VFD Group_2022_Annual Report

Key: P = Present
AWA = Absent With Apology
NYA = Not Yet Appointed
R = Resigned
NLC = No Longer in the Committee

RECORD OF ATTENDANCE-BOARD OF DIRECTORS MEETINGS

S/N DIRECTORS MAY 28, AUGUST OCTOBER DECEMBER
2021 23, 2021 27, 2021 14, 2021
1. Mr. Olatunde Busari (SAN) P P P
2. Mr. Nonso Okpala P P P P
3. Mr. Adeniyi Adenubi P P AWA P
4. Mr. John Okonkwo NYA P P P
5. Mr. Folajimi Adeleye NYA NYA P P
6. Mr. Gbenga Omolokun P P P P
7. Mr. Mobolaji Adewumi P P P P
8. Mrs. Ngozi Aghanya P P P P
9. Mr. Victor Fagbamila P P R R
10. Mr. Suleiman Lawal P P P P
11. Mr. Azubike Emodi P P P P
12. Ms. Jewel Okwechime P P P P
13. Mr. Chuks C. Ozigbo P P P P
14. Dr. Samuel Onyishi P P R R
15. Mr. Ayodele Onawunmi P R P P
16. Mr. Kelvin Orogun NYA P P P
17. Mr. Femi Akinware NYA P P P
P

Consolidation • Stability • Focus 51

RECORD OF ATTENDANCE-BOARD FINANCE AND GENERAL-PURPOSE
COMMITTEE MEETINGS

S/N COMMITTEE MEMBERS MAY 27, 2021 AUGUST OCTOBER DECEMBER
18,2021 19, 2021 7, 2021
1 Dr. Sam Maduka Onyishi P R R
2 Mr. Mobolaji Adewumi P R P P
3 Mr. Azubike Emodi P P NLC NLC
4 Mr. Victor Fagbamila P P R R
5 Mr. Kelvin Orogun NYA P P P
6 Mr. Nonso Okpala NYA NYA P P
7 Mr. John Okonkwo NYA NYA P P
8 Mr. Folajimi Adeleye NYA NYA P P
NYA

RECORD OF ATTENDANCE-BOARD CORPORATE GOVERNANCE
COMMITTEE MEETINGS

S/N COMMITTEE MEMBERS APRIL 16, AUGUST OCTOBER DECEMBER
2021. 17, 2021 22, 2O21 6, 2021
1 Mr. Ayodele Onawunmi P P
2 Mrs. Ngozi Aghanya P P P P
3 Mr. Suleiman Lawal P P P P
4 Ms. Jewel Okwechime P P P P
5 Mr. Azubike Emodi NYA P P P
6 Mr. Kelvin Orogun NYA NYA P P
NYA P

52 VFD Group plc 2021 Annual Report & Financials

RECORD OF ATTENDANCE-BOARD RENUMERATION COMMITTEE
MEETINGS

S/N COMMITTEE MEMBERS APRIL 16, AUGUST OCTOBER DECEMBER
2021 17, 2021 22, 2O21 6, 2021
1 Ms. Jewel Okwechime P P
2 Mrs. Ngozi Aghanya P P P P
3 Mr. Chuks Celestine Ozigbo P P P P
4 Mr. Azubike Emodi NYA P P P
5 Mr. Femi Akinware NYA NYA P P
6 Mr. Suleiman Lawal NYA NYA P P
NYA P

RECORD OF ATTENDANCE-BOARD RISK AND COMPLIANCE
COMMITTEE MEETINGS

S/N COMMITTEE MEMBERS APRIL 15, AUGUST OCTOBER DECEMBER
2021 18, 2021 25, 2021 10, 2021
1 Mr. Victor Fagbamila P R
2 Mr. Ayodele Onawunmi P P R NLC
3 Mr. Nonso Okpala AWA P NLC NLC
4 Mr. Gbenga Omolokun P P NLC P
5 Mr. Azubike Emodi NYA P P
6 Mr. Adeniyi Adenubi NYA NYA P P
7 Mr. John Okonkwo NYA NYA P P
8 Mr. Folajimi Adeleye NYA NYA P P
NYA P
P

Consolidation • Stability • Focus 53

RECORD OF ATTENDANCE-BOARD AUDIT COMMITTEE MEETINGS

S/N COMMITTEE MEMBERS OCTOBER 2O, 2021 DECEMBER 9, 2021

1. Mr. Mobolaji Adewumi P P
2 Mr. Gbenga Omolokun P P
3 Mr. Chuks Ozigbo P P
4 Mr. Suleiman Lawal P P
5 Mr. Femi Akinware P P

RECORD OF ATTENDANCE-BOARD INVESTMENT COMMITTEE
MEETINGS

S/N COMMITTEE MEMBERS OCTOBER 21, 2021 DECEMBER 6, 2021
1 Mr. Ayodele Onawunmi P P
2 Mr. Nonso Okpala P P
3 Mr. Adeniyi Adenubi P P
4 Mr. Mobolaji Adewumi P P
5 Mr. Femi Akinware P P
6 Mr. John Okonkwo P P

NOTES

• Board Audit Committee was separated from Board Risk and Compliance Committee
and became a standalone committee in August, 2021.

• Board Investment Committee had two meetings in 2021, prior interactions were via
electronic email.

54 VFD Group plc 2021 Annual Report & Financials

BOARD CHANGES
RESIGNATION

The following Directors resigned during the financial year:

• Dr. Samuel Onyishi effective May 28, 2021
• Mr. Victor Fagbamila effective August 23, 2021

BOARD APPOINTMENTS

1. The following Directors were appointed to the Board as Non-Executive Directors on May 28,
2021:

• Mr. Kelvin Orogun
• Mr. Femi Akinware

The Securities and Exchange Commission was duly notified of the appointments and same
was approved by the Corporate Affairs Commission. These appointments shall be presented
to members for ratification at the Annual General Meeting.

2. Mr. Folajimi Adeleye was appointed to the Board as Executive Director, Finance effective May
28, 2021 while Mr. John Okonkwo was appointed to the Board as an Executive Director &
Chief Operating Officer effective August 23, 2021. The Securities and Exchange Commission
was duly notified of the appointments and same was approved by the Corporate Affairs
Commission. These appointments shall be presented to members for ratification at the Annual
General Meeting.

3. The following Directors resigned as Executive Directors but retained their seats on the Board
as Non-Executive Directors.

• Mr. Gbenga Omolokun was appointed on August 20, 2014 as an Executive Director,
and subsequently appointed as a Non-Executive Director effective August 23, 2021.

• Mr. Azubike Emodi was appointed on October 15, 2018 as an Executive Director, and
subsequently appointed as a Non-Executive Director effective August 23, 2021.

Consolidation • Stability • Focus 55

DIRECTORS INTERESTS IN CONTRACTS

None of the Directors has notified the Company for the purpose of Section 303 of the Companies
and Allied Matters Act 2020, of any declarable interest in contracts in which the Company is
involved.

DIRECTORS AND THEIR INTERESTS IN THE SHARES OF THE COMPANY

Directors’ interests in the issued share capital of the Company as recorded in the Register of
Members and/or as notified by the Directors in compliance with Sections 301 and 302 of the
Companies and Allied Matters Act, 2020 were as follows:

S/N NAME OF DIRECTOR DIRECT SHAREHOLDING INDIRECT SHAREHOLDING
1. Mr. Olatunde Busari [SAN] 174,787 Nil
2. Mr. Nonso Okpala Nil
3. Mrs. Ngozi Aghanya 106,250 26,578,032
4. Mr. Mobolaji Adewumi 8,710,924
5. Mr. Gbenga Omolokun 1,893,296 7,818,637
6. Mr. Azubike Emodi 100,113 2,848,068
7. Ms. Jewel Okwechime 159,375 1,485,715
8. Mr. Chuks Celestine Ozigbo 156,060 330,991
9. Mr. Suleiman Lawal Nil 11,454,451
10. Mr. Ayodele Onawunmi
11. Mr. Kelvin Orogun 4,552,820 Nil
12. Mr. Femi Akinware Nil 4,878,048
13. Mr. Adeniyi Adenubi
14. Mr. John Okonkwo 2,194,726 Nil
15. Mr. Folajimi Adeleye Nil 3,994,837
8,827,858
1,489,458
122,516 Nil
Nil 361,675

56 VFD Group plc 2021 Annual Report & Financials

ALTERNATE DIRECTORSHIP

There was no alternate directorship during the year under review.

