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Reliable
Effective
Innovative
Annual Report &
Financial Statements
2012
CORPORATE Profile
The history of A.G. Leventis (Nigeria) Plc started when Chief
A. G. Leventis himself formed a trading co...
CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n ...
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t
GROUP FINANCIAL
2012 2011
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CHAIRMAN’S Statement
Chief Joseph Babatu...
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For The Year Ended 31 December 2012 (con...
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n ...
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For The Year Ended 31 December 2012 (con...
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OUR Directors
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BOARD OF Directors
Anastasi s Ioannis Le entis (Bri ish)
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Sul man Ab
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Haralambos George
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t
For The Year Ended 31 December 2012
DIR...
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For The Year Ended 31 December 2012 (Continued)
DIRECTORS’ REPOR...
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t
For The Year Ended 31 December 2012 (Co...
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For The Year Ended 31 December 2012
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The Board is alive to its responsibilities which primarily involves the creation of stakeholder value and ensuring the
suc...
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CORPORATE GOVERNANCE REPORT
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A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t
In 2012 the Audit Committee:
COMMUNICAT...
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AUDIT COMMITTEE’SREPORT
For The Year En...
THEFinancials
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For The Year Ended 31 December 2012
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For The Year Ended 31 December 2012
CHA...
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For The Year Ended 31 December 2012
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The consolidated financial statemen...
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For The Year Ended 31 December 2012 (continued)
FINANCIAL STATEM...
For The Year Ended 31 December 2012 (continued)
FINANCIAL STATEMENTSNOTES TO THE
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For The Year Ended 31 December 2012 (continued)
FINANCIAL STATEM...
For The Year Ended 31 December 2012 (continued)
FINANCIAL STATEMENTSNOTES TO THE
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For The Year Ended 31 December 2012 (continued)
FINANCIAL STATEM...
A.G.Leventis Plc 2012 Annual report #Nigeria
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A.G.Leventis Plc 2012 Annual report #Nigeria
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A.G.Leventis Plc 2012 Annual report #Nigeria

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A.G.Leventis Plc 2012 Annual report #Nigeria

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A.G.Leventis Plc 2012 Annual report #Nigeria

  1. 1. Reliable Effective Innovative Annual Report & Financial Statements 2012
  2. 2. CORPORATE Profile The history of A.G. Leventis (Nigeria) Plc started when Chief A. G. Leventis himself formed a trading company known as A.G. Leventis & Company Limited in Ghana in 1937. Originally, the main activities of the Company were produce buying, importing and wholesaling of textile goods. Over the years, the Company expanded into various parts of Nigeria investing in properties and also in general trade and the sales and service of motor vehicles. The Company later devolved into Leventis Motors Limited (established in 1958), Leventis Stores Limited (1965), Leventis Technical Limited (1972) whilst it retained ownership of valuable freehold and leasehold property throughout the country. Under and by virtue of a series of Mergers and Schemes of Arrangement, the afore-mentioned companies merged with A. G. Leventis (Nigeria) Plc. and they were dissolved and the Group acquired its current name. At present, the Group has invested in several companies and provides Secretarial Services, business and residential and operates several divisions andaccommodation subsidiaries as follows: Major Subsidiaries: Abuja (Capital) Motors Limited (Sales and service of vehicles), Cummins West Africa Limited (Sales and service of Cummins generators and engines), Leventis Foods Limited (producer of bread and pastries) Victoria Beach Hotel Limited (owner of Mainland Hotel in Ebute- Metta) Iddo Investments Limited (a property owning company) Druckfarben Nigeria Limited (producer and distributors of inks for flexible packaging) TCN Properties Limited (a property owing company) Guinea Construction Company Limited (a property owning company) Divisions: Real Estate (Commercial and Residential accommodation) Leventis Motors (Sales and service of VW Eicher, Trucks & Buses, JCB Construction & Agriculture Equipment) Corporate Affairs. The Group continues to seek avenues to invest in Nigeria thereby creating employment opportunities and contributing to the nation’s economy.
  3. 3. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 1 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t ContentsTABLE OF For over seven decades, A.G. Leventis (Nigeria) Plc has provided West Africa with reliable, innovative and affordable products and services. By focusing on such core markets as Power, FMCG, Logistics and Real Estate, A. G. Leventis has become one of the Major forces in Nigeria and beyond. Group Financial Highlights2 Notice of Annual General Meeting Chairman’s Statement Report of the Independent Auditors Directors, Officers and Advisers Directors’ Report 19 3 4 12 23 24 11 14 27 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity28 Consolidated Statement of Cash Flows29 Board of Directors Corporate Governance Report Audit Committee’s Report 18 Statement of Management Responsibilities Consolidated Statement of Comprehensive Income26 Five-Year Group Financial Summary101 Consolidated Statement of Value Added103 Electronic Delivery Mandate Form105 Additional Information104 E-dividend Mandate Form106 Proxy Form107 Five-Year Company Financial Summary102 Notes to the Financial Statements30
  4. 4. 2 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t GROUP FINANCIAL 2012 2011 N'000 NN'000 Incr. % 2012 2011 '000N N‘000 % The Group The Company Highlights Incr. Revenue 16,302,953 18,095,183 -10% 7,515,354 8,501,055 12% Profit before tax 652,846 823,532 -21% 1,598,041 1,130,437 41% Income tax expenses (368,677) (494,889) -26% (479,048) (420,087) 14% Profit for the year 284,169 328,643 -14% 1,118,993 710,350 58% Othercomprehensiveincome,netoftax 30,700 15,085 104% 38,052 (14,554) +/- Total comprehensive income attributable to: Owners of the Company 767,631 564,401 36% 1,157,045 695,796 66% Non-controlling interest (452,762) (220,673) 105% - - 314,869 343,728 -8% 1,157,045 695,796 66% Dividend 370,621 370,621 0% 370,621 370,621 0% Total Equity 10,229,029 10,284,781 -1% 9,683,544 8,897,119 9% Cash and cash equivalent (165,226) (106,428) -55% 1,061,661 561,169 89% INFORMATION PER 50 KOBO ORDINARY SHARE KOBO KOBO KOBO KOBO Earnings per share 28 21 33% 42 27 56% Net assets per share 386 389 -1% 366 336 9% Number Number Number Number Number of employees 1,469 1,482 -1% 731 728 0%
  5. 5. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 3 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t NOTICE OF ANNUAL GENERAL Meeting For The Year Ended 31 December 2012 Dividend Warrants 1. To lay before the meeting, the audited financial statements for the year ended December 31, 2012 and the Directors', Auditors' and Audit Committee's Reports thereon. 2. To elect/re-elect Directors retiring in accordance with the Company's Articles of Association. 3. To declare a dividend. 4. To authorise the Directors to fix the remuneration of the Auditors. 5. To elect/re-elect shareholders' representatives on the Audit Committee. A member entitled to attend and vote at the General Meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy needs not be a member of the Company. All instruments of proxy duly stamped by the Commissioner of Stamp Duties in accordance with the Stamp Duties Act (CAP S8, LFN 2004) should be deposited with the Registrar at City Securities (Registrars) Limited, 358, Herbert Macauley Way, Yaba, Lagos not less than 48 hours before the time for holding the meeting. BY ORDER OF THE BOARD TEMIDAYO OLAOFE (MRS) Company Secretary/Legal Adviser IDDO HOUSE, IDDO, LAGOS Dated this 27th day of March 2013 NOTICE IS ER Y GIVE hat t e 54th Ann al ner l Mee in oH EB N t h u Ge a t g f . Le e ti (Nig ria lc i l e h ld at a nlan ot l ute-A. G v n s e ) P w l b e M i d H e , Eb Me ta, Lagos on Tu sday, Jul 2 201 at 2.0 n on for het e y , 3 1 0 o t follo ing urpose :w p s If the payment of a dividend of 14k per share as recommended by the Directors is approved, it is intended that the warrants will be posted on July 3, 2013 to holders of eligible shares whose names appear on the Register of Members on May 24, 2013.
