May & Baker Nigeria Plc 2013_HY

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May & Baker Nigeria Plc 2013_HY

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May & Baker Nigeria Plc 2013_HY

  1. 1. May & Baker Nig Plc RC. 558 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2013 MAY & BAKER NIGERIA PLC UNAUDITED CONSOLIDA TED STATEMENT OF PROFIT OR LOSS A ND OTHER COM PREHENSIVE INCOM E FOR THE SIX M ONTHS ENDED 30 JUNE 2013 JUNE Gross profit Other operating income Distribution, sales and marketing Administrative expenses Operating profit Investment income Other gains and losses Finance costs JUNE 5 7 8 9 10 Profit before tax 2012 N'000 5,668,449 (3,598,756) 2,426,847 (1,402,314) 936,592 1,923 (327,671) (282,544) 2,069,693 11,960 (1,260,231) (588,476) 1,024,533 4,327 (513,918) (255,664) 328,300 1,231 417 (277,854) 232,946 2,447 278,759 (469,630) 259,278 (218,860) 52,094 Note Revenue Cost of sales DECEMBER 2013 N'000 2,864,363 (1,927,771) 2012 N'000 44,522 40,418 Taxation 13 (16,670) 31,421 (12,934) Profit for the period 11 35,424 75,943 27,484 Other comprehensive income (net of tax) Items that may be reclassified subsequently
  2. 2. to profit or loss. Gains / (losses) on property revaluation Gain or loss arising from available for sale financial assets Total items that may be reclassified to profit or loss subsequently Total other comprehensive income(net of tax) Profit attributable to: Non-controlling interest Owners of the parent Earnings per share Basic (kobo per share) 14 3.61 7.75 2.80 3.61 Diluted (kobo per share) 7.75 2.80 The results for the second quarter of 2013 shows growth for both revenue and profit before tax. Revenue grew by 18 percent while profit before tax grew by 29 percent. This was achieved despite the current security challenges in the country which significantly hampered products distribution to some parts of the country most especially the northern states. Also the depreciation of our Ultra modern factory in Ota MAY & BAKER NIGERIA PLC Unaudited Consolidated Statem ent of Financial Position For the six months ended June 2013 ASSETS Note Non-current assets Intangible assets Property, plant and equipment Deposit for investment 15 16 17 Total assets DECEMBE R 2012 N'000 JUNE 2012 N'000 18 19 20 21 67,296 4,577,472 245,325 67,296 4,670,433 245,325 67,296 4,641,807 246,325 4,890,093 Total non-current assets Current assets Inventories Trade and other receivables Cash and bank balances Other assets Asset held sale Total current assets JUNE 2013 N'000 4,983,054 4,955,428 1,452,936 1,646,473 115,349 182,514 1,090,999 1,092,975 79,014 224,296 3,397,272 1,313,857 1,424,267 237,418 66,517 44,293 3,086,352 8,287,365 8,069,406 7,442,712 2,487,284
  3. 3. Current liabilities Trade and other payables Current tax liabilities Dividends Borrowings Other liabilities 990,504 27,534 100,358 1,426,298 106,746 22 13 23 24 25 Total current liabilities 965,815 39,866 1,619,973 145,597 2,651,440 Non-current liabilities Borrowings Deferred tax liabilities Other liabilities 24 2,771,251 2,039,602 126,257 2,336,796 126,203 13 25 454,984 60,292 50,349 1,661,508 89,041 2,316,174 1,610,000 240,468 95,523 Total non-current liabities 2,462,999 2,165,859 1,945,991 Total liabilities 5,114,439 4,937,110 4,262,165 490,000 1,626,094 1,056,832 3,172,926 490,000 1,626,094 1,016,202 3,132,296 490,000 1,626,094 1,064,453 3,180,547 8,287,365 8,069,406 7,442,712 Equity Share capital Share premium account Retained earnings Total equity 26 27 28 Total equity and liabilities - - MAY & BAKER NIGERIA PLC Unaudited Consolidated Statement Of Changes In Equity For the six months ended June 2013 Equity attributable to equity holders of the Group Share Capital Balance at 1 January 2013 N'000 490,000 Share Premium Account N'000 1,626,094 (Loss)/Profit for the period - - Other comprehensive income for the period - - Retained Earnings N'000 1,021,408 35,424 - Total N'000 3,137,502 35,424 - -
  4. 4. Total comprehensive income for the period Issue of share capital Dividends 490,000 - - Balance at June 2012 1,626,094 - 1,056,832 - 490,000 - 3,172,926 - 1,626,094 1,056,832 3,172,926 MAY & BAKER NIGERIA PLC Unaudited Consolidated Statement Of Cash flow. For the six months ended 30 June 2012 Note Cash from operating activities Cash received from customers Cash paid to suppliers and employees Value added tax Taxes paid June 2013 N'000 2,462,643 (2,640,054) (9,958) (18,889) December 2012 N'000 June 2012 N'000 5,080,229 2,147,566 (5,240,426) (2,678,488) 0 (133,485) (84,964) Net cash used in operating activities (206,258) (293,682) (615,886) Cash flows from Investing activities Proceed from contract manufacturing Proceeds from sale of fixed assets Interest received Purchase of fixed assets Net cash used in investing activities 1,923 417 1,231 (120,921) (117,350) 5,703 2,247 (417,828) (409,878) 0 (387) (98,000) 292,503 (188,984) (121,606) 3,659,281 (2,195,505) (396,710) Financing activities Dividends paid Unclaimed dividends returned Term loans obtained Loans repaid Interest paid Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year (18,474) (342,082) (740,534) 969,066 (120,921) (120,230) (50,405) 136 1,271,428 (270,584) (218,860) 731,715 265,506 (4,666) (1,006,040) (1,006,040)
  5. 5. Cash and cash equivalents at 30 June 2013 (1,082,616) Reconciliation of cash and bank balances to cash and cash equivalents Cash and bank balance Bank overdrafts and commercial papers (740,534) (1,010,706) 115,349 (1,197,965) (1,082,616) 237,418 79,014 (977,952) (1,089,720) (740,534) 1,010,706 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 1.1 Description of business MAY & BAKER NIGERIA PLC is involved in the manufacture, sale and distribution of human pharmaceuticals, human vaccines and consumer products. 1.2 Composition of Financial Statement This financial statement comprise the entity's statement of financial position as at 30 June 2013 and the notes to the account as at that date with comparative figures as at 30 June 2012 and December 2012 1.3 Accounting convention The financial statements have been prepared using the historical cost convention, as modified by the revaluation of certain items, as stated in the accounting policies . 2 ADOPTION OF NEW AND REVISED STANDARDS 2.1 Accounting standards and interpretations issued but not yet effective Below are the new International Financial Reporting Standards and International Accounting Standards which have not been early adopted by the company and that might affect future reporting periods, on the assumption that the company will continue with its current activities. IFRS 13 FAIR VALUE MEASUREMENT IFRS 13 applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), IFRS 13 is applicable to annual reporting periods beginning on or after 1 January 2013. An entity may apply IFRS 13 to an earlier accounting period, but if doing so it must disclose the fact. IFRS 9 FINANCIAL INSTRUMENTS IFRS 9 introduces new requirements for classifying and measuring financial assets. At the IASB's July 2011 meeting, the IASB decided to postpone the mandatory application of IFRS 9 to annual periods beginning on or after 1 January 2013 with early application still permitted