SHAREHOLDING AND SUBSTANTIAL SHAREHOLDERS

The current authorized capital of the Company is N150,000,000 [One Hundred and Fifty Million
Naira] divided into 300,000,000 [Three Hundred Million] ordinary shares of N0.50k each out of
which 126,684,910 [One Hundred and Twenty-Six Million, Six Hundred and Eighty-Four Thousand,
Nine Hundred and Ten] ordinary shares have been issued and fully paid up.

In terms of significant shareholding [5% and above] the table below is instructive.



SHAREHOLDERS WITH 5% AND ABOVE AS AT DECEMBER 31, 2021

S/N FULL NAME HOLDINGS HOLDINGS in %
40.285%
1 PREMIUMGREEN LIMITED 51,035,649 9.042%
6.876%
2 EXPOZE INTERNATIONAL LIMITED 11,454,451 5.243%

3 THREE SEAS INVESTMENT LIMITED 8,710,924

4 MCGREEN SETTLEMENT LIMITED 6,641,747

SHAREHOLDERS STRUCTURE AS AT DECEMBER 31, 2021

VFD GROUP PLC HOLDER COUNT HOLDINGS
37 108,007,822
STRUCTURE AS AT DECEMBER 31, 2021 1
S/N HOLDER TYPE 99 655,049
2 17,858,414
1 CORPORATE 139
2 FOREIGN 163,625
3 INDIVIDUAL 126,684,910
4 JOINT

TOTAL

Consolidation • Stability • Focus 57

ANALYSIS OF SHAREHOLDINGS

The details of shareholding of the Company as at December 31, 2021 is as stated below;

VFD GROUP PLC

RANGE ANALYSIS AS AT 31-12-2021

RANGE NO. OF HOLDERS % HOLDERS UNITS UNITS % UNITS CUM.
HOLDERS CUM. 48,402
120,538
1 - 5,000 30 21.58 30 48,402 0.04 861,883

5,001 - 10,000 8 5.76 38 72,136 0.06 1,889,279
8,199,220
10,001 - 50,000 29 20.86 67 741,345 0.59 12,623,149
44,185,270
50,001 - 100,000 15 10.79 82 1,027,396 0.81 64,923,020
126,684,910
100,001 - 500,000 34 24.46 116 6,309,941 4.98

500,001 - 1,000,000 6 4.32 122 4,423,929 3.49

1,000,001 - 5,000,000 12 8.63 134 31,562,121 24.91

5,000,001 - 10,000,000 3 2.16 137 20,737,750 16.37

10,000,001 - 50,000,000 2 1.44 139 61,761,890 48.75

Grand Total 139 100.00 126,684,910 100

DONATIONS

There were donations to Olowogbowo Methodist School and the Nigerian Immigration Services
during the year ended December 31, 2020.

PROPERTY, PLANT AND EQUIPMENT

Information relating to changes in property, plant and equipment is given in Note 22 to the Financial
Statements.

HUMAN RESOURCES

The Company makes it a paramount objective to hire individuals based on standards of merit and
competence. Also, the Company upholds a sound culture of providing continued development and
training for its Staff to address knowledge gaps and provide new skill sets along the Company’s

58 VFD Group plc 2021 Annual Report & Financials

lines of responsibilities. Annually, trainings Safety regulations are in place within the
are identified for staff and followed through Company’s premises and employees are
in accordance with an approved training plan regularly informed of the regulations.
meant to ensure that this objective is achieved.
The Company encourages easy interaction There are contributory retirement benefit
between Management and other staff of the schemes for both management and
Company to foster an atmosphere of warmth employees of the Company in conformity
at work and to kindle the necessary synergy with the Pensions Reform Act 2014.
required for the Company’s success.
EMPLOYEES’ INVOLVEMENT AND
EMPLOYMENT OF DISABLED TRAINING
PERSONS
The Company has an effective employer/
The Company operates a non-discriminatory employee communication system aimed at
policy on recruitment. Applications by enhancing industrial harmony. Employees are
disabled persons are always fully considered kept fully informed as much as practicable of
bearing in mind the respective aptitudes and the Company’s activities which particularly
abilities of the applicants concerned. During affect them as employees and are also
the year under review, there was no disabled encouraged to communicate any information
person in the Company’s employment. useful to management through use of
suggestion boxes and other channels. Regular
HEALTH, SAFETY AND WELFARE training programmes are usually arranged
OF EMPLOYEES for employees locally and where applicable,
overseas for the improvement of skills and
The Company approaches Health, Safety enhancement of career prospects.
and Welfare issues affecting staff with every
sense of seriousness and therefore maintains POST BALANCE SHEET EVENTS
an insurance health care scheme with AXA
Mansard, a Health Maintenance Organization There were no post balance sheet events which
[HMO], licensed by the National Health could have a material effect on the financial
Insurance Scheme [NHIS] to provide health position of the Company as at December 31,
insurance to employees in the private sector. 2021 and results attributable to equity holders.
Through this arrangement, each employee,
his/her respective spouse, and dependents FIXED ASSETS
below the age of eighteen [18] years are
entitled to medical treatments in well- In the opinion of the Directors, the market
equipped, qualitative network of hospitals value of the Company’s fixed assets is not less
under the scheme. than as shown in the statement of financial
position.

Consolidation • Stability • Focus 59

STATUTORY AUDIT COMMITTEE



The Company has a Statutory Audit Committee with the following members:

S/N NAME OF DIRECTOR POSITION
1. Mr. Adeyemi Lawal Chairman
2. Mr. Afolabi Adegbayo Shareholder
3. Mr. Akinola Oladapo Shareholder
4. Mr. Mobolaji Adewumi Director
5. Mr. Chuks Ozigbo Director

The Committee has adopted the functions of the Audit Committee as laid down in Section 404[7]
of the Companies and Allied Matters Act, 2020

AUDITORS

The Auditors, Messrs. Deloitte & Touché has indicated their willingness, to continue in office as the
Company’s Auditors in accordance with Section 401 [2] of the Companies and Allied Matters Act,
2020. The firm ensures that its responsibilities to the Company are carried out in an independent
manner.

BY ORDER OF THE BOARD

GBEMINIYI SHODA
FRC/2015/NBA/0000011768
Group Company Secretary
163/165 Broad Street,
Lagos.

April 19, 2022

60 VFD Group plc 2021 Annual Report & Financials

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Consolidation • Stability • Focus 61

STATUTORY AUDIT COMMITTEE
REPORT

TO THE MEMBERS OF VFD GROUP PLC

In accordance with the provision of Section 404(4) of the Companies and Allied Matters Act
2020, the members of the Audit Committee of VFD Group Plc hereby report on the financial
statements for the year ended 31 December 2021 as follows:

We have exercised our statutory functions under Section 404(4) of the Companies and Allied
Matters Act 2020 and acknowledge the co-operation of management staff in the conduct of
these responsibilities.

We are of the opinion that the accounting and reporting policies of the Company are in accordance
with legal requirements and agreed ethical practices and that the scope and planning of both the
external and internal audits for the year ended 31 December 2021 were satisfactory and reinforce
the Company’s internal control systems.

We have deliberated with the external auditors, who have confirmed that necessary co-operation
was received from management in the course of their statutory audit and we are satisfied
with management’s responses thereon and with the effectiveness of the Company’s system of
accounting and internal control.

Members of the Audit committee are:

S/N MEMBERS POSITION

1 Mr. Adeyemi Lawal Chairman
2 Mr. Akinola Oladapo Shareholder
3 Mr. Afolabi Adegbayo Shareholder
4 Mr. Mobolaji Adewumi Director
5 Mr. Chuks Ozigbo Director

The Company Secretary serves as the Secretary to the Committee.


