Seven‐Up Bottling Company Plc Nigeria FY 2013


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Seven‐Up Bottling Company Plc Nigeria FY 2013

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Seven‐Up Bottling Company Plc Nigeria FY 2013

  1. 1. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports
  2. 2. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Contents Page Directors and Other Corporate information 1 Results at a Glance 2 Directors’ Report 3 Statement of Directors’ Responsibilities 8 Independent Auditor's Report 9 Statement of Financial Position 10 Statement of Comprehensive Income 11 Statement of Changes in Equity 12 Statement of Cash Flows 13 Notes to the Financial Statements 14 Value Added Statement Five Year Financial Summary
  3. 3. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Directors and Other Corporate Information Board of Directors: Mr Faysal El‐Khalil (Lebanese) ‐Chairman Mr Sunil Sawhney (Indian) ‐Managing Director/ CEO Chief Emmanuel N. Nwokoro Alhaji Ahmadu Yaro Mr Femi Mokikan Mallam Mohammed Hayatu‐Deen O.O.N. Otunba (Dr) A. Ojora O.F.R., C.O.N. Alternate‐ Mrs Oluwatoyin Ojora Saraki Mr Ziad A. El‐Khalil (Lebanese) Chief Farid El‐khalil (Lebanese) Company Secretaries Equity Services Limited 162, Ikorodu road (2nd floor), Onipanu  Lagos Registered Office: 247, Moshood Abiola Way Ijora Lagos Registrars: Union Registrars Limited 2, Burma Road Apapa, Lagos Independent  Auditors: KPMG Professional Services KPMG Tower Bishop Aboyade Cole Street, Victoria Island, Lagos Members of the Audit Committee Evang. Peter Akinola Soares Mr Obarinde I. Obatosho Mr Kenneth N. Nwosu Mr Femi Mokikan Mr Ziad El‐Khalil Otunba (Dr.) A. Ojora, C.O.N, O.F.R Chairman/ Shareholder Representative Shareholders Representative Shareholders Representative Directors' Representative Directors' Representative Directors' Representative 1
  4. 4. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Results at a Glance In thousands of naira 2013 Revenue Profit before taxation Profit for the year Share capital Total equity 64,088,879 3,262,719 2,856,504 320,295                12,577,980 Data per 50k share‐ ( in naira per share  ) Basic earnings  Diluted earnings per share Declared dividend* Net assets Dividend per 50k share in respect of current  year  results only  Final dividend proposed** Stock Exchange Information Stock exchange quotation at 31 March in Naira per share Number of shares issued (‘000) Market capitalisation at 31 March (N: million) 2012 Increase % 59,864,385              7 2,558,644             28 1,678,471             70 320,295 ‐                 10,307,595 22 4.46 4.46 2.00 19.63 2.62 2.62 2.00 16.09 70 70 0 22 2.20 2.00 10 49.00 41.75 17                       640,590 26,744,633 0 17                      640,590                  31,388,910 * Declared dividend represents the final dividend proposed for the preceding year but declared during the current year. ** The directors recommend the payment  of N 1,409,298,798 (2012: N1,281,180,725)  representing N 2.20 (2012: N2)  per  share, on the issued share capital of 640,590,364 (2012: 640,590,364) ordinary shares of 50k each, subject to approval by the  shareholders at the Annual General Meeting.  2
  5. 5. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Directors’ Report For the year ended 31 March 2013 The directors present their annual report on the affairs of Seven Up Bottling Company  Plc ("the Company") , together with the  financial statements and independent auditor's report for the year ended 31 March 2013. 1 Legal Form The Company was incorporated as a private Limited liability Company on 25th June, 1959 under the name Seven‐Up Limited.   On 16th May 1960, the name was changed to Seven‐Up Bottling Company Limited and in 1978 it became a Public Company.   The name “Seven‐Up Bottling Company Plc” was adopted on 26th November 1991 in compliance with the provisions of the  Companies and Allied matters Act 1990.  Currently, the Company’s shares are quoted on the floor of the Nigerian Stock  Exchange. 2 Principal Activities The Company is mainly engaged in the bottling and marketing of a wide variety of soft drinks and Aquafina premium table  water. 3 Operating Results The following is a summary of the Company’s operating results: 2013 N'000 Revenue Results from operating activities Profit before taxation Profit for the year Total comprehensive income for the year Retained earnings, end of year                64,088,879                  5,526,734                  3,262,719                  2,856,504                  2,928,875                11,958,545 2012 N'000                 59,864,385                    4,802,379                    2,558,644                    1,678,471                    1,678,471                    9,688,160 4 Dividend The directors recommend the payment  of N 1,409,298,798 (2012: N1,281,180,725)  representing 220 kobo (2012: 200 kobo)   per share, on the issued share capital of 640,590,364 (2012: 640,590,364 ) ordinary shares of 50k each. If the proposed final  dividend of N 1,409,298,798 is approved by the shareholders, it will be subject to deduction of withholding tax at the  applicable rate at the time of payment.   5 Directors and their Interests (a) The directors who served during the year and their interests in the shares of the Company at the year end were as follows: Interest in the Ordinary Shares of the Company 2013 2012 Otunba (Dr.) A. Ojora O.F.R, C.O.N Chief Emmanuel N. Nwokoro Alhaji Ahmadu Yaro Mr. Femi Mokikan Mallam Mohammed Hayatu‐deen O.O.N Chief Farid EL‐Khalil Mr. Sunil Sawhney 2,252,635 1,464,843 110,795 26,700 Nil Nil Nil 2,252,635 1,464,843 417,613 21,400 Nil Nil Nil 3
  6. 6. Seven-Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Mr. Ziad M.EL-Khalil Mr. Faysal El-Khalil Alternate-Mrs Oluwatoyin Ojora Saraki Nil Nil Nil Nil Nil Nil (b) Except as disclosed in Note 26, none of the Directors has notified the Company of any declarable interest in contracts with which the Company was involved during the year ended 31st March, 2013 for the purpose of Section 277 of the Companies and Allied Matters Act, Cap C20, Laws of the Federation of Nigeria, 2004. (c) No share options were granted to the directors by Seven Up Bottling Company Plc. (d) In accordance with the company’s Articles of Association, the following Directors: Alhaji Ahmadu Yaro, Otunba (Dr.) Adekunle Ojora, OFR, CON and Mr. Femi Mokikan will retire by rotation and being eligible, they offer themselves for re-election. Pursuant to section 258(2) of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria (LFN) 2004, the Directors’ attendances at Board Meetings during the year under review will be made available at the Annual General Meeting. As regards Alhaji Amadu Yaro, and Otunba (Dr.)Adekunle Ojora who are 85 and 81 years of age respectively, special notices have been received in accordance with section 256 of the Companies and Allied Matters Act 2004 to propose motions for their re-election. 6 Board of Directors The Board comprises seven Non-Executive Directors including the chairman and two Executive Directors. In line with global best practices in corporate governance, the positions of the Chairman and Chief Executive Officer are separate and held by different Directors. The Board has overall responsibility for supervising the Company’s business, maintaining adequate and effective internal control system, adding value to shareholders and protecting the interests of other stakeholders. The Board of Directors held four meetings during the financial year ended 31 March, 2013 and a record of their attendance is as shown below; No. of meetings attended No. of meetings held Name of Directors Otunba (Dr.) A. Ojora O.F.R, C.O.N Chief Emmanuel N. Nwokoro Alhaji Ahmadu Yaro Mr. Femi Mokikan Mallam Mohammed Hayatu-deen O.O.N Chief Farid EL-Khalil Mr. Sunil Sawhney Mr. Ziad A.EL-Khalil Mr. Faysal El-Khalil 4 4 4 4 4 4 4 4 4 4 1 0 4 1 0 4 0 3 7 Analysis of Shareholdings Shareholding Between 1 1,001 5,001 10,001 50,001 100,001 500,001 1,000,001 1,000 5,000 10,000 50,000 100,000 500,000 1,000,000 and above Number of shareholders 18,882 11,387 1,582 1,036 142 142 20 17 33,208 % 56.9 34.2 4.8 3.1 0.4 0.4 0.1 0.1 100.0 Number of shares 9,456,342 23,654,372 11,167,606 20,208,252 9,828,047 30,053,238 14,833,194 521,389,312 640,590,363 % 1.5 3.7 1.7 3.2 1.5 4.7 2.3 81.4 100.0 4
