Flour Mills of Nigeria Plc - Nigerian Stock · PDF fileFlour Mills of Nigeria Plc Annual report for the year ended March 31, 2017 Index The reports and statements set out below comprise

Flour Mills of Nigeria PlcAnnual report

March 31, 2017

Flour Mills of Nigeria PlcAnnual report for the year ended March 31, 2017

Index

The reports and statements set out below comprise the annual report presented to the members:

Index Page

2 - 12

13

14

15 - 19

20

21

22

23

24

25 - 102

103

104 - 105

Report of The Directors

Audit Committee Report

Directors' Responsibilities in Relation to the Financial Statements

Independent Auditor's Report

Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income

Consolidated and Separate Statements of Financial Position as at March 31, 2017

Consolidated Statement of Changes in Equity for the year ended March 31, 2017 Separate

Statement of Changes in Equity as at March 31, 2017

Consolidated and Separate Statements of Cash Flows

Notes to the Annual Report

Other National Disclosures

- Consolidated and Separate Statements of Value Added

- Five Year Financial Summary 106 - 107


Board of Directors, Officers and Other Corporate Information

Directors Mr. George S. Coumantaros (Chairman Emeritus) * (U.S. Citizen)

John G. Coumantaros (Chairman) (U.S. Citizen)

Dr. (Chief) Emmanuel A. Ukpabi (KJW) (Vice- Chairman)

Paul Miyonmide Gbededo (Group Managing Director)

Alhaji Abdullahi A. Abba

Prof. Jerry Gana, CON

Alfonso Garate (Spanish)

Alhaji Rabiu M. Gwarzo, OON

Ioannis Katsaounis (Greek)

Thanassis Mazarakis (Greek)

Atedo N.A Peterside, CON

Foluso O. Philips

Alhaji Y. Olalekan A. Saliu

Folarin R. A. Williams

Mrs Salamatu Hussaini Suleman Appointed 8th March 2017

Secretary Joseph Odion Umolu

Company registration number RC 2343

Date of incorporation September 29, 1960

Independent Auditors KPMG Professional Services

KPMG Tower

Bishop Aboyade Cole Street

Victoria Island

Lagos

Registered office / Business address 1, Golden Penny Place,

Wharf Road

Apapa,

Lagos

Registrars and Transfer office Atlas Registrars Ltd

34 Eric Moore Road,

Iganmu,

(Bagco Building)

P.O.Box 341, Apapa, Lagos

Bankers Access Bank Plc Skye Bank Plc

Citibank Nigeria Limited Stanbic IBTC Bank Plc

Diamond Bank Plc Suntrust Bank Limited

Ecobank Nigeria Plc Union Bank of Nigeria Plc

Fidelity Bank Plc United Bank for Africa Plc

First Bank of Nigeria Limited Wema Bank Plc

First City Monument Bank Zenith Bank Plc

Guaranty Trust Bank Plc

Heritage Bank Limited

Providus Bank Limited

*Deceased on 17 October 2016.

1



1. Accounts

The Directors are pleased to present the annual report together with the audited consolidated and separate financial statements of the

company and its subsidiaries (together, “the Group”) for the year ended 31st March, 2017.

2. Legal form

The Company was incorporated in Nigeria on 29th September, 1960 as a private limited liability company and converted to a public liability

company in November, 1978. The shares are currently quoted on the Nigerian Stock Exchange.

3. Principal activities

The group is primarily engaged in flour milling; production of pasta, noodles, edible oil and refined sugar; production of livestock feeds;farming and other agro-allied activities; distribution and sale of fertilizer; manufacturing and marketing of laminated woven polypropylenesacks and flexible packaging materials; operation of Terminals A and B at the Apapa Port; customs clearing, forwarding and shipping agentsand logistics.

4. Results

Group Company31-Mar-17 31-Mar-16 31-Mar-17 31-Mar-16

N '000 N '000 N '000 N '000Revenue 524,464,448 342,586,459 375,225,284 247,876,504Operating profit 41,439,897 9,052,143 29,948,911 4,300,173Profit before taxation 10,472,847 11,489,278 10,979,579 6,248,497Profit for the year 8,836,452 14,420,284 9,829,046 10,425,786Total comprehensive income for the year 9,598,943 13,860,828 10,473,401 9,950,884

5. Dividend

The Directors are pleased to recommend to shareholders at the forthcoming annual general meeting the declaration of a total of N2.62

billion (2016: N2.62 billion) representing a dividend of N1.00 (2016: N1.00) per ordinary share of 50 kobo each. This dividend is to bedeclared out of accumulated pioneer profit.

6. Directors and directors' interests

The names of Directors who are currently in office are detailed on page 1.

In accordance with the Company’s Articles of Association, the following Directors retire and, being eligible, offer themselves for re-electionat the next Annual General Meeting:Retiring by rotation:Mr. Ioannis KatsaounisMr. Thanassis MazarakisAlhaji Olalekan SaliuMr. Folarin WilliamsMrs. Salamatu SuleimanNo Director has an interest in contracts.Mrs. Salamatu Suleiman who was appointed to the Board as a Non–Executive Director of the company on Wednesday, 8th March 2017 willseek confirmation of her appointment at the Annual General Meeting.No Director has a service contract not determinable within five years.

2



In accordance with the Company’s Articles of Association, the following Directors retire and, being eligible, offer themselves for re-electionat the next Annual General Meeting:

Retiring by rotation:

Mr. Ioannis Katsaounis

Mr. Thanassis Mazarakis

Alhaji Olalekan Saliu

Mr. Folarin Williams

Mrs. Salamatu Suleiman

No Director has an interest in contracts.

Mrs. Salamatu Suleiman who was appointed to the Board as a Non–Executive Director of the company on Wednesday, 8th March 2017 willseek confirmation of her appointment at the Annual General Meeting.

No Director has a service contract not determinable within five years.

7. Directors' interests in shares

The Directors’ interests in the issued share capital of the Company as recorded in the Register of members and/or as notified by them forthe purpose of Section 275 of the Companies and Allied Matters Act,Cap C20 Laws of the Federation of Nigeria, 2004 are as follows:

Interests in shares31-Mar-17 31-Mar-16

Director Direct Indirect Direct Indirect** Mr. George S. Coumantaros - - - -** John G. Coumantaros - - - -Alhaji Abdullahi A. Abba 12,343 - 12,343 -Dr. (Chief) Emmanuel A. Ukpabi (KJW) 4,194,986 - 4,194,986 -Paul Miyonmide Gbededo 1,667,370 - 1,167,370 -Prof. Jerry Gana, CON 44,000 - 44,000 -Ioannis Katsaounis 2,570,765 - 2,570,765 -Folarin R. A. Williams 30,082 - 30,082 -*Atedo N.A Peterside, CON - 2,500,000 - 2,150,000Alhaji Rabiu M. Gwarzo, OON 199,722 - 199,722 -Alhaji Y. Olalekan A. Saliu 1,608,985 - 1,608,985 -Foluso O. Philips - - - -Alfonso Garate - - - -Thanassis Mazarakis - - - -Mrs Salamatu Hussaini Suleman - - - -

*Mr. Atedo N. A. Peterside, CON owns these shares indirectly through The First ANAP Domestic Trust.

**Mr. George S. Coumantarous and Mr. John G. Coumantarous represents Exclesior Shipping Company Limited. See note 1.4 of thefinancial statements.

8. Profile of Directors seeking re-election

The profile of Directors seeking re-election at the Annual General Meeting.

Mr. Ioannis Katsaounis

Mr. Ioannis Katsaounis is a non-executive member of the Board of Directors of Flour Mills of Nigeria Plc, a position he has occupied sinceSeptember, 1993.

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Mr. Katsaounis holds a Graduate Degree in Economics University of Geneva (1972); Graduate Degree in Regional Development, Universityof Athens (1975); Bachelor of Science Degree in Mechanical Engineering (University of Minnesota 1969) and an MBA in Economics from theUniversity of California, Berkeley (1970). He is an alumnus of Harvard Business School of Post Graduate Studies.

Prior to joining Flour Mills, Mr. Katsaounis was the founder and owner of Plexus Construction Company, Greece (1974 – 1985). He has alsoserved as Managing Director and General Manager of Alucanco S.A. Greece, an aluminum cans manufacturing company (1985-2000).


Thanassis Mazarakis is a non-executive member of the Board of Directors of Flour Mills of Nigeria PLC, a position he has occupied since 3rdJuly, 2006.

He holds a Bachelor of Arts degree from Princeton University (1984) and a Masters in Business Administration from the Wharton School atthe University of Pennsylvania (1985). Prior to joining Flour Mills, Mr. Mazarakis has held numerous finance, marketing and generalmanagement positions. Most recently he was the Chief Financial Officer of the Prudential Insurance Company of America, one of the largestUS life insurance companies, and the Chief Executive Officer of Chase Merchant Services, the largest global credit and debit card transactionprocessor.

Mr. Folarin Rotimi Abiola Williams

Mr. F. R. A. Williams Jnr, a Chemical Engineer and a legal practitioner, joined the Board of Flour Mills of Nigeria Plc as a non-executivemember on 20th May, 2005.

He was educated at Imperial College of Science and Technology, London where he graduated BSc. (Hons.) AGGI Chemical Engineering. Hereceived an award for Outstanding Work in the Humanities at the University of London in 1976.

Following a study at Selwyn College Cambridge from 1981 to 1983, Mr. Williams obtained MA Cantab Law and subsequently attended theNigerian Law School from 1983 to 1984.

Mr. Williams is a highly experienced legal practitioner who is principally active in commercial and corporate advisory work and litigation.

He is currently serving on the Board of Pharma-Deko Plc, G. Cappa Plc, Smithkline Beecham Plc and a number of other companies.


Alhaji Saliu is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and a Fellow of Association of Certified CharteredAccountants, U.K..

Alhaji Saliu who holds an Upper Second Class honours Bachelor of Science Degree in Economics, University of Ibadan (June 1969) had abrief stint with the Civil Service of the old Western Nigeria before travelling to the United Kingdom in January 1971 for training inAccountancy which he completed in June 1973.

On return to Nigeria in 1974, he joined the accounting firm of KPMG Audit (formerly Peat Marwick Ani Ogunde & Co) and rose to theposition of a Partner before joining Flour Mills of Nigeria Plc in February 1994 as Finance Director/Company Secretary. He stepped asidefrom his role of Finance Director in September, 2011 and continued to serve Flour Mills as an Executive Director and Company Secretary.

Alhaji retired as the Company Secretary on 31st December 2015 and remains on the Board of Directors as a Non-Executive Director of theCompany.

Mrs Salamatu Hussaini Suleman

Mrs. Salamatu Hussaini Suleiman joined the Board of Flour Mills of Nigeria Plc. as an Independent Non-Executive Director on Wednesday8th March 2017.

Mrs. Salamatu Hussaini Suleiman, who is presently an Independent non-executive director of Stanbic IBTC Holdings Plc, is an experiencedprofessional in corporate business development and an amazon in the Nigerian public sphere widely known for her advocacy for theeducation of the girl-child and women development.

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Mrs. Suleiman obtained an LLB (Hons) degree from Ahmadu Bello University, Zaria, Kaduna State, Nigeria in 1981 as well as an LLM (withDistinction in “Multinational Enterprise and the Law”) from the London School of Economics & Political Science in 1987. She commencedher professional career as a State Counsel with the Ministry of Justice Sokoto in 1981 and thereafter worked with Continental MerchantBank from 1988 to 1996 and NAL Merchant Bank from 1996 to 1997. She also worked as Secretary/Legal Adviser with the AluminumSmelter Company of Nigeria from 1997 to 2001 and later became the Secretary and Director of Legal Services at the Securities & ExchangeCommission between 2001 and 2008.

Mrs. Suleiman was appointed Honourable Minister of Women Affairs and Social Development, Federal Republic of Nigeria in December2008 and went on to become the Honourable Minister of State, Foreign Affairs Ministry, Federal Republic of Nigeria in 2010. In February2012, Mrs. Suleiman was appointed Commissioner, Political Affairs, Peace and Security, ECOWAS Commission and completed her tenure atthe end of April 2016.

9. Directors' Responsibilities

The Directors are responsible for the preparation of financial statements which give a true and fair view in accordance with InternationalFinancial Reporting Standards (IFRSs) and in the manner required by the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004and the Financial Reporting Council of Nigeria (FRCN) Act. In doing so, they ensure that:

proper accounting records are maintained;

applicable accounting standards are complied with;

suitable accounting policies are adopted and consistently applied;

judgments and estimates made are reasonable and prudent;

the going concern basis is used, unless it is inappropriate to presume that the Company will continue in business and;

Internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets and also prevent and detect fraud

and other irregularities.

10. Corporate Governance

Introduction

The Company is committed to the best practice and procedures in corporate governance. Its business is conducted in a fair, honest andtransparent manner which conforms to high ethical standards. This enables the directors and Management to accomplish the company’sstrategic goals, ensure good growth and corporate stability for the benefit of all stakeholders.

Board composition

The Company’s Articles of Association provides that the Company’s Board of Directors shall consist of not more than fifteen directors.Presently, the Board has a non-executive Chairman, a non-executive Vice Chairman, one executive director and eleven non-executivedirectors, one of whom is an independent director.

The thorough process of selecting Board members gives premium to educational and professional background, integrity, competence,capability, knowledge, expertise, skills, experience and diversity.

Board meetings

Members of the Board of Directors hold a minimum of four quarterly meetings to approve the Company’s business strategy and objectives,decide on policy matters, direct and oversee the company’s affairs, progress, performance, operations, finances; and ensure that adequateresources are available to meet the company’s goal and objectives. Attendance of Directors at quarterly meetings is very good.

It is noteworthy that the Company's Memorandum and Articles of Association allows for teleconferencing in order to ensure wideconsultation and maximum participation by board members.

In line with provisions of Section 258(2) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, record of Directors’attendance at Board meetings is available for inspection at the Annual General Meeting

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Role of Directors

The highlights of the role of directors include:

Critical and regular examination of the company’s overall strategy with a view to ensuring that its goals, business plan andbudget are in alignment.

Assign respective committees to consider and take appropriate decisions on issues requiring Board attention.

Establish well-considered objectives for the company and monitor implementation, reviewing performance and ensure thedeployment of appropriate competencies.

Ensure that adequate resources are available to meet the company’s goals and objectives.

Oversee Board appraisal, training, succession planning, appointment and remuneration of members.

Board Committees

The Board of Directors has two principal board committees in line with SEC’s Code of Corporate Governance. These are listed belowindicating the summary of attendance at meetings held during the financial year ended March 31, 2017:

Remuneration/ Governance Committee

Mr. John G. Coumantaros

Dr. (Chief) Emmanuel A. Ukpabi (KJW)


Mr. Joseph Umolu - Company Secretary

Record of attendance at Meetings (Yes - Present; No - Absent):

Name 20/07/2016 07/12/2016Mr. John G. Coumantaros Yes YesDr. (Chief) Emmanuel A. Ukpabi (KJW) No YesMr. Thanassis Mazarakis Yes YesMr. Joseph Umolu Yes Yes

Risk Management Committee

Members of the committee include:

Mr. Paul Miyonmide Gbededo


Alhaji Rabiu M. Gwarzo, OON


Mr. J. Vauthier - Chief Finance Officer

Mr. W. Percival – Deigh - Group Head, Internal Audit

Mr. Joseph Umolu - Company Secretary

Record of attendance at Meetings (Yes - Present; No - Absent):

6



Name 20/07/2016 07/12/2016Mr. P. M. Gbededo Yes YesMr. T. Mazarakis Yes YesAlh R.M. Gwarzo, OON Yes YesAlh. Y. O. A. Saliu Yes YesMr. J. Vauthier Yes YesMr. W. Percival - Deigh Yes YesMr. Joseph Umolu Yes Yes

Segments and Directorates

For effective management, the group is structured along the following Segments and Directorates

Segments

Agro Allied

Food

Packaging

Port operations and logistics

Real estates

Directorates

Finance

Corporate services/ Legal

Technical

Marketing and Sales

Supplies/ Procurement

General Services

Human Resources

Internal Audit

Frequency and Attendance of Board Meetings

The Board held four (4) meetings during the financial year ended March 31, 2017. The notice for each meeting was in line with theCompany’s Articles of Association and board papers are usually provided to Directors in advance.

Senior Executives of the Company are invited to attend board meetings and make representations of their business units.

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A summary of record of attendance at Board meetings is presented below:

Name 20/07/2016 08/09/2016 07/12/2016 08/03/2017Mr. George S. Coumantaros No No N/a N/aMr. John G. Coumantaros Yes Yes Yes YesDr. (Chief) Emmanuel Akwari Ukpabi (KJW) Yes Yes Yes YesMr. Paul M. Gbededo Yes Yes Yes YesAlhaji Abdullahi Ardo Abba Yes No Yes YesAlhaji Rabiu Muhammad Gwarzo, OON Yes Yes Yes YesMr. Ioannis Katsaounis Yes Yes Yes YesMr. Thanassis Mazarakis Yes Yes Yes YesMr. Atedo N. A. Peterside, CON Yes Yes Yes YesMr. Folarin Rotimi Abiola Williams Yes Yes Yes YesProf. Jerry Gana, CON No Yes Yes YesAlhaji Yunus Olalekan Saliu Yes Yes Yes YesMr. Folusho Olajide Phillips [Independent ] Yes Yes Yes YesMr. Alfonso Garate No Yes Yes YesMrs. Salamatu Suleiman [Independent ] N/a N/a N/a Yes

Yes - Present

No - Absent

NA – Not applicable (not a director on this date)

Statutory Audit Committee

Composition

Pursuant to section 359(3) of the Companies and Allied Matters Act of Nigeria, Cap C20 LFN 2004, the Company has put in place an AuditCommittee comprising three Directors and three shareholders as follows:

Mr. K. A. Taiwo

Mr. E.O. Oladokun

Mr. S.O. Ogunnowo

Dr (Chief) E. A. Ukpabi

Mr. F. Phillips

Alh. Y. O. A. Saliu

The functions of the Committee are laid down under section 359 (6) of theCompanies and Allied Matters Act Cap C20 Laws of theFederation of Nigeria, 2004.

Meetings

Members of the Audit Committee receive regular reports and updates on financial matters and internal control reviews from internal andexternal auditors. A summary of record of attendance at Audit Committee meetings held during the financial year ended March 31, 2017 ispresented below:

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Name 22/06/2016 14/07/2016 13/12/2016 10/03/2017Mr. K.A. Taiwo Yes Yes Yes YesMr. E.O. Oladokun No No Yes YesMr. S.O. Ogunnowo Yes Yes Yes YesMr. Foluso Phillips N/a N/a Yes YesDr. (Chief) E. A. Ukpabi No No Yes YesAlh. Y. O. A. Saliu Yes Yes Yes Yes

Yes- Present

No- Absent

N/A- Not applicable

Internal Audit:

The Company’s efforts to continuously ensure sound financial discipline and adherence to high ethical standards, as part of its enhancedcorporate governance strategy, have resulted in the setting up of a robust Group Internal Audit which is risk focused.

Internal audit function is currently manned by a team of professionals charged with the responsibility of ensuring that strategic businessrisks facing the Group are promptly identified, effectively mitigated, and that recommendations are proffered and continuously monitored.To ensure independence of this important function, Internal Audit reports directly to the statutory Audit Committee on a quarterly basisand is supervised by the Risk Management Committee of the Board.

Code of Business Conduct

In demonstration of strong commitment to best practices in corporate governance, integrity and high ethical standards in all aspects of ourbusiness, FMN has a Code of Conduct in place. Apart from being in line with current global trends, FMN’s Code of Conduct also aligns withthe requirements of regulatory authorities.

Through the provisions of the Code, FMN instills in its Directors and Employees the need to maintain high standard of corporate values,transparency, accountability, professionalism and promote good corporate governance.

Whistle Blowing

Under its whistle blowing mechanism, employees of FMN and other stakeholders including third parties are encouraged to report anyobserved or suspected acts of fraud, corruption or other irregularities, orally or anonymously contact the independent helpline bytelephone or online without fear of reprisal or recrimination.

The company guarantees that the identity of the reporting individual or organization shall be accorded utmost protection and the reporttimeously investigated and treated.

The robust system has been embraced by all employees and stakeholders and it is producing good results.

11. Regulatory matters

The Financial Reporting Council of Nigeria (FRCN) has granted the company a waiver which allows the Chief Finance Officer, Mr. JacquesVauthier to sign the Company’s financial statements for the year ended 31 March 2017 without indicating his FRC registration numberalong with certifiction, pending the conclusion of his registration with FRCN. The waiver is granted on the condition that the registrationrequirement shall be fulfilled before signing-off the financial statements for the year ending 31 March 2018.

12. Security trading policy

Flour Mills of Nigeria Plc has put in place a Code of Conduct which aligns with section 14 of the Amendment to the Listing Rules of theNigeria Stock Exchange.

During the financial year under review, the Directors and employees of the company complied with the Nigerian Stock Exchange Rulesrelating to securities transactions and the provisions of the FMN Code on Insider Trading.

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13. Complaint management policy

In line with the Securities and Exchange Commission (SEC) Rules relating to the Complaints Management Framework of the Nigerian CapitalMarket, FMN has established a clearly defined Complaints Management Policy to handle and resolve complaints within the purview of theFramework.

The framework as established by FMN involves the maintenance of an electronic complaints register by our Registrars and the Policy isavailable for review on the company’s website and copies of same shall be circulated to members at the Annual General meeting.

14. Substantial Interest in shares

The Registrar has advised that according to the Register of Members on March 31, 2017, apart from Excelsior Shipping Company Limitedwith 1,369,231,166 (2016: 1,369,231,166), representing 52.18% of the paid up share capital, no other individual shareholder held up to 5%of the issued share capital of the Company.

15. Analysis of Shareholding Structure

As at March 31, 2017 No ofshareholders

Percentage (%) No of sharesheld

Percentage (%)

1-1,000 27,713 34.83 11,557,787 0.451,001-5,000 39,491 49.63 93,944,581 3.585,001-10,000 5,750 7.23 40,596,602 1.5510,001-50,000 5,077 6.38 106,383,728 4.0550,001-100,000 728 0.92 52,091,089 1.98100,001-500,000 623 0.78 129,726,994 4.94500,001-1,000,000 85 0.11 61,573,130 2.351,000,001 and above 94 0.12 2,128,379,277 81.10

79,561 100.00 2,624,253,188 100.00

16. Donations and Charitable Gifts

No donation was made to any poltical party or organization during the year.

Donations and charitable gifts amounting to N16 million were made during the year (2016: N7.62 million):

DonationsN

Nigeria Employers' Consultative Association (NECA) 300,000Association of Company Secretaries and Legal Advisers (Sponsorship of ACSLA Manufacturing MaidenLecture)

300,000

Polymer Institute of Nigeria 6,000,000Association of Food, Beverage and Tobacco Employees (AFBTE) 3,000,000Manufacturers Association of Nigeria 2,350,000Raptors Basketball Academy 3,800,000Lagos Chamber of Commerce 250,000

16,000,000

17. Events after the reporting period

There were no significant developments since the reporting date which could have had a material effect on the state of affairs of theCompany at March 31, 2017 and the profit for the year ended on that date which have not been adequately provided for or recognized inthe financial statements.

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18. Customers

The Company’s products are sold through numerous customers who are spread across the country. Amongst its main customers are YALEFoods Limited, OK Foods Limited, Chikki Foods Industries Limited, Beloxxi Industries Limited, Niger Biscuit Company Limited, Leventis FoodsLimited and Eminco Investment (Nigeria) Limited.

19. Suppliers

The Company obtains its materials at arm’s length basis from overseas and local suppliers. Amongst its main overseas and local suppliersare Star Trading Company Limited, Southern Star Shipping Co. Inc., Buhler AG., First Blend Limited, Vitachem Nigeria Limited, MontizenLimited, Gas Link Limited and Wahum Packaging Limited.