  6. 6. IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES The objective of IFRS 12 is to require the disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities the effects of those interests on its financial position, financial performance and cash flows. IFRS 12 is applicable to annual reporting periods beginning on or after 1 January 2013. Early application is permitted. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 2 ADOPTION OF NEW AND REVISED STANDARDS (cont) IAS 19: EMPLOYEE BENEFITS This standard, amended in June 2011 will affect Post-Employment Benefits and Termination Benefits projects and will enhance disclosures about defined benefit plans. It is efective January, 2013 but earlier application is permitted with disclosures. 2.2 Standards and Interpretations effective in the current year The following new and revised Standards and interpretations have been adopted in the current year and have primarily affected the disclosure in these financial statements IAS 1- Presentation of Financial Statements: IAS 1 (2007) has introduced terminology changes (including revised titles for the Presentation of Financial Statements) and changes in the format and content of the financial statements. IAS 10- Events after the Reporting Period The amendment results from the issue of IFRIC 17 - Distribution of Non-cash Assets to owners. IAS 17 - Leases The amendment relates to the classification of leases of Land and buildings IAS 12: Income Taxes IAS 12 has introduced a rebuttable presumption that an investment property will be recovered in its entirely through sale 2.3 Early adoption of standards and interpretations The Company has not early adopted any standard. 3. Significant accounting policies 3.1 Statement of compliance
  7. 7. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). 3.2 The principal accounting policies adopted are set out below. Foreign currency translation Foreign currency transactions are booked in the functional currency of the Company at the exchange rate ruling on the date of transaction. Foreign currency monetary assets and liabilities are retranslated into the functional currency at rates of exchange ruling at the balance sheet date. Exchange differences are included in the income statement. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3. Significant accounting policies Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiary acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Business combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. Where a business combination is achieved in stages, the Group s previously-held interests in the acquired entity are re-measured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
  8. 8. The acquiree s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3(2008) are recognised at their fair value at the acquisition date, except that: MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.3 Revenue from sale of goods Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: i. the Company has transferred to the buyer the significant risks and rewards of ownership of the goods ii. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; iii. the amount of revenue can be measured reliably; iv. it is probable that the economic benefits associated with the transaction will flow to the Company; and v. the costs incurred or to be incurred in respect of the transaction can be measured reliably. vi. the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; 3.4 Expenditure Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. Manufacturing start-up costs between validation and the achievement of normal production are expensed as incurred. Advertising and promotion expenditure is charged to profit or loss as incurred. Shipment costs on inter-company transfers are charged to cost of sales; distribution costs on sales to customers are included in distributionexpenditure. Restructuring costs are recognised and provided for, where appropriate, in respect of the direct expenditure of a business reorganisation where the plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken. 3.5 Intangible assets Intangible assets acquired seperately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
  9. 9. Internally generated intangible assets - research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.5 Intangible Assets ( continued) the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. 3.6 Legal and other dispute Provision is made for the anticipated settlement costs of legal or other disputes against the Company where an outflow of resources is considered probable and a reliable estimate can be made of the likely outcome. In addition, provision is made for legal or other expenses arising from claims received or other disputes. In respect of product liability claims related to certain products, there is sufficient history of claims made and settlements to enable management to make a reliable estimate of the provision required to cover un-asserted claims. The Company may become involved in legal proceedings, in respect of which it is not possible to make a reliable estimate of the expected financial effect, if any, that could result from ultimate resolution of the proceedings. In these cases, appropriate disclosure about such cases would be included but no provision would be made. Costs associated with claims made by the Company against third parties
