nigerian aviation handling company plc lagos, nigeria · to equity holders of the parent 199,625...

NIGERIAN AVIATION HANDLING COMPANY PLC Lagos, Nigeria

CONSOLIDATED AND SEPARATE AUDITED FINANCIAL STATEMENTSAND

OTHER NATIONAL DISCLOSURES FOR THE YEAR ENDED 31 DECEMBER 2018

NIGERIAN AVIATION HANDLING COMPANY PLC

FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018

Contents Page

Corporate Information 3

Report of the Directors 4

Corporate Governance Report 10

Statement of Directors’ Responsibilities 16

Report of the Audit Committee 17

Independent Auditors’ Report 18

Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income 23

Consolidated and Separate Statements of Financial Position 24

Consolidated Statements of Changes in Equity 26

Separate Statements of Changes in Equity 28

Consolidated and Separate Statements of Cash flows 29

Notes to the Consolidated and Separate Financial Statements 31

Other National Disclosures:

Value Added Statement 95

Five-Year Financial Summary 96

3


CORPORATE INFORMATION

Directors

Chairman Arc. Usman Arabi Bello (Resigned 25 October 2018)Mr Seinde Oladapo Fadeni (Appointed 25 October 2018)

Group Managing Director Mrs. Olatokunbo Adenike Fagbemi (Appointed 20 December 2018)(Appointed Non-Executive Director – 15 August 2018)

Managing Director/CEO Mr. Idris Yakubu (Resigned 20 December 2018)

Executive Director Mrs. Folashade Ode (Resigned 13 July 2018)Mr. Olumuyiwa Augustus Olumekun (Appointed 11 February 2019)

Non-Executive Directors Mr. Denis Hasdenteufel – French (Resigned 19 July 2018) Mr. Ahmed Tijjani Uwais (Resigned 25 October 2018)

Mr. Christopher Oshiafi (Resigned 11 July 2018)Mr. Femi Olubanwo (Resigned 10 July 2018)Mr. Solomon Adeusi (Resigned 28 December 2018)Sir. Sunday Nnamdi Nwosu, KSSEngr. Mohammed Gambo Umar mni (Appointed 19 July 2018)Mr. Akinwumi Godson Fanimokun (Appointed 19 July 2018)Mr. Taofeeq Oluwatoyin Salman (Appointed 25 October 2018)Engr. Sholagbade Olukayode Alabi (Appointed 29 January 2019)Mr. Tajudeen Moyosola Shobayo (Appointed 29 January 2019)

Independent Director Ms. Hadiza Aliko Mohammed (Resigned 14 December 2018)

Company Secretary Dikko & Mahmoud (Solicitors & Advocates)4th Floor, Abia HouseOff Ahmadu Bello Way, Central Business District,Abuja, FCT

Registered Office nahco aviance HouseMurtala Muhammed International AirportIkeja,Lagos

Auditors Ernst & Young10th & 13th Floors, UBA House57 Marina, Lagos.

Bankers Citibank Nigeria LtdEcobank Nigeria LimitedFidelity Bank PlcFirst Bank of Nigeria LtdGT Bank PlcPolaris Bank LimitedStanbic IBTC Bank PlcZenith Bank Plc

Registrars Cardinal Stone Registrars Limited358, Herbert Macaulay WayYaba, LagosP. O. Box 9117 Lagos, Nigeria

RC No. 30954

4


REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2018

The directors are pleased to present to the members of the Group their Report and Audited FinancialStatements for the year ended 31st December, 2018, which is in compliance with the International FinancialReporting Standards (IFRS).

Principal activitiesThe principal activity of the Group is the provision of services including aircraft handling, cargo handling,passenger handling, passenger profiling, crew transportation, energy and power distribution and leasingof ground handling equipment.

Significant eventsThe former MD/CEO Mr Idris Yakubu resigned his appointment during the year, and Mrs. OlatokunboFagbemi was appointed as Group MD/CEO within the year.

Review of businessThe review of the Group’s business and future prospects contained in the Chairman’s statement are anintegral part of the Directors Report and should be read in conjunction with the Directors Report.

Results for the yearGroup Company Group Company2018 2018 2017 2017

N‘000 N‘000 N‘000 N‘000

Revenue 9,825,279 9,157,680 7,926,152 7,565,763========== ========== ========== ==========

Profit for the year before taxation 503,237 299,754 600,011 509,563Taxation for the year (306,443) (290,048) 175,756 178,339

-------------- ------------- ------------ -------------Profit for the year after taxation 196,794 9,706 775,767 687,902Non-controlling interest 2,831 - 4,295 -

-------------- ----------- -------------- --------------Retained profit for the year attributableto equity holders of the parent 199,625 9,706 780,062 687,902

========= ======= ========= =========

DividendThe directors will propose a gross dividend of 25 kobo per ordinary share of 50 kobo each amounting to₦ 406million, to the members at the Annual General Meeting for approval.

5


REPORT OF THE DIRECTORS – Continued


DirectorsThe directors who served on the Board during the year under review and up till the date of signing this financialstatement are:

Arc. Usman Arabi Bello (Resigned 25 October 2018)Mr Seinde Oladapo Fadeni (Appointed 25 October 2018)Mrs. Olatokunbo Adenike Fagbemi (Appointed 20 December 2018)Mr. Idris Yakubu (Resigned 20 December 2018)Mrs. Folashade Ode (Resigned 13 July 2018)Mr. Olumuyiwa Augustus Olumekun (Appointed 11 February 2019)Mr. Denis Hasdenteufel – French (Resigned 19 July 2018)Mr. Ahmed Tijjani Uwais (Resigned 25 October 2018)Mr. Christopher Oshiafi (Resigned 11 July 2018)Mr. Femi Olubanwo (Resigned 10 July 2018)Mr. Solomon Adeusi (Resigned 28 December 2018)Sir. Sunday Nnamdi Nwosu, KSSEngr. Mohammed Gambo Umar mni (Appointed 19 July 2018)Mr. Akinwumi Godson Fanimokun (Appointed 19 July 2018)Mr. Taofeeq Oluwatoyin Salman (Appointed 25 October 2018)Engr. Sholagbade Olukayode Alabi (Appointed 29 January 2019)Mr. Tajudeen Moyosola Shobayo (Appointed 29 January 2019)Ms. Hadiza Aliko Mohammed (Resigned 14 December 2018)

Director’s electionIn accordance with Article 85 of the Articles of Association and provisions of the Companies and Allied MattersAct, CAP 20, LFN, 2014, Mrs. Olatokunbo Adenike Fagbemi, Mr. Seinde Oladapo Fadeni, Mr. TaofeeqOluwatoyin Salman, Mr. Tajudeen Moyosola Shobayo, Engr. Sholagbade Olukayode Alabi and Mr. OlumuyiwaAugustus Olumekun having been appointed since the last Annual General Meeting and being eligible offerthemselves for election. The profiles of the Directors for election are contained in the 2018 Annual Report andcan also be accessed on the Group’s website: www.nahcoaviance.com.

Re-election of DirectorsIn accordance with Article 107 – 109 of the Articles of Association and provisions of the Companies and AlliedMatters Act, CAP 20, LFN, 2014, Sir Sunday Nnamdi Nwosu, KSS, Mr. Akinwumi Godson Fanimokun and Engr.Mohammed Gambo Umar, mni, are the Directors retiring by rotation and being eligible offer themselves for re-election. The profiles of the Directors for re-election are contained in the 2018 Annual Report and can also beaccessed on the Group’s website: www.nahcoaviance.com.

Directors’ interestThe direct and indirect interests of the Directors in the issued share capital of the Group as recorded in theRegister of Directors’ shareholdings and/or notified by them for the purpose of Sections 275 of the Companiesand Allied Matters Act, CAP C20, LFN 2004 were as follows:

6




Directors’ Shareholding:

Name No of Shares No of Shares No of Shares31 December 31 December 28 February

2017 2018 2019Mr. Femi Olubanwo - Direct 2,970 - - '- Indirect (Rosehill Group Ltd) 154,647,970 - -Mr. Denis Hasdenteufel - Indirect 94,436,717 - - (Air France)Arc. Usman Bello 46,405 - -Mr. Ahmed Uwais- Direct 168,617 - -- Indirect (Sycor Private Investment Ltd) 145,019,530 - -Mrs. Olatokunbo Fagbemi - 66,000 66,000

Mr. Solomon Adeusi – Indirect - - -(Lufthansa Commercial Holding GmbH) 97,453,125 - -Mr. Christopher Oshiafi 5,621,000 - -Ms. Hadiza Aliko Mohammed 1,855 - -Mr. Idris Yakubu 2,970 - -Mrs Folashade Ode 351,535 - -

Sir Sunday Nnamdi Nwosu - 137,715 137,715Mr. Akinwumi Godson Fanimokun - 100,000 100,000Mr. Seinde Fadeni Oladapo- Indirect(Godsmart Nigeria Limited) - 437,731,927 437,731,927Mr. Tajudeen Moyosola Shobayo - - 72,576Mr. Taofeeq Oluwatoyin Salman - - -Engr. Sholagbade Olukayode Alabi - - -- Direct - - -- Indirect (White Cowry Industries Limited) - 113,426,267 113,426,267Engr. Mohammed Gambo Umar - - -Mr Olumuyiwa Augustus Olumekun - - -

None of the Directors notified the Company for the purposes of section 277 of the Companies and AlliedMatters Act, CAP C20, LFN 2004, to the effect that they were members or held some specified interests whichcould be regarded as interested in any contracts with which the Company was involved during the year underreview.

7




Related partyThe Group carries out business for Airlines, some of whom are founder transactions shareholders of the Group.However, in line with Group policy, transactions are carried out at arm’s length basis.

ShareholdingThe registrars have advised that the called up and fully paid shares of the Company as at 31st December 2018were beneficially held as follows:

Share Range Analysis:

31 December 2018 28 February 2019Range No of Holders No of Units % No of Holders No of Units %1 - 10,000 62,789 129,314,273 7.96 63,381 129,189,557 7.9510,001 - 100,000 7,880 231,724,652 14.27 8,125 233,023,146 14.35100,001 - 1,000,000 939 223,795,521 13.78 981 223,554,746 13.761,000,001 - 10,000,000 85 202,525,972 12.47 82 203,592,969 12.5310,000,001 - 100,000,000 11 381,011,624 23.46 11 379,011,624 23.34100,000,001 - 500,000,000 2 455,846,708 28.06 3 455,846,708 28.07Grand Total 71,706 1,624,218,750 100 72,583 1,624,218,750 100

Godsmart Nigeria Limited is represented on the board by Mr. Seinde Oladapo Fadeni, Engr MuhammedGambo Umar, Mr. Akinwumi Godson Fanimokun and Tajudeen Moyosola Shobayo, White CowryIndustries Limited is represented by Engr. Sholagbade Olukayode Alabi.

The following shareholders held more than 5% of the issued share capital:

31 December 2018 28 February 2019Godsmart Nigeria Limited 26.95% 26.95%Awhua Resources Limited 7.13% 7.13%White Cowry Industries Limited 6.98% 6.98%

Acquisition of own shareThe group did not acquire any of its shares during the year.

Audit committeePursuant to Section 359(3) of the Companies and Allied Matters Act CAP C20 LFN 2004, the Company hasan audit committee comprising of Directors and Shareholders. The report of the Audit Committee is includedin the financial statements and their function is laid out in Section 359(6) of the Companies and Allied MattersAct CAP C20, LFN 2004.

8




SHAREHOLDERS’ INFORMATION

Share Capital History

DATE

AUTHORIZEDSHARE

CAPITALINCREASED

FROM (N)

AUTHORIZEDSHARE CAPITAL

INCREASEDTO (N)

ISSUEDSHARE

CAPITALINCREASED

FROM (N)

ISSUED SHARECAPITAL

INCREASEDTO (N) CONSIDERATIO

N25 May 2007 150,000,000 500,000,000 150,000,000 375,000,000 BONUS (3:2)25 May 2007 - 500,000,000 375,000,000 392,500,000 RIGHTS25 May 2007 - 500,000,000 392,500,000 437,500,000 PUBLIC OFFER09 May 2008 - 500,000,000 437,500,000 492,187,500 BONUS (1:8)21 August 2009 500,000,000 750,000,000 - 492,187,500 -21 August 2009 - 492,187,500 615,234,375 BONUS (1:4)

7 June 2012-- - 615,234,375 738,281,250 BONUS (1:5)

11 June 2015 750,000,000 1,500,000,000 738,281,250 812,109,375 BONUS (1:10)

DonationsThe group made donations and gifts as detailed below during the year (2017: Nil)

N’000Nigerian Institute of Public Relations 500Association of Foreign Airlines & Reps in Nigeria 2,700Lagos Country Club 100Rotary Club of Maryland 250Kaduna Polo Club 1,000

---------4,550

======

The group did not make any donation or gift to any political party, political association or for any politicalpurpose in the course of the year under review.

Unclaimed dividendShareholders who are yet to receive their dividend are advised to contact the Registrar, Cardinal StoneRegistrars, 358, Herbert Macaulay Way, Yaba Lagos.

Physically challenged personsIt is the Group’s policy not to discriminate against physically challenged persons.

9




Employees Health, Safety and WelfareHealth and Safety Regulations are in force within the Group for the benefit of all employees. A staff clinic ismaintained and in addition the Company has made arrangements with private hospitals and clinics for thetreatment of employees on referral basis. Also, the Group has a dedicated unit for Health, Safety Environmentand Quality in line with standard policy applicable to aviation industry.

Employees’ trainingsThis is carried out at various levels within the Group through internal and external trainings.

AuditorsThe auditors, Ernst & Young having indicated their willingness, will continue in office as the Group’s auditorsin accordance with Section 357 (2) of the Companies and Allied Matter Act, CAP C20, Laws of the Federationof Nigeria 2004.

By Order of the Board

Bello A. AbdullahiDikko & Mahmoud (Solicitors & Advocates)FRC/2013/ NBA/00000002301Company Secretary16 April 2019

10


CORPORATE GOVERNANCE REPORT

Corporate Governance

Nigerian Aviation Handling Company Plc is committed to observing high standards of corporategovernance. The Board of Directors recognises the importance of applying best corporate governanceprinciples, its valuable contribution to long term business prosperity and accountability to its shareholders.Consequently, the Company has undertaken to create the institutional framework conducive to defendingthe integrity of our directors and is convinced that, on account of this, the Board of “nahco aviance” isfunctioning in a highly effective manner. The Board will continue to challenge itself to improve the standardin areas where the need for improvement is identified.

Governance Structure

The BoardThe Board comprises ten (10) Directors, made up of eight (8) non-Executive and two (2) ExecutiveDirectors. The Board is responsible to shareholders for creating and delivering sustainable value throughits general supervision of the Group’s business. The positions of the Chairman and the Chief ExecutiveOfficer are held by different persons, in order to avoid undue concentration of power. The chairman isresponsible for the leadership of the Board and creating the conditions for overall effectiveness of theindividual Directors and the Board in general. All of the Directors bring various and varied competenciesto bear on all Board decisions. Each individual Director has the experience, knowledge, qualifications,expertise and integrity that is necessary to effectively discharge the duties of the Board of Directors. TheBoard meets regularly and is responsible for effective control and monitoring of the Group’s strategy.

The Board has established a number of committees to assist it in the discharge of its responsibilities. TheGroup has established the Board Charter and the Board Committees Charters. The Board and theCommittees Charters spell out the responsibilities, appointment, terms of references, composition, andthe review of the charter among other things.

During the year under review, the Board met at various times to provide strategic directions, policy andleadership in attaining the objectives of the Group.

The Board monitors the activities of the Executive Management and the accomplishment of set objectivesthrough reports at its meetings.

Relationship with ShareholdersAs a deliberate policy, nahco aviance maintains an effective and candid communication with itsshareholders which enables them to understand the Group’s business, financial conditions and operatingperformance and trends. The Board places considerable importance on effective communication with itsshareholders as it recognises the importance of ensuring an appropriate balance in meeting their needs.The group strives at all times to build enduring relationships with the shareholders. The Board ensures thatshareholders receive prior notice of meetings and that all other statutory notices and information arecommunicated regularly. Shareholders can freely communicate their thoughts and recommendationswhenever they feel the need to do so by contacting the Company Secretary or the Group ManagingDirector/CEO.

12


CORPORATE GOVERNANCE REPORT - Continued

Risk, Investment and Compliance CommitteeThe Committee was chaired by a non-executive director and was made up of Five (5) other non-executivedirectors and one (1) executive director.

The terms of reference include:(a) Stay informed on a timely basis about the Company’s financial status.

(b) As appropriate, review and recommend to the Board, key financial policy matters, overseedevelopment of the budget, financial reporting, its policies and processes.

(c) To review and recommend to the Board the strategic planning processed, long term objectives andstrategic plan along with specific business and marketing plans of the Company.

(d) To support Management on the redefinition of market and support management in seeking new waysof being innovative by updating traditional ways of doing business and adding new ones.

(e) Oversee the strategic direction of the Company’s innovation and product development programmes,to ensure alignment with the Company’s overall corporate strategy.

(f) To review Management submission of capital project as approved by the Board.

(g) To review and make recommendation to the Board on capital project which are beyond the scope ofapproval limit of Management.

(h) To review Management proposal on the purchase of Ground Support Equipment (GSE) in line with theCompany’s strategic plan.

Governance and Remuneration CommitteeThe committee was chaired by a non-executive director and made up of four (4) other non-executivedirectors.

The terms of reference include:(a) To establish and review on regular basis, the existence of an appropriate code of conduct which

focuses on leadership policies and general behaviour within the Company.

(b) Oversees the Board’s performance evaluation process.

(c) Access he effectiveness of the Board of Directors as a whole.

(d) Oversees the compliance of all the Company’s committees with the Company’s CorporateGovernance policies and standards.

(e) To make recommendation on the composition of the Board and define the criteria and theprocedure for the appointment of Directors to the Board.

(f) To conduct evaluation competency on the appointment of non-executive directors and thesenior management.

13


CORPORATE GOVERNANCE REPORT - Continued

Governance and Remuneration Committee – Continued

(g) Ensures the Company’s remuneration policies and practices support recruitment, developmentand retention of Executive Directors and senior management and recommend remunerationand promotion of executives and senior management.

MEETINGS HELD BY COMMITTEES

Risk, Investment and Compliance Committee met seven (7) times during the 2018 financial year. Themeetings were held on 17 January, 28 March, 26 April, 19 July, 15 October, 13 November and 19December 2018.

Directors DesignationNumber ofMeetings

DuringTenure

Number ofMeetingsAttended

Mr. Christopher Oshiafi Chairman (Resigned 11 July2018)

3 3

Mr. Ahmed Tijjani Uwais Vice Chairman (Resigned 25October 2018)

5 5

Mr. Solomon Adeusi Non-Executive (Resigned 28December 2018)

7 7

Mr. Denis Hasdenteufel Non-Executive (Resigned 19July 2018)

3 2

Sir Sunday Nnamdi Nwosu Non-Executive 7 7Mr. Idris Yakubu Managing Director (Resigned

20 December 2018)7 7

Mr. Akinwumi GodsonFanimokun

Non-Executive (Appointed 15August 2018)

3 3

Mrs Olatokunbo AdenikeFagbemi

Non-executive (Appointed 15August 2018)

3 3

Governance and Remuneration Committee met seven (7) times during the 2018 financial year. Themeetings were held on 18 January, 25 January, 28 February, 29 June, 15 August, 8 October and 14December, 2018.


