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PZ CussoNs Nigeria PlC
aNNual rePort aNd aCCouNts 2016
Creating sustainable
value for all
PZ Cussons is a dynamic consumer
products company and the business
behind some of Nigeria’s best-loved
and well-known brands. Diverse,
growing and exciting, our brands lead
in Home Care, Personal Care, Electrical
goods and Food & Nutrition.
For over a century, we have kept our promise of ‘Making Life
Better’ every day in different ways. Our operational diversity
and understanding of the commercial landscape allows us to
strategically tap potentials for future growth. Our world-class
supply chain and distribution networks enable us to meet
consumer needs and deliver quality brands across Africa,
adding value and enhancing everyday lives. Our people,
our greatest asset, live and deliver our CAN DO values.
w PZ Cussons Nigeria Plc Annual Report and Accounts 2016
01
Mission
We are an international, entrepreneurial
conglomerate operating locally to enhance the
lives of all consumers through quality, value and
innovation day after day.
Vision
We shall profitably grow our business,
strengthening our product portfolio, enhancing
the lives of our employees, consumers and all
other stakeholders, by living and breathing our
shared values, every day.
Values
Our CAN DO values are inspired by the spirit
of our founders.
Read more on pages 20-21
Contents
Strategic Review
03 Board of Directors, Officers and
other Corporate Information
04 Financial Highlights
05 Chairman’s Statement
08 Our Business Model
10 Our Geographies
12 Our Categories
16 Our World-Class Supply Chain
20 Our Can DO Values
22 Creating Value by Being
Good4Business
24 Corporate Social Responsibility
Governance
28 Board of Directors
30 Report of the Directors
35 Statement of Directors’
Responsibilities
36 Report of the Audit Committee
37 Report of the Independent Auditor
38 Results at a Glance
Financial Statements
39 Consolidated Statement
of Comprehensive Income
40 Consolidated Statement
of Financial Position
41 Statement of Changes in Equity
43 Statement of Cash Flows
44 Notes to the Consolidated
Financial Statements
72 Statement of Value Added
73 Five Year Financial Summary – Group
Other Information
74 Shareholders’ Information
75 Share Capital History
76 Notice of Meeting
77 Shareholders’ Admission Form
79 Proxy Form
81 E-bonus Mandate Form
83 E-dividend Mandate Form
03
BOaRd OF dIReCtORS, OFFICeRS and
OtheR CORpORate InFORMatIOn
Chief (Dr) Kola Jamodu, CFR
Chairman: Non-executive
Mr B. Oyelola
Vice Chairman: Non-executive
Mr C. Giannopoulos (Greek)
Chief Executive Officer
Mr L. Batagarawa
Ms J.F. Coker
Mrs E. Ebi
Mr A. Goma
Mrs O.T. Ifaturoti
Independent
Executive
Independent
Executive
Executive
Mr D. Petzer (South African)
Executive
Mr P. Usoro, SAN
Non-executive
Mr D. Muhammad
Non-executive (Appointed 12/05/16)
Company Secretary
Mr R.A. Alade
Registered Office
45/47 Town Planning Way
Ilupeju Industrial Estate
P.M.B. 21132
Ikeja
Registration number
RC 693
Registrars
First Registrars Nigeria Limited
Plot 2, Abebe Village Road
Iganmu Complex
P.M.B. 12692
Lagos
auditors
PricewaterhouseCoopers (Chartered Accountants)
Landmark Towers
5B Water Corporation Road
Victoria Island
Lagos
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 04
FInanCIal hIGhlIGhtS
Positive results in a challenging year
Reported results
Revenue
Operating profit
n69,528m
n3,250m
2015: N73,126m
% change: (4.9%)
2015: N6,651m
% change: (51.1%)
Profit before taxation
Basic and diluted earnings per share
n3,148m
47 kobo
2015: N6,557m
% change: (52.0%)
2015: 102 kobo
% change: (53.9%)
Statutory results
Operating profit
Profit before taxation
n3,250m
n3,148m
2015: N6,651m
% change: (51.1%)
2015: N6,557m
% change: (52.0%)
Basic and diluted earnings per share
Final and interim dividend per share
47 kobo
50 kobo
2015: 102 kobo
% change: (53.9%)
2015: 81 kobo
% change: (38.3%)
net assets
n43,403m
2015: N43,672m
% change: (0.62%)
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
05
ChaIRMan’S StateMent
Despite the extremely challenging environment,
we are poised for future growth.
My dear fellow Shareholders,
distinguished ladies and gentlemen,
On behalf of the Board of Directors, I am
delighted to welcome you all to the 68th Annual
General Meeting of our Company to present the
Annual Report and Financial Statements for the
year ended 31 May 2016. Before I do this, I would
like to highlight some of the key events in the
operating environment that impacted on the
performance of the Company during the year.
Business environment
The year under review witnessed another
challenging operating environment,
largely caused by the sharp decline in
global oil prices. These shocks manifested
through various challenges including
scarcity of foreign currency, price hikes and
weakening consumer demand including
down-trading. These, coupled with the
disruptions in the Northern part of the
country, particularly in the North East,
impacted on the Company’s performance.
For the calendar year January to
December 2015, the country’s GDP
growth slowed to 2.79% compared to
a growth of 6.22% in 2014. Domestic
output contracted by 0.36% in quarter
one of 2016 (January to March). The
negative impact was more severe on the
industrial sector which experienced a
contraction of 2.24% in 2015, and the
decline accelerated further to 5.49% in
quarter one of 2016 (January to March).
Even though challenges still exist in the
economy we are optimistic that the
flexible exchange rate policy introduced
in June 2016 will result in improved
prospects in the coming years.
Despite the deteriorating operating
environment, your Company remained
focused and managed to deliver
a steady performance for the year
to grow Shareholder value.
Operating results and performance
Consolidated revenue decreased by 4.9%
from N73.1 billion to N69.5 billion due to
the adverse economic conditions
referred to above.
We continued with our strategic initiatives
aimed at increasing Shareholder value and
sustaining long-term growth. Innovative
projects to improve efficiencies in supply
chain continue on track, while attention
was increasingly focused on our core
brands. We streamlined our product
portfolio to make the business more
agile in an increasingly competitive and
fast changing market. In addition, we
launched key projects to improve our
processes and to strengthen our back
office and business support systems.
The Family Care business experienced
a marginal decrease of 2% in revenue
compared to the prior year. Improved
planning and execution in supply chain
and targeted investments in key brands
helped to limit the negative impact of
the scarcity of foreign currency and
other adverse factors. The revenue of
the white goods business decreased by
9% as consumers shifted demand from
durable consumer goods to foods and
other basic necessities. Consequently,
and largely due to an exchange loss of
N2.9 billion, Group profit before taxation
(PBT) dropped by 52% from N6.56 billion
to N3.15 billion.
Overall, the Company did well to hold its
position in the market, reducing the
negative impact of the prevailing adverse
conditions, and performing satisfactorily
against peers in the sector. The various
initiatives mentioned above give the
Company a base to improve performance
going into the future.
Our balance sheet remains strong with
total assets of N74.4 billion compared
to N67.4 billion in the previous year.
The N1.7 billion of export rebates
that are receivable from the Nigerian
government mentioned in the prior year
report are included in our total assets.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 06
ChaIRMan’S StateMent
continued
We returned to a strong cash position
which puts us in a flexible and agile
position to fund operations and exploit
any business opportunities that may arise.
dividends
Fellow Shareholders, the Board
of Directors is recommending to
the Shareholders at this AGM a final
dividend pay-out of N1.99 billion,
representing a payment of 50 kobo
per share (2015: 81 kobo). If approved,
the dividend will be paid to Shareholders
on Friday 7 October 2016, after deducting
the appropriate withholding tax.
products
The business environment for the Fast
Moving Consumers Goods (FMCG) sector
was extremely challenging during the
period under review. Our focus brands
in the Personal Care and Home Care
categories performed relatively well
in line with expectations, though we
experienced some decline in our
traditional trading brands and bulk
detergent lines.
In Personal Care, we maintained our
leadership position in key baby and
toilet soaps categories. The extension
of the Cussons Baby range into gift
packs continues to drive our growth
by creating trial opportunities. Cussons
Baby soap remains the market leader
in the baby soap segment. The Premier
range, especially Premier Cool Deo,
continued its strong performance,
driving our market leadership in the
toilet soaps category. The Hot Robb
variant gained market share with the
Robb range also maintaining its overall
leadership in the medicaments category.
In our drive to improve and increase
consumer awareness of general personal
hygiene, we anchored a number of
activations and educational programs
which resulted in the Carex brand
becoming a household name.
In the Home Care range, Morning
Fresh and Canoe retained their market
leadership in the dish wash and laundry
bar categories respectively despite the
entry of competitive brands. Canoe
detergents gained share, playing a key
role in us holding our market share in
the branded detergent category.
To manage the impact of devaluation
we ran a number of product optimisation
initiatives to ensure the delivery of
quality products at affordable prices
and accelerated our Active Distributor
Development program.
In the Electricals category, we have
retained our leading market positions.
The category remains very competitive
with a plethora of brands operating
across many price points and product
features. The increasing cost of forex
during the year made it necessary to
review our selling prices, which
subsequently put pressure on total
category volumes. Nevertheless,
by continuing to build on product
innovation and performance, customer
network and after sales service,
we have managed to maximise the
available commercial opportunities.
the Board
During the course of the 2015/2016
financial year, Mr Dahiru Muhammad,
a highly experienced banker and
business administrator was appointed
Non-executive Director on the Board.
He brings with him several years of
diverse experience acquired in both
the public and private sectors. Please
join me in welcoming Mr Muhammad
to the Board.
Staff
The good performance of the Company
despite the difficult environment was
made possible by our most valued asset,
our employees, who continue to diligently
serve and deliver on their objectives. The
Company invested in leadership training
programs for senior managers in addition
to several developmental programs at
junior levels during the year.
Corporate Social Responsibility
The mission of the PZ Cussons Foundation
is to improve the welfare of Nigerians
by working in partnership with local
communities, government and other
NGOs. We aim to deploy sustainable
projects that have a positive impact,
and ensure these corporate social
investments have maximal community
involvement and wide geographical
spread. Our priority areas of intervention
are health education and potable water.
Our host communities remain
our partners.
Since inception, the Foundation has
implemented 58 projects in the six
geopolitical zones. During the 2015/16
financial year the following projects
were commissioned:
• Construction of a community
health facility in Gbaiko Community,
Niger State
• Donation of a block of classrooms
and renovation of a library in Odo-Ere
Community, Kogi State
• 2015 edition of the Annual PZ Carex
Chemistry Challenge for Secondary
Schools in Lagos State
• Donation of two blocks of classrooms
with a teachers’ office and borehole
in Wuro Mijiyawa Community,
Taraba State
• 2015 Global Handwashing Day
campaign in schools in the rural
communities of Benue and Cross
River States
• Donation of a block of classrooms at
Community Grammar School, Oloko
Ikwuano, Abia State
• Construction of a PZ Nasara shea
butter processing centre in Kontagora,
Niger State
• Construction of a block of four
classrooms at Marymount College,
Agbor, Delta State.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 “Our brands remain
strong and popular
with consumers, which
leaves us well placed
to hold our market
position and exploit
any emerging
opportunities”
07
the future
We regard the current economic
challenges as transitory and we remain
excited about the future of the Company.
Our confidence has been emboldened by
positive policy changes being adopted by
the government such as the new foreign
exchange regime that has been
introduced by the Central Bank of Nigeria.
Our brands remain strong and popular
with consumers which leaves us well
placed to hold our market position and
exploit any emerging opportunities.
The streamlined product portfolio will
gives us the required focus and agility
in the marketplace. We will continue to
invest in our supply chain processes to
optimise operational efficiencies. The SAP
implementation project that we launched
to improve and strengthen our business
processes and systems will also unlock
efficiencies and improve decision making
in our businesses. Additionally, along with
these operational changes we are
adapting our management structure to
reflect a truly consumer-led organisation.
The focus of our sales organisation is to
deliver superior Route to Market (RTM)
execution that grows our brands and
delivers efficiencies to the business.
These changes will integrate global
and local perspectives which will have
a significant bearing on new product
developments (NPDs) to ensure that
consumer needs in the local market
are the driving force of our investments.
All of these innovations and improvements
put our Company in a strong position for
the future.
Conclusion
In concluding, my appreciation goes to
our parent company, PZ Cussons Plc for
the continued faith and support in the
development of the country and for
their unwavering support for our
Company. My appreciation also goes
to all of the other stakeholders who
contributed in one way or the other to
the success of our business. I would like
to express my appreciation to the
distributors for their partnership and
loyalty; to the management and staff
for their dedication to duty and to the
consumers for their trust and use of
our brands.
Finally, I would like to thank my
colleagues on the Board and members
of the various committees for their
counsel and support during the last
financial year. I am confident that
together, we will deliver an improved
performance in the next financial year.
Once again, I thank you all for listening.
Chief Kolawole B. Jamodu, CFR
Chairman
FRC/2013/ICAN/00000001617
2 August 2016
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
08
OuR BuSIneSS MOdel
N D O c u l t ure, people and valu
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Sustainable value
for all
Our categ o r i
s
e
Good4Busi n e s s
Our mission
Enhancing the lives
of consumers through
sustainable, quality and
innovative brands
Our business model
Our geographies
Delivering growth and expansion
across all our geographies
Manufacturers: Nigeria
Export countries: Angola, Benin, Côte d’Ivoire,
DR Congo, Gabon, Ghana, Liberia, Mali, Niger,
Senegal, Sierra Leone, Sudan, Togo.
Our categories
Leveraging our market-leading brands
across all our categories
personal Care
Food & nutrition
home Care
electricals
World-class supply chain
Creating a world-class supply chain to optimise
business and operational efficiency
Modern factory footprint
Excellent distribution network
Can dO
culture, people and values
Living our values:
Courage | accountability | networking |
drive | Oneness
Good4Business
Further integration of sustainability
throughout our business:
environment
Business Governance & ethics
Sourcing
Community & Charity
Key strategic focus
Risks
Maximising our retail
Political and economic
landscape by maintaining a
instability
fit for purpose, go-to-market
logistics footprint to sharpen
delivery of our products and
maximise customer loyalty
and participation
Exchange rate fluctuations
Regulatory compliance
Security
Leveraging our market-
leading brands across all
our categories
Demand risks
Product safety and quality
Business transformation
Building and maintaining
our global supply chain
capabilities and regional
trade structures
Materials price fluctuations
Health and safety
Supply chain disruptions
Business transformation
Creating an enabling
Staff recruitment and
environment for stakeholders
talent selection
to express their passion,
commitment and willingness
to go above and beyond
Staff retention
Integrating Good4Business
Sustainability and integrity
principles into our global
of raw materials
operations
Climate change mitigation
and adaptation
Reputational risks
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
09
Our business model
Our geographies
Delivering growth and expansion
across all our geographies
Manufacturers: Nigeria
Export countries: Angola, Benin, Côte d’Ivoire,
DR Congo, Gabon, Ghana, Liberia, Mali, Niger,
Senegal, Sierra Leone, Sudan, Togo.
Our categories
Leveraging our market-leading brands
across all our categories
personal Care
Food & nutrition
home Care
electricals
World-class supply chain
Creating a world-class supply chain to optimise
business and operational efficiency
Modern factory footprint
Excellent distribution network
Can dO
culture, people and values
Living our values:
drive | Oneness
Courage | accountability | networking |
Good4Business
Further integration of sustainability
throughout our business:
environment
Business Governance & ethics
Sourcing
Community & Charity
Key strategic focus
Risks
Maximising our retail
landscape by maintaining a
fit for purpose, go-to-market
logistics footprint to sharpen
delivery of our products and
maximise customer loyalty
and participation
Political and economic
instability
Exchange rate fluctuations
Regulatory compliance
Security
Leveraging our market-
leading brands across all
our categories
Demand risks
Product safety and quality
Business transformation
Building and maintaining
our global supply chain
capabilities and regional
trade structures
Materials price fluctuations
Health and safety
Supply chain disruptions
Business transformation
Creating an enabling
environment for stakeholders
to express their passion,
commitment and willingness
to go above and beyond
Staff recruitment and
talent selection
Staff retention
Integrating Good4Business
principles into our global
operations
Sustainability and integrity
of raw materials
Climate change mitigation
and adaptation
Reputational risks
Our vision
To be a leading consumer brand
of choice in our operating markets,
delivering innovative, sustainable
products created by exceptional people
in a unique CAN DO culture that
embraces integrity and diversity,
and drives the passion to succeed.
Delivering long-term growth in
earnings and dividend per share.
how we create value
For investors
Strong management
structure
Stringent cost controls
For consumers
Innovative, quality, market-
leading brands
For employees
Living CAN DO values
and policies
State-of-the-art factories
and office facilities
For sustainability
Good4Business policies,
governance and strong
business ethics
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
10
OuR GeOGRaphIeS
Delivering growth
and expansion
We operate in markets that will give us
the highest growth potentials through our
own infrastructure or by working in close
partnerships. We are continuously evolving
and transforming our distribution networks
to achieve our planned expansion and growth.
12
13
Key
depots:
eastern
01 Aba
02 Onitsha
03 Calabar
lagos
04 Isolo
Middle belt
05 Abuja
06 Makurdi
07 Jos
08 Kaduna
09 Minna
10 Lokoja
north
11 Kano
12 Sokoto
13 Gusau
14 Yola
15 Maiduguri
16 Gombe
17 Zaria
West
18 Ibadan
distribution
сentres:
19 Ikorodu
20 Aba
17
11
08
16
05
09
07
15
14
18
10
04
19
06
03
02
01
20
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 11
Our history
Since 1899 when Paterson and
Zochonis opened their first branch
office in Nigeria, we have remained the
largest operating unit of the PZ Cussons
Group. In 1948 we commenced soap
manufacturing in Aba and, as the
demand for the Company’s products
grew, we expanded and diversified
into new product categories – toiletries,
cosmetics, and pharmaceuticals.
With growing confidence and an
excellent distribution network, the
Company began manufacturing
detergent and white goods in 1973;
building one of the largest detergent
factories in Africa in 1982.
Our geography
As a result of our history, we now
have a significant footprint in Africa.
Nigeria’s huge population of 170 million
people provided the foundation for
understanding the demanding needs
of consumers across the continent.
Our steady growth and increasing
consumer recognition provided
opportunities for a number of joint venture
business units known today as Haier
Thermocool – with over 40 years’ heritage
in the manufacture and distribution of
white goods brands; Nutricima (sister
company) – manufacturing and sale of
powdered milk, evaporated milk and
yoghurt drinks; and PZ Wilmar (sister
company) – manufacturing and
distribution of edible oils.
Expanding markets
We are currently focused on growing
in our current geographies rather than
expanding into new ones as we believe
the geographies where we operate
today offer significant growth potential.
We have developed an industry-leading
‘Route to Market’ capability and an
extensive ‘Active Distributor’ partnership
model that has guaranteed our brands are
within easy reach of our loyal consumers.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 12
OuR CateGORIeS
Leveraging our market
leading brands…
personal Care
home Care
Our Personal Care unit prides itself on the delivery of
innovative products and brands that meet consumers’
needs. Our rich heritage and equity in toilet soaps has
resulted in pioneering the move from washing with bar
soaps to the Personal Care range of shower gels and
lotions. We have created and grown the Cussons Baby
gift packs, aiding brand trials and facilitating growth
of the brand.