  7. 7. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 8 Substantial Shareholders As contained in the Register of Members, AFFELKA S.A held 467,458,626 ordinary shares representing 72.97% of the issued  share capital of the Company as at 31st March, 2013.  No other shareholder held 5% or more of the share capital of the  Company as at that date.       9 Donations In the year under review, the Company made donations to charitable institutions, bodies and individuals amounting to  N13,323,860 (2012:N12,981,000). The beneficiaries were as follows:  2013 Lagos State Security Trust Fund Elekahia Community Dev. Project‐Borehole Installation Walk for Sight Orphanage and Old People's Home LAWAN Rumuokwurush, Elekahia and Rumuodumaya Communities Sponsorship of Lost in Lagos Event at Federal Palace Hotels GCE Forms for 10 Abete Community Children GAA Iman Community Students Palace of Eze Rebisi Ikeja Golf Club, Lagos Others 10,000,000                                ‐ 750,000 505,860 500,000 450,000 250,000 158,000 200,000 150,000 100,000 260,000 13,323,860 2012 10,000,000 935,000                                ‐ 425,000                                ‐                                 ‐                                 ‐ 147,000                                ‐                                ‐ 430,000 1,044,000 12,981,000 In compliance with Section 38(2) of the Companies and Allied Matters Act of Nigeria, the Company did not make any donation  or gift to any political party, political association or for any political purpose during the year. 10 Local Sourcing of Raw Materials On a continuing basis, the Company explores the use of local raw materials in its production processes and has successfully  introduced the use of locally produced items such as sugar, crown corks and chemicals in a number of its products. 11 Product Distribution The Company distributes products through key distributors and also maintains depots at various locations through which its  products are distributed nationwide. 12 Suppliers The Company procures all of its raw materials on a commercial basis from overseas and local suppliers.   13 Acquisition of Own Shares The Company did not acquire any of its own shares during the year under review. 14 Property, plant and equipment Information relating to changes in property, plant and equipment is given in note 12 to the financial statements.  In the  opinion of the Directors the fair value of the Company’s property, plant and equipment is not less than the value shown in the  financial statements. 15 Employment and Employees (a) Employment of physically challenged persons: Seven‐Up operates a non‐discriminatory policy on selection of applicants, including physically challenged persons, for  employment.  Besides, the promotion and career development of the physically challenged persons, to a large extent, follow  the same pattern as those of their able‐bodied counterparts. 5
  8. 8. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports (b)     Health and safety at work and welfare of employees: The Company operates its own clinics in all its plants supplemented by other health‐care centres it retains for the use of  employees and their families at Company’s expense.   The Company’s premises are certified by the Federal Fire Service to be prepared for emergency and the employees insured  against occupational hazards. The Company has accident prevention measures in place and safety regulations are strictly enforced. The Company continues to provide subsidized transport, housing and meals for its employees. ( c) Employee involvement and training: The Company recognizes that information exchange is crucial to promotion of team spirit, hence it holds joint meetings  regularly with its employees at both formal and informal levels.  As much as possible, employees are informed about the  Company’s plans and achievements while their views are sought on issues affecting them as employees. The Company considers its employees as its most valuable asset and their continuous development essential for achieving  enhanced efficiency and effectiveness .  Toward this end, regular staff training and management development programmes  are carried out internally or externally through consultants.  16 Management Committee The Management Committee is made up of three Directors and is chaired by the Managing Director/Chief Executive Officer.   The Committee is responsible for recommending strategic initiatives to the Board of Directors, monitoring and managing risks  facing the company, reviewing the terms and conditions of service of senior management and supervising the implementation  of the Board’s policies.  The committee met seventeen times during the year under consideration with all members present. No. of meetings held 17 17 17 Mr. Sunil Sawhney Mr. Ziad A.EL‐Khalil Mr. Femi Mokikan No. of meetings  attended 17 17 17 17 Audit Committee Pursuant to section 359(3) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the company has an Audit Committee  in place whose functions are as stated in section 359(6) of the Act.  The Committee consists of three Directors and three  shareholders’ representatives of the company including the chairman.   The Committee members met three times in the year  under review and their attendance record is as shown below:  No. of meetings held Evang. Peter Akinola Soares‐  Chairman Mr Obarinde I. Obatosho Mr Kenneth N. Nwosu Mr Femi Mokikan Mr Ziad El‐Khalil Otunba (Dr.) A. Ojora, C.O.N., O.F.R Shareholders’ Representative Shareholders’     '' Shareholders’     '' Directors’             '' Directors’             '' Directors’             '' No. of meetings  attended 3 3 3 3 3 3 3 3 3 0 3 0 18 Disclosures a) Borrowings and maturity dates The details of the borrowings and maturity dates are stated in Note 20 to the financial statements. b) Risk Management and Compliance System The directors are responsible for the total process of risk management as well as expressing their opinion on the effectiveness  of the process. The risk management framework is integrated into the day‐to‐day operations of the business and provides  guidelines and standards for administering the acceptance and on‐going management of key risks such as operational,  reputational, financial, market, technology and compliance risk. The directors are of the view that effective internal audit  function exists in the Company. 6
