the end of the performance cycle. Dividends can be paid in the form of cash or shares.

The calculation of the fair value of each share option/award used the Monte Carlo pricing model and the following weighted average assumptions:

	2015			2014
Risk free interest rate
Executive share options/awards		1.0	%		1.0	%
SARs		15.92	%		15.92	%
Expected life
Executive share options/awards		36 months			36 months
SARs		120 months			120 months
Dividend yield
Executive share options/awards		2.9	%		2.7	%
SARs		4.35	%		4.35	%
Weighted average share price
Executive share options/awards		1,700p			1,970p
Weighted average fair value of awards granted in the year
Executive share options/awards		1,239p			1,147p
Number of awards granted in the year
Executive share options/awards		10,122			167,752

During the year, there were no share appreciation rights awarded to employees of the Company (2014: Nil).

Transactions on share based payment transactions

During the year, there were no transactions on share appreciation rights. Transactions on the executive share options/ awards were as follows:

	Number of awards/options in units
	2015			2014
Outstanding at 1 July		280,649			264,847
Granted		10,122			167,752
Exercised/awarded		(67,397	)		(140,937	)
Forfeited/expired/transferred		(12,996	)		(11,013	)
Outstanding at 30 June		210,378			280,649

At 30 June 2015, 61,000 (2014: 275,655) executive share options/awards were exercisable at a weighted average exercise price of 1,841 pence.

  |  ANNUAL REPORT 2015    87

Notes to the Financial Statements

27. Deferred tax liabilities

(a) Recognised deferred tax assets and liabilities are attributable to the following:

	Assets				Liabilities						Net
	2015		2014		2015			2014			2015			2014
	N’000		N’000		N’000			N’000			N’000			N’000
Property, plant and equipment		—		—		(14,856,484	)		(15,687,894	)		(14,856,484	)		(15,687,894	)
Employee benefits		663,877		908,596		—			—			663,877			908,596
Intangible assets		—		—		(72,823	)		(148,288	)		(72,823	)		(148,288	)
Unrealised exchange losses		97,484		149,959		—			—			97,484			149,959
Inventories		308,288		1,941,949		—			—			308,288			1,941,949
Trade and other receivables		503,454		259,184		—			—			503,454			259,184
Other items		14,968		17,053		—			—			14,968			17,053
Net deferred tax liabilities		1,588,071		3,276,741		(14,929,307	)		(15,836,182	)		(13,341,236	)		(12,559,441	)

(b) Movement in deferred taxation during the year

	Balance 1 July 2014			Recognised in Profit or Loss			Recognised in other comprehensive income			Balance 30 June 2015
Property, plant and equipment		(15,687,894	)		831,410			—			(14,856,484	)
Employee benefits		908,596			(230,955	)		(13,764	)		663,877
Intangible assets		(148,288	)		75,465			—			(72,823	)
Unrealised exchange losses		149,959			(52,475	)		—			97,484
Inventories		1,941,949			(1,633,661	)		—			308,288
Trade and other receivables		259,184			244,270			—			503,454
Other items		17,053			(2,085	)		—			14,968
		(12,559,441	)		(768,031	)		(13,764	)		(13,341,236	)

There are no unrecognised deferred tax assets and liabilities at the end of the current and preceding year.

28. Trade and other payables

(a) Trade and other payables comprise:

	2015		2014
	N’000		N’000
Trade payables		17,669,293		20,404,418
Other payables and accrued expenses		8,926,444		6,353,088
Amount due to related parties (Note 32(b))		4,886,576		3,966,071
		31,482,313		30,723,577

88       |  ANNUAL REPORT 2015

Notes to the Financial Statements

(b) Changes in trade and other payables in the statement of cash flows

	2015		2014
	N’000		N’000
Change in trade and other payables		758,736		290,223
Effect of accruals for PPE		117,408		1,595,838
Changes in fair value of Share Appreciation Rights (Note 26(c))		13,229		27,656
Value added tax paid during the year		4,374,215		3,588,494
Equity settled share based payment (Note 26(c))		—		(103,465	)
		5,263,588		5,398,746

The Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 29.

29. Financial risk management and financial instruments

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

• Credit risk

• Liquidity risk

• Market risk

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.

Risk management framework

The risk management committee is responsible for developing and monitoring the Company’s risk management policies which are established to identify and analyse the risks faced by the Company, to set appropriate risk limit and controls, and monitor risks as well as adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

The Company’s Finance and Risk 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 risk management controls and procedures, the results of which are reported to the audit committee.

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and other related parties.