  10. 10. are charged to the income statement as they are incurred. 3.7 Pensions and other post-employment benefits Defined Contribution scheme The company operates a defined contribution based retirement benefit scheme for its staff, in accordance with the Pension Reform Act of 2004 with employee and employer contributing 6% and 10% respectively. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Defined Benefit Scheme In addition to the pension scheme, the company operates a gratuity scheme payable to employees that have served a minimum of five years of service.The benefits are calculated based on employees salary for each qualifying year. The company discharges its obligation to employees once fund is remitted to the fund managers MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.8 Property plant and equipment Property, plant and equipment is carried at the cost of acquisition or construction depreciated over its estimated useful life. An impairment loss is recognized in addition if an asset s recoverable amount falls below its carrying amount. The cost of acquisition comprises the acquisition price plus ancillary and subsequent acquisition costs, less any reduction received on the acquisition price. The cost of self-constructed property, plant and equipment comprises the direct cost of materials, direct manufacturing expenses, and appropriate allocations of material and manufacturing overheads. Where an obligation exists to dismantle or remove an asset or restore a site to its former condition at the end of its useful life, the present value of the related future payments is capitalized along with the cost of acquisition or construction upon completion and a corresponding liability is recognized. If the construction phase of property, plant or equipment extends over a long period, the interest incurred on borrowed capital up to the date of completion is capitalized as part of the cost of acquisition or construction in accordance with IAS 23 (Borrowing Costs). Expenses for the repair of property, plant and equipment, such as on-going maintenance costs, are normally recognized in income. The cost of acquisition or construction is capitalized if a repair (such as a complete overhaul of technical equipment) will result in future economic benefits. Property, plant and equipment is depreciated by the straight-line method, except where depreciation based on actual depletion is more appropriate. Significant asset components with different useful lives are accounted for and depreciated
  11. 11. separately. The following depreciation periods, based on the estimated useful lives of the respective assets, are applied throughout the Company: Useful lives Land and Buildings 33.33 years Plant, Machinery and Fittings 10-20 years Office equipment and furniture 3-10 years Trucks & Motor vehicles 3-8 years 3.9 Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases Company as lessor Amounts due from lessees under finance leases are recognised as receivables at the amount of the company's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the company's net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.9 Leases (continued) Company as lessee Assets held under finance leases are initially recognised as assets of the company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the company's general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they
  12. 12. consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 3.10 Impairment of non-current assets At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. The recoverable amount is the higher of fair value less costs to sell and value in use. 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 which the estimates of future cash flows have not been adjusted. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.10 Impairment of non-current assets (continued) If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a
  13. 13. relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 3.11 Financial Assets The company's financial assets include: Cash and cash equivalents Fixed deposits Other investments Cash and cash equivalents Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and highly liquid investments with maturities of three months or less when acquired. They are readily convertible into known amounts of cash and are held at amortised cost. Fixed deposits Fixed deposits, comprising principally funds held with banks and other financial institutions, are initially measured at fair value, plus direct transaction costs, and are subsequently remeasured to amortised cost using the effective interest rate method at each reporting date. Changes in carrying value are recognised in profit or loss. Other investments Held to maturity Investments with fixed or determinable payment and fixed maturity that the management has the intent and ability to hold to maturity are classified as held to maturity and are initially measured at cost and at subsequent reporting dates measured at amortized cost using the effective interest method less any impairment. Available for sale Dividends on available for sale equity instruments are recognised in profit or loss when the company's right to receive the dividends is established. Available for sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of each reporting period. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including [trade and other receivables, bank balances and cash, and others [describe]) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013
  14. 14. 3.11 Financial assets (continued) Held for trading Investments that are acquired principally for the purpose of generating a profit from short term fluctuations in price are classified as trading investments and included in current assets. These are initially measured at cost and at subsequent reporting dates, these investments are remeasured at fair value. Realized and unrealized gains and losses arising from changes in fair value are included in net profit or loss for the period in which they arise. 3.12 Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For available for sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, objective evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or breach of contract, such as a default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or the disappearance of an active market for that financial asset because of financial difficulties. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other