20. Property, plant and equipment

Movements in Property, plant and equipment during the year are shown in Note 18 of the financial statements. In the opinion of theDirectors, the market value of the Company’s properties is not less than the value shown in the audited financial statements.

21. Human Capital

(a) Employment and Employees

The Company reviews its employment policy in line with the needs of our business. Careful recruiting is undertaken to ensure that potentialhigh performers are attracted and retained.

Equal Employment Opportunity and Diversity

Subject to the applicable laws, we recruit, hire, train, promote, discipline and provide other conditions of employment without regard to aperson’s race, colour, religion, sex, age, national origin, disability or other classifications protected under the law. This includes providingreasonable accommodation for members’ disabilities or religious beliefs and practices.

(b) Employee Developments

Local and Overseas Training and Development Programmes are organized to meet the needs of the Company’s modernization / automationstrategy implementation.

The Company continues to place premium on its Human Capital Development arising from the fact that this would ensure improvedefficiency of the business and maintain strategic advantage over competition.

Equal Employment Opportunity and Diversity

Subject to applicable laws we recruit, hire, train, promote, discipline and provide other conditions of employment without regard to aperson’s race, colour, religion, sex, age, national origin, disability or other classifications protected under law. This includes providingreasonable accommodation for members’ disabilities or religious beliefs and practices.

(c) Health, Safety and Environment

The Company appreciates the value of safe work environment to business success and therefore embarks on periodic assessment to ensurecompliance and safety. Employees are continuously sensitized and pep talks on safe work procedures precede the commencement of eachshift in the operational areas. The Company provides Personal Protective Equipment to employees as required by the nature of job andsafety officers are on regular monitoring to ensure usage compliance.

There are fully equipped clinics at its various sites of operations.

The employee canteens at all its sites of operations continue to provide nutritionally balanced meals in very conducive environment and atsubsidized rates.

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Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income

for the year ended March 31, 2017

Group Company

31-Mar-17 31-Mar-16 31-Mar-17 31-Mar-16Note(s) N '000 N '000 N '000 N '000

Revenue 5 524,464,448 342,586,459 375,225,284 247,876,504

Cost of sales 6 (457,775,380) (304,961,737) (324,918,838) (223,664,917)

Gross profit 66,689,068 37,624,722 50,306,446 24,211,587

Selling and distribution expenses 9 (5,341,148) (5,003,801) (4,981,999) (4,600,274)

Administrative expenses 10 (18,419,807) (15,848,261) (12,013,415) (9,436,976)

Net operating gains and losses 8 (1,488,216) (7,720,517) (3,362,121) (5,874,164)

Operating profit 41,439,897 9,052,143 29,948,911 4,300,173

Gain on disposal of investment in associate 12 - 23,731,422 - 13,952,039

Investment income 13 1,562,304 1,103,475 3,230,407 1,008,096

Finance costs 14 (32,529,354) (22,397,762) (22,199,739) (13,011,811)

Profit before taxation 10,472,847 11,489,278 10,979,579 6,248,497

Net income tax (expense) /credit 15 (1,636,395) 2,931,006 (1,150,533) 4,177,289

Profit for the year 8,836,452 14,420,284 9,829,046 10,425,786

Other comprehensive income:

Items that will not be reclassified to profit or loss:

Remeasurements on net defined benefit liability 35 1,153,011 (664,250) 979,281 (579,832)

Related tax 16 (368,964) 173,814 (313,370) 173,950

Remeasurements of defined benefit liability, net of tax 784,047 (490,436) 665,911 (405,882)

Items that may be reclassified to profit or loss:

Loss on available-for-sale financial assets (21,556) (69,020) (21,556) (69,020)

Other comprehensive income for the year net of taxation 762,491 (559,456) 644,355 (474,902)

Total comprehensive income for the year 9,598,943 13,860,828 10,473,401 9,950,884

Profit attributable to :

Owners of the Company 7,961,484 14,620,321 9,829,046 10,425,786

Non-controlling interest 23 874,968 (200,037) - -

8,836,452 14,420,284 9,829,046 10,425,786

Total comprehensive income attributable to:

Owners of the Company 8,712,032 14,060,865 10,473,401 9,950,884

Non-controlling interest 23 886,911 (200,037) - -

9,598,943 13,860,828 10,473,401 9,950,884

Earnings per share

Per share information

Basic earnings per share (kobo) 17 303 557 375 397

Diluted earnings per share (kobo) 17 303 557 375 397

The notes on pages 25 to 102 form an integral part of the financial statements.

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Consolidated Statement of Changes in Equity for the year ended March 31, 2017

Share capital Share premium Fair valuereserve

Capital reserve Retainedearnings

Equityattributable toowners of the

Company

Non-controllinginterest

Total equity

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

Group

Balance as at April 01, 2015 1,312,126 36,812,540 (20,740) 281,201 45,967,357 84,352,484 3,057,911 87,410,395

Profit for the year - - - - 14,620,321 14,620,321 (200,037) 14,420,284Other comprehensive income - - (69,020) - (490,436) (559,456) - (559,456)

Total comprehensive income for the year - - (69,020) - 14,129,885 14,060,865 (200,037) 13,860,828

Transactions with owners recorded directly in equityTransfer to reserves from unclaimed dividends (Note 39) - - - - 33,423 33,423 - 33,423Transfer from capital reserves to retained earnings - - - (281,201) 281,201 - - -Dividend declared (Note 39 - - - - (5,510,932) (5,510,932) (27,940) (5,538,872)

Total contributions by and distributions to owners of the companyrecognised directly in equity

- - - (281,201) (5,196,308) (5,477,509) (27,940) (5,505,449)

Balance as at March 31, 2016 1,312,126 36,812,540 (89,760) - 54,900,934 92,935,840 2,829,934 95,765,774

Balance as at April 01, 2016 1,312,126 36,812,540 (89,760) - 54,900,934 92,935,840 2,829,934 95,765,774

Profit for the year - - - - 7,961,485 7,961,485 874,967 8,836,452Other comprehensive income - - (21,556) - 772,103 750,547 11,944 762,491

Total comprehensive income for the year - - (21,556) - 8,733,588 8,712,032 886,911 9,598,943

Transactions with owners recorded directly in equityAcquisition of NCI without a change in control (Note 23) - - - - (581,996) (581,996) 363,464 (218,532)Transfer to reserves from unclaimed dividends (Note 39) - - - - 22,412 22,412 - 22,412Dividends declared (Note 39) - - - - (2,624,253) (2,624,253) - (2,624,253)

Total contributions by and distributions to owners of the companyrecognised directly in equity

- - - - (3,183,837) (3,183,837) 363,464 (2,820,373)

Balance as at March 31, 2017 1,312,126 36,812,540 (111,316) - 60,450,685 98,464,035 4,080,309 102,544,344

Note(s) 33 33

The notes on pages 25 to 102 form an integral part of these financial statements.

22


Separate Statement of Changes in Equity for the year ended March 31, 2017

for the year endedShare capital Share premium Fair value

reserveRetainedearnings

Totalattributable to

equity holders ofthe Company

Total equity

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

Company

Balance as at April 01, 2015 1,312,126 36,812,540 (20,740) 58,547,740 96,651,666 96,651,666

Profit for the year - - - 10,425,786 10,425,786 10,425,786Other comprehensive income - - (69,020) (405,882) (474,902) (474,902)

Total comprehensive income for the year - - (69,020) 10,019,904 9,950,884 9,950,884

Transactions with owners recorded directly in equityTransfer to reserves from merger (Note 22) - - - (880,902) (880,902) (880,902)Transfer to reserves from unclaimed dividends - - - 33,423 33,423 33,423Dividend declared (Note 39) - - - (5,510,932) (5,510,932) (5,510,932)

Total contributions by and distributions to owners of the Company recognised directly in equity - - - (6,358,411) (6,358,411) (6,358,411)

Balance as at March 31, 2016 1,312,126 36,812,540 (89,760) 62,209,233 100,244,139 100,244,139

Balance as at April 01, 2016 1,312,126 36,812,540 (89,760) 62,209,233 100,244,139 100,244,139

Profit for the year - - - 9,829,046 9,829,046 9,829,046Other comprehensive income - - (21,556) 665,911 644,355 644,355

Total comprehensive income for the year - - (21,556) 10,494,957 10,473,401 10,473,401

Transactions with owners recorded directly in equityTransfer to reserves from unclaimed dividends (Note 39) - - - 22,412 22,412 22,412Dividend declared (Note 39) - - - (2,624,253) (2,624,253) (2,624,253)

Total contributions by and distributions to owners of Company recognised directly in equity - - - (2,601,841) (2,601,841) (2,601,841)

Balance as at March 31, 2017 1,312,126 36,812,540 (111,316) 70,102,349 108,115,699 108,115,699

Note(s) 33 33


23


Consolidated and Separate Statements of Cash FlowsGroup Company

31-Mar-17 31-Mar-16 31-Mar-17 31-Mar-16Note(s) N '000 N '000 N '000 N '000

Cash flows from operating activities

Cash (generated from)/used in operating activities 32 (7,183,833) 55,843,408 (7,881,387) 25,963,224

Income tax paid 15 (621,269) (629,927) (1,263) (102,174)

Long service award benefit paid 36 (99,174) (65,474) (88,048) (56,768)

Retirement benefit paid 35 (229,726) (662,227) (203,909) (389,251)

Foreign exchange loss (5,795,397) (6,544,087) (6,154,270) (3,812,588)

Net cash (used in)/ generated from operating activities (13,929,399) 47,941,693 (14,328,877) 21,602,443

Cash flows from investing activities

Acquisition of property, plant and equipment 18 (22,538,573) (24,115,684) (6,842,793) (6,513,112)

Proceeds from sale of property, plant and equipment 1,744,807 356,688 156,467 85,257

Acquisition of intangible assets 20 (42,492) (15,864) (42,491) (12,993)

Acquisition of investment property 19 (9,564) - - -

Proceeds from biological assets sold/ harvested 25 674,345 31,844 - -

Net loans received from / (granted to) related companies 26 - 3,904,188 (23,813,415) 2,066,416

Net proceeds from sale of investment in associate 12 - 27,267,092 - 27,267,092

Additions to investment in subsidiary 23 - - (229,532) (50,000)

Finance income 13 1,562,304 1,103,475 3,230,407 982,569

Dividend income received 13 - - - 25,527

Net cash (used in)/ generated from investing activities (18,609,173) 8,531,739 (27,541,357) 23,850,756

Cash flows from financing activities

Proceeds from borrowings 34 176,925,100 136,860,256 113,195,929 69,968,981

Repayment of borrowings 34 (133,183,965) (97,520,217) (69,657,393) (35,954,536)

Movement in unsecured fixed rate bond - (19,248,115) - (19,248,115)

Dividends paid 39 (2,971,314) (3,688,887) (2,971,314) (3,660,946)

Finance costs paid 14 (29,036,615) (22,397,762) (19,230,685) (13,011,811)

Net cash generared from/ (used in) financing activities 11,733,206 (5,994,725) 21,336,537 (1,906,427)

Net cash movement for the year (20,805,366) 50,478,707 (20,533,697) 43,546,772

Cash at the beginning of the year 16,800,057 (33,678,650) 15,013,752 (27,904,763)

Cash decrease through merger - - - (628,257)

Net cash at end of the year 31 (4,005,309) 16,800,057 (5,519,945) 15,013,752


24



1 General information

1.1 Reporting entity

Flour Mills of Nigeria Plc (The Company) was incorporated in Nigeria as a private limited liability Company on 29 September 1960 and wasconverted to a public liability company in November 1978. Its registered head office is located at 1 Golden Penny Place, Apapa, Lagos.These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the "Group").

1.2 Principal activities

The Group is primarily engaged in flour milling, production of pasta, noodles, edible oil and refined sugar, production of livestock feeds,farming and other agro-allied activities, distribution and sales of fertilizer, manufacturing and marketing of laminated woven polypropylenesacks and flexible packaging materials, operation of terminals A and B at the Apapa Port, customs clearing, forwarding agents, shippingagents and logistics.

1.3 Going concern status

The financial statements have been prepared on a going concern basis. The Directors believe that there is no intention or threat from anysource to curtail significantly the Compny's lines of business in the foreseeable future.

1.4 Ownership structure

Name of shareholder No of sharesheld

Percentage ofshare capital

Excelsior Shipping Company Limited 1,369,231,166 52.18Other individuals and institutional shareholders 1,255,022,022 47.82

2,624,253,188 100

The parent and ultimate holding company is Excelsior Shipping Company Limited, a company registered in Liberia. The beneficial owner

of Excelsior Shipping Company is a trust established by the late Mr. John S. Coumantaros.

1.5 Financial period

These consolidated and seperate financial statements cover the financial year from 1 April 2016 to 31 March 2017, with comparatives foryear ended 31 March 2016.

1.6 Statement of compliance

The consolidated and seperate financial statements have been prepared in accordance with International Financial Reporting Standardsissued by the International Accounting Standard Board (IASB) and the interpretation issued by the International Financial ReportingInterpretation Committee (IFRIC) and the requirements of the Companies and Allied Matters Act Cap C.20 Laws of Federation of Nigeria,2004 and the Financial Reporting Council (FRC) of Nigeria Act 2011 . The financial statements were authorised for issue by the board on 30June 2017.

1.7 Basis of Preparation

The financial statements have been prepared on the historical cost basis except for the following:

Agricultural produce: Fair value less cost to sell.

Non-bearer plant biological assets: Fair value where possible and cost where it is impossible to determine the fair value.

Financial instruments: Initially measured at fair value and subsequently measured at amortised cost.

Inventories: Lower of cost and net realisable value

Defined benefits obligations: Present value of the obligation

Available for sale financial assets: Fair value through other comprehensive income

25



Derivative financial assets and liabilties: Fair value

1.8 Functional and presentation currency

For the purpose of these financial statements, the results and financial position of the Company and its subsidiaries are expressed in Naira,which is the functional currency of the Group and Company, and the presentation currency for the Group financial statements.

All amounts have been rounded to the nearest thousand, unless otherwise indicated.

2. Significant accounting policies

The following accounting policies have been applied consistently to all periods presented in these financial statements except otherwiseindicated:

2.1 Consolidation

2.1.1 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent Company and its subsidiaries. The Group haspower to exercise control over these subsidiaries. Control is exposure (right) to variable returns from an involvement with an investee andan ability to affect those returns through power over the investee. This is generally accompanied by a share of more than 50% of the votingrights.

The financial information of the subsidiaries are prepared as of the same reporting date and consolidated using consistent accountingpolicies. Subsidiaries are consolidated from the date on which control is transferred to the group and are included until the date on whichthe group ceases to control them.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the group's interesttherein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interest.

Transactions which result in changes in ownership levels, where the group has control of the subsidiary both before and after thetransaction are regarded as equity transaction and are recognised directly in the statement of changes in equity.

2.1.2 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition ismeasured at the aggregate of the fair values (at the date of exchange) of assets given and the liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss asincurred.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingentconsideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of theconsideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurementperiod adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments areadjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from theacquisition date) about facts and circumstances that existed at the acquisition date.

Contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets thedefinition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity.Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value ofthe contingent consideration are recognised in profit or loss.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement periodadjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is notremeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that isclassified as an asset or a liability is remeasured at subsequent reporting dates in accordance with the Group's accounting policy on financialinstruments or, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

26



2.1 Consolidation (continued)

Where a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity are remeasured at fairvalue at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognized in profit or loss.Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensiveincome are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, Businesscombinations are recognized and measured at their fair value at the acquisition date, except:

deferred tax assets or liabilities arising from the assets acquired and liabilities assumed are measured in accordance with theGroup's accounting policy on taxation.

liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with the Group'saccounting policy on employee benefits; .

assets (or disposal groups) that are classified as held for sale in accordance with the Group's accounting policy on Non-currentAssets Held for Sale and Discontinued Operations are measured in accordance with the applicable Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in theacquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date fairvalue of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of theidentifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognisedimmediately 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 inthe event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of therecognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transactionbasis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, theGroup reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted duringthe measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstancesthat existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

2.1.3 Business combination of entities under common control

Business combinations in which all of the entities or businesses are ultimately controlled by the Group both before and after thecombination and that control is not transitory are recognised as common control transactions. Where the transaction takes the form of amerger in which individual assets are acquired and liabilities assumed rather than the shares in the business being acquired, the acquireraccounts for such assets and liabilities at book value and the difference between the carrying value of the investments and the net assetsacquired is recognised in retained earnings.

2.1.4 Investment in associates

An associate is an entity over which the group has significant influence and which is neither a subsidiary nor a joint venture. Significantinfluence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control overthose policies.

The results, assets and liabilities of associates are incorporated in the financial statements using the equity method of accounting from thedate on which the investee becomes an associate. Where such investments are classified as held for sale, they are accounted for inaccordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.

Under the equity method, investments in associates are carried in the consolidated and separate statement of financial position at costadjusted for post acquisition changes in the group's share of net assets of the associate, less any impairment losses.

Profits or losses on transactions between the group and an associate are eliminated to the extent of the group's interest therein.

Gains or losses on disposal of investment in associate are recognised in profit or loss.

2.1.5 Loss of Control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary and any related non-controlling interest and other component of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in theformer subsidiary is measured at fair value when control is lost.

27



2.2 Non-current assets held for sale

Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than throughcontinuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available forimmediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups).

2.3 Goodwill

Goodwill represents the excess of the consideration over the fair value of the net identifiable assets of the acquired entity at the date of theacquisition. Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business lessaccumulated impairment losses, if any.

The excess of the purchase price over the carrying amount of non-controlling interest, when the Group increases its interest in an existingsubsidiary, is recognised in equity. Goodwill is tested annually for impairment. Impairment losses on goodwill are not reversed. Gains andlosses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating unitsor groups of cash-generating units that are expected to benefit from the business combination.

2.4 Revenue

Revenue represents amount received and receivable for goods supplied to customers and for services rendered. Revenue is measured atthe fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of tradediscounts, volume rebates, and value added tax.

Sale of goods

Revenue is recognised when the following conditions are met; 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 Group; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction isrecognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction canbe estimated reliably when all the following conditions are satisfied:

the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Group: the stage of completion of the transaction at the end of the reporting period can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only tothe extent of the expenses recognised that are recoverable.

Advance payments received for goods yet to be delivered and services yet to be rendered by the Group/Company are recognised ascustomer deposit liabilities on the statement financial position and revenue is recognised as soon as goods have been delivered or serviceshave been rendered.

When an intangible asset is expressed as a measure of revenue, for example a service concession, the expiry of the contract might be basedon a fixed amount of total revenue to be generated from the service concession contract. Provided that the contract is a fixed amount ofrevenue to be generated on which amortisation is to be determined, the revenue that is to be generated might be an appropriate basis foramortising the intangible asset or when it can be demonstrated that revenue and the consumption of the economic benefits of theintangible asset are highly correlated.

28



2.5 Investment Income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established by approval ofdividend at the annual general meeting of the investee (provided that it is probable that the economic benefits will flow to the Group andthe 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 bemeasured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to thatasset’s net carrying amount on initial recognition.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income from theordinary business of the group is recognised as revenue, while rental income from activities other than the ordinary business are recognisedas other operating income.

2.6 Foreign currency translation

Foreign currency transactions

Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailingon the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreigncurrencies are translated at the rates prevailing at that date. Non-monetary items that are measured based on historical cost in foreigncurrency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreigncurrency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences on monetary items are recognised in the profit or loss in the period in which they arise.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at whichthey were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the periodin which they arise.

When a gain or loss on a non-monetary item is recognised in other comprehensive income and accumulated in equity, any exchangecomponent of that gain or loss in recognised in other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

Cash flows arising from transactions in a foreign currency are recorded in naira by applying to the foreign currency amount the exchangerate between the naira and the foreign currency at the date of the cash flow.

Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included inthe cost of those assets are regarded as an adjustment to interest costs on those foreign currency borrowings.

2.7 Employee benefits

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paidas cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by theemployee and the obligation can be estimated reliably.

Defined contribution plans

The Group and Company operate a defined contribution based retirement benefit scheme for its staff, in accordance with the PensionReform Act of 2014 with employee contributing 8% and the employer contributing 10% each of the employee’s relevant emoluments (basicsalaries, housing and transport allowances). Payments to defined contribution retirement benefit plans are recognised as an expense whenemployees have rendered the service entitling them to the contributions. Employees contributions are deducted through payroll.

29



2.7 Employee benefits (continued)

Defined benefits

The Group also operates a gratuity scheme for its qualified staff. Benefits are related to the employees' length of service and remuneration.The gratuity obligation is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of eachreporting period by an independent actuary. All actuarial gains and losses are recognised immediately through other comprehensiveincome. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability. TheCompany's obligation in respect of the scheme is the amount of future benefits that employees have earned in return for their service inthe current and prior periods.

The benefit is discounted to determine its present value. The discount rate is the yield at the reporting date on Federal Government ofNigeria issued bonds that have maturity dates approximate to the term of the company's defined benefits obligation. Defined benefit costsare categorised as follows:

Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements) Net interest expense Remeasurement (actuarial gains and losses)

The service cost and net interest expense are charged to the profit or loss while the gains and loss due to remeasurement are charged toother comprehensive income.

Although the fund is not funded the Group ensures that adequate arrangements are in place to meet its obligations under the scheme.

Long service award

In addition, the Group operates long service award for its qualified staff. The benefits are graduated depending on the employees numberof years in service to the group. The Group's obligation in respect of the scheme is the amount of future benefits that employees haveearned in return for their service in the current and prior periods. The benefit is discounted to determine its present value. The discountrate is the yield at the reporting date on Federal Government of Nigeria issued bonds that have maturity dates approximate to the term ofthe Group's defined benefits obligation. The obligation is determined by an independent actuary at each reporting period.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gainor loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a definedbenefit plan when the settlement occurs. Gains or losses due to remeasurement of long service awards are recognised in profit or loss

Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when theGroup recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, thenthey are discounted.

2.8 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax, including adjustments in respect of prior periods.

Current tax

The current tax is based on taxable profit for the year and any adjustment in respect of previous years. Taxable profit differs from profit asreported in the consolidated and separate statement of profit or loss and other comprehensive income because of items of income orexpense that are taxable or deductible in future years and items that are never taxable or deductible. The amount of current tax is the bestestimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. The Group andCompany's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reportingperiod. Current tax assets and liabilities are offset only if certain criteria are met.

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2.8 Taxation (continued)

Deferred tax assets and liabilities

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated and separatefinancial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generallyrecognised for all taxable temporary differences. Deferred tax assets are generally recognised for unused tax losses and for all deductibletemporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporarydifferences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill orfrom the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither thetaxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, andinterests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differencesassociated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxableprofits against which the benefits of the temporary differences will be utilised and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable thatsufficient 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 theasset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Themeasurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Groupexpects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensiveincome or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly inequity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect isincluded in the accounting for the business combination.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current taxliabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current taxassets and liabilities on a net basis.

2.9 Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Cost includesexpenditure that is directly attributable to the acquisition of the items, including the capitalisation of borrowing costs on qualifying assets.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probablethat future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Thecarrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financialperiod in which they are incurred.

Depreciation is calculated on a straight-line basis at rates deemed appropriate to write off the cost of the assets less their residual valuesover their expected useful lives.

31



2.9 Property, plant and equipment (continued)

Depreciation is recognised so as to write off the cost of assets (other than properties under construction) less their residual values overtheir useful lives, using the straight-line method, on the following bases:

Item Average useful lifeLeasehold Land NilBuildings 50 yearsPlant and machinery 5-25 yearsFurniture and equipment 3-10 yearsMotor vehicles 4-5 yearsMature bearer plants 25-35 yearsFreehold land IndefiniteBerth rehabilitation Over the lease period

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of anychanges in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise fromthe continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Assets in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includesprofessional fees and for qualifying assets borrowing costs capitalised in accordance with the Group's accounting policy. Assets in thecourse of construction are not depreciated until they get to the stage of intended use.