DuringTenure


Ms. Hadiza Aliko Mohammed Chairman (Resigned 14December 2018)

7 7

Mr. Ahmed Tijjani Uwais Vice Chairman(Resigned 25 October 2018)

6 6

Mr. Solomon Adeusi Non-Executive(Resigned 28 December 2018)

7 4

Mr. Femi Olubanwo Non-Executive(Resigned 10 July 2018)

4 3

Engr. Mohammed Gambo Umar Non-Executive (Appointed 15August 2018)

3 3

14


CORPORATE GOVERNANCE REPORT - continued

The Audit CommitteeThe Audit Committee was composed of six members made up of three representatives of the Shareholderselected at the 2017 Annual General meeting held on 20th July, 2018 for a tenure of one year till theconclusion of the 2018 Annual General Meeting; and three representatives of the Board of Directorsnominated by the Board.

Two of the representatives of the Board of Directors, Messrs Hadiza Aliko Mohammed (Resigned 14December 2018) and Ahmed Uwais (Resigned 19 July 2018) resigned and were replaced by Mr. TaofeeqO. Salman (Appointed 14 December 2018) and Sir Sunday Nnamdi Nwosu (Appointed 19 July 2018).

The terms of reference include as provided in section 359 (6) of the Companies and Allied Matters Act CAPC20 Laws of the Federation of Nigeria, 2004.

1. Ascertains whether the accounting and reporting policies of the Company are in accordance withlegal requirements and agreed ethical practices;

2. Reviews the scope and planning of audit requirements;

3. Reviews the findings on management matters in conjunction with the external auditor anddepartmental responses thereon;

4. Keeps under review the effectiveness of the Company’s system of accounting and internal control;

5. Makes recommendations to the Board with regard to the appointment, removal and remunerationof the external auditors of the Company; and

6. Authorises the internal auditor to carry out investigations into any activities of the Company whichmay be of interest or concern to the Committee.

Audit Committee met six (6) times during the 2018 financial year. The meetings were held on 26 January,28 March, 20 April, 16 July, 15 October and 7 November, 2018.


DuringTenure


Engr. Mohammed Gambo Umar (mni) Chairman 6 6Dr. Okpan Awa Erem Member 6 6Mrs Olabisi Bakare Member 6 6Mr. Ahmed Tijjani Uwais Non-Executive (Resigned

25 October 2018)5 5

Ms. Hadiza Aliko Mohammed Non-Executive (Resigned14 December 2018)

6 5

Mr. Femi Olubanwo Non-Executive (Resigned10 July 2018)

3 3

Sir. Sunday Nnamdi Nwosu Non-Executive (Appointed27 April 2018)

3 3

Mr. Taofeeq Oluwatoyin Salman Non-Executive (Appointed25 October 2018)

1 1

15


CORPORATE GOVERNANCE REPORT - continued

Complaint Management PolicyThe Board approved the Complaint Management Policy pursuant to the Rules of the Securities & ExchangeCommission (“SEC”) on the Complaints Management Framework of the Nigerian Capital Market(“Framework”) released on 16 February 2015 and also on the directive of the Nigerian Stock Exchange(“The NSE”) contained in its circular No. NSE/LARD/LIR6/15/04/22 issued on 22 April 2015 to all listedCompanies. The policy is published on the Company’s website.

Insider TradingThe Board approved an Insider Trading Policy which is compliant with the provisions of Section 14 of theAmended Listing Rules of the Nigerian Stock Exchange. The Policy applies to all Directors, AuditCommittee, Employees of the Company and any other person in possession of insider information fromdealing with the Company’s shares during the Non-Authorised Trading Periods. The Company’s Directors,Audit Committee and employees are therefore notified and prohibited from dealing in the Company’sshares during the Non-Authorised Trading Periods, in accordance with the Investment and Securities Act,2007, the Post Listing Rules of the Nigerian Stock Exchange and the Company’s policy on Insider Trading,published on the Company’s website.

17


REPORT OF THE AUDIT COMMITTEE


In accordance with the provision of Section 359(6) of the Companies and Allied Matters Act, CAP C20,Laws of Federation of Nigeria 2004, members of the Audit Committee of Nigerian Aviation HandlingCompany Plc report as follows:-

We have exercised our statutory functions under section 359(6) of the Companies and Allied Matter Act,CAP C20, Laws of the Federation of Nigeria 2004, and we acknowledge the co-operation of themanagement and staff in the conduct of these responsibilities.

We confirm that:

1. The accounting and reporting policies of the Group are consistent with legal requirements andagreed ethical practices.

2. The scope and planning of the external audit are in our opinion adequate.3. The internal control system was in order.4. The Independent Auditors’ Management Letter Comments were satisfactorily dealt with by the

Management.5. We have reviewed the consolidated and separate audited financial statements prior to the Board’s

approval.

Dr Okpan Awa EremMember, Audit CommitteeFRC/2014/NIM/00000008663

16 April 2019

MEMBERS OF THE AUDIT COMMITTEE

Mr. Mohammed Gambo Umar (mni) – (Chairman) Shareholders’ RepresentativeMrs. Olabisi Bakare Shareholders’ RepresentativeDr. Okpan Awa Erem Shareholders’ RepresentativeSir Sunday Nnamdi Nwosu Non-Executive DirectorMr. Taofeeq Oluwatoyin Salman Non-Executive DirectorMrs. Hadiza Aliko Mohammed Non-executive Director

23


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

For the year ended 31 December 2018

Group Company2018 2017 2018 2017

Notes N’000 N’000 N’000 N’000

Revenue 5 9,825,279 7,926,152 9,157,680 7,565,763Operating costs 9a (6,656,013) (5,606,676) (6,418,021) (5,522,689)

----------------- ---------------- ---------------- ----------------Gross profit 3,169,266 2,319,476 2,739,659 2,043,074

Other income 6 263,257 626,962 222,496 547,900Administrative expenses 9b (2,930,165) (2,315,045) (2,737,591) (2,127,260)

---------------- ---------------- ---------------- ----------------Profit from operations 502,358 631,393 224,564 463,714

Finance costs 7 (169,776) (213,066) (169,776) (213,066)Finance income 7 220,679 181,684 286,482 258,915

------------- ------------- ------------- -------------Operating profit 553,261 600,011 341,270 509,563Expected credit losses 9c (50,024) - (41,516) -

------------- ------------- ------------- -------------Profit before tax 503,237 600,011 299,754 509,563

Income tax (expense)/credit 8(a) (306,443) 175,756 (290,048) 178,339------------- ------------- ------------ ------------

Profit for the year 196,794 775,767 9,706 687,902

Other comprehensive income - - - ------------- ------------ ------------ -------------

Total comprehensive income for theyear, net of tax 196,794 775,767 9,706 687,902

======== ======== ======== ========Attributable to:Profit attributable to equity holdersof the parent 199,625 780,062 9,706 687,902

Non-controlling interest 27 (2,831) (4,295) - -------------- ------------- ---------- -------------196,794 775,767 9,706 687,902======== ======== ====== ========

Earnings per share:Basic/dilutedearnings per share(Kobo) 10 12 48 1 42

=== === == ===

24


CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2018

Group CompanyNotes 2018 2017 2018 2017

---------------- ---------------- ---------------- ----------------Total non-current assets 6,454,876 6,868,053 6,857,111 6,730,372

--------------- ---------------- ---------------- ---------------Current assetsInventories 18 256,187 238,827 256,187 238,827Trade and other receivables 20 2,017,717 1,884,940 1,933,697 1,841,831Intercompany receivables 21 - - 144,837 595,231Other current assets 17 40,850 11,079 40,850 11,079Loan to subsidiary 16 - - - 301,168Prepayments 19 754,929 687,764 557,772 491,675Held to maturity 15 - 200,000 - 200,000Debt instruments at amortized costs 22a 122,390 - 122,390 -Cash and cash equivalents 22 2,698,921 2,371,408 2,596,708 2,236,564

---------------- ---------------- -------------- --------------Total current assets 5,890,994 5,394,018 5,652,441 5,916,375

----------------- ----------------- ----------------- -----------------Total assets 12,345,870 12,262,071 12,509,552 12,646,747

=========== =========== =========== ===========

--------------- --------------- --------------- ----------------Total equity attributable to equityholders of the Company 6,454,751 6,898,418 6,764,546 7,396,202

Non-controlling interests 27 (130,911) (127,645) - ---------------- --------------- --------------- ---------------

Total equity 6,323,840 6,770,773 6,764,546 7,396,202--------------- --------------- --------------- ---------------

Non-current liabilitiesLoans and borrowings 28 439,588 857,632 439,588 857,632Deferred tax liabilities 8C 715,661 761,385 713,673 760,955

--------------- --------------- --------------- ---------------Total non-current liabilities 1,155,249 1,619,017 1,153,261 1,618,587

--------------- --------------- --------------- ---------------

Equity and liabilitiesEquityShare capital 23 812,109 812,109 812,109 812,109Share premium 24 1,914,758 1,914,758 1,914,758 1,914,758Retained earnings 26 3,727,884 4,171,551 4,037,679 4,669,335

N’000 N’000 N’000 N’000AssetsNon-current assetsProperty, plant and equipment 11 6,156,696 6,547,947 5,058,515 4,497,225Intangible assets 12 166,313 187,966 72,691 94,344Investment property 13 131,867 132,140 131,867 132,140Investment in subsidiaries 14 - - 1,594,038 1,594,038Loan to subsidiary 16 - - - 412,625

26


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Attributable to the equity holders of the parent

2018Share

capitalShare

premiumRetainedearnings Total

Non-controlling

interestTotal

equityN'000 N'000 N'000 N'000 N'000 N'000

At 1 January 2018 812,109 1,914,758 4,171,551 6,898,418 (127,645) 6,770,773Effect of adoption of IFRS 9 - - (237,237) (237,237) (435) (237,672)

------------ --------------- ---------------- ---------------- --------------- ----------------At 1 Jan 2018 (*Restated) 812,109 1,914,758 3,934,314 6,661,181 (128,080) 6,533,101Profit for the year - - 199,625 199,625 (2,831) 196,794Other comprehensive income for theyear - - - - - -

------------- --------------- ------------- ------------- ------------ -------------Total comprehensive income for theyear - - 199,625 199,625 (2,831) 196,794

Dividend paid (Note 25) - - (406,055) (406,055) - (406,055)------------ --------------- ---------------- ---------------- ------------- ----------------

At 31 December 2018 812,109 1,914,758 3,727,884 6,454,751 (130,911) 6,323,840======== ========== ========== ========== ======== ==========

27


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Attributable to the equity holders of the parent

Sharecapital

Sharepremium

Retainedearnings Total

Non-controlling

interestTotal

equityN'000 N'000 N'000 N'000 N'000 N'000

At 1 January 2017 812,109 1,914,758 3,748,817 6,475,684 (123,350) 6,352,334------------- --------------- --------------- --------------- -------------- ---------------

Profit for the year - - 780,062 780,062 (4,295) 775,767Other comprehensive income - - - - - -

------------- --------------- ------------- ------------- --------- -------------Total comprehensive income for the year - - - - - -Dividend paid (Note 25) - - (357,328) (357,328) - (357,328)

------------ --------------- --------------- --------------- -------------- ---------------At 31 December 2017 812,109 1,914,758 4,171,551 6,898,418 (127,645) 6,770,773

======== ========== ========== ========== ========= ==========

28


SEPARATE STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018Share

capitalShare


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

At 1 January 2018 812,109 1,914,758 4,669,335 7,396,202Effect of adoption of IFRS 9 - - (235,307) (235,307)

------------- --------------- --------------- ---------------At 1 Jan 2018 (*Restated) 812,109 1,914,758 4,434,028 7,160,895Profit for the year - - 9,706 9,706Other comprehensive income - - - -

------------- --------------- --------------- ---------------Total comprehensive income - - 9,706 9,706Dividend paid (Note 25) - - (406,055) (406,055)

------------- --------------- --------------- ---------------At 31 December 2018 812,109 1,914,758 4,037,679 6,764,546

======== ========== ========== ==========

2017Share

capitalShare


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

At 1 January 2017 812,109 1,914,758 4,338,761 7,065,628------------- --------------- --------------- ---------------

Profit for the year - - 687,902 687,902Other comprehensive income - - - -

------------- --------------- --------------- ---------------Total comprehensive income - - 687,902 687,902Dividend paid (Note 25) - - (357,328) (357,328)

------------- --------------- ---------------- ---------------At 31 December 2017 812,109 1,914,758 4,669,335 7,396,202

======== ========== ========== ==========

29

NIGERIAN AVIATION HANDLING COMPANY PLCCONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2018

Group CompanyNotes 2018 2017 2018 2017

N’000 N’000 N’000 N’000Operating activitiesProfit before tax 503,237 600,011 299,755 509,563

------------- ------------- ------------- -------------Adjustments to reconcile profitbefore tax to net cash flows:

Depreciation of property, plant andequipment (PPE) 11 762,389 851,637 547,641 641,104Depreciation of investment property 13 4,131 3,189 4,131 3,189Amortisation of intangible asset 12 21,653 35,608 21,653 35,608Cost of assets transferred - - (845,648) -Depreciation on the transferredassets - - 93,181 -Gain on disposal of PPE 6 (242) (3,515) (242) (3,515)Expected credilt loss 9c 50,024 (104,793) 41,516 (104,793)Unrealised exchange gain 6a 2,326 (53,389) 2,326 (54,740)Deferred rent released to profit orloss 30 (200,294) (387,646) (141,451) (195,573)Finance cost 7 169,776 213,066 169,776 213,066Finance income 7 (220,679) (181,684) (220,679) (258,915)

-------------- -------------- -------------- --------------589,084 372,473 (327,796) 275,431

Working capital adjustments:Increase in inventories (17,359) (41,289) (17,359) (41,289)Increase in trade and otherreceivables (499,648) (493,935) (512,421) (472,195)Decrease in intercompanyreceivables (9,354) - 440,370 266,653(Increase)/decrease in prepayments (67,164) 735,667 (66,096) (113,558)Increase/(decrease) in trade andother payables 693,334 (101,763) 619,163 (106,102))

--------------- --------------- --------------- ---------------1,192,129 1,071,164 435,616 318,503

Taxation paid 8(b) (87,983) (257,965) (86,690) (257,964)-------------- -------------- -------------- --------------

Net cash flows from operatingactivities 1,104,146 813,199 348,926 60,539

--------------- --------------- -------------- ---------------

30


CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS – Continued

FOR THE YEAR ENDED 31 DECEMBER 2018Group Company

Notes 2018 2017 2018 2017N’000 N’000 N’000 N’000

Net cash flows from operatingactivities 1,104,146 813,199 348,926 60,539

--------------- ------------- ------------- -----------Investing activitiesPurchase of property, plant andequipment 11 (371,977) (1,057,633) (357,303) (154,094)Acquisition of investment properties (3,857) - (3,857) -

Investment in debt Instrument (124,191) (200,000 (124,191) (200,000)Liquidation of debt instrument 200,000 - 200,000 -Proceeds from disposal of property,plant and equipment 1,081 10,305 1,081 10,305

Rent Received 12 142,095 302,121 142,095 149,313

Outflow from bond repayment fund 17 506,689 (412,778) 506,689 (412,778)Inflow from bond repayment fund 17 (489,514) 491,689 (489,514) 491,689

Purchase of intangible asset 12 - (977) - (977)Loan to subsidiary 15 - - 779,596 137,671Interest received 7 220,679 181,684 220,679 176,697

--------------- --------------- --------------- ---------------Net cash outflows from/(used in)investing activities 81,005 (685,589) 875,275 197,826

--------------- ---------------- ---------------- ----------------Financing activitiesRepayment of bond 28 (322,799) (277,540) (322,799) (277,540)Unclaimed dividend 26b 85,702 102,497 85,702 102,497

Finance cost 7 (166,715) (207,967) (166,715) (207,967)Dividends paid (406,055) (357,328) (406,055) (357,328)

--------------- --------------- -------------- --------------Net cash flows used in financingactivities (809,867) (740,338) (809,867) (740,338)

------------- ------------- ------------- -------------Net increase/(decrease) in cash andcash equivalents 375,284 (612,728) 414,334 (481,973)Net foreign exchange difference (39,922) 53,389 (46,344) 54,740Cash and cash equivalents at 1January 2,371,408 2,930,747 2,236,564 2,663,797

---------------- ---------------- ---------------- ----------------Cash and cash equivalents at 31December 22 2,706,770 2,371,408 2,604,554 2,236,564

========== ========== ========== ==========

31


NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018

1. Reporting entity

Nigerian Aviation Handling Company PLC ("nahco aviance" or "the Company") is a companydomiciled in Nigeria with its registered office at Murtala Muhammed International Airport, Ikeja,Lagos. The consolidated financial statements of the Company for the year ended 31 December2018 comprise the Company and its subsidiaries (together referred to as the "Group" andindividually as "Group entities"). The group is primarily involved in provision of services includingaircraft handling, cargo handling, passenger handling, passenger profiling, crew transportation,energy and power distribution and leasing of ground handling equipment.

2. Basis of preparation

(a) Statement of complianceThe financial statements have been prepared in accordance with the International FinancialReporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial statements were authorised for issue by the directors on 16 April 2019.

(b) Functional and presentation currencyThese financial statements are presented in the Nigerian Naira, which is the Group’s functionalcurrency. Except as indicated, financial information presented in Naira has been rounded to thenearest thousands.

(c) Basis of measurementThese financial statements are prepared on the historical cost basis.

(d) Use of estimates and judgmentsThe preparation of financial statements in conformity with the IFRSs requires management tomake judgments, estimates and assumptions that affect the application of policies and reportedamounts of assets and liabilities, income and expenses. The estimates and associated assumptionsare based on historical experience and various other factors that are believed to be reasonableunder the circumstances, the results of which form the basis of making the judgments aboutcarrying values of assets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimates are revised, if the revisionaffects only that period, or in the period of the revision and future periods, if the revision affectsboth current and future periods.


NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS - Continued

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2. Basis of preparation – Continued

(d) Use of estimates and judgments - Continued

JudgmentsIn the process of applying the Group’s accounting policies, management has made the followingjudgments, which have the most significant effect on the amounts recognised in the financialstatements:

Operating lease commitments – Group as lessorThe group has entered into commercial property leases on its investment property portfolio. Thegroup has determined, based on an evaluation of the terms and conditions of the arrangements,such as the lease term not constituting a major part of the economic life of the commercial propertyand the present value of the minimum lease payments not amounting to substantially all of the fairvalue of the commercial property, that it retains all the significant risks and rewards of ownershipof these properties and accounts for the contracts as operating leases.