  9. 9. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports c) Related Party Transactions The Company has contractual relationship with related companies in the ordinary course of business. The details of the value  of the transactions and outstanding balances arising from related party transactions are stated in Notes 17,22 and 26 to the  financial statements. 19 Report on Social, Ethical, Safety, Health and Environmental Policies and Practices Corporate Social Responsibility The Company is committed to discharging its responsibilities to the host communities and the public at large.  Toward this  end, the Company established a Graduate Management and Manufacturing Trainee Scheme under which 40 university  graduates are selected annually and groomed for twelve months prior to being employed.  Thus, the graduate trainees are  given the opportunity of building a dream career for themselves.  The Company continued to award full scholarship (covering  tuition, boarding and travelling expenses each year) to one Nigerian to do an MBA programme at Harvard Business School in  the United States of America.   In addition, the Company ardently supports the Pepsi Football Academy where talented players  are made to realize their full potential. 20 Independent Auditors Messrs KPMG Professional Services served as the Independent Auditors during the year under review. The Independent  Auditor’s Report was signed by Patrick Adetola Adeyemi (Mr.), FCA, a Partner in the Firm. In accordance with Section 357(2) of the Companies and Allied Matters Act, Cap. C20, Laws of the Federation of Nigeria, 2004,  Messrs KPMG Professional Services have indicated their willingness to continue in office as Independent Auditors to the  Company. Dated the 25th day of July, 2013. BY ORDER OF THE BOARD Samuel O. Uboh Pp: Equity Services Limited Company Secretary FRC/2013/ICSAN/00000003001 162, Ikorodu road, Onipanu Lagos 7
  10. 10. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Statement of Directors’ Responsibili es For the year ended 31 March 2013 The directors accept responsibility for the preparation of the annual financial statements set out on pages 10 to 55 that give a true and fair view in accordance with the International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011. The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY: __________________________________ Sunil Sawhney (Managing Director/ CEO) 25 July, 2013 Faysal El‐Khalil (Chairman) 25 July, 2013 8
  11. 11. INDEPENDENT AUDITOR’S REPORT To the Members of Seven‐Up Bottling Company Plc Report on the Financial Statements We have audited the accompanying financial statements of Seven‐Up Bottling Company Plc (‘the Company’) which comprise the statement of financial position as at March 31, 2013 and the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on in the pages xx to yy.   Directors' Responsibility for the Financial Statements The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and in the manner required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  Auditor's Responsibility  Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.  Opinion In our opinion, these financial statements give a true and fair view of the financial position of Seven‐Up Bottling Company Plc (“the Company”) as at March 31, 2013, and of the Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of Nigeria and the Financial Reporting Council of Nigeria Act, 2011.  Report on Other Legal and Regulatory Requirements Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of   In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those books and the statement of financial position and the statements of comprehensive income are in agreement with the books of accounts  25 J l 2013 9
  12. 12. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Statement of financial position As at 31 March 2013 In thousands of naira Note Assets Property, plant and equipment Intangible assets Prepayment Other receivables 12 13 Total Equity                    28,262,657                              6,839                          193,446                          173,214                33,480,167                    28,636,156                   8,729,497                   3,253,760                      410,901                   3,102,268                  8,271,687                  3,817,032                      556,784                  2,359,992                      5,617,417                      3,365,120                          463,429                      5,549,536                15,005,495                48,485,662                    14,995,502                    43,631,658                      320,295                      299,140                 11,958,545                      320,295                      299,140                  9,688,160                          320,295                          299,140                      9,280,183                10,307,595                      9,899,618                    4,997,584                   3,337,468                   2,594,643                    2,313,776                  3,717,939                  2,476,226                      7,617,778                      4,467,866                      1,774,984                 10,929,695 19                33,108,410                        46,901                      187,304                      137,552                 12,577,980 18                 35,451,669                         58,402                      229,858                      133,815                 15,496,426                 51,370,170 16 17 Total current assets Total assets Equity Share capital Share premium Retained earnings 1 April 2011 2012                 35,873,744 14 Total non‐current assets Inventories Trade and other receivables Prepayments Cash and cash equivalents 2013                  8,507,941                    13,860,628                      835,003                      965,613                  13,988,312                 12,073,567                      777,634                  1,090,458                 16,636,510                11,165,524                          873,562                      1,006,901                    10,340,647                      7,650,302                 27,862,495                 38,792,190                 51,370,170                29,670,126                38,178,067                48,485,662                    19,871,412                    33,732,040                    43,631,658 Liabilities Loans and borrowings ‐ long  term Employee benefits Deferred tax liabiliites 20 21 15 Total non‐ current lliabilities Bank overdraft Current tax liabililties Loans and borrowings ‐ short term Trade and other payables Total current liabilities Total liabilities Total equity and liabilities 18 10 20 22 Approved by the Board of Directors on the 25th of July, 2013 and signed on its behalf by: ________________________________ Faysal El‐Khalil (Chairman)                                                                              ________________________________ Sunil Sawhney (Managing Director/ CEO) Additionally certified by;                                                                              ________________________________ Ali Jafri (CFO) The accompanying notes and significant accounting policies form an integral part of these financial statements. 10
  13. 13. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 11