Trade and other receivables

The Company’s exposure to credit risk in relation to trade receivables is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry and customers’ operating environment, has an influence on credit risk. The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. Credit limit are establised for each customers, which represents the maximum open amount. These limits are reviewed periodically.

Other receivables includes employee debtors, related party receivables and sundry receivables. The Company reviews amounts due in respect of other receivables on a periodic basis taking into consideration functions such as continued employment relationship/going concern status of the respective counterparties and its ability to offset amounts against balances due to these counterparties.

  |  ANNUAL REPORT 2015    89

Notes to the Financial Statements

In monitoring customers credit risk, customers are classified according to their credit characteristics, including whether they are an individual, corporate and wholesale, geographic location, maturity and existence of previous difficulties. The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance are a specific loss component that relates to individually significant exposures. The collective loss allowance is determined based on historical date of payment statistics for similar financial assets.

The maximum exposure to credit risk for trade and other receivables and related impairment losses at the reporting date was:

	2015			2014
Trade receivables		13,419,805			16,144,891
Impairment		(1,108,906	)		(652,970	)
		12,310,899			15,491,921
Other receivables (current and non-current)		2,280,908			3,566,091
Impairment		(645,946	)		(210,978	)
		1,634,962			3,355,113
Due from related parties		1,582,839			396,772
		15,528,700			19,243,806

Impairment losses

The aging of trade and other receivables and related impairment allowances for the Company at the reporting date was:

	Gross		Impairment			Gross		Impairment
	2015		2015			2014		2014
	N’000		N’000			N’000		N’000
Not past due		12,901,589		—			10,929,356		—
Past due 1 - 30 days		—		—			2,915,479		—
Past due 31 - 60 days		424,007		—			656,685		—
Past due 61 - 180 days		400,167		—			336,716		—
Past due by greater than 180 days		3,557,789		(1,754,852	)		5,269,518		(863,948	)
		17,283,552		(1,754,852	)		20,107,754		(863,948	)

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

	2015			2014
	N’000			N’000
Balance at 1 July		(863,948	)		(897,773	)
Impairment loss reversed		112,848			108,934
Impairment loss recognised		(1,003,752	)		(75,109	)
Balance at 30 June		(1,754,852	)		(863,948	)

The impairment loss as at 30 June relates to trade and other receivables which in the Company’s assessment will not be recoverable from the counter parties mainly due to their economic circumstances. The Company believes that the unimpaired amounts past due dates are collectible, based on historic payment behaviour and extensive analyses of the underlying counter party’s credit ratings. Based on historic default rates, the Company believes that, apart from the above, no additional impairment allowance is necessary in respect of trade and other receivables past due. The impairment loss is included in administrative expenses.

90       |  ANNUAL REPORT 2015

Notes to the Financial Statements

Cash and cash equivalents

The Company held cash and cash equivalents of N5.80 billion as at 30 June 2015 (2014:N6.29 billion), which represents its maximum credit exposure on these assets. The cash and cash equivalents are held by reputable financial institutions in Nigeria.

(b) Liquidity risk

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.

The credit terms with customers and payment terms to its vendors are favorable to the Company in order to help provide sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, the Company has overdraft facilities with its banks to enable it manage its liquidity risks. At year end, the Company had overdraft facilities lines amounting to N30 billion (2014: N32 billion). The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

	Contractual Cash Flows
	Carrying		Total		6 months		6 -12
	Amount		Cashflows		or Less		months		1- 2years		2- 5years
	N’000		N’000		N’000		N’000		N’000		N’000
Non-derivative financial liabilities
30 June 2015
Unsecured term loans		12,118,872		13,298,007		700,458		1,825,443		4,975,719		5,796,387
Finance lease liabilities		5,826,390		6,602,119		1,983,151		3,433,296		795,081		390,591
Dividend payable		3,903,005		3,903,005		3,903,005		—		—		—
Trade and other payables		31,482,313		31,482,313		31,482,313		—		—		—
Other short term borrowings		1,273,052		1,273,052		1,273,052		—		—		—
Bank overdraft		1,471,762		1,471,762		1,471,762		—		—		—
		56,075,394		58,030,258		40,813,741		5,258,739		5,770,800		6,186,978
30 June 2014
Unsecured term loan		21,599,983		30,460,365		1,373,770		1,352,230		5,002,338		22,732,027
Finance lease liabilities		8,926,516		10,530,897		2,024,405		2,024,405		5,294,316		1,187,771
Dividend payable		4,110,475		4,110,475		4,110,475		—		—		—
Trade and other payables		30,723,577		30,723,577		30,723,577		—		—		—
Bank overdraft		4,680,225		4,680,225		4,680,225		—		—		—
		70,040,776		80,505,539		42,912,452		3,376,635		10,296,654		23,919,798

  |  ANNUAL REPORT 2015    91

Notes to the Financial Statements

(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rate, interest rates and equity prices will affect the Company’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return.