Going concernThe group’s management has made an assessment of its ability to continue as a going concern andis satisfied that it has the resources to continue in business for the foreseeable future.Furthermore, the Management is not aware of any material uncertainties that may cast significantdoubt upon the Group’s ability to continue as a going concern. Therefore, the financial statementscontinue to be prepared on the going concern basis.

Estimates and assumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at thereporting date, that have a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within the next financial year, are described below. The groupbased its assumptions and estimates on parameters available when the financial statements wereprepared. Existing circumstances and assumptions about future developments, however, maychange due to market changes or circumstances arising beyond the control of the Group. Suchchanges are reflected in the assumptions when they occur.

Re-assessment of useful lives and residual valuesThe Group carries its PPE at cost in the consolidated and separate statements of financial position.The annual review of the useful lives and residual value of PPE result in the use of significantmanagement judgements.



33

2. Basis of preparation – Continued

(d) Use of estimates and judgments – Continued

Impairment of non-financial assetsImpairment exists when the carrying value of an asset or cash generating unit exceeds itsrecoverable amount, which is the higher of its fair value less costs to sell and its value in use. Thefair value less costs to sell calculation is based on available data from binding sales transactions,conducted at arm’s length for similar assets or observable market prices less incremental costs fordisposing of the asset. The value in use calculation is based on a discounted cash flow model. Thecash flows are derived from the budget for the next five years and do not include restructuringactivities that the Group is not yet committed to or significant future investments that will enhancethe asset’s performance of the CGU being tested. The recoverable amount is most sensitive to thediscount rate used for the discounted cash flow model as well as the expected future cash inflowsand the growth rate used for extrapolation purposes.

Fair value of financial instrumentsWhen the fair value of financial assets and financial liabilities recorded in the consolidated andseparate statements of financial position cannot be derived from active markets, their fair value isdetermined using valuation techniques including the discounted cash flow model. The inputs tothese models are taken from observable markets where possible, but where this is not feasible, adegree of judgement is required in establishing fair values. The judgments include considerationsof inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factorscould affect the reported fair value of financial instruments.

TaxesUncertainties exist with respect to the interpretation of complex tax regulations, changes in taxlaws, the amount and timing of future taxable income. Given the wide range of internationalbusiness relationships and the long-term nature and complexity of existing contractualagreements, differences arising between the actual results and the assumptions made, or futurechanges to such assumptions, could necessitate future adjustments to tax income and expensealready recorded. The group establishes provisions, based on reasonable estimates, for possibleconsequences of audits by the tax authorities.



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3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented inthese financial statements.

(a) Basis of ConsolidationThe consolidated financial statements comprise the financial statements of the Group and itssubsidiaries as at 31 December 2018. Control is achieved when the Group is exposed, or has rights,to variable returns from its involvement with the investee and has the ability to affect those returnsthrough its power over the investee. Specifically, the Group controls an investee if, and only if, theGroup has:• Power over the investee (i.e., existing rights that give it the current ability to direct the relevantactivities of the investee)

• Exposure, or rights, to variable returns from its involvement with the investee• The ability to use its power over the investee to affect its returnsGenerally, there is a presumption that a majority of voting rights results in control. To support thispresumption and when the Group has less than a majority of the voting or similar rights of aninvestee, the Group considers all relevant facts and circumstances in assessing whether it haspower over an investee, including:• The contractual arrangement(s) with the other vote holders of the investee• Rights arising from other contractual arrangements• The Group’s voting rights and potential voting rights

The group re-assesses whether or not it controls an investee if facts and circumstances indicatethat there are changes to one or more of the three elements of control. Consolidation of asubsidiary begins when the Group obtains control over the subsidiary and ceases when the Grouploses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired ordisposed of during the year are included in the consolidated financial statements from the date theGroup gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to theequity holders of the parent of the Group and to the non-controlling interests, even if this resultsin the non-controlling interests having a deficit balance. When necessary, adjustments are madeto the financial statements of subsidiaries to bring their accounting policies into line with theGroup’s accounting policies. All intra-group assets and liabilities, equity, income, expenses andcash flows relating to transactions between members of the Group are eliminated in full onconsolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as anequity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),liabilities, non-controlling interest and other components of equity, while any resultant gain or lossis recognised in profit or loss. Any investment retained is recognised at fair value.

(b) Foreign currencyForeign currrency transactionsTransactions in foreign currencies are translated into the respective functional currencies of Groupentities at exchange rates at the dates of the transactions. Monetary assets and liabilitiesdenominated in foreign currencies at each reporting date are retranslated to the functionalcurrency at exchange rates as at that date. The foreign currency gain or loss on monetary items isthe difference between amortised cost in the functional currency at the beginning of the year,adjusted for effective interest and payments during the year, and the amortised cost in thefunctional currency translated at the exchange rate at the end of the year. Differences arising onsettlement or translation of monetary items are recognised in the profit or loss.



35

3. Significant accounting policies - Continued

(c) Property, plant and equipmentRecognition and measurementItems of property, plant and equipment are carried at cost less accumulated depreciation andimpairment losses. Cost includes expenditures that are directly attributable to the acquisition ofthe asset. The attributable cost of each asset is transferred to the relevant asset categoryimmediately the asset is available for use and depreciated accordingly.

When parts of an item of property, plant and equipment have different useful lives, they areaccounted for as separate items (major components) of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised aspart of the equipment.

Any gains or losses on disposal of an item of property, plant and equipment (calculated as thedifference between the net proceeds from disposal and the carrying amount of the item) isrecognised in the profit and loss.

Subsequent costsThe cost of replacing part of an item of property or plant is recognised in the carrying amount ofthe item if it is probable that future economic benefits embodied within the part will flow to theGroup and its cost can be measured reliably.

The carrying amount of the replaced component is derecognised. The costs of the day-to-dayservicing of property and equipment are recognised in the profit or loss as incurred.

DepreciationDepreciation is recognised in the profit or loss on a straight-line basis to write down the cost ofeach asset, to their residual values over the estimated useful lives of each part of an item ofproperty and equipment. Leased assets under finance lease are depreciated over the shorter ofthe lease term and their useful lives. Items of property, plant and equipment are depreciated fromthe date that they are installed and are ready for use, or in respect of internally constructed assets,from the date the asset is completed and available for use. Depreciation ceases at the earlier ofthe date that the asset is derecognised or classified as held for sale in accordance with IFRS 5. Anon-current asset or disposal group is not depreciated while it is classified as held for sale.

The estimated useful lives for the current and comparative period are as follows:

Buildings 50 yearsLand Over the lease periodComputer hardware 3-10 yearsFurniture, fittings & equipment 2-10 yearsMotor vehicles 4- 5 yearsPlant and machinery 6-15 yearsCapital work-in-progress Not depreciated

Depreciation methods, useful lives and residual values are reviewed at each financial year- end andadjusted if appropriate.



36


De-recognitionAn item of property and equipment is derecognised on disposal or when no future economicbenefits are expected from its use or disposal. Any gain or loss arising on de-recognition of theasset (calculated as the difference between the net disposal proceeds and the carrying amount ofthe asset is included in profit or loss in the year the asset is derecognised.

(d) Intangible assetsThe group's intangible assets comprise softwares that are not integral part of the relatedhardware. The intangible assets have finite useful lives and are measured at cost less accumulatedamortisation and accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefitsembodied in the specific asset to which it relates. All other expenditure is recognised in profit orloss as incurred.

Intangible assets acquired separatelyIntangible assets with finite useful lives that are acquired separately are carried at cost lessaccumulated amortisation and accumulated impairment losses. Amortisation is recognised on astraight-line basis over their estimated useful lives. The estimated useful life and amortisationmethod are reviewed at the end of each annual reporting period, with the effect of any changes inestimate being accounted for on a prospective basis. Intangible assets with indefinite useful livesthat are acquired separately are carried at cost less accumulated impairment losses.

Derecognition of intangible assetsAn intangible asset is derecognised on disposal, or when no future economic benefits are expectedfrom use or disposal. Gains or losses arising from derecognition of an intangible asset, measuredas the difference between the net disposal proceeds and the carrying amount of the asset arerecognised in the profit or loss when the asset is derecognised.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end andadjusted if appropriate.

(e) InventoriesInventories are shown at the lower of cost and net realisable value. Net realisable value is theestimated selling price in the ordinary course of business less the estimated costs of completionand the estimated costs necessary to make the sale. The cost includes direct cost and appropriateoverheads and is determined on the first-in first-out method.

(f) Financial Instruments

i) Financial assetsPolicy applicable from 1 January 2018

RecognitionNon-derivative financial instruments- recognition and measurementThe Group recognizes a financial asset when it becomes a party to the contractual provisions ofthe instrument. The Group initially recognizes trade and other receivables on the date oftransaction. Transaction cost of a financial asset measured at fair value through profit or loss isrecognized as profit or loss. (b) Classification of non-derivative financial assetsClassification and measurement model of non-derivative financial assets are summarized asfollows. The Group classifies financial assets at initial recognition as financial assets measured atamortized cost, debt instruments measured at fair value through other comprehensive income,equity instruments measured at fair value through other comprehensive income or financial assetsmeasured at fair value through profit or loss.



37


(f) Financial Instruments – Continued

i) Financial assets – Continued

Financial assets measured at amortized costA financial asset that meets both the following condition is classified as a financial asset measuredat amortized cost.• The financial asset is held within the Group’s business model whose objective is to hold assets inorder to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transactioncost directly attributable to the asset. After initial recognition, carrying amount of the financialasset measured at amortized cost is determined using the effective interest method, net ofimpairment loss, if necessary.

Debt instruments measured at fair value through other comprehensive income

A debt instrument that meets both the following condition is classified as a financial assetmeasured at fair value through other comprehensive income.

• The financial asset is held within the Group’s business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets.

• The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

A debt instrument measured at fair value through other comprehensive income is recognizedinitially at fair value plus transaction cost directly attributable to the asset. After initial recognition,the asset is measured at fair value with changes in fair value included as “financial asset at fairvalue through other comprehensive income” in other comprehensive income. Accumulated gainsor losses recognized through other comprehensive income are directly transferred to profit or losswhen debt instrument is derecognized.

Cash and cash equivalents

Cash and cash equivalents comprise of cash, bank balances and call deposits with originalmaturities of three months or less.

Trade and other payables

Trade and other payables are stated at amortised cost using the effective interest method. Short-duration other payables with no stated interest rate are measured at original invoice amount unlessthe effect of imputing interest would be significant.

Others

Other non-derivative financial instruments which comprise of loans and receivables, and otherfinancial liabilities are measured at amortised cost using the effective interest method, less anyimpairment losses. Short-term trade receivables, other receivables, trade payables and otherpayables with no stated interest rate are carried at original invoice amounts where the effect ofdiscounting is not significant.



38

3. Significant accounting policies – Continued

(f) Financial Instruments – ContinuedDerecognition of financial assets

The Group derecognises a financial asset when the contractual rights to cash flows from the assetexpire, or it transfers the rights to receive the contractual cash flows on the financial asset in atransaction in which substantially all the risks and rewards of ownership of the financial asset aretransferred, or has assumed an obligation to pay those cashflows to one or more recipients, subjectto certain criteria.

Any interest in transferred financial assets that is created or retained by the Group is recognisedas a separate asset or liability.

(i) Financial liabilities measured at amortized cost

The Group derecognizes its financial asset if the contractual rights to the cash flows from theinvestment expire, or the Group transfers substantially all the risks and rewards of ownership ofthe financial asset. Any interests in transferred financial assets that are created or continuouslyretained by the Group are recognized as a separate asset or liability.

ii. Non-derivative financial liabilities.

Recognition and measurement of financial liabilities

The Group recognizes financial debt when the Group becomes a party to the contractual provisionsof the instruments. The measurement of financial debt is explained in (b) Classification of financialliabilities.

Classification of financial liabilities

A financial liability other than those measured at fair value through profit or loss is classified as afinancial liability measured at amortized cost. A financial liability at amortized cost is initiallymeasured at fair value less transaction cost directly attributable to the issuance of the financialliability. After initial recognition, the financial liability is measured at amortized cost based on theeffective interest rate method.

(c) Derecognition of financial liabilities

The Group derecognizes a financial liability when the financial liability is distinguished, i.e. whenthe contractual obligation is discharged or cancelled or expired.

Impairment of financial assets

The Group recognizes 12-month expected credit loss as loss allowance when there is no significantincrease in the credit risk since initial recognition. When there is a significant increase in credit risksince initial recognition, expected credit losses for the remaining life of the financial assets arerecognized as loss allowance. Whether credit risk is significantly increased or not is determinedbased on the changes in default risk. To determine if there is a change in default risk, followingfactors are considered. However, the Group always measures loss allowance for trade receivablesat an amount equal to lifetime expected credit losses.

· External credit rating of the financial asset

· Downgrade of internal credit rating

· Operating results, such as decrease in sales, decrease in working capital, asset deteriorationand increase in leverage



39



Policy Applicable before 1 January 2018

Initial recognition and measurementFinancial assets are classified into loans and receivables. The classification depends on the natureand purpose of the financial assets and is determined at the time of initial recognition. All regularway purchases or sales of financial assets are recognised and derecognised on a trade date basis.Regular way purchases or sales are purchases or sales of financial assets that require delivery ofassets within the time frame established by regulation or convention in the marketplace. Allfinancial assets are recognised initially at fair value.

Subsequent measurementFor purposes of subsequent measurement, financial assets are classified as follows:• Loans and receivablesLoans and receivablesThis category is the most relevant to the Group. Loans and receivables are non-derivative financialassets with fixed or determinable payments that are not quoted in an active market. After initialmeasurement, such financial assets are subsequently measured at amortised cost using theEffective Interest Rate method (EIR), less impairment. Amortised cost is calculated by taking intoaccount any discount or premium on acquisition and fees or costs that are an integral part of theEIR. The Effective Interest Rate amortisation is included in finance income in the statement ofprofit or loss. The losses arising from impairment are recognised in the statement of profit or lossin finance costs for loans and in cost of sales or other operating expenses for receivables.

Trade and other receivablesTrade and other receivables are recognised initially at fair value and subsequently measured atamortised cost, less allowance for impairment. The carrying amount of trade receivable is reducedthrough the use of an allowance account. When trade receivables are uncollectible, it is written offas ‘administrative expenses’ in the profit or loss. Subsequent recoveries of amounts previouslywritten off are included in other operating income.

Cash and cash equivalentsCash and cash equivalents comprise of cash, bank balances and call deposits with originalmaturities of three months or less.

DerecognitionA financial asset (or, where applicable, a part of a financial asset or part of a group of similarfinancial assets) is primarily derecognised (i.e., removed from the Group’s consolidatedstatement of financial position) when:• The rights to receive cash flows from the asset have expiredOr• The group has transferred its rights to receive cash flows from the asset or has assumed anobligation to pay the received cash flows in full without material delay to a third party under a‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks andrewards of the asset, or (b) the Group has neither transferred nor retained substantially all therisks and rewards of the asset, but has transferred control of the asset



40



When the Group has transferred its rights to receive cash flows from an asset or has entered intoa pass-through arrangement, it evaluates if, and to what extent, it has retained the risks andrewards of ownership. When it has neither transferred nor retained substantially all of the risksand rewards of the asset, nor transferred control of the asset, the Group continues to recognisethe transferred asset to the extent of its continuing involvement. In that case, the Group alsorecognises an associated liability. The transferred asset and the associated liability are measuredon a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measuredat the lower of the original carrying amount of the asset and the maximum amount of considerationthat the Group could be required to repay.

Held to maturity financial assetsHeld to maturity investments are non-derivative financial assets with fixed or determinablepayment and fixed maturity that the Group’s management has positive intention and ability to holdto maturity other than;

(a) Those that the company upon recognition designates as at fair value through profit or loss(b) Those that the company designate as available for sale(c) Those that meet the definition of loans and receivables

These are initially recognized at fair value including direct and increment transaction costs andmeasured subsequent at amortized cost using effective interest rate.

ii) Financial liabilitiesInitial recognition and measurementFinancial liabilities are classified, at initial recognition, as loans and borrowings or payables, asappropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowingsand payables, net of directly attributable transaction costs.The group’s financial liabilities include trade and other payables, loans and borrowings includingbank overdrafts.

Subsequent measurementThe measurement of financial liabilities depends on their classification, as described below:

Loans and borrowingsThis is the category most relevant to the Group. After initial recognition, interest-bearing loansand borrowings are subsequently measured at amortised cost using the EIR method. Gains andlosses are recognised in the profit or loss when the liabilities are derecognised as well as throughthe EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition andfees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costsin the statement of profit or loss.



41



This category generally applies to interest-bearing loans and borrowings.Trade and other payablesTrade and other payables are obligations to pay for goods or services that have been acquired inthe ordinary course of business from suppliers. Trade and other payables are classified as currentliabilities if payment is due within one year (or in the normal operating cycle of the business, iflonger). If not, they are presented as non-current liabilities. Trade and other payables arerecognised initially at fair value and subsequently measured at amortised cost using the effectiveinterest method.

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelledor expires. When an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantially modified, suchan exchange or modification is treated as the derecognition of the original liability and therecognition of a new liability. The difference in the respective carrying amounts is recognised inthe statement of profit or loss.

iii) Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is reported in theconsolidated statement of financial position if there is a currently enforceable legal right to offsetthe recognised amounts and there is an intention to settle on a net basis, to realise the assets andsettle the liabilities simultaneously.



42


(g) Share CapitalOrdinary SharesOrdinary shares are classified as equity. Incremental costs directly attributable to the issue ofordinary shares and share options are recognised as deductions from equity, net of any tax effects.

Dividend on ordinary sharesDividends on the Group’s ordinary shares are recognised in equity in the period in which they arepaid or, if earlier, approved by the Group’s shareholders.

(h) TaxationIncome tax on the profit or loss for the year comprises current tax. Current tax is the expected taxpayable on the taxable income for the year, using tax rates enacted at the reporting date and anyadjustment required for prior period.

Deferred tax is recognised in respect of temporary differences arising between the tax bases ofassets and liabilities and their carrying values for financial reporting purposes. Deferred tax is notrecognised for the temporary differences on the initial recognition of assets or liabilities in atransaction that is not a business combination and that affects neither accounting nor taxableprofit or loss. Currently enacted tax rates are used to determine deferred tax. Deferred tax assetsare recognised to the extent that it is probable that future taxable profits will be available againstwhich the temporary difference can be utilised.

(i) Impairment of financial instrumentsFinancial assetsA financial asset not carried at fair value through profit or loss is assessed at each reporting dateto determine whether there is any objective evidence that it is impaired. A financial asset isconsidered impaired if objective evidence indicates that one or more events have had a negativeeffect on the estimated future cash flows of the asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as thedifference between its carrying amount, and the present value of the estimated future cash flowsdiscounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. Theremaining financial assets are assessed collectively in groups that share similar credit riskcharacteristics. All impairment losses are recognised in profit or loss.

Non-financial assetsThe carrying amounts of the Group's non-financial assets, other than inventories, are reviewed ateach reporting date to determine whether there is any indication of impairment. If any suchindication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs tosell. In assessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects the current market assessments of the time value ofmoney and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset exceeds its estimatedrecoverable amount. Impairment losses are recognised in profit or loss.