Immature bearer plants are carried at cost and represents bearer plants that have been planted but have not reached a matured stage andhave not started yielding biological assets. They are not depreciated.

2.10 Investment property

Investment property are properties held for long term rental yields. Investment properties are carried in the Group statement of financialposition at cost less accumulated depreciation.

Investment property is initially measured at cost and depreciated on a straight line basis to allocate cost less residual values of the assetsover their estimated useful lives.

Depreciation of Investment property is calculated on a straight line basis to allocate cost less residual values of the assets over theirestimated useful lives.

Investment property (building) is depreciated over a useful life of 50 years.

Investment property is derecognised in the event of transfer of the investment property or the disposal of the investment property. Anygain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carryingamount of the item) is recognised in profit or loss.

2.11 Borrowing costs

Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds. These include interestexpenses calculated using the effective interest rate method, finance charges in respect of finance leases and exchange differences arisingfrom foreign currency borrowings. Where a range of debt instruments is used to borrow funds, or where the financing activities arecoordinated centrally, a weighted average capitalisation rate is applied.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarilytake a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as theassets are substantially ready for their intended use or sale. The Group defines a qualifying asset as an asset that takes more than a year toprepare for its intended use.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deductedfrom the borrowing costs eligible for capitalisation.

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2.11 Borrowing costs (continued)

All other borrowing costs are recognised as an expense in the period in which they are incurred.

2.12 Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to themand that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses therelated costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Groupshould purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement offinancial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediatefinancial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference betweenproceeds received and the fair value of the loan based on prevailing market interest rates. The grant is recognised in profit or loss over thetenor of the loan.

2.13 Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life andamortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on aprospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairmentlosses.

Amortisation is recognised so as to write off the cost of finite intangible assets over their useful lives, using the straight-line method, on thefollowing bases:

Item Useful lifeComputer software 3 yearsTrade marks 3- 5 years

Service concession arrangement

The Group recognises an intangible asset arising from a service concession arrangement when it has a right to charge for use of theconcession infrastructure. An intangible asset received as consideration for providing construction or upgrade services in a serviceconcession arrangement is measured at fair value on initial recognition with reference to the fair value of the services provided. Theamount so determined is regarded as the cost. Subsequent to initial recognition, the intangible asset is measured at cost, which includescapitalised borrowing costs, less accumulated amortisation and accumulated impairment losses.

The estimated useful life of an intangible asset in a service concession arrangement is the period from when the Group is able to charge thepublic for the use of the infrastructure to the end of the concession period.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value atthe acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisationand accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

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Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or lossesarising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amountof the asset, are recognised in profit or loss when the asset is derecognised.

2.14 Impairment of tangible and intangible assets excluding goodwill, inventories, deferred tax assets and financial assets.

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whetherthere is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assetis estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount ofan individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When areasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, orotherwise they are allocated to the smallest Group of cash-generating units for which a reasonable and consistent allocation basis can beidentified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, andwhenever there is an indication that the asset may be impaired. Whenever such indication exists, the assets recoverable amount isestimated. The impairment is the carrying amount less the recoverable amount of the assets.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flowsare discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money andthe risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of theasset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss,unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revisedestimate of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have beendetermined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment lossis recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal ofthe impairment loss is treated as a revaluation increase.

The carrying amount of an item of Property, plant and equipment is written down immediately to its recoverable amount if the asset'scarrying amount is greater than its estimated recoverable amount.

2.15 Change in inventories

Inventories are measured at the lower cost and net realisable value. Cost comprises direct materials and, where applicable, direct labourcosts and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable valuerepresents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

The basis of costing of the different inventory types are as follows:

Raw and packaging materials: Purchase cost including transportation and other incidental cost on a First In First Out (FIFO) basis.

Goods in transit: Purchase cost incurred to date

Finished products: Purchase cost of direct materials, labour and a reasonable allocation of overheads based on normal operating capacityon a weighted average basis.

Harvested agricultural produce: Fair value less cost to sell at the point of harvest

Engineering spares: Weighted average cost

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the periodthe write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value,are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

2.16 Biological assets

Biological asset or agriculture produce is recognised only when the Group controls the asset as a result of past events, it is probable thatfuture economic benefits will flow to the entity, and the fair value or cost of the asset can be measured reliably.

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2.16 Biological assets (continued)

Biological assets comprise growing sugar cane, oil palm fresh fruit bunches and cassava as well as poultry. Biological assets are measured atfair value where available or cost where fair value is not available or cannot be determined.

The Company early adopted the amendments to IAS 41 in 2015 and therefore accounts for Palm Plantation at cost in accordance with IAS16.

Agricultural produce at the point of harvest are measured at fair value less cost to sell and are subsequently reclassified from agriculturalproduce to inventory and measured in accordance with the accounting policy on inventories.

Changes in fair value are recognised in profit or loss.

2.17 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions, bank overdrafts and highly liquidinvestments generally with maturities of three months or less. They are readily convertible into known amounts of cash and have aninsignificant risk of changes in value.

2.18 Deposit for imports

Foreign currencies applied to fund of letters of credit in respect of imported raw materials, spare parts and machinery are recognised asdeposit for imports on the statement of financial position.

2.19 Provisions and contingencies

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that anoutflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of thereporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the timevalue of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable isrecognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measuredreliably.

Restructurings

A restructing provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a validexpectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features tothose affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring,which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.Future operating losses are not provided for.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arisesfrom past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will berequired to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities areonly disclosed and not recognised as liabilities in the statement of financial position. If the likelihood of an outflow of resources is remote,the possible obligation is neither a provision nor a contingent liability and no disclosure is made.

2.20 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to thelessee. All other leases are classified as operating leases.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basisis more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arisingunder operating leases are recognised as an expense in the period in which they are incurred.

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2.20 Leases (continued)

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregatebenefit of incentives is recognised as a reduction of rental expense on a straight line basis except where another systematic basis is morerepresentative of the time pattern in which economic benefits from the leased assets are consumed.

Rental income from letting property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentivesgranted are considered as an integral part of the total rental income and recognised over the term of the lease. Rental income arerecognised in investment income in the Group financial statement.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the consolidated and seperate statement of financial position at amounts equal tothe fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessoris included in the consolidated and separate statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocatedto each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases - lessor

Operating lease income is recognised as an income on a straight-line basis over the lease term.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset andrecognised as an expense over the lease term on the same basis as the lease income.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amountsrecognised as an expense and the contractual payments are recognised as an operating lease asset.

Any contingent rents are expensed in the period they are incurred.

2.21 Financial instruments

Classification

The Group classifies financial assets and financial liabilities into the following categories based on their nature and categories: Loans and receivables Available-for-sale financial assets At fair value through profit or loss: derivatives Financial liabilities measured at amortised cost

Loans and receivables include trade and other receivables as well as loans given to group companies.

Financial liabilities include trade and other payables, bank overdraft and borrowings.

Initial recognition and measurement

Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments.

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or anequity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which aremeasured at cost and are classified as available-for-sale financial assets.

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2.21 Financial instruments (continued)

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of theinstrument.

Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss.

Subsequent measurement

Financial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changesin fair value being included in profit or loss for the period.

Net gains or losses on the financial instruments at fair value through profit or loss dividends and interest.

Dividend income is recognised in profit or loss as part of other income when the group's right to receive payment is established.

Loans and receivables are measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Available-for-sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is notdeterminable, which are measured at cost less accumulated impairment losses.

Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in equity until the assetis disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method isrecognised in profit or loss as part of other income. Dividends received on available-for-sale equity instruments are recognised in profit orloss as part of other income when the group's right to receive payment is established.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Borrowings for which the Group has an unconditional right to defer settlement of the liability for at least twelve(12) months after thestatement of financial position date, are classified as non-current liabilities.

The group offsets financial assets and financial liabilities when and only when the following conditions are satisfied:

The group currently has a legally enforceable right to set off the recognised amounts of the assets and liabilities.

The group intends to settle on a net basis, or to realise the assets and settle the liablities simultaneously.

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers thefinancial asset and substantially all the risks and rewards of ownership of the asset to another party. If the entity neither transfers norretains substantially all the risks and rewards of ownership and continues to control the transferred asset, the entity recognises its retainedinterest in the asset and an associated liability for amounts it may have to pay. If the entity retains substantially all the risks and rewards ofownership of a transferred financial asset, the entity continues to recognise the financial asset and also recognises a collateralisedborrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the considerationreceived and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated inequity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the entity retains an option to repurchase part of a transferredasset), the entity allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuinginvolvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. Thedifference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received forthe part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income isrecognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between thepart that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

The group derecognises a financial liability only when its obligation is settled, cancelled or expired

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Impairment of financial assets

At each reporting date the Group assesses all financial assets, other than those at fair value through profit or loss, to determine whetherthere is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the Group, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default ofpayments are all considered indicators of impairment.

The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significantassets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that hasbeen incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment.Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, andmakes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser thansuggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cashflows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account.When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amountof impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment wasrecognised, then the previously recognised impairment loss is reversed through profit or loss.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below itscost is considered an indicator of impairment. The Group considers a decline of 20% to be significant and a period of 6 months to beprolonged. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between theacquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removedfrom equity as a reclassification adjustment to other comprehensive income and recognised in profit or loss.

Impairment losses are recognised in profit or loss.

Impairment losses are reversed when an increase in the financial asset's recoverable amount can be related objectively to an eventoccurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that theimpairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair valuewas not determinable.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss withinoperating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveriesof amounts previously written off are credited against operating expenses.

Financial instruments designated as available-for-sale

Listed equities held by the Group that are traded on the Nigerian Stock Exchange are classified as available-for-sale and are stated at fairvalue at the end of each reporting period. Changes in the carrying amount of available-for-sale financial assets are recognised in othercomprehensive income and accumulated in equity. When the investment is disposed of or is determined to be impaired, the cumulativegain or loss previously accumulated in the reserve is reclassified to profit or loss.

Available-for-sale assets are classified as non current financial assets unless management intends to dispose of it within 12 months of theend of the reporting period. In that case it would be accounted for as short term investment.

Derivative financial instruments and hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency risk exposure. Embedded derivatives are separated fromthe host contract and accounted for separately if the following criteria are met.

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(a) The economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risksof the host contract

(b) A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and

(c) The hybrid (combined) instrument is not measured at fair value with changes in fair value recognised in profit or loss (i.e., aderivative that is embedded in a financial asset or financial liability at fair value through profit or loss is not separated).

Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred.Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognise in profit or loss.

2.22 Ordinary share capital

The Company has only one class of shares, ordinary shares. Ordinary shares are classified as equity. When new shares are issued, they arerecorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve. Theuse of the share premium account is governed by S.120(3) of CAMA. All ordinary shares rank equally with regard to the Company's residualassets. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at generalmeetings of the Company.

2.23 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during theperiod, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and theweighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinaryshares.

2.24 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. Thechief operating decision-maker is responsible for monitoring, allocating resources and assessing performance of the operating segmentsand has been identified as the Board of Directors of Flour Mills of Nigeria Plc.

The Group's primary format for segment reporting is based on business operating segments. Where applicable, segment results, assets andliabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

2.25 Statement of cash flows

The Group applies the indirect method for preparation of the statement of cash flows. In prior year, the Group applied the Direct method inpreparing its statement of cashflow. Changes in statement of financial position items that have not resulted in cash flows such astranslation differences, fair value changes and other non-cash items have been adjusted for the purpose of preparing the statement.Dividends paid to ordinary shareholders are included in financing activities. Interest paid is also included in financing activities while financeand dvidend income is included in investing activities.

2.26 Dividends

Dividends which remain unclaimed for a period exceeding twelve(12) years from the date of declaration and which are no longer actionableby shareholders in accordance with section 385 of the Companies and Allied Matters Act Cap C.20 Laws of the Federation of Nigeria, 2004are written back to retained earnings.

3 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group accounting policies, the Directors are required to make judgements, estimates and assumptions about thecarrying amounts of the assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actualresults may differ from these estimates.

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3 Critical accounting judgements and key sources of estimation uncertainty (continued)

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in theperiod in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if therevision affects both current and future periods.

The following are the areas of estimation uncertainties and critical judgements, that the directors have made in the process of applying theGroup’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements:

Biological assets

Fair value of biological assets is measured with reference to the estimated price in an active market at the point of harvest adjusted for itspresent location and condition. Judgement is involved in the determination of the adjustment required to the market price to reflect thestage of maturity/condition of the biological assets.

Allowance for credit losses

The Company periodically assesses its trade and other receivables for probability of credit losses. Management considers several factorsincluding past credit record, current financial position and credibility of management. Judgment is exercised in determining the allowancesmade for credit losses.

Impairment allowance are made for receivables that have been outstanding for 365 days, in respect of which there is no firm commitmentto pay by the customer.

Furthermore all balances are reviewed for evidence of impairment and provided against once recovery is doubtful. These assessments aresubjective and involve a significant element of judgment by management on the ultimate recoverability of amounts receivable.

Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Group, accounting for about 61% of the Group’stotal assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation are critical to theGroup’s financial position and performance.

The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expectedresidual value at the end of its life. Increasing an asset’s expected life or its residual value would result in the reduced depreciation charge inprofit or loss.

The Group reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. There were no changesin the useful lives of Property, plant and equipment in the current year.

Contingencies

Judgements and assumptions are made about the likelihood and magnitude of an outflow of resources with respect to ongoing litigationand claims and regulatory audits.

Valuation of financial liabilities

As at the end of the reporting period, the Group was granted some government assisted loans at below market rates. In accordance withIAS 20, the government grant which is the difference between the proceeds of the loans and their fair value should be accounted for. Basedon IAS 39, all financial liabilities should be initially recognized at fair value. In computing the fair value of these loans, the imputed interestrate used in discounting the cash flows associated with the loans is based on management judgement of best estimate of its borrowing costat the time the loans were granted.

Provision for gratuity

The Company operates an unfunded defined benefit scheme which entitles staff who put in a minimum qualifying working period of fiveyears to gratuity upon leaving the employment of the Company. IAS 19 requires the application of the Projected Unit Credit Method foractuarial valuations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employeeturnover etc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

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Provision for long term service award

A provision for Long term service award is granted at first to employees that have spent a minimum of ten years in service and for everymultiple five years an employee remains in service. IAS19 requires the application of the Projected Unit Credit Method for actuarialvaluations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnoveretc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

Taxation

The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Group’s totaltax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finallydetermined until resolution has been reached with the relevant tax authority.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value of the cash generating units to which goodwill has beenallocated. The value in use calculations requires directors to estimate the future cashflows expected to arise from the cash generating unitand a suitable discount rate in order to calculate the present value. Where the actual future cashflows are less than expected, a materialimpairment loss may arise.

Measurement of fair value

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financialassets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notesspecific to that asset or liability. Significant valuation issues are reported to the Audit Committee.

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

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

In some cases, if the inputs used to measure the fair value of an asset or a liability is categorised in different levels of the fair valuehierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest levelinput that is significant to the entire measurement.

The Group/Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which thechange has occurred.

Further information about the basis of determination of fair values are as follows:

i Property, plant and equipment

The fair value of property, plant and equipment recognized as a result of a business combination is based on the quoted market prices forsimilar items when available and depreciated replacement cost based on independent valuation when appropriate.

ii Intangible assets

The fair value of intangible assets acquired in a business combination is based on the discounted cash flows expected to be derived fromthe use and eventual sale of the assets.

iii Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course ofbusiness less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sellthe inventories.

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iv Trade and other receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate ofinterest at the reporting date. This fair value is determined for disclosure purposes. For short term trade receivables, no disclosure of fairvalue is presented when the carrying amount is a reasonable approximation of fair value due to the insignificant impact of discounting.

v Non-derivative financial instruments

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

Further information about the assumptions made in measuring fair value is included in the following notes: Biological assets (note 25) Financial instruments - Financial risk management and fair values (note 43)

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4. New Standards and Interpretations

4.1 Standards and interpretations effective and adopted in the current year

In the current year, the group has adopted the following standards and interpretations that became effective in the current financial yearand that are relevant to its operations:

Amendment to IFRS 5: Non-current Assets Held for Sale and Discontinued Operations: Annual Improvements project

The amendment clarifies that non-current assets held for distribution to owners should be treated consistently with non-current assets heldfor sale. It further specifies that if a non-current asset held for sale is reclassified as a non-current asset held for distribution to owners orvisa versa, that the change is considered a continuation of the original plan of disposal.

The effective date is for years beginning on or after January 01, 2016.

The group has adopted the amendment for the first time in the 2017 financial statements.

The amendment had no impact on the consolidated and separate financial statements.

Amendment to IFRS 7: Financial Instruments: Disclosures: Annual Improvements project

The amendment provides additional guidance regarding transfers with continuing involvement. Specifically, it provides that cash flowsexcludes cash collected which must be remitted to a transferee. It also provides that when an entity transfers a financial asset but retainsthe right to service the asset for a fee, that the entity should apply the existing guidance to consider whether it has continuing involvementin the asset.



The amendment had no significant impact on the consolidated and separate financial statements.

Amendment to IAS 19: Employee Benefits: Annual Improvements project

The amendment clarifies that when a discount rate is determined for currencies where there is no deep market in high quality corporatebonds, then market yields on government bonds in that currency should be used.



The amendmenthad no significant impact on the consolidated and separate financial statements.

Disclosure Initiative: Amendment to IAS 1: Presentation of Financial Statements

The amendment provides new requirements when an entity presents subtotals in addition to those required by IAS 1 in its annual report. Italso provides amended guidance concerning the order of presentation of the notes in the annual report, as well as guidance for identifyingwhich accounting policies should be included. It further clarifies that an entity's share of comprehensive income of an associate or jointventure under the equity method shall be presented separately into its share of items that a) will not be reclassified subsequently to profitor loss and b) that will be reclassified subsequently to profit or loss.



The amendment had no significant impact on the consolidated and separate financial statements but resulted in additional disclosures.

43



4. New Standards and Interpretations (continued)

Amendment to IAS 34: Interim Financial Reporting. Annual Improvements project

The amendment allows an entity to present disclosures required by paragraph 16A either in the interim annual report or by cross referenceto another report, for example, a risk report, provided that other report is available to users of the annual report on the same terms as theinterim annual report and at the same time.

The effective date s for years beginning on or after January 01, 2016.


The amendment had no significant impact on the consolidated and separate financial statements.

Amendments to IAS 16 and IAS 41: Agriculture: Bearer Plants

The amendment defines bearer plants and include bearer plants within the scope of IAS 16 Property, Plant and Equipment. A bearer plant isdefined as a living plant used in the production or supply of agricultural produce, is expected to bear produce for more than one period andhas a remote likelihood of being sold as agricultural produce. Bearer plants were previously within the scope of IAS 41 Agriculture.

The effective date of the amendment is for years beginning on or after January 01, 2016.

The group early-adopted the amendment in its financial statements for the year ended 31 March, 2015.

IFRS 14 Regulatory Deferral Accounts

The new standard is an interim standard applicable to entities subject to rate regulation. The standard is only applicable to entities adoptingIFRS for the first time. It permits entities to recognise regulatory deferral account balances in the statement of financial position. When theaccount has a debit balance, it is recognised after total assets. Similarly, when it has a credit balance, it is recognised after total liabilities.Movements in these accounts, either in profit or loss or other comprehensive income are allowed only as single line items.

The effective date of the standard is for years beginning on or after January 01, 2016.

The group has adopted the standard for the first time in the 2017 financial statements.

The standard had no significant impact on the financial statements.

Amendment to IAS 27: Equity Method in Separate Financial Statements

The amendment adds the equity method to the methods of accounting for investments in subsidiaries, associates and joint ventures in theseparate annual report of an entity.


The amendment had no impact on the separate financial statements.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendment clarifies that a depreciation or amortisation method that is based on revenue that is generated by an activity that includesthe use of the asset is not an appropriate method. This requirement can be rebutted for intangible assets in very specific circumstances asset out in the amendments to IAS 38.


The group has adopted the amendment for the first time in the 2017 annual report.

The amendment had no impact on the consolidated and separate financial statements.

44




Amendment to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations

The amendments apply to the acquisitions of interest in joint operations. When an entity acquires an interest in a joint operation in whichthe activity of the joint operation constitutes a business, as defined in IFRS 3, it shall apply, to the extent of its share, all of the principles onbusiness combinations accounting in IFRS 3, and other IFRSs, that do not conflict with the guidance in this IFRS and disclose the informationthat is required in those IFRSs in relation to business combinations. This applies to the acquisition of both the initial interest and additionalinterests in a joint operation in which the activity of the joint operation constitutes a business.

The effective date of the amendments is for years beginning on or after January 01, 2016.

The group has adopted the amendments for the first time in the 2017 financial statements.

The amendments had no significant impact on the consolidated and separate financial statements.

4.2 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for thegroup’s accounting periods beginning on or after April 01, 2017 or later periods:

IFRS 16 Leases

IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee accounting model. The main changes arisingfrom the issue of IFRS 16 which are likely to impact the group are as follows:

Group as lessee: Lessees are required to recognise a right-of-use asset and a lease liability for all leases, except short term leases or leases where

the underlying asset has a low value, which are expensed on a straight line or other systematic basis. The cost of the right-of-use asset includes, where appropriate, the initial amount of the lease liability; lease payments made

prior to commencement of the lease less incentives received; initial direct costs of the lessee; and an estimate for any provisionfor dismantling, restoration and removal related to the underlying asset.

The lease liability takes into consideration, where appropriate, fixed and variable lease payments; residual value guarantees tobe made by the lessee; exercise price of purchase options; and payments of penalties for terminating the lease.

The right-of-use asset is subsequently measured on the cost model at cost less accumulated depreciation and impairment andadjusted for any re-measurement of the lease liability. However, right-of-use assets are measured at fair value when they meetthe definition of investment property and all other investment property is accounted for on the fair value model. If a right-of-use asset relates to a class of property, plant and equipment which is measured on the revaluation model, then that right-of-useasset may be measured on the revaluation model.

The lease liability is subsequently increased by interest, reduced by lease payments and re-measured for reassessments ormodifications.

Re-measurements of lease liabilities are affected against right-of-use assets, unless the assets have been reduced to nil, in whichcase further adjustments are recognised in profit or loss.

The lease liability is re-measured by discounting revised payments at a revised rate when there is a change in the lease term or achange in the assessment of an option to purchase the underlying asset.

The lease liability is re-measured by discounting revised lease payments at the original discount rate when there is a change inthe amounts expected to be paid in a residual value guarantee or when there is a change in future payments because of achange in index or rate used to determine those payments.

Certain lease modifications are accounted for as separate leases. When lease modifications which decrease the scope of thelease are not required to be accounted for as separate leases, then the lessee re-measures the lease liability by decreasing thecarrying amount of the right of lease asset to reflect the full or partial termination of the lease. Any gain or loss relating to thefull or partial termination of the lease is recognised in profit or loss. For all other lease modifications which are not required tobe accounted for as separate leases, the lessee re-measures the lease liability by making a corresponding adjustment to theright-of-use asset.

Right-of-use assets and lease liabilities should be presented separately from other assets and liabilities. If not, then the line itemin which they are included must be disclosed. This does not apply to right-of-use assets meeting the definition of investmentproperty which must be presented within investment property. IFRS 16 contains different disclosure requirements compared toIAS 17 leases.

45




Group as lessor: Accounting for leases by lessors remains similar to the provisions of IAS 17 in that leases are classified as either finance leases or

operating leases. Lease classification is reassessed only if there has been a modification. A modification is required to be accounted for as a separate lease if it both increases the scope of the lease by adding the right

to use one or more underlying assets; and the increase in consideration is commensurate to the stand alone price of theincrease in scope.