  15. 15. comprehensive income are reclassified to profit or loss in the period. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. MAY & BAKER NIGERIA PLC Notes to the Consolidated financial statem ents For the six months ended June 2013 3.12 Impairment of financial assets (continued) In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. 3.13 Derecognition of financial assets The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. On derecognition of a financial asset other than in its entirety (e.g. when the company retains an option to repurchase part of a transferred asset), the company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. 3.14 Financial liabilities
  16. 16. Financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. 3.15 Trade payables Trade payables are held at amortised cost which equates to nominal value. Long-term payables are discounted where the effect is material. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.16 Borrowings All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing. 3.17 Other receivables and liabilities Accrued items and other non-financial assets and liabilities are carried at amortized cost. They are amortized to income by the straight-line method or according to performance of the underlying transaction. In accordance with IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance), grants and subsidies from third parties that serve to promote investment are reflected in the statement of financial position under other liabilities and amortized to income over the useful lives of the respective assets. 3.18 Government grants Government grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Government grants relating to property, plant and equipment are treated as deferred revenue and released to profit or loss over the expected useful lives of the assets concerned. 3.19 Derecognition of financial liabilities The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the
  17. 17. consideration paid and payable is recognised in profit or loss 3.20 Inventories In accordance with IAS 2 (Inventories), inventories encompass assets held for sale in the ordinary course of business (finished goods and goods purchased for resale), in the process of production for such sale (work in process) or in the form of materials or supplies to be consumed in the production process or in the rendering of services (raw materials and supplies). Inventories are stated at the lower of cost and net realizable value. The net realizable value is the achievable sale proceeds under normal business conditions less estimated cost to complete and selling expenses. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 3.21 Trade receivables Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the income statement. Subsequent recoveries of amounts previously provided for are credited to the income statement. Long-term receivables are discounted where the effect is material. 3.22 Taxation Current tax is provided at the amounts expected to be paid applying tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is provided using rates of tax that have been enacted or substantively enacted by the balance sheet date. Deferred tax liabilities and assets are not discounted. 3.23 Discounting Where the time effect of money is material, balances are discounted to current values using appropriate rates of interest. The unwinding of the discounts is recorded in finance income and finance costs. 3.24 Noncurrent asset held for sale Non-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying value is to be recovered principally through a sale transaction rather than through continuing use. 4 Critical accounting judgements and key sources of estimation uncertainty
  18. 18. In the application of the Company s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. These estimates would include allowances for doubtful debts, product re-calls, gratuity payable and bad stocks. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 June 2013 5 Revenue An analysis of the Group s revenue is as follows: December 2012 June 2012 N'000 N'000 Sale of Goods 2,864,363 5,668,449 2,426,847 Total revenue 6 N'000 2,864,363 5,668,449 2,426,847 Segment information Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on both the types of goods or services delivered or provided and the market where the goods or services are delivered or provided. The Group's reportable segments under IFRS 8 are therefore as follows. N'000 N'000 N'000 2,085,486 32,616 746,261 2,864,363 4,589,847 59,651 1,018,951 5,668,449 1,884,614 31,871 510,362 2,426,847 845,835 1,740 89,017 1,915,490 16,155 138,048 912,437 12,766 99,330 936,592 Parmaceuticals Beverage FoodS 2,069,693 1,024,533 1,923 11,960 4,327 Segment Profit Parmaceuticals Beverage Foods Other operating income
  19. 19. Investment Income Other gains and losses Selling, marketing and distribution costs Central administration costs and directors' salaries Finance costs (Loss)/Profit before tax 1,231 417 (327,671) (282,544) (277,854) 2,447 278,759 (1,260,231) (588,476) (469,630) 52,094 (513,918) (255,664) (218,860) 44,522 40,418 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 6 Segment Information (continued) Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year. The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 3. Segment profit represents the gross profit earned by each segment without allocation of central administration costs and directors' salaries, selling, marketing and distribution expenses, other operating income, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance. Geographical information The Group operates in Lagos and West, East and North principal geographical areas The Group's revenue from continuing operations from external customers by location of operations. Revenue from External Customers N'000 East 847,851 West 458,298 Lagos 1,019,713 North 538,501 2,864,363 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 JUNE 2013 DECEMBER 2012 JUNE 2012