43


(i) Impairment of financial instruments – ContinuedImpairment losses recognised in prior periods are assessed at each reporting date for anyindications that the loss has decreased or no longer exists. An impairment loss is reversed if therehas been a change in the estimates used to determine its recoverable amount. An impairment lossis reversed only to the extent that the asset's carrying amount does not exceed the carryingamount that would have been determined, net of depreciation or amortisation, if no impairmentloss had been recognised.

(j) Employee benefitsDefined contribution plansA defined contribution plan is a post-employment benefit plan under which an entity pays fixedcontribution into a separate entity and will have no legal or constructive obligation to pay furtheramounts. Obligations for contributions to defined contribution pension plans are recognised as anemployee benefit expense in the profit or loss when they are due. Prepaid contributions arerecognised as an asset to the extent that a cash refund or a reduction in future payments isavailable.

Short-term benefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensedas the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus plans ifthe Group has a present legal or constructive obligation to pay this amount as a result of pastservice provided by the employee and the obligation can be estimated reliably.

(k) ProvisionsA provision is recognised if, as a result of a past event, the Group has a present legal or constructiveobligation that can be estimated reliably, and it is probable that an outflow of economic benefitswill be required to settle the obligation. Provisions are determined by discounting the expectedfuture cash flows at a pre-tax rate that reflects current market assessments of the time value ofmoney and, where appropriate, the risks specific to the liability. When some or all of the economicbenefits required to settle a provision are expected to be recovered from a third party, a receivableis recognised as an asset if it is virtually certain that reimbursement will be received and theamount of the receivable can be measured reliably.

(l) Revenue recognitionServicesRevenue from services rendered is recognised in profit and loss in proportion to the stage ofcompletion of the transaction at the reporting date. The stage of completion is assessed byreference to services performed to date as a percentage of total services to be performed.

The group is involved in aviation cargo, aircraft handling, crew and passenger transportationservice delivery and power distribution. When the services under a single arrangement arerendered in different reporting periods, the consideration is allocated on a relative fair value basisbetween the services.

Rental incomeRental income from investment property is recognised as revenue on a straight line basis over theterm of the lease. Lease incentives granted are recognised as an integral part of the total rentalincome, over the term of the lease. Rental income from other property is recognised as otherincome.



44


(m) Finance income and expenseFinance income comprise of interest on funds invested. Finance costs comprise interest expenseon borrowings, exchange differences on financial instruments and bank charges.

Borrowing costs that are not directly attributable to the acquisition, construction or production ofa qualifying asset are recognised in the profit and loss using the effective interest method.Foreign currency gains and losses are reported on a net basis as either finance income or financecost depending on whether foreign currency movements are in a net gain or net loss positionexcept for foreign currency translation differences recorded in other comprehensive income.

(n) Leased assetsLeases in term of which the Company assumes substantially all the risks and rewards of ownershipare classified as finance leases. Upon initial recognition, the leased asset is measured at an amountequal to the lower of its fair value and the present value of the minimum lease payments.Subsequent to initial recognition, the asset is accounted for in accordance with the accountingpolicy applicable to that asset.

(o) Lease PaymentsPayments made under operating leases are recognised in profit and loss on a straight-line basisover the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expenseand the reduction of the outstanding liability. The finance expense is allocated to each periodduring the lease term so as to produce a constant periodic rate of interest on the remaining balanceof the liability.

Determining whether an arrangement contains a leaseAt inception of an arrangement, the Company determines whether such an arrangement is orcontains a lease. A specific asset is the subject to a lease if fulfilment of the arrangement isdependent on the use of that specified asset. An arrangement conveys the right to use the asset ifthe arrangement conveys to the Company the right to control the use of the underlying asset.

At inception or upon reassessment of the arrangement, the Group separates payments and otherconsiderations required by such an arrangement into those for other elements on the basis of theirrelative fair values, If the Group concludes for a finance lease that it is impracticable to separatethe payments reliably, then an asset and a liability are recognised at an amount equal to the fairvalue of the underlying asset. Subsequently the liability is reduced as payments are made and animputed finance charge on the liability is recognised on a straight line.

Group as a lessorLeases in which the Group does not transfer substantially all the risks and rewards of ownership ofan asset are classified as operating leases. Initial direct costs incurred in negotiating and arrangingan operating lease are added to the carrying amount of the leased asset and recognised over thelease term on the same basis as rental income. Contingent rents are recognised as revenue in theperiod in which they are earned.



45


(p) Investment propertyInvestment property is property held either to earn rental income or for capital appreciation or forboth, but not for sale in the ordinary course of business, use in the production of goods and servicesor for administrative purposes. Investment property is measured at cost less accumulateddepreciation and impairment loss. Cost includes expenditure that is directly attributable to theacquisiton of the investment property. Investment property held by the Group is depreciated overthe estimated useful life of 50 years. Fair values are determined at the end of the reporting periodand disclosed.

(q) Earnings per shareThe group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS iscalculated by dividing the profit or loss attributable to ordinary shareholders of the Group by theweighted average number of ordinary shares outstanding during the period.

(r) Fair value measurementThe group measures financial instruments such as derivatives, and non-financial assets such asinvestment properties, at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date. The fair valuemeasurement is based on the presumption that the transaction to sell the asset or transfer theliability takes place either:

• In the principal market for the asset or liabilityOr• In the absence of a principal market, in the most advantageous market for the asset or liabilityThe principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participantswould use when pricing the asset or liability, assuming that market participants act in theireconomic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's abilityto generate economic benefits by using the asset in its highest and best use or by selling it toanother market participant that would use the asset in its highest and best use.

The group uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximising the use of relevant observableinputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statementsare categorised within the fair value hierarchy, described as follows, based on the lowest level inputthat is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair valuemeasurement is directly or indirectly observable• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair valuemeasurement is unobservableFor assets and liabilities that are recognised in the financial statements at fair value on a recurringbasis, the Group determines whether transfers have occurred between levels in the hierarchy byre-assessing categorisation (based on the lowest level input that is significant to the fair valuemeasurement as a whole) at the end of each reporting period.



46


s) Current versus non-current classificationThe group presents assets and liabilities in the statement of financial position based oncurrent/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the normal operating cycle• Held primarily for the purpose of trading• Expected to be realised within twelve months after the reporting periodOr• Cash or cash equivalents unless restricted from being exchanged or used to settle a liability forat least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:• It is expected to be settled in the normal operating cycle• It is held primarily for the purpose of trading• It is due to be settled within twelve months after the reporting periodOr• There is no unconditional right to defer the settlement of the liability for at least twelve monthsafter the reporting periodThe Group classifies all other liabilities as non-current.Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3t Changes in accounting policies and disclosuresThe Group applied IFRS 15 and IFRS 9 for the first time. The nature and effect of the changes as aresult of have an impact on the consolidated financial statements of the Group. The Group has notearly adopted any standards, interpretations or amendments that have been issued but are not yeteffective.

FRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretationsand it applies, with limited exceptions, to all revenue arising from contracts with its customers.IFRS 15 establishes a five-step model to account for revenue arising from contracts with customersand requires that revenue be recognised at an amount that reflects the consideration to which anentity expects to be entitled in exchange for transferring goods or services to a customer.IFRS 15 requires entities to exercise judgment, taking into consideration all of the relevant factsand circumstances when applying each step of the model to contracts with their customers. Thestandard also specifies the accounting for the incremental costs of obtaining a contract and thecosts directly related to fulfilling a contract. In addition, the standard requires extensivedisclosuresThe Group adopted IFRS 15 using the modified retrospective method of adoption with the date ofinitial application of 1 January 2018. Under this method, the standard can be applied either to allcontracts at the date of initial application or only to contracts that are not completed at this date.The Group elected to apply the standard to all contracts as at 1 January 2018.

The cumulative effect of initially applying IFRS 15 is recognised at the date of initial application asan adjustment to the opening balance of retained earnings. Therefore, the comparativeinformation was not restated and continues to be reported under IAS 18 and relatedInterpretations.

There is no material quantitative changes based on the adoption of IFRS 15 to the Group's revenuebut the qualitative disclosures have been updated in line with the application of IFRS 15.



47


3t Changes in accounting policies and disclosures – Continued

Impact of application of IFRS 9 Financial instruments

IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurementfor annual periods beginning on or after 1 January 2018, bringing together all three aspects ofthe accounting for financial instruments: classification and measurement; impairment; and hedgeaccounting.The Company and its subsidiaries applied IFRS 9 retrospectively, with an initial application date of1 January 2018. The Group has not restated the comparative information, which continues to bereported under IAS 39. Differences arising from the adoption of IFRS 9 have been recogniseddirectly in retained earnings and other components of equity.The effect of adopting IFRS 9 as at 1 January 2018 was, as follows:The nature of these adjustments are described below:

Classification and measurementUnder IFRS 9, debt instruments are subsequently measured at fair value through profit or loss,amortised cost, or fair value through OCI. The classification is based on two criteria: the Group’sbusiness model for managing the assets; and whether the instruments’ contractual cash flowsrepresent ‘solely payments of principal and interest’ on the principal amount outstanding.The assessment of the Group’s business model was made as of the date of initial application, 1January 2018. The assessment of whether contractual cash flows on debt instruments are solelycomprised of principal and interest was made based on the facts and circumstances as at the initialrecognition of the assets.

The classification and measurement requirements of IFRS 9 did not have a significant impact tothe Group.The following are the changes in the classification of the Group’s financial assets:Trade and other receivables, cash and short-term deposits classified as Loans and receivables,intercompany receivables, intercompany loans, held to maturity as at 31 December 2017 are heldto collect contractual cash flows and give rise to cash flows representing solely payments ofprincipal and interest. These are classified and measured as Debt instruments at amortised costbeginning 1 January 2018.

The Group has not designated any financial liabilities as at fair value through profit or loss. Thereare no changes in classification and measurement for the Group’s financial liabilities. In summary,upon adoption of IFRS 9, the Group had the following required or elected reclassifications as at 1January 2018.

Impairment of Financial assets

The adoption of IFRS 9 has fundamentally changed the Group’s accounting for impairment lossesfor financial assets by replacing IAS 39’s incurred loss approach with a forward-looking expectedcredit loss (ECL) approach. IFRS 9 requires the Group to recognize an allowance for ECLs for alldebt instruments not held at fair value through profit or loss.

Set out below is the reconciliation of the ending impairment allowances in accordance with IAS 39to the opening loss allowances determined in accordance with IFRS 9:



48



Impact of application of IFRS 9 Financial instruments – Continued

Other adjustmentsIn addition to the adjustments described above, other items such as deferred taxes were adjustedto retained earnings as necessary upon adoption of IFRS 9 as at 1 January 2018.

Group Adjustments 1 January 2018Assets N'000Trade receivables 321,869Intercompany receivables 9,355fixed Deposit 6,123Treasury Bill 1,183Intercompany loan 1,002

-------------Total Assets 339,532

========

Deferred tax liabilities (101,860)--------------

Total liabilities (101,860)=========

Total adjustment on equity:Retained earnings 237,672

------------NCI 435

-----------To the owners of the parent company 237,237

========

CompanyN'000

Trade receivables 319,022Intercompany receivables 9,019fixed Deposit 5,928Treasury Bill 1,183Intercompany loan 1,001

-------------Total Assets 336,153

========

Deferred tax liabilities (100,846)--------------

Total liabilities (100,846)=========

Total adjustment on equity:Retained earnings 235,307

========



49



Impact of application of IFRS 9 Financial instruments – Continued

In summary, upon the adoption of IFRS 9, the Group had the following required or electedreclassifications:

GroupIFRS 9 Measurement Category 1 January 2018

Amortizedcost

IAS 39 Measurement Category N'000 N'000 N'000 N'000Loans and ReceivablesTrade and other receivables* 1,884,940 - - 1,563,071Cash and bank balances 1,165,643 - - 1,165,643Fixed Deposit* 1,205,765 - - 1,199,642Held to maturity* 200,000 - - 198,817

-------------- ------- ------ ---------------4,456,348 - - 4,127,173========= ===== ==== =========

CompanyIFRS 9 Measurement

Category 1 January 2018Amortizedcost

IAS 39 Measurement Category N'000 N'000 N'000 N'000Loans andReceivablesTrade and other receivables* 1,841,831 - - 1,522,809Cash and bank balances 1,125,799 - - 1,125,799Fixed Deposit* 1,110,765 - - 1,104,837Held to maturity* 200,000 - - 198,817Intercompany Receivables* 595,231 - - 586,212Intercompany loan* 412,625 - - 411,623

---------------- -------- -------- ----------------5,286,251 - - 4,950,097

=========== ===== ===== ==========

*The change in the carrying amount is as a result of additional impairment allowance.



50


3t Changes in accounting policies and disclosures – ContinuedImpact of application of IFRS 9 Financial instruments – Continued

Set out below is the reconciliation of the ending impairment allowances in accordance with IAS 39to the opening loss allowances determined in accordance with IFRS 9:

Group

Allowanceforimpairmentunder IAS39 asat 31December2017

Remeasurement ECL under IFRS 9 as at 1January 2018

N'000 N'000 N'000Loans and receivablesunder IAS 39/Financialassets at amortised costunder IFRS 9- Trade receivables 756,791 321,869 1,078,660- Intercompanyreceivables - 9,355 9,355Intercompany Loan - 1,002 1,002Fixed Deposit - 6,123 6,123Cash and cashequivalents - - -Held to maturity/DebtInstrument at amortizedcosts

- 1,183 1,183

------------- ------------ ---------------756,791 339,532 1,096,323======== ======== ==========



51



CompanyAllowanceforimpairmentunder IAS39 asat 31December2017

Remeasurement ECL under IFRS 9 as at 1January 2018

N'000 N'000 N'000Loans and receivablesunder IAS39/Financial assets atamortised cost underIFRS 9- Trade

receivables 756,791 319,022 1,075,812- Intercompany

receivables - 9,019 9,019Intercompany Loan

- 1,001 1,002Cash and BankBalances - - -Held to maturity/debtinstrument atamortized costs

- 1,183 1,183

Fixed Deposit - 5,928 5,928------------- ------------- ----------------756,791 336,153 1,092,944======== ======== ==========



52



Credit riskCredit risk refers to the risk that counterparty will default on its contractual obligations resultingin financial loss to the Group.The Group is exposed to credit risk from its operating activities primarily trade receivables anddeposits with banks and other financial institution. The Group has a credit control function thatweekly monitors trade receivables and resolves credit related matters. Weekly collection report isalso done at the Group level to the Chief Financial Officer.

Trade receivablesCustomer credit risk is managed by each business unit subject to the Group’s established policy,procedures and control relating to customer credit risk management. The Group has adopted apolicy of only dealing with creditworthy counterparties, as a means of mitigating the risk offinancial loss from defaults. The Credit Control Unit closely follows up with each customer andoutstanding customer receivables are regularly monitored by the Unit. The requirement forimpairment is analysed at each reporting date on an individual basis for all customers. The Groupevaluates the concentration of risk with respect to trade receivables as Medium as customersconsists of large and reputable foreign and domestic Airlines and Logistics Companies bodies thatare subject to scrutiny by various regulatory bodies, local and international. The Group’s maximumexposure to credit risk for the components of the statement of financial position is its carryingamount.

Deposits with banks and other financial institutionsCredit risk from balances with banks and financial institutions is managed by the Group’s treasurydepartment in accordance with the Group’s policy. Surplus funds are spread amongst reputablecommercial banks and funds must be within treasury limits assigned to each of the counterparty.Counterparty treasury limits are reviewed by the Group’s Chief Financial Officer periodically andmay be updated throughout the year subject to approval of the Group Managing Director. The limitsare set to minimize the concentration of risks and therefore mitigate financial loss throughpotential counterparty’s failure. The Group’s maximum exposure to credit risk for the componentsof the statement of financial position is its carrying amount.

Impairment lossesNigeria Mapping TableGlobal-scale longterm local

Nationalscalelong

National scaleshort termrating Agusto rating

Implied S&Prating class(without

Implied S&Prating categories(with modifiers)

BB+ and above ngAAA ngA-1 AAA B B+BB ngAA+ ngA-1 AA B BBB- ngAA, ngAA- ngA-1 AA B BB+ ngA+, ngA, ngA- ngA-1, ngA-2 A B BB ngBBB+, ngBBB,ngBBB- ngA-2, ngA-3 BBB B B-B- ngBB+, ngBB ngB BB B B-CCC+ ngBB-, ngB+ ngB B CCC CCC+CCC ngB, ngB-, ngCCC+ ngC B CCC CCCCCC- ngCCC, ngCCC- ngC CCC CCC CCC-CC ngCC ngC CC CC CCC ngC ngC C C CR R R D D DSD SD SD D D DD D D D D D



53


3t Changes in accounting policies and disclosures – ContinuedImpact of application of IFRS 9 Financial instruments – ContinuedTrade receivablesFor trade receivables, the Company applied the simplified approach in computing ECL. Therefore,the Group does not track changes in credit risk, but instead recognises a loss allowance based onlifetime ECLs at each reporting date. An impairment analysis is performed at each reporting dateusing a provision matrix to measure expected credit losses (ECL). The provision rates are based ondays past due for groupings of various customer segments with similar loss patterns (i.e., bygeographical region, customer type and rating, and coverage by letters of credit or other forms ofcredit insurance). The calculation reflects the probability-weighted outcome, the time value ofmoney and reasonable and supportable information that is available at the reporting date aboutpast events, current conditions and forecasts of future economic conditions. Generally, tradereceivables are written-off if past due for more than one year and are not subject to enforcementactivity. The maximum exposure to credit risk at the reporting date is the carrying value of eachclass of financial assets disclosed in Note 34. The Company does not hold collateral as security.Set out below is the information about the credit risk exposure on the Group’s trade receivables asat 31 December 2018 using a provision matrix:

Company

In thousands of naira 1 - 30 days 31 - 60 days 61 - 90 days 91-180days 181-360 >365 days TotalN'000 N'000 N'000 N'000 N'000 N'000 N'000

Expected credit loss rate793,482 113,774 221,318 137,606 122,985 878,560 2,267,725

Expected credit loss 189,059 41,380 106,121 116,332 81,592 582,861 1,117,345

In thousands of naira 1 - 30 days 31 - 60 days 61 - 90 days 91-180days 181-360 >365 days TotalN'000 N'000 N'000 N'000 N'000 N'000 N'000

Expected credit loss rate617,390 114,990 134,736 150,542 151,298 884,346 2,053,302

-Expected credit loss 147,184 41,822 72,462 127,268 100,375 586,699 1,075,810

31 December 2018 Trade receivablesDays past due

Estimated total gross carrying amount at default

1 January 2018 Trade receivables


In thousands of naira 1 - 30 days 31 - 60 days 61 - 90 days 91-180days 181-360 >365 days Total

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

Expected credit loss rate

793,042 220,047 197,322 135,513 122,985 878,560 2,347,469


In thousands of naira 1 - 30 days 31 - 60 days 61 - 90 days 91-180days 181-360 >365 days Total

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

Expected credit loss rate

720,296 114,990 134,736 150,542 151,298 884,346 2,156,208

-



Trade receivables


1 January 2018



54



Set out below is the movement in the allowance for expected credit losses of trade receivables:

Expected credit loss measurement - other financial assets

The Group applied the general approach in computing expected credit losses (ECL) forintercompany receivables and short-term deposits. The Company recognises an allowance forexpected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.