Adeyemi Lawal
FRC/2012/ICAN/00000000280
Chairman, Audit Committee
19 April 2022

62 VFD Group plc 2021 Annual Report & Financials

STATEMENT OF DIRECTORS’
RESPONSIBILITIES

The Directors of VFD Group Plc are responsible GOING CONCERN:
for the preparation of the consolidated and
separate financial statements that give a The Directors have made an assessment of
true and fair view of the financial position of the Company’s ability to continue as a going
the Group and Company as at 31 December concern and have no reason to believe the
2021, and the results of its operations, cash Company will not remain a going concern in
flows and changes in equity for the year the year ahead.
ended 31 December 2021, in compliance with
International Financial Reporting Standards
(“IFRS”) and in the manner required by the CERTIFICATION OF FINANCIAL
Companies and Allied Matters Act 2020, the STATEMENTS
Financial Reporting Council of Nigeria Act
2011 and the Investments and Securities Act In accordance with section 405 of the
CAP S124 LFN 2007. Companies and Allied Act 2020, the Chief
Executive Officer and the Chief Financial
In preparing the consolidated and separate Officer certify that the financial statements
financial statements, the Directors are have been reviewed and based on our
responsible for: knowledge, the

(i) audited financial statements do
• properly selecting and applying
accounting policies; not contain any untrue statement
of material fact or omit to state a
• presenting information, including material fact, which would make the
accounting policies, in a manner that statements misleading, in the light of
provides relevant, reliable, comparable the circumstances under which such
and understandable information; statement was made, and

• providing additional disclosures (ii) audited financial statements and all
when compliance with the specific other financial information included
requirements in IFRSs are insufficient in the statements fairly present, in
to enable users to understand the all material respects, the financial
impact of particular transactions, other condition and results of operation
events and conditions on the Group of the Company as of and for, the
and Company’s financial position and periods covered by the audited
financial performance. financial statements.




Consolidation • Stability • Focus 63

We have disclosed:


i. all significant deficiencies in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarise and report financial
data, and has identified for the company’s auditors any material weaknesses in internal
controls, and

ii. whether or not, there is any fraud that involves management or other employees who
have a significant role in the Company’s internal control; and

iii. as indicated in the report, whether or not, there were significant changes in internal
controls or in other factors that could significantly affect internal controls subsequent to
the date of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.



The consolidated and separate financial statements of the Group and Company for the year ended
31 December 2021 were approved by Directors on 19 April 2022.


On behalf of the Directors of the Group

Mr. Nonso Okpala Mr. Folajimi Adeleye

Group Managing Director Group Chief Finance Officer
FRC/2013/ FRC/2017/
ICAN/00000004697 ICAN/00000017043

64 VFD Group plc 2021 Annual Report & Financials

STATEMENT ON VFD GROUP BOARD
EVALUATION FY2021

VFD Group has a stated commitment to high standards of Corporate Governance. In this regard,
the Institute of Directors Centre for Corporate Governance (IoDCCG) was engaged by VFD Group
to carry out an evaluation of the performance of the Board of Directors for the year 2021, in
line with the provisions of the Nigerian Code of Corporate Governance 2018 (NCCG 2018), the
SEC Corporate Governance Guideline 2020, the Companies & Allied Matters Act 2020 (CAMA
2020) and other global best practices on Boards’ performance and Corporate Governance. By
implication and inevitably, we assessed the Company’s adherence to the NCCG 2018, and other
relevant guidelines mentioned.

In carrying out the Board evaluation, we assessed eight key focus areas and their subsets. These are
Board Structure and Composition; Strategy and Planning; Board Functioning and Effectiveness;
Monitoring, Measuring and Reporting Performance; Risk Management, Audit, and Compliance;
Sustainability and Good Corporate Citizenship; Transparency and Disclosure; and Individual
Directors Assessment. These focus areas are all derived from the 28 principles relevant to Board
Evaluation as contained in NCCG 2018. Based on our evaluations the following are our findings
highlighted below:

BOARD STRUCTURE & COMPOSITION

The Group’s board structure and composition are satisfactory and largely in line with NCCG
statutes. The Group has one Independent Non-Executive Director and efforts are on to recruit
2 Independent Non-Executive Directors as now required under CAMA 2020. Skills and gender
diversity are reasonably adequate. The Board Committees exist and work in accordance with
their charters on tasks delegated by the Board. The Board has now established a Board Audit
Committee as recommended in the previous year’s exercise.

STRATEGY & PLANNING

The Group has segmented its strategic plan into three phases which are 2016-2018, 2019-2023,
2024 -2028 and this is in line with our recommendation from the last evaluation. The plan is being
monitored at the Board level.

65 Navigatin2g02a0vAernynual R6e5port
Uncertain World& Financials

BOARD FUNCTIONING & EFFECTIVENESS

We reviewed the Board Minutes and saw evidence of robust debates and discussions on issues.
The Board meetings were held quarterly, and minutes were prepared and reviewed with actions
and decisions taken. Despite the continuing effects of the pandemic, the Company had meetings
with near 100% attendance. Committee meetings were also held in line with the agenda and
evidenced by minutes. We also noted there is now a Board Audit Committee in line with the
recommendations of NCCG 2018 (Principle 11).

MONITORING & MEASURING PERFORMANCE

The Board expressed its satisfaction with Executive Management’s performance and has now
undertaken two Board Evaluation exercises for the years 2019 and 2020. This exercise will be the
third which is commendable.

RISK MANAGEMENT, AUDIT & COMPLIANCE

The Audit and Compliance framework as well as the Risk Management framework is in place and
working reasonably satisfactorily. The Principles being employed are comprehensive and based
on best practice guidelines.

SUSTAINABILITY AND GOOD CORPORATE CITIZENSHIP

VFD as an organization has continued to demonstrate some commitment to social responsibility
and expressed its desire to comply with global best practices in environmental, social, and
sustainability principles. A number of the relevant policies and procedures are in place.

TRANSPARENCY AND DISCLOSURE

The Group has adequately addressed the Transparency and Disclosure requirements through
appropriate policies and reputable external Auditor Reporting, Compliance, and Audit processes.
The Annual General Meeting of the Group shareholders also provided evidence of this.

66 2020 Annual Report

& Financials

INDIVIDUAL DIRECTORS ASSESSMENT

The individual Directors’ peer assessment indicated better overall performances this year for most
of the Directors. The specific scores will again be communicated to the Chairman for his action.
We will liaise with the Chairman to ensure this exercise is satisfactorily concluded.
It is our considered opinion that the Board of VFD Group has continued in its commitment to
entrenching the tenets of good corporate governance practices in the Company. This is evident
from the implementation of some of the recommendations in the last exercise and prevailing
practices of the Company which are largely consistent with the provisions of both statutes and
regulations regarding corporate governance; especially the Companies and Allied Matters Act
2020, the Nigerian Code of Corporate Governance 2018 and the SEC Corporate Governance
Guideline 2020.
Consequently, our overall rating of the performance of the Board and its individual Directors is Very
Good. However, there are areas requiring improvement which we have highlighted for attention
and further action in the detailed report. We trust that the Board will attend to these to achieve
sustained improvements in line with its aspirations.
Signed

Nerus Ekezie, MBA, MNIM, FIMD, FIMC, FIMS (UK)
Ag. Chief Executive Officer, IoDCCG

67 Navigatin2g02a0vAernynual R6e7port
Uncertain World& Financials

P.O. Box 965 Deloitte & Touche
Marina Civic Towers
Lagos Plot GA 1, Ozumba Mbadiwe Avenue
Nigeria Victoria Island
Lagos
Nigeria

Tel: +234 (1) 904 1700
www.deloitte.com.ng

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF VFD GROUP PLC

As at 31 December 2021

We have audited the accompanying consolidated and separate financial statements of VFD Group
Plc (“the company’) and its subsidiaries (together “the group”) which comprise the consolidated
statement of financial position as at 31 December 2021, the consolidated statement of profit or loss
and other comprehensive income, the statement of changes in equity, the consolidated statement
of cash flow for the year then ended, and the notes to the consolidated and separate financial
statements including a summary of significant accounting policies.