  6. 6. 4 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t CHAIRMAN’S Statement Chief Joseph Babatunde Oke, OON Executive Chairman My vision is to pilot this company to becoming a first choice for investors from all over the world wanting to do business in Nigeria. Our Business Development Division has taken great strides in this direction with three new businesses on the verge of actualisation. One of the businesses is the assembly of commercial vehicles, fabrication of bottle carriers and petroleum and water tankers. The other businesses are distribution of Plumbing and Industrial Pipes and Fittings, and the mining of minerals. The three businesses are very promising and will manifest during the 2013 financial year.
  7. 7. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 5 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (continued) CHAIRMAN’S Statement Chiefs, Ladies and Gentlemen, it gives me great pleasure to welcome you to the 54th Annual General Meeting of our Company, and to present to you the financial statements for the year 2012. ECONOMIC/BUSINESS ENVIRONMENT The year started with a two-week nationwide strike as a result of the decision of the Federal Government to remove the subsidy on petroleum products, especially PMS and AGO. This decision paralysed manufacturing and sales operations in the country and thus affecting our plans for the year. We found ourselves still trying to catch-up throughout the year. Other factors that affected our operations included threats to our well being by the affliction of the Boko Haram insurgency, the spate of assassinations and kidnappings which were rampant throughout the country, and the nation's inadequate power supply. The Banking reforms which commenced in the previous year continued during the period under review and this meant that even though the Naira was relatively stable, interest rates continued to grow, thus affecting our cost of borrowing. The issue of multiple taxation and incessant levies from various tiers of governments continued unabated despite several promises made by the Federal Government to streamline same. I wish to seize this opportunity once again, to plead with the different tiers of government to coordinate and evolve a single but efficient system of taxation which will benefit both the Governments and the organised private sector, as well as the public, our final consumers. The revenue of the Company and the Group for the year under review was N7.52 billion and N16.30 billion respectively. While Profit Before Tax for the Company grew from N1.13 billion to N1.60 billion, this was not the case for the Group as some of the subsidiaries had to contend with operational challenges which impacted negatively on their results. On a more positive note however, you may recall that I had mentioned in my statement of last year that we had a long outstanding debt from National Emergency Management Authority (NEMA). I am pleased to inform you that the debt has now been fully settled and the provision made for it in our financial statement last year has been reversed. In my usual practice, I will now highlight the activities of our various divisions and subsidiaries and their contributions to performance for the year under review. Turnover was N6.30billion, a slight reduction from the N7.33 billion that was realised last year. OPERATING RESULTS LEVENTIS MOTORS DIVISION The revenue of the Company and the Group for the year under review was N7.52 billion and N16.30 billion respectively. While Profit Before Tax for the Company grew from N1.13 billion to N1.60 billion, this was not the case for the Group as some of the subsidiaries had to contend with operational challenges which impacted negatively on their results.
  8. 8. 6 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (continued) CHAIRMAN’S Statement Although the division witnessed increases in some aspects of its operation especially in the sales of construction equipment and the haulage services, there were reduced sales of commercial vehicles. This was a direct consequence of the economic climate prevailing at the time, as well as the significantly higher costs of these trucks which the market was not willing to accept. Nevertheless, in order to provide a complete range of commercial vehicles to our customers, the division added a lower priced brand of Eicher trucks to its portfolio. This new business, it is hoped, along with other brands being added currently, will add significantly to both turnover and profit. The result of this division increased from N1.02 billion to 1.06 billion, an increase of 4% over last year. The division improved upon its results for the prior year through increased occupancy levels in some of our residential properties in prime locations. Furthermore, with increased borrowing rates, the division also benefitted from enhanced interest on its bank deposits. The property in Ikoyi is nearing completion and would be commissioned and occupied before the end of the current financial year. In the meantime, the division continues to study the real estate business in Nigeria, with a view to rationalising its property portfolio throughout the country with the REAL ESTATE DIVISION N aim of redeveloping some and disposal of others that are not viable. Plans are also at advance stage to acquire new properties for the development of residential and commercial estates in some prime locations in the country. The results of this subsidiary were disappointing, having been unable to achieve its targets for the year. Turnover declined from N6.05 billion to N5.20 billion. Profits also fell considerably. The Board of Directors has studied the problems that has beset the company over the past two years and have come up with a plan of action that will boost performance and improve results. Our Technical Partner, Cummins Inc. of USA have assured us that the plans that have been formulated by the Board will be supported by them and that plans for the development of the Africa market with Nigeria being in the core of their business worldwide will continue. The turnover of this subsidiary was flat against its achievement in the previous year. In view of the huge loss incurred again this year, the Board decided to restructure its entire operation and consequently closed down the Abuja factory as the cost of running the business there had become uneconomical. Even though higher sales were recorded in the bakery section, the increased cost of borrowing and interest payments eroded the gains made. CUMMINS WEST AFRICA LIMITED LEVENTIS FOODS LIMITED The division improved upon its results for the prior year through increased occupancy levels in some of our residential properties in prime locations. Furthermore, with increased borrowing rates, the division also benefitted from enhanced interest on its bank deposits.
  9. 9. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 7 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (continued) CHAIRMAN’S Statement The Directors are considering various options to improve performance in order to remain relevant in this sector, including additional cost reduction options. Mainland Hotel, owned by this subsidiary, recorded sales of N361.11 million compared with N323.77 million achieved in the previous year. Profit before tax was N62.35 million against N26.24 million in 2011. There are plans to upgrade some of its facilities like the website which will make it more accessible to both national and international customers. It is also planned to install a close circuit television (CCTV) within the premises to ensure security of life and property and also complete the refurbishment and upgrading of all the rooms, these actions, we expect, will translate into increased patronage and profitability. This subsidiary that was incorporated last year and carrying on the business of distribution of printing inks, is still studying and getting used to the peculiarities of the market. Sales improved from N337.67 million in the six months of the prior year to N668.59 million this year. Profit before tax however, dipped slightly from N64.76 million last year to N62.51 million. The Board of Directors is seeking new ways to expand the business and I hope to give you more details of our new direction in the near future. VICTORIA BEACH HOTEL LIMITED DRUCKFARBEN NIGERIA LIMITED ABUJA (CAPITAL) MOTORS LIMITED DIVIDEND The turnover for Abuja (Capital) Motors Limited was N122.69 million which was 11% lower than what was achieved in prior year. The company also recorded a loss of N14.23 million for the year under review. Even though there had been attempts to expand the business beyond the Federal Capital Territory, its efforts had been hampered by the insecurity that was predominant in the northern part of the country. It is hoped that the situation will improve in the coming year in view of the action now embarked upon by the Federal Government to improve security throughout the country. Despite the harsh economic climate under which we operated in the year under review, the total income attributable to shareholders after minority interest grew by 31% to N734.2 million. Given this, the Board is pleased to recommend a dividend payout of 14 kobo per share, representing a total of N370.60 million payable to shareholders net of withholding tax at the appropriate rate. You may recall that last year, we had printed e-dividend forms in the Annual Report and you had been requested to complete them and pass them on to the Registrar. Unfortunately, the response had been very disappointing and I wish to implore you once again, to complete the forms and return them as it would mean a quicker receipt of dividends paid and thus reducing the number of unclaimed dividends. Although the division (Leventis Motors) witnessed increases in some aspects of its operation especially in the sales of construction equipment and the haulage services, there were reduced sales of commercial vehicles.