ECLs are based on the difference between the contractual cash flows due in accordance with thecontract and all the cash flows that the Company expects to receive, discounted at anapproximation of the original effective interest rate.ECLs are recognised in two stages. For credit exposures for which there has not been a significantincrease in credit risk since initial recognition, ECLs are provided for credit losses that result fromdefault events that are possible within the next 12-months (a 12-month ECL). For those creditexposures for which there has been a significant increase in credit risk since initial recognition, aloss allowance is required for credit losses expected over the remaining life of the exposure,irrespective of the timing of the default (a lifetime ECL).

The ECL is determined by projecting the Probability of default, Loss Given default and Exposure atdefault for each future month and for each individual exposure. These three components aremultiplied together and adjusted for the likelihood of survival (i.e. the exposure has not prepaid ordefaulted in an earlier month). This effectively calculates an ECL for each future month, which isthen discounted back to the reporting date and summed. The discount rate used in the ECLcalculation is the original effective interest rate or an approximation thereof.

2018 2017 2018 2017N'000 N'000 N'000 N'000

Balance as at 1 January 2018 under IAS 39 756,790 756,790 756,790 756,790Adjustment upon application of IFRS 9 321,869 - 319,022 -Balance as at 1 January 2018 /1 January 2017– As restated 1,078,659 756,790 1,075,812 756,790Provision for expected credit losses 45,002 - 41,533 -Unused amount reversed - -Changes in credit risk parameters - -Balance at 31 December 1,123,661 756,790 1,117,345 756,790

Loss rate are calculated using a 'roll rate' method based on the probablity of a receivable progressing throught successive stage delinquency to write-off. These rate are multiplied by scalar factors to reflect fifferences between economic conditionsduring the period over which the historical data has been collected, current conditions and the Company's view of economic conditions over the expected lives of the receivables.

Group Company



55



The 12-month and Lifetime PDs are derived by mapping the internal rating grade of the obligorsto the PD term structure of an external rating agency for all asset classes. The 12-month andlifetime EADs are determined based on the expected payment profile, which varies by product type.The assumptions underlying the ECL calculation – such as how the maturity profile of the PDs, etc.– are monitored and reviewed on a regular basis. There have been no significant changes inestimation techniques or significant assumptions made during the reporting period. The significantchanges in the balances of the other financial assets including information about their impairmentallowance are disclosed below respectively.

The Company considers a financial asset in default when contractual payments are 90 days pastdue. However, in certain cases, the Company may also consider a financial asset to be in defaultwhen internal or external information indicates that the Company is unlikely to receive theoutstanding contractual amounts in full before taking into account any credit enhancements heldby the Company. A financial asset is written off when there is no reasonable expectation ofrecovering the contractual cash flows.

Analysis of inputs to the ECL model under multiple economic scenariosAn overview of the approach to estimating ECLs is set out in Note 3.b (ii) Summary of significantaccounting policies and in Note 2d use of estimates and judgments. To ensure completeness andaccuracy, the Company obtains the data used from third party sources (Central Bank of Nigeria,Standards and Poor's etc.) and a team of expert within its credit risk department verifies theaccuracy of inputs to the Company's ECL models including determining the weights attributable tothe multiple scenarios. The following tables set out the key drivers of expected loss and theassumptions used for the Company’s base case estimate, ECLs based on the base case, plus theeffect of the use of multiple economic scenarios as at 1 January 2018 and 31 December 2018.



56



Impact of application of IFRS 9 Financial instruments – ContinuedThe tables show the values of the key forward looking economic variables/assumptions used ineach of the economic scenarios for the ECL calculations. The figures for “Subsequent years”represent a long-term average and so are the same for each scenario.

31 December, 2018

Key driversAssigned

ProbabilitiesECL Scenario 2019 2020 2021 2022 2023 Subsequent years

GDP growth10% Upturn 0.26 0.29 0.32 0.35 0.38 0.4180% Base 0.20 19.00 0.15 0.16 0.14 0.1510% Downturn 0.14 0.11 0.08 0.05 0.02 -0.01

Oil Price %10% Upturn 56.00 59.00 62.00 65.00 68.00 71.0080% Base 55.00 57.00 62.00 54.00 56.00 57.0010% Downturn 44.00 41.00 38.00 35.00 32.00 29.00

Exchange rate %10% Upturn 180.00 175.00 170.00 165.00 160.00 155.0080% Base 199.50 209.48 219.95 230.95 242.49 254.6210% Downturn 204.75 214.99 225.74 237.02 248.87 261.32

Inflation rate %10% Upturn 26.00 24.00 22.00 20.00 18.00 16.0080% Base 31.00 32.00 33.00 34.00 35.00 36.0010% Downturn 34.00 36.00 38.00 40.00 42.00 44.00

1 January, 2018

Key driversAssigned

ProbabilitiesECL Scenario 2018 2019 2020 2021 2022 Subsequent years

GDP growth11% Upturn 0.23 0.26 0.29 0.32 0.35 0.3879% Base 0.20 0.20 19.00 0.15 0.16 0.1410% Downturn 0.17 0.14 0.11 0.08 0.05 0.02

Oil Price %11% Upturn 53.00 56.00 59.00 62.00 65.00 68.0079% Base 50.00 55.00 57.00 62.00 54.00 56.0010% Downturn 47.00 44.00 41.00 38.00 35.00 32.00

Exchange rate %11% Upturn 185.00 180.00 175.00 170.00 165.00 160.0079% Base 190.00 199.50 209.48 219.95 230.95 242.4910% Downturn 195.00 204.75 214.99 225.74 237.02 248.87

Inflation rate %11% Upturn 28.00 26.00 24.00 22.00 20.00 18.0079% Base 30.00 31.00 32.00 33.00 34.00 35.0010% Downturn 32.00 34.00 36.00 38.00 40.00 42.00

31 December 2018 Short-termdeposit

Intercompanyrecivables Total

N'000 N'000 N'000Upside (10%) - - -Base (80%) - - -Downside (10%) - - -

Total - - -

1 January 2018 Short-termdeposit

Intercompanyrecivables Total

N'000 N'000 N'000Upside (11%) 454 - 454Base (79%) 3,263 - 3,263Downside (10%) 413 - 413

Total 4,130 - 4,130

Stage 1 Stage 2 Stage 3 TotalN'000 N'000 N'000 N'000

ECL allowance as at 1 January 2018 4,130 - - 4,130New asset purchased - - - -Asset derecognised or repaid (excluding write offs) (4,130) - - (4,130)At 31 December 2018 - - - -

The following tables outline the impact of multiple scenarios on the allowance:



57

4a. Standards issued but not effective

The standards and interpretations that are issued, but not yet effective, up to the date ofissuance of financial statements.

Amendments to IFRS 9: Prepayment Features with Negative CompensationUnder IFRS 9, a debt instrument can be measured at amortised cost or at fair value through othercomprehensive income, provided that the contractual cash flows are ‘solely payments ofprincipal and interest on the principal amount outstanding’ (the SPPI criterion) and theinstrument is held within the appropriate business model for that classification. Theamendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of theevent or circumstance that causes the early termination of the contract and irrespective of whichparty pays or receives reasonable compensation for the early termination of the contract.

The amendments should be applied retrospectively and are effective from 1 January 2019, withearlier application permitted. These amendments have no impact on the financial statements ofthe Group.

Amendments to IAS 19: Plan Amendment, Curtailment or SettlementThe amendments to IAS 19 address the accounting when a plan amendment, curtailment orsettlement occurs during a reporting period. The amendments specify that when a planamendment, curtailment or settlement occurs during the annual reporting period, an entity isrequired to:• Determine current service cost for the remainder of the period after the plan amendment,curtailment or settlement, using the actuarial assumptions used to remeasure the net definedbenefit liability (asset) reflecting the benefits offered under the plan and the plan assets afterthat event• Determine net interest for the remainder of the period after the plan amendment, curtailmentor settlement using: the net defined benefit liability (asset) reflecting the benefits offered underthe plan and the plan assets after that event; and the discount rate used to remeasure that netdefined benefit liability (asset).The amendments also clarify that an entity first determines any past service cost, or a gain orloss on settlement, without considering the effect of the asset ceiling. This amount is recognisedin profit or loss. An entity then determines the effect of the asset ceiling after the planamendment, curtailment or settlement. Any change in that effect, excluding amounts includedin the net interest, is recognised in other comprehensive income.The amendments apply to plan amendments, curtailments, or settlements occurring on or afterthe beginning of the first annual reporting period that begins on or after 1 January 2019, withearly application permitted. These amendments will apply only to any future plan amendments,curtailments, or settlements of the Group.

Amendments to IAS 28: Long-term interests in associates and joint venturesThe amendments clarify that an entity applies IFRS 9 to long-term interests in an associate orjoint venture to which the equity method is not applied but that, in substance, form part of thenet investment in the associate or joint venture (long-term interests). This clarification is relevantbecause it implies that the expected credit loss model in IFRS 9 applies to such long-terminterests.

The amendments also clarified that, in applying IFRS 9, an entity does not take account of anylosses of the associate or joint venture, or any impairment losses on the net investment,recognised as adjustments to the net investment in the associate or joint venture that arise fromapplying IAS 28 Investments in Associates and Joint Ventures.

The amendments should be applied retrospectively and are effective from 1 January 2019, withearly application permitted. Since the Company does not have such long-term interests in itsassociate and joint venture, the amendments will not have an impact on its financial statements.



58

4a. Standards issued but not effective – Continued

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor andits Associate or Joint VentureThe amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss ofcontrol of a subsidiary that is sold or contributed to an associate or joint venture. Theamendments clarify that the gain or loss resulting from the sale or contribution of assets thatconstitute a business, as defined in IFRS 3, between an investor and its associate or jointventure, is recognised in full. Any gain or loss resulting from the sale or contribution of assetsthat do not constitute a business, however, is recognised only to the extent of unrelatedinvestors’ interests in the associate or joint venture. The IASB has deferred the effective date ofthese amendments indefinitely, but an entity that early adopts the amendments must apply themprospectively. The Group will apply these amendments when they become effective.

Annual Improvements 2015-2017 Cycle (issued in December 2017)These improvements include:IFRS 3 Business CombinationsThe amendments clarify that, when an entity obtains control of a business that is a jointoperation, it applies the requirements for a business combination achieved in stages, includingremeasuring previously held interests in the assets and liabilities of the joint operation at fairvalue. In doing so, the acquirer remeasures its entire previously held interest in the jointoperation. An entity applies those amendments to business combinations for which theacquisition date is on or after the beginning of the first annual reporting period beginning on orafter 1 January 2019, with early application permitted. These amendments will apply on futurebusiness combinations of the Group.

IFRS 11 Joint ArrangementsA party that participates in, but does not have joint control of, which the activity of the jointoperation constitutes a business as defined in IFRS 3.The amendments clarify that the previously held interests in that joint operation are notremeasured. An entity applies those amendments to transactions in which it obtains joint controlon or after the beginning of the first annual reporting period beginning on or after 1 January2019, with early application permitted. These amendments are currently not applicable to theGroup but may apply to future transactions.

IAS 12 Income TaxesThe amendments clarify that the income tax consequences of dividends are linked more directlyto past transactions or events that generated distributable profits than to distributions toowners. Therefore, an entity recognises the income tax consequences of dividends in profit orloss, other comprehensive income or equity according to where the entity originally recognisedthose past transactions or events.An entity applies those amendments for annual reporting periods beginning on or after 1 January2019, with early application is permitted. When an entity first applies those amendments, itapplies them to the income tax consequences of dividends recognised on or after the beginningof the earliest comparative period. Since the Grouo’s current practice is in line with theseamendments, the Group does not expect any effect on its financial statements.



59

4a. Standards issued but not effective – Continued

IAS 23 Borrowing CostsThe amendments clarify that an entity treats as part of general borrowings any borrowingoriginally made to develop a qualifying asset when substantially all of the activities necessary toprepare that asset for its intended use or sale are complete. An entity applies those amendmentsto borrowing costs incurred on or after the beginning of the annual reporting period in which theentity first applies those amendments. An entity applies those amendments for annual reportingperiods beginning on or after 1 January 2019, with early application permitted. Since theGroups’s current practice is in line with these amendments, the Group does not expect any effecton its financial statements.

IFRS 16 LeasesEffective for annual periods beginning on or after 1 January 2019.Key requirementsThe scope of IFRS 16 includes leases of all assets, with certain exceptions. A lease is defined asa contract, or part of a contract, that conveys the right to use an asset (the underlying asset) fora period of time in exchange for consideration. IFRS 16 requires lessees to account for all leasesunder a single on-balance sheet model in a similar way to finance leases under IAS 17. Thestandard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g.,personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).At the commencement date of a lease, a lessee will recognise a liability to make lease payments(i.e., the lease liability) and an asset representing the right to use the underlying asset during thelease term (i.e., the right-of-use asset). Lessees will be required to separately recognise theinterest expense on the lease liability and the depreciation expense on the right-of-use asset.Lessees will be required to remeasure the lease liability upon the occurrence of certain events(e.g., a change in the lease term, a change in future lease payments resulting from a change inan index or rate used to determine those payments). The lessee will generally recognise theamount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.Lessor accounting is substantially unchanged from today’s accounting under IAS 17. Lessors willcontinue to classify all leases using the same classification principle as in IAS 17 and distinguishbetween two types of leases: operating and finance leases.

TransitionA lessee can choose to apply the standard using either a full retrospective or a modifiedretrospective approach. The standard’s transition provisions permit certain reliefs. Earlyapplication is permitted, but not before an entity applies IFRS 15.

ImpactThese amendments are currently not applicable to the Group but may apply to futuretransactions.



60

5. RevenueThe Company's revenue represents the amount invoiced to customers for passenger handling,ground handling and cargo less trade discounts but excluding value added tax.

Group CompanyRevenue from Contracts with Customer: Dec-18 Dec-17 Dec-18 Dec-17

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

Passenger/aircraft handling 5,392,927 4,471,250 5,392,927 4,471,250Leasing 276,950 192,073 - -Cargo handling 3,767,808 2,960,808 3,377,159 2,792,492Equipment rental and maintenance 387,594 302,021 387,594 302,021

--------------- --------------- --------------- ---------------Total Revenue 9,825,279 7,926,152 9,157,680 7,565,763

========== ========== ========== ==========

Passenger/aircraft handling: Income from passenger handling includes invoices raised for check informalities, passenger profiling, security and baggage handling (loading and offloading).

Cargo Handling: These include invoices raised for; cargo documentation services for airlines,import and export cargo facillitation through Nigeria's biggest network of customs bondedwarehouses in Lagos, Kano, Abuja, Port-Harcourt and Enugu, using Galaxy computerisationsystem, which ensures safe storage and easy retrieval of cargoes.

Equipment rental and maintenance: The group leases its equipment to airlines for services that arenot covered in the Standard Ground Handling Agreement.

Leasing: A subsidiary, NFZ ltd is into the leasing of properties and heavy duty equipment todifferent Airline companies

b. Ten major customers contributed N3.8 billion (2017:N3.5 billion) towards the revenue of theGroup.

6 Other incomeGroup Company

Dec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Rental income from investment property 141,451 195,753 141,451 195,573Foreign exchange gain – realized - 130,002 - 130,002Sundry Income 122,715 200,731 81,954 120,498Foreign exchange gain – unrealized (2,326) 53,389 (2,326) 54,740

Impairment allowance recovery - 38,293 - 38,293Profit on disposal of property, plantand equipment 242 3,515 242 3,515Income from training services 1,175 5,279 1,175 5,279

-------------- ------------- ------------- -------------263,257 626,962 222,496 547,900

========= ======== ======== ========



61

7 Finance income and expenseGroup Company


Finance income:Interest income on bond reserve (Note 17) 12,771 12,534 12,771 12,534Interest income on treasury bill 23,071 18,987 23,071 18,987Interest income on fixed & bank deposits 184,837 150,163 184,837 145,179Interest income on loan - - 65,803 82,215

------------- ------------- ------------- -------------220,679 181,684 286,482 258,915------------- ------------- ------------- -------------

Interest expense on financial liabilitiesmeasured at amortised cost

Interest on bond 162,476 204,125 162,476 204,125Other bond charges 7,300 8,941 7,300 8,941

------------- ------------- ------------- -------------Finance costs 169,776 213,066 169,776 213,066

------------- ------------- ------------- -------------Net finance income/(costs) 50,903 (31,382) 116,706 45,849

======= ======== ======== =======

Finance income comprises interest income on funds invested. Finance costs comprise of interestexpenses on borrowings. Effective June 2016, Tranche 2 bond was restructured to enable half -yearly liquidation of principal and interest renegotiated to 15.75% per annum.

The full effect of the gains due to the restructuring of bond 2 will be felt incrementally over fiveyear’s period to 2020.