In our opinion, the consolidated and separate financial statements give a true and fair view of the
consolidated and separate financial position of VFD Group Plc as at 31 December, 2021 and the
financial performance and cash flows for the year then ended in accordance with the International
Financial Reporting Standards, the Companies and Allied Matters Act, 2020, Investment and
Securities Act CAP S124 LFN 2007 and the Financial Reporting Council of Nigeria Act, 2011.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of VFD Group Plc
in accordance with the Institute of Chartered Accountants of Nigeria (ICAN) Professional Code of
Conduct and Guide for Accountants and other independence requirements applicable to performing
audits of financial statements in Nigeria. We have fulfilled our other ethical responsibilities in
accordance with the ICAN Code and in accordance with other ethical requirements applicable to
performing audits in Nigeria. The ICAN Code is consistent with the International Ethics Standards
Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

68 VFD Group plc 2021 Annual Report & Financials

KEY AUDIT MATTERS

Key audit matter is the matters that, in our professional judgment, was of most significance in
our audit of the consolidated and separate financial statements of the current year. The matter
was addressed in the context of our audit of the consolidated and separate financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the
matters. The key audit matter below relates to the audit of the consolidated and separate financial
statements.

Key Audit Matter How the matter was addressed in the audit
Loan loss impairment

IFRS 9- “financial instruments” introduces a new Our audit procedures to assess the adequacy of the
forward- looking impairment model, requiring loan loss impairment in line with IFRS 9 included a
companies to provide for expected credit losses review of the Company’s business Model to test the
(ECLs) on Financial Instruments. It also includes new design and operating effectiveness of the key controls
requirements and guidance on the classification and over the completeness and accuracy of the key inputs
measurement of financial assets. and assumptions into the IFRS 9 impairment models.

In estimating the expected credit losses (ECLs) on With the assistance of our IFRS (Credit) Specialist(s),
loans and advances, management makes use of we:
significant assumptions and judgement in determining
the impairment loss. 1. Obtained a detailed understanding of the default
definition(s) used in the ECL calculation.
Some of the key assumptions used are:
2. Tested the underlying calibration of data behind
• Assessment of significant increase in credit risk. the determination of the probability of default
• Calculation of lifetime probabilities of default( PD) by agreeing same to underlying supporting
documentation.
as well as lifetime expected credit loss (ECL)
• Loss given default (LGD) 3. Tested the disclosures to ensure that the required
• Forward looking information macro-economic disclosures under IFRS 9 have been appropriately
disclosed.
factors (e.g. unemployment rates, inflation rate
etc.) 4. Challenged the criteria used to allocate asset to
stage 1, 2 and 3 in accordance with IFRS 9;
Because of the significance of these estimates and
judgement, the audit of loan impairment is considered 5. Tested assets in stages 1, 2 and 3 to verify that
a key audit matter. they were allocated to the appropriate stage;

6. Tested the data used in the ECL calculation
(including the macro economic factors) by
reconciling to source systems;

Based on our review, we found that the Company’s
impairment methodology, including the model,
assumptions and key inputs used by management to
estimate the amount of loan impairment losses were
comparable with historical performance, and prevailing
economic situations and that the estimated loan
loss impairment determined was appropriate in the
circumstances.

Consolidation • Stability • Focus 69

OTHER INFORMATION

The Directors are responsible for the other information. The other information comprises the
Directors’ Report as required by Companies and Allied Matters Act, 2020, Corporate Governance
Report and the Statement of Director’s Responsibility, which we obtained prior to the date of this
auditor’s Report. The other information does not include the consolidated and separate financial
statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the consolidated and separate financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED AND
SEPARATE FINANCIAL STATEMENTS

The Directors are responsible for the preparation and fair presentation of the consolidated and
separate financial statements in accordance with International Financial Reporting Standards and
the requirements of the Companies and Allied Matters Act 2020, Investment and Securities Act
CAP S124 LFN 2007 and the Financial Reporting Council of Nigeria Act, 2011 and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated and
separate financial statements that are free from material misstatement, whether due to fraud or
error.

In preparing the consolidated and separate financial statements, the Directors are responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group and the Company or to cease operations, or have no realistic
alternative but to do so.

70 VFD Group plc 2021 Annual Report & Financials

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF CONSOLIDATED
AND SEPARATE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated and separate
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated and separate
financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and
separate financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group and the Company’s internal
control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis
of accounting and based on the audit evidence obtained, whether a material
uncertainty exists relating to events or conditions that may cast significant
doubt on the Group and Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to continue as a going concern.

Consolidation • Stability • Focus 71

• Evaluate the overall presentation, structure and content of the consolidated and
separate financial statements, including the disclosures, and whether the Group and
company’s financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the Fifth Schedule of Companies and Allied Matters Act 2020 we expressly
state that:

• We have obtained all the information and explanation which to the best of our
knowledge and belief were necessary for the purpose of our audit.

• The Group has kept proper books of account, so far as appears from our examination
of those books.

• The Group and Company’s financial position and its statement of profit or loss and
other comprehensive income are in agreement with the books of account and returns.

During the year, the Group contravened certain guidelines issued by the Securities and Exchange
Commission. The details of the contraventions and the related penalties are as disclosed in note
XX of the consolidated and separate financial statements.

For: Deloitte & Touche
Chartered Accountants
Lagos, Nigeria
March, 2022

Engagement Partner: Ojo Joshua, FCA,
FRC/2013/ICAN/00000000849

72 VFD Group plc 2021 Annual Report & Financials

04

FINANCIAL
STATEMENTS

• CONSOLIDATED AND SEPARATE STATEMENT OF
FINANCIAL POSITION

• CONSOLIDATED AND SEPARATE STATEMENT OF
COMPREHENSIVE INCOME

• CONSOLIDATED AND SEPARATE STATEMENT OF
CHANGES IN EQUITY

• NOTES TO THE CONSOLIDATED AND SEPARATE
FINANCIAL STATEMENTS

• RISK MANAGEMENT

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME

AS AT 31 DECEMBER 2021

Group Company

Notes 31 December 31 December 31 December 31 December

2021 2020 2021 2020

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

Gross Earnings 4 9,953,390 6,653,993 5,420,558 4,411,832
Interest and similar income 5 7,326,366 3,687,407 3,797,562 1,633,440
Interest and similar expense 6 (7,635,543) (1,043,033) (4,020,350) (982,459)
Net trading income 7 6,244,544 2,939,850 3,436,696 2,827,027
12 5,935,367 5,584,224 3,213,908 3,478,007
Net operating income 9 4,315,900 1,654,825 2,135,403 1,105,045
Other income 8 (515,646) (659,587) (146,522) (245,751)
Impairment of financial assets
Share of profit from associate 10 217,769 - 217,769 -
Net gains on financial assets at fair valued 11 - 74,531 - 74,531
through profit or loss 14
9,953,390 6,653,993 5,420,558 4,411,832
Total Revenue 13 (1,964,570) (1,033,921) (640,514) (399,164)
Personnel expenses (3,408,958) (1,277,416) (1,175,747) (886,130)
Other operating expenses 29.1 (638,743) (191,564) (187,608) (139,371)
(75,439)
Depreciation and amortisation - (2,578,340) - -
4,075,653 (2,003,869) (1,424,665)
Impairment allowance (6,012,271) (726,360)
3,941,120 3,349,293 3,416,688 2,987,167
Total Expenses (330,328) (387,462)
Profit before income tax (936,880) 3,086,360 2,599,705
Income tax expense 3,004,240

Profit for the year -- --

Other comprehensive income, net 220,300 914,923 120,788 832,704
of income tax Items that will not be
reclassified subsequently to profit or loss 220,300 914,923 120,788 832,704
Net fair value loss on investments in
equity instruments designated as at 3,224,539 4,264,217 3,207,147 3,432,410
FVTOCI
Items that may be reclassified 2,929,488 3,193,930 3,086,360 -
subsequently to profit or loss 74,752 155,363 - -
Net fair value gain/(loss) on investments 2,599,705
in financial instruments designated as 3,004,240 3,349,293 3,086,360
FVTOCI