Our brand engagement platforms continue to generate
excitement and brand love amongst consumers across our
portfolio. The PZ Carex Chemistry Challenge has positioned
the brand at the forefront of Nigerian childhood education,
whilst the Premier Cool Manchester City FC partnership
lends credence to and reinforces the brand’s assets.
In medicaments, Robb continues to maintain its position
as Nigeria’s first relief from symptoms of cold and flu.
Other consumer activities were also put in place to sustain
the Family Care business as the No1 family care solution
provider that makes life better for Nigerians every day.
The Home Care unit, consisting of the fabric care and dish
wash categories, continues to provide high quality innovative
products. Morning Fresh maintained its leadership position
in the dish wash category despite the influx of stiff
international and local competition.
Our fabric care category, made up of laundry soap, branded
detergent and bulk detergent has different brand options
to meet specific consumer needs – Canoe for ‘Colour Care’
protection, Zip which delivers ‘Unbeatable Whites’ and
Tempo Bulk which takes care of the economy consumer
market. Our brand equity initiatives have yielded positive
results and established a large footprint across the North
with the market penetration and leadership of Zip detergent,
while the Canoe partnership with Da Viva textiles continues
to reinforce the brand’s unique ‘Colour Care’ proposition and
#alivewithcolour campaign.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 13
We operate in selected categories where our
brands have a strategic advantage and can
achieve No1 or No2 market share positions.
Food & nutrition
electricals
Our Food & Nutrition category is a diverse and ever-growing
area of our business. Not only do we pride ourselves on
developing great tasting and nutritious foods, we aim to
make a real difference to communities and families with
our food products from production to consumption.
Cooking
Our sister company, PZ Wilmar, has successfully leveraged
two strong brands (Mamador & Devon King’s) to tap into
the needs of both premium and economy consumers.
We continue to invest in our brand equity, expand our
geographic spread and distribution channels, and build
and develop our team towards greater heights. This brand
strength has also set the tone for extensions into other
food/cooking ingredient categories.
dairy products
For the dairy business in Nigeria, Nutricima (our sister
company) with the Nunu and Olympic brands as key drivers,
is the largest company in the Group and has been fully
owned by the Group since April 2015. Our ‘360 degree’
strategic execution covers all consumer touch points by
driving trial awareness and increasing the chances of repeat
purchases. This results in a significant trade impact, with
shoppers driving sales and visibility, and inclusion on the
‘must stock list’.
Our operation in this category comes with a good heritage.
HPZ Limited is a joint venture between PZ Cussons Nigeria
Plc (Thermocool) and the Haier Group. With over 40 years
of experience, the Thermocool brand is the most trusted,
No1 white good brand in Nigeria and has become a
household name.
Combining cutting edge technology to address everyday
household challenges, Thermocool is built for life in Nigeria.
The range of products, from refrigerators, freezers, air
conditioners, cookers, washing machines and dryers, to
water dispensers, microwave ovens and power-supply
generators, combined with quality, performance and style,
guarantees we are the first choice for consumers equipping
their homes.
Coolworld Electrical Retail Stores (sister company) is the
leading electrical retailer in West Africa providing solutions
and enhancing the lifestyle of its customers. Coolworld is
Thermocool’s No1 retailer. Being our service brand, we
deliver the most enjoyable, world-class shopping
experience at every contact: in store, online or in person.
We offer unbeatable customer service, product expertise,
flexible payment options, leading warranties and unrivalled
after sales services.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 14
OuR CateGORIeS
…across all
our categories
We win through understanding local consumers
and being focused on a smaller portfolio of
larger, more profitable brands. You may not
know it, but we’re the business behind some
of Nigeria’s best-known and best-loved brands.
During the year, we leveraged our unique
approach of constantly challenging ourselves
and looking for new and better ways to enhance
our consumers’ lives – it’s all about adding a little
bit of extraordinary to every day.
personal Care
partnership with
Manchester City FC
PZ Cussons signed a three-year
partnership with Manchester City FC
to become the club’s official partner
in Nigeria. For Robb, the partnership
provides a platform to strengthen
the brand’s reputation as the ‘best
first relief’ for muscular aches, nasal
congestion and catarrh and its
support for physical fitness at all
levels in life.
Robb, together with other PZ Cussons
brands, Olympic and Premier Cool,
is associated with the ‘Be a Player’
promotion that links our brands with
Nigeria’s most-loved sport, and with
a team playing in the English Premier
League, the most watched league
in Nigeria.
Daniel Winner 2014 Morire Winner 2015& Other Fantastic Prizesin theFor details visitwww.facebook.com/cussonsbabyngPZ Cussons Nigeria Plc Annual Report and Accounts 2016 15
Cussons Baby of the
Year 2016
Oritsejolomisan Nina Grant emerged
the winner of Cussons Baby of the
Year 2016, surpassing over 600 other
babies. After a number of stages
which involved screening and voting,
Nina outshone the other contestants
with her looks, charm and personality.
home Care
Food & nutrition
electricals
Canoe – #alivewithcolour
with da Viva
In fabric care, Canoe has continued
building on the partnership with Da
Viva – a contemporary clothing line
and fashion designer with a unique
blend of cutting edge designs and
vibrant colours associated with
traditional African fabrics.
The partnership reinforces Canoe’s
colour care proposition and supports
the #alivewithcolour campaign,
strengthening the brand’s imagery
and heritage in the minds of Nigerian
consumers, and further building a
solid share base for Canoe detergent.
Mamador – endorsed
by the Nigerian Heart
Foundation
Recently the Nigerian Heart
Foundation, an affiliate of the
World Heart Federation in Geneva,
recognised Mamador cooking oil as
a heart friendly cooking oil product
and recommended it to Nigerian
consumers. All of the brand’s claimed
benefits, including its cholesterol-
free claim, vitamin enrichment and
Omega 6 and 9 content, were tested
and confirmed, and Mamador cooking
oil was therefore certified by the
NHF. This brand is owned by our
sister company PZ Wilmar Limited.
Maintaining market
share through innovation
Thermocool consistently provides
innovative products, ensuring long
lasting customer satisfaction so that
the Thermocool experience continues
long after consumers leave the
showroom. The Thermocool brand
builds and delivers on the three pillars
of performance, durability and service
through customised solutions for
Nigerian consumers.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 16
OuR WORld-ClaSS SuPPly CHaiN
Creating a world-class
flexible supply chain…
Our supply chain mission in Africa is to support the
Group’s strategy of sustainable growth via an externally
focused and competitive customer services agenda,
which enables us to compete across all categories,
businesses, operating units and markets in Africa.
Key
Manufacturers/
distributors
01 Nigeria
Export countries
02 Angola
03 Benin
04 Côte d’Ivoire
05 DR Congo
06 Gabon
07 Ghana
08 Liberia
09 Mali
10 Niger
11 Senegal
12 Sierra Leone
13 Sudan
14 Togo
11
12
08
09
10
13
03
01
07
04
14
06
05
02
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 17
“Our supply chain is
a valued part of the
business in winning
Africa.”
The key pillars of our supply chain
performance
a regional-cum-global procurement
organisation and operation
This enables us to leverage our scale
towards unlimited access to supplies
of input materials and feedstock for
our plants, at competitive prices
across the globe. By partnering and
interfacing with our suppliers across
Africa, Asia and Europe we bring
value into the business.
a manufacturing capability
that confers a winning edge
In Africa, in the absence of strong
regional trade structures, our
manufacturing capability is a major
advantage. We continually update
and invest in our manufacturing
plants, making them second to none
in our categories, which gives us both
cost and quality advantage in the
market. We leverage our global
technical expertise to translate our
dreams into reality.
a fit for purpose, go-to-market
logistics footprint
The logistics footprint is evolving and
being optimised to cope with current
challenges. Combined with world-
class warehouse infrastructure, it
enables rapid deliveries to markets
and customers across our
geographies.
Our global freight forwarding system
and customs clearing management
delivers an efficient inbound logistics
operation and creates additional
value for the Group.
a global (5+2) customer services
agenda that sharpens delivery
We are evolving a customer services
agenda that is driven by:
• Customer relationship management
• SAP-driven business systems that
rely on best processes
• Stock optimisation: right quantity,
right place
• Regional sales & operational planning
• Physical logistics.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
18
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
OuR WORld-ClaSS SuPPly CHaiN
…to optimise business
and operational efficiency
We are building a bigger, better supply chain. We are increasing
our business flexibility, agility and our distribution network –
supported by new technology and processes.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
19
process transformation
Eagle
eagle – africa
The Eagle Project is a global
business transformation programme
supporting the new Target Operating
Model (TOM) for the business.
The objective is to drive simplification
and standardisation so that the
business has the optimum processes
and systems to support our future
business growth.
The project is divided into three
waves with the first wave already
implemented successfully and
reaping benefits in Asia. The second
wave, known as Wave 2, involves
implementation in Africa
and Singapore.
Wave 2 is currently underway, with
the design phase already completed,
and the remaining phases on track.
Workplace transformation
Renovated head office
The newly renovated head office
building at Ilupeju was formally
commissioned on 3 June 2016.
It was a day of excitement for staff,
who were educated on the historical
progression of the Company to date.
Staff bonding activities under an ‘Old
School’ theme added colour. In warm
pastel colours with modernised large
windows allowing a lot of natural
lighting, the building’s aesthetics
make it one of the most modern
in Nigeria.
Efficiency transformation
aba site cooling tower –
recycling our water
The cooling tower recirculates and
cools the water required by one of
the soap drying machines at the Aba
factory, reducing the quantity of
water extracted from the borehole
by 180,000m3 per annum whilst at
the same time reducing the quantity
of waste water leaving the facility by
120,000m3 per annum.
20
OuR Can dO ValueS
Living our values
Courage, Accountability, Networking, Drive
and Oneness. That’s CAN DO. And it’s much
more than just a phrase – it’s the spirit that
binds us and makes a PZ Cussons team
recognisable and distinct from any other
organisation.
What we value
Courage
We challenge convention,
ourselves and each other.
We have the strength,
willingness and
determination to initiate,
make things happen and
to carry them through.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 21
Our people, our greatest asset
At PZ Cussons, we know that one of our greatest assets is our people. That’s why
we have created our CAN DO culture that enables our employees to flourish and
develop their talents within a unique environment. As part of our global family,
we employ 5,000 like-minded people throughout our African, Asian and
European operations who share the same CAN DO values and passion to work
together to achieve our future sustainable growth ambitions.
What we value
accountability
We are all champions of our
Company, take responsibility
for achieving our objectives,
and do what we say we will
do. We do what is right, not
merely what is expected, act
with openness, integrity and
trust, ask for help, admit to
our mistakes and put
things right.
networking
We are one Company
across all functions and
geographies, working
towards a common goal
through cooperation
and teamwork.
drive
We are relentless in our
pursuit of success and
together we approach
each day with the energy,
passion and persistence
to exceed expectations.
Oneness
We are all PZ Cussons people
and quiet achievers. We treat
each other with respect
regardless of status. We act
professionally and together
we celebrate success with
understated pride.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 22
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
CReatInG Value BY BeInG GOOd4BuSIneSS
Sustainable value
at the heart of our
business strategy
As part of our wider programme of business transformation,
we have evolved our approach to corporate social responsibility
(CSR). In June 2015 we launched Good4Business which explicitly
links CSR to business success and elevates our commitments
beyond doing good business to creating sustainable value.
The PZ Cussons Foundation falls under one of the four focus
areas of Good4Business – ‘Community & Charity’.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
23
Creating sustainable value
Eight projects were commissioned
during the year, with education
receiving the lion’s share of available
funding. There has been and
continues to be a huge demand
for access to education that puts
enormous pressure on the facilities
essential for successful learning.
We believe that the government
alone cannot overcome the problems
of classroom overcrowding, hostel
accommodation and facilities such
as libraries being over-stretched or
totally absent.
24
CORpORate SOCIal ReSpOnSIBIlItY
Globally, our Good4Business
principles are based around four
areas in which we believe our
operations have the greatest
potential for impact. One of the focus
areas is on ‘Community and Charity’
which covers the activities of the
PZ Cussons Foundation in Nigeria.
2015 has turned out to be the most exciting and busiest year
for the Foundation to date. Project locations had a wide
geographical spread and therefore involved a lot of travelling
to meet members of various communities as well as
monitoring the projects to completion. The special song
renditions during commissioning, the hoots of laughter and
the genuine appreciation of the school children and adults
alike created truly heartwarming, joyous occasions.
2015 PZ Carex Chemistry Challenge
The PZ Cussons Chemistry Challenge, now the PZ CAREX
Chemistry Challenge (PZCCC) is an initiative of the PZ Cussons
Foundation and is aimed at inspiring the learning of chemistry
amongst secondary school students in Lagos State.
The third annual edition of the competition, involving three
rigorous stages, kicked off on 7 November 2015, with
registrations from over 500 schools (public and private)
in Lagos State. Each school presented its best two students
and over a thousand students participated in the first stage
of the competition, which was held in 10 centres across
the state.
during the year, eight projects were commissioned/launched, with one still ongoing:
area
project
Community
Kogi State
School renovation/library
Odo-Ere Community
niger State
Construction of a community health facility
Gbaiko Community
Benue & Cross
River States
Sponsorship of Global Handwashing Day
Obanliku, Abi Bekwarra Logo, Alaide
lagos State
2015 Carex Chemistry Challenge
Lagos
taraba State
Provision of classrooms and borehole
Wuro Mijiyawa
abia State
Construction and donation of a block of classrooms
Oloko Ikwuano
niger State
Construction of a shea butter processing plant
Kontangora
delta State
Construction and donation of a block of classrooms
Boji Boji Agbor
date of
commissioning
22.06.15
14.07.15
15.10.15
12.12.15
18.02.16
23.03.16
19.04.16
15.06.16
Katsina State
Provision of a mobile maths laboratory
Katsina
Ongoing project
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 25
Inner heart – employee CSR initiative
In July 2013, PZ Cussons Nigeria Plc launched ‘Inner Hearts’,
an employee initiative to complement the activities of the
PZ Cussons Foundation. Totally funded by the employees,
the primary objectives are:
• to create a love for charity and good deeds in the heart
of every PZ employee;
• to demonstrate PZ Cussons employees’ love for Nigeria
and its communities; and
• to create a culture of team work amongst PZ staff as well
as fostering inter-departmental relations.
Since inception, PZ employees as individuals, groups,
departments and SBUs have implemented several projects
that ranged from donating to colleagues’ medical needs,
building toilets in schools where the children use the bush,
and donating to prisons, orphanages and IDP camps, to
simple programs such as giving lectures in public schools.
All projects are funded by the employees.
Below is an excerpt from the global launch of Inner Hearts
by our Global CEO, Dr Alex Kanellis:
“ Inner Hearts to me, shows our CAN DO spirit
in action and how our employees are living our
values within their communities for the good
of others. Inner Hearts is the golden thread
that connects us and demonstrates to the
world that we care about our local communities
and we are passionate about enhancing lives
and securing futures.”
Inner hearts to Idp Camp Yola
144 PZ Nigeria employees under our ‘Inner Hearts’ umbrella
took it upon themselves to voluntarily donate their monthly
product packs to Nigerians who, through no fault of their
own, were displaced from their homes and farmlands
without an opportunity to take any of their possessions.
The North East region, once their safety net, had become
the home of insurgents and their lives were periodically
threatened by suicide bombers.
2015 education CSR: construction,
renovations and commissioning
of infrastructure
Okuta-dudu high School, Odo-ere, Kogi State
The Foundation commissioned and handed over the fully
furnished block of classrooms and the newly renovated John
Giannopoulos Library, which was first built in the early 80s.
Commissioning of a block
of classrooms at Community
Grammar School, Oloko Ikwuano,
abia State
Commissioning of two blocks of
classrooms with a teachers’ office
and borehole at Wuro Mijiyawa
Community, taraba State
Global handwashing day Finale, 15 October 2015
Global Handwashing Day is an annual global advocacy
day dedicated to increasing awareness and understanding
of the importance of handwashing with soap as an easy,
effective, and affordable way to prevent diseases and
save lives.
The two week long campaign (2–15 October 2015) saw
Carex and Concern Universal take the handwashing
campaign to schools in the rural communities of Benue
State and Cross River State, with the aim of changing the
handwashing habits of the children. Three LGAs in each
state were visited; Logo, Alaide & Agatu in Benue State
and Obanliku, Abi and Bekwarra in Cross River State.
Over 2,000 children were empowered as ‘Hygiene Heroes’ –
handwashing promoters – in their schools, families and
communities, and they also competed to show that they
had the ‘CareX Factor’! This talent competition enabled the
children to get creative about handwashing by performing
their own version of the campaign’s anthem ‘Wash Your
Hands O!’ by Sunny Neji.
The winners of each LGA, as judged by a panel of local
leaders, competed against other regional winners at the
grand finale event on Global Handwashing Day itself
(15 October) for fantastic prizes and the chance to
perform with Sunny Neji and his band.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 PZ Cussons Nigeria Plc Annual Report and Accounts 2016
27
Governance
Contents
28 Board of Directors
30 Report of the Directors
35 Statement of Directors’ Responsibilities
36 Report of the Audit Committee
37 Report of the Independent Auditor
38 Results at a Glance
28
BOaRd OF dIReCtORS
1. Chief Kola Jamodu, CFR
Chairman (Non-executive)
Chief Jamodu joined PZ Cussons
Group in 1974 and served in
Executive positions for 24 years,
rising to the position of Chairman/
Chief Executive Officer until he
retired in 1999. He thereafter
continued as the Board Chairman
until 2001 when he joined the
Federal Executive Council as the
Minister of Industry. An alumnus
of the Harvard Business School,
Boston, USA, Chief Jamodu is a
Fellow of the Chartered Institute
of Accountants, Nigeria, Fellow of
the Chartered Institute of Taxation
Nigeria, Fellow of the Chartered
Institute of Management
Accountants, London and Fellow
of the Chartered Institute of
Secretaries.
He is currently on the Board of
Nigerian Breweries Plc as its
Chairman, in addition to his
membership of the Board of
United Bank for Africa Plc. He is
also the immediate past President
of the Manufacturers Association
of Nigeria.
2. Mr tunde Oyelola
Vice Chairman (non-
executive)
Mr Oyelola, a graduate of Chemical
Engineering worked for 30 years
with the PZ Cussons Group in
different senior management
positions and retired as the
Deputy Chief Executive in 2007.
He is a Fellow of the Nigerian
Society of Chemical Engineers,
member of the Nigerian Institute
of Management, and Vice
President of the Manufacturers
Association of Nigeria (MAN). He
was appointed as the Vice Chairman
of the Board of Directors in 2008.
3. Mr Christos Giannopoulos
Chief Executive Officer
Mr Giannopoulos joined the PZ
Cussons Group in 1988 with a
degree in Business Administration
specialising in Marketing from
Derby University, United Kingdom.