  10. 10. 8 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (continued) CHAIRMAN’S Statement REGISTRARS CODE OF CORPORATE GOVERNANCE BOARD OF DIRECTORS Again you must have noticed that we have new Registrars, City Securities (Registrars) Limited; this is as a result of the acquisition of Fin Registrars Limited by City Securities Limited, a direct consequence of the take- over of Finbank Plc by First City Monument Bank Plc. We welcome the new Registrars to A. G. Leventis (Nigeria) Plc and express the sincere hope that they will serve us without any complaints. We continue to strive to follow the Code of Corporate Governance as can be seen in the Corporate Governance report included in this Annual Report/Financial statements. As an addition to what has been included, I would like to inform you that the Human Resources and Remuneration Committee of the Board has been reconstituted to include three non Executive Directors. This is to ensure the independence of its d e l i b e r a t i o n s , d e c i s i o n s a n d recommendations to the Board. The committee's immediate assignment is to review the existing Human Resources and Remuneration policies and procedures of the company. Furthermore, as already included in the Directors' report, I shall retire from Executive Management of the Group after this meeting, but will continue as Chairman in a non Executive capacity. Mr. Charis Katsaras, our Business Development Director resigned from the Board with effect from May 1, 2013. Mr. Katsaras was an enthusiastic and loyal member of the Board, who also served as the Finance Director before holding his last position. Mr. A. P. Leventis CBE, OFR also retired from the Board, having served continuously since April, 1977. We have benefited immensely from his insightful thoughts and knowledge of international business practices. On your behalf, I wish to thank them both for their services and wish them success in their future endeavours. Messrs. Suleman Abubakar, Kola Karim and Michail Oikonomakis were appointed directors after the last Annual General Meeting. Mr. Suleman Abubakar is the Managing Director/Chief Executive Officer of Imani Group of Companies, one of the oldest indigenous real estate companies in Nigeria. He is also the current Vice President of the Real Estate Developers Association of Nigeria. Mr. Kola Karim is the Group Managing Director/Chief Executive of Shoreline Energy International Limited and sits on several other Boards which include Ecobank Nigeria Plc, The Nigerian Ropes Plc and Costain West Africa Plc. Mr. Michail Oikonomakis brings to the Board a wealth of experience garnered from the Bottling and Food production industries in Greece. We continue to strive to follow the Code of Corporate Governance as can be seen in the Corporate Governance report included in this Annual Report/financial statements. As an addition to what has been included, I would like to inform you that the Human Resources and Remuneration Committee of the board has been reconstituted to include three non Executive Directors
  11. 11. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 9 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (continued) CHAIRMAN’S Statement The three directors will retire at this Annual General Meeting and being eligible will seek election. In the realisation that our staff constitutes the key and vital ingredient to the growth and success of our organisation, we embarked upon a rigorous training regime during the year. This is in an attempt to shift the mindset of staff from a reactionary point of view to a more proactive manner of taking action. We appreciate both Management and Staff for their contributions to the results achieved this year with the hope that they will remain dedicated, loyal and focussed for even better results in the years to come. My vision is to pilot this company to becoming a first choice for investors from all over the world wanting to do business in Nigeria. Our Business Development Division has taken great strides in this direction with three new businesses on the verge of actualization. One of the businesses is the assembly of commercial vehicles, fabrication of bottle carriers and petroleum and water tankers. The other businesses are distribution of Plumbing and Industrial Pipes and Fittings, and the mining of minerals. The three businesses are very promising and will manifest during the 2013 financial year. I am pleased to inform Shareholders that the first quarter of the current year has shown greater promise and barring any unforeseen circumstances, the end result will show a remarkable improvement over the year under review. MANAGEMENT AND STAFF FUTURE PROSPECTS CONCLUSION Finally, I wish to express my appreciation to my colleagues on the Board both old and new, for their contributions, cooperation and efforts to improve the Company's businesses. It would be an oversight not to mention the support received from all our Technical Partners in ensuring the sustenance and growth of their own line of business within the Group. I also must appreciate our dear Shareholders and Customers for their loyalty, encouragement and steadfastness. Thank you all and God bless. Chief Joseph Babatunde Oke, OON. Executive Chairman I am pleased to inform Shareholders that the first quarter of the current year has shown greater promise and barring any unforeseen circumstances, the end result will show a remarkable improvement over the year under review.
  12. 12. OUR Directors A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t 10
  13. 13. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 11 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t DIRECTORS: SECRETARY: REGISTERED OFFICE: REGISTRAR AND TRANSFER OFFICE: AUDITORS: Chief Joseph Babatunde Oke, OON - Executive Chairman Arthur Bourekas (Australian) - Group Managing Director Charalambos Katsaras (Cypriot) - Group Business Development Director (Resigned w.e.f 1/5/2013) Prince Ademola Adetona - (Retired w.e.f. 7/5/12) Suleman Abubakar - (Appointed w.e.f 13/9/12) Haralambos George David (Cypriot) Orikolade Adebayo Karim - (Appointed w.e.f. 6/12/12) Anastasios Ioannis Leventis (British) Anastasios Paul Leventis, CBE, OFR (British) - (Retired w.e.f. 13/9/12) Kenny Ezenwani Odogwu Michail Oikonomakis (Greek) - (Appointed w.e.f. 6/12/12) Temidayo Olaofe (Mrs) Iddo House, Iddo, P O Box 159, Lagos City Securities (Registrars) Limited 358, Herbert Macauley Way Yaba, Lagos Akintola Williams Deloitte (Chartered Accountants) 235 Ikorodu Road Ilupeju Lagos DIRECTORS, OFFICERS & ADVISERS
  14. 14. BOARD OF Directors Anastasi s Ioannis Le entis (Bri ish) o v t Direct ro xe u ive Chairm E c t an C J sep b e OO hief o h Ba atund Oke, N O ikolade eb yo Karim r Ad a e Dir ct ro hail o m k r e Mic Oik no a is (G e k) D cto ire r
  15. 15. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS e u Sul man Ab bakar i c D re tor irector D Haralambos George avid (Cypriot) D Ke n Ez ni Od gw n y enwa o u Dir ctor e n irec o M anagi g D t r Arthur Bourekas (Australian)
  16. 16. 14 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 DIRECTORS’REPORT The Directors present to the members of the Company, the Annual Report together with the audited statement of financial position as at 31 December 2012. The principal activities of the Group continued to be: · Sales and Servicing of: passenger cars, commercial vehicles, agricultural, mining, construction and other industrial machinery, including engine rebuilds. · Real Estate: Property development and management. · The Provision of: administrative, management and other specialised services to subsidiary, associated and related companies. · Production and distribution of bakery and pastry products. · Hospitality services. · The assembly, sale and servicing of power generation equipment and other high horsepower engines, including overhauls. · The manufacture and sales of flexography and rotogravure inks for flexible packaging products and paints. The Financial Statements of the Company were prepared in accordance with International Financial Reporting Standards (IFRS) for the first time in 2012. In preparing them the Company had to adjust figures previously reported under the Statements of Accounting Standards issued by the Nigerian Accounting Standards Board (Nigerian GAAP). Explanations on how the transition from Nigerian GAAP to IFRS has affected the Company's statement of financial position (Balance Sheet), financial performance (Profit and Loss) and cash flows are set out in the tables and notes to these Financial Statements. The major areas of such impact for the Company are the format of presentation and disclosures, investment properties valuation and disposals, accounting for property, plant and equipment, employee benefits, lease and borrowing costs, etc. The conversion to IFRS is expected to bring the Company's reporting standards and systems in uniformity with other companies, domestic or global, where IFRS are in use and will allow the Company to streamline its operations, reporting and auditing standards, training and development. The performance of the Group during the year under review as compared with the previous year is as stated below: PRINCIPAL ACTIVITIES RESULTS FOR THE YEAR 31, 2011 N’000 December 31, 2012 N’000 734,252 December Turnover 16,302,953 18,095,183 Profit before taxation and non-controlling interest 652,846 823,532 Taxation (368,677) (494,889) Profit after taxation 284,169 328,643 Non-controlling interest 450,083 233,585 Profit after tax and non-controlling interest 562,228
  17. 17. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS For The Year Ended 31 December 2012 (Continued) DIRECTORS’ REPORT DIVIDEND N'000 DIRECTORS RECORD OF DIRECTORS' ATTENDANCE INTERESTS OF DIRECTORS The Directors recommend to the shareholders, the payment of a gross dividend of N370,620,643.70 that is, 14 Kobo per share payable to Shareholders on the Company's Register of Members at 24 May 2013. The dividend is subject to the deduction of appropriate withholding tax. If members at the Annual General Meeting approve this recommendation, the appropriation of the profit as at the end of the financial year would be as follows: Proposed Dividend 370,621 Retained Profit at the end of the year 748,372 Prince Ademola Adetona and Mr. Anastasios Paul Leventis, CBE, OFR, retired after the last Annual General Meeting. Mr. Charalambos Katsaras has indicated his intention to resign from the Board on May 1, 2013. Mr. Suleman Abubakar, Mr. Michail Oikonomakis and Mr. Orikolade Karim were appointed Directors after the last Annual General Meeting. They will retire at this Annual General Meeting, and being eligible, seek election. The Director retiring by rotation and seeking re-election is Chief Joseph Babatunde Oke, OON. Special Notice is hereby given in accordance with Section 256 of the Companies and Allied Matters Act, CAP C20 LFN 2004, in respect of the re-election of Chief Joseph Babatunde Oke, OON, who attained the age of Seventy (70) Years in 2012. Chief Oke will also retire from Executive Management of the Company after this Annual General Meeting. In accordance with Section 258(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the records of Directors' attendance at Board meetings during the year under review will be available for inspection at the Annual General Meeting. Directors' interests in the issued share capital of the Company as recorded in the Register of Members and/or as notified by the Directors in compliance with Sections 275 and 276 of the Companies and Allied Matters Act, CAP C20, LFN 2004 and the Listing Requirements of the Nigerian Stock Exchange were as follows: 15 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t No. of Shares At January 1, 2012 - - December 31, 2012 Chief Joseph Babatunde Oke, OON 4,000,000 3,000,000 Arthur Bourekas 1,014,069 334,069 Prince A. Adetona (Retired w. e. f. 07.05.2012) 4,803,646 4,803,646 Suleman Abubakar (Appointed w. e. f. 13.09.2012) - - Haralambos George David 3,487,059 3,160,059 Orikolade Adebayo Karim (Appointed w. e. f. 06.12.2012) - - Charalambos Katsaras (Retired w. e. f. 01.05.2013) 1,370,915 548,444 A. P. Leventis, CBE, OFR (Retired w. e. f. 13.09.2012) 4,791,847 722 Anastasios Ioannis Leventis 876,000 876,000 Kenny Ezenwani Odogwu 768 768 Michail Oikonomakis (Appointed w. e. f. 06.12.2012) Other than as disclosed above, the Directors are not aware of any disclosable interests or transactions in the share capital of the Company or any of its subsidiaries as at December 31, 2012 or at the date of this report.