Other comprehensive income for the
period, net of taxes

Total comprehensive income for the year

Profit for the year attributable to:
Equity holders of the Company
Non Controlling Interest

Other comprehensive income 36.1 220,300 901,768 120,788 832,704
attributable to: - 13,155 - -
Equity holders of the Company
220,300 914,923 120,788 832,704
Non Controlling Interest
2,371 2,809 2,436 2,180
Earnings per share-basic (kobo) 16

74 VFD Group plc 2021 Annual Report & Financials

CONSOLIDATED & SEPARATE STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

Group Company

Notes 31 December 31 December 31 December 31 December

17 2021 2020 2021 2020
19
20 =N=' 000 =N=' 000 =N=' 000 =N=' 000
21
ASSETS 15 3,881,378 4,490,804 2,306,643 4,077,652
Cash and cash equivalents 22 15,170,586 12,792,413 - -
Funds under management 24 63,582,110 25,899,754
Investment in financial assets 23 41,459,270 17,997,509
Investments in subsidiaries 24 - - 4,181,406 2,414,124
Investment in associates 4,095,921 - 4,095,921 -
Property, plant and equipment 25 1,808,409 340,367 1,424,005
Operating lease 17a 945,259 - - -
Intangible assets 18 134,637 113,007 89,708 98,670
Investment property and development 26 612,822 6,080,258 2,389,201 3,825,175
property 4,571,669
Trade and other receivables 27
Statutory deposit 28 9,670,123 5,373,563 7,005,362 4,060,099
Special placement with CBN 29 1,780 - - -
Deferred tax assets 30 - -
Goodwill 31 - 25,000,000 - 25,000,000
26 117,076 - 95,944
TOTAL ASSETS 157,102 - -
32 61,867,878
LIABILITIES 33 102,823,387 81,675,284 58,993,178
Funds Under Management 34
Borrowings 35 26,062,482 25,248,777 - -
Other liabilities 36 8,379,397 7,366,178 33,536,150 22,161,396
Deposit Liabilities 25,519,858 13,619,041 28,487,798
Current tax liabilities 29,068,807
Deferred tax liabilities 25,820,007 9,285,817 - -
907,109 812,396 438,889 499,038
TOTAL LIABILITIES 101,216 12,630
142,614 -
SHAREHOLDERS FUND 86,790,069 71,794,605
Share capital 47,736,694 51,148,232
Share Premium
Retained earnings 63,342 59,616 63,342 59,616
Regulatory risk reserve 7,912,098 3,822,062 7,912,098 3,822,062
Other reserves 5,623,548 5,391,222 3,197,496
4,199,114
TOTAL SHAREHOLDERS FUND 2,690 13,486 - -
Non-Controling Interest 1,040,679 764,522 765,772
14,642,357 820,379 14,131,184 7,844,946
TOTAL LIABILITIES AND 1,390,961 8,914,657
SHAREHOLDERS FUND - -
102,823,387 966,023
61,867,878 58,993,178
81,675,284

Olatunde Busari (SAN) Nonso Okpala
(CHAIRMAN) (GROUP MANAGING DIRECTOR)
FRC/2013/ICAN/00000004697
FRC/2019/NBA/00000019449

Folajimi Adeleye
(GROUP CHIEF FINANCE OFFICER)

FRC/2017/ICAN/00000017043

Consolidation • Stability • Focus 75

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2021

Share Retained Share Regulatory Other Non- Total
Capital Earnings Premium risk reserve Reserves controlling
=N=' 000
At 1 January 2021 =N=' 000 =N=' 000 =N=' 000 =N=’ 000 =N=' 000 interest 9,880,679
Share of newly 59,616 4,199,113 3,822,062 13,486 820,379
consolidated subsidiary - (501,177) - - =N=' 000 (87,135)
Right Issue -
966,023
Transfer from profit or loss
account 414,040
Dividend paid
3,726 - - - - 4,093,762
Transfer to/(from) - 2,929,488
regulatory reserve 4,090,036 - - 74,752 3,004,240
Fair value reserves -
At 31 December 2021
- - - - (63,854)
(1,014,672) - (10,796) (1,078,526)

- 10,796 -- -

- - - - 220,300 - 220,300
63,342 5,623,548 7,912,098 2,690 1,040,679 1,390,961 16,033,320

Company 59,616 3,197,496 3,822,062 - 765,772 - 7,844,946
At 1 January 2021 3,726 - -- - 4,093,763
Rights issue 4,090,037
- 3,086,360 - -- - 3,086,360
Transfer from profit or
loss account - (1,014,672) - -- -
Dividend paid 122,038 (1,014,672)
- - - - (122,038)
Reclassification - - - 120,788 --
Fair value reserve 63,342 5,391,222 7,912,099 - 764,522 - 120,788
At 31 December 2021 - 14,131,185

76 VFD Group plc 2021 Annual Report & Financials

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 DECEMBER 2021

Share Retained Share Regulatory Other Non- Total
Capital Earnings Premium risk reserve Reserves controlling
=N=' 000
=N=' 000 =N=' 000 =N=' 000 =N=’ 000 =N=' 000 interest
5,982,102
59,616 1,406,457 3,822,062 =N=' 000 50,000
- - -
Group - - 6,462 (81,389) 768,894 3,349,293
At 1 January 2020 3,193,929 - - - 50,000
Capital injection - - - 155,364 (415,639)
Transfer from profit or loss - (394,249) - -
account (7,024) - - (21,390)
Dividend paid - 7,024 -- 914,923
Transfer to/(from) -
regulatory reserve - 901,768 13,155
Fair value reserves

At 31 December 2020 59,616 4,199,113 3,822,062 13,486 820,379 966,023 9,880,679

Company 59,616 989,987 3,822,062 - (66,932) - 4,804,733
At 1 January 2020 - 2,599,705 - -- - 2,599,705
Transfer from profit or loss
account - (392,196) - -- - (392,196)
Dividend paid -- - - 832,704 - 832,704
Fair value reserve

At 31 December 2020 59,616 3,197,496 3,822,062 - 765,772 - 7,844,946

Consolidation • Stability • Focus 77

CONSOLIDATED STATEMENT OF CASH FLOWS

AS AT 31 DECEMBER 2021

Group Company

Notes 31 December 31 December 31 December 31 December

2021 2020 2021 2020

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

Profit for the year 3,004,240 3,349,293 3,086,360 2,599,705

Adjustments for; 13 936,880 726,360 330,328 387,462
Income tax recognised in profit or loss (2,266,917) - (138,817) -
Gain on disposal of property plant and
equipment (217,769) - (217,769) -
Share of profit from associate (711,358) - (785,206) -
Gain on fair value of investment property
1,293,676 4,202,713 2,281,075 3,046,256

Movement in working capital (4,296,560) 758,253 (2,945,263) 2,153,212
Decrease/(increase) in trade receivables (1,564,468) 15,106,026 - -
Increase in managed funds - -
Increase in deposit liabilities 16,534,189 9,285,817
Increase/ (decrease) in other liabilities (2,379,934) 22,863,850 (14,868,757) 22,467,933

Cash generated from operations 31 9,586,904 52,216,659 (15,532,944) 27,667,401
Income taxes paid (842,167) (243,639) (151,920) (56,686)
Net cash generated by/(used in) 8,744,737 51,973,020
operating activities (15,684,864) 27,610,715

Cash flows from investing activities 24 (4,728,820) (6,080,258) (4,728,820) (3,825,175)
Purchase of investment property 6,950,000 -
20 6,950,000 -
Proceeds on disposal of investment
property 22 (2,011,841) (670,414) (156,191) (307,162)
Purchase of property and equipments 1,200,000 -
16 3,597,345 120,000
Proceeds on disposal of property and
equipment 23 (562,493) (66,486) - (56,145)
Purchase of intangible assets (23,460,511) (13,836,321)
Purchase of financial assets (37,902,656) (18,692,304) 25,000,000 (15,000,000)
(Placementwith)/refund from CBN
Investment in subsidiary 25,000,000 (15,000,000) (1,767,282) (900,001)
Investment in associates (3,878,151) -
Net cash (used in) investing activities --
(840,954) (33,924,804)
(3,878,151) -