  14. 14. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Statement of comprehensive income For the year ended 31 March 2013 In thousands of naira Continuing operations Note 2013 2012 Revenue Cost of sales Gross profit 5                             64,088,879                           (41,199,890)                             22,888,989                    59,864,385                  (38,538,105)                    21,326,280 Other income Selling and distribution expenses Administrative expenses 6                                    45,870                           (12,730,718)                             (4,677,407)                            53,287                  (11,388,608)                    (5,188,580)                               5,526,734                      4,802,379 7(a) 7(b)                                    25,769                             (2,289,784)                             (2,264,015)                              4,079                    (2,247,814)                    (2,243,735) Profit before taxation 8                               3,262,719 2,558,644                      Income tax expense 10                                 (406,215)                        (880,173)                               2,856,504                      1,678,471                                  103,387                                   (31,016)                                    72,371                               2,928,875                                ‐                                  ‐                        1,678,471 Profit for the year is attributable to: Owners of the company                               2,856,504                      1,678,471 Total comprehensive income for the year is attributable to: Owners of the company                               2,928,875                      1,678,471 446 446 262 262 Results from operating activities Finance income Finance expense Net finance cost Profit for the year Other comprehensive income Defined benefit plans actuarial gains Tax on other comprehensive income Other comprehensive income for the year, net of income tax Total comprehensive income for the year Earnings per share Basic earnings per share (kobo) Diluted earnings per share (kobo) 21 (a) 11 11 The accompanying notes and significant accounting policies form an integral part of these financial statements. 11
  15. 15. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Statement of changes in equity Attributable to equity holders of the company For the year ended 31 March 2013 In thousands of naira Note Balance at 1 April 2011 28(a) Share capital Share premium Retained earnings Total equity                             320,295                              299,140                          9,280,183                         9,899,618 Comprehensive income for the year  Profit for the year                                     ‐                                     ‐                          1,678,471                         1,678,471 Other Comprehensive income                                     ‐                                     ‐                                      ‐ Total comprehensive income for the year                                     ‐                                     ‐                          1,678,471                         1,678,471                                     ‐                                     ‐                         (1,281,181)                        (1,281,181)                                     ‐ Transactions with owners, recorded directly in equity Dividend to equity holders 11(b) Unclaimed dividend written back 22(b)                                     ‐                                     ‐                               10,687                              10,687   Total transactions with Equity owners                                     ‐                                     ‐                         (1,270,494)                        (1,270,494) Balance at 31 March 2012                             320,295                              299,140                          9,688,160                       10,307,595 Balance at 1 April 2012                             320,295                              299,140                        10,310,851                       10,930,286 Profit for the year                          2,856,504                         2,856,504 Other comprehensive income for the year Defined benefit plan actuarial gain, net of tax 21(a) Total comprehensive income for the year                               72,371                              72,371                                       ‐                                     ‐                          2,928,875                         2,928,875                                     ‐                                     ‐                         (1,281,181)                        (1,281,181) Transactions with owners, recorded directly in equity Dividend to equity holders Balance at 31 March 2013 11(b)                             320,295                              299,140                        11,958,545                       12,577,980 The accompanying notes and significant accounting policies form an integral part of these financial statements. 12
  16. 16. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Statement of cash flows For the year ended 31 March 2013 In thousands of naira Note Cash flows from operating activities Profit for the year Adjustments for: Depreciation  Amortisation of intangible assets Finance income Finance cost Loss on foreign exchange transactions Employee benefit charge Loss/(gain) on sale of property, plant and equipment Assets written off Income tax expense 2013 2012              2,856,504                     1,678,471              7,268,715                    10,634                   (25,769)              2,289,784                (121,525)                  875,013                      4,776                  209,482                  406,215            13,773,829                     5,881,115                             3,922                             (4,079)                     2,247,814                             (7,292)                          168,497                               (974)                          404,819                          880,173                   11,252,466                (457,810)                  567,009                  103,329              2,529,080            16,515,437                    (2,654,270)                       (416,250)                         (87,213)                     4,875,742                   12,970,475             (1,702,747)                (710,527)                (262,538)                    (1,444,387)                       (454,533)                       (559,265) Net cash from  operating activities            13,839,625                   10,512,290 Cash flow from  investing activities Finance income Proceeds from sale of property, plant and equipment Acqusition of property, plant and equipment Acqusition of Intangible assets  Net cash used in investing activities                    25,769                    18,476             (9,762,998)                   (22,135)             (9,740,888)                             4,079                             1,717                   (11,037,876)                         (43,984)                   (11,076,064)              8,221,389             (8,225,826)             (2,126,787)             (1,281,181)             (3,412,405)                     2,381,059                    (1,424,237)                    (2,212,775)                    (1,281,181)                    (2,537,134) Net increase/(decrease) in cash and cash equivalents                  686,332                    (3,100,908) Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held              1,582,358                     (1,425)                     4,675,974                             7,292 Cash and cash equivalents at the end of the year              2,267,265                     1,582,358 12 13 7(a) 7(b) 7(b) 21(a) 10(a) Change in inventories  Change in trade and other receivables  Change in  prepayments  Change in trade and other payables * Cash generated from operating activities Value Added Tax (VAT) paid * Income tax paid Employee benefit paid Cash flow from financing activities Proceeds from loans and borrowings Repayment of loans and borrowings Interest paid Dividends paid Net cash used in financing activities 10(c) 21(a) 20 20 *Change in trade and other payables have been adjusted for the effect of Value added tax (VAT) paid shown separately on the  statement of cash flows. The accompanying notes and significant accounting policies form an integral part of these financial statements. 13