  20. 20. 7 Other operating income Profit on contract manufacturing Sale of scraps N'000 1,923 1,923 N'000 5,116 6,844 11,960 N'000 4,327 4,327 540 691 200 2,247 - 1,231 2,447 - N'000 N'000 - 8 Investment income Rent received Interest received The interest income is earned on short term investments( fixed deposits) with various commercial banks in Nigeria. The investments are not designated at fair value through profit or loss, rather they are carried at amortised cost. 9 Other gains and losses Profit on disposal of property, plant and equipment Gain on fair Value Foreing exchange gain N'000 417 275,616 3,143 417 10 Finance cost - 11 Profit for the year is attributed to : Owners of the bussiness N'000 N'000 396,844 72,786 469,630 218,860 N'000 N'000 35,424 75,943 27,484 35,424 Interest on bank overdrafts and loans Interest on loans from related party N'000 278,759 75,943 27,484 121,606 156,248 277,854 N'000 All profit is attributable to owners of the parent as all the subsidiaries are wholly owned MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 11b Profit for the year is attributable to: Profit for the year from continuing operations has been arrived at after charging (crediting): June 2013 N'000 December 2012 N'000 218,860
  21. 21. Depreciation of Property, plant and equipment Cost of inventories recognised as expense Gain/(loss) on disposal of property, plant and equipment (see note 9) Auditor's remuneration Staff costs (see note 13) Director's remuneration and fees Fees Salaries and allowance Interest on loans and overdrafts (see note 10) 12 Staff costs The aggregate employee remuneration is as follows: Salaries and wages Staff pension and gratuity 12b 219,414 265,354 421,483 3,598,756 1,200 26,695 277,854 1,200 70,658 469,630 221,394 43,960 265,354 488,369 73,048 561,417 Employees remunerated at higher rates The number of employees excluding Directors in respect of emoluments excluding provident fund contributions and allowances N Number of employees 250,001 - 300,000 35 300,001 - 350,000 67 350,001 - 400,000 20 400,001 - 450,000 23 450,001 - 500,000 108 500,001 - 550,000 550,001 - 600,000 600,001 - 650,000 52 650,001 - 700,000 700,000 and above 63 368 650,001 - 700,000 700,000 and above 63 368 12,600 561,417 34 69 22 22 108 47 57 359 57 359 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 12 Staff Cost (continued) The average number of persons employed in the financial year are as follows Managerial June 2013 Number 48 December 2012 Number 17
  22. 22. Senior staff Junior staff 190 118 356 N'000 15,628 1,042 16,670 13 Taxation Income tax recognised in profit or loss Income tax Education tax Capital gains tax Deferred tax recognised in current year 193 149 359 N'000 23,552 11,813 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 13 Taxation (continued) The charge for taxation in these financial statements was based on the provisions of the Companies Income Tax Act, CAP C21, LFN 2004 as amended and the Education Tax Act, CAPE 4, LFN 2004 June 2013 N'000 December 2012 N'000 Paid during the year At Period End 37,904 16,670 54,574 (27,040) 27,534 135,900 34,680 170,580 (132,676) 37,904 Deferred Taxation At 1 January Charge for the year At Period End 126,203 126,203 192,989 (66,786) 126,203 Current tax liabilities At 1 January Charge for the year Deferred tax liabilty The following are the major deferred tax asset/liabilities recognised by the company and movements thereon. Opening balance N'000 1-Jan-13 Property, plant & equipment 126,203 Recognised in profit or loss N'000 Acquisitions or disposals - - N'000 Closing balance N'000 126,203 (66,786) (31,421)
  23. 23. Finance leases Intangible assets Deferred revenue Provisions Doubtful debts 126,203 - - 126,203 126,203 - - 126,203 30-Jun-13 Property, plant & equipment Finance leases Intangible assets Deferred revenue Provisions Doubtful debts MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 13 Taxation (continued) The following is the analysis of deferred tax assets/(liabilities) presented in the consolidated statement of financial position: Deferred tax liability June 2013 N'000 126,203 December 2012 N'000 126,203 Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. 14 Earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows. Earnings Earnings for the purpose of basic earnings per share being net June 2013 N'000 35,424 December 2012 N'000 75,943 profit attributable to equity holders of the Company Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share 980,000 980,000
  24. 24. Earnings per 50k share (kobo) - basic 3.61 980,000 Earnings per 50k share (kobo) - diluted 980,000 3.61 Weighted average number of ordinary shares for the purpose of dilutive earnings per share 27.52 7.75 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the twelve months ended Decem ber 2012 15 Intangible assets June 2013 N'000 Trademark 67,296 December 2012 N'000 67,296 June 2012 N'000 67,296 The trademark represents cost of acquisition of trademark of Thalazole, Sulphatriad and Thiazamide products from May and Baker limited, England by the company. No impairment loss has been recognised with respect to the the trade mark as the recoverable amount from the product exceeds the carrying value. There is increasing revenue generation from the products. The trademark is considered to have an indefinite useful life given the strength and durability of the products and the level of marketing support. The products are in a relatively stable and profitable market sector and their size,diversification and market share indicate that the risk of market-related factors causing a reduction in the life of the trademark is considered to be relatively low. The Company is not aware of any material legal, regulatory, contractual, competitive, economic or other factor which could limit their useful lives. 16 Property, plant and equipment Leasehold land and buildings Accumulated depreciation and impairment Office equipment and furniture Trucks & Motor vehicles Capital work in progress N'000 Cost At 1 January 2013 Additions Disposals Reclassification At 31 June 2013 Plant, machinery and fittings N'000 N'000 N'000 N'000 2,101,847 5,687 2,107,534 3,122,534 77,786 (12,695) 39,114 3,226,739 262,746 5,404 448,820 29,098 (8,750) 268,150 469,168 Non Current Assets held for Sale N'000 199,167 2,946 44,293 (39,114) 162,999 44,293 Total N'000 6,179,407 120,921 (21,445) 6,278,883