(13,536,616) (40,389,462)

78 VFD Group plc 2021 Annual Report & Financials

CONSOLIDATED STATEMENT OF CASH FLOWS

AS AT 31 DECEMBER 2021

Group Company

Notes 31 December 31 December 31 December 31 December

2021 2020 2021 2020

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

Cash flows from financing activities 90,142 64,504 303,465 80,282
Dividend received (1,014,672) (394,249) (1,014,672) (392,196)
Dividend paid to owners of equity capital 4,093,763 4,093,763
Proceeds from share issue - 11,438,739 -
Proceeds from borrowings 315,339 - 15,619,394
Bank overdraft 1,100,000
Repayment of borrowings 28 (402,119) (8,377,698) (63,986) (6,101,655)
17 (8,707,443) 14,757,310 9,205,826
Net cash (used in)/generated by 4,182,453
financing activities
(609,426) 2,876,113 (1,768,508) 2,891,734
Net increase/(decrease) in cash and cash 153,366 (2,501) -
equivalents 4,490,804 1,461,325
Effect of foreign exchange changes on 3,881,378 4,490,804 4,077,652 1,185,918
cash 2,306,643 4,077,652
Cash and cash equivalents at beginning
of period

Cash and cash equivalents at end of year

Consolidation • Stability • Focus 79

A boutique Hotel & short
stay Apartments designed

to taste for a perfect
home-away-from-home

experience

Meeting Rooms Hotel Rooms & 24/7 SPA-CATION
Apartments by Tirta Ayu Spa

Our property features: Ohuru by HSE
Gourmet
8 hotel rooms, 5 ultra modern apartments
ranging from studios to 2-bedroom apartments,

3 meeting rooms, 24/7 Spa, Café, Rooftop
Restaurant & Bar

Room rates from N55,125

CONTACT US: Prince Samuel Adedoyin street,
Ikate, Lekki, Lagos.

80 VFD Group plc 2021 Annual Report & Financials
09088050582 @boardroom.apartments

[email protected] HSE Café

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

1 COMPANY INFORMATION Nigeria. Information about the Company’s
subsidiaries are disclosed in Note 20.
The financial statements is the
consolidated financial statements of VFD The Consolidated and seperate financial
Group Plc, a company incorporated in statements for the year ended 31
Nigeria and its subsidiaries (hereafter December 2021 comprise the Company
referred to as ‘the Group’). and its subsidiaries (together referred
to as “the Group” and individually as
VFD Group Plc was incorporated on 7 “Group entities”). The separate financial
July 2009 as a private limited liability statements comprise the Company.
company under the Companies and The consolidated and separate financial
Allied Matters Act, CAP C20 LFN 2004. It statements for the year ended 31
commenced operations on 21 December December 2021 were approved for issue
2010. Its name formerly Viadaz FD by the Board of Directors on 30 April
Limited was changed to VFD Group 2022.
Limited by a special resolution of the
Board on 1 February 2016. The change of 2 SUMMARY OF SIGNIFICANT
name was registered at Corporate Affairs ACCOUNTING POLICIES
Commission on 14 March 2016.

The name of the Company was again The principal accounting policies
changed to VFD Group Plc by a special
resolution of the Board and with the adopted by the Group in the preparation
authority of the Corporate Affairs of these consolidated and separate
Commission on 28 January 2019. financial statements are set out below.
These policies have been consistently
The principal activity of the Company applied to all the years presented, unless
is to carry on business as an investment otherwise stated.
company and for that purpose to acquire
and hold either in its name or that of any
nominee, shares, stocks, debentures and 2.1 Going concern
other securities issued by any company
wherever incorporated. These financial statements have been
prepared on the going concern basis.
VFD Group Plc is domiciled in Nigeria The Group has no intention or need
and its registered address is at Foresight to reduce substantially its business
House, 163/165, Broad Street, Lagos. operations. The Management believes
that the going concern assumption
The Company’s parent and ultimate is approprate for the group due to
holding company is Premium Green sufficient capital adequacy ratio and
Limited, a company incorporated in projected liquidity, based on historical
experience that short term obligations
will be refinanced in the normal
course of business. Liquidity ratio

Consolidation • Stability • Focus 81

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

and continuous evaluation of current 2.2.1 Statement of Compliance
ratio of the group is carried out by
the group to ensure that there are no The consolidated and separate
going concern threats to the operation financial statements have been
of the group. prepared in accordance with
International Financial Reporting
Standards (“IFRS”) issued by the
2.2 Basisofpreparationandmeasurement International Accounting Standards
Board (IASB) and adopted by the
The consolidated financial statements Financial Reporting Council of Nigeria.
for the year ended 31 December 2021
have been prepared in accordance The consolidated and separate
with International Financial Reporting financial statements comply with
Standards (IFRS) as issued by the the requirement of the International
IASB. Additional information required Financial Reporting Standard,
by national regulations is included Companies and Allied Matters Act
where appropriate. 2020, Investment and Securities Act
Cap S127 LFN 2004, the Financial
The preparation of financial statements Reporting Council Act 2011 to the
in conformity with IFRS requires the extent that they are not in conflict with
use of certain critical accounting the International Financial Reporting
estimates. It also requires the Standards (IFRS).
Directors to exercise their judgement
in the process of applying the Group’s 2.2.2 Adoption of new and revised
accounting policies. Changes in Standards
assumptions may have a significant
impact on the financial statements
in the period the assumptions In the current year, the Company has
changed. The Directors believe that applied a number of amendments
the underlying assumptions are to IFRSs issued by the International
appropriate and that the Group’s Accounting Standards Board (IASB)
financial statements therefore present that are mandatorily effective for an
the financial position and results fairly. accounting period that begins on or
The areas involving a higher degree after 1 January 2020.
of judgement or complexity, or areas
where assumptions and estimates are New and amended IFRS Standards that
significant to the financial statements, are effective for the current year
are disclosed in the Notes.
Impact of the initial application of
Interest Rate Benchmark Reform
amendments to IFRS 9 and IFRS 7.

82 VFD Group plc 2021 Annual Report & Financials

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

In September 2020, the IASB issued The practical expedient applies only to

Interest Rate Benchmark Reform rent concessions occurring as a direct

(Amendments to IFRS 9, IAS 39 and IFRS consequence of COVID-19 and only if all

7). These amendments modify specific of the following conditions are met:

hedge accounting requirements to allow

hedge accounting to continue for affected (a) The change in lease payments

hedges during the period of uncertainty results in revised consideration
before the hedged items or hedging for the lease that is substantially
instruments affected by the current the same as, or less than, the
interest rate benchmarks are amended consideration for the lease
as a result of the on-going interest rate immediately preceding the
benchmark reforms. change;

(b) Any reduction in lease payments
The amendments also introduce new affects only payments originally
disclosure requirements to IFRS 7 for due on or before 30 June 2021
hedging relationships that are subject (a rent concession meets this
to the exceptions introduced by the condition if it results in reduced
amendments to IFRS 9. lease payments on or before 30
June 2021 and increased lease
payments that extend beyond 30
Impact of the initial application of June 2021); and

Covid-19-Related Rent Concessions (c) There is no substantive change to
other terms and conditions of the
Amendment to IFRS 16 lease.

In May 2020, the IASB issued Covid-19-

Related Rent Concessions (Amendment

to IFRS 16) that provides practical relief to New and revised Standards that are

lessees in accounting for rent concessions effective but with no material effect on

occurring as a direct consequence of the financial statements

COVID-19, by introducing a practical

expedient to IFRS 16. The practical In the current year, the Company has

expedient permits a lessee to elect not applied the below amendments to IFRS

to assess whether a COVID-19-related Standards and Interpretations issued by

rent concession is a lease modification. the Board that are effective for an annual

A lessee that makes this election period that begins on or after 1 January

shall account for any change in lease 2020. Their adoption has not had any

payments resulting from the COVID-19- material impact on the disclosures or on

related rent concession the same way it the amounts reported in these financial

would account for the change applying statements.