If a finance lease is modified, and the modification would not qualify as a separate lease, but the lease would have been anoperating lease if the modification was in effect from inception, then the modification is accounted for as a separate lease. Inaddition, the carrying amount of the underlying asset shall be measured as the net investment in the lease immediately beforethe effective date of the modification. IFRS 9 is applied to all other modifications not required to be treated as a separate lease.

Modifications to operating leases are required to be accounted for as new leases from the effective date of the modification.Changes have also been made to the disclosure requirements of leases in the lessor's financial statements.

Sale and leaseback transactions: In the event of a sale and leaseback transaction, the requirements of IFRS 15 are applied to consider whether a performance

obligation is satisfied to determine whether the transfer of the asset is accounted for as the sale of an asset. If the transfer meets the requirements to be recognised as a sale, the seller-lessee must measure the new right-of-use asset at

the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The buyer-lessor accountsfor the purchase by applying applicable standards and for the lease by applying IFRS 16

If the fair value of consideration for the sale is not equal to the fair value of the asset, then IFRS 16 requires adjustments to bemade to the sale proceeds. When the transfer of the asset is not a sale, then the seller-lessee continues to recognise thetransferred asset and recognises a financial liability equal to the transfer proceeds. The buyer-lessor recognises a financial assetequal to the transfer proceeds.


The group expects to adopt the standard for the first time in the 2020 financial statements and is currently assessing the impact.

Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions

The amendment now specifies the treatment of vesting and non-vesting conditions with regards to cash-settled share-based paymenttransactions. The treatment is essentially similar to the treatment of such conditions for equity-settled share-based payment transactions.That is, non-market vesting conditions are taken into consideration when estimating the number of awards which are expected to vest (andwhich ultimately vest), while market conditions and other non-vesting conditions are taken into consideration when determining the fairvalue of the share based payment liability, both initially and subsequently.

The amendment also provides for share-based payment transactions with a net settlement feature for withholding tax obligations.Essentially, where the entity is required to withhold part of the equity instruments equal to the tax obligation, the entity is required toaccount for the payment to tax authorities as a reduction in equity, except to the extent that the payment exceeds the fair value of theequity instruments withheld at net settlement date. The entity should also disclose the amount that it expects to transfer to tax authoritiesin terms of such transactions.

The amendment further provides guidance in terms of modifications which convert cash-settled share-based payment transactions toequity -settled share-based payment transactions. For such modifications, the equity-settled share based payment transaction is measuredby reference to the fair value of the equity instruments granted at modification date, to the extent to which goods or services have beenreceived. The liability for cash-settled share based payment transactions is derecognised on the modification date. Any difference betweenthe two is recognised immediately in profit or loss.


The group expects to adopt the amendment for the first time in the 2019 financial statements and is currently assessing the impact.

Amendments to IFRS 15: Clarifications to IFRS 15 Revenue from Contracts with Customers

The amendment provides clarification and further guidance regarding certain issues in IFRS 15. These items include guidance in assessingwhether promises to transfer goods or services are separately identifiable; guidance regarding agent versus principal considerations; andguidance regarding licenses and royalties.

46






IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurements of financial assets. IFRS 9 wassubsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and forderecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 wasissued in July 2014 mainly to include a)impairment requirements for financial assets and b) limited amendments to the classification andmeasurement requirements by introducing a "fair value through other comprehensive income" (FVTOCI) measurement category for certainsimple debt instruments.

Key requirements of IFRS 9: All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are

required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within abusiness model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solelypayments of principal and interest on the outstanding principal are generally measured at amortised cost at the end ofsubsequent reporting periods. Debt instruments that are held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on outstanding principal, are measured atFVTOCI. All other debt and equity investments are measured at fair value at the end of subsequent reporting periods. Inaddition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equityinvestment (that is not held for trading) in other comprehensive income with only dividend income generally recognised inprofit or loss.

With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that theamount of change in the fair value of the financial liability that is attributable to changes in the credit risk of the liability ispresented in other comprehensive income, unless the recognition of the effect of the changes of the liability's credit risk inother comprehensive income would create or enlarge an accounting mismatch in profit or loss. Under IAS 39, the entire amountof the change in fair value of a financial liability designated as at fair value through profit or loss is presented in profit or loss.

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred creditloss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes inthose expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. It is therefore nolonger necessary for a credit event to have occurred before credit losses are recognised.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available inIAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting,specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been replaced with the principal ofan "economic relationship". Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosurerequirements about an entity's risk management activities have also been introduced.



IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction contracts; IAS 18 Revenue; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for theconstruction of Real Estate; IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving AdvertisingServices.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entityrecognises revenue in accordance with that core principle by applying the following steps:

Identify the contract(s) with a customer

47




Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognise revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 also includes extensive new disclosure requirements.



Amendments to IAS 7: Disclosure initiative

The amendment requires entities to provide additional disclosures for changes in liabilities arising from financing activities. Specifically,entities are now required to provide disclosure of the following changes in liabilities arising from financing activities:

changes from financing cash flows; changes arising from obtaining or losing control of subsidiaries or other businesses; the effect of changes in foreign exchanges; changes in fair values; and other changes.



Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses

In terms of IAS 12 Income Taxes, deferred tax assets are recognised only when it is probable that taxable profits will be available againstwhich the deductible temporary differences can be utilised.

If tax law restricts the utilisation of losses to deductions against income of a specific type, a deductible temporary difference is assessed incombination only with other deductible temporary differences of the appropriate type.

Additional guidelines were prescribed for evaluating whether an entity will have sufficient taxable profit in future periods. The entity isrequired to compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from thereversal of those deductible temporary differences. This comparison shows the extent to which the future taxable profit is sufficient for theentity to deduct the amounts resulting from the reversal of those deductible temporary differences.

The amendment also provides that the estimate of probable future taxable profit may include the recovery of some of an entity’s assets formore than their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this.



48


Notes to the Annual ReportGroup Company

31-Mar-17 31-Mar-16 31-Mar-17 31-Mar-16N '000 N '000 N '000 N '000

5. RevenueSale of goods and services 524,464,448 342,586,459 375,225,284 247,876,504

Analysis of Revenue - Group and Company - 2017Group

RevenueN '000

Cost of salesN '000

Gross profitN '000

Food 422,709,578 364,984,425 57,725,153Agro Allied 80,514,710 73,720,099 6,794,611Packaging 20,693,495 18,365,025 2,328,470Port operations and logistics 414,439 367,806 46,633Real Estate 132,226 338,025 (205,799)

524,464,448 457,775,380 66,689,068

CompanyRevenue

N '000Cost of sales

N '000Gross profit

N '000Food 328,285,470 285,968,066 42,317,404Agro Allied 24,641,088 19,049,785 5,591,303Packaging 20,693,495 18,365,025 2,328,470Logistics 1,605,231 1,535,962 69,269

375,225,284 324,918,838 50,306,446

Analysis of Revenue - Group and Company - 2016Group

RevenueN '000

Cost of salesN '000

Gross profitN '000

Food 280,291,012 262,576,072 17,714,940Agro Allied 46,719,821 30,447,533 16,272,288Packaging 12,100,425 10,966,693 1,133,732Port operation and logistics 3,411,670 915,736 2,495,934Real Estate 63,531 55,703 7,828

342,586,459 304,961,737 37,624,722

CompanyRevenue

N '000Cost of sales

N '000Gross profit

N '000Food 217,950,277 208,844,778 9,105,499Agro Allied 14,675,300 987,369 13,687,931Packaging 14,054,683 12,920,951 1,133,732Logistics 1,196,244 911,819 284,425

247,876,504 223,664,917 24,211,587

49



6. Cost of sales (by nature)

Group Company


Cost of raw and packaging materials 403,152,026 264,150,719 293,055,239 197,972,381Production employee cost 12,100,810 11,858,209 8,743,861 8,947,273Depreciation (cost of sales) 12,778,252 12,151,928 6,651,951 6,133,803Fuel, gas and oil 18,581,494 8,591,039 11,547,077 5,578,642Factory rents and rates 4,648,532 3,624,910 961,971 1,599,151Factory repairs and maintenance 4,958,453 3,463,635 3,400,302 2,652,366Insurance 216,166 203,801 127,969 127,807Other production expenses 1,339,647 917,496 430,468 653,494

457,775,380 304,961,737 324,918,838 223,664,917

7. Segment information

Information reported to the chief operating decision makers (board of directors) for the purposes of resource allocation and assessment ofsegment performance focuses on types of goods or services delivered or provided.

Basis of Segmentation

The Group has the following five strategic divisions, which are its reportable segments. These divisions offer different products and services,and are managed separately because they require different operational and marketing strategies.

The following summary describes the operations of each reportable segment:

Food Milling and sales of flour and rice and production and sales ofpasta, snacks, sugar and noodles.

Agro Allied Farming of maize, cassava, soya, sugar cane and oil palm andproduction and sales of fertilizer, edible oils and livestock feeds.

Packaging Manufacturing and marketing of laminated wovenpolypropylene sacks and flexible packaging materials.

Port operations and logistics Port terminal operations, customs clearing and forwarding,shipping and haulage services

Real estate Leasing of investment property

`

The Board of Directors of Flour Mills of Nigeria Plc reviews the internal management reports of each division on a periodic basis.

There are varying levels of integration between the Food and the Agro allied segments and the packaging and port operations and logisticssegments. This integration includes transfer and sale of raw and packaging materials and shared distribution services respectively.

Inter-segment pricing is determined on an arm’s length basis.

All non-current asset of the group are domiciled in Nigeria.

50



7. Segment information (continued)

Group

Segment revenue and profit or lossThe following is an analysis of the Group's revenue and results from continuing operations by reportable segment:

Group Group31-Mar-17

N '00031-Mar-17

N '00031-Mar-16

N '00031-Mar-16

N '000Segmentrevenue

Segmentprofit/(loss)

Segmentrevenue

Segmentprofit/(loss)

Food 483,694,743 5,688,203 303,691,048 11,723,357Agro Allied 117,500,297 9,252,989 78,871,667 1,838,624Packaging 27,919,473 2,211,464 20,802,156 (1,025,230)Port operations and logistics 12,237,472 (248,163) 9,212,872 889,502Others 180,995 (5,375,870) 106,395 (377,879)Elimination of Inter-segment revenue (117,068,532) - (70,097,679) -Elimination of Inter-segment profit/loss - (1,055,776) - (1,559,096)

524,464,448 10,472,847 342,586,459 11,489,278

Revenue from customers domiciled in Nigeria amounted to N510.7 billion, while revenue from foreign customers (export revenue)amounted billion to N13.78 billion. Export revenue from a customer in Cyprus amounted to N11.3 billion.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profitrepresents the profit earned by each segment without allocation of income tax expense. This is the measure reported to the chiefoperating decision maker for the purposes of resource allocation and assessment of segment performance.

Segment assets and liabilities

31-Mar-17N '000

31-Mar-16N '000

Segment assetsFood 427,881,785 315,210,268Agro Allied 142,636,113 101,661,672Packaging 30,464,163 64,379,050Port operations and logistics 19,497,088 16,345,646Real Estate 2,911,258 3,147,849Elimination of Inter-segment Assets (140,787,150) (155,396,159)

Total assets 482,603,257 345,348,326

31-Mar-17N '000

31-Mar-16N '000

Segment liabilitiesFood 319,272,125 229,283,965Agro Allied 153,005,889 104,179,688Packaging 18,703,408 54,890,038Port operations and logistics 11,055,848 9,893,194Real Estate 9,935,105 4,794,959Elimination of Inter-segment Liabilities (131,913,462) (153,459,292)

Total liabilities 380,058,913 249,582,552

Major customer

Revenues from one customer of the Group’s food segments represented approximately N28 Billion (2016: N18.8 Billion) of the Group’stotal revenues.

51



7. Segment information (continued)

Other material items

Group

March 31, 2017 Food Agro Allied Packaging Port operationsand logistics

Real estate Reportablesegment totals

Adjustments Consolidatedtotal

N '000 N '000 N '000 N '000 N '000 N '000 N '000 N '000Interest income (3,323,754) (175,357) (437,678) - (266) (3,937,055) 2,374,751 (1,562,304)Interest expense and fair valueloss on derivatives

23,189,549 8,575,078 571,762 226,133 953,183 33,515,705 (986,351) 32,529,354

Capital expenditure 8,974,256 12,813,264 771,046 153,774 23,136 22,735,476 - 22,735,476Depreciation and amortisation 9,218,165 3,316,239 1,414,227 1,507,329 384,191 15,840,151 - 15,840,151Impairment losses on non-financial assets

- - - - - - - -

Reversal of impairment losseson non-financial assets

(1,468,381) - - - - (1,468,381) - (1,468,381)

36,589,835 24,529,224 2,319,357 1,887,236 1,360,244 66,685,896 1,388,400 68,074,296

March 31, 2016 Food Agro Allied Packaging Port operationsand logistics

Real estate Reportablesegment totals

Adjustments Consolidatedtotal

N '000 N '000 N '000 N '000 N '000 N '000 N '000 N '000Interest income (3,038,812) (88,452) (118,397) - - (3,245,661) 2,142,185 (1,103,476)Interest expense 15,865,556 5,055,198 844,039 632,969 - 22,397,762 - 22,397,762Capital expenditure 6,210,664 16,719,994 994,666 106,869 83,492 24,115,685 - 24,115,685Depreciation and amortisation 8,941,524 2,518,196 1,093,197 1,733,848 382,992 14,669,757 - 14,669,757Impairment losses on non-financial assets

3,955,217 - - - - 3,955,217 - 3,955,217

31,934,149 24,204,936 2,813,505 2,473,686 466,484 61,892,760 2,142,185 64,034,945

52



8. Net operating gains and losses

Group Company


Insurance claim 242,220 145,745 239,927 143,200Sundry income 418,972 1,025,601 229,676 188,189Rental income 219,841 221,395 156,047 144,351Reversal / (allowance) impairment of property, plant andequipment

509,846 (3,955,217) 1,581,368 (2,698,850)

Fees earned 329,851 238,506 305,222 218,891Government grants 885,956 943,888 253,944 218,387Bad debts recovered 86,532 18,238 86,532 18,238Fair value gain on derivative 755,516 - 387,814 -Loss on exchange differences (5,742,096) (6,296,099) (6,653,268) (4,007,717)Profit or (loss) on disposal of property, plant and equipment 77,823 (217,493) 50,617 (98,853)Fair value changes in biological asset 727,323 154,919 - -

(1,488,216) (7,720,517) (3,362,121) (5,874,164)

9. Selling and distribution expenses (analysed by nature)

Employee costs 1,697,205 1,672,783 1,574,648 1,549,871Advertisement 375,710 707,558 371,142 679,902Selling expenses 3,268,233 2,623,460 3,036,209 2,370,501

5,341,148 5,003,801 4,981,999 4,600,274

10. Administrative expenses (analysed by nature)

Bad debts 389,604 1,420,811 291,474 841,026Bank charges 2,552,401 909,444 1,726,677 725,185Legal and professional fees 661,822 631,860 447,907 437,305Depreciation and amortisation 2,379,083 2,255,659 1,837,244 1,758,288Salaries, wages and other staff costs 4,607,074 4,304,432 3,269,535 3,152,325Computer related expenses 959,618 485,987 826,290 389,819Insurance 218,747 182,317 59,870 73,982Medical, canteen and welfare expenses 670,027 283,169 606,288 244,085Motor vehicle expenses 92,732 62,763 77,151 49,006Penalties, fines and non recoverable taxes 806,672 412,755 528,063 69,869Fuel,gas and oil 380,866 121,692 174,815 87,047Auditors remuneration 296,900 301,275 166,600 166,600Postages, telephone and cables 42,417 167,651 12,684 135,712Printing and stationery 86,623 85,330 58,004 64,434Rent and rate 409,799 799,214 381,173 723,815Repairs and maintenance 964,296 528,382 787,311 60,525Subscriptions and donations 185,322 91,325 161,984 68,421Security services 255,015 800,600 61,492 59,090Travelling expenses 707,816 413,283 386,037 217,996General administrative expenses 1,752,973 1,590,312 152,816 112,446

18,419,807 15,848,261 12,013,415 9,436,976

53




11. Employee information

11.1 Employee costs

Employee cost comprise:

Salaries, wages and other benefits 15,810,357 15,328,946 11,504,161 11,641,441Pensions 1,536,028 1,356,845 1,207,953 1,055,837Long service awards 77,360 319,153 62,037 296,860Gratuity 981,344 830,480 813,893 655,331

18,405,089 17,835,424 13,588,044 13,649,469

Total employee costs have been recognised in profit or lossas follows:Cost of sales 12,100,810 11,858,209 8,743,861 8,947,273Selling and distribution expenses 1,697,205 1,672,783 1,574,648 1,549,871Administrative expenses 4,607,074 4,304,432 3,269,535 3,152,325

18,405,089 17,835,424 13,588,044 13,649,469

11.2 Number of employees

The number of persons employed as at year end was as follows:


Number Number Number NumberManagerial 1,182 1,345 893 803Non-managerial staff 6,102 5,837 2,562 2,590

7,284 7,182 3,455 3,393

The number of employees in receipt of emoluments excluding certain benefits allowances and pension/gratuity within the following rangeswere:

Group Company=N= 31-Mar-17

Number31-Mar-16

Number31-Mar-17

Number31-Mar-16

Number100,001 - 200,000 2,274 1,332 - 412200,001 - 300,000 788 745 11 346300,001 - 400,000 437 961 80 382400,001 - 500,000 524 704 102 189500,001 - 600,000 169 353 270 63600,001 - 700,000 72 181 256 48700,001 - 800,000 67 393 158 232800,001 - 900,000 118 453 245 274900,001 - 1,000,000 212 241 324 141

Over 1,000,001 2,623 1,819 2,009 1,306

7,284 7,182 3,455 3,393

54




12. Gain on disposal of investment in associate

Proceeds from disposal of investment in associate - 27,267,092 - 27,267,092Book value of investment - (3,514,035) - (13,293,418)Additional cost incurred on disposal - (21,635) - (21,635)

- 23,731,422 - 13,952,039

13. Investment income

Dividend income from subsidiaries - - - 25,527

Interest incomeInterest income from short term investments and bankdeposits

1,562,304 1,103,475 855,655 806,361

Interest income from related companies - - 2,374,752 176,208

Interest received per statement of cash flows 1,562,304 1,103,475 3,230,407 982,569

1,562,304 1,103,475 3,230,407 1,008,096

14. Finance costs

Interest expense on related parties transactions - - 607,557 4,861Interest on bond - 1,187,844 - 1,187,844Interest on bank loans and overdrafts 29,036,615 21,209,918 18,623,128 11,819,106Fair value loss on derivatives 3,492,739 - 2,969,054 -

32,529,354 22,397,762 22,199,739 13,011,811

15. Taxation

Per profit or loss

Company income tax 1,442,825 708,867 - -Tertiary education tax 291,746 178,890 112,739 36,873Over provision in prior year - (498,072) - (136,956)

Current tax expense 1,734,571 389,685 112,739 (100,083)Deferred taxation (98,176) (3,320,691) 1,037,794 (4,077,206)

Net income tax expense /(credit) as per profit or loss 1,636,395 (2,931,006) 1,150,533 (4,177,289)

Corporation tax is calculated at 30% (2016: 30%) of the estimated taxable profit for the year while tertiary education tax is calculated at 2%(2016: 2%) of the estimated assessable profit for the year.

55




15. Taxation (continued)

Per statement of financial positionAt 1 April 1,336,015 1,802,610 439,157 624,831Acquired through merger - - - 22,682Charge for the year 1,734,571 389,685 112,739 (100,083)Payment during the yearCash (621,269) (629,927) (1,263) (102,174)Witholding tax utilized (207,101) (226,353) - (6,099)

Current tax payable 2,136,490 1,336,015 550,633 439,157

Reconciliation of effective tax rateProfit before tax (A) 10,472,847 11,489,278 10,979,579 6,248,497

Tax at the statutory corporation tax rate of 30% (2016:30%) 3,227,780 3,446,783 3,293,874 1,874,549Effect of income that is exempt from taxation (4,702,913) (7,119,427) (425,124) (4,194,005)Effect of expenses that are not deductible in determiningtaxable profit

568,802 259,814 440,986 183,097

Effect of investment allowance and similar tax incentives (898,390) (155,714) (214,886) (35,022)Effect of previously unrecognised and unused tax losses anddeductible temporary differences now recognised asdeferred tax assets

- (2,111,417) - (2,111,417)

Effect of pioneer status* (1,192,890) (76,359) (1,192,890) (314,084)Education tax at 2% of assessable profits 288,817 178,890 112,739 36,873Minimum tax adjustments 149,821 - - -Under/ (over) provision in prior years (156,613) (498,072) - (136,956)Change in recognised deductible temporary differences (878,775) 367,080 (864,166) 519,676Unrecognised deffered tax assets 5,230,756 2,777,416 - -

Income tax expense recognized in profit or loss (relating tocontinuing operations) (B)

1,636,395 (2,931,006) 1,150,533 (4,177,289)

Effective tax rate (B/A) %16 %(26) %10 %(67)

* The Company obtained production date certificate in respect of the pioneer status tax holiday for its Apapa West Mill in September2013. Based on the certificate, the production date (effective commencement date of pioneer status) is 1 October 2013. The related taximpact has been recognised in the current year profit or loss account as the pioneer status expired on 31 September, 2016.

16. Deferred tax

Analysis of deferred tax balances

Deferred tax asset 1,846,674 66,022 - -Deferred tax liability (7,819,480) (5,768,040) (5,904,270) (4,553,105)

Net deferred tax liability (5,972,806) (5,702,018) (5,904,270) (4,553,105)

The Group has unrecognised capital allowances and unused tax losses amounting to N53.9 billion and N14 billion (2016: N20.9 billionand N5.4 billion) respectively. No deferred tax asset has been recognised in respect of these amounts due to the unpredictability of theamount and timing of future taxable profit against which they would be utilised. The capital allowances and tax losses can be carriedforward indefinitely.

56



16. Deferred tax (continued)

Deferred tax assets and liabilities

The following are the major deferred tax liabilities and assets recognised by the Group and Company and movements thereon during thecurrent and prior reporting period.

Group

2017

Deferred tax (assets)/liabilities in relation to:Opening balance

N '000

Recognised inprofit or loss

N '000

Recognised inother

comprehensiveincomeN '000

Closing balanceN '000

Property, plant and equipment 8,783,047 (3,617,870) - 5,165,177Tax losses (547,287) 476,711 - (70,576)Exchange difference 5,046 3,758,155 - 3,763,201Employee benefits (1,500,018) (639,206) 368,964 (1,770,260)Allowances for doubtful receivables (1,038,770) (75,966) - (1,114,736)

5,702,018 (98,176) 368,964 5,972,806

March 31, 2016

Deferred tax (assets)/liabilities in relation to:Opening balance

N '000


N '000

Recognised inother

comprehensiveincome N '000

Closing balanceN '000

Property, plant and equipment 10,893,284 (2,110,237) - 8,783,047Tax losses - (547,287) - (547,287)Exchange difference (334,974) 340,020 - 5,046Employee benefits (1,143,617) (182,587) (173,814) (1,500,018)Allowance for doubtful receivables (218,170) (820,600) - (1,038,770)

9,196,523 (3,320,691) (173,814) 5,702,018

Company

2017 Openingbalance


Recognised inother

comprehensiveincome

Closingbalance

N '000 N '000 N '000 N '000Deferred tax (assets)/liabilities in relation to:Property, plant and equipment 7,073,563 (1,550,401) - 5,523,162Tax losses (469,391) 469,391 - -Exchange difference 160,252 2,694,438 - 2,854,690Employee benefits (1,327,223) (383,146) - (1,710,369)Allowance for bad debt (573,136) (192,487) - (765,623)Arising on actuarial (gains)/losses on staff retirement benefit (310,960) - 313,370 2,410

4,553,105 1,037,794 313,370 5,904,270

57



16. Deferred tax (continued)

2016 Openingbalance

Arising frommerger


Recognised inother

comprehensive income

Closingbalance

N '000 N '000 N '000 N '000 N '000Deferred tax (assets)/liabilities in relation to:Property, plant and equipment 11,061,410 4,152 (3,991,999) - 7,073,563Tax losses - - (469,391) - (469,391)Exchange difference (341,702) - 501,954 - 160,252Employee benefits (1,115,407) - (211,816) - (1,327,223)Allowance for bad debt (804,192) - 231,056 - (573,136)Arising on actuarial (gains)/losses on staff retirement benefit - - (137,010) (173,950) (310,960)

8,800,109 4,152 (4,077,206) (173,950) 4,553,105

17. Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the Company by the weightedaverage number of ordinary shares outstanding during the year.