  25. 25. At 1 January 2013 Charge for the year On disposals Impairment loss At 30 June 2013 Carrying amount At 30 June 2013 140,147 2,056 142,203 1,965,331 897,112 198,875 (8,447) - 178,045 5,432 (2,250) - 266,691 26,000 (2,250) - - - 1,087,540 181,227 290,441 - - 2,139,199 86,923 178,727 162,999 44,293 1,481,995 232,363 (12,947) 1,701,411 4,577,472 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 16 Property, plant and equipment Impairment loss recognized during the year Nil Assets pledged as security Nil The following useful lives were used in the computation of depreciation charge during the year Land and buildings Plant, machinery and fittings Office equipment and furniture Trucks & Motor vehicles June 2013 33.33 years 10-20 years 3-10 years 3-8 years Range December 2012 33.33 years 10-20 years 3-10 years 3-8 years MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 17 Deposits for investments Carrying amount June 2013 N'000 245,325 December 2012 N'000 245,325 June 2012 N'000 245,325
  26. 26. The amount above represents payments for the acquisition of interest in Bio vaccines Nigeria Limited, a joint venture arrangement with the Federal Government of Nigeria for the production of vaccines in Nigeria. The shares of Bio-vaccines Nigeria Limited are yet to be issued. The deposit is stated at cost. The directors are of the opinion that the carrying value of the investment is not lower than the recoverable amount. Impairm ent 18 Inventories Raw materials Work-in-progress Finished goods Spare parts Goods in transit 19 June 2013 N'000 523,493 257,453 530,708 141,282 - December 2012 N'000 407,644 259,810 346,297 217,853 82,253 1,452,936 Carrying amounts 1,313,857 June 2013 N'000 1,581,347 (322,723) 1,258,624 December 2012 N'000 1,746,129 (492,530) 1,253,599 June 2012 N'000 351,661 125,277 459,527 154,534 1,090,999 Trade and other receivables Trade receivables Less: allowance for doubtful debts Other receivables Staff loans Staff advance Other debtor Advance payment to suppliers Due from related companies(see note 30) Less: allowance for doubtful debt Total trade and other receivables June 2012 N'000 1,027,149 (180,556) 846,593 7,787 34,353 223,188 155,966 421,294 (33,445) 387,849 9,204 30,205 164,704 12,027 40,087 52,911 204,113 (33,445) 170,668 141,357 246,382 246,382 1,646,473 1,424,267 1,092,975 Trade receivables Trade and other receivables disclosed above are carried at cost less allowance for doubtful debts. The average credit period taken on sales of goods is between 30 - 45 days. No interest is charged on the overdue receivables. The company has recognises of 100% against all receivables over 360 days because historical experience has been that receivables that are past due beyond 360 days are not likely recoverable. Allowances against doubtful debts are recognised against trade receivables outstanding for more than 360 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty s
  27. 27. amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty s current financial position. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 19 Trade and other receivables (continued) Before accepting any new customer, the company uses an internal credit scoring system to assess the potential customer s credit quality and defines credit limits by customer. The internal credit scoring system are constantly reviewed. Trade receivables disclosed above include amounts (see below for aged analysis) which are past due at the reporting date but against which the company has not recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable. The company does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the company to the counterparty. The average age of these receivables is 90 days. Ageing of past due but not impaired receivables 0-30 days 31-60 days 61-90 days 91-360 days Total Movement in the allowance for doubtful debts Balance at the beginning of the period Impairment losses recognised Amounts written off during the year as uncollectible Amounts recovered during the year Impairment losses reversed Foreign exchange translation gains and losses Balance at the end of the period June 2013 N'000 421,206 233,456 105,963 497,999 1,258,624 December 2012 N'000 738,559 267,423 150,193 97,424 1,253,599 June 2012 N'000 492,530 December 2012 N'000 180,556 311,974 (169,807) 322,723 492,530 In determining the recoverability of a trade receivable the company considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited
  28. 28. due to the customer base being large and unrelated. Included in the allowance for doubtful debts are individually impaired trade receivables with a balance of NIL due from companies which have been placed in liquidation. The impairment recognised represents the difference between the carrying amount of these trade receivable and the present value of the expected liquidation proceeds. The company does not hold any collateral over these balances. Ageing of impaired trade receivables June 2012 N'000 60-90 days 90-120 days 120+ days - December 2011 N'000 - - - - - Total - - The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value. MAY & BAKER NIGERIA PLC Notes to the unaudited Consolidated financial statem ents For the six months ended June 2013 June 20 Cash and bank balances Cash in hand Cash at bank Short term deposits 2013 N'000 459 46,138 68,752 115,349 December 2012 N'000 5,541 142,369 67,175 215,085 June 2012 N'000 4,795 6,607 67,612 79,014 The short term deposits above is in respect of the unclaimed dividend balance that has been invested in a demand deposit account. 21 Other assets Prepayments Witholding tax recoverable Deposit for letter of credit June 2013 N'000 65,501 37,421 79,592 182,514 December 2012 N'000 9,859 37,425 33,109 80,393 June 2012 N'000 66,396 37,425 120,475 224,296
  29. 29. Deposit for letter of credit are the balances that are yet to be remitted to suppliers for imported products. 22 Trade and other payables June Trade creditors Other payables: Accruals Customer advance payments Social security Other charges Other liabilities Customer deposits Due to related companies(see note 30) Gratuity ( see note 22a) June December 2012 N'000 329,880 2013 N'000 452,705 2012 N'000 238,851 71,409 13,884 45,639 39,586 42,339 55,207 222,754 6,705 63,487 62,789 42,315 139,749 990,504 87,949 6,705 27,161 43,595 50,723 454,984 597,944 Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 40 days. For most suppliers no interest is charged on the trade payables from the date of the invoice. The company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. The directors consider that the carrying amount of trade payables approximates to their fair value. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 Note 22 contInue 22a Provision for staff gratuity At beginning of the period for the year Charge Payment during the year Interest cost June 2013 137,317 9,769 (7,337) 139,749 137,317 9,769 (7,337) December 2012 109,704 30,710 (14,067) 101,011 (5,488) 139,749 10,970 137,317 95,523