IFRS 16 if the change were not a lease

modification.



Consolidation • Stability • Focus 83

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

Amendments to The Company has adopted the amendments included in Amendments to
References to the references to the conceptual framework in IFRS Standards for the first time in the
Conceptual Framework current year. The amendments include consequential amendments to affected
in IFRS Standards Standards so that they refer to the new Framework. Not all amendments, however,
update those pronouncements with regard to references to and quotes from
the Framework so that they refer to the revised Conceptual Framework. Some
pronouncements are only updated to indicate which version of the Framework
they are referencing to (the IASC Framework adopted by the IASB in 2001, the
IASB Framework of 2010, or the new revised Framework of 2018) or to indicate
that definitions in the Standard have not been updated with the new definitions
developed in the revised Conceptual Framework. The Standards which are
amended are IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38,
IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32.

Amendments to IFRS 3 This is not applicable to the Company. The amendments clarify that while
Definition of a business businesses usually have outputs, outputs are not required for an integrated set
of activities and assets to qualify as a business. To be considered a business an
acquired set of activities and assets must include, at a minimum, an input and a
substantive process that together significantly contribute to the ability to create
outputs.

The amendments remove the assessment of whether market participants are
capable of replacing any missing inputs or processes and continuing to produce
outputs. The amendments also introduce additional guidance that helps to
determine whether a substantive process has been acquired.

The amendments introduce an optional concentration test that permits a
simplified assessment of whether an acquired set of activities and assets is not
a business. Under the optional concentration test, the acquired set of activities
and assets is not a business if substantially all of the fair value of the gross assets
acquired is concentrated in a single identifiable asset or group of similar assets.
The amendments are applied prospectively to all business combinations and asset
acquisitions for which the acquisition date is on or after 1 January 2020.

Amendments to IAS 1 The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in
and IAS 8 Definition of the current year. The amendments make the definition of material in IAS 1 easier to
material understand and are not intended to alter the underlying concept of materiality in
IFRS Standards. The concept of ‘obscuring’ material information with immaterial
information has been included as part of the new definition. The threshold for
materiality influencing users has been changed from ‘could influence’ to ‘could
reasonably be expected to influence’. The definition of material in IAS 8 has been
replaced by a reference to the definition of material in IAS 1. In addition, the IASB
amended other Standards and the Conceptual Framework that contain a definition
of ‘material’ or refer to the term ‘material’ to ensure consistency.

84 VFD Group plc 2021 Annual Report & Financials

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Company has not applied the

following new and revised IFRS Standards that have been issued but are not yet effective:

IFRS 17 Insurance Contracts
IFRS 10 and IAS 28 (amendments)
Sale or Contribution of Assets between an Investor and its
Amendments to IAS 1 Associate or Joint Venture
Amendments to IFRS 3
Amendments to IAS 16 Classification of Liabilities as Current or Non-current
Amendments to IAS 37
Annual Improvements to IFRS Standards Reference to the Conceptual Framework
2018-2020 Cycle
Property, Plant and Equipment—Proceeds before Intended Use

Onerous Contracts – Cost of Fulfilling a Contract

Amendments to IFRS 1 First-time Adoption of International
Financial Reporting Standards, IFRS 9 Financial Instruments,
IFRS 16 Leases, and IAS 41 Agriculture

IFRS 17 Insurance Contracts
IFRS 17 establishes the principles for the recognition, measurement, presentation and

disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts.

IFRS 17 outlines a general model, which is modified for insurance contracts with direct

participation features, described as the variable fee approach. The general model is simplified
if certain criteria are met by measuring the liability for remaining coverage using the
premium allocation approach. The general model uses current assumptions to estimate the
amount, timing and uncertainty of future cash flows and it explicitly measures the cost of
that uncertainty. It takes into account market interest rates and the impact of policyholders’
options and guarantees.

In June 2020, the IASB issued Amendments to IFRS 17 to address concerns and implementation
challenges that were identified after IFRS 17 was published. The amendments defer the date
of initial application of IFRS 17 (incorporating the amendments) to annual reporting periods
beginning on or after 1 January 2023. At the same time, the IASB issued Extension of the
Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) that extends the fixed
expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting
periods beginning on or after 1 January 2023. IFRS 17 must be applied retrospectively unless
impracticable, in which case the modified retrospective approach or the fair value approach
is applied. For the purpose of the transition requirements, the date of initial application is

Consolidation • Stability • Focus 85

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

the start if the annual reporting period in The directors of the Company anticipate
which the entity first applies the Standard, that the application of these amendments
and the transition date is the beginning may have an impact on the Company’s
of the period immediately preceding the financial statements in future periods
date of initial application. should such transactions arise.

Amendments to IFRS 10 and IAS 28 –
Sale or Contribution of Assets between Amendments to IAS 1 – Classification of
an Investor and its Associate or Joint
Venture Liabilities as Current or Non-current
The amendments to IFRS 10 and IAS 28 The amendments to IAS 1 affect only the
deal with situations where there is a sale
or contribution of assets between an presentation of liabilities as current or
investor and its associate or joint venture. non-current in the statement of financial
Specifically, the amendments state that position and not the amount or timing of
gains or losses resulting from the loss recognition of any asset, liability, income
of control of a subsidiary that does not or expenses, or the information disclosed
contain a business in a transaction with about those items.
an associate or a joint venture that is
accounted for using the equity method, The amendments clarify that the
are recognised in the parent’s profit or classification of liabilities as current or
loss only to the extent of the unrelated non-current is based on rights that are
investors’ interests in that associate or in existence at the end of the reporting
joint venture. period, specify that classification is
unaffected by expectations about
Similarly, gains and losses resulting whether an entity will exercise its right to
from the remeasurement of investments defer settlement of a liability, explain that
retained in any former subsidiary (that rights are in existence if covenants are
has become an associate or a joint complied with at the end of the reporting
venture that is accounted for using period, and introduce a definition of
the equity method) to fair value are ‘settlement’ to make clear that settlement
recognised in the former parent’s profit refers to the transfer to the counterparty
or loss only to the extent of the unrelated of cash, equity instruments, other assets
investors’ interests in the new associate or services.
or joint venture. The effective date of
the amendments has yet to be set by The amendments are applied
the Board; however, earlier application retrospectively for annual periods
of the amendments is permitted. beginning on or after 1 January 2023,
with early application permitted.


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AS AT 31 DECEMBER 2021

Amendments to IFRS 3 – Reference to of operating in the manner intended by
management. Consequently, an entity
the Conceptual Framework recognises such sales proceeds and
The amendments update IFRS 3 so that it related costs in profit or loss. The entity
measures the cost of those items in
refers to the 2018 Conceptual Framework accordance with IAS 2 Inventories.
instead of the 1989 Framework. They also
add to IFRS 3 a requirement that, for The amendments also clarify the
obligations within the scope of IAS 37, meaning of ‘testing whether an asset
an acquirer applies IAS 37 to determine is functioning properly’. IAS 16 now
whether at the acquisition date a present specifies this as assessing whether the
obligation exists as a result of past technical and physical performance of
events. For a levy that would be within the asset is such that it is capable of
the scope of IFRIC 21 Levies, the acquirer being used in the production or supply of
applies IFRIC 21 to determine whether goods or services, for rental to others, or
the obligating event that gives rise to a for administrative purposes.
liability to pay the levy has occurred by
the acquisition date.
If not presented separately in the
Finally, the amendments add an explicit statement of comprehensive income,
statement that an acquirer does not the financial statements shall disclose
recognise contingent assets acquired in a the amounts of proceeds and cost
business combination. The amendments included in profit or loss that relate to
are effective for business combinations items produced that are not an output
for which the date of acquisition is on of the entity’s ordinary activities, and
or after the beginning of the first annual which line item(s) in the statement of
period beginning on or after 1 January comprehensive income include(s) such
2022. Early application is permitted if proceeds and cost.
an entity also applies all other updated
references (published together with the The amendments are applied
updated Conceptual Framework) at the retrospectively, but only to items of
same time or earlier. property, plant and equipment that are
brought to the location and condition
Amendments to IAS 16 – Property, necessary for them to be capable of
operating in the manner intended by
Plant and Equipment—Proceeds before management on or after the beginning
of the earliest period presented in the
Intended Use financial statements in which the entity
“The amendments prohibit deducting first applies the amendments.