He had occupied several managerial
positions in the United Kingdom,
Australia, Kenya and Indonesia
before he joined the Nigerian
subsidiary in 2002. He was
appointed to the Board in 2004 and
took over the position of the Group
Chief Executive Officer in 2009.
6
10
5
3
1
2
4
7
9
8
11
6. Mr lawal Batagarawa
Non-executive
Mr Batagarawa is a graduate
of Engineering and Applied
Mathematics from the Ahmadu
Bello University. He was appointed
to the Board in 2008.
He has been a lecturer in the
Katsina State College of Arts,
Science and Technology, a
Permanent Secretary in Kaduna
State, and between 1999 and 2003
he was Minister for Education and
later Minister for Defence.
Between 2003 and 2007 he
was the Special Adviser to the
President on Intra-Party Relations.
4. Mrs Yomi Ifaturoti
Corporate affairs & admin
director
Mrs Ifaturoti is the Corporate
Affairs & Admin Director with
Central Business Service
responsibilities for the Group
spanning external affairs,
administration, regulatory issues,
communication and CSR. She
worked for Nigerian Hoechst Ltd
as a Marketing Analyst and for
Jagal Group as the Sales &
Marketing Coordinator before
joining PZ Cussons in 1992 as a
Group Product Manager.
Prior to her current role, she was
the Marketing Director and later
Sales Director for the Health &
Beauty division. An alumnus of
the University of Ibadan with a
BSc degree in Pharmacology and
a Diploma in Sales, she became a
Director of the Company in 2004
and was appointed to the Board in
2006. She is a member of the Audit
Committee as well as the
Governance/People Committee
and is also a Fellow of the
Chartered National Institute
of Marketing of Nigeria.
5. Mrs elizabeth ebi
Non-executive
Mrs Ebi is the Chief Executive
Officer of Futureview Financial
Services Limited. She was previously
the MD/CEO of Futureview Securities
Ltd established in 1996, before the
holding Company was formed in
2008 to oversee the Group’s wider
interest in the investment banking,
oil & gas, and agro-allied sectors
of the economy as well as the
commodities and currency markets.
A New York University Scholar with
an MBA in Finance and Investment,
Mrs Ebi had a stellar 15-year career
with Chase Merchant Bank where
she retired as an Executive Director.
Mrs Ebi was the first female
stockbroker licensed on the
Nigerian Stock Exchange, and is a
Fellow of the Chartered Institute
of Stockbrokers. She was a two
term member of the Technical
Committee of the National
Council on Privatisation.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016Governance
29
10. Mr paul usoro, San
Non-executive
Mr Usoro, Senior Advocate of
Nigeria, was educated at the
Obafemi Awolowo University,
Ile Ife. He is the senior partner
of Paul Usoro & Co, a law firm
founded by him which has grown
to become one of Nigeria’s leading
commercial law firms. Apart from
being an acclaimed legal
practitioner, Mr Usoro has
extensive boardroom experience
having served as a director of
diverse organisations. He is the
only surviving pioneer director of
Airtel Networks Limited and chairs
its Board Audit Committee.
Between 2008 and 2014, Mr Usoro
served on the Board of Premium
Pensions Limited, Nigeria’s leading
pension funds administrator and
chaired its Board Audit Committee.
Mr Usoro also serves as a director
in Access Bank Plc and CR Services
(Credit Bureau) Plc, representing
Zenith Bank Plc thereat, and is also
the Chairman of Marina Securities
Limited. Mr Usoro was appointed
by President Goodluck Jonathan,
GCFR to the Board of Nigerian Bulk
Electricity Trading Plc in 2011 and
chairs the Company’s Board
Audit Committee.
11. Mr dahiru Muhammad,
FCIB
Non-executive
Mr Dahiru Muhammad, a Fellow of
the Chartered Institute of Bankers,
was educated at the Ahmadu Bello
University, Zaria and Vanderbilt
University, Nashville, Tennessee,
USA. He was a lecturer in Economics
at the University of Maiduguri
and former Managing Director and
CEO of New Africa Merchant Bank
Ltd. from which he retired in 1994.
Since then he has established
a consultancy firm, Ardo
Investments Ltd., as well as
manufacturing outfits in plastics
and oil and gas. Mr Muhammad has
extensive boardroom experience
being on the board of several
diverse organisations. He served
as non-executive director of the
Central Bank of Nigeria, and the
Nigeria Security Printing and
Minting Company Plc, and as
Chairman at Newdevco Financial
Services Ltd. He is currently on the
Board of PZ Cussons Foundation,
and the Pension Administrators
Association of Nigeria, and
a member of the Governing
Council of Bells University
of Technology, Ota.
6
10
5
3
1
2
4
7
9
8
11
7. Mr alex Goma
Managing director –
Family Care
Mr Goma is a Biochemistry graduate
of the University of Port Harcourt
and a Fellow of the National
Institute of Marketing of Nigeria.
He is an experienced business
manager with significant expertise
in the sales and marketing of Fast
Moving Consumer Goods (FMCG).
He started his career in quality
control before moving into the
commercial functions with stints
in customer service and logistics.
Before he joined the Company and
the Board in 2010 as Commercial
Director, he had worked for
Procter & Gamble in Nigeria,
Ghana and Egypt, British American
Tobacco in Senegal, Gambia, and
Mauritania, and Guinness Nigeria
Plc where he was the Sales
Director.
8. Mr david petzer
Chief Financial Officer
Mr Petzer is a graduate of
Commerce and Accounting with
a Postgraduate Diploma in Risk
Management from the University
of Cape Town, South Africa. He is
a member of the South African
Institute of Chartered Accountants
with considerable experience
spanning 17 years.
Before joining the Company, he had
worked with KPMG in South Africa
as General Accounting Manager.
He had also worked with the British
American Tobacco Group first in the
United Kingdom and later in South
Africa where he rose to the position
of Finance Director. He was
appointed to the Board in 2012.
9. Ms Joyce Folake Coker
human Resources director
Ms Coker joined the PZ Cussons
Group in 2011 as the Human
Resources Director. In 2014
she earned additional
responsibility as the Regional HR
Director for the Africa PZ Group.
She joined the Group with a wealth
of experience across industries –
financial services, consulting,
and manufacturing/consumer
goods having worked with top
organisations like Universal
Commercial Plc London, Accenture,
Heirs Alliance Unilever Nigeria &
Unilever Group based in Kenya
with responsibility across the East,
West & Central Africa region.
She earned her first degree from
the University of Lagos and a
Master of Arts in Human Resources
Management from the University
of Westminster, London, and is an
alumnus of the London Business
School. She is a member of
Chartered Institute of Personnel
Management Nigeria as well as
the Institute of Directors.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
30
RepoRt of the DiRectoRs
For the year ended 31 May 2016
Accounts, results and appropriation
the Board of directors of PZ Cussons nigeria Plc is pleased to
present to members the Consolidated Statements of Financial
Position as at 31 May 2016 together with the Consolidated
Statements of Comprehensive Income for the year ended
on that date.
Group profit after taxation
and non-controlling interest
n’000
1,863,013
Dividend
the directors are pleased to recommend to the Shareholders
the payment of a final dividend of 50 kobo per share amounting
to N1,985 million (2015: 81 kobo per share amounting to
N3,216 million).
principal activities
the principal activities of the Group continued to be the
manufacturing, marketing, sale and distribution of a wide
range of consumer products and home appliances which are
leading brand names throughout the country in detergent,
soap, cosmetics, pharmaceuticals, refrigerators and air
conditioners. The Group also distributes the products of
Nutricima Limited, Harefield Industrial Nigeria Limited,
PZ Wilmar Limited and PZ Wilmar Food Ltd.
Directors and their interests
the directors who served during the year and their interest
in the shares of the Company as recorded in the register of
members for the purpose of Section 275 of the Companies
and allied Matters act and in compliance with the listing
requirements of the Nigerian Stock Exchange are as follows:
interest in the ordinary shares of the company
Chief K.B. Jamodu, CFR
Mr B. Oyelola
Mr C. Giannopoulos
Mr L. Batagarawa
Mrs E. Ebi
Ms J.F. Coker
Mr A. Goma
Mrs O.T. Ifaturoti
Mr D. Muhammad
Mr D. Petzer
Mr P. Usoro
2016
2015
3,416,880
3,416,880
244,336
244,336
–
20,706
–
3,889
25,000
12,245
–
–
–
20,706
51,500
3,889
25,000
22,245
–
–
1,000,000
1,000,000
There was no change in the above holdings as at 2 August 2016.
interest in contracts
In accordance with Section 277 of the Companies and allied
Matters Act, Mr Paul Usoro, SAN hereby notifies the Company
that he is a Partner in the law firm of Paul Usoro & Co which
renders Legal Advisory services to the Company. No other
Director has notified the Company of any declarable interest
in any contract in which he was involved with the Company
during the year.
Directors for re-election
In accordance with article 90 of the Company’s articles of
Association and Section 259 (1) of the Companies and Allied
Matters act, one third of the number of directors, based on
the length of stay in office must retire at the Annual General
Meeting. They may offer themselves for re-election.
Accordingly Mr T. Oyelola, Ms J.F. Coker and Mr P. Usoro will be
retiring at the meeting, and, being eligible, they have offered
themselves for re-election.
Mr dahiru Muhammad was appointed to the Board after the
last Annual General Meeting. The appointment is now being
presented for Shareholders’ approval at the annual General
Meeting .
Records of Directors’ attendance
In compliance with Section 258 (2) of the Companies and Allied
Matters act the record of directors’ attendance at Board
Meetings in the 2015/2016 financial year will be made available
at the Annual General Meeting for inspection by members.
Meetings of the Board of Directors
as a rule the Board of directors meets at least quarterly and
additional meetings are convened as required. Also, as allowed
by the Company’s articles of association, material decisions
are sometimes taken between meetings by way of
written resolutions.
at every quarterly meeting the directors are provided with
comprehensive reports of the activities of the various business
units as well as important corporate events. They are also
briefed on all business developments between meetings.
The Board met five times during the 2015/2016 financial year.
The meetings were presided over by the Chairman. In all cases
written notices of meetings, meeting agendas and the reports
for consideration were circulated well ahead of the meetings.
the minutes of the meetings were appropriately recorded
and circulated.
Attendance at meetings
In line with the Code the table below shows the number of
Board meetings during the year and members’ attendance
at the meetings:
director
Chief Kola Jamodu
Mr B. Oyelola
Mr C. Giannopoulos
Mr L. Batagarawa
Ms J.F. Coker
Mrs E. Ebi
Mr A. Goma
Mrs O.T. Ifaturoti
Mr D. Petzer
Mr P. Usoro, SAN
Meetings while
on the Board
No. of meetings
attended
5
5
5
5
5
5
5
5
5
5
5
4
5
4
5
3
4
4
5
4
GovernancePZ Cussons Nigeria Plc Annual Report and Accounts 2016
31
The meetings were held on 20 August 2015, 29 September 2015,
26 January 2016, 17 March 2016 and 12 May 2016.
Major shareholdings
according to the register of members as at 31 May 2016,
PZ Cussons (Holdings) Limited UK held 2,889,467,241 shares.
This represents 73.03% of the paid-up capital of the Company.
Analysis of shareholdings
the shareholding pattern of the Company as at 31 May 2016
as advised by the Registrar is as stated below:
range
No. of
holders
holders
%
Units
Units
%
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
100,001 – 500,000
500,001 – 1,000,000
1,000,001 – 5,000,000
5,000,001 – 10,000,000
10,000,001 – 50,000,000
50,000,001 – 3,970,477,045
23,993
23,688
11,784
14,511
1,213
866
77
68
2
7
1
10,434,625
31.48
58,638,031
31.08
90,161,250
15.46
297,163,950
19.04
85,044,136
1.59
169,767,937
1.14
54,153,214
0.10
147,652,641
0.09
15,344,411
0.00
0.01
142,649,609
0.00 2,899,467,241
0.26
1.48
2.27
7.48
2.14
4.28
1.36
3.72
0.39
3.59
73.03
76,211
100.00 3,970,477,045 100.00
Apart from PZ Cussons (Holdings) Limited, UK, no other
Shareholder held more than 5% of the paid-up capital of
the Company as at 31 May 2016.
Board committees
the Board has established Standing Committees whose terms
of reference clearly spell out their roles, responsibilities and
scope of authorities. To ensure compliance with best practice
in corporate governance each Committee is chaired by a
Non-executive Director.
Audit committee
the Committee is established to perform the functions listed
in Section 359(5) of the Companies and Allied Matters Act.
The Committee consists of six members made up of three
representatives of the Shareholders elected at the previous
annual General Meeting for a tenure of one year and three
representatives of the Board of Directors. The meetings of the
Committee were attended by the head of Internal Control and
representatives of PricewaterhouseCoopers, the Company’s
external auditors.
The following Directors served on the Committee during the year:
• Mr L. Batagarawa
• Mr B. Oyelola
• Mrs O.T. Ifaturoti
the table below summarises attendance at the Committee
meetings during the year:
name
Professor A. Osuntogun
Mr O.I. Obarinde
Mr E.A. Akinduro
Mr B. Oyelola
Mr L. Batagarawa
Mrs O.T. Ifaturoti
No. of meetings
held
No. of meetings
attended
3
4
4
4
4
4
3
4
4
3
3
3
The meetings were held on 19 August 2015, 12 January 2016,
15 March 2016 and 12 May 2016.
Risk Management committee
The Committee has responsibility for:
• review of the Company’s risk management policies and the
adequacy and effectiveness of control;
• review of the Company’s compliance level with relevant
regulations that may impact the Company’s risk profile; and
• review of the changes in business environment and other
factors relevant to the Company’s risk profile.
The Committee is made up of six members namely:
• Mr L. Batagarawa – Chairman
• Mr C. Giannopoulos
• Mrs E. Ebi
• Mr A. Goma
• Mr B. Oyelola
• Mr D. Petzer
The Committee met three times during the financial year.
The table below summarises members’ attendance at
the meetings:
name
Mr L. Batagarawa
Mr C. Giannopoulos
Mr B. Oyelola
Mrs E. Ebi
Mr D. Petzer
Mr A. Goma
No. of meetings
held
No. of meetings
attended
3
3
3
3
3
3
3
3
3
3
3
3
The meetings were held on 16 October 2015, 19 January 2016
and 15 March 2016.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 32
RepoRt of the DiRectoRs
For the year ended 31 May 2016 continued
Governance/people committee
the Committee advises the Board on the appointment of
Directors, corporate governance matters, staff welfare and
remuneration, talent management and other strategic
employees relations matters.
independent Directors
In compliance with the Code, two of the six Non-executive
Directors are independent Directors having no significant
shareholding interest or any special business relationship
with the Company.
The Committee members are:
• Mr P. Usoro, SAN – Chairman
• Mr B. Oyelola
• Mr C. Giannopoulos
• Mrs O.T. Ifaturoti
• Ms J.F. Coker
Board operations
the Board is the ultimate governing body of the Company and
it is responsible for its overall supervision and the protection
of the interests of Shareholders and other stakeholders.
It ensures that the Company is appropriately managed
to achieve strategic objectives.
The specific issues reserved for the Board include:
The Committee met four times during the financial year and
the table below shows the attendance at those meetings:
• the ultimate direction of the Company particularly the
conduct and supervision of the business;
name
Mr P. Usoro
Mr B. Oyelola
Mr C. Giannopoulos
Mrs O.T. Ifaturoti
Ms J.F. Coker
No. of
meetings
attendance
4
4
4
4
4
3
4
4
4
4
• determination of the Company’s organisation;
• risk management and internal control;
• supervision with respect to compliance with the law;
• corporate governance matters;
• communication with Shareholders; and
• review of business performance.
The meetings were held on 28 October 2015, 19 January 2016,
8 March 2016 and 4 May 2016.
the Board has delegated to management the day-to-day
running of the business and the Chief Executive, who is the
head of the Management Team, is answerable to the Board.
corporate Governance Report
the Board is committed to meeting the standards of best
practice set out in the Code of Corporate Governance
published by the Securities and Exchange Commission.
this report describes how the Board has been complying with
the Code as well as best practices in corporate governance.
Board composition
The Company’s Articles of Association provides for a maximum
of 15 Directors. At the date of this report, the Board consists
of 11 Directors: six Non-executive Directors and five Executive
Directors.
The profile of the Board comprises distinguished individuals
with diverse skills and competences in different areas of the
Company’s business. This continually ensures the realisation
of the set corporate objectives.
In line with best practice, the position of the Chairman is distinct
from that of the Group Chief Executive Officer. The Chairman is
Chief Kola Jamodu, CFR, a Non-executive Chairman while the
Chief Executive Officer is Mr C. Giannopoulos. Furthermore
while the Chairman is responsible for the running of the Board,
the Chief Executive Officer is responsible for coordinating the
running of the business and implementing strategies.
Board appointment and induction
directors are appointed to the Board following a declaration
of vacancy at a Board meeting. New Directors are selected
through carefully articulated selection guidelines that place
emphasis on integrity, skills and competences relevant to the
Company’s goals and aspirations. The Policy confers on the
Governance/People Committee the responsibility of identifying
individuals with a track record of outstanding achievements
and potential for value enhancement. The Committee’s
recommendation is subjected to further scrutiny by the Board
before a decision is taken. The appointed Director is made to
undergo an induction programme to equip and familiarise
him/her with the requisite knowledge and information about
the Company and its business. The appointed Director is
presented to the next Annual General Meeting for election.
Furthermore a newly appointed director receives a letter
of appointment spelling out in detail the entitlements,
terms of reference of the Board and its Committees and
the Key Performance Indicators.
Board evaluation
The Board has established a system to undertake a formal
annual evaluation of its performance, that of its Committees
and the individual Directors.
GovernancePZ Cussons Nigeria Plc Annual Report and Accounts 2016 33
internal control
the Board maintained a sound system of internal control
to safeguard Shareholders’ investments and the Company’s
assets. The system of internal control provides reasonable
assurance against material loss. The responsibilities include
oversight functions of internal audit and control, risk
assessment and compliance, conformity and contingency
planning, and formalisation and improvement of
business process.
Distributors and suppliers
the Group has 20 distribution depots across the country with
over 500 distributors.
the Group also obtains its requirements from both local
and overseas suppliers. The principal overseas suppliers are
associated companies in the PZ Cussons group. PZ Power
and PZ Tower were merged into the parent company PZCN
on 31 December 2015.
communication with shareholders
the Board is committed to an open and consistent
communication policy with Shareholders and other
stakeholders. The guiding principle is that all Shareholders
should be given equal treatment in equal situations. Thus price
sensitive information is published in full in a timely, simple and
transparent format to all Shareholders at the same time.
Research and development
The Group research and development efforts, supported
through licensing and technical services agreements with
overseas associated companies in the PZ Cussons group
are designed to ensure a constant programme of product
improvement and new product introduction.