  17. 17. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 14
  18. 18. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Notes to the financial statement Page Page 1 Reporting entity 15 16 Inventories 32 2 Basis of preparation 15 17 Trade and other receivables 32 3 Significant accounting policies 15 18 Cash and cash equivalent 32 4 Determination of fair values 23 19 Capital and reserves 33 5 Revenue 24 20 Loans and borrowings 33 6 Other income 24 21 Employee benefits 35 7 Finance income and finance cost 24 22 Trade  and other  payables 37 8 Profit before taxation 24 23 Financial risk management and financial  instruments 37 9 Personnel expenses 25 24 Operating leases 45 10 Taxation 27 25 Contingencies 45 11 Earnings and declared dividend per share 28 26 Related Parties 45 12 Property, plant and equipment 29 27 Subsequent events 47 13 Intangible assets 30 28 Explanation of transition to IFRSs 48 14 Other receivables 31 15 Deferred taxation 31 14
  19. 19. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Notes to the financial statements For the year ended 31 March 2013 1 Reporting Entity Seven‐Up Bottling Company Plc (“the Company”) is a company domiciled in Nigeria. The Company was incorporated in Nigeria as a private Limited liability Company on 25th June, 1959 under the name Seven‐Up Limited. On 16th May 1960, the name was changed to Seven‐Up Bottling Company Limited and thereafter to “Seven‐Up Bottling Company Plc” on 26th November 1991 in compliance with the provisions of the Companies and Allied matters Act 1990. Currently, the Company’s shares are quoted on the floor of the Nigerian Stock Exchange. The majority shareholder of the company is Afelka S.A,  having 72.76% interest in the equity of Seven‐Up Bottling Company. The address of the Company’s registered office is 247, Moshood Abiola Way, Ijora, Lagos.  The Company primarily is involved in the business of bottling and sale of a wide range of soft drinks across Nigeria. 2 Basis of Preparation (a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). These are the Company’s first financial statements prepared in accordance with IFRSs and IFRS 1 First‐time Adoption of International Financial Reporting Standards has been applied. An explanation of how the transition to IFRSs has affected the reported financial position, financial performance and  cash flows of the Company is provided in note 28. The financial statements were authorized for issue by the Board of Directors on 25 July, 2013. (b) Basis of measurement The financial statements have been prepared under the historical cost basis and the use of actuarial methods for estimating certain employee benefits, which are based on the present value of anticipated future liabilities. (c) Functional and presentation currency These financial statements are presented in Naira, which is the Company’s functional currency. All financial information presented in Naira have been rounded to the nearest thousand except where otherwise indicated. (d) Use of estimates and judgement The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about assumptions and estimation uncertainties and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the following notes: Note 10 Note 12 Note 15 Note 21 Note 23 Note 25 Taxation Property, plant and equipment Deferred taxation Employee benefits Financial risk management and financial instruments Contingencies 3 Significant accounting policies The accounting policies set out below have been applied consistently to all years presented in these financial statements and in preparing the opening IFRS statement of financial position at 1 April 2011 for the purposes of the transition to IFRSs unless otherwise indicated. 15
  20. 20. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports (a) Foreign currency  Foreign currency transactions Transactions denominated in foreign currencies are translated and recorded in Naira at the actual exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the rates of exchange prevailing at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the year. Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognized in profit or loss, except for qualifying cash flow hedges, which are recognized in other comprehensive income. Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. (b) Financial instruments I.  Non‐derivative financial assets The Company initially recognizes loans and receivables and deposits on the date that they are originated. All other financial assets are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Company’s non‐derivative financial assets are classified as loans and receivables. Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade and other receivables. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, Cash balances with banks and call deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Cash and cash equivalents are carried at amortised cost in the statement of financial position. 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. 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. The Company has the following non‐derivative financial liabilities: loan and borrowings, bank overdrafts, trade and other payables. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. 16
  21. 21. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports III. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. (c) Property, plant and equipment I. Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. For the purposes of application of IFRS 1, the cost of certain items of property, plant and equipment, namely land and buildings and plant and machinery was determined by reference to previous revaluation prior to the date of transition to IFRS. The Company elected to apply the optional exemption to use this previous revaluation as deemed cost as 1 April 2011, the date of transition to IFRS. Cost includes expenditure that is directly attributable to the acquisition of the asset. Items of property, plant and equipment under construction are disclosed as capital work‐in‐progress. The cost of construction recognised includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets. 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. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss. II .Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day‐to‐day servicing of property, plant and equipment are recognized in profit or loss as incurred. III. Depreciation Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of capital‐work‐in‐progress, from the date that the asset is completed and ready for use.  Depreciation is calculated to consume the cost of items of property, plant and equipment less their estimated residual values using a straight‐line basis over their estimated useful lives. Depreciation is generally recognized in profit or loss, unless the amount is included in the carrying amount of another asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term in which case the assets are depreciated over the useful life. The estimated useful lives for the current and comparative periods are as follows: • Leasehold land •  Buildings •  Plant and machinery ‐ moulds ‐ Other plant and machinery •  Motor vehicle •  Furniture and fittings •  IT equipment • Returnable packaging  materials ‐ Bottles ‐ Crates Over lease period or 99 years, whichever is lower 20 years 3 years 7 years 5 years 10 years 4 years 5 years 7 years 17