(i) Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and the Naira. 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. In managing currency risk, the Company aims to reduce the impact of short-term fluctuations on earnings. Although the Company employ various measures including matching sales and purchase currencies to mitigate exposure to foreign exchange rate movement, over the longer term, however, permanent changes in exchange rates would have an impact on profit. The Company monitors the movement in the currency rates on an ongoing basis. The Company’s exposure to foreign currency risk was as follows in notional terms.

	30 June 15									30 June 14
	GBP (£)			Euro (€)			US ($)			GBP (£)			Euro (€)			US ($)
	000			000			000			000			000			000
Financial assets
Cash and cash equivalents		566			630			1,688			2,924			39			1,665
Trade and other receivables		3,196			—			2,411			682			—			541
		3,762			630			4,099			3,606			39			2,206
Financial liabilities
Trade and other payables		(2,979	)		(1,377	)		(9,329	)		(2,800	)		(333	)		(7,260	)
Net exposure		783			(747	)		(5,230	)		806			(294	)		(5,054	)

The following significant exchange rates applied during the year:

	Average rate				Reporting date spot rate
	2015		2014		2015		2014
	N		N		N		N
GBP (£) 1		271.99		252.44		308.72		264.56
Euro (€) 1		206.78		210.59		219.49		211.92
US$ 1		173.07		155.25		196.45		155.23

92       |  ANNUAL REPORT 2015

Notes to the Financial Statements

Sensitivity analysis on foreign currency rates

A fifteen percent (15%) strengthening of the Naira, against the Euro, Dollar and GBP at 30 June would have increased/ (decreased) income statement 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 and has no impact on equity. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2014, albeit that the reasonably possible foreign exchange rate variances were different, as indicated below.

	(Decrease)/Increase in
	income statement
	N’000
30 June 2015
GBP (£)		(36,296	)
Euro (€)		24,601
US$		154,134
30 June 2014
GBP (£)		(31,986	)
Euro (€)		9,345
US$		117,681

A weakening of the Naira against the above currencies would have had the equal but opposite effect on the above currencies to the magnitude of the amounts shown above, on the basis that all other variables remain constant.

(ii) Interest rate risk

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

	2015			2014
	N’000			N’000
Fixed rate instruments
Financial assets		4,785,518			3,228,934
Financial liabilities		(1,273,052	)		(4,680,225	)
		3,512,466			(1,451,291	)
Variable rate instruments
Financial liabilities		17,945,262			30,578,867

The Company does not account for any fixed rate financial assets and liabilities at fair value through income statement. Therefore a change in interest rates at the end of the reporting period would not affect income statement.

Cash flow sensitivity analysis for variable rate instruments

At 30 June 2014, an increase/decrease in of one percentage (1%) point would have resulted in a decrease/increase in profit after tax of N169,651,164 (2014: N167,579,094). This analysis assumes that all other variables remain constant.

(d) Capital management

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. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company considers total equity in the statement of financial position to be its capital.

The Company’s management is committed to enhancing shareholder value in the long term, both by investing in the businesses and brands so as to improve the return on investment and by managing the capital structure. The Company manages its capital structure to achieve capital efficiency, maximise flexibility and give the appropriate level of access to debt markets at attractive cost levels.

  |  ANNUAL REPORT 2015    93

Notes to the Financial Statements

The Company regularly assesses its debts and equity capital levels against its stated policy for capital structure. The Company’s management monitors the return on capital, which the Company defines as profit before taxation divided by total equity.

The Company’s return on capital as at the end of the reporting period was as follows:

	2015			2014
	N’000			N’000
Profit before taxation		10,795,102			11,681,560
Total equity		48,341,376			45,061,717
Return on capital		23	%		26	%

Furthermore, the Company’s adjusted net debt to equity ratio at the end of the reporting period was as follows:

	2015			2014
	N’000			N’000
Total liabilities		73,905,256			87,266,556
Cash and cash equivalents		(5,804,623	)		(6,290,582	)
Adjusted net debt		68,100,633			80,975,974
Total equity		48,341,376			45,061,717
Adjusted net debt to equity ratio:		1.41			1.80

There was no change in the Company’s approach to capital management during the current and preceeding year.