Furthermore all Shareholders have equal opportunity at the
annual General Meeting to present questions to the Board
and make comments on any aspect of the financial statements.
insider dealings
the Company has regulations guiding directors, members
of the Audit Committee and other officers of the Company
on periods when they, or persons connected to them, cannot
lawfully effect transactions on the shares of the Company
as well as on the disclosure requirements when effecting
any transaction on the Company’s shares.
e-dividend
the Company consistently encourages its Shareholders to
embrace the e-dividend and e-bonus introduced in the capital
market. This is to enable prompt crediting of the Shareholder’s
account with the dividend and their CSCS account with bonus
shares. This will also eliminate the cost of posting dividend
warrants and share certificates, as well as the risk of them
being lost in the post.
fixed assets
Movements in fixed assets during the year are shown in note
4 to the financial statements. In the opinion of the Directors
the market value of the Group’s fixed assets is not lower than
the value shown in the financial statements.
employment of disabled persons
the Group policy provides for due priority to be accorded
to disabled persons in recruitment for any available position
where their incapacity will not expose them to danger or
serious disadvantage. Employees who become disabled in
the course of their employment are retained and redeployed
wherever possible within the context of the above policy.
health, safety and welfare
the Group recognises that the health and safety of its
employees, customers, contractors and other stakeholders
are a top priority and form an integral part of its business
activities. We are committed to maintaining a safe working
place at all times and in all sites, depots and business units
across the country so as to avoid accidents and ill health due
to work situations. We recognise that health and safety is
fundamental to good manufacturing practice. The roll out
of our world-class manufacturing programme has ensured
that our factories are pleasant work places.
employee involvement in training
The Group is committed to keeping employees informed
regarding the Group’s performance and progress through
regular briefings and meetings. Their views are sought
wherever practicable on matters which affect them as
employees. The Group believes that the professional and
technical expertise of its managers constitutes a major asset,
and investment in developing such skills continues to
receive attention.
The Group’s skill base has been steadily expanding with the
range of training provided for career development within
the Group.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 34
RepoRt of the DiRectoRs
For the year ended 31 May 2016 continued
statement of compliance
We hereby affirm that the SEC Code of Corporate Governance
governs the operations of the Company and confirm that to
the best of our knowledge we are in compliance with the Code.
complaint Management policy
the Complaint Management Policy sets out the broad
framework of how the Company and its Registrars attend
to issues and concerns raised by Shareholders and provides
the opportunity for Shareholders to give feedback to the
Company. The Company is dedicated to ensuring great
standards of service to its Shareholders by:
• creating an efficient process for the management
of Shareholders’ complaints and enquiries;
• ensuring that all matters relating to Shareholders
are adequately addressed; and
• making information readily available to Shareholders.
independent auditors
PricewaterhouseCoopers were appointed at the last annual
General Meeting as independent auditors and, having
indicated willingness, will continue in office in accordance
with Section 357(2) of the Companies and Allied Matters Act.
A resolution will be proposed authorising the Directors to fix
their remuneration.
By order oF the Board
R. A. Alade
company secretary
FRC/2013/NBA/00000004100
Lagos, nigeria
2 august 2016
GovernancePZ Cussons Nigeria Plc Annual Report and Accounts 2016 35
stAteMent of DiRectoRs’ ResponsiBilities
For the year ended 31 May 2016
the Companies and allied Matters act requires the directors
to prepare financial statements for each financial year that
give a true and fair view of the state of financial affairs of the
Company at the end of the year and of its profit or loss. This
responsibility includes:
• ensuring that the Company keeps proper accounting records
that disclose, with reasonable accuracy, the financial position
of the Company and comply with the requirements of the
Companies and Allied Matters Act;
• designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement,
whether due to fraud or error; and
• preparing the Company’s financial statements using suitable
accounting policies supported by reasonable and prudent
judgements and estimates that are consistently applied.
The Directors accept responsibility for the annual financial
statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent
judgements and estimates, in conformity with International
Financial reporting Standards and the requirements of the
Companies and allied Matters act and the Financial reporting
Council of Nigeria Act.
The Directors are of the opinion that the financial statements
give a true and fair view of the state of the financial affairs of the
Company and of its profit or loss. The Directors further accept
responsibility for the maintenance of accounting records that
may be relied upon in the preparation of financial statements,
as well as adequate systems of internal financial control.
nothing has come to the attention of the directors to indicate
that the Company will not remain a going concern for at least
12 months from the date of this statement.
chief (Dr) Kola Jamodu, cfR
chairman
FRC/2013/ICAN/00000001617
2 august 2016
Mr christos Giannopoulos
Chief Executive Officer
FRC/2013/IODN/00000004206
2 august 2016
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
36
RepoRt of the AuDit coMMittee
For the year ended 31 May 2016
to the members of pZ cussons nigeria plc
In compliance with the provisions of Section 359(6) of the Companies and Allied Matters Act, the members of the Audit
Committee hereby confirm that we have:
• reviewed the scope and planning of the audit requirements and found them adequate;
• reviewed the financial statements for the year ended 31 May 2016 and are satisfied with the explanations obtained;
• reviewed the external auditors’ management letter for the year ended 31 May 2016 and are satisfied that management is
taking appropriate steps to address the issues raised; and
• ascertained that the accounting and reporting policies for the year ended 31 May 2016 are in accordance with legal
requirements and agreed ethical practices.
The external auditors confirmed having received full cooperation from the Company’s management and that the scope of their
work was not restricted in any way.
professor c.A. osuntogun, ofR
chairman, Audit committee
29 July 2016
Members of the Audit committee
• Professor C.A. Osuntogun (Chairman)
• Mr O.I. Obarinde
• Mr E.A. Akinduro
• Mr B. Oyelola
• Mr L. Batagarawa
• Mrs O.T. Ifaturoti
Shareholders’ representative
Shareholders’ representative
Shareholders’ representative
Director
Director
Director
GovernancePZ Cussons Nigeria Plc Annual Report and Accounts 2016 37
RepoRt of the inDepenDent AuDitoR
TO THE MEMBERS OF PZ CUSSONS NIGERIA PLC
Report on the financial statements
We have audited the accompanying financial statements
of PZ Cussons Nigeria Plc (the Company) and its subsidiaries
(together, the Group). These financial statements comprise
the statement of financial position as at 31 May 2016 and the
statements of comprehensive income, changes in equity and
cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
opinion
In our opinion, the accompanying financial statements give
a true and fair view of the state of the financial affairs of the
Company and the Group at 31 May 2016 and of their financial
performance and cash flows for the year ended in accordance
with International Financial reporting Standards and the
requirements of the Companies and allied Matters act
and the Financial Reporting Council of Nigeria Act.
Report on other legal requirements
the Companies and allied Matters act requires that in carrying
out our audit we consider and report to you on the following
matters. We confirm that:
1. we have obtained all the information and explanations
which to the best of our knowledge and belief were
necessary for the purposes of our audit;
2. the Company has kept proper books of account, so far as
appears from our examination of those books and returns
adequate for our audit have been received from branches
not visited by us;
3. the Company’s statement of financial position and
comprehensive income are in agreement with the books
of account.
for: pricewaterhousecoopers
chartered Accountants
Lagos, nigeria
11 august 2016
Engagement Partner: Osere Alakhume
FRC/2013/ICAN/00000000647
Directors’ responsibility for financial statements
the directors are responsible for the preparation and fair
presentation of these financial statements in accordance
with International Financial Reporting Standards and with the
requirements of the Companies and allied Matters act and for
such internal control, as the directors determine is necessary
to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements
and plan and perform our audit to obtain reasonable
assurance that the financial statements are free from
material misstatement.
an audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in financial
statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments; the auditor
considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 38
Results At A GlAnce
For the year ended 31 May 2016
revenue
Operating profit
Profit before taxation
Taxation
Profit for the year
non-controlling interest
Profit attributable to equity holders of parent company
At year end:
Share capital
Shareholders’ fund
per 50k share data:
Based on 3,970,477,045 ordinary shares of 50k each:
Basic and diluted earnings per share (Naira)
Adjusted earnings per share (Naira)
number of employees
stock exchange quotations in naira (company):
As at 31 May
the Group
2016
n’000
2015
n’000
%
Increase/
(decrease)
69,527,537
3,249,523
3,148,196
(1,018,507)
2,129,689
266,676
1,863,013
73,126,070
6,651,022
6,556,814
(1,986,027)
4,570,787
517,503
4,053,284
(4.9)
(51.1)
(52.0)
(48.7)
(53.4)
(48.5)
(54.0)
1,985,238
40,900,644
1,985,238
41,436,794
0.47
0.47
1.02
1.02
1,786
1,869
21.66
28.66
GovernancePZ Cussons Nigeria Plc Annual Report and Accounts 2016 PZ Cussons Nigeria Plc Annual Report and Accounts 2016
Financial Statements
39
consoliDAteD stAteMent of coMpRehensive incoMe
For the year ended 31 May 2016
revenue
Cost of sales
Gross profit
Selling and distribution costs
Administrative expenses
Operating profit
other income
Interest income
Interest cost
Net finance cost
Profit before taxation
Taxation
Profit for the year
total comprehensive income for the year
total comprehensive income for the year attributable to:
equity holders of the parent company
non-controlling interest
notes
16a
16b
25
25
14
Group
2016
n’000
69,527,537
(52,209,703)
17,317,834
(8,825,636)
(5,242,675)
3,249,523
286,084
210,256
(597,667)
Group
2015
n’000
73,126,070
(52,672,138)
20,453,932
(9,248,099)
(4,554,811)
6,651,022
121,861
228,794
(444,863)
company
2016
n’000
69,527,537
(57,487,627)
12,039,910
(6,358,556)
(4,547,281)
1,134,073
487,694
8,417
(853,304)
Company
2015
n’000
73,126,070
(59,884,674)
13,241,396
(6,412,591)
(4,061,998)
2,766,807
1,011,694
94,802
(725,903)
(387,411)
(216,069)
(844,887)
(631,101)
3,148,196
(1,018,507)
6,556,814
(1,986,027)
2,129,689
4,570,787
2,129,689
4,570,787
776,880
(386,881)
389,999
389,999
3,147,400
(978,533)
2,168,867
2,168,867
1,863,013
266,676
4,053,284
517,503
2,129,689
4,570,787
389,999
–
389,999
0.10
2,168,867
–
2,168,867
0.55
Basic and diluted EPS (Naira)
18
0.47
1.02
The notes on pages 44 to 71 are an integral part of these financial statements.
40
consoliDAteD stAteMent of finAnciAl position
at 31 May 2016
Assets
non-current assets
Property, plant and equipment
Investments in subsidiaries
current assets
Inventories
trade and other receivables
deposits for letters of credit
Cash and cash equivalents
total assets
equity
ordinary share capital
Share premium
retained earnings
equity attributable to equity holders of parent company
non-controlling interest
total equity
liabilities
non-current liabilities
Deferred taxation
Provisions
current liabilities
trade and other payables
Current taxation payable
Provisions
total liabilities
total equity and liabilities
Group
Company
notes
31 May 2016
n’000
31 May 2015
n’000
31 May 2016
n’000
31 May 2015
n’000
4
5
6
7
8
9
10
11
12
13
14
12
26,504,924
–
25,217,847
–
25,339,722
504,406
19,239,673
526,406
26,504,924
25,217,847
25,844,128
19,766,079
19,278,455
15,587,350
191,791
12,867,654
21,012,631
17,912,325
916,639
2,328,472
14,342,118
11,358,182
191,791
4,524,881
13,241,598
13,085,927
439,431
1,573,626
47,925,250
42,170,067
30,416,972
28,340,582
74,430,174
67,387,914
56,261,100
48,106,661
1,985,238
6,878,269
32,037,137
40,900,644
2,502,326
1,985,238
6,878,269
32,573,287
41,436,794
2,235,650
1,985,238
6,878,269
24,928,782
33,792,289
–
1,985,238
6,878,269
17,721,422
26,584,929
–
43,402,970
43,672,444
33,792,289
26,584,929
3,694,005
237,544
3,903,589
248,900
4,108,185
–
3,757,845
–
3,931,549
4,152,489
4,108,185
3,757,845
25,716,237
1,289,711
89,707
17,834,536
1,671,311
57,134
18,034,963
325,663
–
17,129,501
634,386
–
27,095,655
19,562,981
18,360,626
17,763,887
31,027,204
23,715,470
22,468,811
21,521,732
74,430,174
67,387,914
56,261,100
48,106,661
The financial statements on pages 39 to 73 were approved by the Board of Directors on 2 August 2016 and signed on its behalf by:
chief (Dr) Kola Jamodu, cfR
Chairman
Mr christos Giannopoulos
Chief Executive Officer
Mr oluwasegun Agbekeye
Head of Finance
FRC/2013/ICAN/00000001617
FRC/2013/IODN/00000004206
FRC/2013/ICAN/00000004098
The notes on pages 44 to 71 are an integral part of these financial statements.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 41
stAteMent of chAnGes in equity
For the year ended 31 May 2016
year ended 31 May 2016
At 1 June 2015
Profit for the year
total comprehensive income for the year
Transactions with owners:
Final dividend paid relating to year ended 31 May 2015
Unclaimed dividend forfeited
total transactions with owners
At 31 May 2016
Year ended 31 May 2015
At 1 June 2014
Profit for the year
total comprehensive income for the year
Transactions with owners:
dividend paid relating to year ended 31 May 2014
Interim dividend paid relating to year ended 31 May 2015
Unclaimed dividend forfeited
total transactions with owners
At 31 May 2015
Group
Attributable to owners
share
capital
n’000
share
premium
n’000
Retained
earnings
n’000
non-
controlling
interest
n’000
total
n’000
1,985,238
6,878,269
32,573,287
2,235,650
43,672,444
–
–
–
–
–
–
–
–
–
–
1,863,013
1,863,013
266,676
266,676
2,129,689
2,129,689
(2,421,991)
22,828
(2,399,163)
–
–
–
(2,421,991)
22,828
(2,399,163)
1,985,238
6,878,269
32,037,137
2,502,326
43,402,970
Group
attributable to owners
Share
capital
n’000
Share
premium
n’000
retained
earnings
n’000
non-
controlling
interest
n’000
total
n’000
1,985,238
6,878,269
31,711,254
1,963,821
42,538,582
–
–
–
–
–
–
–
–
–
–
–
–
4,053,284
4,053,284
517,503
517,503
4,570,787
4,570,787
(2,421,991)
(794,096)
24,836
(3,191,251)
(245,674)
–
–
(2,667,665)
(794,096)
24,836
(245,674)
(3,436,925)
1,985,238
6,878,269
32,573,287
2,235,650
43,672,444
The notes on pages 44 to 71 are an integral part of these financial statements.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 42
stAteMent of chAnGes in equity
For the year ended 31 May 2016 continued
year ended 31 May 2016
At 1 June 2015
Profit for the year
total comprehensive income for the year
Transactions with owners:
Excess of net assets acquired over purchase consideration arising from the
merger of PZ tower Limited and PZ Power Company Limited with the Company
(Note 5)
Final dividend paid relating to year ended 31 May 2015
Unclaimed dividend forfeited
total transactions with owners
At 31 May 2016
Year ended 31 May 2015
At 1 June 2014
Profit for the year
total comprehensive income for the year
Transactions with owners:
dividend paid relating to year ended 31 May 2014
Interim dividend paid relating to year ended 31 May 2015
Unclaimed dividend forfeited
total transactions with owners
At 31 May 2015
company
Attributable to owners
share
capital
n’000
share
premium
n’000
Retained
earnings
n’000
total
n’000
1,985,238
6,878,269
17,721,422
26,584,929
–
–
–
–
–
–
–
–
–
–
–
–
389,999
389,999
389,999
389,999
9,216,524
(2,421,991)
22,828
9,216,524
(2,421,991)
22,828
6,817,361
6,817,361
1,985,238
6,878,269
24,928,782
33,792,289
Company
attributable to owners
Share
capital
n’000
Share
premium
n’000
retained
earnings
n’000
total
n’000
1,985,238
6,878,269
18,743,806
27,607,313
–
–
–
–
–
–
–
–
–
–
–
–
2,168,867
2,168,867
2,168,867
2,168,867
(2,421,991)
(794,096)
24,836
(2,421,991)
(794,096)
24,836
(3,191,251)
(3,191,251)
1,985,238
6,878,269
17,721,422
26,584,929
The notes on pages 44 to 71 are an integral part of these financial statements.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 43
stAteMent of cAsh flows
For the year ended 31 May 2016
Cash flows from operating activities
Tax paid
net cash generated from operating activities
Cash flows from investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Change in investment in subsidiaries
Interest income
net cash used in investing activities
dividend paid to equity holders of parent
dividend paid to non-controlling interest
Interest expense
Net cash used in financing activities
net increase/(decrease) in cash and cash equivalents
cash and cash equivalents at 1 June
notes
19
14
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
18,385,369
(1,609,691)
6,938,709
(2,640,549)
9,924,033
(592,686)
4,769,208
(1,063,810)
16,775,678
4,298,160
9,331,347
3,705,398
4
5
(3,453,991)
26,897
–
210,256
(2,783,166)
13,759
–
228,794
(3,159,691)
24,477
22,000
8,417
(2,084,259)
10,475
–
94,802
(3,216,838)
(2,540,613)
(3,104,797)
(1,978,982)
(2,421,991)
–
(597,667)
(3,216,087)
(245,674)
(444,863)
(2,421,991)
–
(853,304)
(3,216,087)
–
(725,903)
(3,019,658)
(3,906,624)
(3,275,295)
(3,941,990)
10,539,182
2,328,472
(2,149,077)
4,477,549
2,951,255
1,573,626
(2,215,574)
3,789,200
cash and cash equivalents at 31 May
9
12,867,654
2,328,472
4,524,881
1,573,626
The notes on pages 44 to 71 are an integral part of these financial statements.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 44
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016
1 General information
the Group
PZ Cussons Nigeria Plc is a company incorporated in Nigeria on 4 December 1948 under the name of P.B. Nicholas and Company
Limited. The name was changed to Alagbon Industries Limited in 1953 and to Associated Industries Limited in 1960. The Company
became a public company in 1972 and was granted a listing on the Nigerian Stock Exchange. The name was changed to Paterson
Zochonis Industries Limited on 24 November 1976 and, in compliance with the Companies and Allied Matters Act, it changed its
name to Paterson Zochonis Industries Plc on 22 November 1990. On 21 September 2006, the Company adopted its present name
of PZ Cussons Nigeria Plc.
the principal activities of the Group are the manufacture, distribution and sale of a wide range of consumer products and
home appliances through owned depots. These products are leading brand names throughout the country in detergent, soap,
pharmaceuticals, cosmetics, confectionery, refrigerators, freezers and air conditioners. The Group also distributes the milk
products of Nutricima Limited, products of Harefield Industrial Nigeria Limited, products of PZ Wilmar Limited and products
of PZ Wilmar Food Limited.
The address of the registered office is 45/47 Town Planning Way, Ilupeju, Lagos.
These financial statements are presented in Nigerian Naira which is the functional currency of the primary economic
environment in which the Group operates. The financial statements have been rounded to the nearest thousands.
2 Summary of significant accounting policies of the Company and the Group
2.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), including
International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations
Committee (IFRIC).
The preparation of financial statements in conformity with generally accepted accounting principles under IFRS requires the
Directors to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the
reporting date and the reported amounts of revenues and expenses during the reporting period. Although these estimates
are based on the Directors’ best knowledge of the amount, event or actions, actual results may ultimately differ from those
estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised and in any future periods affected.