8. Taxation(a) The tax charge for the period comprises:

Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Company income tax 117,765 104,444 104,963 102,650Education tax 22,014 20,889 20,992 20,530Prior year under provision 110,529 - 110,529 -

------------- ------------- ------------- --------------250,308 125,333 236,484 123,180

Deferred tax 56,135 (301,089) 53,564 (301,519)-------------- -------------- ------------- --------------306,443 (175,756) 290,048 (178,339)

========= ========= ======== =========



62

(b) The movement on the current tax payable account during the year was as follows: Group Company


At 1 January 192,976 325,608 190,824 325,608Charge for the year (Note 8a) 250,308 125,333 236,485 123,180Payments made during the year (87,983) (257,965) (86,691) (257,964)

------------- ------------- ------------- -------------At 31 December 355,301 192,976 340,618 190,824

========= ======== ======== ========

Reconciliation between tax expense and the product of accounting profit for the year ended 31December 2018 is as follows:

Group Company2018 2017 2018 2017

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

Accounting profit before income tax 503,237 600,011 299,754 509,563------------ ------------ ------------- -------------

At Nigeria’s statutory income tax rate of 30%(2017: 30%) 150,971 180,003 89,926 152,869Education tax 22,014 20,889 20,992 20,530Non-deductible expenses 233,614 152,424 231,974 129,429Non-taxable income (9,526) (529,072) (7,012) (481,167)Underprovision in the previous year 110,529 110,529 -Capital Allowance absorbed (201,159) - (156,361) -

------------- ------------- ------------- -------------Income tax expense reported in the profit orloss 306,443 (175,756) 290,048 (178,339)

======== ========= ======== =========Effective tax rate (%) 61 (29) 98 (35)

=== === === ===

(c) The movement on the deferred tax liability during the year was as follows:


At 1 January 761,385 1,062,474 760,955 1,062,474 Effect of adoption of IFRS 9 (101,860) - (100,846) -

--------------- ---------------- --------------- ----------------- As at January 1 Restated 659,525 1,062,474 660,109 1,062,474 Charge for the year 56,136 (301,089) 53,564 (301,519)

--------------- ------------- ------------- ------------- At 31 December 715,661 761,385 713,673 760,955

========== ======== ======== ========



63

8. Taxation - Continued

(c) Deferred tax liability – Continued:

Deferred tax relates to the following:Group

Statement of financialposition

Statement ofcomprehensive income

2018 2017 2018 2017N'000 N'000 N'000 N'000

Property, plant and equipment 1,554,407 970,905 583,502 (3,410)Unrealised exchange gain loss - 17,517 (17,517) (70,642)Effect of implementation of IFRS 9 101,860Capital Allowance absorbed (502,921) - (502,921)Impairment on Debtors (335,825) (227,037) (108,788) (227,037)

--------------- ------------ ------------- --------------Deferred tax (credit) expense - - 56,136 (301,089)

======== =========Deferred tax liabilities 715,661 761,385 - -

======== =========

CompanyStatement of financial

positionStatement of

comprehensive income2018 2017 2018 2017

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

Property, plant and equipment 1,551,621 970,475 581,146 (3,840)Unrealised exchange gain loss - 17,517 (17,517) (70,642)Capital Allowance absorbed (502,745) - (502,745) -Impairment on Debtors (335,203) (227,037) (108,166) (227,037)Implementation of new standards 100,846 -

--------------- ------------- ------------ --------------Deferred tax expense 53,564 (301,519)

======== =========Deferred tax liabilities 713,673 760,955

========== ========= - -



64

9a Operating costsGroup Company


Payroll 3,386,139 2,865,249 3,350,583 2,851,631Pensions 350,499 319,887 350,499 319,887Staff participatory 19,443 29,495 19,443 29,069Ground Rent 348,198 180,507 348,198 180,507Concession 317,456 383,178 317,456 383,178Management service fee - 44,000 - 44,000Machine & equipment spares 278,354 130,030 276,309 111,396Depreciation of property, plant and equipment 567,600 715,251 365,192 568,780Computer expenses 50,893 30,665 50,893 30,475Staff uniform and protective equipment 43,097 25,396 43,097 25,396Security charges 70,811 11,926 70,811 10,812Fuel and lubricant 210,321 121,225 210,321 120,978Lease rental - 372,480 391,104Other operating expenses 1,013,202 749,867 642,739 455,476

----------------- --------------- --------------- ----------------6,656,013 5,606,676 6,418,021 5,522,689

=========== ========== ========== ==========

Other operating expenses consist of Clearing costs (MCO) N218m, Damaged Aircraft N220m,Consultancy fees N87m, Hajj Operations N48m and Severance package N43m and some other costs.



65

9b Administrative expenses;Group Company


Audit fee 14,000 10,000 10,000 7,500Bank charges 18,254 16,066 18,254 14,032Board expenses * 502,011 258,261 471,069 242,224Computer 78,222 94,190 77,927 93,707Depreciation/amortization (Note 9d) 220,572 175,183 208,232 111,121Directors’ remuneration 56,757 152,120 56,757 152,120Entertainment 2,741 25,733 2,400 25,588Fuel & oil 2,808 2,282 2,513 2,282Industrial Training Fund (ITF) 93,989 13,275 93,989 13,275Insurance 87,047 14,588 82,862 14,353Laundry and cleaning 24,902 48,098 24,992 48,098Medical expenses 161,627 32,914 161,087 32,743Others** 298,179 257,547 238,439 234,482Payroll costs 771,303 720,844 706,289 660,083Pensions 65,105 62,688 65,105 60,846Printing & stationaries 19,289 16,819 19,289 16,047Professional 141,767 110,998 139,086 110,748Repairs & maintenance 43,286 35,744 42,077 32,655Staff participatory 4,861 12,742 4,861 12,458Training 152,166 127,177 145,176 117,284Transport & travelling 150,569 92,496 147,954 91,708Utilities 20,710 35,280 19,233 33,906

---------------- ---------------- ---------------- ----------------2,930,163 2,315,045 2,737,591 2,127,260========== ========== ========== ==========

* Board expenses for 2018 includes a total of N322million set aside for payment of exit packages toretiring directors and directors who resign their appointments on the Board.

** Others include includes MCO Admin Expenses N47m, Subscriptions N37m, Consumables N28m, Year-end gifts N26m, Staff Relocations N14m and others.

Group CompanyDec-18 Dec-17 Dec-18 Dec-17N’000 N’000 N’000 N’000

9c Impairment losses on financial assets

Impairment recovery recognized on tradereceivables (See Note 31) - (217,965) - (217,965)

Impairment loss recognized on tradereceivables (See Note 31) - 113,172 - 113,172Expected credit losses recognized 50,024 - 41,516 -

----------- -------------- ----------- -------------50,024 (104,793) 41,516 (104,793)======= ========= ======= =========



66


9d DepreciationDepreciation of property, plant and equipment 762,389 851,637 547,641 641,104Amortisation of intangible assets 21,653 35,608 21,653 35,608Depreciation of investment property 4,130 3,189 4,130 3,189

------------- ------------- ------------- -------------788,172 890.434 573,424 679,901======== ======== ======== ========

Depreciation allocation:

Operating Costs 567,600 715,251 365,192 568,780Administrative expenses 220,572 175,183 208,232 111,121

------------- ------------- ------------- -------------788,172 890.434 573,424 679,901======== ======== ======== ========

10. Basic earnings per share

The calculation of basic earnings per share at 31 December 2018 was based on the earnings attributable toordinary shareholders of N 199.63million (2017: earnings of N780.06 million) and on ordinary shares of1,624,218,200 of 50k each being the average number of ordinary shares in issue during the year.


Profit attributable toordinary shareholders 199,625 780,062 9,706 687,902

======== ======== ====== ========Average number of ordinary shares 1,624,218 1,624,218 1,624,218 1,624,218

Basic/diluted earnings per share (Kobo) 12 48 1 42=== === === ===



67

11.Property, Plant and equipment- Group

Land Building Plant &Machinery

MotorVehicles

ComputerEquipment

Furniture&Equipment Capital WIP Total

GROUP N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000COST:At I January 2017 50,218 3,128,824 6,564,621 457,508 1,160,931 443,269 47,686 11,853,057Additions 35,894 918,522 29,093 60,515 13,609 1,057,633Disposal - (156,135) (40,421) (9,482) - (206,038)

------------- -------------- ---------------- ----------- ----------- ------------- ------------ ---------------At 31 December 2017 50,218 3,164,718 7,327,008 446,180 1,211,964 456,878 47,686 12,704,652Additions - 39,039 37,896 16,000 267,900 11,142 - 371,977Disposals - - - (15,000) - (1,959) - (16,959)

----------- --------------- --------------- ------------- --------------- ------------ ----------- -----------------At 31st December 2018 50,218 3,203,757 7,364,904 447,180 1,479,864 466,061 47,686 13,059,670

----------- --------------- --------------- ------------- --------------- ------------ ----------- -----------------DEPRECIATION:At 1 January 2017 4,904 331,757 3,351,831 398,060 1,059,274 358,490 - 5,504,316Charge for the year 1,002 66,810 596,436 53,402 104,681 29,306 - 851,637Disposal - - (151,657) (38,400) (9,191) - (199,248)

------------- --------------- --------------- ------------- ------------- ------------- ----------- ----------------At 31 December 2017 5,906 398,567 3,796,610 413,062 1,154,764 387,796 - 6,156,705Charge for the year 1,002 58,194 567,690 35,839 75,989 23,675 - 762,389Disposals - - - (14,250) - (1,870) - (16,120)

---------- -------------- ----------------- ------------- --------------- ------------- ----------- ------------------At 31st December 2018 6,908 456,761 4,364,300 434,651 1,230,753 409,601 - 6,902,974

===== ======= ======== ======= ======== ======= ======= ========NET BOOK VALUE

At 31 December 2018 43,310 2,746,996 3,000,604 12,529 249,111 56,460 47,686 6,156,696====== ======== ======== ====== ======= ======= ======= =========

At 31 December 2017 44,312 2,766,151 3,530,398 33,118 57,200 69,082 47,686 6,547,947====== ======== ======== ======= ======= ======= ======= =========



68

11. Property, plant and equipment – Company

Land Building Plant &Machinery

MotorVehicles

ComputerEquipment

Furniture&Equipment Capital WIP Total

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000At 1 January 2017 50,218 3,040,709 5,010,083 448,520 1,152,912 397,418 47,686 10,147,546Additions - 35,894 29,731 24,254 58,202 6,013 - 154,094Disposal - (156,135) (40,421) (9,482) - - (206,038)

--------- -------------- -------------- ------------ ------------- ------------ ----------- ------------------At 31 December 2017 50,218 3,076,603 4,883,679 432,353 1,201,632 403,431 47,686 10,095,602Additions - 39,039 26,778 16,000 266,198 9,288 - 357,303Disposals - - - (15,000) - (1,959) - (16,959)Transfers 845,648 845,648

----------- --------------- --------------- ------------ --------------- ------------ ----------- -----------------At 31st December 2018 50,218 3,115,642 5,756,105 433,353 1,467,830 410,760 47,686 11,281,594

----------- --------------- --------------- ------------ --------------- -------=---- ----------- -----------------DepreciationAt 1 January 2017 4,904 330,165 3,020,873 394,757 1,054,972 350,850 - 5,156,521Charge for the year 1,002 64,082 401,443 48,745 101,527 24,305 - 641,104Disposal - - (151,657) (38,400) (9,191) - - (199,248)

-------- ----------- -------------- ------------ ------------ ------------ -----------------At 31 December 2017 5,906 394,247 3,270,659 405,102 1,147,308 375,155 - 5,598,377Charge for the year 1,002 56,432 365,192 32,383 74,342 18,290 547,641Disposals (14,250) (1,870) (16,120)Transfers 93,181 93,181

--------- ------------- --------------- ------------- --------------- ------------ ----------- ----------------At 31 December 2018 6,908 450,679 3,729,032 423,235 1,221,650 391,575 - 6,223,079

---------- ------------- ---------------- ------------- --------------- ------------ ----------- ----------------NET BOOK VALUE

At 31st December 2018 43,310 2,664,963 2,027,073 10,118 246,180 19,185 47,686 5,058,515====== ======== ======== ====== ====== ====== ====== ========

At 31st December 2017 44,312 2,682,356 1,613,020 27,251 54,324 28,276 47,686 4,497,225====== ======== ======== ======= ======= ======= ======= ========



69

Group CompanyDec-18 Dec-17 Dec-18 Dec-17

12. Intangible assets N'000 N'000 N'000 N'000Cost:At 1 January 440,906 439,929 347,284 346,307Additions - 977 - 977

------------ ----------- ------------ ------------At 31 December 440,906 440,906 347,284 347,284

------------ ----------- ------------ ------------Amortization:At 1 January 252,940 217,332 252,940 217,332Amortization for the year 21,653 35,608 21,653 35,608

-------------- ----------- -------------- --------------At 31 December 274,593 252,940 274,593 252,940

-------------- ----------- -------------- -------------Carrying amount:At 31 December 166,313 187,966 72,691 94,344

======== ======== ======= =======

13. Investment property Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Cost:At 1 January 157,342 157,342 157,342 157,342Additions 3,857 - 3,857 -

------------ ------------ ------------ ------------At 31 December 161,199 157,342 161,199 157,342

------------ ------------ ------------ ------------Depreciation:At 1 January 25,202 22,013 25,202 22,013Charge for the year 4,130 3,189 4,130 3,189

----------- ----------- ----------- -----------At 31 December 29,332 25,202 29,332 25,202

======= ======= ======= ======= Carrying amounts

At 31 December 131,867 132,140 131,867 132,140======== ======== ======== ========

The fair value of the investment property at 31 December 2018 was N625.7million (2017: N 715m). Totalrevenue from the investment property as at 31 December 2018 was N84 million (2017: N153million). Thefair value of the properties are based on valuation performed by Jide Taiwo & Co., accredited independentvaluers. Jide Taiwo & Co is a renowned specialist in valuing these types of investment properties.



70

13. Investment property – Continued

Company & GroupDec-18 Dec-17

N'000 N'000Rental income derived from investment properties 141,451 195,753

Direct operating expenses (including repairs and maintenance) generatingrental income (included in cost of sales) (57,605) (42,350)

Direct operating expenses (including repairs and maintenance) that did not generate rental income (included in cost of sales) - -

----------- ------------Profit arising from investment properties carried at fair value 83,846 153,403

======= ========The group has no restrictions on the realisability of its investment properties and no contractualobligations to purchase, construct or develop investment properties or for repairs, maintenance andenhancements.Fair value hierarchy disclosures for investment properties are in Note 34.

14. Investment in subsidiaries CompanyDec-18 Dec-17

N'000 N'000Shares in subsidiaries:Nahco FTZ Limited 10,000 10,000Nahco Energy and Power Limited 25,500 25,500Mainland Cargo Options Ltd 4,000 4,000Deposit for shares in NFZ 1,554,538 1,554,538

---------------- ---------------1,594,038 1,594,038========== ==========

Details of the Group’s subsidiaries at the end of the reporting date are as follows:

(i) NFZ LimitedThe company holds N10 million ordinary shares of N1 in this subsidiary, representing 100 percent ofthe issued share capital of N10 million. The principal activity of this subsidiary is the management andoperation of Free Trade Zone which includes: leasing of plant and equipment, logistics, warehousing,transhipment, manufacturing and provision of related services. NAHCO FTZ was granted approval tooperate at the Murtala Mohammed International Airport, Lagos as NFZ by the Nigerian ExportProcessing Zone Authority (NEPZA) in February 2014 and the applicable fees have been paid. Thecompany has since commenced activities towards making the zone operational.

(ii) NAHCO Energy and Power LimitedThe company holds N25.5 million ordinary shares of N1 in this subsidiary representing 63 percent ofthe issued share capital of N40.5 million. The remaining shares are held by RHG, a shareholder ofNigerian Aviation Handling Company Plc. The company intends to carry out energy and powerdistribution in Nigeria.

Intercompany balances between the holding company and its subsidiaries have been eliminated onconsolidation.



71

14. Investment in subsidiaries – Continued

(iii) Mainland Cargo Options LimitedThe company holds 4 million ordinary shares in the subsidiary representing 40% of the issued sharecapital of N10 Million. The remaining 60% are owned by NAHCO Energy and Power Limited. In addition,the business strategy, operations and the board of the Company are under the control of NigerianAviation Handling Company Plc. The company is into cargo logistics and started operations in 2015.

Disclosure of Entity with Non-Controlling Interest within the groupSummary of financial positionand performance of Mainland Cargo Options

Limited as at 31 December 2018 is as shown below:Proportion of equity interests held by non-controlling interests

22.20% 22.20%

"Country ofincorporation andOperation”

31/12/2018 31/12/2017Mainland Cargo Options Limited Nigeria N'000 N'000Non-current assets 9,322 9,547Current assets 109,174 84,180Total assets 118,496 93,727

Total equity 43,026 18,790Non-controlling interest 8,703 1,951Non-current liabilities - -Current liabilities 66,767 72,986Total Equity and Liabilities 118,496 93,727

Summarized Statement of comprehensiveincome

31/12/2018 31/12/2017N'000 N'000

Revenue 390,649 110,944Profit 33,023 1,883Profit attributable to the owners of thecompany

25,692 1,463

Profit attributable to the non-controllinginterests

7,331 420

Other Comprehensive income - -Total Comprehensive income 33,023 1,883

Summary of Cash Flows

Net cashflows from operating activities 35,884 371Net cashflows from investing activities (2,414) (529)Net cashflows from financing activities - (228)



72

14. Investment in subsidiaries - Continued

Disclosure of Entity with Non- Controlling Interest within the Group – Continued

NAHCO Energy and Power Limited has not commenced operations. Hence, its summary financialstatements are not provided.

15. Held to maturity Group CompanyDec-18 Dec-17 Dec-18 Dec-17

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

Federal Government Treasury Bills - 200,000 - 200,000==== ======== ==== ========

This relates to the Company’s investment in Federal Government of Nigeria treasury bills and issuedby the central bank of Nigeria

16. Loan to subsidiary CompanyDec-18 Dec-17

N'000 N'000

At 1 January 713,793 769,246Impact of IFRS 9 Impairment 1,002 -

------------- ------------- Restated balance as at 1/1/2018 714,795 769,246 Accrued Interest 65,803 82,218 Payment (779,596) (137,671) Reversal of prior year impairment (1,002) -

----------- -------------At 31 December - 713,793

======= ========

Current - 301,168Non-current - 412,625This majorly represents the loan of $1.26 million (N211.05 million) and $760,000 (N127.3 million) granted bythe company to its subsidiary, NAHCO FTZ Limited in February and June 2014 respectively. These facilities arepayable in 60 equal instalments from 1st January, 2017 and 1st June, 2017 respectively. The facilities werefully paid off in 2018.

17 Other current assets Group CompanyDec-18 Dec-17 Dec-18 Dec-17

Other current assets comprise of:N'000 N'000 N'000 N'000

Bond repayment fund-At 1 January 11,079 89,990 11,079 89,990Interest earned on fund in 2018 12,771 12,534 12,771 12,534Additions during the year 506,689 400,244 506,689 400,244

--------------- --------------- ---------------- ---------------530,539 502,768 530,539 502,768

Interest distributions (166,715) (214,148) (166,715) (214,148)Periodic liquidation on Principal - Tranche 2 (322,974) (277,541) (322,974) (277,541)

--------------- ------------- ----------- -----------At 31 December 40,850 11,079 40,850 11,079

========= ========= ======= =======



73

17. Other current assets – Continued

The balance on this account represents the amount available in the Debt Service Reserve Account forthe eventual repayment of the principal amount of the Bond. An amount is set aside every monthtoward settlement of biannual interests and eventual repayment of principal to bond holders. Tranche1 bond series repayment was completed in September 2016 and the liability was fully discharged. Theamount accrued as at 31 December 2018 is held by the Trustees. (See Note 28)

18. Inventories Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Spare parts 206,399 191,027 206,399 191,027Stationeries/medical 36,627 29,646 36,627 29,646Diesel 13,161 18,154 13,161 18,154

------------ ------------- ------------- -------------256,187 238,827 256,187 238,827======== ======== ======== ========

Inventories recognized as an expense during 2018 amount to N278.35 million (2017: N111.39million). This is recognized in operating costs. No amount was recognized for inventory write downduring the year (2017: Nil).

19. Prepayments Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Prepayments comprise:

Deposit for property, plant & equipment 648,626 516,255 471,901 335,560Prepaid insurance 21,113 24,583 20,184 24,583Prepaid Stock 54,118 108,856 54,118 108,856Others 31,072 38,070 11,569 22,676

------------- ------------- ------------- -------------754,929 687,764 557,772 491,675======== ======== ======== ========

Deposit for property, plant and equipment (PPE) is largely made up of PPE paid for but yet to be delivered.