(f) Fair values - Financial instruments not measured at fair value

Fair values versus carrying amounts

The fair values of financial assets and liabilities which have been determined using level 2 hierachy, together with the carrying amount shown in the statement of financial position, are as follows:

	30 June 15				30 June 14
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	N’000		N’000		N’000		N’000
Assets measured at amortised cost
Other receivables (non-current)		24,876		18,872		25,570		23,780
Liabilities measured at amortised cost
Unsecured term loans		12,118,872		11,422,052		21,599,983		21,167,983
Finance lease liabilities		5,826,390		5,799,178		8,926,516		8,747,986
Unsecured commercial papers (Note 29(b))		1,273,052		1,188,264		—		—
		19,218,314		18,409,494		30,526,499		29,915,969

All financial instruments except finance lease liabilities, term loans and non-current other receivables are short term financial instruments. Accordingly, management believes that their fair values are reasonable approximation of their carrying values.

The fair value of the financial instruments above have been determined using the discounted cashflows technique. The valuation model considers the present value of expected cashflows using market related yields as follows:

	2015			2014
Other receivables		15.50	%		15.50	%
Unsecured term loans		15.50	%		15.50	%
Finance lease liabilities		15.50	%		15.50	%
Unsecured commercial papers		13.31	%		—

The future cash flows are based on contractual amounts and considers the probability of occurrence of the cash flows. There are no significant unobservable inputs. The fair values were determined on the same basis in prior year and there was no transfer between levels during the year.

94       |  ANNUAL REPORT 2015

Notes to the Financial Statements

30. Operating leases

(a) Leases as lessee

“The Company leases a number of offices, warehouse, factory facilities and trucks for distribution of its products under operating leases. During the year, an amount of N1,188 million was recognised as an expense in income statement in respect of these leases (2014: N3,527 million). Lease rentals are paid upfront and included in prepayments and charged to the profit and loss over the life of the lease.

(b) Leases as lessor

The Company leases some of its plant and machinery and motor vehicles to third parties under operating lease arrangements. Income from these operating lease arrangements during the year was N592 million (2013: N563 million). At year end, minimum lease payments under operating lease rental commitments are receivable as follows:

	2015		2014
	N’000		N’000
Less than one year		518,862		530,000
Between one and two years		327,890		560,000
Between two and three years		168,324		560,000
Between three and four years		30,380		560,000
		1,045,456		2,210,000

31. Contingencies

(a) Guarantee and contingent liabilities

Contingent liabilities at the reporting date arising in the ordinary course of business out of guarantees, amounted to N3,067 million (2014: N4,070 million). In the opinion of the Directors, no material loss is expected to arise from these guarantees.

(b) Pending litigation and claims

The Company is subject to various claims and other liabilities arising in the normal course of business. The contingent liabilities in respect of pending litigation and other liabilities amounted to N2,504 million as at 30 June 2015 (2014: N2,285 million). In the opinion of the Directors and based on legal advice, no material loss is expected to arise from these claims.

(c) Financial commitments

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.

32. Related parties

(a) Parent and ultimate controlling entity

Related parties include the parent and ultimate controlling company, Diageo Plc. and other Diageo 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 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.

As at 30 June 2015, Guinness Overseas Limited and Atalantaf Limited owned 46.48% (2014: 46.48%) and 7.84% (2014: 7.84%) respectively of the issued share capital of the Company.

  |  ANNUAL REPORT 2015    95

Notes to the Financial Statements

(b) Transactions with related parties

The Company has transactions with its parent and other related parties who are related by virtue of being members of the Diageo group. The total amounts due to related parties by nature of the transaction are shown below:

	Transaction Value						Balance due (to) from
	2015			2014			2015			2014
	N’000			N’000			N’000			N’000
Purchases and other services
Ultimate parent		(148,394	)		(125,549	)		(24,168	)		(337,635	)
Other related parties		(9,387,796	)		(17,713,340	)		(3,884,360	)		(1,891,862	)
Technical service fees and royalties
Other related parties		(2,508,268	)		(2,260,167	)		(978,048	)		(1,736,574	)
								(4,886,576	)		(3,966,071	)
Sales and other services
Ultimate parent		133,511			120,427			—			38,072
Other related parties		5,283,642			2,946,417			1,582,839			358,700
								1,582,839			396,772
Related party loan and finance costs		—			(6,805,283	)		—			—

(c) Transactions with key management personnel

Key management personnel compensation

In addition to their salaries, the Company also provides non-cash benefits to directors and executive officers and contributes to post employment defined benefit and defined contribution plans on their behalf. In accordance with the terms of the plans, directors and executive officers retire at the age of 55 at which time they become entitled to receive post employment benefits.