The financial statements have been prepared on a historical cost basis and the accounting policies set out below have been
consistently applied to all the years presented.
2.1.1 Going concern
The consolidated financial statements have been prepared on a going concern basis. Nothing has come to the attention
of the Directors that cast doubt about the ability of the Company to continue as a going concern.
2.1.2 changes in accounting policy and disclosures
new and amended standards adopted by the Group
The Group adopted the following standard for the first time:
Amendments to IAS 1,‘Presentation of financial statements’ on the disclosure initiative: These amendments are part of the IASB
initiative to improve presentation and disclosure in financial reports. The amendments merely clarify the existing requirements,
they do not affect the Group’s accounting policies or any of the disclosures.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 45
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
new accounting standards issued but not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after
1 June 2016, and have not been applied in preparing these financial statements. None of these is expected to have an effect on
the financial statements of the Company, except the following set out below:
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value
through P&L. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is
permitted. The Company is assessing IFRS 9’s full impact.
IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus
has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and
IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after
1 January 2017 and earlier application is permitted. The Company is assessing the impact of IFRS 15.
IFRS 16, ‘Lease’ eliminates the classification of leases as either operating or finance leases for a lessee. All leases are treated in a
similar way to finance leases under IAS 17. Leases are capitalised by recognising the present value of the lease payments and
showing them either as lease assets (right-of-use assets) or together with property, plant and equipment. If lease payments are
made over time, a company also recognises a financial liability representing its obligation to make future lease payments. IFRS 16
does not require a lessee to recognise assets and liabilities for short-term leases and leases of low-value assets. The standard is
effective for accounting periods beginning on or after 1 January 2019 and earlier adoption is permitted. The Company is
assessing the impact of IFRS.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact
on the Company.
2.2 Basis of consolidation
subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any
non-controlling interest in the acquire on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such re-measurement
are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability are recognised in accordance
with IAS 39 either in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent
settlement is accounted for within equity.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Where necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s
accounting policies.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 46
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2 Summary of significant accounting policies of the Company and the Group continued
2.2 Basis of consolidation continued
changes in ownership interests in subsidiaries without change of control
transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is,
as transactions with the owners in their capacity as owners. The difference between the fair value of any consideration paid and
the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals
to non-controlling interests are also recorded in equity.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when
control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition,
any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group
had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
common control transactions
Business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or parties
both before and after the business combination (and where that control is not transitory) are referred to as common control
transactions. The accounting policy for the acquiring entity would be to account for the transaction at book values in its
consolidated financial statements. The book values of the acquired entity are the book values of its assets and liabilities on
the date of acquisition. The excess of the cost of the transaction over the acquirer’s proportionate share of the net asset value
acquired in common control transactions will be allocated to the existing business combination reserve in equity. Where
comparative periods are presented, the financial statements and financial information are not restated.
2.3 segment reporting
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Executive Board which comprises the five Executive Directors.
An operating segment is a distinguishable component of the Company that earns revenue and incurs expenditure from
providing related products or services (business segment), or providing products or services within a particular economic
environment (geographical segment), and which is subject to risks and returns that are different from those of other segments.
The Company’s primary format for segment reporting is based on business segments. The business segments are determined
by management based on the Company’s internal reporting structure.
2.4 Revenue recognition
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of discounts, rebates and sales-related taxes but including interest
receivable on sales on extended credit. Revenue is recognised when the amount of revenue can be reliably measured and it is
probable that future economic benefits will flow to the entity.
Sales of goods are recognised when title has passed and the significant risks and rewards of ownership have been transferred.
The Group manufactures and sells a range of consumer products and electrical products in the wholesale market.
Sales of goods are recognised when a Group entity has despatched products to the wholesaler, the wholesaler has full discretion
over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s
acceptance of the products. Delivery does not occur until the products have been shipped from the local Group depot, the
risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products
in accordance with the sales contract, the acceptance provisions have lapsed or the Group has objective evidence that all criteria
for acceptance have been satisfied.
Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established.
Interest is recognised using the effective interest method.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 47
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2.5 leases
operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are
classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received
from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. When an operating lease is
terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised
as an expense in the period in which termination takes place.
2.6 foreign currencies
functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Nigerian Naira (N).
transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income
statement within ‘finance income or cost’. All other foreign exchange gains and losses are presented in the income statement
within ‘other (losses)/gains – net’.
Changes in the fair value of monetary securities denominated in foreign currency are analysed between translation differences
resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security.
Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying
amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss
are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets,
are included in other comprehensive income.
2.7 finance income and expense
Finance income and expense are recognised in the income statement in the period in which they are earned or incurred.
Interest income is recognised using the effective interest method.
2.8 Employee benefits
2.8.1 Gratuity scheme
The PZ Cussons Nigeria Plc gratuity scheme is a short-term employee benefit that is computed based on the agreement
between PZ Cussons Nigeria Plc and staff of PZ Cussons Nigeria Plc dated 31 December 2006.
The scheme expense is computed on a monthly basis based on the length of service of the employee and the gross pay of the
employee for the year under consideration. The scheme is funded directly using the Company’s cash flow and expensed to the
income statement appropriately.
The PZ Cussons Nigeria Plc gratuity scheme runs from January to December of each year and it is paid in the month of February
of the subsequent year. The gratuity scheme obligation at the end of each year relates to gratuity awards for January to May
that are due to be paid to staff but are unpaid as at year end.
The scheme is only applicable to staff engaged before 1 January 2007. All staff employed subsequently are not covered by
the scheme.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 48
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2 Summary of significant accounting policies of the Company and the Group continued
2.8 Employee benefits continued
2.8.2 Defined contribution scheme
The Group operates a defined contribution plan. The defined contribution plan pays a fixed contribution into a separate entity.
Hence, the Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets
to pay all the employees the benefits relating to their service in the current and prior period.
The contributions are recognised as employee benefit expenses when they are due. The Group has no further payment
obligation once the contributions have been paid. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in the future payment is available. The Group and employees each contribute 15% and 10% respectively.
2.8.3 incentive and bonus scheme
The Group recognises a liability and expense for the incentive and bonus scheme based on the formula that takes into
consideration the Group’s objectives (net sales, operating contribution %, net working capital %). The Group recognises
a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
2.9 export expansion Grant
Export Expansion Grant (‘the grant’) from the government is recognised at fair value where there is a reasonable assurance that
the grant will be received and the Group will comply with all the attached conditions. The grant is recognised as a reduction to
cost of sales with a corresponding recognition of receivable from government. The following are the conditions precedent:
• The Company must be registered with the Nigerian Export Promotion Council (NEPC)
• The Company must have a minimum annual export turnover of N5 million and evidence of repatriation of proceeds of exports
• The Company shall submit its baseline data which includes audited financial statements and information on operational
capacity to nePC
• The Company shall be a manufacturer, producer or merchant of products of Nigerian origin for the export market (i.e. the
products must be made in nigeria)
• Qualifying export transactions must have the proceeds fully repatriated within 180 days, calculated from the date of export
and as approved by the EEG Implementation Committee.
2.10 current and deferred income tax
The tax for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that
it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is recognised in other
comprehensive income or directly in equity, respectively.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted at the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the taxable nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred
tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case
the deferred tax is also dealt with in equity.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 49
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2.10 current and deferred income tax continued
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax liabilities on a net basis.
2.11 property, plant and equipment
all property, plant and equipment are initially recognised at cost and subsequently stated at historical cost less accumulated
depreciation and impairment losses.
Land and buildings comprise mainly factories and offices.
Historical cost includes purchase costs, expenditure that is directly attributable to the acquisition of the items and the estimate
of the cost of decommissioning (dismantling and removing the asset and restoring the site).
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company or the Group and the cost can
be measured reliably. The carrying amount of the replaced cost is derecognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Freehold land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their
cost to their residual values over their estimated useful lives as follows:
Freehold land
Freehold buildings
Leasehold buildings
– Over 50 years
– Under 50 years
Plant and machinery
Motor vehicles
Computer/IT equipment
Office furniture and fittings
nil
2%
2%
2%
Over the lease period
4-8%
25%
33%
20%
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting date.
Capital work in progress represents assets under construction. Accordingly, they are not depreciated until they are completed
and available for use.
Minor items of furniture and fittings are not capitalised but expensed on acquisition. The annual rates of depreciation are
consistent with those of the prior year.
Where an indication of impairment exists, an asset’s carrying amount is written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its estimated recoverable amount.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the income statement for the period.
2.12 warranty
Provision for products warranty is made at the time of revenue recognition and reflects the estimated costs of replacement
and free-of-charge services that will be incurred by the Group with respect to the products. Initial recognition is based on
historical experience.
2.13 Non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed
for possible reversal of the impairment at each reporting date.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016
50
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2 Summary of significant accounting policies of the Company and the Group continued
2.14 financial assets
2.14.1 trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. If collection
is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
2.14.2 cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand plus short-term deposits. Short-term deposits have a maturity
of less than three months from the date of acquisition.
2.15 financial liabilities
2.15.1 trade payables
trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.
2.16 inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost comprises direct materials and where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location
and condition. Cost is calculated using the FIFO method. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in marketing, selling and distribution.
2.17 provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable
that the Group will be required to settle that obligation and the amount has been reliably estimated. Provisions for restructuring
costs are recognised when the Company has a detailed formal plan for the restructuring that has been communicated to
affected parties. Provisions are not recognised for future operating losses.
Provisions are measured at the present values of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessment of the time value of money and the specific risk relating to the obligation.
The increase in the provision due to the passage of time is recognised as interest expense.
2.18 Dividend distribution
Dividend distribution to the Company’s Shareholders is recognised as a liability in the Group’s financial statements in the period
in which the dividends are approved by the Company’s Shareholders. In respect of interim dividends these are recognised once
paid. Any dividend that remains unclaimed after 12 years is treated as statute barred and is written back to retained earnings.
2.19 Recognition and measurement of investments in subsidiary in separate financial statements of the Company
Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s statement of financial
position. On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts
of the investments are recognised in profit or loss.
2.20 Deposits for letters of credit
Deposits for letters of credit are recognised at fair value less impairment losses.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 51
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
2.21 critical accounting policies and key sources of estimation uncertainty
Estimates and accounting judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The preparation of financial statements under IFRS requires management to make assumptions and estimates about future
events. The resulting accounting estimates will, by definition, differ from the actual results. The assumptions and estimates
that have significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial
year are as follows:
Revenue recognition
The Group recognises revenue generally at the time of despatch of goods, which represents the point at which the significant
risk and rewards of ownership are transferred to the customer, and when collection of the resulting consideration for those
goods is reasonably assured. Should management consider that the criteria for recognition are not met, revenue is deferred
until such a time as the consideration has been fully earned. Revenue is measured at the fair value of the consideration received
or receivable and represents the amount receivable net of discounts, rebates and sales-related taxes but including interest
receivable on sales on extended credit and income from the provision of technical services and agreements. Dividend income
from investment is recognised when the right to receive payment is established.
Impairment of financial assets
The Group assesses at the end of the reporting period whether there was an impairment loss on a financial asset. At the
reporting date, financial assets were assessed for evidence of impairment triggers, and a default in payments was identified.
Subsequently, an impairment testing was carried out using the rate that reflects the time value of money and risks associated
with the asset as the discount rate for determining the present value of future cash flows.
Impairment of non-financial assets
The Group reviews non-financial assets for possible impairment if there are events or changes in circumstances that indicate
that the carrying values of the assets may not be recoverable, or at least at every reporting date, when there is any indication
that the asset might be impaired. Impairment exists when the carrying value of an asset exceeds its recoverable amount, which
is the higher of its fair value less costs of disposal and its value in use. Following the impairment charge as disclosed in note 15,
management believe that no further write down is required.
useful lives of plant, property and equipment
Plant, property and equipment are depreciated over their useful lives. The Group estimates the useful lives of PPE based on the
period over which the assets are expected to be available for use. The estimation of the useful lives of PPE is based on technical
evaluations carried out by those staff with knowledge of the machines and experience with similar assets. Estimates could
change if expectations differ due to physical wear and tear and technical or commercial obsolescence. It is possible, however,
that future results of operations could be materially affected by changes in the estimates brought about by changes in factors
mentioned above. The amounts and timing of expenses for any period would be affected by changes in these factors and
circumstances. A reduction in the estimated useful lives of the plant and machinery would increase expenses and decrease
the value of non-current assets.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 52
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
3 financial risk management
The Group’s and Company’s operations expose it to a variety of financial risks that include the effects of changes in foreign
exchange rates, credit risk, liquidity risk and interest rates.
3.1 credit risk
Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a
contract. It arises principally from trading activities with customers. The Group has dedicated standards, policies and procedures
to control and monitor all such risks. Although the Group is potentially exposed to credit loss in the event of non-performance
by counterparties holding the Group’s cash and cash equivalents, such credit risk is controlled through credit rating and equity
price reviews of the counterparties and by limiting the total amount of exposure to any one party. Equity price reviews of
counterparties is done through monitoring of the share price of the counterparties on the floor of the stock exchange.
The credit risk of customers is assessed at subsidiary and Group level, taking into account their financial positions, past
experiences and other factors. Individual customer credit limits are imposed based on these factors. Customers are initially
brought on board on a cash basis for a period of six months. At the expiration of the six month cash trading period, customers
are free to apply for credit.
The Group does not believe it is exposed to any material concentrations of credit risk.
All of the Group’s financial assets are carried at amortised cost. The maximum exposure to credit risk at the reporting date is the
carrying value of the financial assets in the statement of financial position.
The table below analyses the Company’s and Group’s financial assets into relevant maturity groupings as at the reporting date.
company
31 May 2016
financial assets:
Cash and cash equivalents (Note 9)
Trade receivables (Note 7)
Receivables from subsidiary companies (Note 7)
Receivables from related party companies (Note 7)
Export rebate receivable (Note 7)
Negotiable duty credit certificates (Note 7)
Other receivables (Note 7)
Deposit for letters of credit (Note 8)
total
31 May 2015
Financial assets:
Cash and cash equivalents (Note 9)
Trade receivables (Note 7)
Receivables from subsidiary companies (Note 7)
Receivables from related party companies (Note 7)
Export rebate receivable (Note 7)
Negotiable duty credit certificates (Note 7)
Other receivables (Note 7)
Deposit for letters of credit (Note 8)
total
neither
past due
nor impaired
n’000
4,524,881
2,795,632
1,381,316
2,360,759
–
–
617,462
191,791
11,871,841
neither
past due
nor impaired
n’000
1,573,626
2,789,609
3,999,808
2,565,709
59,840
–
592,893
439,431
12,020,916
up to 90 days
n’000
91 – 180 days
n’000
over 180 days
n’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,643,658
271,913
–
–
Up to 90 days
n’000
91 – 180 days
n’000
over 180 days
n’000
–
5,713
–
–
133,440
–
–
–
139,153
–
–
–
–
187,604
–
–
–
187,604
–
–
–
–
1,262,774
271,913
–
–
total
n’000
4,524,881
2,795,632
1,381,316
2,360,759
1,643,658
271,913
617,462
191,791
total
n’000
1,573,626
2,795,322
3,999,808
2,565,709
1,643,658
271,913
592,893
439,431
1,915,571
13,787,412
1,534,687
13,882,360
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 53
total
n’000
12,867,654
6,195,450
3,996,759
1,663,117
297,491
778,077
191,791
total
n’000
2,328,472
8,250,809
5,414,239
1,663,117
297,491
780,621
916,639
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
Group
31 May 2016
financial assets:
Cash and cash equivalents (Note 9)
Trade receivables (Note 7)
Receivables from related party companies (Note 7)
Export rebate receivable (Note 7)
Negotiable duty credit certificates (Note 7)
Other receivables (Note 7)
Deposit for letters of credit (Note 8)
total
31 May 2015
Financial assets:
Cash and cash equivalents (Note 9)
Trade receivables (Note 7)
Receivables from related party companies (Note 7)
Export rebate receivable (Note 7)
Negotiable duty credit certificates (Note 7)
Other receivables (Note 7)
Deposit for letters of credit (Note 8)
neither
past due
nor impaired
n’000
12,867,654
6,166,858
3,996,759
–
–
778,077
191,791
23,809,349
neither
past due
nor impaired
n’000
2,328,472
7,860,198
5,414,239
59,840
–
780,621
916,639
up to 90 days
n’000
91 – 180 days
n’000
over 180 days
n’000
–
28,592
–
–
–
–
–
28,592
–
–
–
–
–
–
–
–
–
–
–
1,663,117
297,491
–
–
1,960,608
25,798,549
Up to 90 days
n’000
91 – 180 days
n’000
over 180 days
n’000
–
375,224
–
133,440
–
–
–
–
15,210
–
187,604
–
–
–
202,814
–
177
–
1,282,233
297,491
–
–
total
17,360,009
508,664
1,579,901
19,651,388
Provision for impairment as disclosed in Note 7 relates to specific provision for trade receivables that are doubtful of recovery.
Provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables.
An analysis of the international long-term credit ratings by Augusto & Co and Fitch Rating of counterparties where cash and cash
equivalents are held is as follows:
Credit rating
B
Credit rating
B
Company
2016
n’000
2015
n’000
4,524,881
1,573,626
4,524,881
1,573,626
Group
2016
n’000
2015
n’000
12,867,654
2,328,472
12,867,654
2,328,472
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 54
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
3 financial risk management continued
3.2 liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group maintains
a strong liquidity position and manages the liquidity profile of its assets, liabilities and commitments so that cash flows are
appropriately balanced and all funding obligations are met when due.
There is a central treasury that coordinates cash flows management and funding activities. Cash surplus to immediate
requirements is placed in interest yielding short-term deposit accounts in banks with good credit ratings.
The Group enjoys a favourable 90 days of credit from its suppliers against the 30 days of credit it gives to its customers. Thus, the
Group is always in an advantageous position to meet its obligations because funding is quickly available from credits extended to
its customers than the timing it is required to settle its obligations.
Included in the Group’s trade and other payables as at 31 May 2016 and 31 May 2015 are balances due to related parties
of N17.4 billion and N9.5 billion respectively while those of the Company are N11.0 billion and N10.0 billion respectively.
The table below analyses the Group’s financial liabilities into relevant maturity groupings as at the reporting date.
company
31 May 2016
financial liabilities:
up to 90 days
n’000
up to 180 days
n’000
total
n’000
Trade and other payables – excluding other taxation and social security (Note 13)
2,068,729
15,824,560
17,893,289
31 May 2015
Financial liabilities:
2,068,729
15,824,560
17,893,289
Up to 90 days
n’000
Up to 180 days
n’000
total
n’000
Trade and other payables – excluding other taxation and social security (Note 13)
1,175,743
15,870,740
17,046,483
Group
31 May 2016
financial liabilities:
1,175,743
15,870,740
17,046,483
up to 90 days
n’000
up to 180 days
n’000
total
Trade and other payables – excluding other taxation and social security (Note 13)
2,127,142
23,431,157
25,558,299
31 May 2015
Financial liabilities:
2,127,142
23,431,157
25,558,299
Up to 90 days
n’000
Up to 180 days
n’000
total
Trade and other payables – excluding other taxation and social security (Note 13)
1,315,787
16,300,026
17,615,813
1,315,787
16,300,026
17,615,813
3.3 Market risk
Market risk is the risk that movements in market rates, including foreign exchange rates, interest rates, equity and commodity
prices will affect the fair value or future cash flows of a financial instrument. The management of market risk is undertaken using
risk limits approved by the operating unit finance directors under delegated authority.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016
55
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
3.4 foreign exchange risk
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates. Subsidiary undertakings
must ensure that all transactional exposures arising from commitments in a currency other than their functional currency are
identified and monitored. The Group is primarily exposed to the US Dollar. A 15% increase/decrease in foreign exchange rates
at the reporting dates would have increased/decreased profit or loss and total equity by the following amounts. This analysis
is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the
reporting period. The analysis assumes that all other variables remain constant.