Group Company


Reconciliation of profit or loss for the year to earnings pershareProfit or loss for the year attributable to equity holders ofthe parent

7,961,484 14,620,321 9,829,046 10,425,786

Weighted average number of shares ('000) 2,624,253 2,624,253 2,624,253 2,624,253

Basic earnings per share(kobo per share) 303 557 375 397

Diluted earnings per share

In the determination of diluted earnings per share, profit or loss attributable to the equity holders of the Company and the weightedaverage number of ordinary shares are adjusted for the effects of all dilutive potential ordinary shares.

Where there is a discontinued operation, diluted earnings per share is determined for both continuing and discontinued operations.

Group Company


Reconciliation of profit or loss for the year to earnings pershareProfit or loss for the year attributable to equity holders ofthe parent

7,961,484 14,620,321 9,829,046 10,425,786

Weighted average number of shares ('000) 2,624,253 2,624,253 2,624,253 2,624,253

Diluted earnings per shareDiluted earnings per share (kobo per share) 303 557 375 397

58



18. Property, plant and equipmentGroup Land and building Plant and machinery Furniture and equipment Vehicles Bearer plants Berth Rehabilation Capital work-in-progress Total

N '000 N '000 N '000 N '000 N '000 N '000 N '000 N '000CostBalance at April 01, 2015 46,487,548 161,719,586 5,794,986 10,660,664 519,989 - 54,554,825 279,737,598Additions 1,520,226 4,182,896 138,256 110,220 14,150 - 18,149,936 24,115,684Disposals (9,579) (646,063) (95,922) (390,927) - - (182,280) (1,324,771)Reclassification 7,951,829 17,129,109 181,448 284,377 - - (25,546,763) -Transfer to intangible assets - - - - - - (322,935) (322,935)Transfer to investment property (2,165,028) - - - - - - (2,165,028)

Balance at March 31, 2016 53,784,996 182,385,528 6,018,768 10,664,334 534,139 - 46,652,783 300,040,548

Balance at April 01, 2016 53,784,996 182,385,528 6,018,768 10,664,334 534,139 - 46,652,783 300,040,548Additions 289,658 2,835,526 217,902 225,099 - - 18,970,388 22,538,573Disposals (22,278) (307,738) (9,676) (698,255) - - (1,536,211) (2,574,158)Transfer to inventory - - - - (16,500) - - (16,500)Transfer from intangibles - - - - - 763,547 - 763,547Transfer to intangible - - - - - - (201,880) (201,880)Transfer from CWIP 20,851,757 23,541,078 250,699 128,955 396,621 - (45,169,110) -Write off - (78,653) - (18,379) - - (1,881,195) (1,978,227)

Balance at March 31, 2017 74,904,133 208,375,741 6,477,693 10,301,754 914,260 763,547 16,834,775 318,581,001

Accumulated depreciationBalance at April 01, 2015 4,699,680 56,771,496 2,957,073 6,349,542 19,332 - - 70,797,123Charge for the year 2,033,091 10,188,178 856,137 1,481,588 11,046 - - 14,570,040Disposals (2,848) (258,589) (95,666) (393,487) - - - (750,590)Impairment (Note) (a) - 2,578,865 - - - - 1,376,352 3,955,217Transfer to investment property (119,318) - - - - - - (119,318)

Balance at March 31, 2016 6,610,605 69,279,950 3,717,544 7,437,643 30,378 - 1,376,352 88,452,472

Balance at April 01, 2016 6,610,605 69,279,950 3,717,544 7,437,643 30,378 - 1,376,352 88,452,472Charge for the year 2,245,231 10,903,003 981,534 1,306,284 67,104 41,068 - 15,544,224Disposals (8,916) (240,359) (8,936) (648,962) - - - (907,173)Transfer from intangible - - - - - 147,526 - 147,526Write offs - (44,570) - (18,379) - - - (62,949)Reversal of Impairment 53,909 (1,247,953) - - - - (274,337) (1,468,381)

Balance at March 31, 2017 8,900,829 78,650,071 4,690,142 8,076,586 97,482 188,594 1,102,015 101,705,719

Carrying amountBalance as at March 31, 2017 66,003,304 129,725,670 1,787,551 2,225,168 816,778 574,953 15,732,760 216,866,184

Balance as at March 31, 2016 47,174,391 113,105,578 2,301,224 3,226,691 503,761 - 45,276,431 211,588,076

59



CompanyLand and building

Plant andmachinery

Furniture andequipment Vehicles

Capital work-in-progress Total

N '000 N '000 N '000 N '000 N '000 N '000CostBalance at April 01, 2015 19,508,212 80,542,448 3,188,049 3,585,551 23,030,727 129,854,987Additions 366,903 3,465,286 46,612 40,112 2,594,199 6,513,112Disposals - (117,973) (10,836) (446,616) (2,441) (577,866)Reclassification 5,873,001 10,522,462 84,003 203,571 (16,683,037) -Arising from merger (Note e) 3,677,113 2,314,965 789,602 5,002,328 1,058,239 12,842,247Transfer from investment property (Note 19) 1,039,960 - - - - 1,039,960Transfer to intangible assets - - - - (27,835) (27,835)

Balance at March 31, 2016 30,465,189 96,727,188 4,097,430 8,384,946 9,969,852 149,644,605

Balance at April 01, 2016 30,465,189 96,727,188 4,097,430 8,384,946 9,969,852 149,644,605Additions 53,275 1,842,057 93,052 74,590 4,779,819 6,842,793Disposals (22,278) (255,077) (6,580) (630,223) - (914,158)Transfer from CWIP 316,195 2,726,701 70,074 78,269 (3,191,239) -Transfer to ROM Oil - - - - (31,499) (31,499)Transfer to intangible assets - - - - (201,880) (201,880)Write off - - - - (28,064) (28,064)

Balance at March 31, 2017 30,812,381 101,040,869 4,253,976 7,907,582 11,296,989 155,311,797

Accumulated depreciationBalance at April 01, 2015 2,505,489 42,492,262 2,246,158 2,189,302 - 49,433,211Charge for the year 979,731 5,210,785 461,339 1,166,868 - 7,818,723Disposals - (12,554) (9,567) (371,635) - (393,756)Transfer from investment property (Note 19) 126,341 - - - - 126,341Arising from merger (Note e) 358,792 798,668 300,576 2,770,829 - 4,228,865Impairment (Note a) - 2,174,513 - - 524,337 2,698,850

Balance at March 31, 2016 3,970,353 50,663,674 2,998,506 5,755,364 524,337 63,912,234

Balance at April 01, 2016 (Accumulated depreciation and Impairment) 3,970,353 50,663,674 2,998,506 5,755,364 524,337 63,912,234Charge for the year 973,850 5,947,822 484,873 988,709 - 8,395,254Disposals (8,916) (211,242) (6,262) (581,889) - (808,309)Reversal of impairment - (1,307,031) - - (274,337) (1,581,368)

Balance at March 31, 2017 4,935,287 55,093,223 3,477,117 6,162,184 250,000 69,917,811

Carrying amountBalance as at March 31, 2017 25,877,094 45,947,646 776,859 1,745,398 11,046,989 85,393,986

Balance as at March 31, 2016 26,494,836 46,063,514 1,098,924 2,629,582 9,445,515 85,732,371

60



Analysis of bearer plants

31-Mar-17 CostN '000

Accumulateddepreciation

N '000

Carrying amountN '000

Mature bearer plants 665,157 (97,482) 567,675Immature bearer plants 249,103 - 249,103

914,260 (97,482) 816,778

31-Mar-16 CostN '000

Accumulateddepreciation

N '000

Carrying amountN '000

Mature bearer plants 283,439 (30,378) 253,061Immature bearer plants 250,700 - 250,700

534,139 (30,378) 503,761

Included in the group property, plant and equipment movement schedule is berth rehebilitation, which represents the cost of leaseholdimprovement at Apapa Bulk Terminal Limited.

(a) Impairment losses/ (reversal)

During the year, impairment on previously idle plant and machinery amounting to N1.58 billion was reversed by the group as the assetswere put to use in the current year. The reversal of impairment is recognised in net operating gains and losses in the consolidated andseparate of profit or loss and other comprehensive income.

(b) Pledged as security

As at March 31, 2017, specific properties with carrying amount of about N3 billion (2016: N2 billion) were pledged as security for bankloans. There are also negative pledges over other Company's property, plant and equipment and floating assets, which have been given inrelation to the Company's borrowings.

(c) Capital commitment

The total capital commitment of the Company as at March 31, 2017 amounted to N3.5.billion (2016: N3.2 billion) in respect of variouscapital projects.

(d) Capital work in progress

Capital work in progress comprises Building, Plant and Machinery under construction during the year. Included in the amount arecapitalised borrowing cost of approximately N1.4 billion (2016: N1.2 billion) calculated using an average capitalization rate of 14%. Majorprojects included in the Group Capital work in progress is capital expenditure of about N2.5 billion relating to the Sunti Golden Sugar EstateFarm and Mill and plant and machinery of about N9 billion relating to Flour and Pasta production line.

Group Company


Closing Capital WIP is analysed as follows:Buildings 1,321,441 22,462,402 1,321,441 1,926,839Plant and machinery 14,411,319 22,814,029 9,725,548 7,518,676

15,732,760 45,276,431 11,046,989 9,445,515

(e) Arising from merger

61



Arising from merger relates to property, plant and equipment from subsidiaries which merged with the Company as at March 2016.

19. Investment propertyGroup

BuildingN'000

CostBalance at April 01, 2015 -Transfer from Property, plant and equipment (Note a) 2,165,028

Balance at March 31, 2016 2,165,028

Balance at April 01, 2016 2,165,028Addition 9,564

Balance at March 31, 2017 2,174,592

Accumulated depreciationBalance at April 01, 2015 -Charge for the year 22,331Transfer from Property, plant and equipment (Note a) 119,318

Balance at March 31, 2016 141,649

Balance at April 01, 2016 141,649Charge for the year 103,746


Carrying amountBalance as at March 31, 2017 1,929,196

Balance as at March 31, 2016 2,023,379

Company BuildingN '000

CostBalance at April 01, 2015 1,113,245Transfer to property, plant and equipment (Note (a)) (1,039,960)


Balance at April 01, 2016 73,285Balance at March 31, 2017 73,285

Accumulated depreciationBalance at April 01, 2015 127,590Charge for the year 22,332Transfer to Property, plant and equipment (Note a) (126,341)




Carrying amountBalance as at March 31, 2017 48,137

Balance as at March 31, 2016 49,704

The Company applies the cost model in accounting for its investment property.

Rental income generated from investment property during the year was N35.4m (2016:N32m).

62



19. Investment property (continued)

Direct operating expenses (including repairs and maintenance) arising from investment property that generated rental income during theperiod was N104 million (2016: N70.2 million).

(a) The transfers from Investment property to Property plant and equipment as at March 2016, represents the carrying amount ofinvestment property relating to the Gbagada Truck Park located at Gbagada, Lagos. The property is occupied by the Transport divisionwhich was a subsidiary of the Company during the period. Subseqent to the merger of the subsidiary with the Company as at March 2016,the property was converted to own use and reclassified the carrying amount of the property to property, plant and equipment.

Transfers from property, plant and equipment to investment property in prior year represents investment property which had previouslybeen classified as property, plant and equipment in the Group's statement of financial position.

(b) The Group and Company's carrying amount of investment property as at year end represents:

i. Abuja Residential Quarters- This is a building located at Life Camp Abuja and owned by Flour Mills of Nigeria Plc. The property is currentlybeing occupied by Levant Construction Limited from whom the company earns rental income.

ii. FMN Property-Onireke GRA Ibadan- the Company earns income from this property which has been rented out to Chi Foods Limited.

iii The Olympic Tower properties relate to residential flats in Victoria Island, Lagos which the group holds primarily for generating rental income.The Group and Company is yet to determine the fair value of the investment property. However, based on previous valuations performed for similar assets, the fair value is estimated to be within the range of N2.2 billion to N2.5 billion

The properties at Abuja and Onireke GRA Ibadan are not owner-occupied and are held by Flour Mills of Nigeria Plc to earn rental income.

No contigent rents are charged.

20. Intangible assetsGroup Computer software Berth rehabilitation Trademarks Total

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

539,147 487,742 460,000 1,486,88915,864 - - 15,864

CostBalance at April 01, 2015 AdditionTransfer from PPE 47,130 275,805 - 322,935

Balance at March 31, 2016 602,141 763,547 460,000 1,825,688

602,141 763,547 460,000 1,825,68842,491 - - 42,491

201,880 (763,547) - (561,667)

Balance at April 01, 2016 AdditionTransfer from/(to) PPE (Note 18) Write off (38,056) - - (38,056)

Balance at March 31, 2017 808,456 - 460,000 1,268,456

Accumulated amortisationBalance at April 01, 2015 414,884 115,757 460,000 990,641Charge for the year 67,948 31,769 - 99,717

Balance at March 31, 2016 482,832 147,526 460,000 1,090,358

Balance at April 01, 2016 482,832 147,526 460,000 1,090,358Charge for the year 155,310 - - 155,310Transfer to PPE - (147,526) - (147,526)Write off (38,056) - - (38,056)

Balance at March 31, 2017 600,086 - 460,000 1,060,086

Carrying amountBalance as at March 31, 2017 208,370 - - 208,370

63



20. Intangible assets (continued)

Balance as at March 31, 2016 119,309 616,021 - 735,330

Computer software relates to acquired software license and other development costs directly attributable to the preparation ofthe computer software for its intended use. Amortization of computer software is calculated based on useful life of 3 years.

Berth Rehabilitation cost previously classified as an intangible asset has now been reclassified to Property Plant and Equipmentas leasehold improvement.

Company Computersoftware

N'000

365,57512,993

CostBalance at April 01, 2015AdditionTransfer from Property, plant and equipment (Note 18) 27,835


Balance at April 01, 2016 406,403Transfer from Property, plant and equipment (Note 18) 201,880Addition 42,491


Accumulated amortisationBalance at April 01, 2015 268,933Charge for the year 51,035




Carrying amountBalance as at March 31, 2017 191,508

Balance as at March 31, 2016 86,435

Computer software relates to acquired software license and other development costs directly attributable to the preparation of thecomputer software for its intended use. Amortization of computer software is calculated based on useful life of 3 years.

Amortisation of intangible assets is recognised in administrative expenses in profit or loss.

21. Goodwill

Group 31-Mar-17 31-Mar-16

Cost Accumulatedimpairment

Carrying value Cost Accumulatedimpairment

Carrying value

Goodwill 4,148,022 - 4,148,022 4,148,022 - 4,148,022

31-Mar-17 31-Mar-16N '000 N '000

Goodwill on acquisition of ROM Oil Mills Limited 1,351,067 1,351,067Goodwill on acquisition of Thai Farms Limited 920,139 920,139Goodwill from New Horizon Flour Mills Limited 1,876,816 1,876,816

4,148,022 4,148,022

Goodwill has been assessed for impairment as part of the annual mandatory impairment testing. Goodwill was apportioned to CashGenerating Units (CGUs) that are expected to benefit from the respective business combinations on the basis of management expectationof the benefit to be derived from the synergy. As the carrying value of the assets of the CGU to which the Goodwill was allocated is lowerthan the recoverable amount, Management did not recognize any impairment loss on the Goodwill

Allocation of goodwill to cash generating units (CGU)

64



21. Goodwill (continued)

Goodwill was apportioned to CGUs that are expected to benefit from the synergies of the respective business combinations on the basis oftheir net asset values

Goodwill has been allocated for impairment test purposes to the following cash-generating units Flour Mills of Nigeria Plc. Premier Feed Mills Company Limited Nigerian Eagle Flour Mills Limited

The carrying amount of goodwill was allocated to the cash generating units as follows:

Allocation of Goodwill March 31, 2017

Cash Generating Units ROM OIL THAI FARM QUILVEST TotalN '000 N '000 N '000 N '000

Flour Mills of Nigeria Plc 769,754 801,153 1,876,816 3,447,723Premier Feed Mills Company Limited 581,313 - - 581,313Nigerian Eagle Flour Mills Limited - 118,986 - 118,986

1,351,067 920,139 1,876,816 4,148,022

Company 31-Mar-17 31-Mar-16

Cost Accumulatedimpairment

Carrying value Cost Accumulatedimpairment

Carrying value

Goodwill (Note 22) 1,876,816 - 1,876,816 1,876,816 - 1,876,816

Goodwill in the Company is as a result of merger with New Horizon Flour Mills Limited in 2016. Prior to the merger, the goodwill which isfrom Quilvest Properties Limited, a subsidiary of New Horizon Flour Mills Limited was disclosed under the Flour Mills Plc group financialstatements.

Cash Generating Units

For subsidiary CGUs, the recoverable amount of the cash generating units is determined based on a value in use calculation which uses cashflow projections based on five year projection of current year EBITDA and an average cost of capital of 15% per annum (2016: 11% perannum).

The Directors believe that any reasonably possible change in the key assumptions on which the recoverable amount is based would notcause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit.

Key forecast assumptions

The key assumptions used in the value in use calculations for the cash generating units are as follows. Discount rate: 15% (2016: 11%) Net cash flow: The Net cash flow is based on 5-year forecast using 2017 as the base year. Budgeted EBITDA growth rate: The Growth rate of 15% (2016: 8%) has been applied based on management expectations of

improvement in performance of the Company. Inflation rate: Inflation rate is based on forecast consumer price indices during the period for the country. An inflation rate of

18% has been applied for the current year (2016: 13%). The value assigned to the key assumption is consistent with externalsources of information

The discount rate was a based on the historical weighted-average cost of capital.

The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate wasdetermined based on management’s estimate of the long-term compound annual EBITDA growth rate, consistent with theassumptions that a market participant would make.

65



21. Goodwill (continued)

Budgeted EBITDA was based on expectations of future outcomes taking into account past experience, adjusted for anticipated revenuegrowth. Revenue growth was projected taking into account the average growth levels experienced over the past five years and theestimated sales volume and price growth for the next five years. It was assumed that sales prices would grow at a constant marginabove forecast inflation over the next five years.

22. Merger

In 2016, the Company sought and obtained shareholders' and regulatory approval to merge with five wholly owned subsidiaries. Themerger was effected during the year and the integration of the entities has been completed.

The subsidiaries which were merged were under the same control prior to the date of the merger, consequently, this is a businesscombination of entities under common control. The Company has developed an accounting policy to include in the standalone financialstatements of Flour Mills of Nigeria Plc as at 31 March 2016, the results of the merged subsidiaries as if the merger occurred at thebeginning of the financial year. Management has elected not to restate the comparatives in the Statement of profit or loss and othercomprehensive income as this is not explicitly required by the standards.

The assets and liabilities acquired through the merger were as follows: N '000

Property, plant and equipment 8,613,382Goodwill 1,876,816Long term receivables 3,904,188Prepayments 1,904,471Inventories 1,314,761Trade receivables 497,639Cash and cash equivalents 437,014Non current assets held for sale 13,293,418

Total Assets 31,841,689

N '000Borrowings 12,527,447Deferred income 56,987Deferred tax liabilities 4,152Employee benefit obligation 95,531Bank overdraft 1,065,271Trade payables 18,749,521Current tax liabilities 22,682

Total liabilities 32,521,591

Net liabilities (679,902)Derecognition of investment in subsidiaries at cost (201,000)

Transfer to reserves from merger (880,902)

66



23. Investment in subsidiaries

Investment in subsidiaries are stated at cost and analysed as follows:

Group Company

31-Mar-17

N'000

31-Mar-16

N'000

31-Mar-17

N'000

31-Mar-16

N'000UnquotedApapa Bulk Terminal Limited - - 50,000 50,000Golden Shipping Company Nigeria Limited - - 26,000 10,000Golden Sugar Company Limited - - 10,000 10,000Kaboji Farms Limited - - 30,000 30,000Premier Feed Mills Company Limited - - 12,750 12,750Nigerian Eagle Flour Mills Limited - - 510,000 510,000Golden Penny Rice Limited - - 10,000 10,000Crestview Towers Limited - - 10,000 10,000Olympic Towers Limited - - 10,000 10,000ROM Oil Mills Limited - - 1,915,728 1,915,728Thai Farm International Limited - - 878,598 660,066Agri Palm Limited - - 10,000 10,000Agri Estates Limited - - 10,000 10,000Agro Allied Farms Sunti Limited - - 10,000 10,000Agro Allied Syrups Limited - - 10,000 10,000Sunti Golden Sugar Estates Limited - - - 5,000Best Chickens Limited - - 10,000 10,000Golden Agri Input Limited - - 50,000 50,000

- - 3,563,076 3,333,544

QuotedNorthern Nigeria Flour Mills Plc - - 303,441 303,441

- - 3,866,517 3,636,985

During the year, the investment in Sunti Golden Sugar Estate Limited was transferred to Golden Sugar Company Limted. Also, an additionalinvestment of N16 Million was made in Golden Shipping Company Nigeria Limited and N218.53 million in Thai Farms International Limited.

67



23. Investment in subsidiaries (continued)

ShareholdingShareholding (%)

Subsidiaries Ordinary shares 31-Mar-17 31-Mar-16 Principal Activity

Apapa Bulk Terminal Limited 380,000,000 ordinary sharesof 50 kobo each

100 100 Port operations

Golden Agri Inputs Limited 100,000,000 ordinary sharesof 50k each

100 100 Agriculture

Golden Shipping Company Nigeria Limited 26,000,000 ordinary sharesof N1 each

100 100 Shipping agency

Golden Sugar Company Limited 20,000,000 ordinary sharesof 50k each

100 100 Manufacturingof sugar

Northern Nigeria Flour Mills Plc 178,200,000 ordinary sharesof 50k each

53 53 Flour milling

Kaboji Farms Limited 30,000,000 ordinary sharesof N1 each

100 100 Farming

Premier Feed Mills Company Limited 50,000,000 ordinary sharesof 50k each

62 62 Livestock feeds

Nigeria Eagle Flour Mills Limited 510,000,000 ordinary sharesof N1 each

51 51 Flour milling

Golden Penny Rice Limited 20,000,000 ordinary sharesof 50k each

100 100 Importation andbagging of rice

Crestview Towers Limited 20,000,000 ordinary sharesof 50k each

100 100 Real estate

Olympic Towers Limited 20,000,000 ordinary sharesof 50k each

100 100 Real estate

Agri Palm Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agri Estates Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agro Allied Farms Sunti Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Agro Allied Syrups Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

ROM Oil Mills Limited 10,000,000 ordinary sharesof 50k each

90 90 Manufacturingof edible oil.

Thai Farm international Limited 349,650,135 Ordinary sharesof 50k share

100 75 Manufacturingof cassava flour

Best Chickens Limited 20,000,000 ordinary sharesof 50k each

100 100 Agriculture

Sunti Golden Sugar Estates Limited 10,000,000 ordinary sharesof 50k each

- 100 Manufacturingof sugar

Golden Penny Power Limited (*) 2,000,000 ordinary shares of50k each

100 100 Powergeneration

Premier Poultry Processors Limited (*) 20,000,000 ordinary sharesof 50 kobo each

100 100 Livestockfarming

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Shareholding (%)Subsidiaries Ordinary shares 3/31/2017 3/31/2016 Principal Activity

Premier Chicks Limited (*) 10,000,000 ordinary sharesof 50 kobo each

100 100 Livestockfarming

Iganmu Power Company Limited (*) 2,000,000 ordinary shares of50 Kobo each

100 100 Powergeneration

The shareholdings in the subsidiaries above represents the Company's voting rights in the subsidiaries.