  22. 22. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 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 (d) Intangible assets I. Software Purchased software with finite useful life is measured at cost less accumulated amortisation and accumulated impairment losses. II. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. III. Amortisation Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognized in profit or loss on a straight‐line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life for the current and comparative periods is as follows: • Computer software      4 years Amortisation methods, useful lives and residual values are reviewed at each financial year‐end and adjusted if appropriate. (e) Leases I. Leased assets Assets held by the Company under leases for which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.. Assets held under other leases are operating leases and the leased assets are not recognised in the Company’s statement of financial position. II. Lease payments Payments made under operating leases are recognised in profit or loss on a straight‐line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. (f) Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work‐in‐progress, cost includes an appropriate share of production overheads based on normal operating capacity. Cost incurred in bringing each product to its present location and condition is based on: Raw and non‐retunable packaging materials purchase cost on a first‐ in, first ‐ out basis including transportation and clearing costs weighted average cost of direct materials and labour plus a  18
  23. 23. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports Products‐ in‐ process and manufactured finished  goods reasonable proportion of manufacturing overheads based  on normal levels of activity Engineering spares: purchase cost on a weighted average cost basis, including  transportation and clearing costs Goods‐in‐transit: purchase cost incurred to date Weighted average cost and standard cost are reviewed periodically to ensure they consistently approximate historical cost.  Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Engineering spares that are generic in nature are classified as inventory and are recognised in the profit or loss as consumed. Allowance is made for obsolete, slow moving or defective items where appropriate. (g)  Impairment I. Non‐derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be reliably estimated. Objective evidence that financial assets are impaired can include; default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Company considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment, the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised. II. Non‐financial assets The carrying amounts of the Company’s non‐financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash‐generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to 19
  24. 24. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 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”). The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. In respect of other assets (excluding Goodwill for which impairment loss is not reversed), impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised. (h) Employee benefits I. Defined Contribution plans A defined contribution plan is a post‐employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts in respect of all employee benefits relating to employee service in current and prior periods. In line with the provisions of the Pension Reform Act 2004, the Company has instituted a defined contribution pension scheme for their permanent staff. Staff contributions to the scheme are funded through payroll deductions. Obligations for contributions to the defined contribution plan are recognised as employee benefit expense in profit or loss in the periods which related services are rendered by employees. Employees contribute 7.5% each of their Basic salary, Transport & Housing allowances to the Fund on a monthly basis. The Company also contributes 7.5% of each employee’s Basic salary, Transport & Housing allowances. II. Defined benefit plans A defined benefit plan is a post‐employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit gratuity scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years and that benefit is discounted to determine its present value. In determining the liability for employee benefits under the defined benefit scheme, consideration is given to future increases in salary rates and the Company's experience with staff turnover. The Company's liability with respect to this scheme is determined by an independent actuarial valuation every year using the projected unit credit method. Actuarial gains and losses arising from differences between the actual and expected outcome in the valuation of the obligation are recognized in other comprehensive income. The effect of any curtailment is also charged in full in profit or loss immediately when the curtailment occurs. The discount rate is the yield on Federal Government of Nigeria issued bonds that have maturity dates approximating the terms of the company’s obligation. Although the scheme is not funded, the Company ensures that adequate arrangements are in place to meet its obligations under the scheme. III.Other long term employee benefits The Company’s other long‐term employee benefits represent Long Service Awards scheme instituted for all permanent employees. The Company’s obligation in respect of the Long Service Awards scheme is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on Federal Government of Nigeria issued bonds that have maturity dates approximating the term of the Company’s obligation. The calculation is performed using the Projected Unit Credit method. Any actuarial gains and losses are recognized in other comprehensive income. 20
  25. 25. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports IV.Termination benefits Termination benefits are recognised as an expense when the Company is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value. 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 or profit sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. (i) 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. (j) Contingent liabilities 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. (k) 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, sales returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discount will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. Transfer of significant risk and rewards of ownership is determined to be transferred to the buyer at the point of delivery to the buyer. (l) Finance income and finance costs Finance income comprises interest income on funds invested and changes in the fair value of financial assets at fair value through profit or loss where the Company holds such financial assets. Interest income is recognized as it accrues in profit or loss, using the effective interest method.   Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss where the Company holds such financial assets and impairment losses recognized on financial assets (other than trade receivables).  Borrowing cost that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss.  Foreign currency gains and losses are reported on a net basis. 21