US Dollar – 15% increase
US Dollar – 15% decrease
Group
Company
31 May 2016
n’000
1,203,429
(1,203,429)
31 May 2015
n’000
31 May 2016
n’000
31 May 2015
n’000
209,160
(209,160)
423,781
300,480
(423,781)
(300,480)
The foreign exchange risk is mainly from related parties payable and receivable balances with foreign related parties.
3.5 Fair value of financial assets and liabilities
All of the Group’s financial assets and liabilities are measured at amortised cost and due to the short-term nature of these
financial instruments, the fair value reasonably approximates the carrying value in the statement of financial position.
3.6 capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for Shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to Shareholders,
return capital to Shareholders, issue new shares or sell assets.
Capital requirements are generally recommended by the majority Shareholder, PZ Cussons (Holdings) Limited U.K.
The Group reports the net cash/net debt ratio to the parent company. This is summarised as follows:
Cash and cash equivalents
Short-term borrowing
Long-term borrowing
net fund
Group
Company
31 May 2016
n’000
12,867,654
–
–
12,867,654
31 May 2015
n’000
31 May 2016
n’000
31 May 2015
n’000
2,328,472
–
–
2,328,472
4,524,881
–
–
4,524,881
1,573,626
–
–
1,573,626
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 56
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
4 property, plant and equipment
Group – 2016
cost
At 1 June 2015
additions
transfers
Write-offs
disposals
At 31 May 2016
Depreciation
At 1 June 2015
Charge for the year
Write-offs
on disposals
freehold
land and
buildings
n’000
leasehold
land and
buildings
n’000
plant and
machinery
n’000
Office
furniture and
computers
n’000
Motor
vehicles
n’000
capital work
in progress
n’000
total
n’000
29,048
–
–
–
–
15,942,343
–
1,728,781
–
–
18,407,439
–
1,630,990
(1,209,967)
(127,044)
2,101,530
–
293,424
(333,114)
(19,239)
718,480
–
–
(17,426)
(79,589)
2,543,294
3,453,991
(3,653,195)
–
–
39,742,134
3,453,991
–
(1,560,507)
(225,872)
29,048
17,671,124
18,701,418
2,042,601
621,465
2,344,090
41,409,746
6,391
581
–
–
2,495,306
301,672
–
–
9,636,970
1,628,729
(1,200,559)
(127,044)
1,705,384
207,942
(333,005)
(19,237)
680,236
16,202
(17,427)
(77,319)
–
–
–
–
14,524,287
2,155,126
(1,550,991)
(223,600)
At 31 May 2016
6,972
2,796,978
9,938,096
1,561,084
601,692
–
14,904,822
net book value
At 31 May 2016
Group – 2015
cost
At 1 June 2014
additions
transfers
disposals
At 31 May 2015
Depreciation
At 1 June 2014
Charge for the year
on disposals
22,076
14,874,146
8,763,322
481,517
19,773
2,344,090
26,504,924
Freehold
land and
buildings
n’000
29,048
–
–
–
Leasehold
land and
buildings
n’000
Plant and
machinery
n’000
Office
furniture and
computers
n’000
Motor
vehicles
n’000
Capital work
in progress
n’000
total
n’000
15,726,157
–
216,186
–
16,949,320
–
1,458,119
–
1,964,150
–
237,991
(100,611)
810,892
–
–
(92,412)
1,672,424
2,783,166
(1,912,296)
–
37,151,991
2,783,166
–
(193,023)
29,048
15,942,343
18,407,439
2,101,530
718,480
2,543,294
39,742,134
5,736
655
–
2,209,028
286,278
–
8,113,848
1,523,122
–
1,622,283
183,525
(100,424)
715,960
51,341
(87,065)
–
–
–
12,666,855
2,044,921
(187,489)
At 31 May 2015
6,391
2,495,306
9,636,970
1,705,384
680,236
–
14,524,287
net book value
At 31 May 2015
22,657
13,447,037
8,770,469
396,146
38,244
2,543,294
25,217,847
Depreciation expense of N1.22 billion (2015: N1.10 billion) has been charged in ‘cost of sales’, N0.29 billion (2015: NG0.30 billion)
in ‘selling and distribution expenses’ and N0.65 billion (2015: N0.64 billion) in ‘administrative expenses’.
Construction work in progress as at 31 May 2016 mainly comprises building development and installation of new factory lines.
Depreciation on freehold land and buildings relates to depreciation charged on buildings constructed on freehold land.
There was no capitalised borrowing cost during the years ended 31 May 2015 and 31 May 2016.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 57
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
company – 2016
cost
At 1 June 2015
additions
transfers
Inter-company transfer
Write-offs
disposals
At 31 May 2016
Depreciation
At 1 June 2015
Charge for the year
Inter-company transfer
Write-offs
on disposals
at 31 May 2016
net book value
At 31 May 2016
company – 2015
cost
At 1 June 2014
additions
transfers
Inter-company transfer
disposals
At 31 May 2015
Depreciation
At 1 June 2014
Charge for the year
on disposals
freehold
land and
buildings
n’000
leasehold
land and
buildings
n’000
plant and
machinery
n’000
Office
furniture and
computers
n’000
Motor
vehicles
n’000
capital work
in progress
n’000
total
n’000
29,048
–
–
–
–
–
29,048
6,391
581
–
–
–
6,972
14,113,506
–
1,514,562
1,665,585
–
–
17,293,653
12,063,141
–
1,302,532
5,604,268
(1,182,590)
(127,044)
17,660,307
1,787,267
–
285,525
66,191
(291,278)
(11,809)
1,835,896
2,337,763
275,887
168,400
–
–
2,782,050
6,963,433
1,172,564
2,697,281
(1,173,344)
(127,044)
9,532,890
1,496,390
157,731
49,447
(291,243)
(11,808)
1,400,517
612,461
–
–
2,079
(17,427)
(62,405)
534,708
602,911
5,027
2,079
(17,427)
(61,873)
530,717
2,041,138
3,159,691
(3,102,619)
141,046
–
–
2,239,256
30,646,561
3,159,691
–
7,479,169
(1,491,295)
(201,258)
39,592,868
–
–
–
–
–
–
11,406,888
1,611,790
2,917,207
(1,482,014)
(200,725)
14,253,146
22,076
14,511,603
8,127,417
435,379
3,991
2,239,256
25,339,722
Freehold
land and
buildings
n’000
29,048
–
–
–
–
29,048
Leasehold
land and
buildings
n’000
Plant and
machinery
n’000
Office
furniture and
computers
n’000
Motor
vehicles
n’000
Capital work
in progress
n’000
total
n’000
14,054,085
–
59,421
–
–
14,113,506
11,148,644
–
921,494
(6,997)
–
12,063,141
1,663,624
–
224,071
–
(100,428)
1,787,267
664,774
–
–
–
(52,313)
612,461
1,161,865
2,084,259
(1,204,986)
–
–
2,041,138
28,722,040
2,084,259
–
(6,997)
(152,741)
30,646,561
5,736
655
–
2,083,576
254,187
–
6,040,080
923,353
–
1,464,144
132,487
(100,241)
615,256
34,805
(47,150)
–
–
–
10,208,792
1,345,487
(147,391)
At 31 May 2015
6,391
2,337,763
6,963,433
1,496,390
602,911
–
11,406,888
net book value
At 31 May 2015
22,657
11,775,743
5,099,708
290,877
9,550
2,041,138
19,239,673
Depreciation expense of N1.12 billion (2015: N0.82 billion) has been charged in ‘cost of sales’, N0.26 billion (2015: N0.29 billion)
in ‘selling and distribution expenses’ and N0.23 billion (2015: N0.24 billion) in ‘administrative expenses’.
Construction work in progress as at 31 May 2016 mainly comprises building development and installation of new factory lines.
Inter-company transfer relates mainly to fixed assets transferred from PZ Tower and PZ Power upon merger with PZ Cussons
Nigeria Plc during the year ended 31 May 2016.
Depreciation on freehold land and buildings relates to depreciation charged on buildings constructed on freehold land.
There was no capitalised borrowing cost during the years ended 31 May 2015 and 31 May 2016.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 58
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
5 investments in subsidiaries
At 1 June
decrease arising from merger of PZ tower and PZ Power with the Company
decrease arising from impairment of investment in robbert Pharmaceutical
total
the Company
2016
n’000
526,406
(20,000)
(2,000)
504,406
2015
n’000
526,406
–
–
526,406
decrease in investment in subsidiaries relates to elimination of investments of n10 million in each of PZ tower Limited and PZ
Power Company Limited due to the merger of the two entities with PZ Cussons Nigeria Plc during the year ended 31 May 2016.
also, during the year ended 31 May 2016, a previous investment of n2 million in robbert Pharmaceutical Company – a dormant
company – was impaired.
hPZ Limited
Investment
amount
n’000
504,406
Country of
incorporation and
place of business nature of business
Proportion
of shares held
by the Company
%
Proportion
of shares held
by nCI
%
nigeria
household electrical appliances manufacturer
74.99
25.01
There are no restrictions on transfer of funds within the entities in the Group.
integration of pZ tower limited and pZ power company limited
On 31 December 2015, a restructuring of the PZ Cussons Nigeria Plc Group structure was carried out. The effect of this was that
the operations of PZ Tower Limited and PZ Power Company Limited were integrated into the operations of PZ Cussons Nigeria Plc.
PZ Tower Limited and PZ Power Company Limited thus ceased to exist from the date of the integration.
This transaction was deemed to be a reorganisation of an existing Group and thus, the net assets of PZ Tower Limited and
PZ Power Company Limited were combined with PZ Cussons Nigeria Plc using the book values as at that date. This business
combination has been accounted for as a common control transaction where PZ Cussons Nigeria Plc (the acquirer) has applied
predecessor accounting as the basis for recognising the assets acquired and the liabilities assumed of PZ tower Limited and
PZ Power Company Limited. Any difference between the purchase consideration and the net assets acquired has been
accounted for in retained earnings.
In line with the accounting policy on common control transactions accounted for using the predecessor accounting method,
PZ Cussons Nigeria Plc chose to incorporate the results from the operations of PZ Tower Limited and PZ Power Company Limited
prospectively effective from the date of integration. On the integration date of 31 December 2015, the net assets of PZ Tower
Limited and PZ Power Company Limited acquired by PZ Cussons Nigeria Plc are as follows:
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
59
Assets acquired
Property, plant and equipment (net book value)*
Inventory
Sundry debtors
Cash at bank
Inter-company balances
Assets
liabilities assumed
accruals and other liabilities
Current tax liabilities
Deferred tax liability
liabilities
net assets acquired
Purchase consideration
PZ Power
Company Ltd
n’000
1,264,886
347,751
1,646
1,425
1,524,643
PZ tower Ltd
n’000
3,297,076
–
12,008
3,275
3,139,018
total
n’000
4,561,962
347,751
13,654
4,700
4,663,661
3,140,351
6,451,377
9,591,728
3,007
80,393
167,029
250,429
2,889,922
(10,000)
104,775
–
–
104,775
6,346,602
(10,000)
107,782
80,393
167,029
355,204
9,236,524
(20,000)
excess of net assets acquired over purchase consideration
2,879,922
6,336,602
9,216,524
* Property, plant and equipment (net book value) represents the sum of N7,479,169,000 and N2,917,207,000 being cost and accumulated depreciation respectively
of fixed assets acquired from PZ Power Company Limited and PZ Tower Limited upon their merger with PZ Cussons Nigeria Plc.
6 inventories
raw materials
Finished goods and goods for resale
Engineering spares and other stocks
total
Group
2016
n’000
2015
n’000
10,958,734
6,095,554
2,224,167
12,236,662
7,148,479
1,627,490
Company
2016
n’000
9,192,746
3,111,617
2,037,755
2015
n’000
8,053,017
3,828,686
1,359,895
19,278,455
21,012,631
14,342,118
13,241,598
During the year ended 31 May 2016, N281.5 million (2015: N666.4 million) was charged to the income statement for obsolete,
damaged and missing inventories identified during the monthly stock count exercises. Also recognised as an expense in the
financial statements are engineering spares used for production of N577.3 million (2015: N557.2 million).
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 60
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
7 trade and other receivables
Receivables due within one year:
trade receivables
Less: provision for impairment of trade receivables
net trade receivables
Receivables from subsidiary companies (Note 25)
Receivables from related party companies (Note 25)
Export rebate receivable
Prepayments
Negotiable duty credit certificates
WHT credit note receivable
advances to suppliers
other receivables
total
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
7,683,784
(1,488,334)
9,416,359
(1,165,550)
3,712,705
(917,073)
3,571,948
(776,626)
6,195,450
–
3,996,759
1,663,117
125,913
297,491
73,663
2,456,879
778,077
8,250,809
–
5,414,239
1,663,117
189,014
297,491
73,663
1,243,371
780,621
2,795,632
1,381,316
2,360,759
1,643,658
117,192
271,913
73,663
2,096,587
617,462
2,795,322
3,999,808
2,565,709
1,643,658
117,258
271,913
73,663
1,025,703
592,893
15,587,350
17,912,325
11,358,182
13,085,927
WHT credit note receivable of N73.7 million as at 31 May 2015 remained the same as at 31 May 2016 because the related WHT
credit note is yet to be received from the tax authority.
Export rebate receivable is recognised at the rate of 20% on the related export proceeds. The weighted eligibility criteria has
three bands: 20%, 15% and 10%. Approval of the rebate is subject to meeting the thresholds of the following eligibility criteria:
local value added, local content, employment (Nigerians), priority sector, export growth and capital investment.
Movements in the provision for impairment of trade receivables are as follows:
At 1 June
(Provision for)/reversal of receivable impairment
Closing
All trade receivables are denominated in Nigerian Naira.
Group
2016
n’000
2015
n’000
(1,165,550)
(322,784)
(1,179,589)
14,039
(1,488,334)
(1,165,550)
Company
2016
n’000
(776,626)
(140,447)
(917,073)
2015
n’000
(700,768)
(75,858)
(776,626)
The credit risk of distributors is assessed at subsidiary and Group level, taking into account their financial positions, past
experiences and other factors. Individual distributor credit limits are imposed based on these factors.
The Group operates in 26 depots across Nigeria with over 1,000 distributors.
Distributors are initially brought on board on a cash basis for a period of six months. At the expiration of the six month cash
trading period, distributors are free to apply for credit.
8 Deposits for letters of credit (lcs)
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
191,791
916,639
191,791
439,431
LCs represent committed cash no longer available for another purpose other than the purpose it has been designated for.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 61
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
9 cash and cash equivalents
Cash at bank and in hand
cash and cash equivalents
10 ordinary share capital
Group and Company
Authorised:
Ordinary Shares of 50k each
total authorised share capital
Allotted, called up and fully paid:
Ordinary Shares of 50k each
total called up share capital
11 Deferred taxation
The analysis of deferred tax liabilities is as follows:
– Deferred tax liability to be recovered after more than 12 months
– Deferred tax liability to be recovered within 12 months
The movement in deferred tax liability is as follows:
at start of year
Changes during the year:
– Deferred tax balance inherited on merger of PZ Power
and PZ Tower with the Company (Note 5)
(Credited)/charged to income statement (Note 14)
at end of year
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
12,867,654
2,328,472
4,524,881
1,573,626
12,867,654
2,328,472
4,524,881
1,573,626
2016
2015
number
in thousands
Amount
n’000
number
in thousands
amount
n’000
4,000,000
4,000,000
2,000,000
2,000,000
4,000,000
4,000,000
2,000,000
2,000,000
3,970,477
1,985,238
3,970,477
1,985,238
3,970,477
1,985,238
3,970,477
1,985,238
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
3,694,005
–
3,903,589
–
4,108,185
–
3,757,845
–
3,694,005
3,903,589
4,108,185
3,757,845
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
3,903,589
4,365,881
3,757,845
3,374,580
–
(209,584)
–
(462,292)
167,029
183,311
–
383,265
3,694,005
3,903,589
4,108,185
3,757,845
At 1 June 2014
– Charged/(credited) to income statement
At 31 May 2015
– dt acquired from merger of entities
– (Credited)/charged to income statement
Group
Company
Property,
plant and
equipment
n’000
3,662,841
110,000
3,772,841
–
(1,022,065)
Provisions
n’000
703,040
(572,292)
130,748
–
812,481
total
n’000
4,365,881
(462,292)
3,903,589
–
(209,584)
Property,
plant and
equipment
n’000
3,133,557
126,726
3,133,557
167,029
360,048
Provisions
n’000
241,023
256,539
241,023
–
(176,737)
total
n’000
3,374,580
383,265
3,757,845
167,029
183,311
At 31 May 2016
2,750,776
943,229
3,694,005
3,660,634
64,286
4,108,185
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 62
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
12 warranty provisions
Warranty provisions
at beginning of the year
Charged to the income statement
Utilised in the year
At 31 May
The ageing of the provisions are as follows:
Within 12 months
Greater than 12 months
total
Group
2016
n’000
306,034
89,707
(68,490)
327,251
89,707
237,544
327,251
2015
n’000
299,861
57,134
(50,961)
306,034
57,134
248,900
306,034
Company
2016
n’000
2015
n’000
–
–
–
–
–
–
–
–
–
–
–
–
The Group generally offers 1–3 year warranties for its electrical products and components. Directors estimate the related
provision for future warranty claims based on historical warranty claim information, as well as recent trends. Factors that could
impact the estimated claim information include the success of the Group’s product and quality initiatives, as well as spare parts
and labour costs.