* These are dormant companies. The share capital for these subsidiaries have not been issued or paid up by the Company, hence noinvestment has been recorded as at 31 March 2017.

* Golden penny power limited and Iganmu power company limited were incorporated to carry out independent power projects, whilePremier poultry processors limited and Premier chicks limited were incorporated for livestock farmng and processing.

Acquisition of NCI

In the current year, the Group acquired an additional 25% interest in Thai Farm International Limited for N218 million increasing itsownership from 75% to 100%. The carrying amount of Thai Farms International Limited's net liability in the Group's consolidated financialstatement was NGN1.453 billion. The Group recognized an increase of N363 million in NCI and a decrease of N582 million in retainedearnings attributable to owners of the Company.

N'000Net Liabilities at date of acquisition (1,453,856,000*25%) (363,464)Consideration paid to NCI (218,532)

(581,996)

Subsidiaries with material non-controlling interests

The following information is provided for subsidiaries with non-controlling interests which are material to the reporting company. Thesummarised financial information is provided prior to intercompany eliminations.

Subsidiaries% Ownership interest held by

non-controlling interest31-Mar-17 31-Mar-16

Northern Nigeria Flour Mills Plc. %47 %47Premier Feed Mills Company Limited. %38 %38Nigerian Eagle Flour Mills Limited %49 %49

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March 31, 2017

Summarised consolidated and separate statement offinancial position

NCIpercentage

Non currentassets

Current assets Total assets Non currentliabilities

Currentliabilities

Totalliabilities

Net assets Carrying amountof non-controlling

interest

Northern Nigeria Flour Mills Plc %47 2,045,646 1,854,326 3,899,972 2,535,858 124,538 2,660,396 1,239,576 582,601Premier Feed Mills Company Limited %38 22,830,657 8,615,987 31,446,644 25,275,365 3,270,578 28,545,943 2,900,701 1,102,266Nigerian Eagle Flour Mills Limited %49 3,761,808 6,254,051 10,015,859 1,196,063 3,353,798 4,549,861 5,466,000 2,678,340

28,638,111 16,724,364 45,362,475 29,007,286 6,748,914 35,756,200 9,606,277 4,363,207Non-controlling interest other subsidiary 10 % 19,852,955 14,953,725 34,806,680 9,382,523 29,012,789 38,395,312 (3,588,632) (358,863)Intra-group eliminations - - - - - - - - 75,965

Non-controlling interest per consolidated statement offinancial position

4,080,309

The difference between the carrying amount of non-controlling interest and the non-controlling interest's proportionate share of the net assets of the subsidiary is represented by goodwill.

Summarised statement of profit or loss andother comprehensive income

NCIpercentage

Revenue Profit/(loss)before tax

Tax expense Profit/(loss)for the year

Othercomprehensive

income

Totalcomprehensive

income

Profit (loss)allocated to non-

controllinginterest

OCIattributable

to NCI

Totalcomprehensive

incomeattributable to

NCI

Northern Nigeria Flour Mills Plc %47 902,349 7,367 (15,902) (8,535) - (8,535) (4,011) - (4,011)Premier Feed Mills Company Limited %38 48,743,270 536,773 (104,031) 432,742 8,626 441,368 164,444 3,278 167,720Nigerian Eagle Flour Mills Limited %49 27,021,352 2,695,747 (813,850) 1,881,899 17,039 1,898,938 922,130 8,348 930,478

76,666,971 3,239,887 (933,783) 2,306,106 25,665 2,331,771 1,082,563 11,626 1,094,187Profit or loss allocated to non-controllinginterest of other subsidiaries

37,971,931 (1,993,648) (82,306) (2,075,954) 3,170 (2,079,124) (207,595) 317 (207,278)

Intra-group eliminations - - -

Total profit or loss allocated to non-controllinginterest

874,968 11,943 886,911

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Summarised statement of cash flows NCI percentage Cash flow fromoperatingactivities

Cash flow frominvestingactivities

Cash flow fromfinancingactivities

Net increase(decrease) in

cash flow

Northern Nigeria Flour Mills Plc %47 (865,134) (1,439,291) 2,388,092 83,667Premier Feed Mills Company Limited %38 140,202 (422,336) (2,007,308) (2,289,442)Nigerian Eagle Flour Mills Limited %49 3,797,194 (4,110,995) 675,585 361,784

Total 3,072,262 (5,972,622) 1,056,369 (1,843,991)

No dividend was paid to shareholders with non controlling interest during the year.

March 31, 2016

Summarised statement of financial position NCI percentage Non currentassets

Current assets Total assets Non currentliabilities

Current liabilities Total liabilities Net assets Carrying amountof non-

controllinginterest

Norther Nigerian Flour Mills Plc %47 658,654 1,081,103 1,739,757 113,546 375,227 488,773 1,250,984 587,962Premier Feed Mills Company Limited %38 9,041,565 8,615,663 17,657,228 1,200,767 13,940,840 15,141,607 2,515,621 955,936Nigerian Eagle Flour Mills Limited %49 3,920,604 3,610,995 7,531,599 1,313,296 2,728,732 4,042,028 3,489,571 1,709,890Total

13,620,823 13,307,761 26,928,584 2,627,609 17,044,799 19,672,408 7,256,176 3,253,788Other individually immaterial subsidiaries (503,645)Intra-group eliminations 79,791

Non-controlling interest per consolidatedstatement of financial position

2,829,934

The difference between the carrying amount of non controlling interest and the non controlling interest's proportionate share of the net assets of the subsidiary is represented by goodwill.

71




Summarised statement ofprofit or loss and othercomprehensive income

NCI percentage Revenue Profit before tax Tax expense Profit/ (loss) Othercomprehensive

income

Totalcomprehensive

income

Profit/ (loss)allocated to non-

controllinginterest

OCI attributableto NCI

Totalcomprehensive

incomeattributable to

NCI

Northern Nigeria Flour MillsPlc

%47 968,486 (233,067) 35,831 (197,236) 21,574 (175,662) (92,701) 10,140 (82,561)

Premier Feed Mills CompanyLimited

%38 37,356,109 848,368 (158,445) 689,923 - 689,923 262,171 - 262,171

Nigerian Eagle Flour MillsLimited

%49 18,160,578 423,018 (363,903) 59,115 (8,021) 51,094 28,966 (3,930) 25,036

Total56,485,173 1,038,319 (486,517) 551,802 13,553 565,355 198,436 6,210 204,646

Other individually immaterialsubsidiaries

(379,958) (343) (380,301)

Intra-group eliminations (18,515) 194,170 (24,382)Total profit or loss allocatedto non-controlling interest

(200,037) 200,037 (200,037)

Summarised statement of cash flows NCIpercentage

Cash flow fromoperating activities

Cash flow frominvesting activities

Cash flow fromfinancing activities

Net increase/(decrease) in cash

flow

Northern Nigeria Flour Mills Plc %47 (487,140) 14,605 (81,099) (553,634)Premier Feed Mills Company Limited %38 3,837,870 (147,425) (2,746,479) 943,966Nigerian Eagles Flour Mills Limited %49 167,793 (1,766,052) (59,173) (1,657,432)

Total 3,518,523 (1,898,872) (2,886,751) (1,267,100)

Dividend paid to shareholders with non controlling interest amounted to N27.94 million.

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24. Available for sale investments

Available for sale investments (unquoted)Maiduguri Flour Mills Limited 5,956 5,956 5,956 5,956Newport Tradings Limited 2,000 2,000 2,000 2,000

7,956 7,956 7,956 7,956

Available for sale investments (Quoted)Transnational Corporation Plc 127,500 127,500 127,500 127,500Less fair value loss (111,316) (89,760) (111,316) (89,760)

16,184 37,740 16,184 37,740

24,140 45,696 24,140 45,696

The Group's investment in Transnational Corporation Plc was fair valued using the market price of N0.71per share (2016: N1.06) as at yearend which resulted in fair value decrease of N111.32 million. THe valuation has been categorised as Level 1 in the fair value hierarchy asthere are no unobservable input to the valuation. The valuation was done on the same basis in prior year and there has been no transfersbetween levels during the year. The fair value decrease has been recognised in other comprehensive income. The available for saleinvestments in unquoted entities have been carried at cost as the fair value cannot be reliably measured. Management does not have anyimmediate plan to dispose off these investments.

Group Company


Movement on impairment of AFS investmentsOpening balance 69,020 20,740 69,020 20,740Charged to profit or loss 42,296 48,280 42,296 48,280Impairment reversal - - - -

111,316 69,020 111,316 69,020

25. Biological assets

Group Livestock (a) Oil palm (b) Cassava (c) Sugar (d) TotalN'000 N'000 N'000 N'000 N'000

Balance at April 01, 2015 26,138 32,372 328,662 70,418 457,590Harvested during the year (13,520) - (18,324) - (31,844)Fair value changes 49,534 (22,490) (91,575) 219,450 154,919Write- off - - (46,032) - (46,032)

Balance at March 31, 2016 62,152 9,882 172,731 289,868 534,633

Balance at April 01, 2016 62,152 9,882 172,731 289,868 534,633Harvested during the year (24,322) (373,813) (58,733) (217,477) (674,345)Fair value changes 14,945 370,110 91,170 251,098 727,323

Balance at March 31, 2017 52,775 6,179 205,168 323,489 587,611

73



25. Biological assets (continued)

31-Mar-17 31-Mar-16N '000 N '000

Analysed into:Current 558,480 182,613Non-current 29,131 352,020

587,611 534,633

a Livestock relates to poultry used for poultry eggs production at Best Chickens Limited and are stated at fair value less estimatedpoint-of-sale costs, with any resultant gain or loss recognised in the profit or loss. Point-of-sale costs include all costs that willbe necessary to sell the assets. The fair value of livestock is determined based on valuations using the market prices of livestockof similar age, breed and generic merit.

b Oil palm refers to growing fresh fruit bunches at Agri Palm Limited and are stated at fair value less cost-to-sell with any resultantgain or loss recognised in profit or loss. Selling costs include all costs that would be necessary to sell the fresh fruit bunches(including cost of harvest). The fair value is determined based on valuations using the market prices of fresh fruit bunches ofsimilar weight and quality.

c Cassava is cultivated at Agro Allied Syrups Limited and Kaboji Farms Limited and the harvested cassava tubers are used for starchextraction and production of high quality cassava flour. They are stated at fair value less estimated cost-to-sell. Cost-to-sellinclude costs that would be necessary to sell the cassava tubers (including the cost of harvest). Fair value is determined basedon valuation using market prices of cassava tubers of similar weight and quality.

d Growing sugarcane refers to sugarcane plants at the plantation owned by Sunti Golden Sugar Estates Limited. The plantation iscurrently in developmental stage and the harvested sugarcane are re-planted until such a time when the plantation reachesoptimum maturity to enable the production of sugar cane to be used for the extraction of premium raw sugar. The sugarcaneplants are currently being stated at cost as it is currently impracticable to determine the fair value at this stage of maturity.

Methods and assumptions used in determining fair value

Fair value is determined using market-based evidence by appraisal. Valuation of biological assets is carried out at sufficient regularityto identify any material movement and any material differences are adjusted accordingly to ensure that the carrying value of the assetsdoes not differ materially from the fair values determined as at the reporting date. The Company is involved in cultivation of oil palm fruits,sugarcane, cassava and poultry farming.

Measurement of fair values

Fair value hierarchy

The fair value measurement for the palm and cassava have been categorised as Level 3 fair values based on the inputs to the valuationtechniques used. The fair value measurements of livestock have been categorised as Level 2 fair values based on observable market salesdata.

74




The following table shows the valuation techniques used in measuring fair values as well as the valuation variables used:

Type Valuation techniques Valuation variables

Inter-relationship between keyvaluation variables and fair value

measurement

Oil palm Market comparism technique: Thefair values are based on marketprice of palm fruit bunches ofsimilar age, weight and marketvalue.

Estimated plantation size 4,342hectares (2016: 4,342)

Estimated market price per bunch -N563 (2016: N250)

Estimated number of trees - .343,903 .(2016: 308,278)

Estimated yield per tree -2 bunches per year (2016: 2).

Estimated cost-to-sell per bunch - N60 (2016: N120)

The estimated fair value wouldincrease/(decrease) if:

a. the estimated price per fresh fruitbunch were higher/(lower).

b. if the estimated harvest werehigher/ (lower).

c. If the estimated yield per hectarewere higher/(lower).

d. If the estimated transport costwere lower/(higher)

Livestock Market comparism technique: Thefair values are based on marketprice of livestock of similar age,weight and breed.

Estimated number of birds as at 2017; .60,968 (2016: 64,210). Average age ranges from 18 weeks and over 85weeks). Average price per bird is N900(2016: N1,000).

The estimated fair value wouldincrease/(decrease) if:a. the estimated price per birdswere higher/(lower)

b. the estimated number of birdswere higher/ (lower)

Cassava Market comparism technique: Thefair values are based on marketprice of cassava tubers of similarage, weight and yield.

There was no hectares of cultivatedland in the year (2016: 42,100hectares). Also the estimated yield perhectare was Nil tonnes (2016:10tonnes).

Estimated market price N8,372 permetric tonne (2016: N6,121 per metrictonne).

The estimated fair value wouldincrease/(decrease) if:a. the estimated price per tonnewere higher/ (lower)

b. If the estimated yield per hectarewere higher/(lower)

Sugarcane Cost: Actual cost includes cost ofland preparation, planting youngsugar cane stems, pesticides andany other cost directly attributableto the sugar cane plantation.

Estimated price per metric tonne -N10,710.

Estimated yield per hectre 45.5 tonnes.

The total planted area as at year endwas 1,371 hectres.

The estimated fair value wouldincrease/ decrease if:

(a) Price per metric tonne werehigher/ (lower)

(b) Estimated yield per hectre werehigher/ (lower).

Risk management strategy related to agricultural activities

The Group is exposed to the following risks relating to its biological assets:

a Regulatory and environmental risks

The Group is subject to laws and regulations in the states in which it operates. The Group has established environmental policies andprocedures aimed at compliance with local environmental and other laws.

75




b Supply, demand and yield risks

The Group is exposed to risks arising from fluctuatioins in the prices of birds and seedlings for cultivation as well as yield volumes. Whenpossible, the Group manages these risks by aligning its harvest volume to market supply and demand. Management performs regularindustry trend analyses for projected harvest volumes and pricing. The Group manages yield volume risks by employing latest technologyand sourcing for optimally viable seedlings.

c Climate, disease and other risks

The Group's biological assets are exposed to the risks of damage from climatic conditions, diseases, forest fires and other natural forces.The Group has processes in place aimed at monitoring and mitigating those risks, including insurance, regular health inspections, poultryvaccinations, use of environmentally friendly pesticides for the crops and leveraging on industry pest and disease surveys as well as otheragricultural best practices.

26. Long term receivables

Group Company


Thai Farm International Limited - - 433,303 361,501Agri Palm Limited - - 556,851 1,157,496Golden Penny Rice Limited - - 1,966,692 984,629ROM Oil Mills Limited - - 10,450,576 47,966Port Harcourt Flour Mills Limited 975,578 - - -Sunti Golden Sugar Estate - - 5,013,489 -Northern Nigerian Flour Mills Plc - - 2,418,106 -Golden Agri Inputs - - 2,183,509 -Premier Feeds Mills Limited - - 2,030,527 -Receivable from ABCML 13,444 - - -

989,022 - 25,053,053 2,551,592

Credit quality on long term receivables

The Company and the group are faced with the risk that there might be a shortfall in the repayment of these receivables. To mitigate thisrisk, the Company ensures that proper agreements are put in place as well as ensuring that the business activities of these Companies aremonitored closely on a monthly basis and interests are charged based on Commercial Bank rate. The tenor of the loans ranges from 6 to 7years and the loans are unsecured.

Movement in Long term loan receivable

Group Company


Opening balance - 3,904,188 2,551,592 4,618,008Reclassications/ additions 989,022 - 25,666,126 2,506,133

989,022 3,904,188 28,217,718 7,124,141Repayments in the year - (3,904,188) (3,164,665) (4,572,549)

Closing balance 989,022 - 25,053,053 2,551,592

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27. Derivative financial instruments

The following information relates to derivative financial instruments arising from outstanding foreign exchange forwards and futurescontracts as at year end:

Group

March 31, 2017 March 31, 2016Assets Liabilities Assets LiabilitiesN'000 N'000 N'000 N'000

Foreign exchange forward contracts 13,712 (3,492,739) - -Foreign exchange futures contracts 741,804 - - -

755,516 (3,492,739) - -

Company

2017 2016AssetsN'000

LiabilitiesN'000

AssetsN'000

LiabilitiesN'000

Foreign exchange forward contracts - (2,969,054) - -Foreign exchange futures contracts 387,814 - - -

387,814 (2,969,054) - -

The full fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the derivative is more than 12months and, as a current asset or liability, if the maturity of derivative is less than 12 months.

The fair value of the futures and forward contracts have been determined using market-related inputs as follows: Exchange rate of N311/ USD (average rate for all outstanding contract at year end) Discount rate of 17.84% determined based on the NIBOR and LIBOR rates.

There are no significant unobservable inputs, thus the valuation is categorised as level 2 in the fair value hierarchy.

A 10% strengthening of the Naira against the average exchange rate used in the valuation, holding the discount rate constant would havedecreased profit by N2.8 billion and vice versa.

Holding all other variables constant, a change by 100 basis point in the NIBOR and LIBOR rates will resulting in the following variations inthe derivative assets and liabilities;

N'000 N'000Base derivative liability/asset (3,479,026) 741,804

Figures in thousands of Naira Derivativeforward net

liability

Derivativefutures net

asset100 basis point increase in NIBOR Rates (3,462,318) 741,024100 basis point increase in USD LIBOR Rates (3,491,317) 741,804100 basis point decrease in NIBOR Rates (3,495,779) 742,585100 basis point decrease in USD LIBOR Rates 3,466,698 741,804

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28. Inventories

Group Company


Raw and packaging materials 85,805,895 37,209,730 49,020,649 23,063,622Work in progress 1,799,258 1,309,493 1,755,701 1,106,061Finished goods 15,817,193 4,795,026 5,003,375 2,400,643Consumable stores and maintenance spares 15,674,466 15,915,723 9,215,066 11,106,456

119,096,812 59,229,972 64,994,791 37,676,782Write-downs (1,800,650) (531,204) (1,397,120) (419,099)

117,296,162 58,698,768 63,597,671 37,257,683

The cost of inventories recognised as an expense during the year in the Group was N531 billion (2016: N264 billion), while in theCompany it was N419 billion (March 31, 2016: N198 billion)

Inventory write down during the period for the Group was N1.80 billion (2016: N531 million), Company N1.40 billion (2016: N419million).

29. Trade and other receivables

Group Company


Trade receivables 17,664,260 14,292,489 7,812,156 7,560,078Allowance for doubtful trade receivables (1,632,172) (1,557,556) (1,462,855) (1,476,933)

16,032,088 12,734,933 6,349,301 6,083,145Staff debtors 612,049 331,818 488,666 250,909Amount due from related parties - - 70,694,757 58,691,414Short term loan receivable (a) 1,912,272 - 1,912,272 -Sundry debtors 2,846,723 5,899,417 1,378,659 1,478,771

21,403,132 18,966,168 80,823,655 66,504,239

Trade and other receivables

(a) Short- term loan receivables represents a loan of N4.3 billion to a third party at an interest rate of 3 months NIBOR plus 1.5%. The loan isrepayable quarterly and is expected to be fully repaid by 30 June, 2017.

The average credit period on sale of goods is 30 days. The Group has recognised an allowance for doubtful debts of 100% against allreceivables over 365 days because historical experience has been that receivables that are past due beyond 365 days are not recoverable.Allowances for doubtful debts are recognised against trade receivables between 30 and 365 days based on estimated irrecoverableamounts determined by reference to past default experience of the counterparty and an analysis of the counterparty's current financialposition and credit analysis.

Before accepting a new customer the Group initially trades with the customer on cash basis to assess the customer’s ability and alsodetermine the customer’s transaction volumes. This enables a reasonable credit limit to be set. Once these are determined the customer isthen allowed to apply for a credit facility from the company through a rigorous process with several levels of approval. Also certaincategories of credit customers provide bank guarantees before being accepted as credit customers of the Group.

Credit sales form a small portion of overall sales. The concentration of credit risk is limited due to this fact and the large and unrelatedcustomer base. The Group has pledged no trade receivables during the year.

78



29. Trade and other receivables (continued)

Trade receivables neither past due nor impaired

Group Company


0 - 30 days 5,433,532 6,115,151 1,662,007 2,222,543

Trade receivables past due but not impaired

The ageing of amounts past due but not impaired is as follows:

31-60 days 6,182,491 4,501,452 2,734,255 2,468,84961-180 days 2,649,639 1,988,604 1,171,823 685,847181-365 1,766,426 129,726 781,216 705,906

10,598,556 6,619,782 4,687,294 3,860,602

16,032,088 12,734,933 6,349,301 6,083,145

Trade receivables impaired

Past due and impaired 1,632,172 1,557,556 1,462,855 1,476,993

Movement in the allowance for doubtful receivables

Opening balance 1,557,556 1,407,240 1,476,933 1,354,803Amount written off during the year (26) (211) (26) (211)Amounts recovered during the year (75,023) (18,238) (87,977) (18,298)Increase in allowance recognised in profit or loss 149,665 168,765 73,925 140,639

1,632,172 1,557,556 1,462,855 1,476,933

In determining the recoverability of trade receivables, the Group and Company consider any change in the credit quality of the tradereceivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited because of thecustomer base being large and unrelated and large credit risks are covered by bank guarantees. Accordingly, the Directors believe thatthere is no further credit allowance required in excess of the allowance for doubtful debts already made.

The creation and release of provision for impaired receivables have been included in operating expenses in the statement of profit or lossand other comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation ofrecovering additional cash.

The group does not hold any collateral as security other than bank guarantees from certain customers.

79



30. Prepayments

Group Company


Deposit for imports (Letters of credit) 26,247,241 9,097,476 26,247,241 9,097,476Deposit for FX relating to forward and futures contracts 30,679,360 - 20,815,339 -Advance Payment to Suppliers 7,831,005 1,175,675 1,103,414 747,868Prepaid rent on operating premises 1,679,252 1,703,939 1,604,444 1,703,939Prepaid expenses 5,093,867 3,352,099 4,069,931 2,334,624

71,530,725 15,329,189 53,840,369 13,883,907

Analysed into:Current 69,851,473 13,625,250 52,235,925 12,179,968Non-current 1,679,252 1,703,939 1,604,444 1,703,939

71,530,725 15,329,189 53,840,369 13,883,907

30.1 Operating lease

Commitment for future rentals on Operating lease

The property to which the operating lease relates is the land at 311 Apapa Road, Apapa, Lagos State which has been leased from RailwayProperty Management Company Limited. The property was inherited from Brossette Nigeria Limited on the acquisition of QuilvestProperties Limited in June 2012 with a residual lease period of 11 years. Quilvest merged with the Company in 2016. The lease term wasextended to a period of 21 years with effect from 1 January 2014. In addition to the lump sum prepaid on the leased asset, the leasecontract stipulates annual rent of N6.25 million over the lease period.