  30. 30. June 2013 Dividend 23 s Balance at the beginning Unclaimed returned during the year Paid during the year Balance at end N'000 100,745 December 2012 N'000 100,618 127 N'000 100,618 136 (50,405) 100,745 50,349 December 2012 N'000 864,684 113,268 36,806 569,577 220,000 June 2012 N'000 1,089,720 1,000,000 595,000 220,000 95,360 271,428 (387) 100,358 June 2012 The balance at year end represents the amount that are yet to be received by shareholders. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 24 Borrowings Borrowing at amortised cost Bank overdrafts Commercial papers Term Loan - FCMB CBN Intervention fund - Term loan CBN Intervention fund - Overdraft Term loan- Access bank Term loan- Bank of industry Term loan- Ecobank Term loan- First Securities Discount House Ltd Term loan- Gtbank Plc TY Holdings Total borrowings June 2013 N'000 1,157,187 40,778 32,389 507,500 220,000 8,333 1,796,907 3,763,094 58,333 1,796,907 3,659,575 3,271,508 Analysis of loan balance to current and non-current portion. Bank overdraft Commercial papers and Bankers acceptance Term Loan - FCMB CBN intervention fund- Term loan CBN intervention fund- Overdraft Term loan- Access bank Term loan- Bank of industry Term loan- Ecobank 1,157,187 40,778 220,000 - 864,684 113,268 13,093 79,412 220,000 1,089,720 100,000 35,000 220,000 95,360 -
  31. 31. Term Loan - FSDH Term loan- Gtbank Plc TY Holdings loan Current Portion CBN intervention fund- Term loan Term loan- Bank of industry Term loan- Access bank Term loan- Ecobank Term Loan - FCMB Term Loan - FSDH TY Holdings loan 8,333 1,426,298 507,500 32,389 1,796,907 2,336,796 58,333 271,183 1,619,973 490,165 - 23,713 1,525,724 2,039,602 Non-current Portion All the borrowings were obtained in naira, the functional currency of the Company The principal features of the Company's borrowings are described below: (i) The Bank Overdrafts and Commercial Papers are secured by a negative pledge on the Company's assets and their interest rate range from 16% and 19%. Bank overdrafts are repayable on demand. (ii) The company has three principal bank loans: MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 24 Borrowings (continued) (b) Bank of Industry granted the company a medium term facility of N594.73 million on 18 May 2007 with initial drawdown on 11 January 2009. The loan facility is for 5 year period (inclusive of one year moratorium and subsequently extended by 9 months) to be disbursed towards the acquisition of ultra modern pharmaceutical equipment at interest rate of 10% per annum payable monthly in arrears. The loan is repayable in 34 equal and consecutive instalments commencing from 31 January 2010 and is secured on bank guarantee from Guaranty Trust Bank Plc. (c) First City Monument Bank Plc: Obtained in March 2012 and repayable in 36 equal monthly instalment . (d) TY Holdings Facility First: The sum of N2 Billion was obtained in 2012 to finance existing loans and working capital facilities.The facility was obtained from a related party.Interest is 11% per annum. The loan and accruing interest is to 121,428 1,661,508 560,000 900,000 150,000 1,610,000
  32. 32. facilities.The facility was obtained from a related party.Interest is 11% per annum. The loan and accruing interest is to repaid over 36months period commencing 12 months after the date of disburement of the loan. 25 Other Liabilities December 2012 N'000 June 2012 N'000 106,746 101,950 101,011 89,041 106,746 Witholding tax payable Provision for staff gratuity June 2013 N'000 202,961 89,041 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 26 Share capital Authorised At Beginning Increase in authorised share capital At end 2,000,000 ordinary shares at 50 kobo each Issued and fully paid At beginning Issued during the year At 30 June 2013 Authorised, Issued and fully paid: 980,000,000 ordinary shares of 50k each 27 Share premium account Balance at 1 beginning Expenses of issue of equity shares June 2013 N'000 December 2012 N'000 June 2012 N'000 1,000,000 0 1,000,000 0 1,000,000 0 1,000,000 1,000,000 1,000,000 490,000 490,000 490,000 490,000 490,000 490,000 490,000 490,000 490,000 June 2013 N'000 1,626,094 - December 2012 N'000 1,626,094 - June 2012 N'000 1,626,094
  33. 33. 1,626,094 Bonus issue expense Balance at end 1,626,094 MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 28 Retained earnings Balance at the beginning Retained (Loss)/profit for the year Dividend paid Bonus issue Balance at end The IFRS adjustments are described below: Loans measured at amortised cost instead of nominal value Prior year IFRS adjustment 29 June 2013 N'000 1,021,408 35,424 - December 2012 N'000 1,037,126 82,282 (98,000) 1,056,832 1,021,408 N'000 18,803 18,803 N'000 18,803 18,803 Related party transactions The Group is related to the following entities: Related parties Osworth Nigeria Limited Tydipacks Nigeria Limited Servisure Nigeria Limited Reasons Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary Biovaccines Nigeria Limited is yet to commence commercial operations. Transactions on its behalf are mainly in respect of expenses incurred in maintaining its assets and personnel at its old site at Harvey Road, Yaba, Lagos. May & Baker Nigeria Plc therefore maintains an inter-company account with it for such transactions, including disbursements also made by Biovaccines Nigeria Limited on behalf of May & Baker Nigeria Plc. At the balance sheet date, the amount outstanding and due to Biovaccines Nigeria Limited was N42.3 million. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 1,626,094