Executive officers also participate in share based payment plans (see Note 26) and the Company’s long service awards benefit plan. Key management personnel compensation comprised:

	2015		2014
	N’000		N’000
Short-term employee benefits
Salaries and wages		350,646		345,755
Long-term employee benefits
Post-employment benefits		42,313		48,944
Long-service award benefit plan		4,680		6,498
Share based payments plan
Diageo executive share options/awards		166,376		90,453
		564,015		491,650

33. Events after the reporting date

There are no significant subsequent events, which could have had a material effect on the financial statements of the Company as at 30 June 2015 that have not been adequately provided for or disclosed in the financial statements.

96       |  ANNUAL REPORT 2015

Additional

Financial

Information

  |  ANNUAL REPORT 2015    97

Value Added Statement

for the year ended 30th June

	2015					2014
	N’000			%		N’000			%
Revenue		118,495,882					109,202,120
Bought-in materials and services
- Local		(51,202,325	)				(51,437,387	)
- Imported		(28,255,481	)				(22,305,881	)
		39,038,076					35,458,852
Other income		722,587					734,346
Finance income		705,443					319,741
Valued added		40,466,106			100		36,512,939			100
Distribution of Value Added:
To Government:
Taxation		3,000,203			7		2,108,080			6
To Employees:
Salaries, wages and fringe benefits		12,728,213			31		9,527,408			26
To Providers of Finance:
Finance costs		5,577,720			14		4,761,559			13
Retained in the Business:
For replacement of property, plant and equipment		11,215,213			29		10,525,929			29
For replacement of intangible assets		117,743			—		94,433			—
Proposed dividend		4,818,842			12		4,818,842			13
To augument reserve		3,008,172			7		4,676,688			13
		40,466,106			100		36,512,939			100

Value added represents the additional wealth which the Company has been able to create by its own employees’ efforts. This statement shows the allocation of that wealth between government, employees, providers of capital and that retained in the business.

98       |  ANNUAL REPORT 2015

Financial Summary

Income Statement

	2015		2014			2013			2012
	N’000		N’000			N’000			N’000
Revenue		118,495,882		109,202,120			122,463,538			116,461,882
Operating profit		15,667,379		16,123,378			20,933,616			21,895,799
Profit before taxation		10,795,102		11,681,560			17,008,875			20,383,158
Profit for the year		7,794,899		9,573,480			11,863,726			14,214,620
Statement of comprehensive income
Profit after taxation		7,794,899		9,573,480			11,863,726			14,214,620
Other comprehensive income, net of tax		32,115		(77,950	)		(83,770	)		86,811
Comprehensive income for the year		7,827,014		9,495,530			11,779,956			14,301,431
Per 50k share data (in kobo)
Basic and diluted earnings per share		518		636			793
Declared dividend per share		320		700			800

Statement of Financial Position

	2015			2014			2013			2012			1 July 11
	N’000			N’000			N’000			N’000			N’000
Employment of funds
Property, plant and equipment		87,754,074			90,683,405			88,112,852			76,293,851			58,269,455
Intangible assets		942,887			608,138			578,771			679,792			1,031,280
Prepayments		13,283			171,119			98,768			247,549			343,385
Other recievables		24,876			25,570			31,611			10,292			27,824
Net current liabilities		(12,588,832	)		(3,408,438	)		(19,036,478	)		(16,421,354	)		(6,233,119	)
Loans and borrowings		(12,250,754	)		(27,429,985	)		(8,796,183	)		(8,513,058	)		(1,332,933	)
Employee benefits		(2,212,922	)		(3,028,651	)		(2,994,557	)		(2,782,809	)		(3,435,532	)
Deferred tax liabilities		(13,341,236	)		(12,559,441	)		(11,955,673	)		(10,902,749	)		(9,798,989	)
Net assets		48,341,376			45,061,717			46,039,111			38,611,514			38,871,371
Funds employed
Share capital		752,944			752,944			752,944			737,463			737,463
Share premium		8,961,346			8,961,346			8,961,346			1,545,787			1,545,787
Share based payment reserve		18,582			18,582			18,582			62,308			21,413
Retained earnings		38,608,504			35,328,845			36,306,239			36,265,956			36,566,708
Shareholders’ funds		48,341,376			45,061,717			46,039,111			38,611,514			38,871,371
Per 50k share data (in kobo)
Net assets per share		3,210			2,992			3,057

The financial information presented above reflects historical summaries based on Internation 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.

  |  ANNUAL REPORT 2015    99