The commitment for the future rentals for Group and Company is analysed below

Group Company


Minimum annual rent - within one year 6,250 6,250 6,250 6,250 - in second to fifth year inclusive 25,000 25,000 25,000 25,000 - later than five years 81,250 87,500 81,250 87,500

112,500 118,750 112,500 118,750

31. Cash and cash equivalents

Cash and cash equivalents consist of:Cash on hand 594,325 284,569 569,165 270,514Bank balances 44,424,178 32,928,474 28,260,326 21,400,665

Cash and cash equivalents per statement of financial position 45,018,503 33,213,043 28,829,491 21,671,179Bank overdraft (Note43) (49,023,812) (16,412,986) (34,349,436) (6,657,427)

Cash and cash equivalents per statement of cash flows (4,005,309) 16,800,057 (5,519,945) 15,013,752

Cash and cash equivalents comprise cash and bank balances, net of outstanding bank overdrafts. The carrying amount of these assetsapproximate their fair values. See note 43 for additional information on exposure to credit and currency risk.

80




32. Cash (used in) generated from operations

Profit (loss) for the year 8,836,452 14,420,284 9,829,046 10,425,786Adjustments for:Depreciation of property, plant and equipment 18 15,544,224 14,570,040 8,395,254 7,818,723Amortisation of intangible assets 20 155,310 99,717 139,298 51,035Depreciation of investment property 19 103,747 22,331 1,567 22,332Dividends received 13 - - - (25,527)Interest income 13 (1,562,304) (1,103,475) (3,230,407) (982,569)Finance costs 14 32,529,354 22,397,762 22,199,739 13,011,811Reversal of impairment loss on property, plant andequipment

18 (1,468,381) 3,955,217 (1,581,368) 2,698,850

Write-off of property, plant and equipment 18 1,915,278 - 28,064 -(Gain)/Loss on disposal of PPE 8 (77,823) 217,493 (50,617) 98,853Write-off of biological asset - 46,032 - -Changes in biological assets 8 (727,323) (154,919) - -Net loss on foreign exchange transactions 8 5,742,096 6,296,099 6,653,268 4,007,717Derivative gain on forwards and futures 27 (755,516) - (387,814) -Provisions for Long Service award 36 77,360 319,153 62,037 296,860Provisions for retirement benefit 35 981,344 830,480 813,893 655,331Income tax charge/(credit) 15 1,636,395 (2,931,006) 1,150,533 (4,177,289)Profit from sales of associate 12 - (23,731,422) - (13,952,039)

62,930,213 35,253,786 44,022,493 19,949,874Changes in working capital:Change in inventories (58,597,394) 9,727,235 (26,339,988) 11,978,358Change in trade and other receivables (3,425,986) (1,892,930) (14,319,416) 7,565,048Change in prepayments (56,201,536) (5,576,606) (39,956,462) (5,088,124)Change in trade and other payables 44,150,256 15,838,704 26,755,451 (14,156,211)Changes in deferred income 2,537,381 (484,721) (287,346) (251,791)Changes in long term receivables - - 1,311,954 3,904,188Changes in customer deposits 1,423,233 2,977,940 931,927 2,061,882

(7,183,833) 55,843,408 (7,881,387) 25,963,224

33. Share capital and share premium

Authorised4,000,000,000 Ordinary shares of 50 kobo each 2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paid:At the beginning of the year2,624,253,188 (2016: 2,624,253,188) ordinary shares of 50kobo each

1,312,126 1,312,126 1,312,126 1,312,126

At the end of the year

2,624,253,188 Ordinary Shares of 50Kobo each 1,312,126 1,312,126 1,312,126 1,312,126

Share premiumShare premium * 36,812,540 36,812,540 36,812,540 36,812,540

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34. Borrowings

Group Company


Unsecured borrowings at amortised costBank of Industry Loan - CBN intervention fund (Note a) 36,641,687 41,473,602 4,716,646 7,732,671Commercial Agricultural Credit Scheme- Agriculturalloans(Note b)

11,869,917 10,111,596 - -

RSSF-Real Sector Support Facility (c) 2,877,551 - - -Other Term Loans (Note e,f) 131,545,710 92,608,532 107,391,128 65,875,814Intra Group Loan (d) - - 5,039,247 -

182,934,865 144,193,730 117,147,021 73,608,485

Secured Borrowings at amortised costTerm loan 1 (g) 8,000,000 3,000,000 - -Term loan 2 (h) 1,646,445 1,646,445 1,646,445 1,646,445

192,581,310 148,840,175 118,793,466 75,254,930

Analysed intoCurrent 141,702,267 100,830,460 111,429,573 67,045,775Non-current 50,879,043 48,009,715 7,363,893 8,209,155

192,581,310 148,840,175 118,793,466 75,254,930

Bank loan movementOpening balance 148,840,175 109,500,136 75,254,930 28,494,301Additions 176,925,100 136,860,256 113,195,929 69,968,981Arising from merger - - - 12,746,184Repayment (133,183,965) (97,520,217) (69,657,393) (35,954,536)

Closing balance 192,581,310 148,840,175 118,793,466 75,254,930

Details of Borrowings

a Flour Mills of Nigeria Plc obtained funds from the CBN/BOI Power and Aviation Intervention Fund and Manufacturing Intervention Fundin different tranches, with tenures of 6 to 10 years. Principal repayment commenced in September 2011. Principal and interest are repaidquarterly in arrears. The facilities have fixed interest rates between 7% and 10% per annum. The loans were granted to finance or refinancethe construction of the group's power plants and expansion of existing manufacturing plants.

b N11.8 billion (2016: 10.112 billion) outstanding in Central Bank of Nigeria-Commercial Agricultural Credit Scheme - Agriculturalloans were obtained by some subsidiaries at 9% interest rate per annum. The moratorium periods for these loans are between 18 monthsand 24 months. Loan tenures ranged between 6 and 7 years. Principal and interest are also payable quarterly in arrears.

c The Central Bank of Nigeria, as part of the efforts to unlock the potential of the real sector to engender output growth, value addedproductivity and job creation established a N300 billion Real Sector Support Facility (RSSF). Flour Mills of Nigeria Plc obtained funds fromthis facility at 9%, with quarterly repayment of principal and interest.

Loans obtained under (a), (b) and (c) were obtained at below market interest rate and were hence recorded at their fair value at inceptionusing the appropriate market rate at date of draw down. Due to the nature of the lending and the providers, the benefit of the belowmarket rate has been treated as government grants and included in deferred revenue (Note 37).

d This loan relates to the borrowings provided by other subsidiaries in the Flour Mills group to Flour Mills of Nigeria Plc. These are NEFMand ABTL. The relevant interest rate is the prevailing interest rate on short term loans provided by commercial banks. During the year, thisranged from 13%-25%.

82



34. Borrowings (continued)

e Other terms loans (unsecured) were obtained by the group from various commercial banks in Nigeria and non-interest bearing shortterm loan of $22 million from the major shareholder, Excelsior Shipping Company Limited. The facilities are used to finance the importationof raw materials. The interest bearing facilities were granted at average interest rates of 5% with tenures of less than one year.

f The balance of the other bank loans with tenors ranging from 90 days to 5 years are repayable by instalments at various dates between2014 and 2022 with interest rate varying between 13% to 15%.

g Term loan 1: This loan relates to amount of $20 million obtained in prior periods by a subsidiary company to finance the construction ofresidential tower. The loan has a tenor of 5 years and is currently under a moratorium period for principal and interest repayment. The loanis secured by legal mortgage on the residential complex . The loan is priced at 12.5% interest per annum.

h Term loan 2: Credit facility amounting to N3 billion was obtained in 2013 to finance the construction of the office complex at GoldenPenny Place, Wharf Road. Apapa. The tenor of the loan is 7 years with 18 months moratorium on principal. Effective interest rate was16.57%. Interest is paid quarterly. The loan is secured by legal mortgage on the office complex.

35. Retirement benefit obligation

Defined benefit plan

The employees of the Group are members of a government approved Pension scheme (Pension reform act, 2014) which is managed byseveral private sector service providers. The Group is required to contribute a specified percentage of payroll costs to the retirementbenefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specifiedcontributions.

The Group also operates unfunded defined benefit plans for qualifying employees of the Group. Under the plans, the employees areentitled to retirement benefits on attainment of a retirement age ranging from 50 to 60 years.

The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at March 31, 2017 by HRNigeria Limited (FRC resgistration number: FRC/2012/00000000738). The present value of the defined benefit obligation, and the relatedcurrent service cost, were measured using the Projected Unit Credit Method.

Carrying value

The amount included in the statement of financial position arising from the Group’s obligations in respect of its defined benefit retirementbenefit schemes is as follows:

Group Company


Present value of the defined benefit obligation-whollyunfunded

(3,676,418) (4,077,811) (3,084,875) (3,454,172)

Movements for the year

Movements in the present value of defined benefit obligations were as follows:

At beginning of the year 4,077,811 3,245,308 3,454,172 2,552,715Transfer due to merger - - - 55,545Benefits paid during the year (229,726) (662,227) (203,909) (389,251)Net expense recognised in profit or loss and othercomprehensive income

(171,667) 1,494,730 (165,388) 1,235,163

At end of the year 3,676,418 4,077,811 3,084,875 3,454,172

83




35. Retirement benefit obligation (continued)

Net expense recognised in profit or loss and other comprehensive income

Current service cost 462,967 475,836 372,355 388,823Interest cost 518,056 529,675 441,538 376,594Curtailment 321 (175,031) - (110,086)

Recognised in profit or loss 981,344 830,480 813,893 655,331Actuarial (gains)/losses recognised in other comprehensiveincome

(1,153,011) 664,250 (979,281) 579,832

(171,667) 1,494,730 (165,388) 1,235,163

Actuarial gains and losses due to:Change in economic assumptions (1,137,491) 954,856 (940,143) 819,621Change in demographic assumptions (15,520) (290,606) (39,138) (239,789)

(1,153,011) 664,250 (979,281) 579,832

The cumulative amount of actuarial (gains)/loss recognised in other comprehensive income is shown in Note .

Key financial assumptions used

The principal assumptions for the purpose of the actuarial valuations were as follows


interest credit %6.50 %6.50 %6.50 %6.50Discount rates used %16.00 %13.00 %16.00 %13.00Average rate on inflation %12.00 %9.00 %12.00 %9.00Expected increase in salaries %12.00 %12.00 %12.00 %12.00Average duration of the plan (years) 11.20 11.20 11.41 11.41

Demographic assumption

Mortality in service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Instituteand Faculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives

Withdrawalfrom Service(Age band)

Withdrawalfrom Service

(Rate)25 7 </=30 2.5 %30 7 31 - 39 1.5 %35 9 40 - 44 1.0 %40 14 45 - 50 0.0 %

84



35. Retirement benefit obligation (continued)

Sensitivity analysis

ReasonAbly possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant,would have affected the defined benefits obligation by the amount shown below:

Group

N '000Base 3,676,418Discount rate +1%

-1%3,356,1104,043,918

Salary increase +1%-1%

3,862,2183,509,421

12 months deposit rate (Central Bank of Nigeria) +1%-1%

369,932315,047

Mortality experience Age rated down by 1 yearAge rated up by 1 year

3,674,9903,677,414

Company

N '000Base 3,084,875Discount rate +1%

-1%2,814,6993,395,760

Salary increase +1%-1%

3,236,8542,948,909

12 months deposit rate (Central Bank of Nigeria) +1%-1%

369,932315,047


3,083,2753,086,847

36. Long service award

Long term service award is granted at first to employees that have spent a minimum of ten years in service and for every multiple five yearsthe employee remains in service. Payments to employees are both in cash and in kind.

Carrying value

The amount included in the statement of financial position arising from the Group’s obligations in respect of its long service awards is asfollows:

Group Company


Long service awards 1,568,859 1,593,819 1,403,388 1,426,602

The movement in the account during the year was as follows:

85




36. Long service award (continued)

At the begining of the year 1,593,819 1,340,140 1,426,602 1,142,397Transfer from merger (3,146) - 2,797 39,986Transfer from other group companies - - - 4,127Net expense recognised in profit or loss 77,360 319,153 62,037 296,860Benefits paid (99,174) (65,474) (88,048) (56,768)

At the end of the year 1,568,859 1,593,819 1,403,388 1,426,602

Net expense recognised in profit or lossService cost 206,092 191,937 183,038 166,420Interest cost 200,636 193,449 180,277 170,240Actuarial (gains)/ losses (329,368) (66,233) (301,278) (39,800)

77,360 319,153 62,037 296,860

The actuarial gains and losses on long service awards areanalyzed as follows: Change in economic assumptions (312,258) 168,535 (281,040) 151,106Change in demographic assumptions (17,110) (234,768) (20,238) (190,906)

At 31 December (329,368) (66,233) (301,278) (39,800)

The principal assumptions used for the purpose of the actuarial valuations were as follows:

Group

Valuation at31-Mar-17 31-Mar-16

% %Discount rate 16 13Expected rate(s) of salary increases 12 12Average rate on inflation (p.a.) 12 10Benefit inflation rate 6 5Average duration of the plan (years) 7.18 7.18

Company

Valuation at31-Mar-17 31-Mar-16

% %Discount rate 16 13Expected rate(s) of salary increases 12 12Average rate on inflation (p.a.) 12 10Benefit inflation rate 6 5Average duration of the plan (years) 7.44 7.44

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36. Long service award (continued)

Demographic assumptions

Mortality in service

The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Institute andFaculty of Actuaries in the UK due to unavailability of published reliable demographic data in Nigeria.

Sample age

Number ofdeaths in yearout of 10,000

lives Age bandWithdrawal from

service

25 7 </= 30 2.5%30 7 31 - 39 1.5%35 9 40 - 44 1.0%40 14 45 - 50 0.0%45 26


Reasonbly possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, wouldhave affected the long service awards obligation to the amount shown below.

Group

N '000Base 1,568,859Discount rate

-1%1,480,1141,666,720

Salary increase-1%

1,666,2571,479,500

Inflation increase-1%

1,573,9621,563,188


1,563,2701,573,112

Company

N '000Base 1,403,388Discount rate

-1%1,323,5871,491,325

Salary increase-1%

1,490,6171,323,301

Inflation increase-1%

1,408,0681,398,124


1,398,3531,407,143

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37. Deferred income

At 1 April 8,169,990 8,654,711 1,157,436 1,352,240Additions 3,423,337 459,167 - 23,583Release of deferred income from government grant (885,956) (943,888) (287,346) (218,387)

At 31 March 10,707,371 8,169,990 870,090 1,157,436

Non-current liabilities 8,618,213 7,093,966 648,432 900,749Current liabilities 2,089,158 1,076,024 221,658 256,687

10,707,371 8,169,990 870,090 1,157,436

The deferred income arises as a result of the benefit received from below-market-interest rate government assisted loans (BOI, CACS andRSSF loans) granted to date. The income is recognised in profit or loss over the tenor of the loan.

38. Trade and other payables

Group Company


Trade payables 82,735,408 38,494,348 48,765,271 22,355,911Value Added Tax (VAT) 2,383,843 2,629,543 1,132,602 1,381,900Due to related parties (Note 41) - - 2,087,414 2,093,814Witholding tax payable 297,789 512,984 245,287 135,984Accruals 6,707,617 6,512,683 2,226,319 2,092,251Sundry creditors 2,442,513 2,267,356 1,344,619 986,201

94,567,170 50,416,914 55,801,512 29,046,061

The average credit period on purchases is 28 days. No interest is charged on trade payables. The Group and Company have financial riskmanagement policies in place to ensure that all payables are paid within a reasonable time of the credit time frame.

The Group's major supplier accounts for over 70% of the inventory purchases and the Group does not default in the payment to thesupplier.

39. Dividend payable

Group Company


At 1 April 1,936,869 120,307 1,936,869 120,307Declared during the year 2,624,253 5,538,872 2,624,253 5,510,932Payment during the year (2,971,314) (3,688,887) (2,971,314) (3,660,947)Unclaimed dividends transferred to reserves (22,411) (33,423) (22,411) (33,423)Unclaimed dividends returned to FMN 464,701 - 464,701 -

At 31 March 2,032,098 1,936,869 2,032,098 1,936,869

88



39. Dividend payable (continued)

As at 31 March, 2017 N 291.9 million of the total dividend was held with the Company Registrar, Atlas Registrar Limited (formerly FMNRegistrar Limited). Unclaimed dividends returned to FMN of N464.7 million represents dividends which remained unclaimed for aperiod of 15 months and above which have been returned to the Company by the Registrars and are held in a separate interest yieldingBank account.

Unclaimed dividends transferred to retained earnings represents dividends which have remained unclaimed for over twelve (12) yearsand are therefore no longer recoverable or actionable by the shareholders in accordance with section 385 of the Companies and AlliedMatters Act, Cap. C20, Laws of the Federal Republic of Nigeria, 2004.

Recognised dividends per share during the year amounted to 1.00 Naira per share (2016: 2,10 Naira per share).

40. Customer deposits

Group Company


Advance payments by customers for products 12,453,166 11,029,933 10,058,636 9,126,709

41. Related parties transactions

`

Name of related party Nature of relationship Nature of transactionApapa Bulk Terminal Limited Subsidiary Cargo handling services to the CompanyGolden Shipping Company Nigeria Limited Subsidiary Custom clearing and forwarding services for the

CompanyGolden Sugar Company Limited Subsidiary Purchase of packaging materials from the CompanyNorthern Nigeria Flour Mills Plc Subsidiary Purchase of wheat grain from the CompanyKaboji Farms Limited Subsidiary Purchase of fertilizer from the CompanyPremier Feed Mills Company Limited Subsidiary Purchase of packaging materials from the CompanyNigerian Eagles Flour Mills Limited Subsidiary Purchase of packaging materials from the CompanyGolden Penny Rice Limited Subsidiary Purchase of packaging materials from the CompanyCrestview Towers Limited Subsidiary Sold residential apartments to the CompanyOlympic Towers Limited Subsidiary Rental of residential apartments to the CompanyAgri Palm Limited Subsidiary Purchase of fertilizer from the CompanyAgri Estates Limited Subsidiary Purchase of fertilizers from the CompanyAgro Allied Farms Sunti Limited Subsidiary Purchase of fertilizers from the CompanyAgro Allied Syrups Limited Subsidiary Purchase of fertilizers from the CompanyROM Oil Mills Limited Subsidiary Sale of edible oil to the CompanyThai Farm International Limited Subsidiary Purchase of packaging materials from the CompanyBest Chickens Limited Subsidiary Provision of business support servicesSunti Golden Sugar Estates Limited Sub- subsidiary Purchase of fertilizers from the CompanyGolden Agri Inputs Limited Subsidiary Provision of business support servicesEastern Premier Feeds Limited Sub- subsidiary Purchase of raw and packaging for the company

89




41. Related parties transactions (continued)

Related party balances

Amounts due from subsidiary companiesGolden Shipping Company Nigeria Limited - - 2,386,218 -Apapa Bulk Terminal Limited - - 923 63Agri Estates Limited - - 165,229 155,350Golden Sugar Company Limited - - 30,675,526 38,575,913Kaboji Farms Limited - - 3,938,226 3,027,379Nigerian Eagle Flour Mills Limited - - 464,876 94,954Premier Feed Mills Company Limited - - 4,537,204 1,653,653Northern Nigeria Flour Mills Plc - - 39,352 17,478Thai Farm International Limited - - 414,237 91,816Olympic Towers Limited - - 1,398,606 416,869ROM Oil Mills Limited - - 2,460,211 3,801,477Agri Palm Limited - - 1,788,260 1,237,685Agro Allied Syrups Limited - - 1,881,881 1,526,377Agro Allied Farms Sunti Limited - - 501,976 473,543Best Chickens Limited - - 4,843 6,022Sunti Golden Sugar Estate Limited - - 16,548,404 7,530,371Golden Agri Inputs - - 929,266 34,099Golden Penny Rice Limited - - 112,574 48,365Eastern Premier Feed Mills Company Limited - - 2,445,631 -Premier Poultry Company Limited - - 710 -Agro Allied Terminals Limited - - 604 -

- - 70,694,757 58,691,414

Total amount due from related parties (Note 29) - - 70,694,757 58,691,414

Amount due to subsidiary companiesThai Farms International Limited - - - 13,199ROM Oil Mills Limited - - 113,702 46,979Apapa Bulk Terminal Limited - - 1,685,877 1,778,755Premier Feeds Mills Company Limited - - - 1,148Crestview Tower Limited - - 9,907 103,737Golden Shipping Company Nigeria Limited - - 23,202 90,532Northern Nigerian Flour Mills Plc - - 254,726 41,241

- - - 18,223

Total amount due to related parties (Note38) - - 2,087,414 2,093,814

Loans to related parties (Note 27) - - 25,053,053 2,551,592

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41. Related parties transactions (continued)

The following transactions were carried out with related parties during the year:Purchase of goods and servicesGolden Penny Rice Limited - 1,670,900Golden Shipping Company Nigeria Limited 176,172 142,585ROM Oil Mills Limited 3,008,733 1,938,580Kaboji Farms Limited - -Thai Farm International Limited 52,389 240,109Apapa Bulk Terminal Limited 6,106 4,025,816Golden Sugar Company Limited 8,972,548 4,767,749Nigerian Eagle Flour Mills Limited 10,027,714 9,923,846Crestview Tower Limited 240 27,338Atlas Registrar Limited (formerly FMN Registrar) - 80,616Olympic Towers Limited 48,768 7,466Northern Nigeria Flour Mills Plc 1,914 375,742

22,294,584 23,200,747

Sale of goodsGolden Agric Input Limited 925,726 -Crestview Tower Limited 1,660 1,166Olympic Tower Limited 177,498 44,793Golden Penny Rice Limited - 8,712Atlas Registrar Limited (formerly FMN Registrar Limited) - 2,715Kaboji Farms Limited - 291,986Eastern Premier Feeds Limited 1,358,442 1,141,851Premier Feed Mills Company Limited 2,506,751 1,438,854Northern Nigeria Flour Mills Plc 80,215 339,781Nigerian Eagle Flour Mills Limited 22,978,537 8,752,615Golden Sugar Company Limited 2,237,466 1,619,851Kaboji Farms Limited 239,484 -Sunti Golden Sugar Estates 153,159 65,179Agro Allied Syrups Limited 54,584 14,205ROM Oil Mills Limited 218,293 97,880Agri Palm Limited 23,340 327Thai Farm International Limited 56,761 81,194Apapa Bulk Terminal Limited 144 26,000

31,012,060 13,927,109

Related party transactions disclosed is inclusive of the relevant Value Added Tax applicable on the transactions.

Compensation of key management personnelShort term benefits 368,375 350,834Long term benefits (Post- employment benefit) 38,118 36,303

406,493 387,137

The members of the executive management team and all directors are considered to be the key management personnel of the Group.

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance ofindividuals and market trends.

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Directors

The remuneration paid to Directors was:Fees 2,200 2,200 2,200 2,200Salaries and other emoluments 86,468 82,351 86,468 82,351

88,668 84,551 88,668 84,551

Fees and other emoluments disclosed above include amount paid to:

Chairman 2,750 2,750 2,750 2,750Other directors 85,918 81,801 85,918 81,801

88,668 84,551 88,668 84,551

The number of Directors excluding the Chairman whose emoluments (excluding certain benefits) were within the following ranges:


190,000 - 200,000 12 12 12 12 19,000,001 - 20,000,000 1 2 1 2

13 14 13 14

Highest paid Director received 31,718 31,601 31,718 31,601

Loan to key management personnel

Loan to key management personnel amounted to Nil (2016: N195 Million). The loan was given at no interest and is secured against accruedretirement benefit.

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42. Categories of financial instruments

GroupCarrying amount

CompanyCarrying amount


Non- derivative financial assetsLoans and receivables (at amortised cost)Cash and cash equivalents (Note 31) 45,018,503 33,213,043 28,829,491 21,671,179Trade and other receivables (Note 29) 21,403,132 18,966,168 80,823,655 66,504,239Loans to related party (Note 26) 989,022 - 25,053,053 2,551,592Available for saleAvailable for sale investments (Note 24) 24,140 45,696 24,140 45,696Derivative financial assetsDerivative financial assets (Note 27) 755,516 - 387,814 -

68,190,313 52,224,907 135,118,153 90,772,706

Financial liabilities (at amortised cost)Bank overdraft (Note 31) 49,023,812 16,412,986 34,349,436 6,657,427Borrowings (Note 34) 192,581,310 148,840,175 118,793,466 75,254,930Trade and other payables (excluding value added tax andwithholding tax payable) (Note 38)

91,885,538 47,274,387 54,423,623 27,528,177

Derivative financial liabilitiesDerivative Liabilities (Note 27) 3,492,739 - 2,969,054 -

336,983,399 212,527,548 210,535,579 109,440,534

43. Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and commodityprice risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors.Management identifies and evaluates the financial risks in co-operation with the Group's operating units. The board provides writtenprinciples for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk,credit risk and liquidity risk. The Group's overall risk management program seeks to minimize potential adverse effects on the Company'sfinancial performance.