  18. 18. 16 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 (Continued) DIRECTORS’ REPORT DIRECTOR'S INTERESTS IN CONTRACTS DONATIONS CORPORATE SOCIAL RESPONSIBILITY (CSR) CSR Activities and Highlights None of the Directors have notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20 LFN 2004 of any disclosable interests in contracts in which the Company was involved during the year ended 31 December 2012 or up to the date of this report. The Company made a donation of N1,200,000.00 to Manufacturers Association of Nigeria and N160,000.00 to the National Conservation Foundation, during the year under review. Our Corporate Social Responsibility integrates social, environmental and economic concerns into the Group's values, culture, decision making, strategy and operations in a transparent and accountable manner and thus, establishes better practices within the Group, creates wealth and improves the society at large. We aim at enriching the lives of our employees and the Community at large and to this end, we provide support for our communities along the lines of our branded theme of “Enriching Lives”, through activities that focus on the active and continuous community involvement, development and investment with particular emphasis on: . Education . Social Welfare; through corporate philanthropy and employee volunteerism. The Key Benefits of our corporate social responsibility are: . Improved reputation management . Enhanced ability to recruit, develop and retain staff . Improved innovation, competitiveness and market positioning . Enhanced ability to address change . More robust “social license” to operate in the community In conjunction with our communities, the state government and non-governmental organisations (NGOs), we directed our investment towards the actualisation of the following activities; 1. Leadership, Ethics and Civics (LEC) Programme The Leadership, Ethics and Civics (LEC) Training Programme is an extracurricular programme for selected SS1 students in two secondary schools – Randle Senior High School (Apapa) and Birrel Avenue Senior High School (Yaba). The programme will be delivered through LEAP Africa, a non-profit organisation, which is committed to inspiring, empowering and equipping a new cadre of African leaders. The LEC Programme is modelled after international best practices and emerging lessons from Ford Foundation's youth leadership efforts across the globe. The objectives of the programme are to primarily expose youth to the concept of leadership and to encourage them to apply those skills in implementing change projects in their communities. As part of the Company's pilot programme, thirty selected students from each of the schools mentioned above will be trained on the LEC curriculum over one academic term. The students will receive grants from A.G. Leventis (Nigeria) Plc. to support their change projects. LEAP will also provide on-going support through its staff and youth volunteers who will assist these students on their project implementation. At the end of the programme, A.G. Leventis (Nigeria) Plc. along with LEAP will celebrate the best student project, and award certificates to students who complete the entire curriculum.
  19. 19. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 17 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t 2. Other CSR projects within the Group included: . Visit to the Heart of Gold Hospice / Re-visit to the Heart of Gold Hospice with a . donation of a washing machine; . Cleaning exercise at Oyingbo Market; . Cleaning / donations at Ijora Health Center; . Visit to the Lady Mechanic Initiative; . Mentoring and Cleaning exercise at the Government Technical College, Port Harcourt. It is the Company's policy to give special consideration to disabled persons having regard to the individual applicant's aptitudes and abilities. At the end of the year, the Company commenced an insurance health care scheme with HYGEIA, a Health Maintenance Organisation (HMO), licensed by the National Health Insurance Scheme (NHIS) to provide health insurance to employees in the private sector. Through this arrangement, each employee, their respective spouses, and dependents below the age of eighteen (18) years are entitled to medical treatment in well-equipped, qualitative network of hospitals under the scheme. The Company runs canteens for junior and management employees where meals are heavily subsidised. Safety regulations are in place within the Company's premises and employees are regularly informed of the regulations. There are contributory retirement benefit schemes for both management and junior employees of the Company in conformity with the Pensions Reform Act 2004. The Company has an effective employer/employee communication system aimed at enhancing industrial harmony. Employees are kept as fully informed as practicable of the Company's activities which particularly affect them as employees and are also encouraged to communicate any information useful to management through use of suggestion boxes and other channels. Regular training programs are usually arranged for employees locally and where applicable, overseas for the improvement of skills and enhancement of career prospects. In the opinion of the Directors, the market value of the Company's fixed assets is not less than as shown in the statement of financial positions. Messrs. Akintola Williams Deloitte, having indicated their willingness, will continue in office as the Company's Auditors in accordance with Section 357 (2) of the Companies and Allied Matters Act, CAP C20, LFN 2004. Projects EMPLOYMENT OF DISABLED PERSONS HEALTH, SAFETY AND WELFARE OF EMPLOYEES EMPLOYEES' INVOLVEMENT AND TRAINING FIXED ASSETS AUDITORS BY ORDER OF THE BOARD TEMIDAYO OLAOFE (MRS) Company Secretary/Legal Adviser FRC No: FRC/2013/ICSAN/00000002145 IDDO HOUSE, IDDO, LAGOS For The Year Ended 31 December 2012 (Continued) DIRECTORS’ REPORT
  20. 20. 18 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS The Directors of A.G. Leventis (Nigeria) Plc are responsible for the preparation of the consolidated and separate financial statements that present fairly the financial position of the Company and its subsidiaries ("the Group") as at 31 December 2012, and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with 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. . properly selecting and applying accounting policies; . presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; . providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient, to enable users understand the impact of particular transactions, and conditions on the Company's consolidated and separate financial position and financial performance; and . making an assessment of the Group's ability to continue as a going concern. . designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; . maintaining adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS; . maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; . taking such steps as are reasonably available to them to safeguard the assets of the Company; and . preventing and detecting fraud and other irregularities. The consolidated and separate financial statements of the Group for the year ended 31 December 2012 were approved by Management on 27 March 2013. Signed on behalf of Management of the Company Chairman Group Managing Director FRC no: FRC/2013/NIM/00000002128 FRC no: FRC/2013/MANUN/00000002147 Group Finance Director FRC no: FRC/2013/ICAN/00000002031 In preparing the financial statements, the Directors are responsible for: The Directors are responsible for: Chief Joseph Babatunde Oke, OON Mr. Arthur Bourekas Mr. Oleg Buchak
  21. 21. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 19 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t CORPORATE GOVERNANCEREPORT A G LEVENTIS (NIGERIA) PLC is committed to the best practices in corporate governance; hence the Board is continually reviewing corporate governance standards and procedures in the light of the current developments in and outside Nigeria. It recognizes that corporate governance is fundamental to earning the confidence and trust of the shareholders and consequently provides the structure through which the objectives of the Company are set and the means of attaining such objectives. The Board is guided in their Corporate Governance policies by the provisions of the Code of Corporate Governance (“the Code”) which came into effect on April 1, 2011 and their policies are designed to ensure that the Company's business is conducted in a fair and transparent manner which conforms to high ethical standards. The governance framework helps the Board to discharge its roles of providing oversight and strategic counsel in balance with their responsibility to ensure conformity with regulatory requirements and acceptable risk. In compliance with Section 34(4) of the Code, it is hereby reported as follows: The Directors of the Company are professionals who are well established in various fields of endeavor such as Engineering, Accountancy, Marketing, Administration, Business, Law, Economics etc., creating a good skills- mix and wealth of experience which they have brought to bear on deliberations at Board meetings and in the exercise of their oversight functions. The Board governs and supervises the overall activities of the Company through the Group Managing Director. The composition of the Board of Directors of the Company is as follows: THE BOARD OF DIRECTORS COMPOSITION OF THE BOARD OF DIRECTORS THE ROLES OF THE BOARD OF DIRECTORS The Directors are in the process of formalizing a Charter and a Code of Business Ethics for the Group. The Charter provides for the following as the roles and responsibilities of the Board of Directors: · Strategy and Planning · Staffing at Board and Senior Management Levels & Succession Planning · Executive Remuneration · Performance Monitoring · Risk Management and Internal Control · Audit and Compliance · Capital Management and Financial Reporting · Communication with the shareholders and management of investor relations · Board and its Committees' accountabilities and responsibilities Executive/ Non-Executive/ Date of Title Name Independent Appointment Chairman Chief Joseph Babatunde Oke, OON Executive 4/2/1994 Managing Director Arthur Bourekas (Australian) Executive 9/4/2008 Director Charalambos Katsaras (Cypriot) Executive 9/4/2008 -1/5/2013 Director Anastasios Ioannis Leventis (British) Non-Executive 15/4/2010 Director Haralambos George David (Cypriot) Non-Executive 30/5/2000 Director Michail Oikonomakis (Greek) Executive 6/12/2012 Director Suleman Abubakar Non-Executive 13/9/2012 Director Orikolade Karim Non-Executive 6/12/2012 Director Kenny Ezenwani Odogwu Independent 20/6/2011 For The Year Ended 31 December 2012