  34. 34. 29 Related party transactions Amounts owed by related Amounts owed to related parties June Osworth Nigeria Limited Biovaccines Nigeria Limited Others Tydipacks Nigeria Limited 2013 N'000 136,275 16,691 152,966 parties December June 2012 N'000 123,047.0 12,845 135,892 2012 N'000 126,045 15,312 141,357 June 2013 N'000 42,315 42,315 December June 2012 N'000 45,041 45,041 2012 N'000 50,723 50,723 Transactions in which Osworth Nigeria Limited was involved have been consolidated with the group. The balance due to Bio-vaccines Limited For the period ended June 2013 stood at N42,315 million (December 2012: 45,041 million) Purchases were made at market price discounted to reflect the quantity of goods purchased and the relationships between the parties. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties. 29 Related party transactions Remuneration of key management personnel The remuneration of the directors, who are the key management personnel of the Company, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. Director's remuneration Director's fees Salaries and allowances MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 30 Financial Instruments (continued) Significant accounting policies June 2013 N'000 1,200 26,694 27,894 December 2012 N'000 1,200 70,658 71,858
  35. 35. Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and the bases for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in note 3. Categories of financial instruments Financial assets Cash and bank balances Trade and other receivables June 2013 N'000 115,349 1,643,473 1,758,822 December 2012 N'000 237,418 1,424,267 1,661,685 Financial risk management objectives The company s Corporate Treasury function provides services to the business, co-ordinates foreign exchage transactions, monitors and manages the financial risks relating to the operations of the company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk ), credit risk and liquidity risk Market risk The Company's exposure to variations in foreign exchange rate and interest rates are minimal and the Company is not expected to be exposed to these risks at a higher than minimal level. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 30 Financial Instruments Capital risk management The company manages its capital to ensure that it will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of its capital structure The capital structure of the company consists of debt, which includes the borrowings disclosed in note 24, cash and cash equivalents and equity attributable to owners of the Company, comprising issued capital, reserves and retained earnings as disclosed in notes 26 to 28. The company is not subject to any externally imposed capital requirements. The company s risk management committee reviews the capital structure on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital. The company has a target gearing ratio of 50 per cent to 60 per cent determined as the proportion of net debt to equity. The Directors are June 2013 N'000 79,014 1,092,975 1,171,989
  36. 36. target gearing ratio of 50 per cent to 60 per cent determined as the proportion of net debt to equity. The Directors are giving serious consideration to more equity contribution in the nearest future. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 30 Financial Instruments (continued) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The company transacts with entities that have good credit standing and the company uses other publicly available financial information and its own trading records to rate its major customers. The company s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. Trade receivables consist of a large number of customers spread across various geographical zones in Nigeria. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The company does not have any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The company defines counterparties as having similar characteristics if they are related entities. The carrying amount of financial assets recorded in the financial statements, represents the company s maximum exposure to credit risk as no collateral or other credit enhancements are held. The company does not hold any collateral or other credit enhancements to cover its credit risk. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company s short-, medium- and long-term
  37. 37. appropriate liquidity risk management framework for the management of the company s short-, medium- and long-term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate working capital reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 31 Substantial interest in shares List of shareholding 5% and more: June 2013 Number Lt- Gen T.Y Danjuma (Rtd)( TY Holdings) Joseph Odumodu David Dankaro % 238,928,169 57,742,156 56,023,695 24.38 5.89 5.72 December 2012 Number 238,928,169 57,742,156 56,023,695 % 24.38 5.89 5.72 No individual shareholder other than as stated above held more than 5% of the issued share capital of the Company as at 30 June 2013 32 Guarantees and other Financial Commitments Charges on assets The bank loans and overdrafts are secured by a negative pledge on the Company's assets. Capital expenditure Capital expenditure authorised by the Dire tors but not contracted was nil ( June 2013: nil) The Directors are of the opinion that all known liabilities and commitments have been taken into account in the preparation of the financial statement. 33 Contingent liabilities There were no contingent liabilities resulting from litigations at 30 June 2013. (December 2012 - NIL) 34 Events after the reporting date The Directors are of the opinion that there were no significant events after the balance sheet date which would have had any material effect on the accounts which have not been adequately provided for or disclosed in the financial statement. 35 Strategy for preventing risk of materials and product obsolescense/ doubtful debts The Company holds a weekly production planning where sales and production forecasts are reviewed in order to adjust procurement ordering schedule so as to minimise the risk of expiring stocks. Also, potential debtors are critically evaluated ahead of approval of credit.
  38. 38. MAY & BAKER NIGERIA PLC Notes to the Unaudited Consolidated financial statem ents For the six months ended June 2013 36 Major suppliers The Company's suppliers are both local and foreign. Some of the Companies major suppliers include: Local Drugs & Healthcare Limited National Salt Company Dangote Flour Mills Plc Primal Nigeria Limited Chellarams Folur Mills of Nigeria Plc. Presco Plc. Foreign IPCA Laboratories Limited (india) Aurobindo Pharm Limited (india Surya Engineers (India) Caffry Sanders International Limited (UK) Belco Pharma ( India) The Company is not related to any of its suppliers.

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