Financial risk management is an integral part of the way the Group is managed. The Board of Directors establishes the Group’s financialpolicies and the Group Managing Director establishes objectives in line with these policies. The Chief Financial Officer is then responsiblefor setting financial strategies, which are executed by the Centralised Treasury department.

The risk management activities are supervised by the Internal Audit Department and they provide an independent assurance of the riskframework. The Internal Audit assesses compliance with established controls and recommendations for improvement in processes areescalated to relevant management, Audit Committee and Board of Directors.

Capital risk management

The Group and Company manage their capital to ensure that it is able to continue as a going concern in order to provide returns forshareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimise the cost of capital.

In order to maintain the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares by way ofright-issue or sell investments to reduce debt. The Group monitors capital on the basis of the debt to equity ratio. This ratio is calculated asnet debt divided by total equity. Net debt is calculated as total borrowings (including overdrafts, bonds and other bank loans as shown inthe consolidated statement of financial position) less cash and cash equivalents. Total equity is the equity attributable to owners of FlourMills of Nigeria Plc. in the consolidated statement of financial position.

The Group and Company are not subject to any externally imposed capital requirements.

93



43. Financial risk management (continued)

Group operates a centralised procurement department in order to take advantage of the benefits of bulk purchase and also the logisticsand transportation of products are handled by the Transport division and this creates more efficiency in delivery and thereby reducing cost.

The Group’s risk management committee reviews the capital structure of the Group on a semi-annual basis. As part of this review, thecommittee considers the cost of capital and the risks associated with each class of capital.

Ratios

The debt: equity ratio at 2017 and 2016 respectively were as follows:

Group Company


Total borrowingsDebt (Note 34) 192,581,310 148,840,175 118,793,466 75,254,930Less: Cash and cash equivalents (Note 31) (4,005,309) 16,800,057 (5,519,945) 15,013,752

Net debt 196,586,619 132,040,118 124,313,411 60,241,178Total equity 98,464,035 92,935,840 108,115,699 100,244,139

Total capital 295,050,654 224,975,958 232,429,110 160,485,317

Debt equity ratio %200 %142 %115 %60

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market pricessuch as interest rate, exchange rates and other prices.

The Group's activities expose it primarily to financial risks of changes in foreign currency exchange rates, interest rates, equity prices andcommodity prices. Market risks exposures are measured using sensitivity analysis. There has been no change to the manner in which theserisks are managed and measured.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in marketinterest rates. The Group maintains a centralised treasury department and Group borrowing is done in order to obtain lower interest rates.The Group negotiates long term credit facilities and obtains subsidised loans from the Government in order to reduce the risk associatedwith high cost of borrowing. The Group also takes advantage of the Central Bank of Nigeria intervention funds and grants from the FederalGovernment at below market rate in order to mitigate this risk.

The Group is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The sensitivity analysis belowhave been determined based on the exposure to interest rates for borrowings at the end of the reporting period. For floating rateliabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding forthe whole year. 1000 basis points (BP) increase or decrease are used when reporting NIBOR risk internally to key management personneland these represent management's assessment of the reasonably possible change in interest rates.

Sensitivity analysis of variable rate instrument

If NIBOR had been 1000 basis points (i.e. 10%) higher/lower and all other variables were held constant, the Group 's profit or loss will beaffected as follows:

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GroupProfit/(loss) after tax

CompanyProfit/(loss) after tax

If NIBOR is 1000 BP lower:

2017N'000

2016N'000

2017N'000

2016N'000

Borrowings 3,154,755 2,239,776 1,999,661 1,301,181

If NIBOR is 1000 BP higherBorrowings (3,154,755) (2,239,776) (1,999,661) (1,301,181)

Interest rate profile and tenor of borrowings

Group

CurrencyNominal

interest rate Maturity3/31/2017

N '0003/31/2016

N '000Bank overdraft Naira 14%-14.5% On demand 49,023,812 16,412,986Bank of industry loan- CBN Intervention fund Naira 7%-10% 2017-2025 36,641,687 41,473,602Commercial Agricultural Credit Scheme loans Naira 9% 2016-2022 11,869,916 10,111,596Other Term loan 1 Naira 11%-16% 2016-2020 120,392,155 91,354,977RSSF-Real Sector Support Facility Naira 9% 2017-2027 2,877,553 -Other term loan 2 Dollar 20,800,000 5,900,000

241,605,123 165,253,161

Company

CurrencyNominal

interest rate Maturity3/31/2017

N '0003/31/2016

N '000Bank overdraft Naira 14%-14.5% On demand 34,349,436 6,657,427Bank of industry loan- CBN Intervention fund Naira 7%-10% 2017-2025 4,716,646 7,732,671Other term loans Naira 11%-16% 2016-2020 109,037,572 67,522,259Intra group loan Naira 13% - 25% 2016 - 2023 5,039,247 -

153,142,901 81,912,357

Foreign exchange risk

The Group is mainly exposed to fluctuation in the exchange rate of the United States of America Dollar (USD).

The Group is currently involved in the backward integration of Agro Allied products in order to reduce the foreign exchange risk associatedwith the high dependence on imported raw materials. The Group has also commenced the export of products to neighbouring AfricanCountries in order to get more inflow of the USD.

Effective closing rate as at 31 March 2017 is N400/ US Dollar (2016: 295.75/ US Dollar). Average rate for the year is N440/ US Dollar (2016:N246.65/ US Dollar).

The following table details the Group and Company's sensitivity to a 10%, increase and decrease in the value of Naira against USD.Management believes that a 10% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analysisbelow include outstanding balances of USD denominated assets and liabilities. A positive number indicates an increase in profit where Nairastrengthens by 10% against the USD. For a 10% weakening of Naira against the USD there would be an equal and opposite impact on profit,and the balances below would be negative.

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Foreign currency exposure at the end of the reporting period

Group Company

31-Mar-17 31-Mar-16 31-Mar-17 31-Mar-16USD USD USD USD

In thousandsCash and bank balance 48,018 20,511 46,636 20,486Trade receivables 5,180 821 1,982 821Trade payables (196,866) (155,562) (106,463) (107,576)Borrowings (52,332) - (32,132) -

Net exposure (196,000) (134,230) (89,977) (86,269)


Group Company

3/31/2017 31-Mar-16 31-Mar-17 31-Mar-16Profit/ (loss) after tax Profit/ (loss) after tax

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

Naira strengthens by 10% against the USD 7,832,022 3,969,841 3,599,068 2,551,407

Naira weakens by 10% against the USD (7,832,022) (3,969,841) (3,599,068) (2,551,407)

Price risk

The Group is further exposed to commodity price risk. The risk arises from the Group’s need to buy specific quantities and qualities of rawmaterials to meet its milling requirements. These raw materials include wheat, rice and cassava flour. The risk is partly mitigated by buyingthese raw materials 3 months in advance of use. This is based on management past experience with price movements.

Equity price risk

The group is exposed to equity price risk which arises from available-for-sale equity instruments. The management of the group monitorsthe proportion of equity securities based on market indices. The primary goal of the group's investment strategy is to maximize its return ingeneral. The maximum exposure to equity price risk at the reporting date is N24.1 million.


All the group's listed equity investments are classified as available-for-sale. A 10% increase/ (decrease) in the equity prices at the reportingdate would have increased or (decreased) equity by N 2.4 million after tax (2016: an increase/ (decrease) of N1.9 million with no impact onprofit or loss.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Grouphas adopted a policy of only dealing with creditworthy counterparties and credit limits are set, where appropriate, as a means of mitigatingthe risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above.This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly availablefinancial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of itscounterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

96




Trade and other receivables consist of a large number of customers, spread across diverse industries and geographical areas. It alsoincludes receivables from related parties. Ongoing credit evaluation is performed on the financial condition of custometrs in respect oftrade receivable and, where appropriate, bank credit guarantee is obtained.

The Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similarcharacteristics. The Group defines counterparties as having similar characteristics if they are related entities.

Group Company


Financial assets and other credit exposuresTrade receivables (Note 29) 16,032,088 12,734,933 6,349,301 6,083,145Related party receivables (Note 29) - - 70,694,757 58,691,414Staff receivables (Note 29) 612,049 331,818 488,666 250,909Bank balances (Note 31) 44,424,178 32,928,474 28,260,326 21,400,665Short term loan receivable (Note 29) 1,912,272 - 1,912,272 -Sundry debtors 2,846,723 5,899,417 1,378,659 1,478,771Derivative assets (Note 28) 755,516 - 387,814 -

66,582,826 51,894,642 109,471,795 87,904,904

Staff receivables are recovered through payroll deductions. Accordingly, management does not consider any credit risk on staff receivables.

The directors consider the amounts due from related parties as recoverable as the Group has not suffered significant impairment losses inthe past on related party receivables.

The Group/ Company mitigates its credit risk exposure of its bank balances and derivative financial asset by selecting and transacting withreputable banks with good credit ratings and a history of strong financial performance.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled bydelivering cash or another financial asset.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity riskmanagement framework for the management of the Group’s short-, medium- and long-term funding and liquidity managementrequirements. The Group and Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowingfacilities, by continuously monitoring forecast and actual cashflows, and by matching the maturity profiles of financial assets and liabilities.

Maturity analysis of financial liabilities

The following tables detail the Group and Company’s remaining contractual maturity for its non-derivative financial liabilities with agreedrepayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest dateon which the Group can be required to pay. The table includes both interest and principal cash flows.

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Group

Contractual cash flows

March 31, 2017Carryingamount Total

Less than 1month 1-3 month

Between 3months and 1

yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 49,023,812 49,414,938 - - 49,414,938 - -Borrowings 192,581,310 220,434,522 37,708,293 45,768,336 59,306,902 51,092,171 26,558,820Trade payables 82,735,408 88,274,937 - - 88,274,937 - -Derivativefinancialliabilities

3,492,739 3,492,789 2,470,912 239,288 782,589 - -

327,833,269 361,617,186 40,179,205 46,007,624 197,779,316 51,092,171 26,558,820



Less than 1month 1-3 months


yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 16,412,986 16,615,338 16,615,338 - - - -Borrowings 148,840,175 160,473,975 - 104,062,560 56,411,415 - -Trade payables 38,494,348 38,494,348 38,494,348 - - - -

203,747,509 215,583,661 55,109,686 104,062,560 56,411,415 - -

CompanyContractual cash flows




yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 34,349,436 34,740,562 - - 34,740,562 - -Borrowings 118,793,466 120,731,132 37,026,863 44,335,262 33,750,522 4,623,728 994,757Trade payables 48,765,271 48,765,271 48,765,271 - - - -Derivativefinancialliabilities

2,969,054 2,969,054 2,295,846 208,165 465,043 - -

204,877,227 207,206,019 88,087,980 44,543,427 68,956,127 4,623,728 994,757





yearBetween 1 and

5 yearsMore than 5

yearsN '000 N '000 N '000 N '000 N '000 N '000 N '000

Bank overdraft 6,657,427 6,739,505 - 6,739,505 - - -Borrowings 75,254,930 76,840,671 - - 67,194,914 9,645,757 -Trade payables 22,355,911 22,355,751 - 22,355,751 - - -

104,268,268 105,935,927 - 29,095,256 67,194,914 9,645,757 -

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44. Fair value information of financial instruments

Accounting classification and fair values

The following table shows the carrying amount and fair values of financial assets and liabilites, including their levels in the fair value hierarchy. It does not include fair value information for financial assets andfinancial libailities not measured at fair value if the carring amount is a reasonable approximation of fair value.

GroupCarrying amount Fair value

March 31, 2017In thousands of Naira Note Fair value-

hedginginstruments

Loans andreceivables

Available- for-sale

Other financialliabilites

Total Level 1 Level 2 Level 3 Total

Financial assets measured at fair valueForward and futures exchange contracts used for hedging 755,156 - - - 755,156 - 755,516 - 755,516Equity securities - - 16,184 - 16,184 16,184 - - 16,184

755,156 - 16,184 - 771,340 16,184 755,516 - 771,700

Financial assets not measured at fair valueTrade and other receivables - 21,403,135 - - 21,403,135 - - - -Cash and cash equivalents - 45,018,503 - - 45,018,503 - - - -Equity securities - - 7,956 - 7,956 - - 7,956 7,956

- 66,421,638 7,956 - 66,429,594 - - 7,956 7,956

Financial liabilities measured at fair valueForward and futures exchange contracts used for hedging - - - (3,492,739) (3,492,739) - (3,492,739) - (3,492,739)

- - - (3,492,739) (3,492,739) - (3,492,739) - (3,492,739)

Financial liabilities not measured at fair valueBank overdrafts - - - (49,023,812) (49,023,812) - (49,023,812) - (49,023,812)Secured bank loans - - - (1,646,445) (1,646,445) - (1,646,445) - (1,646,445)Unsecured bank loans - - - (190,934,865) (190,934,865) - (190,934,865) - (190,934,865)Trade and other payables (excluding accruals, non-incomeand other related taxes)

- - - (85,177,921) (85,177,921) - - - -

- - - (326,783,043) (326,783,043) - (241,605,122) - (241,605,122)

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Note(s) Opening balance Closing balance

44. Fair value information of financial instruments (continued)

Carrying amount Fair valueMarch 31, 2016In thousands of Naira Note Fair value-

hedginginstruments

Loans andreceivables

Available- for-sale

Other financialliabilites

Total Level 1 Level 2 Level 3 Total

Financial assets measured at fair valueEquity securities - - 37,740 - 37,740 37,740 - - 37,740

- - 37,740 - 37,740 37,740 - - 37,740

Financial assets not measured at fair valueTrade and other receivables - 18,966,168 - - 18,966,168 - - - -Cash and cash equivalents - 33,213,043 - - 33,213,043 - - - -Equity securities - 7,956 - - 7,956 - - 7,956 7,956

- 52,187,167 - - 52,187,167 - - 7,956 7,956

Financial liabilities not measured at fair valueBank overdrafts - - - (16,412,986) (16,412,986) - - - -Secured bank loans - - - (1,646,995) (1,646,995) - (1,641,009) - (1,641,009)Unsecured bank loans - - - (147,193,730) (147,193,730) - (134,262,562) - (134,262,562)Trade and other payables (excluding accruals, non-incomeand other related taxes)

- - - (40,761,704) (40,761,704) - - - -

- - - (206,015,415) (206,015,415) - (135,903,571) - (135,903,571)

100



44. Fair value information of financial instruments (continued)

Measurement of fair values

Financial instruments in level 1

The fair value of financial instruments traded in active markets (quoted equity) is based on quoted market prices at the reporting date. Amarket is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricingservice, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The quoted market price used for financial assets held by the Company is the bid price at the reporting date. These instruments areincluded in level 1. There were no transfers between levels during the year.


The fair value of financial instruments that are not traded in an active market (loans and borrowings) is determined by using discountedcash flow valuation techniques. This valuation technique maximize the use of observable market data by using the market related interestrate for discounting the contractual cash flows. There are no significant unobservable inputs. There were no transfers between levels duringthe year. The basis of measurement has remained the same between current and prior years.

The fair value of future and forward exchange contracts is determined using quoted forward exchange rates at the reporting date andpresent value calculations based on high credit quality yield curves in the respective currencies.


The valuation model is based on market multiples derived from quoted prices of companies comparable to the investee and the expectedrevenue and EBITDA of the investee. The estimate is adjusted for the effect of non-marketability of the equity securities.

Financial instruments not measured at fair value

The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate.

45. Non-audit fees paid to the Auditors

In the current year the total amount of non-audit fees paid to our auditors amounted to N60.5 million (2016:N54 million). This is in respectof Tax and IT project advisory services rendered during the year..

46. Substantial interest in shares

Excelsior Shipping Company Limited has 1,369,231,166 (2016: 1,369,231,166) ordinary shares of 50k each, representing 52.18% of theissued and paid-up share capital of the Company. No other individual shareholder held up to 5% of the issued share capital of the Companyat March 31, 2017.

47. Commitments

Guarantees and other financial commitments

Financial commitments

The Company has committed itself to providing continued financial support to all subsidiaries in the Group with net liability position. TheCompany also had commitments arising from unconfirmed letters of credit amounting to N33.3 billion (2016: N27.9 billion).

The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the Company's state of affairshave been taken into consideration in the preparation of the financial statements under review.

Gas agreement

The long term gas purchase agreement signed by the Company for the supply of natural gas to Apapa Factory in April 2005 for twenty yearscame into effect during the last quarter of 2006. This commits the Company to taking up a specified minimum quantity of gas over theduration of the purchase agreement.

101



48. Contingencies

Contingent Liabilities

As at March 31, 2017, there were contingent liabilities in respect of litigation against the Group and the Company and other regulatoryreviews amounting to N10.97 billion (2016 - N1.302billion). In the opinion of the Directors, the liabilities, if any, are not likely to be materialbut the amount cannot be determined with sufficient reliability. Accordingly, no provision has been made in these financial statements.

49. Events after the reporting period

There were no events after the reporting date that could have had a material effect on the financial statements of the Group that have notbeen provided for or disclosed in these financial statements.

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Consolidated and Separate Statements of Value Added31-Mar-17 31-Mar-17 31-Mar-16 31-Mar-16

N '000 % N '000 %

Group

VALUE ADDED

Revenue: 524,464,448 342,586,459Investment income 1,562,304 1,103,475Gain on disposal of investment in associate - 23,731,422

Bought - in materials and services - - - Local (73,504,221) (69,985,240) - Foreign (378,552,636) (233,528,043)

Total Value Added 73,969,895 100 63,908,073 100

VALUE DISTRIBUTED

To Pay Employees and directorsSalaries, wages, medical and personnel costs 15,810,357 15,328,946

15,810,357 21 15,328,946 24

To Pay Providers of CapitalFinance costs 32,529,354 22,397,762

32,529,354 44 22,397,762 35

To Pay GovernmentIncome tax 1,734,571 389,685

1,734,571 2 389,685 1

To be retained in the business for expansion and future wealth creation:

Depreciation and amortisation 15,157,335 14,692,087Deferred tax (98,176) (3,320,691)Non-controlling interest 874,967 (200,037)Retained profit 7,961,487 14,620,321

23,895,613 32 25,791,680 40

Total Value Distributed 73,969,895 100 63,908,073 100

Value added represents the additional wealth which the group has been able to create by its own and employees efforts.

104


Consolidated and Separate Statements of Value Added3/31/2017 3/31/2017 3/31/2016 3/31/2016

N '000 % N '000 %

Company

VALUE ADDED

Turnover: 375,225,284 247,876,504Investment income 3,230,407 1,008,096Gain on disposal of investment in associate - 13,952,039

Bought - in materials and services - - - Local (39,906,777) (38,856,562) - Foreign (285,376,240) (185,186,240)

Total Value Added 53,172,674 100 38,793,837 100

VALUE DISTRIBUTED

To Pay EmployeesSalaries, wages, medical and other personnel costs 11,504,161 11,641,441

11,504,161 22 11,641,441 30

To Pay Providers of CapitalFinance costs 22,199,739 13,011,811

22,199,739 42 13,011,811 34

To Pay GovernmentIncome tax 112,739 (100,083)

112,739 - (100,083) -

To be retained in the business for expansion and future wealth creation:

Depreciation and amortisation 8,489,195 7,892,088Deferred tax 1,037,794 (4,077,206)Retained profit 9,829,046 10,425,786

19,356,035 36 14,240,668 37

Total Value Distributed 53,172,674 100 38,793,837 100

Value added represents the additional wealth which the company has been able to create by its own and employees efforts.

105


Five Year Financial Summary31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14 31-Mar-13

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

Group

Consolidated and Seperate Statement of Financial Position

AssetsNon-current assets 227,719,991 220,662,484 219,656,664 195,717,504 169,964,513Current assets 257,472,454 124,685,842 123,604,166 100,843,743 110,173,479

Total assets 485,192,445 345,348,326 343,260,830 296,561,247 280,137,992

LiabilitiesNon-current liabilities 72,562,013 66,543,351 76,636,231 84,342,937 83,142,765Current liabilities 309,799,499 183,039,201 179,214,204 128,658,878 114,509,976

Total liabilities 382,361,512 249,582,552 255,850,435 213,001,815 197,652,741

Total equity 102,830,933 95,765,774 87,410,395 83,559,432 82,485,251

Total equity and liabilities 485,192,445 345,348,326 343,260,830 296,561,247 280,137,992

Profit and loss account

Revenue 524,464,448 342,586,459 308,756,526 362,156,081 320,123,472Profit before taxation 10,472,847 11,489,278 7,724,765 7,686,943 11,803,161Taxation (1,636,395) 2,931,006 738,292 (3,317,643) (3,977,079)

Profit from discontinued operations 8,836,452 14,420,284 8,463,057 4,369,300 7,826,082Discontinued operations - - 11,280 - -

Profit for the year 8,836,452 14,420,284 8,474,337 4,369,300 7,826,082Non-controlling interest (874,967) 200,037 542,203 - 793,897

Retained income for the year 7,961,485 14,620,321 9,016,540 4,369,300 8,619,979

Per share data

Earnings per share (Basic) 306 557 345 193 283Net assets per share 39 36 33 35 35

Earnings per share is based on profit for the year and the number of issued and fully paid ordinary shares at the end of each financial year.

Net assets per share is based on net assets and the number of issued and fully paid ordinary shares at the end of each financial year.

106


Five Year Financial Summary3/31/2017 3/31/2016 3/31/2015 3/31/2014 3/31/2013

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

Company

Statement of Financial Position

AssetsNon-current assets 118,058,601 95,683,538 90,024,782 113,108,927 112,001,080Current assets 225,874,557 137,613,069 141,505,096 107,036,628 111,888,645

Total assets 343,933,158 233,296,607 231,529,878 220,145,555 223,889,725

LiabilitiesNon-current liabilities 18,404,858 18,543,783 18,762,765 39,308,867 46,726,101Current liabilities 217,374,379 114,508,685 116,115,447 81,893,577 84,562,513

Total liabilities 235,779,237 133,052,468 134,878,212 121,202,444 131,288,614

Total equity 108,153,921 100,244,139 96,651,666 98,943,111 92,601,111

Total equity and liabilities 343,933,158 233,296,607 231,529,878 220,145,555 223,889,725

Profit and loss account*

Revenue 375,225,284 247,876,504 229,777,869 251,479,752 183,402,710Profit before taxation 10,979,579 6,248,497 910,983 12,457,541 11,459,537Taxation (1,150,533) 4,177,289 1,508,560 (2,257,664) (3,259,081)

Profit from discontinued operations 9,829,046 10,425,786 2,419,543 10,199,877 8,200,456

Profit for the year 9,829,046 10,425,786 2,419,543 10,199,877 8,200,456

Retained income for the year 9,829,046 10,425,786 2,419,543 10,199,877 8,200,456

Per share data

Earnings per share (Basic) 375 397 92 438 373Net assets per share 41 38 37 41 39

Earnings per share is based on profit for the year and the number of issued and fully paid ordinary shares at the end of each financial year.

Net assets per share is based on the net assets total and the number of issued and fully paid ordinary shares at the end of each financialyear.

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Flour Mills of Nigeria Plc - Nigerian Stock · PDF fileFlour Mills of Nigeria Plc Annual report for the year ended March 31, 2017 Index The reports and statements set out below comprise

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