  22. 22. The Board is alive to its responsibilities which primarily involves the creation of stakeholder value and ensuring the success of the Company. The Board is responsible for ensuring that the affairs of the Company are run in an efficient manner and in compliance with applicable regulations. Members of the Board are required at all times to act in the best interest of the Company in the articulation and formulation of its strategic direction. The Board of Directors is dedicated to ensuring that the Company achieves its objectives. The Board met four (4) times during the year on the following days: 27 March, 2012, 5 July, 2012, 13 September, 2012 and 6 December, 2012 The Board carries out some of their responsibilities through two committees whose terms of reference clearly sets out their roles, responsibilities, scope of authority and procedure for reporting to the Board. The Committees are Executive Committee and Human Resources & Remuneration Committee. The Executive Committee met on 17 February, 2012, 3 July, 2012, 12 September, 2012 and 6 December, 2012 while the Human Resources and Remuneration Committee met on 6 September, 2012 The following is the list of the directors and their attendance at Board and Committees meetings during the year: BOARD COMMITTEES ATTENDANCE AT MEETINGS BY DIRECTORS 20 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t CORPORATE GOVERNANCE REPORT Board Executive Committee Resource and Committee Remuneration Number of Meetings 4 4 1 4 Chief Joseph Babatunde Oke, OON 4 4 1 N/A Arthur Bourekas 3 4 1 3 Ademola Adetona (retired w.e.f 05.07.2012) 2 N/A N/A 2 Haralambos George David 3 4 N/A N/A Charalambos Katsaras (resigned w.e.f 01.05.2013) 4 3 N/A 4 Anastasios Ioannis Leventis 2 N/A N/A N/A Anastasios Paul Leventis, CBE, OFR (retired w.e.f 13.9.2012) - N/A N/A N/A Kenny Ezenwani Odogwu 3 N/A N/A N/A Michail Oikonomakis (appointed w.e.f 06.12.2012) N/A N/A N/A Suleman Abubakar (appointed w.e.f 13.9.2012) 1 N/A N/A N/A Orikolade Karim (appointed w.e.f 06.12.2012) N/A N/A N/A Human Audit Mr. Suleman Abubakar, Mr. Michail Oikonomakis and Mr. Orikolade Karim were appointed Directors after the last Annual General Meeting. They will retire at this Annual General Meeting, and being eligible, seek election. The Director retiring by rotation and seeking re-election is Chief Joseph Babatunde Oke, OON. For The Year Ended 31 December 2012 (Continued)
  23. 23. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS CORPORATE GOVERNANCE REPORT 21 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t The Biographical details of Directors seeking election/re-election are as stated below: th Mr. Michail Oikonomakis was appointed on the Board on 6 December, 2012. He started his career 33 (thirty three) years ago in Coca Cola Hellenic where he rose to the position of General Manager for all Mainland Greece operations of CCH. He was also a Managing Director in several other companies. Mr. Oikonomakis is a member of the Board of Directors and member of the Executive Committee of Leventis Foods Limited. In addition, he is a member of the Board of Directors of GNCCT (Greek-Nigerian Chamber of Commerce and Technology) and a member of the Advisory Board of CEO Association Greece. th Mr. Orikolade Karim was appointed on the Board on 6 December, 2012. He has good entrepreneurial skills and his current portfolios of businesses are in the construction, commodity trading, agro-allied products, oil and gas, engineering and power sectors. He is the Group Managing Director/CEO Shoreline Energy International Limited (a leading energy and infrastructure company focused on Africa). He is the Chairman of Costain West Africa Plc. and Nigerian Ropes Plc. He is also a member of the board of directors of Ecobank Nigeria Plc. Mr. Suleman Abubakar holds a Bachelor's degree in Management from Eckerd College, Saint Petersburg and an MBA in International Finance from American University, Washington. He is MD/C.E.O. of Imani Group of Companies one of the oldest indigenous real estate companies in Nigeria. Mr. Suleman Abubakar is a member of the Fiscal Responsibility Commission. He is also the current Vice President of Real Estate Developers Association. Chief J. B Oke became the Executive Chairman of the Company with effect from June 18, 2009 on the retirement of the former chairman. He had served the Leventis Group in various management capacities before his appointment. He joined the Board of the Company in February 1994. He is also on the Board of some other companies within the Leventis Group. The Audit Committee is composed of six (6) members made up of three representatives of the shareholders elected at the 2011 Annual General Meeting for a tenure of one year, and three representatives of the Board of Directors nominated by the Board. The Chairman of the Committee, Otunba Adedotun Odunuga is a shareholders' representative. The Committee met four times in the year on the following days: January 23, 2012, March 4, 2012, October 23, 2012 and November 13, 2012. 1) Otunba Adedotun Odunuga - Shareholder/Chairman 4/4 2) Prince Ademola Adetona (retired w.e.f 05.07.2012) - Director/Member 2/4 3) Mr. Arthur Bourekas - Director/Member 3/4 4) Mr. Charalambos Katsaras - Director/Member 4/4 5) Mr. Rasak Mumuni - Shareholder/Member 4/4 6) Miss Christie O. Vincent - Shareholder/Member 4/4 7) Mr. Kenny E. Odogwu (appointed w.e.f 05.07.2012) - Director/Member 0/4 MR. MICHAIL OIKONOMAKIS MR. ORIKOLADE KARIM MR. SULEMAN ABUBAKAR CHIEF JOSEPH BABATUNDE OKE, OON THE AUDIT COMMITTEE Composition Category Attendance For The Year Ended 31 December 2012 (Continued)
  24. 24. 22 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t In 2012 the Audit Committee: COMMUNICATION POLICY PRINTED MATERIAL TRANSPARENCY IN FINANCIAL REPORTING AND INTERNAL CONTROL WHISTLE BLOWING POLICY CONCLUSION · Reviewed the results of the audits undertaken by the Internal Audit and considered the adequacy of management's responses to the matters raised, including the implementation of any recommendations made. · Reviewed and approved the 2013 Internal Audit programme, including the proposed audit approach, coverage and allocation of resources. · Reviewed the effectiveness of Internal Audit, taking into account the views of directors and senior management on matters such as independence, proficiency, resourcing, and audit strategy, planning and methodology. · Reviewed regular reports on control issues of Company level significance, including details of any remedial action being taken. It considered reports from the Internal and external auditors on the Company's systems of internal control and reported to the Board on the results of its review. The Company is committed to managing an open and consistent communication policy with shareholders, potential investors and other interested parties. The objective is to ensure that the perception of those parties about the historical record, current performance and future prospects of the Company is in line with management's understanding of the actual situation. The guiding principles of this policy, as it relates to shareholders, are that the Company gives equal treatment to shareholders in equal situations, that any price sensitive information is published in a timely fashion, and that information is provided in a format that is as full, simple, readable, understandable, transparent and consistent as possible. The Company has an established web site and investor–relations portal where the Company's Annual Reports and other relevant information about the Company is published and made accessible to the public. The Company produces a detailed Annual Report and Financial Statements, which provides insight about the business and its financial results, according to relevant international and local standards and regulations. In addition, the Company publishes full year and half year results. Earlier this year, we had issued notices in daily newspapers asking shareholders to give us their proper addresses in order to ensure that the printed Annual Reports reach their correct destinations. We also sent forms to shareholders asking for this information and included stamped addressed envelopes to enable the shareholders to respond. The results from this exercise has been disappointing as less than 100 people have responded. The Company produces annually a comprehensive Annual Report and Financial Statements in compliance with the Companies and Allied Matters Act, CAP C20, LFN 2004 and other relevant accounting standards and regulations. In addition, the Company has in place adequate internal control procedures that compel staff compliance with Company's standard operating procedure. The Company has put in place a WHISTLE BLOWING POLICY which is known to all stakeholders. This policy has a dedicated “hot-line” and email system which could be used anonymously to report unethical practices. The Company and its subsidiaries are committed to ensuring that internationally recognized best practices in corporate governance are observed in all areas of the Company's business. The policies are constantly reviewed with focus on high ethical standards of honesty, integrity, accountability and transparency. CORPORATE GOVERNANCE REPORT For The Year Ended 31 December 2012 (Continued)