  26. 26. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports (m) Tax Income tax expense represents the sum of current tax expense and deferred tax expense.  I.Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates statutorily enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The Company is subject to the following types of current income tax; • Company Income Tax‐ This relates to tax on revenue and profit generated by the Company during the year, to be taxed under the Companies Income Tax Act Cap C21, LFN 2004 as amended to date. • Tertiary Education Tax‐ Tertiary education tax is based on the assessable income of the Company and is governed by the Tertiary Education Trust Fund (Establishment) Act LFN 2011 II.Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;  • taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is provided for using the liability method, which represents taxation at the current rate of corporate tax on all timing differences between the accounting values and their corresponding tax values. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the amount will be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. (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 profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares. (o) Dividends Dividends are recognised as liability in the period they are declared. Dividends which remained unclaimed for a period exceeding twelve (12) years from the date of declaration and  which are no longer actionable by shareholders in accordance with Section 385 of Companies and Allied Matters Act  of Nigeria are written back to retained earnings. (p) Related parties Related parties include the holding company and other group entities. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the Company are also considered to be related parties. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. 22
  27. 27. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports (q) Segment reporting An operating segment is a distinguishable component of the Company that earns revenue and incurs expenditure from providing related products or services (business segment), or providing products or services within a particular economic environment (geographical segment), and which is subject to risks and returns that are different from those of other segments.  The Company’s primary format for segment reporting is based on business segments. The business segments are determined by management based on the Company’s internal reporting structure.  All operating segments’ operating results are reviewed regularly by the Executive Committee, which is considered to be the chief operating decision maker for the Company to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Where applicable, Segment results that are reported include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  (r) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 31 March, 2013 and beyond, and have not been applied in preparing these financial statements. Those which may be relevant to the Company are set out below.  (i)  IFRS 9 Financial Instruments (2010), IFRS 9 Financial Instruments (2009)  IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting.  IFRS 9 (2010 and 2009) is effective for annual periods beginning on or after 1 January 2015 with early adoption (ii) IFRS 13 Fair Value Measurement (2011)  IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement guidance that is currently dispersed throughout IFRS. Subject to limited exceptions, IFRS 13 is applied when fair value measurements or disclosures are required or permitted by other IFRSs. The company is currently reviewing its methodologies in determining fair values. IFRS 13 is effective for annual periods beginning on or after 1 January 2013 with early adoption permitted. The extent of the impact of the above standards has not been determined and the Company does not plan to adopt these  early. 4 Determination of fair values A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non‐financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the measurement date. Fair value for short‐term receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and for disclosure purposes, at each annual reporting date. (b) Non‐derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. 23
  28. 28. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 24
  29. 29. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 25
  30. 30. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 26
  31. 31. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 27
  32. 32. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 28
  33. 33. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 29
  34. 34. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 30
  35. 35. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 31
  36. 36. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 32
  37. 37. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 5 Revenue Revenue for the year comprises: In thousands of naira Local Export Note 2013           63,919,189                169,690 2012        59,812,538              51,847           64,088,879        59,864,385 2013                  45,870 2012              53,287 2013                          29                  25,740 2012                    875                  3,204                  25,769                4,079 2013 2012 Interest on overdraft Interest expense on financial liabilities measured at amortised  cost                (190,443)            (105,972)             (1,976,391)       (2,141,842) Loss on foreign exchange transactions                (122,950)                     ‐ Net finance cost            (2,289,784)             (2,264,015)       (2,247,814)       (2,243,735) 2013 2012             7,268,715                  10,634                  33,000                  40,146             8,387,826                209,482                     4,776                122,950                400,551                  97,882          5,881,115                 3,922               28,000               32,333          7,437,176             404,819                    (974)                    ‐               313,900               97,673 Total Revenue 6 Other income In thousands of naira Sale of scrap 7 Finance income and finance cost a.Finance income comprises: In thousands of naira Interest on staff loans Interest income on bank deposit b. Finance cost comprises: In thousands of naira 8 Profit before taxation Profit before taxation is stated after charging: In thousands of naira Depreciation of property, plant and equipment Amortisation of intangible assets Auditor’s remuneration Directors’ remuneration Personnel expenses Assets written off Loss/(gain) on sale of property, plant and equipment Net foreign exchange loss Operating lease cost Management service fee 12 13 9 (c) 9 (a) 24 26(iv) 24
  38. 38. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 9 Personnel expenses  (a) Personnel expenses for the year comprise of the following: In thousands of naira 2013             6,248,406 Salaries, wages and allowances 2012           6,169,236 Expenses related to defined benefit plans (Note 21a)               875,013             168,497 Contribution to defined contribution plan (Note 22a)               530,758             496,402 Other personnel expenses               733,649             603,041             8,387,826           7,437,176 (b) Employees of the Company, whose duties were wholly or mainly discharged in Nigeria, received remuneration  (excluding pension costs and certain benefits) in the following ranges: 2013 N N 2012 Number Number              380,000 ‐             400,000                        ‐                          3              400,001 ‐             450,000                            1                         20              450,001 ‐             500,000                            7                         19              500,001 ‐             550,000                         12                       139              550,001 ‐             600,000                         20                    1,034              600,001 ‐             650,000                       655                     544              650,001 ‐             700,000                       754                     