13 trade and other payables
trade payables
Other taxation and social security
Unclaimed dividend
accruals
Amounts owed to subsidiaries (Note 25)
Amounts owed to related parties (Note 25)
other payables
total
Average credit period taken for trade purchases
Group
2016
n’000
2,127,142
157,938
1,956,555
3,768,061
–
17,392,753
313,788
2015
n’000
1,315,787
218,723
1,518,734
3,966,832
–
9,542,080
1,272,380
Company
2016
n’000
2,068,729
141,674
1,956,555
2,478,029
–
10,984,038
405,938
2015
n’000
1,175,743
83,018
1,518,734
3,157,216
3,876,984
6,159,333
1,158,473
25,716,237
17,834,536
18,034,963
17,129,501
Days
90
days
90
Days
90
days
90
Trade and other payables comprises amounts outstanding for trade purchases and ongoing costs. The Directors consider the
carrying amount of trade and other payables approximates to their fair value.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 63
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
14 taxation
Income tax expense
Company income tax
Education tax
total current tax
Deferred tax
(Reversal)/origination of temporary differences
total deferred tax (note 11)
income tax expense
Group
2016
n’000
2015
n’000
1,115,747
112,344
2,281,672
166,647
1,228,091
2,448,319
(209,584)
(209,584)
(462,292)
(462,292)
1,018,507
1,986,027
Company
2016
n’000
160,979
42,591
203,570
183,311
183,311
386,881
2015
n’000
503,358
91,910
595,268
383,265
383,265
978,533
Effective tax reconciliation
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the
parent as follows:
Profit before tax
Income tax using the domestic corporation tax rate of 30% (2015: 30%)
Tax effects of:
Non-deductible expenses
Education tax levy
Tax exempt income
total income tax expense in income statement
Group
2016
n’000
2015
n’000
3,148,196
6,556,814
944,459
1,967,044
Company
2016
n’000
776,880
233,064
2015
n’000
3,147,400
944,220
539,712
112,344
(578,008)
1,214,243
166,647
(1,361,907)
1,018,507
1,986,027
386,368
42,591
(275,142)
386,881
1,301,209
91,910
(1,358,806)
978,533
The current tax charge has been computed at the applicable rate of 30% (31 May 2015: 30%) plus education levy of 2%
(31 May 2015: 2%) on the profit for the year after adjusting for certain items of expenditure and income which are not deductible
or chargeable for tax purposes. Non-deductible expenses include items such as legal fees, donations, public relations expenses
and certain provisions which are not allowed as a deduction by the tax authorities. Tax exempt income for the Company is mainly
made up of dividend income and other items not subject to tax while tax exempt income for the Group is mainly made up of
profit of a subsidiary currently under pioneer status. The impact of the franked investment income recognised in the Company
has been eliminated in the Group.
The movement in the current income taxation payable is as follows:
at start of the year
Tax charge for the year
– Current tax balance inherited from merger of
PZ Power and PZ Tower with the Company (Note 5)
Tax paid during the year
at end of the year
Group
2016
n’000
1,671,311
1,228,091
2015
n’000
1,863,541
2,448,319
–
(1,609,691)
–
(2,640,549)
1,289,711
1,671,311
Company
2016
n’000
634,386
203,570
80,393
(592,686)
325,663
2015
n’000
1,102,928
595,268
–
(1,063,810)
634,386
At the statement of financial position date, the Group and the Company have no unused tax losses available for offset against
future profits. There was no offset of deferred tax assets and deferred tax liabilities.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 64
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
15 expense by nature
Changes in inventories of finished goods and work in progress
Foreign exchange loss
Personnel cost (Note 20.5)
Fuel and gas
Depreciation (Note 4)
auditors’ remuneration
Directors’ emoluments (Note 20.1)
rent and rates
Insurance
Freight/carriage cost
Vehicle repairs and maintenance
Technical and management fees (Note 25.2)
Advertising and market promotions
General and other expenses
Cost of sales
Selling and distribution expenses
Administrative expenses
16a Revenue
Components of revenue are as follows:
Sales of goods
Revenue by geographical location of customers:
Domestic (within Nigeria)
Export (outside Nigeria)
16b other income
Sales of scraps and sundry items
Profit on disposal of fixed assets (Note 19)
Write-off of inter-company payable no longer required
dividend income from subsidiary
Group
2016
n’000
41,724,002
2,883,528
7,437,705
2,575,824
2,155,126
40,112
218,774
389,870
492,288
2,688,800
617,873
2,886,025
1,312,851
855,237
2015
n’000
45,184,957
574,509
6,617,878
2,238,223
2,044,921
36,599
169,844
270,697
483,639
2,623,161
474,640
3,252,437
1,804,263
699,280
Company
2016
n’000
2015
n’000
50,458,310
718,705
6,153,877
1,689,281
1,611,790
30,084
218,774
183,592
492,288
1,836,490
453,453
2,886,025
928,695
732,101
55,587,681
14,163
4,702,538
1,183,096
1,345,487
24,528
169,844
178,357
483,639
1,556,765
367,000
3,252,437
902,268
591,460
66,278,014
66,475,048
68,393,464
70,359,263
52,209,703
8,825,636
5,242,675
52,672,138
9,248,099
4,554,811
57,487,627
6,358,556
4,547,281
59,884,674
6,412,591
4,061,998
66,278,014
66,475,048
68,393,464
70,359,263
Group
Company
31 May 2016
31 May 2015
31 May 2016
31 May 2015
69,527,537
73,126,070
69,527,537
73,126,070
66,139,834
3,387,703
69,773,183
3,352,887
66,139,834
3,387,703
69,773,183
3,352,887
69,527,537
73,126,070
69,527,537
73,126,070
Group
Company
31 May 2016
31 May 2015
31 May 2016
31 May 2015
261,459
24,625
–
–
286,084
113,636
8,225
–
–
121,861
402,803
23,944
60,947
–
487,694
269,939
5,125
–
736,630
1,011,694
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 65
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
17 segment analysis
The chief operating decision maker has been identified as the Executive Board which comprises the five Executive Directors.
The Executive Board reviews the Group’s internal reporting in order to assess performance and allocate resources. Management has
determined the operating segments based on these reports which include an allocation of central revenue and costs as appropriate.
The Executive Board considers the business from a product perspective, with branded consumer goods and durable electrical
appliances being the reporting segments. The Executive Board assesses the performance based on operating profit before any
exceptional items.
As at May 2016
total gross segment revenue
Intersegment revenue
revenue
Segment operating profit
Depreciation (Note 4)
Interest income
Interest cost
Profit before taxation
Taxation
Profit after taxation
Property, plant and equipment
total assets
As at May 2015
total gross segment revenue
Intersegment revenue
revenue
Segment operating profit
Depreciation (Note 4)
Interest income
Interest cost
Profit before taxation
Taxation
Profit after taxation
Property, plant and equipment
total assets
entity-wide information
Breakdown of revenue is as follows:
Sales of goods
Branded
consumer
goods
Durable
electrical
appliances
45,956,946
–
23,570,591
–
45,956,946
23,570,591
1,873,712
1,998,944
8,417
853,323
1,468,233
404,821
1,375,811
156,182
457,495
–
1,679,963
613,686
1,063,412
1,066,277
25,339,722
55,540,580
1,165,202
18,889,594
Branded
consumer
goods
durable
electrical
appliances
47,116,946
–
26,009,124
–
47,116,946
26,009,124
3,946,861
1,902,031
94,802
725,981
3,527,543
1,025,940
2,704,161
142,890
429,173
14,063
3,029,271
960,087
2,501,603
2,069,184
23,997,008
48,592,125
1,220,839
18,795,789
eliminations
total
–
–
–
69,527,537
–
69,527,537
–
–
(255,656)
(255,656)
–
–
–
–
–
3,249,523
2,155,126
210,256
597,667
3,148,196
1,018,507
2,129,689
26,504,924
74,430,174
eliminations
total
–
–
–
–
–
(295,181)
(295,181)
–
–
–
–
–
73,126,070
–
73,126,070
6,651,022
2,044,921
228,794
444,863
6,556,814
1,986,027
4,570,787
25,217,847
67,387,914
2016
n’000
2015
n’000
69,527,537
73,126,070
The Group is domiciled in Nigeria. The result of its revenue from external customers in Nigeria is N66.1 billion (2015: N69.8 billion),
and the total of revenue from external customers from other countries is N3.4 billion (2015: N3.3 billion).
The total of non-current assets located in Nigeria is N26.5 billion (2015: N25.2 billion), and the total of such non-current assets
located in other countries is nil (2015: nil).
No single external customer either within Nigeria or outside of Nigeria contributes more than 10% of revenue for the year.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 66
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
18 earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the parent company by the
weighted average number of ordinary shares outstanding at the end of the reporting period.
Profit attributable to equity holders of the parent company
1,863,013
4,053,284
389,999
2,168,867
Weighted average number of ordinary shares in issue
3,970,477
3,970,477
3,970,477
3,970,477
Basic earnings per share (Naira)
0.47
1.02
0.10
0.55
Diluted EPS is the same as basic earnings per share as there are no potential dilutive Ordinary Shares or transactions.
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
19 cash generated from operating activities
Cash flows from operating activities
Profit before taxation
Adjustment to reconcile net income to cash provided:
depreciation
Profit on disposal of fixed assets
NBV of PPE transferred (from)/to related parties
NBV of PPE written-off
Excess of net assets acquired over purchase consideration
(Note 5)
Deferred tax balance inherited on merger of
PZ Power and PZ tower with the Company
Current tax balance inherited on merger of
PZ Power and PZ tower with the Company
Unclaimed dividend forfeited
Interest expense
Interest income
changes in assets and liabilities
decrease in trade and other receivables
decrease in deposit for letters of credit
Decrease/(increase) in inventories
Increase/(decrease) in trade, other payables and provisions
Cash flows from operating activities
Analysis of profit on disposal of fixed assets
Cost of assets disposed (Note 4)
Accumulated depreciation of assets disposed (Note 4)
Proceeds on disposal of assets
Profit on disposal (Note 16b)
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
notes
3,148,196
6,556,814
776,880
3,147,400
4
11
14
2,155,126
(24,625)
–
9,516
2,044,921
(8,225)
–
–
1,611,790
(23,944)
(4,561,962)
9,281
1,345,487
(5,125)
6,997
–
–
–
–
–
–
22,828
597,667
(210,256)
–
24,836
444,863
(228,794)
9,216,524
167,029
80,393
22,828
853,304
(8,417)
–
–
–
24,836
725,903
(94,802)
5,698,452
8,834,415
8,143,706
5,150,696
2,324,975
724,848
1,734,176
7,902,918
2,767,665
113,865
(720,075)
(4,057,161)
1,727,745
247,640
(1,100,520)
905,462
572,326
527,949
998,081
(2,479,844)
18,385,369
6,938,709
9,924,033
4,769,208
(225,872)
223,600
26,897
24,625
(193,023)
187,489
13,759
8,225
(201,258)
200,725
24,477
23,944
(152,741)
147,391
10,475
5,125
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016
67
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
20 Directors’ and employees’ emoluments
20.1 chairman and Directors’ emoluments:
Chairman
directors
total
As fees (as per Non-executive Directors)
Other emoluments (as per Executive Directors)
total
Group
2016
n’000
1,780
216,994
218,774
6,900
211,874
218,774
2015
n’000
1,630
168,214
169,844
8,030
161,814
169,844
Company
2016
n’000
1,780
216,994
218,774
6,900
211,874
218,774
2015
n’000
1,630
168,214
169,844
8,030
161,814
169,844
Included in other emoluments to Executive Directors is pension paid to them during the year.
20.2 number of Directors whose emoluments fell within the following ranges were:
20.2.1 executive Directors
n10,000,000 – 20,000,000
n20,000,001 – 30,000,000
n30,000,001 – 40,000,000
N40,000,001 – 50,000,000
N50,000,001 – 60,000,000
n60,000,001 – 70,000,000
directors with salaries and allowances as emoluments
20.2.2 non-executive Directors
n1,000,000 – 2,000,000
directors with fees as emoluments
directors with no emoluments
20.3 highest paid Director received
Group
Company
2016
number
2015
number
2016
number
2015
number
1
1
1
–
–
2
5
5
5
1
6
2
1
–
1
1
–
5
7
7
–
7
1
1
1
–
–
2
5
5
5
1
6
2
1
–
1
1
–
5
7
7
–
7
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
69,449
56,282
69,449
56,282
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 68
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
20 Directors’ and employees’ emoluments continued
20.4 the number of employees in receipt of emoluments excluding allowances and pension cost within the
following ranges were:
n300,001 – 400,000
N400,001 – 500,000
N500,001 – 600,000
n600,001 – 700,000
n700,001 – 800,000
n800,001 – 900,000
n900,001 – 1,000,000
n1,000,001 – 1,100,000
n1,100,001 – 1,200,000
n1,200,001 – 1,300,000
n1,300,001 – 1,400,000
N1,400,001 – 1,500,000
N1,500,001 and above
total
Group
Company
2016
number
2015
number
2016
number
2015
number
7
71
160
546
342
114
59
33
71
34
31
12
306
11
81
350
558
253
87
43
92
25
40
14
18
297
7
10
144
437
255
66
24
18
52
30
23
8
256
7
29
233
388
142
33
14
61
17
31
9
17
237
1,786
1,869
1,330
1,218
20.5 The average number of persons employed during the year and the related staff costs are as follows:
Production
Sales and distribution
administration
total
The aggregate cost of these employees was:
Wages and salaries
Pension costs – defined contribution plan
Pension costs – gratuity scheme
total
Group
Company
2016
number
1,035
609
142
1,786
2015
number
1,081
642
146
1,869
2016
number
796
404
130
1,330
2015
number
644
434
140
1,218
2016
n’000
6,933,677
196,360
307,668
2015
n’000
6,143,401
187,144
287,333
2016
n’000
5,749,932
137,932
266,013
2015
n’000
4,386,640
109,515
206,383
7,437,705
6,617,878
6,153,877
4,702,538
21 financial commitments
The Directors are of the opinion that all known liabilities and commitments, which are relevant in assessing the Group’s state
of affairs, have been taken into account in the preparation of these financial statements.
21.1 capital commitments
the table below represents capital commitments for the acquisition of property, plant and equipment not provided for in the
financial statements:
authorised and contracted
authorised but not contracted
total
Group
2016
n’000
2015
n’000
Company
2016
n’000
1,176,245
787,334
209,721
1,444,865
1,171,421
735,634
1,963,579
1,654,586
1,907,055
2015
n’000
147,851
596,824
744,675
21.2 contingent liabilities
There are legal actions against the Company pending in various courts of law. According to the lawyers acting on behalf of the
Company, the liabilities arising, if any, are not likely to be significant.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 69
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
22 technical services agreements
Amounts payable under technical services and licensing agreements are based on applicable turnover or 4% of PBT (as applicable).
The charge in these financial statements amounted to N2,886,024,980 (2015: N3,252,436,590). The amount charged is supported
by the approval of National Office for Technology Acquisition and Promotion (NOTAP) certificates 005603, 005604, 005606 and
005617. All of the certificates have a maturity profile of three (3) years from 1 June 2013 to 31 May 2016. Also included in the
technical service charge for the year is value added tax (VAT) at 5% paid on the technical service fee.
23 post-balance sheet events
A final dividend in respect of the year ended 31 May 2016 of 50 kobo per share amounting to a total dividend of N1,985,238,523
was declared at the Board meeting held on 2 August 2016. No provision for the dividend is recognised in the financial statements
for the year then ended because the dividend is recognised as a liability in the period it is approved by Shareholders.
There are no other post-balance sheet events which would have had any material effect on the statement of financial position
as at 31 May 2016 or on the profit for the year then ended.
24 export expansion grant scheme (eeG)
The Export Expansion Grant scheme (EEG) is a very vital incentive of the Federal Government of Nigeria required for the
stimulation of export-oriented activities that will lead to significant growth of the non-oil export sector. Having met the
eligibility criteria and registered under the scheme by the Nigerian Export Promotion Council (NEPC), the Group is entitled
to a rebate on export sales in as much as the Group can demonstrate that all the conditions precedent have been met.
The grant is recognised as a credit to cost of sales and as a receivable from the Government (Note 7). The related receivable
balances with respect to the EEG scheme are:
Export expansion grant receivable
Negotiable Duty Credit Certificate (NDCC)
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
1,663,117
1,663,117
1,643,658
1,643,658
297,491
297,491
271,913
271,913
Negotiable Duty Credit Certificate (NDCC): This is an instrument of the Government for settling of the EEG receivable. The NDCC
is used for the payment of import and excise duties in lieu of cash. In the last three years, the Group and other industry players
have not been able to use the certificates in the settlement of customs duties. No NDCC (physical certificates) was received
during the years ended 31 May 2016 and 31 May 2015.
With respect to the EEG receivable, the ageing analysis is as follows:
Group – 31 May 2016
Group – 31 May 2015
company – 31 May 2016
Company – 31 May 2015
eeG
≤1 year
n’000
1≥ EEG
≤ 2 years
n’000
eeG
> 2 years
n’000
total
n’000
–
445,889
1,217,228
1,663,117
445,889
521,625
695,603
1,663,117
–
445,889
1,197,769
1,643,658
445,889
521,625
676,144
1,643,658
Although a significant component of the NDCC and EEG receivables have been outstanding for more than 1 year, no impairment
charge has been made or recognised because they are regarded as sovereign debts. Moreover, the Government has not
communicated or indicated unwillingness to honour the obligations. Thus, the outstanding balances are classified as
current assets.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 70
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
25 Related party transactions
25.1 Group and company
The Group and Company are controlled by PZ Cussons (Holdings) Limited, incorporated in the UK, which owns 73.03%
(2015: 70.95%) of the Group and Company shares. The remaining 26.97% (2015: 29.05%) of the shares are widely held.
The Group’s ultimate parent is PZ Cussons (Holdings) Limited (incorporated in the UK).
All trading balances are settled in cash. There was no provision for doubtful related party receivables at 31 May 2016
(31 May 2015: nil) and no charges to the income statement in respect of doubtful related party receivables for the years
then ended.
The Company controls a number of subsidiaries. These are detailed in note 5.
25.2 transactions with related parties
purchase of goods and services
purchases of goods from subsidiaries:
– hPZ Limited
– PZ Power Company Limited
– PZ tower Limited
Transactions with subsidiaries (a)
Purchases of goods from joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company):
– PZ Cussons International Limited
Purchases of services from joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company):
– royalties – PZ Cussons International Limited
– technical fees – PZ Cussons International Limited
– Trademark – PZ Cussons International Limited
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
–
–
–
–
–
–
–
–
23,570,591
487,316
5,676,995
26,009,124
1,426,430
8,431,493
29,734,902
35,867,047
34,531,411
37,915,410
22,889,569
22,299,518
474,939
2,158,465
226,161
487,375
2,287,539
232,083
474,939
2,158,465
226,161
487,375
2,287,539
232,083
– Management fees – PZ Cussons International Limited
26,460
245,440
26,460
245,440
Transactions with joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company) (b)
total (a)+(b)
sales of goods/services and advances for purchases
Services recharged to subsidiaries:
– HPZ Limited (Subsidiary)
– PZ Tower Limited (Subsidiary)
– PZ Power Company Limited (Subsidiary)
transactions with subsidiaries
Services recharged to joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company)
Sales of goods to joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company)
Advances for purchases to joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company)
Transactions with joint ventures and subsidiaries
of PZ Cussons (Holdings) Limited (ultimate parent company)
total
2,886,025
3,252,437
2,886,025
3,252,437
37,417,436
41,167,847
25,775,594
25,551,955
37,417,436
41,167,847
55,510,496
61,419,002
–
–
–
–
–
–
2,347,076
–
28,073
2,586,547
–
49,867
2,375,149
2,636,414
1,735,114
2,126,067
1,735,114
2,126,067
709,677
595,117
–
–
14,805,773
21,739,851
11,016,662
8,987,835
17,250,564
24,461,035
12,751,776
11,113,902
17,250,564
24,461,035
15,126,925
13,750,316
Note: Transactions during the year with PZ Power Company Limited and PZ Tower Limited relates to transactions for the seven months up to 31 December 2015.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016
71
notes to the consoliDAteD finAnciAl stAteMents
For the year ended 31 May 2016 continued
Key management compensation
Key management have been determined as Directors (Executive and Non-executive) and the Chairman. Details of their
compensation is as shown in note 20. No loans were advanced to any key management during the year.
year-end balances arising from sales/purchases of goods and services
Due to:
– Subsidiaries of PZ Cussons nigeria Plc
– Joint ventures and subsidiaries of PZ Cussons (Holdings) Limited UK
total
Due from:
– Subsidiaries of PZ Cussons nigeria Plc
– Joint ventures and subsidiaries of PZ Cussons (Holdings) Limited UK
total
Group
2016
n’000
2015
n’000
Company
2016
n’000
2015
n’000
–
17,392,753
–
9,542,080
–
10,984,038
3,876,984
6,159,333
17,392,753
9,542,080
10,984,038
10,036,317
–
3,996,759
–
5,414,239
1,381,316
2,360,759
3,999,808
2,565,709
3,996,759
5,414,239
3,742,075
6,565,517
Balances arising from sales/purchases of goods and services are revolving balances settled within seven days after the end of
the month.