  25. 25. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 23 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t Report on the Financial Statements Directors' Responsibility for the Financial Statements Auditors' Responsibility Opinion Chartered Accountants We have audited the accompanying consolidated and separate financial statements of A.G. Leventis (Nigeria) Plc and its subsidiaries which comprise the consolidated and separate statements of financial position as at 31 December 2012, 31 December 2011 and 1 January 2011, the consolidated income statement, statement of changes in equity, cash flow statement for the years ended 31 December 2012 and 31 December 2011, a summary of significant accounting policies and other explanatory information set out on pages 2 to 89. The Directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011, the International Financial Reporting Standards and for such internal control as the Directors determine are necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion on these consolidated and separate 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 auditors' judgement, 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 auditors consider internal controls relevant to the entity's preparation and fair presentation of the financial statements 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 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. In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of A.G. Leventis (Nigeria) Plc and its subsidiaries as at 31 December 2012 and 31 December 2011 and 1 January 2011 and the financial performance and cash flows for the years ended 31 December 2012 and 31 December 2011 in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011 and the International Financial Reporting Standards. Lagos, Nigeria 30 April 2013 FRCN/2013/ICAN/00000001364 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF A.G. LEVENTIS (NIGERIA) PLC
  26. 26. 24 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t AUDIT COMMITTEE’SREPORT For The Year Ended 31 December 2012 TO THE MEMBERS OF A.G. LEVENTIS (NIGERIA) PLC In compliance with Section 359(6) of the Companies and Allied Matters Act Cap C20 Laws of the Federal Republic of Nigeria 2004, we; . Reviewed the scope and planning of the audit requirements and found them adequate. . Reviewed the financial statements for the year ended December 31, 2012 and are satisfied with the explanations obtained. . Reviewed the External Auditors Management Letter for the year ended December 31, 2012 and are satisfied that Management is taking appropriate steps to address the issues raised. . Ascertained that the accounting and reporting policies for the year ended December 31, 2012 are in accordance with legal requirements and agreed ethical practices. The External Auditors confirmed having received full cooperation from the Company's Management and that the scope of their work was not restricted in any way. Otunba Adedotun Odunuga Chairman of the Audit Committee st Dated this 21 day of March 2013 Otunba Adedotun Odunuga - Chairman Mr Rasaq O Mumuni - Member Miss Christie Vincent - Member Mr Arthur Bourekas - Member Mr Kenny E Odogwu - Member Mr Charalambos Katsaras - Member Members of the Audit Committee
  27. 27. THEFinancials 25 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t
  28. 28. 26 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME The accompanying notes on pages 30 to 100 and non IFRS statements on pages 101 to 104 form an integral part of these consolidated and separate financial statements. Revenue 24 16,302,953 18,095,183 7,515,354 8,501,055 Cost of sales 26.1 (12,858,419) (14,225,480) (5,189,628) (6,067,349) 3,444,534 3,869,703 2,325,726 2,433,706 Investment income 27 182,262 135,895 334,546 193,961 Other gains and losses 28 450,043 166,259 356,187 66,946 Selling and distribution expenses 26.2 (1,301,791) (1,436,757) (261,315) (526,108) Administration expenses 26.3 (1,717,054) (1,629,180) (898,658) (865,139) 1,057,994 1,105,920 1,856,486 1,303,366 Share of profit from joint venture 9.1 31,281 32,379 - - Finance costs 29 (436,429) (314,767) (258,445) (172,929) Profit before tax 652,846 823,532 1,598,041 1,130,437 Income tax expense 31 (368,677) (494,889) (479,048) (420,087) 284,169 328,643 1,118,993 710,350 Actuarial gain /(loss) 19.6 25,174 20,774 32,526 (8,865) Available for sale financial assets 5,526 (5,689) 5,526 (5,689) Other comprehensive income for the year net of tax 30,700 15,085 38,052 (14,554) Total comprehensive income for the year 343,728 695,796 Profit attributable to: Owners of the Company 16 734,252 562,228 1,118,993 710,350 Non-controlling interests 17 (450,083) (233,585) - - 328,643 710,350 Owners of the Company 767,631 564,401 1,157,045 695,796 Non-controlling interests 17 (452,762) (220,673) - - 343,728 695,796 All from continuing operations: Basic and Diluted 32 28 21 42 27 Notes 2011 2011 N'000 N’000 Continuing operations Gross profit Total profit from the year Other comprehensive income, net of tax Total comprehensive income attributable to: Earnings per share (kobo) 2012 2012 N'000 '000 314,869 1,157,045 284,169 1,118,993 314,869 1,157,045 N The Group The Company
  29. 29. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 27 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t Chief Joseph Babatunde Oke, OON Mr. Arthur Bourekas Mr. Buchak Chairman Group Managing Director Group Finance Director FRC no: FRC/2013/NIM/00000002128 FRC no: FRC/2013/MANUN/00000002147 FRC no: FRC/2013/ICAN/00000002031 The accompanying notes on pages 30 to 100 and non-IFRS statements on pages 101 to 104 form an integral part of these consolidated and separate financial statements. Oleg The Group The Company Notes 2011 01/01/11 2011 01/01/11 N'000 N'000 N'000 N'000 2012 2012 N'000 N'000 As at 31 December 2012 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Property, plant and equipment 5 6,551,466 6,565,230 5,576,617 2,973,566 2,958,470 1,761,150 Investment properties 6 4,743,124 5,122,708 5,056,204 4,508,218 4,887,802 4,821,298 Goodwill 7 7,212 7,212 7,212 - - - Interest in subsidiaries 8.1 - - - 968,833 956,575 965,373 Deferred tax assets 18 347,198 90,815 84,822 131,241 24,804 98,689 Other financial assets 9 148,394 136,587 9,897 84,734 104,208 9,897 11,797,394 11,922,552 10,734,752 8,666,592 8,931,859 7,656,407 Inventories 10 5,251,866 4,561,857 4,689,600 1,862,582 1,721,981 1,692,079 3,888,510Trade and other receivables 11 3,497,331 2,923,880 3,529,494 3,070,601 3,093,988 Cash and bank balances 12 1,847,013 987,638 1,227,275 1,567,834 819,366 354,092 10,987,389 9,046,826 8,840,755 6,959,910 5,611,948 5,140,159 20,969,378 19,575,507 14,543,807 12,796,566 Share capital 13 1,323,645 1,323,645 1,323,645 1,323,645 1,323,645 1,323,645 Share premium 14 210,548 210,548 210,548 210,548 210,548 210,548 Other reserve 15 4,354,448 4,321,069 4,318,896 4,342,394 4,304,342 4,318,896 Retained earnings 16 3,937,661 3,574,030 3,329,477 3,806,957 3,058,584 2,665,909 Attributable to equity holders of the parent 9,826,302 9,429,292 9,182,566 9,683,544 8,897,119 8,518,998 Non-controlling interests 17 402,727 855,489 1,076,162 - - - 10,229,029 10,284,781 10,258,728 9,683,544 8,897,119 8,518,998 Deferred tax liabilities 18 898,935 753,221 578,608 840,281 704,276 569,274 Retirement benefit obligation 19.4 671,584 763,883 739,640 415,346 488,306 451,837 Finance lease liabilities 20 871,865 1,214,465 466,344 871,865 1,214,465 466,344 2,442,384 2,731,569 1,784,592 2,127,492 2,407,047 1,487,455 Borrowings 21 2,012,239 1,205,579 895,308 506,173 258,197 6,428 Trade and other payables 22 6,467,841 5,287,804 5,058,774 2,074,212 2,090,807 2,002,053 Deferred revenue 23 660,217 689,254 828,196 387,117 306,488 318,125 Short-term portion of finance lease liabilities 20 326,832 299,601 242,796 326,832 297,283 242,796 Current tax liabilities 31 646,241 470,790 507,113 521,132 286,866 220,711 10,113,370 7,953,028 7,532,187 3,815,466 3,239,641 2,790,113 12,555,754 10,684,597 9,316,779 5,942,958 5,646,688 4,277,568 20,969,378 19,575,507 14,543,807 12,796,566 These financial statements were approved and authorised for issue by the Board of Directors on 27 March 2013 and were signed on its behalf by: Assets Non-current assets Total non-current assets Current assets Total current assets Total assets Equity and Liabilities Capital and reserves Total equity Non-current liabilities Total non-current liabilities Current liabilities Total current liabilities Total liabilities Total equity and liabilities 22,784,783 15,626,502 15,626,50222,784,783