174              700,001 ‐             800,000                       499                     261              800,001 ‐           1,000,000                       352                     307           1,000,001 ‐           1,200,000                       274                     256           1,200,001 ‐           1,400,000                       194                     260           1,400,001 ‐           1,600,000                       262                     172           1,600,001 ‐           1,800,000                       193                     115           1,800,001 ‐           2,000,000                         65                           58           2,000,001 ‐           2,500,000                       153                     103           2,500,001 ‐           3,000,000                         78                           65           3,000,001 ‐           3,500,000                         64                           27           3,500,001 ‐           4,000,000                         51                           23           4,000,001 ‐           4,500,000                         23                           20           4,500,001 ‐           5,000,000                         10                           17           5,000,001 ‐           7,000,000                         17                           12           7,000,001 and  above                         17                           14                    3,701                  3,643 25
  39. 39. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports The number of full‐time persons employed per function as at 31 March was as follows: 2013 2012 Number Number Manufacturing                    1,464                  1,501 Distribution                    1,631                  1,630 Finance                       170                     174 Human Resources/ Administration                       404                     306 Information Technology                         32                           32                    3,701                  3,643 2013 2012 (c) Directors' remuneration Remuneration paid to directors of the Company was as follows: In thousands of naira Fees: Non‐executive directors                       700                     700 Executive directors including chairman (excluding pension  contribution and certain other benefits)                  39,446               31,633                  40,146               32,333 The directors’ remuneration shown above includes: In thousands of naira 2013 2012 Chairman                    3,400                  3,085 Highest paid director                  31,606               24,738 The number of other directors (excluding the Chairman and highest paid director) who received emoluments  excluding pension contributions and certain benefits were within the following ranges: 2013 N N              100,000           3,000,000           3,000,001           4,500,000 2012 Number Number 7                          7 1                          1                            8                          8 26
  40. 40. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports 10 Taxation (a) Income tax expense The tax charge for the year has been computed after adjusting for certain items of expenditure and income, which are not deductible or chargeable for tax purposes, and comprises: In thousands of naira 2013 2012 Current period income tax                       422,790                          384,354 Current period tertiary education tax                       182,632                          153,736                       605,422                          538,090                        (19,740)                                  ‐                       585,682                          538,090 Origination and reversal of temporary differences                      (179,467)                        342,083 Total income tax expense                       406,215                          880,173 Current tax expense Prior year over provision  Deferred tax expense                          20,195 (b) Income tax recognised directly in other comprehensive income In thousands of naira 2013 2012 Charges to other comprehensive income before tax                       103,387                                    ‐ Tax benefit                        (31,016)                                  ‐                          72,371                                  ‐ (c) Tax payable In thousands of naira 2013 2012 At 1 April                    1,090,458                     1,006,901 Charge for the year                       585,682                          538,090 Payments in the year                      (710,527)                       (454,533) At 31 March                       965,613                       1,090,458 Movement in tax payable account during the year was as follows In 2012, the Nigerian Investment Promotion Council (NIPC) granted the Company a pioneer status for a five year period with respect to the following production activities of the Company. i ii Can products produced at the Company's Lagos Plant PET products produced at the Lagos, Enugu and Abuja plant locations, with a retrospective effective commencement production date of 1 September 2011. The effective commencement production date was certified by the Industrial Inspectorate Department of the Federal Ministry of Commerce and Industry on 23 November 2012. In accordance with the provision of the Industrial Development (Income Tax Relief) Act, the Company's profit attributable to the pioneer line of business is therefore not liable to income taxes  for the duration of the pioneer period. 27
  41. 41. Seven‐Up Bottling Company Plc Financial Statements for the year ended 31 March 2013 Together with Directors' and Independent Auditor's Reports (d) Reconciliation of effective tax rate 2013 2013 2012 2012 In thousands of naira Profit for the year             2,856,504           1,678,471 Taxation                   406,215             880,173 Profit before tax             3,262,719           2,558,644 30.0%                   978,816 30.0%              767,593 Impact of Tertiary education tax 5.6%                   182,632 6.0%              153,736 Non‐deductible expenses 3.3%                   106,823 4.4%              112,690 ‐2.4%                    (79,013) ‐6.9%             (175,786) Income tax using the Company’s domestic tax rate Tax exempt income Pioneer status incentive Change in recognized deductible temporary  differences ‐23.4%                (763,303)                ‐                     ‐                           ‐                       ‐ 0.9%                21,940 Prior year under/(over) provision                  ‐0.6%                    (19,740)                ‐ Tax expense 12.5%                   406,215                       ‐ 34.4%             880,173 11 Earnings and declared dividend per share (a) Basic earnings per share of 446 kobo (2012: 262 kobo) is based on profit attributable to the owners of the Company for the year of N2,856,505,000 (2012: N1,678,471,000) and on 640,590,364 ordinary shares of 50 kobo each in issue at the end of the year (2012: 640,590,364). Diluted earnings per share of 446 kobo (2012: 262 kobo) is based on profit attributable to the owners of the Company for the year of N2,856,505,000 (2012: N1,678,471,000), and on the 640,590,364 ordinary shares of 50 kobo each, being the weighted average number of ordinary shares in issue during the year (2012: 640,590,364). (b) Declared dividend per share of 200 kobo (2011:200 kobo) is based on dividend declared on 21 June, 2012 of N1,281,180,725 (2011: N1,281,180,725 (Note 22(b)) on 640,590,364 ordinary shares of 50 kobo each, being the ordinary shares in issue during the year. 28