Included in the joint ventures and subsidiaries of PZ Cussons (Holdings) Limited UK balances are balances arising from
transactions with or due to/due from Harefield Industrial Nigeria Limited, Nutricima Limited, PZ Coolworld Limited, PZ Wilmar
Limited and PZ Wilmar Food Limited.
interest on advances from related entities
During the year, the Company and the Group obtained and gave short-term advances at 13% p.a. from and to related parties.
The advances have been fully liquidated at the 2016 and 2015 year end and they are not included in the closing balances of the
amount due to and the amount due from related parties by the Company and the Group. The advances were also drawn down
or disbursed in various amounts and they did not run throughout the 12 months of the financial year ended 2016 and 2015.
The Company and the Group incurred interest costs of N853.3 million (2015: N725.9 million) and N597.7 million (2015: N444.9
million) as well as earnings of N8.4 million (2015: N94.8 million) and N210.3 million (2015: N228.8 million) respectively on short-
term advances to related parties. All inter-company interest has been eliminated on consolidation. The uneliminated interest
income and interest expense on consolidation relates to interest earned and interest paid on transactions with other related
parties (i.e. Nutricima Limited, Harefield Industrial Nigeria Limited, PZ Coolworld Limited, PZ Wilmar Limited and PZ Wilmar Food
Limited) outside of the PZ Cussons Nigeria Plc group.
26 Dividends
Amounts recognised as dividends to ordinary shareholders in the year
final dividend for the year ended 31 May 2015 of 61 kobo (31 May 2014: 61 kobo) per ordinary share of 50 kobo
The final dividend for the year ended 31 May 2015 was paid during the year ended 31 May 2016 while the final dividend for the
year ended 31 May 2014 was paid during the year ended 31 May 2015. This is consistent with the Group’s policy of recognising
dividends as a liability in the period they are approved by the Shareholders. As disclosed in Note 23, the final dividend in respect
of the year ended 31 May 2016 of 50 kobo per share, amounting to a total dividend of N1,985,238,523, is subject to the approval
of the Shareholders at the Annual General Meeting of the Company for the year then ended. Accordingly, there is no provision
for the dividend in these financial statements. This dividend is being funded from retained earnings of N1,353,846,054 from
the 2011 financial year and retained earnings of N631,392,469 from the 2013 financial year.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 72
stAteMent of vAlue ADDeD
For the year ended 31 May 2016
turnover
other operating income
Interest income
Brought-in-materials and services:
– Imported
– Local
2016
n’000
69,527,537
286,084
210,256
(46,111,376)
(10,573,807)
Group
%
2015
n’000
%
2016
n’000
%
2015
n’000
%
Company
73,126,070
121,861
228,794
(41,499,580)
(16,312,670)
69,527,537
487,694
8,417
73,126,070
1,011,694
94,802
(47,856,948)
(12,770,849)
(46,179,132)
(18,132,107)
value added
13,338,694
100 15,664,476
100
9,395,851
100
9,921,328
100
Applied as follows:
to pay employees:
– Salaries, wages and other benefits
to pay government:
– Income and education taxes
to pay providers of capital:
– Interest cost
Retained for replacement of assets
and business growth:
– Deferred taxation
– depreciation
– non-controlling interest
– Profit attributable to equity
holders of parent company
7,437,705
56
6,617,878
42
6,153,877
65
4,702,538
47
1,228,091
9
2,448,319
16
203,570
597,667
4
444,863
3
853,304
2
9
595,268
725,903
(209,584)
2,155,126
266,676
(2)
16
2
(462,292)
2,044,921
517,503
(3)
13
3
183,311
1,611,790
–
2
17
–
383,265
1,345,487
–
1,863,013
13
4,053,284
26
389,999
4
2,168,867
13,338,694
100 15,664,476
100
9,395,851
100
9,921,328
6
7
4
14
–
22
100
Value added represents the additional wealth which the Group has been able to create by its own and its employees’ efforts.
this statement shows the allocation of that wealth to employees, government, providers of capital and the amount retained
for the future creation of more wealth.
Note: Statement of value added is not a required disclosure under IFRS.
Financial StatementsPZ Cussons Nigeria Plc Annual Report and Accounts 2016 73
FIvE yEAR FINANCIAl SummARy – GROuP
year ended 31 May
non-current assets
Current assets
total assets
equity attributable to equity holders of parent
non-controlling interest
non-current liabilities
Current liabilities
ifRs
2016
n’000
IFrS
2015
n’000
IFrS
2014
n’000
IFrS
2012
n’000
IFrS
2012
n’000
26,504,924
47,925,250
25,217,847
42,170,067
24,485,136
46,480,599
24,370,445
47,925,975
24,360,347
40,046,450
74,430,174
67,387,914
70,965,735
72,296,420
64,406,797
40,900,644
2,502,326
3,931,549
27,095,655
41,436,794
2,235,650
4,152,489
19,562,981
40,574,761
1,963,821
4,475,105
23,952,048
44,116,061
2,320,796
4,462,476
21,397,087
40,929,117
1,938,925
4,426,381
17,112,374
total equity and liabilities
74,430,174
67,387,914
70,965,735
72,296,420
64,406,797
turnover
Profit before taxation
Profit after taxation (attributable to members)
per 50k share
Earnings per share (Naira)
ifRs
2016
n’000
IFrS
2015
n’000
IFrS
2014
n’000
IFrS
2013
n’000
IFrS
2012
n’000
69,527,537
3,148,196
1,863,013
73,126,070
6,556,814
4,053,284
72,905,679
6,949,985
4,591,399
71,343,088
7,650,265
4,875,040
72,154,601
4,306,863
2,410,498
0.47
1.02
1.16
1.23
0.61
Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the parent company by the
weighted average number of Ordinary Shares outstanding at the end of the reporting period.
Note: The five year financial summary is not a required disclosure under IFRS.
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 74
shAReholDeRs’ infoRMAtion
Share Certificates Issued
date issued
Basis
dividends declared
in the last 12 years
year to 31 May Payment number
13 november 1973
19 november 1974
6 april 1976
7 February 1977
28 october 1977
31 March 1978
23 december 1980
21 december 1981
17 January 1983
16 december 1988
31 december 1990
31 december 1991
28 november 1992
25 November 1993
24 november 1994
23 November 1995
19 February 1997
4 September 2000
25 November 2002
18 november 2004
28 March 2006
20 September 2007
15 September 2011
Bonus of 1 for 4
Bonus of 1 for 5
1 aIL for 1 PZnL share
Bonus of 1 for 2
Public issue for cash
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
Bonus of 1 for 4
rights issue for cash
Bonus of 1 for 5
Bonus of 1 for 4
rights issue for cash
Bonus of 1 for 4
Bonus of 1 for 4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
35
36
37
38
39
40
41
42
43
44
45
46
forfeiture of unclaimed dividend
Under section 385 of the Companies and Allied Matters Act, dividends are special debt due to and recoverable by Shareholders
within 12 years. Dividends declared up to 31 May 2003 and payable from 2004 (dividend number 34) which remained unclaimed
will therefore cease to be recoverable by this year (2016/2017). This unclaimed dividend will be credited to the general reserves
in 2016/2017. The dividend payment and value of unclaimed dividend in this category are as follows:
dividend number
dividend number 34
Value
N33,548,268
Other InformationPZ Cussons Nigeria Plc Annual Report and Accounts 2016 75
shARe cApitAl histoRy
For the year ended 31 May 2016
The Company was incorporated with an authorised share capital of £40,000 of Ordinary Shares of £1 each. The Company
became a public limited liability company and had its shares subdivided into Ordinary Shares of 50 kobo each on 19 July 1972,
after which its shares were quoted on the Exchange in the same year.
The following changes have since taken place in the Company’s authorised capital:
£60,000 to
£150,000 to
£350,000 to
£400,000 to
£100,000 in shares of £1
£250,000 in shares of £1
£600,000 in shares of £1
£1,000,000 in shares of £1
On 27 April 1951 by
On January 1968 by
on 14 May 1970 by
on 9 February 1971 by
On 19 July 1972, the shares of £1 each were subdivided into 4 shares of 5/- each. At that date, the capital of the Company was
£1,000,000 in 4,000,000 Ordinary Shares of 5/- each.
on 12 november 1973 by
on 18 november 1974 by
On 8 January 1976 by
on 24 november 1976 by
on 13 april 1977 by
on 17 March 1978 by
on 26 november 1980 by
on 24 november 1981 by
on 23 november 1982 by
on 24 november 1988 by
on 23 november 1989 by
on 22 november 1990 by
on 24 november 1994 by
On 23 November 1995 by
on 21 november 1996 by
on 16 november 2000 by
on 31 october 2002 by
on 21 october 2004 by
on 20 September 2007 by
On 15 September 2011 by
N500,000 to
N500,000 to
N2,500,000 to
N2,500,000 to
n4,000,000 to
n3,000,000 to
N3,500,000 to
N5,000,000 to
N5,500,000 to
n11,000,000 to
N35,000,000 to
N75,000,000 to
N135,000,000 to
N265,000,000 to
n300,000,000 to
N150,000,000 to
N250,000,000 to
n100,000,000 to
n100,000,000 to
n400,000,000 to
N2,500,000
n3,000,000
N5,500,000
N5,500,000
n12,000,000
N15,000,000
N18,500,000
N23,500,000
n29,000,000
n40,000,000
N75,000,000
N150,000,000
N285,000,000
N550,000,000
N850,000,000
n1,000,000,000
N1,250,000,000
N1,500,000,000
n1,600,000,000
n2,000,000,000
PZ Cussons Nigeria Plc Annual Report and Accounts 2016 76
notice of MeetinG
notICe IS hereBy GIVen that the 68th annual General Meeting of PZ Cussons nigeria Plc will be held at transcorp hilton,
Abuja on Thursday 6 October 2016 at 11.00 am for the following purposes:
ordinary business
1. To lay before the members the Report of the Directors, the Consolidated Statement of Financial Position of the Company and
of the Group as at 31 May 2016 together with the Consolidated Statement of Comprehensive Income for the year ended on
that date and the reports of the auditors and the Audit Committee thereon.
2. To declare a dividend.
3. To elect Directors:
a) to elect Mr dahiru Muhammad as a director
b) to re-elect Mr tunde oyelola as a director
c) To re-elect Ms Joyce Folake Coker as a Director
d) To re-elect Mr Paul Usoro, SAN as a Director.
4. To authorise the Directors to fix the remuneration of the auditors.
5. To elect members of the Audit Committee.
special business
6. To approve the remuneration of the Directors.
7. To authorise the Company to procure goods and services necessary for its operations from related third parties.
By order oF the Board
Rotimi Alade
company secretary
FRC/2013/NBA/00000004100
45/47, Town Planning Way
Ilupeju Industrial Estate
Lagos
2 august 2016
proxy
a member of the Company entitled to attend and
vote at the meeting is entitled to appoint a proxy
to attend and vote in his/her place and such proxy
need not be a member of the Company. A proxy
form is enclosed and if it is to be valid for the
meeting, it must be completed and deposited at
the registered office of the Company not less than
48 hours before the time of the meeting.
Dividend warrants
If the dividend recommended by the directors
is approved, dividend warrants will be posted
on Friday, 7 October 2016 to Shareholders whose
names are on the register of Members on Friday,
16 September 2016.
closure of Register
The Register of Members and Transfer Books of the
Company will be closed from Monday 19 September
to Friday 23 September 2016 (both dates inclusive)
for the purpose of updating the register of members.
Audit committee
the audit Committee consists of three
representatives of the Shareholders and three
representatives of the Directors. Any member
may nominate a Shareholder as a member of
the Committee by giving notice in writing of such
nomination to reach the Company Secretary at
least 21 days before the Annual General Meeting.
nominators should bear in mind that the Code
of Corporate Governance requires the Board to
ensure the constitution of a suitably skilled Audit
Committee. Accordingly the nominees should
have basic financial literacy and be able to
interpret financial statements
unclaimed dividend warrants
and share certificates
Shareholders are hereby informed that several
dividend warrants and share certificates remain
unclaimed. Some dividend warrants have not
been presented to the bank for payment or to the
Registrar for revalidation. A list of such members has
been circulated with the Annual Report. Affected
members are advised to contact the Registrars.
e-dividend/bonus
Pursuant to the directive of the Securities and
Exchange Commission members are Hereby advised
to open bank accounts, stock broking accounts and
CSCS accounts for the purpose of the payment of
e-dividend/bonus. Relevant forms are attached to
this annual report for completion to furnish the
particulars of these accounts to the Registrar.
Rights of shareholders to ask questions
Pursuant to Rule 19.12 (c) of the Nigerian Stock
Exchange Rulebook 2015, shareholders have the
right to ask questions not only at the Meeting,
but also in writing prior to the Meeting, and such
questions shall be submitted to the Company
Secretary not later than two weeks before the
date of the meeting.
Other InformationPZ Cussons Nigeria Plc Annual Report and Accounts 2016
shAReholDeRs’ ADMission foRM
Please admit Shareholder .................................................................................................................................................................................................
Or in his/her place Mr/Mrs/Miss ......................................................................................................................................................................................
To represent him/her at the 68th Annual General Meeting of this Company to be held at 11.00 am on Thursday, 6 October 2016
at Transcorp Hilton, Abuja, F.C.T.
this foRM shoulD Be coMpleteD, toRn off, AnD pRoDuceD By the shAReholDeR oR his/heR noMinee in
oRDeR to GAin entRAnce to the MeetinG.
Rotimi Alade
company secretary
pRoxy foRM
please tear off and complete
I/We ............................................................................................................
Resolution **
For
against
of .................................................................................................................
......................................................................................................................
Being a member/members of PZ CUSSONS NIGERIA PLC
Hereby appoint*
......................................................................................................................
1. To receive the report and accounts
2. To declare a dividend
3. a) To elect Mr D. Muhammad as a director
b) To re-elect Mr T. Oyelola as a director
c) To re-elect Ms J.F. Coker as a director
d) To re-elect Mr P. Usoro, SAN as a director
4. To authorise the Directors to fix the
remuneration of the auditors
5. To elect members of the Audit Committee
6. To approve the remuneration
of .................................................................................................................
of the directors
or failing him/her, the Chairman of the meeting as my/our
proxy to act and vote for me/us and on my/our behalf at
the 68th annual General Meeting of the Company to be
held at 11.00 am on Thursday 6 October 2016 and of any
adjournment thereof.
As witness my/our hands(s) this ....... day of ............................2016
Signed: .......................................................................................................
7. To authorise the Company to procure goods
and services for its operations from related
third parties
** Please indicate with an ‘X’ in the appropriate space how you wish your votes
to be cast on the resolutions set out above. Unless otherwise instructed, the
proxy will vote or abstain at his/her discretion.
NOTE: (i)
THIS PROXY FORM SHOULD NOT BE COMPLETED AND RETURNED IF THE MEMBER IS ATTENDING THE MEETING.
(ii) A member entitled to attend and vote at the general meeting is entitled to and may, if he/she wishes appoint a proxy to act for him/her. All proxy forms
must be deposited at the registered office of the Company shown overleaf not less than 48 hours before the time for holding the meeting.
A proxy need not be a member of the Company.
(iii) The Chairman of the meeting has been printed on the form to ensure that someone will be at the meeting to act as your proxy but if you wish you may
appoint anyone else instead, by entering the person’s name in the blank space (marked *) above.
(iv) In the case of joint Shareholders, any Shareholder may complete the form but the names of all joint Shareholders must be stated.
(v) It is a requirement of the law under the Stamp Duties Act, Cap. 411 Laws of the Federation of Nigeria, 1990 that any instrument of proxy to be used
for the purpose of voting by any person entitled to vote at any meeting of Shareholders must be duly stamped by the Commissioner of Stamp Duties.
(vi) If the Shareholder is a corporation this form must be under its common seal or under the hand of some officer or attorney duly authorised in that behalf.
the company secretary
pZ cussons nigeria plc
45/47 town planning way
ilupeju industrial estate
p.M.B. 21132
ikeja
E-bONuS mANDATE FORm
Please credit my account at the Central Securities Clearing System Limited (CSCS) with all subsequent allotments and bonuses
due to me from holdings in PZ Cussons.
instructions
Please fill in the form and return to the address below.
the Registrar
first Registrars nigeria limited
plot 2, Abebe village Road
iganmu
p.M.B. 12692 lagos
nigeria
shareholder Account information
Surname
address
City
Country
First name
other names
State
Postal code
Mobile telephone
email address
Signature
Corporate seal
cscs details
Authorised signature and stamp of stockbroker
please attach a copy of your cscs statement to this form as evidence that a cscs account has been opened for you.
the Registrar
first Registrars nigeria limited
plot 2, Abebe village Road
iganmu
p.M.B. 12692 lagos
nigeria
E-DIvIDEND mANDATE FORm
instructions
Please complete the form and return to the address below:
only clearing banks are acceptable
the Registrar
first Registrars nigeria limited
plot 2 Abebe village Road
iganmu
p.M.B. 12692 lagos
nigeria
We hereby request that from now on, all my/our dividend warrant(s) due to me/us from my/our holdings in PZ Cussons Nigeria Plc
be paid directly to my/our bank account details named below:
Bank name
Bank address
Bank account number
shareholder account information
Surname
address
City
Country
First name
other names
State
Postal code
Mobile telephone
email address
Signature
Joint/Company’s signature
Corporate seal
Sort code (very important)
Authorised signature and stamp of stockbroker
the Registrar
first Registrars nigeria limited
plot 2, Abebe village Road
iganmu
p.M.B. 12692 lagos
nigeria
If you have finished reading this report and no longer wish to retain it,
please pass it on to other interested readers, or recycle it. Thank you.
This Annual Report and Accounts is available at www.pzcussons.com.ng
Designed and produced by Instinctif Partners www.creative.instinctif.com
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PZ Cussons Nigeria Plc
45/47 Town Planning Way
Ilupeju Industrial Estate
P.M.B. 21132
Ikeja
www.pzcussons.com.ng