  30. 30. 28 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 CHANGES IN EQUITYCONSOLIDATED STATEMENT OF The Group Attributable to equity Non- cShare Other holders ofShare Retained ontrolling capital reserve the parent Totalpremium earnings interests Notes N'000 '000 '000 ’000'000 '000 '000N N NN N N Balance at 1 January 2011 as restated 44b 1,323,645 210,548 4,318,896 3,329,477 9,182,566 1,076,162 10,258,728 Profit for the year - - - 562,228 562,228 (233,585) 328,643 Other comprehensive income 15 - - 2,173 - 2,173 12,912 15,085 Total comprehensive income - - 2,173 562,228 564,401 (220,673) 343,728 Payment of dividends 16 - - - (317,675) (317,675) - (317,675) Balance at 1 January 2012 210,548 3,574,030 855,4891,323,645 4,321,069 9,429,292 10,284,781 Profit for the period - - - 734,252 734,252 (450,083) 284,169 Other comprehensive income for the period 15 - - 33,379 - 33,379 (2,679) 30,700 Total comprehensive income - - 33,379 734,252 767,631 (452,762) 314,869 Payment of dividends 16 - - - (370,621) (370,621) - (370,621) Balance at 31 December 2012 210,548 3,937,661 402,7271,323,645 4,354,448 9,826,302 10,229,029 Attributable The Company Non-to equity Share Retained controllingShare Other holders of premium earnings interestscapital reserve the parent Total '000 '000 '000'000 '000 '000 ’000N N N NN N N ` Balance at 1 January 2011 1,323,645 210,548 4,318,896 2,665,909 8,518,998 - 8,518,998 Profit for the year - - - 710,350 710,350 - 710,350 Other comprehensive income 15 - - (14,554) - (14,554) - (14,554) - - - - - - Total comprehensive income - - - 710,350 710,350 - 710,350 Reclassified from revaluation reserve - - (14,554) - (14,554) - (14,554) Payment of dividends 16 - - - (317,675) (317,675) - (317,675) Balance at 1 January 2012 210,548 3,058,584 -1,323,645 4,304,342 8,897,119 8,897,119 Profit for the period - - - 1,118,993 1,118,993 - 1,118,993 Other comprehensive income for the period 15 - - 38,052 - 38,052 - 38,052 Total comprehensive income - - 38,052 1,118,993 1,157,045 - 1,157,045 Payment of dividends 16 - - - (370,621) (370,621) - (370,621) Balance at 31 December 2012 210,548 3,806,956 -1,323,645 4,342,394 9,683,543 9,683,543
  31. 31. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 29 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 The Group The Company Notes 2012 20122011 2011 N'000 N'000N'000 N'000 Cash flows from operating activities Cash receipts from customers 16,507,236 18,099,480 7,781,844 8,486,420 Payments to suppliers and employees (15,480,586) (16,963,243) (7,061,961) (7,312,532) Valued added tax (net) (98,586) 4,772 (79,423) 13,347 Tax paid 31 (286,938) (371,495) (197,899) (141,247) Net cash generated by operating activities 33 641,126 769,514 442,561 1,045,988 Cash flows from investing activities Proceeds from disposal of investment property 28.2 354,444 90,000 354,444 90,000 Proceeds from disposal of property, plant and equipment 31,975 13,650 27,776 5,615 Purchase of property, plant and equipment (668,498) (826,525) (348,226) (531,455) Proceeds from sale of investments 9.1 25,000 - 25,000 - Purchase of investments in companies 9.1 - (100,000) - (100,000) Interest received 27 182,262 135,008 334,546 193,768 Dividend received - 887 - 193 Net cash generated by/(used in) investing activities (74,817) (686,980) 393,540 (341,879) Cash flows from financing activities Term loan obtained/(repaid) 21 (111,513) (245,010) - - Interest paid 29 (436,429) (314,767) (258,445) (172,929) Dividend paid 22.1 (77,165) (317,675) (77,165) (317,675) Net cash used in financing activities (625,107) (877,452) (335,610) (490,604) Net increase in cash and cash equivalents (58,798) (794,918) 500,491 213,505 Cash and cash equivalents at beginning of the year (106,428) 688,490 561,169 347,664 Cash and cash equivalents at end of the year 12 (106,428) 561,169(165,226) 1,061,661 CONSOLIDATED STATEMENT OF CASH FLOWS
  32. 32. 30 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t For The Year Ended 31 December 2012 1. Description of business The Company was incorporated in 1958 as a limited liability company and converted to a public company on 29 November 1978. The principal activities of the Group and Company include the sale and servicing of passenger cars, commercial vehicles, agricultural and construction equipment, property letting and management, provision of financial and other specialised services and investments in subsidiaries and affiliated companies engaged in the provision of food, hospitality services, sales and services of power generating equipment. 1.1 The analysis of ownership structure of 5% and above as at 31 December 2012 The ultimate holding company is Leventis Holding SA, a company registered in Luxembourg. The Company has no ultimate controlling party, as the ownership of the holding company is spread across a number of trusts, with a variety of appointed trustees. 1.2 Going concern status The Group has consistently been making profits. The Directors believe that there is no intention or threat from any source to curtail significantly its line of business in the foreseeable future. Thus, these financial statements are prepared on a going concern basis. 1.3 Operating environment Emerging markets such as Nigeria are subject to different risks than more developed markets, including economic, political and social, and legal and legislative risks. As has happened in the past, actual or perceived financial problems or an increase in the perceived risks associated with investing in emerging economies could adversely affect the investment climate in Nigeria and the country's economy in general. The global financial system continues to exhibit signs of deep stress and many economies around the world are experiencing lesser or no growth than in prior years. These conditions could slow or disrupt Nigeria's economy, adversely affect the Company's access to capital and cost of capital for the Company and, more generally, its business, results of operations, financial condition and prospects. Because Nigeria produces and exports large volumes of oil, the Nigerian economy is particularly sensitive to the price of oil on the world market which has fluctuated significantly during 2012 and 2011. 2. Significant Accounting Policies 2.1 Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. These are the Company's first full financial statements prepared under IFRS as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB. In the preparation of the accompanying financial statement, the provisions of IFRS 1 “First-Time Adoption of International Financial Reporting Standards” (“IFRS 1”) have been applied and the principle accounting policy decisions and exemption taken are detailed in Note 2.2. The financial statements comprise: Consolidated statement of comprehensive income· Consolidated statement of financial position· Consolidated statement of changes in equity· Consolidated statement of cash flows· Notes to the consolidated financial statements.· Leventis Holding SA 1,510,616,882 57.06 Boval SA 640,537,970 24.2 Leventis Overseas Ltd 177,198,452 6.69 Name of shareholder No. of shares held Percentage of share capital FINANCIAL STATEMENTSNOTES TO THE
  33. 33. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS 31 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t These financial statements cover the financial year from 1 January 2012 to 31 December 2012, with comparative figures for the financial year from 1 January 2011 to 31 December 2011. In line with IFRS 1, comparative information in the statement of financial position is also presented for balances as at 1 January 2011, the date of transition to IFRS. In preparing its opening IFRS balance sheet, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Statements of Accounting Standards issued by the Nigerian Accounting Standards Board (“Nigerian GAAP”). An explanation of how the transition from Nigerian GAAP to IFRS has affected the Company's financial position, financial performance and cash flows is set out in Note 44 to the financials. 2.2 Basis of preparation The consolidated and separate financial statements have for the first time, been prepared in accordance with IFRS that are effective at 31 December 2012 (the Company's first reporting date under IFRS) and requirements of the Companies and Allied Matters Act (CAMA) of Nigeria and the Financial Reporting Council (FRC) Act of Nigeria. On initial adoption of IFRS, the Company applied the following exemptions from the requirements of IFRS and from their retrospective application as permitted by IFRS 1: Business combinations The Company has chosen not to restate business combinations that occurred prior to 1 January 2011 to comply with IFRS 3 “Business combinations”. Property, plant and equipment Net book value of property, plant and equipment under Nigerian GAAP are deemed to be carried at cost for subsequent accounting under IFRS. Employee benefits All cumulative actuarial gains and losses on defined pension schemes have been recognised in retained earnings at the transition date, 1 January 2011. For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE Borrowing costs The Company has applied the transitional provisions in IAS 23 “Borrowing costs” and capitalises borrowing costs on assets where construction was commenced on or after the date of transition. Investments in subsidiaries, jointly controlled entities and associated companies AGL has elected to measure its investment in subsidiaries and associated companies at the carrying amount under previous GAAP. Leases AGL has opted to determine whether an arrangement, existing at the date of transition, contains a lease on the basis of fact and circumstances existing at the date of transition. In accordance with IFRS, the Company has not revised its estimates required under IFRS that were also required under local GAAP as at 1 January 2011 and 31 December 2011 and, in addition, where estimates were not required under local GAAP; they have been based on information known at that time and not on subsequent events. IFRS 1 also enforces some mandatory exceptions to retrospective application of IFRS: de-recognition of financial assets and financial liabilities, hedge accounting, accounting for changes in estimates, embedded derivatives and classification and measurement of financial assets. The Company has applied IFRS requirements on these items prospectively. The consolidated and separate financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for assets. All accounting policies applied at 31 December 2012 and described in these financial statements have been applied consistently to all periods presented.