20. Trade and other receivablesGroup Company


Trade and other receivables comprise:

Trade receivables (Note 31) 1,223,808 1,328,554 1,150,380 1,297,790 Withholding tax receivable 472,389 386,587 469,445 383,955

Other receivables 321,520 169,799 313,872 160,086--------------- --------------- --------------- ---------------2,017,717 1,884,940 1,933,697 1,841,831========== ========== ========== ==========

Trade receivables are invoices on ground handling services issued to customers net of taxes andimpairment on the debts. The group's credit policy allows a 30 day credit period for all its customers.Other receivables consist of advances to staff for routine services to be carried out. This is to be retiredwithin fourteen (14) days or on the completion of projects.



74

21 Intercompany receivables CompanyDec-18 Dec-17N'000 N'000

NFZ - 154,943Power and Energy 420,760 401,353Mainland Cargo Options 41,076 38,935

------------ -------------461,836 595,231======== ========

Intercompany payables CompanyDec-18 Dec-17N'000 N'000

NFZ 316,999 -Power and Energy - -Mainland Cargo Options - -

------------ -----------316,999 -======== =======

Net Receivable 144,837 595,231======== ========

Intercompany receivables are funding assistance provided to subsidiaries to finance operations. Thefund is repayable on demand & attracts no interest. The sum of N372million, payable to NFZ as rentalfor the use of equipment by NAHCO Plc, charged during the year was used to defray the intercompanybalance. Intercompany receivables are eliminated in the consolidated accounts of the Group.Refer to Note 21a for details of related party transactions.

21a Related party transactions

The following table provides the total amount of transactions that have been entered into with relatedparties for the relevant financial year (for information regarding outstanding balances at 31 December2018 and 2017, refer to Note 21:

Payments on behalfof

related parties

Rent/servicecharge

Amounts duefrom related

partiesN'000 N'000 N'000

NFZ 2018 -2017 154,943 - 154,943

Power and EnergyLimited 2018 420,760 420,760

2017 401,353 - 401,353

Mainland Cargo Options 2018 41,076 41,0762017 38,935 38,935

Nature of related party transactionsIntercompany receivables are payments made on behalf of the subsidiaries. The subsidiaries have beeninformed and the company expects to get value from the subsidiaries.Intercompany receivables are eliminated in the consolidated accounts of the Group.



75

21a Related party transactions - Continued

ParentThe ultimate controlling party of the Group is Nigerian Aviation Handling Company Plc (nahco aviance).The company acquired a 100% stake in a Subsidiary Company, NAHCO FTZ and a 63% and 40% stakein the second and third subsidiaries; NAHCO Energy and Power and MCO respectively.

Key Management Personnel (KMP)Key management personnel are those who have authority and responsibility for planning, directing andcontrolling activities in the Group either directly or indirectly. These include;1. Executive Directors2. Non- Executive Directors3. Management team that implements Board strategies by Board delegated authority4. Key Management Personnel of the company's subsidiaries: NAHCO NFZ, NAHCO Energy and Powerand Mainland Cargo Options Ltd.

Transactions with key management personnelThere were no transactions with key management personnel or their close family members (2017:Nil).

Loans to directorsThe group did not lend money to any of its Directors during the year under review.

Payments on behalf of key management personnel (KMP):There were no payments made on behalf of the KMPs during the year in review. (2017: Nil)

Key management personnel compensation:Variable pay is applicable to Executive Directors and other Senior Management personnel. A total ofN13.98 million (2017: N13.07million) is deferred subject to performance conditions of the Group andindividuals.

Key management personnel compensation for the year comprised:

Group Company2018 2017 2018 2017

Aggregate No. of persons- Snr Mgt. 12 11 8 7Aggregate No. of persons- Non-Exec. Directors. 10 10 8 8Other Members - - - -

----- ----- ----- -----Total 22 21 16 15

=== === === ===

Group Company2018 2017 2018 2017

N'000 N'000 N'000 N'000Short-term employee benefits- Fixed 165,574 154,742 125,016 116,837Short-term employee benefits- Variable 79,709 74,494 79,002 73,834

------------ ------------ ----------- ------------Total 245,283 229,236 204,018 190,671

======== ======== ======= ========



76

21a Related party transactions – Continued

Transactions with other related party

The following are the related parties of the Group;

1. Key management personnel of NAHCO Plc and close members of their families.

2. Key management personnel of the subsidiaries, NAHCO FTZ, NAHCO Energy and MAINLAND CARGOOPTIONS.

3. Entities controlled by the above or where they have significant influence.

The transaction values and outstanding balances due from or (due to) the related parties were as follows:

Lufthansa Airlines, KLM and Airfrance (shareholders of the Group) entered into a Standard Ground handlingAgreement (SGHA) with NAHCO Plc. The value of the services rendered during the year is disclosed above.

All outstanding balances due to/from the related parties are priced at best price basis and are to be settledin cash. None of these balances is secured. Both Lufhansa and Air France/KLM however, divested from theCompany before the year end 2018.

Entity with control by the Company

NAHCO Free Trade Zone

NAHCO Energy and Power Limited

Mainland Cargo Options.Terms and conditions of transactions with related partyOutstanding balances at the year-end are advances made to the related parties for the purpose of theiroperations. There have been no guarantees provided for any related party payables.

Transaction valuefor the year

Balance outstanding

Trade relationships with related parties 2018 2017 2018 2017N'000 N'000 N'000 N'000

Revenues;Lufthansa Airlines 553,232 574,519 69,808 78.772Air France/ KLM 465,624 491,841 74,353 115,022

------------- ------------144,161 193,794======== ========



77

22 Cash and cash equivalents Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Bank and cash balances 827,958 769,667 760,204 750,964 Domiciliary accounts 429,526 395,976 405,465 374,835 Short term deposits 1,449,285 1,205,765 1,438,885 1,110,765

---------------- --------------- ---------------- ----------------2,706,769 2,371,408 2,604,554 2,236,564

Impairment of short term deposits (7,848) - (7,846) ----------------- ---------------- ---------------- ----------------

Net cash & cash equivalents 2,698,921 2,371,408 2,596,708 2,236,564========== ========== ========== ==========

Included in short term deposits is the investment placed for unclaimed dividend as at 31 December 2018. Short term deposits are made for varying period between one day and three months depending on the Immediate cash requirements of the Group and earn interest at the respective short term deposit rates.

22a Debt Instrument at Amortized costs Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

Treasury Bill 124,191 - 124,191 - Impairment (1,801) - (1,801) -

---------------- ---------------- ---------------- ----------------Federal Government Treasury Bill 122,390 - 122,390 -

========== ========== ========== ========== This relates to the Groups’s investment in federal government of Nigeria treasury bills and issued by the central bank of Nigeria

23 Share capital Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'0000 N'000

(a) 3,000,000,000 ordinary shares of 50 kobo each 1,500,000 1,500,000 1,500,000 1,500,000========== ========== ========== ==========

(b) 1,624,218,700 called-up and fully paidordinary shares of 50 kobo each

812,109 812,109 812,109 812,109======== ======== ======== ========

All shares rank equally with regard to the Group's residual assets.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitledto one vote per share at meetings of the Group.



78

24 Share premiumGroup Company


At 31 December 1,914,758 1,914,758 1,914,758 1,914,758========== ========== ========== ==========

Share premium is the excess paid by shareholders over the nominal value for their shares.

25 Dividend proposed

The directors will propose 25k dividend for FY2018 at the next Annual General Meeting (2017: 25kobo)

The dividend is subject to approval by the shareholders at the Annual General Meeting. Consequently,it has not been included as a liability in these consolidated financial statements.Refer to Note 26b for details relating to dividend.

26 Retained earnings Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N'000 N'000

At 1 January 4,171,551 3,748,817 4,669,335 4,338,761Dividend paid (406,055) (357,328) (406,055) (357,328)Total comprehensive income for the year 199,625 780.062 9,706 687,902Re-statement due to IFRS adoption (237,237) - (235,307) -

----------------- --------------- ---------------- ---------------At 31 December 3,727,884 4,171,551 4,037,679 4,669,335

========== ========== =========== ==========Retained earnings represent the income net of expenses from past periods, carried forward pluscurrent period profit attributable to shareholders.

26b Changes in liabilities arising from financing activities 1 January Dividend cash flows 31 December

2018 declared 2018N'000 N'000 N'000 N'000

Dividend declared and paid - (405,066) (406,055) - Unclaimed Dividend 480,559 - 86,047 566,606

-------------- -------------- ------------- --------------- Total liabilities from financing activities 480,559 (405,066) (320,008) 566,606

========= ========= ======== ========

26c Dividend Per share Group Company

Dec-18 Dec-17 Dec-18 Dec-17N'000 N' 000 N' 000 N'000

Dividend approved and paid 406,054 357,328 406,054 357,328

Number of shares in issue 1,624,218 1,624,218 1,624,618 1,624,618

Dividend Per share (kobo) 0.25 0.25 0.25 0.22



79

27 Non-controlling interestsGroup Dec-18 Dec-17

N'000 N'000

At 1 January (127,645) (123,350)Share of prior year re-statement (435) -Share of current year losses (2,831) (4,295)

------------- --------------At 31 December (130,911) (127,645)

========= =========This represents the portion of the minority shareholder in the called up share capital of the subsidiary, NAHCOEnergy and Power Limited, together with their share of losses that are attributable to their proportion of theordinary share capital.

28 Loans and borrowings Group CompanyDec-18 Dec-17 Dec-18 Dec-17N'000 N'000 N’000 N'000

Unsecured at amortised cost:At 1 January 1,135,172 1,407,613 1,135,172 1,407,613Interest expense 169,950 213,066 169,950 213,066Part Liquidation (322,974) (277,540) (322,974) (277,540)Interest paid (166,715) (207,967) (166,715) (207,967)

-------------- ---------------- -------------- ----------------At 31 December 815,433 1,135,172 815,433 1,135,172

========= ========== ========= ==========Non-current 439,588 857,632 439,588 857,632Current 375,845 277,540 375,845 277,540

------------- ---------------- ------------- --------------- 815,433 1,135,172 815,433 1,135,172

======== ========== ======== ==========

In September 2009, the Group obtained approval to raise N5 billion bond but decided to raise it in tranches.Tranche 1 for N2.15 billion at 13 percent per annum was raised in October 2011 and had a 5-year tenor.The proceeds has since been used to finance the modernisation of the warehouse and acquisition of state-of-the-art Ground Handling Equipment (GSE).Tranche 2 for N2.05 billion at 15.25 percent per annum was raised in December 2013 and has a 7-yeartenor. The proceed has been used to finance the acquisition of GSEs and the Company's inorganicexpansion.Interest is paid to investors biannually while the capitalised sum is expected to be paid at the end of thetenor of each tranche. During the year under review, the Group sought approval from bondholders torestructure the tranche 2 bond to enable principal liquidation on a semi-annual basis. 25% of the bond wasliquidated at June, 2016 and the balance was spread for semi- annual liquidation over the remaining yearsof the bond. A premium of 0.5% was agreed as premium jacking the interest on tranche 2 to 15.75%.Also, the tranche 1 bond was completely paid off and all liabilities discharged accordingly.The Trustees, (First Trustees Limited), maintain an account into which monthly remittances by the Groupare made towards offsetting the biannual interest payments as well as repayment of the capital sum. Thegroup's cashflow is therefore not expected to be affected on maturity as repayment would have been fullyprovided for.



80

29 Trade and other payablesTrade and other payables comprise:


Trade payables 1,010,870 650,506 945,867 640,305Other payables (Note 29.1) 3,008,186 2,589,516 2,897,554 2,498,252

--------------- --------------- ---------------- ----------------4,019,056 3,240,022 3,843,421 3,138,557========== ========== ========== ==========

The group maintains a 60 days credit period with all vendors.

29.1 Other payablesGroup Company


Bond accrued interest 5,563 9,802 5,563 9,802Management service agreement fee - 48,000 - 48,000Amount due to government agencies 394,360 171,552 306,751 125,423Concession fee: FAAN rental & service charge 672,399 935,291 672,399 935,291Directors’ retirement 238,927 59,549 238,927 59,549Industrial training fund 185,095 147,156 185,094 147,156Staff participatory scheme 30,931 47,036 30,931 46,326Performance bonus (Note 26b) 274,574 206,312 271,566 200,000Unclaimed dividend (29.1.1) 566,606 480,559 566,606 480,559Other accruals 639,731 484,259 619,717 446,146

---------------- ---------------- ---------------- ----------------3,008,186 2,589,516 2,897,554 2,498,252========== ========== ========== ==========

29.1.1 Unclaimed dividend

Unclaimed dividend amounting to N566.6 million represents the funds returned to the Group by theRegistrars. This amount has been invested by the Group.



81

30 Deferred incomeGroup Company


At 1 January 161,743 247,268 25,038 71,298Rent received during the year 142,095 302,121 142,095 149,313Amount released to the profit or loss (200,294) (387,646) (142,739) (195,573)

------------ ------------ ----------- -----------At 31 December 103,544 161,743 24,394 25,038

======== ======== ======= =======

The above represents majorly, rent received in advance from the tenants.

31 Impairment lossesThe aging of trade receivables at the reporting date was:


Current (1- 30 days) 793,042 703,246 793,482 697,34631-60 days 220,047 174,640 113,774 159,77660-180 days 332,835 246,283 358,925 236,284More than 180 days 1,001,545 961,175 1,001,545 961,174

--------------- --------------- --------------- ---------------2,347,469 2,085,344 2,267,726 2,054,580

========== ========== ========== ==========

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:Group Company


At 1 January 756,790 861,583 756,790 861,583Re-statement due to IFRS 9 adoption 321,869 - 319,022 -Impairment recovered - (217,965) - (217,965)Allowance for expected credit losses/impairment 45,000 113,172 41,534 113,172

---------------- ------------- --------------- -------------At 31 December 1,123,659 756,790 1,117,346 756,790

========== ======== ========== ========

The expected credit losses and impairment on trade receivables were in respect of receivables for whichthe Group has determined that there are objective indicators of impairment. Impairment losses havebeen recognized based on the difference between the carrying amounts and the present value of theestimated future cash flows on these receivables. The Group holds no collateral in respect of its tradereceivables. Impairment loss on trade receivables is recognized in Statement of Comprehensive income.

Impairment (1,123,661) (756,790) (1,117,346) (756,790)--------------- --------------- --------------- ----------------1,223,808 1,328,554 1,150,380 1,297,790



82

32. Financial Risk Management objectives and policies

a. OverviewThe Group's principal financial liabilities comprise of loans and borrowings, bonds and trade and otherpayables. The main purpose of these financial liabilities is to finance the Group's operations. TheGroup's financial assets include trade and other receivables, investments and cash and bank balances.

The Group has exposure to the following risks from its use of financial instruments:· Credit Risk· Liquidity Risk· Market Risk

The Group's senior management oversees the management of these risks. The Board of Directorsreviews and agrees policies for managing each of these risks.This note presents information about the Group’s exposure to each of the above risks, the Group’sobjectives, policies and processes for measuring and managing risk.

Further quantitative disclosures are included throughout these financial statements.

Credit riskCredit risk is the risk that a counter party will not meet its obligations under a financial instrument orcustomer contract, leading to a financial loss. The Group is exposed to credit risk from its operatingactivities (primarily receivables) and from its financing activities, including deposits with banks.

The maximum exposure to credit risk at the reporting date is the carrying value stated below:Group Company


Cash and cash equivalents (Note 22) 2,698,921 2,371,408 2,596,708 2,236,564 Debt instrument at amortized cost 122,390 - 122,390 - Deposit in DSRA (Note 17) 40,850 11,079 40,850 11,079

Trade and other receivables (Note 20) 2,017,217 1,884,940 1,933,697 1,841,831 Intercompany receivables (Note 21) - - 144,387 595,231 Held to maturity - 200,000 - 200,000

Loan to Subsidiary (Note 16) - - - 301,168--------------- --------------- --------------- ---------------

Total financial assets 4,879,378 4,467,427 4,838,032 5,185,873--------------- --------------- --------------- ---------------

Trade & other payables (Note 29) 4,019,056 3,240,022 3,843,421 3,138,556 Loans and borrowings (Note 28) 815,433 1,135,172 815,433 1,135,172

--------------- --------------- --------------- ---------------Total financial liabilities 4,834,489 4,375,194 4,658,854 4,273,728

--------------- -------------- -------------- --------------- Net exposure 44,889 92,233 179,178 912,145

======= ======= ======== ========



83

32. Financial Risk Management objectives and policies – Continued

Credit risk - Continued

The Group evaluates the concentration of risk with respect to trade receivables as low, as itscustomers are located in several jurisdictions and industries and operate in largely independentmarkets.

Financial instrument and cash depositCredit risk from balances with banks and financial institutions is managed by the Group's financedepartment in accordance with the Group's policy. Investments of surplus funds are made only withapproved counterparties and with credit limits assigned to each counterparty. The Group’s maximumexposure to credit risk for the components of the statement of financial position as at 31 December2018 and 2017 is the carrying amount as illustrated in Note 22.

Trade and other receivablesCustomer credit risk is managed by each business unit subject to the Group’s established policy,procedures and control relating to customer credit risk management. Credit limits are established forall customers based on internal rating criteria. Credit quality of the customer is assessed based on anextensive credit rating scorecard. The requirement for an impairment is analysed at each reportingdate on an individual basis for each client. Based on management assessment, no event has occurredsince the initial recognition of these assets that may give rise to any objective evidence of impairment.

The maximum exposure to credit risk at the reporting date is the carrying value of each class offinancial assets disclosed in Note 20.

Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associatedwith its financial liabilities that are settled by delivering cash or another financial asset. The Group'sapproach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidityto meet its liabilities as at when due, under both normal and stressed conditions, without incurringunacceptable losses or risking damage to the Group's reputation.

The Group uses activity-based costing to cost its products and services, which assists it in monitoringcash flow requirements and optimizing its cash return on investments. Typically, the Group ensures thatit has sufficient cash on demand to meet expected operational expenses for a period of 60 days,including the servicing of financial obligations; this excludes the potential impact of extremecircumstances that cannot reasonably be predicted, such as natural disasters.



84

32. Financial Risk Management objectives and policies – Continued Liquidity risk – Continued

The table below summarises the maturity profile of the Group’s financial liabilities based oncontractual undiscounted payments

Group

Ondemand

Less than3 months

3 to 12months 1-5 years > 5

years Total

Year ended 31 December 2018 N'000 N'000 N'000 N'000 N'000 N'000

Trade and other payables - - 4,019,056 - - 4,019,056Loans and borrowings - - 375,845 439,588 - 815,433

------------ ------------ ---------------- ------------- ----------- ----------------- - 4,394,901 439,588 - 4,834,489

====== ======= ========== ======== ======= ==========

Ondemand

Less than3 months


years Total

Year ended 31 December 2017Trade and other payables - - 3,240,022 - - 3,240,022Loans and borrowings - - 277,540 857,632 - 1,135,172

------------ ------------- ---------------- -------------- ------------- ----------------- - 3,517,562 857,632 - 4,375,194

====== ======= ========== ======== ======= ==========

Company

Ondemand

Less than3 months


years Total

Year ended 31 December 2018 N'000 N'000 N'000 N'000 N'000 N'000

Trade and other payables - - 3,843,421 - - 3,843,421Loans and borrowings - - 439,588 375,845 - 815,433

----------- ------------- ---------------- ------------- ----------- ---------------- - 4,283,009 375,845 - 4,658,854

====== ======= ========== ======== ======= ==========

Ondemand

Less than3 months


years Total

Year ended 31 December 2017Trade and other payables - - 3,138,556 - - 3,138,556Loans and borrowings - - 277,540 857,632 - 1,135,172

--------- ------------- ---------------- ------------ ----------- ----------------- - 3,416,096 857,632 - 4,273,728

====== ======== ========== ======== ======= ===========



85


Market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market prices. Market risk comprise three types of risk: interest rate risk,currency risk and other price risk, such as equity price risk and commodity risk. The Group is exposedto currency risk and insignificant interest rate risk. Financial instruments affected by currency riskinclude cash and short term deposit, trade and other receivables and trade and other payables.