  34. 34. 32 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t 2.3 The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non- controlling interests even if these results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. 2.3.1 Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued Basis of consolidation Changes in the Group's ownership interests in existing subsidiaries amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 “Financial Instruments: Recognition and Measurement” or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity. 2.4 Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that: i. Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 “Income Taxes” and IAS 19 “Employee Benefits” respectively; ii. Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 “Non- Current Assets Held for Sale and Discontinued Operations” are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities Business combinations For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE
  35. 35. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE 33 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non- controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, as appropriate, with the corresponding gain or loss being recognised in profit or loss. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains 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 interests were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. 2.5 Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see Note 2.4 above) less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill
  36. 36. For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE 34 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t The Group's policy for goodwill arising on the acquisition of an associate is described in Note 2.6 below. 2.6 The results, assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate. When applicable, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 “Impairment of Assets” as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. Investments in associates and subsidiaries Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with IAS 39. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate. When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in the Group' consolidated financial statements only to the extent of interests in the associate that are not related to the Group. 2.7 A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control). When a group entity undertakes its activities under joint venture arrangements directly, the Group's share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group's share of the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to/from the Group and their Interests in joint ventures
  37. 37. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE 35 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t amount can be measured reliably. Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group reports its interest in jointly controlled entities using equity accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operation”. Any goodwill arising on the acquisition of the Group's interest in a jointly controlled entity is accounted for in accordance with the Group's accounting policy for goodwill arising in a business combination. When a group entity transacts with its jointly controlled entity, profits and losses resulting from the transaction with the jointly controlled entity are recognised in the Group's consolidated financial statements only to the extent of interests in the jointly controlled entity that are not related to the Group. 2.8 Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, value added taxes and other sales-related taxes. 2.8.1 Revenue from the sale of goods is recognised when all the following conditions are satisfied: · the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; · the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; · the amount of revenue can be measured reliably; · it is probable that the economic benefits associated with the transaction will flow to the entity; and · the costs incurred or to be incurred in respect of the transaction can be measured reliably. 2.8.2 Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows: Revenue recognition Sale of goods Rendering of services · installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at the balance sheet date; · servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the service for the product sold, taking into account historical trends in the number of services actually provided on past goods sold; and · revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses incurred. 2.8.3 The Group's policy for recognition of revenue from leases is described in Note 2.9.1. 2.8.4 Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition. 2.9 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. 2.9.1 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. Rental income Dividend and interest revenue Leasing The Group as lessor
  38. 38. For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE 36 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t 2.9.2 Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet 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 Group'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 term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are 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. 2.10 For the purpose of the consolidated financial statements, the results and financial position of the Group company is expressed in Naira, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements. In preparing the financial statements of each individual group entity, transactions in currencies other than the Group's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value The Group as lessee Foreign currency translation 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. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise. 2.11 Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risk and the uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of time value of money is material). When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that the reimbursement will be received and the amount of the receivable can be measured reliably. 2.12 The Group 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 7.5% and 10% of the employees' relevant emoluments respectively. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contribution. The Group also operates a gratuity scheme (defined benefit plan), for its qualified staff, for which the benefits are related to employees' length of service and remuneration. Provisions Pensions and other post-employment benefits
  39. 39. CORPORATEPROFILEOURDIRECTORSTHEFINANCIALSOURBUSINESSUNITS For The Year Ended 31 December 2012 (continued) FINANCIAL STATEMENTSNOTES TO THE 37 A . G . L e v e n t i s ( N i g e r i a ) P l c 2 0 1 2 A n n u a l R e p o r t In relation to the unfunded gratuity scheme plan the liability recognised at the statement of financial position date is the present value of the defined benefit obligation. The defined benefit obligation is calculated annually by independent actuary using the Projected Unit Credit Method. Actuarial gains and losses that arise are recognised in shareholders' equity in the statement of other comprehensive income in the period they arise. Past service costs are recognised immediately to the extent that benefits are vested and otherwise are amortised on a straight-line basis over the average period until the benefits become vested. Current service costs and any past service costs, together with the unwinding of the discount on plan liabilities, offset by the expected return on plan assets where applicable, are charged to operating expenses. The retirement benefit obligation recognised in the consolidated statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost. 2.13 Income tax expense represents the sum of the tax currently payable and deferred tax. 2.13.1 The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the period. 2.13.2 Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be used. Such Taxation Current tax Deferred tax deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to use the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 2.13.3 Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. Current and deferred tax for the year

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