Foreign currency riskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changesin foreign exchange rates relates primarily to the Group’s operating activities (when revenue orexpense is denominated in a different currency from the Group’s functional currency). Managementhas set up a policy requiring the Group to manage its foreign currency risk against its functionalcurrency. To manage its foreign currency risk arising from future commercial transaction andrecognised asset and liabilities, the Group ensures that significant transaction is contracted in thefunctional currency.

Foreign currency sensitivityThe following tables demonstrate the sensitivity to a reasonably possible change in USD, Euro and GBPexchange rates, with all other variables held constant. The impact on the Group’s profit before tax isdue to changes in the fair value of monetary assets and liabilities.

Change inUSD rate Effect on profit before tax

N’000

2018 5% 18,391

-5% (18,391)

2017 5% 61,130

-5% (61,130)

Change in EURO rate

Effect on profitbefore tax

N’000

2018 5% 7

-5% (7)

2017 5% 10

-5% (10)



86


Foreign currency sensitivity - Continued

The table below show financial instruments by their measurement bases:Group

Amortisedcost

Fair value Carryingamount

N’000 N’000 N’000At 31 December 2018Cash and cash equivalents (Note 23) 2,698,921 - 2,698,921Held to Maturity 200,000 200,000Trade and other receivables (Note 20) 2,017,717 - 2,017,717Debt instruments at amortized costs 122,390 122,390

---------------- ---------- ---------------Total financial assets 5,039,028 - 5,039,028

---------------- ---------- ---------------Trade & other payables 4,019,056 - 4,019,056

Loans and borrowings (Note 28) 815,433 - 815,433--------------- --------- ---------------

Total financial liabilities 4,834,489 - 4,834,489--------------- --------- ---------------

Change inPOUNDS

rateEffect on profit

before tax

2018 N000

5% 253

-5% (253)

2017 5% 210

-5% (210)



87

32. Financial Risk Management objectives and policies – continued

The table below show financial instruments by their measurement bases - continued:Group

At 31 December 2017Amortised

costFair value Carrying

amountN'000 N'000 N'000

Cash and cash equivalents (Note 22) 2,371,408 - 2,371,408Trade and other receivables (Note 20) 1,884,940 - 1,884,940

---------------- -------------- ---------------Total financial assets 4,256,348 - 4,256,348

---------------- -------------- ---------------

Trade & other payables (Note 29) 3,240,022 - 3,240,022Loans and borrowings (Note 28) 1,135,172 - 1,135,172

--------------- -------------- ----------------Total financial liabilities 4,375,194 - 4,375,194

--------------- -------------- ----------------

Company

At 31 December 2018 Amortisedcost


N'000 N'000 N'000Cash and cash equivalents (Note 22) 2,596,708 - 2,596,708Debt instrument at amortized cost 122,390 - 122,390Trade and other receivables (Note 20) 1,933,697 - 1,933,697Intercompany receivables (Note 21) 144,837 - 144,837

---------------- --------------- ----------------Total financial assets 4,797,632 - 4,797,632

---------------- --------------- ----------------Trade & Other payables 3,843,421 - 3,843,421Loans and borrowings (Note 29) 815,433 - 815,433

--------------- --------- ---------------Total financial liabilities 4,658,854 - 4,658,854

--------------- --------- ---------------



88

32. Financial Risk Management objectives and policies – continued

The table below show financial instruments by their measurement bases - continued:

Company

At 31 December 2017 Amortisedcost


N'000 N'000 N'000Cash and cash equivalents (Note 22) 2,236,564 - 2,236,564Trade and other receivables (Note 20) 1,841,831 - 1,841,831Intercompany receivables (Note 21) 595,231 - 595,231Loan to Subsidiary (Note 16) 301,168 - 301,168

---------------- --------------- ----------------Total financial assets 4,974,794 - 4,974,794

---------------- --------------- ----------------Trade & other payables (Note 29) 3,138,557 - 3,138,557Loans and borrowings (Note 28) 1,135,172 - 1,135,172

--------------- --------------- ---------------Total financial liabilities 4,273,729 - 4,273,729

--------------- --------------- ---------------

33. Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong creditrating and healthy capital ratios in order to support its business and maximise shareholder value. TheGroup manages its capital structure and makes adjustments to it, in light of changes in economicconditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment toshareholders, return capital to shareholders or issue new shares.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus netdebt. The Group’s policy is to keep the gearing ratio between 40% and 50%. The Group includes withinnet debt, trade and other payables less cash and cash equivalents.

Group CompanyDec 2018 Dec 2017 Dec 2018 Dec 2017

N'000 N'000 N'000 N'000Trade and other payables (Note 29 ) 4,019,056 3,240,022 3,819,118 3,138,557Loans and borrowings (Note 28) 815,433 1,135,172 815,433 1,135,172Less cash and bank balance (Note 22) (2,698,921) (2,371,408) (2,596,708) (2,236,564)

--------------- --------------- ---------------- ----------------Net debt 2,135,568 2,003,786 2,037,843 2,037,165Equity 6,158,359 6,898,418 6,468,156 7,396,202

--------------- --------------- --------------- ---------------Capital and net debt 8,293,927 8,902,204 8,505,999 9,433,367

========== ========== ========== ==========

Gearing ratio (%) 26% 23% 24% 22%===== ==== ===== =====



89

33. Capital management - Continued

In order to achieve this overall objective, the Group’s capital management, amongst other things, aimsto ensure that it meets short term obligations to creditors and related parties providing fundingsupport.

No changes were made in the objectives, policies or processes for managing capital during the yearsended 31 December 2018 and 31 December 2017.

34. Fair value measurement of financial assets and liabilities

The management assessed that cash and cash equivalents, trade and other receivables, trade andother payables approximate their carrying amounts largely due to the short- term maturities of theseinstruments.

Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financialinstruments that are carried in the financial statements.

Group & CompanyCarrying Amount Fair value

Dec 18 Dec 17 Dec 18 Dec17 ₦'000 ₦'000 ₦'000 ₦'000

Financial liabilities:Interest bearing loans and borrowings 815,433 1,135,172 510,901 735,845

--------------- --------------- ------------ -------------Total 815,433 1,135,172 510,901 735,845

========= ========== ======== =========

Financial assets:Investment property 131,866 132,140 625,700 1,686,350

------------- ------------- ------------- -----------------Total 131,866 132,140 625,700 1,686,350

======== ======== ======== ==========

The fair values of the financial assets and liabilities are included at the amount at which the instrumentcould be exchanged in a current transaction between willing parties, other than in a forced orliquidation sale. The following methods and assumptions were used to estimate the fair values:

· Cash and short-term deposits, trade receivables, trade payables and other current liabilitiesapproximate their carrying amounts largely due to the short-term maturities of these instruments.

· Interest bearing loans and borrowings are evaluated by the Group based on parameters such asinterest rates that reflects market risk characteristics at the measurement date. The fair value of theloans and borrowing are determined based on the market related rate at the reporting date.



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34. Fair value measurement of financial assets and liabilities - continued

· Investment properties are evaluated using the DCF method, using assumptions regarding thebenefits and liabilities of ownership over the asset’s life including an exit or terminal value. Thismethod involves the projection of a series of cash flows on a real property interest. To this projectedcash flow series, a market-derived discount rate is applied to establish the present value of theincome stream associated with the asset. The exit yield is normally separately determined and differsfrom the discount rate.

The duration of the cash flows and the specific timing of inflows and outflows are determined byevents such as rent reviews, lease renewal and related re-letting, redevelopment, or refurbishment.The appropriate duration is typically driven by market behaviour that is a characteristic of the classof real property. Periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commissioncosts and other operating and management expenses. The series of periodic net operating income,along with an estimate of the terminal value anticipated at the end of the projection period, is thendiscounted.

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financialinstruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair valueare observable, either directly or indirectly

Level 3: techniques which use inputs that have a significant effect on the recorded fair value that arenot based on observable market data

As at 31 December 2018 and 31 December 2017, the Group’s financial instruments carried on thestatement of financial position are measured at amortised cost as such, level 3 has been used for theirfair value determination.



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34. Fair value measurement of financial assets and liabilities - continued

The following table provides the fair value measurement hierarchy of the company’s assets and liabilities.

Quantitative disclosures fair value measurement hierarchy for liabilities as at 31 December 2018:

There have been no transfers between Level 1 and Level 2, and Level 2 and Level 3 during the period.

Quantitative disclosures fair value measurement hierarchy for liabilities as at 31 December 2017:

31 December2017

Level 1 Level 2 Level 3

N’000 N’000 N’000 N’000Liability for which fair value are disclosed(Note 28):Interest bearing loans and borrowings 735,845 - 735,845 -Asset for which fair value are disclosed(Note 13):Investment property 1,686,350 - - 1,686,350

There have been no transfers between Level 1 and Level 2, and Level 2 and Level 3 during the year.

31December

2018

Level1

Level 2 Level 3

N’000 N’000 N’000 N’000

Liability for which fair value aredisclosed (Note 28):

Interest bearing loans and borrowings 501,901 - 501,901 -

Asset for which fair value aredisclosed (Note 13):

Investment property 625,700 - - 625,700



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2018 2017N'000 N'000

35. RevenueAn analysis of the entity’s revenue is as follows:

Ground Handling 5,392,927 4,471,250Cargo Handling 3,767,808 2,960,808Other 664,544 494,094

--------------- ----------------9,825,279 7,926,152========== ==========

35a. Segment reporting

Products and services from which reportable segments derive their revenuesInformation reported for the purposes of resource allocation and assessment of segment performanceis based on the products delivered or service rendered to customers.

The company has presented the reconciliation of segment profits in previous year and continues todisclose the same in this year’s financial statement as the reconciliation is reported to the ChiefOperating Officer for the purpose of decision making.

In addition, two minor operating segments, for which the quantitative thresholds for separatedisclosures have not been met, are currently combined below under ‘other’.

The entity’s reportable segments under IFRS 8 are therefore as follows:

Ground Handling - engaged in ramp services, passenger profiling, baggage handling and crewtransportation.

Cargo Handling- : involved in cargo documentation services for airlines, import and export facilitationthrough customs bonded warehouses across the network.

Other - The main sources of revenue for these operating segments are equipment rentals and leaserentals.

35b. Segment revenue and results

Segment revenue Revenue Cost of sales ProfitN'000 N'000 N'000

31 December 2018Ground Handling 5,392,927 (3,507,576) 1,885,351Cargo Handling 3,767,808 (2,947,979) 819,829Others 664,544 (200,458) 464,086

----------------- ---------------- ----------------9,825,279 6,656,013 3,169,266

=========== ========== ==========

31 December 2017Ground Handling 4,471,250 (2,810,737) 1,660,513Cargo Handling 2,960,808 (2,594,909) 365,899Others 494,094 (201,030) 293,064

--------------- ---------------- ----------------7,926,152 (5,606,676) 2,319,476========== =========== ===========



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35c. Segment profit or loss represents the gross profit or loss earned/ incurred by each segment withoutallocation of distribution and administrative expenses, other gains/ losses, investment income as wellas finance costs. This is the measure reported to the Chief Operating Decision Maker for the purposeof resource allocation and assessment of segment performance.There was no intersegment transaction as all revenue generated above was from external customers.

35d. Segment assets and liabilities

The company does not report its assets and liabilities on a segmental basis and the reported segmentsare not assessed by the Chief Operating Decision Maker on this basis.

36. Information relating to employees

The average number of persons employed by the company during the financial year was as follows;2018 2017

Numbers Numbers

Operations 1,497 1,476Administration 176 232

--------- ---------1,673 1,708====== ======

Employees of the Company, other than directors, whose duties were wholly or mainly discharged inNigeria, received remuneration in the following ranges;

2018 2017Naira Numbers Numbers

Less than1,000,000 86 188 1,000,001-1,500,000 747 963

1,500,001-2,500,000 688 4522,500,001-3,500,000 109 613,500,001-6,000,000 25 266,000,001-8,500,000 10 10

Above 8,500,000 8 8--------- ---------1,673 1,708====== ======

Directors mix 2018 2017Numbers Numbers

Executive 2 2Non-Executive 6 8

----- -----8 10

=== ===N'000 N'000

Highest paid Director 75,000 75,000======= =======

37. Contingent liabilities

There are pending lawsuits for and against the Company in various courts of law. The law suits arebeing handled by external legal counsel. The contingent liabilities in respect of pending litigations andclaims amounted to N135 million (2017: N367.2million. No provision has been made in the financialstatements for the claims. In the opinion of the directors and based on legal advice, the Company’sliability is not likely to be significant.



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38 Capital commitmentsThe capital commitments of the Group for the year ended at 31 December 2018 is as follows:

Group &Company Group & Company2018 2017

N'000 N'000

Contracted but not provided - 72,000Authorised but not contracted for - -

---------- -----------At 31 December - 72,000

====== =======

39. Events after the reporting dateThe Directors are of the opinion that there were no events after the reporting date that will could havea significant effect on the financial statements of the Group and Company that had not been adequatelyprovided for or disclosed in these financial statements.

40. Approval of the financial statements

The financial statements were approved by the Board of Directors on ………. April 2019.

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VALUE ADDED STATEMENT


Group Company2018 2017 2018 2017

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

Revenue 9,825,279 7,926,152 9,157,680 7,565,763Other income 263,257 626,962 222,496 547,900Finance income 220,679 181,684 286,482 258,915

-------------- -------------- ---------------- ----------------10,309,215 8,734,798 9,666,658 8,372,578

Bought in materials & services (3,844,625) (2,663,055) (3,720,869) (2,678,747)----------------- ----------------- ----------------- -----------------6,464,590 6,071,743 5,945,789 5,693,831

=========== ========== ========== ==========Applied as follows:

To pay employees anddirectors % % % %Salaries, wages, pensions andrelated costs 4,597,350 71 4,010,905 66 4,496,780 76 3,933,974. 69

To providers of capital:Finance cost 169,776 3 213.066 4 169,776 2 213,066 4Dividend 406,055 6 357,327 6 406,055 7 357,327 6Government:Income tax expenses 250,308 4 125,333 2 236,484 4 123,180 2Asset replacement:Depreciation and amortization 788,172 12 890,434 14 573,424 10 679,901 12Deferred taxation 56,135 1 (301,089) (5) 53,564 1 (301,519) (5)Retained profit 196,794 3 775,767 13 9,706 - 687,902 12

---------------- ----- ---------------- ----- ---------------- ----- ---------------- -----6,464,590 100 6,071,743 100 5,945,789 100 5,693,831 100========== === ========== === ========== === ========== ===

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FIVE-YEAR FINANCIAL SUMMARY

GROUP 2018 2017 2016 2015 2014

N'000 N'000 N'000 N'000 N'000Statement of Profit or Loss

Revenue 9,825,279 7,926,152 7,956,977 8,498,626 8,133,456========== ========== ========== ========== ==========

Profit before tax 503,237 600,011 909,624 796,797 769,453Income tax (306,443) 175,756 (328,906) (259,000) (200,900)

------------- ------------- ------------- -------------- --------------Profit after tax 196,794 775,767 580,718 537,797 568,553

======== ======== ======== ========= =========

Statement of FinancialPositionNon-current assetsNon-current assets 6,454,876 6,868,053 6,796,657 9,858,317 9,520,280Current assets 5,890,994 5,394,018 5,837,928 5,070,861 4,809,709

----------------- ----------------- ----------------- ----------------- -----------------Total assets 12,345,870 12,262,071 12,634,585 14,929,178 14,329,989

=========== =========== =========== =========== ===========Non-current liabilities 1,155,249 1,619,017 2,192,507 5,061,539 4,956,297Current liabilities 4,866,781 3,872,281 4,089,704 3,771,180 3,519,717

---------------- ---------------- ---------------- ---------------- ----------------Total liabilities 6,022,030 5,491,298 6,283,251 8,832,719 8,476,014

========== ========== ========== ========== ==========

Financed by:Share capital 812,109 812,109 812,109 812,109 738,281Share Premium 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758Dividend reserve - - - - -Retained earnings & NCI 3,596,973 4,043,906 3,624,467 3,369,592 3,200,936

----------------- ---------------- ---------------- ---------------- ----------------Total equity 6,323,840 6,770,773 6,351,334 6,096,459 5,853,975

=========== ========== ========== ========== ==========Total equity and liabilities 12,345,870 12,262,071 12,634,585 14,929,178 14,329,989

=========== =========== =========== =========== ===========

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FIVE-YEAR FINANCIAL SUMMARY

COMPANY 2018 2017 2016 2015 2014

N'000 N'000 N'000 N'000 N'000Statement of Profit or LossRevenue 9,157,680 7,565,763 7,797,899 8,458,700 8,133,456

========== ========== ========== ========== ==========Profit before tax 299,754 509,563 911,575 905,419 970,200Income tax (290,048) 178,339 - 328,906 -259,000 -200,900

---------- ------------- ------------- ------------- --------------Profit after tax 9,706 687,902 582,669 646,419 769,300

====== ======== ======== ======== =========

Statement of FinancialPositionNon-current assetsNon-current assets 6,857,111 6,730,372 7,269,534 10,223,768 9,771,043Current assets 5,652,441 5,916,375 5,805,248 5,345,894 5,136,735

----------------- ---------------- ---------------- -------------- ---------------Total assets 12,509,552 12,646,747 13,074,782 15,569,662 14,907,778

=========== ========= ========= ========= =========Non-current liabilities 1,153,261 1,618,587 2,192,547 5,061,539 4,956,297Current liabilities 4,591,745 3,631,958 3,816,607 3,700,320 3,494,785

--------------- --------------- --------------- --------------- ---------------Total liabilities 5,745,006 5,250,545 6,009,154 8,761,859 8,451,082

========== ========== ========== ========== ==========Financed by:Share capital 812,109 812,109 812,109 812,109 738,281Share premium 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758Retained earnings 4,037,679 4,669,335 4,338,761 4,080,936 3,803,657

---------------- ---------------- ---------------- ---------------- ----------------Total equity 6,764,546 7,396,202 7,065,628 6,807,803 6,456,696

========== ========== ========== ========== ==========Total equity and liabilities 12,509,552 12,646,747 13,074,782 15,569,662 14,907,778

=========== =========== =========== =========== ===========

nigerian aviation handling company plc lagos, nigeria · to equity holders of the parent 199,625...

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