from the cost of an item of property, “The entity shall recognise the cumulative
plant and equipment any proceeds from effect of initially applying the amendments
selling items produced before that asset
is available for use, i.e. proceeds while
bringing the asset to the location and
condition necessary for it to be capable

Consolidation • Stability • Focus 87

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

as an adjustment to the opening balance Annual Improvements to IFRS Standards
of retained earnings (or other component 2018–2020
of equity, as appropriate) at the beginning
of that earliest period presented. The Annual Improvements include
amendments to four Standards.
The amendments are effective for annual
periods beginning on or after 1 January IFRS 1 First-time Adoption of
2022, with early application permitted. International Financial Reporting
Standards.
The amendment provides additional
Amendments to IAS 37 – Onerous relief to a subsidiary which becomes a
first-time adopter later than its parent.
Contracts—Cost of Fulfilling a Contract in respect of accounting for cumulative
The amendments specify that the ‘cost of translation differences. As a result of the
amendment, a subsidiary that uses the
fulfilling’ a contract comprises the ‘costs exemption in IFRS 1:D16(a) can now also
that relate directly to the contract’. Costs elect to measure cumulative translation
that relate directly to a contract consist differences for all foreign operations at the
of both the incremental costs of fulfilling carrying amount that would be included
that contract (examples would be direct in the parent’s consolidated financial
labour or materials) and an allocation of statements, based on the parent’s date
other costs that relate directly to fulfilling of transition to IFRS Standards, if no
contracts (an example would be the adjustments were made for consolidation
allocation of the depreciation charge for procedures and for the effects of the
an item of property, plant and equipment business combination in which the parent
used in fulfilling the contract). acquired the subsidiary. A similar election
is available to an associate or joint venture
The amendments apply to contracts for that uses the exemption in IFRS 1: D16 (a).
which the entity has not yet fulfilled all its
obligations at the beginning of the annual The amendment is effective for annual
reporting period in which the entity first periods beginning on or after 1 January
applies the amendments. Comparatives 2022, with early application permitted.
are not restated. Instead, the entity
shall recognise the cumulative effect
of initially applying the amendments IFRS 9 Financial Instruments
as an adjustment to the opening The amendment clarifies that in applying
balance of retained earnings or other
component of equity, as appropriate, the ‘10 per cent’ test to assess whether
at the date of initial application. to derecognise a financial liability, an
The amendments are effective for annual entity includes only fees paid or received
periods beginning on or after 1 January between the entity (the borrower) and
2022, with early application permitted. the lender, including fees paid or received
by either the entity or the lender on the
other’s behalf. The amendment is applied

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AS AT 31 DECEMBER 2021

prospectively to modifications and 2.3 Consolidation
exchanges that occur on or after the date
the entity first applies the amendment. Thefinancialstatementsofthesubsidiaries

The amendment is effective for annual used to prepare the consolidated
periods beginning on or after 1 January financial statements were prepared as of
2022, with early application permitted. the parent company’s reporting date. The
consolidation principles are unchanged
IFRS 16 Leases as against the previous year.
The amendment removes the illustration

of the reimbursement of leasehold
improvements. Subsidiaries
The consolidated and separate financial
As the amendment to IFRS 16 only
regards an illustrative example, no statements incorporates the financial
effective date is stated statements of the company and all its
subsidiaries where it is determined that
IAS 41 Agriculture there is a capacity to control. Control
The amendment removes the means the power to govern, directly or
requirement in IAS 41 for entities to indirectly, the financial and operating
exclude cash flows for taxation when policies of an entity so as to obtain
measuring fair value. This aligns the benefits from its activities.
fair value measurement in IAS 41 with
the requirements of IFRS 13 Fair Value
Measurement to use internally consistent All the facts of a particular situation are
cash flows and discount rates and
enables preparers to determine whether considered when determining whether
to use pretax or post-tax cash flows and control exists. Control is usually present
discount rates for the most appropriate when an entity has:
fair value measurement. The amendment
is applied prospectively, i.e. for fair value • power over more than one-half
measurements on or after the date an of the voting rights of the other
entity initially applies the amendment. entity;

The amendment is effective for annual • power to govern the financial
periods beginning on or after 1 January and operating policies of the
2022, with early application permitted. other entity;

• power to appoint or remove the
majority of the members of the
board of directors or equivalent
governing body; or

• power to cast the majority
of votes at meetings of the
board of directors or equivalent
governing body of the entity.



Consolidation • Stability • Focus 89

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

Subsidiaries are consolidated from the and applying an accounting policy that
date on which control is transferred to the is relevant and reliable. In making this
Group and cease to be consolidated from judgement, the Directors consider the
the date that control ceases. Changes requirements of IFRS dealing with similar
in the Group’s interest in a subsidiary and related issues and the definitions,
that do not result in a loss of control are recognition criteria and measurement
accounted for as equity transactions concepts for assets, liabilities, income
(transactions with owners). Any and expenses in the framework. The
difference between the amount by which Directors also consider the most recent
the non-controlling interest is adjusted pronouncements of other standard setting
and the fair value of the consideration bodies that use a similar conceptual
paid or received is recognised directly in framework to develop accounting
equity and attributed to the Group. standards, to the extent that these do not
conflict with the IFRS Framework or any
other IFRS or interpretation.
In its separate Financial statements, the
Accordingly the Group applies the
company accounts for its investment in guidance as set out in IFRS 3 on common
subsidiaries at cost. control transactions. The assets and
liabilities of the business transferred are
Inter-company transactions, balances measured at their existing book value in
and unrealised gains on transactions the consolidated financial statements of
between companies within the Group are the parent, as measured under IFRS.
eliminated on consolidation. Unrealised
losses are also eliminated in the same The Group incorporates the results of
manner as unrealised gains, but only the acquired businesses only from the
to the extent that there is no evidence date on which the business combination
of impairment. Consistent accounting occurs.
policies are used throughout the Group
for the purposes of consolidation. 2.5 Foreign currency translation


2.4 Common control transactions (a) Functional and presentation

A business combination involving entities currency
Foreign currency transactions are
or businesses under common control
is excluded from the scope of IFRS 3: translated and recorded in Naira using
Business Combinations. The exemption is the exchange rates prevailing at the
applicable where the combining entities dates of the transactions.Monetary assets
or businesses are controlled by the and liabilities denominated in foreign
same party both before and after the currencies are translated at the functional
combination. Where such transactions currency spot rates of exchange at the
occur, the Group, in accordance with reporting date.
IAS 8, uses its judgement in developing

90 VFD Group plc 2021 Annual Report & Financials

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

Differences arising on settlement or Deferred income tax is recognized, using
translation of monetary items are the liability method, on all temporary
recognised in profit or loss differences arising between the tax
bases of assets and liabilities and their
carrying values for financial reporting
Non-monetary items that are measured in purposes based on tax rates and laws
that have been enacted or substantively
terms of historical cost in a foreign currency enacted at the reporting period date and
are translated using the exchange rates are expected to apply when the related
at the dates of the initial transactions. deferred income tax liability is settled.
Non-monetary items measured at fair
value in a foreign currency are translated
using the exchange rates at the date Deferred tax assets and liabilities are
when the fair value is determined. The
gain or loss arising on translation of non- recorded under non-current assets and
monetary items measured at fair value is liabilities.
treated in line with the recognition of the
gain or loss on the change in fair value 2.7 Financial instruments
of the item (i.e.translation differences
on items whose fair value gain or loss Definition
is recognised in OCI or profit or loss are A financial instrument is any contract
also recognised in OCI or profit or loss,
respectively). that gives rise to a financial asset of one
entity and a financial liability or equity
instrument of another entity. A financial
2.6 Income taxation asset or liability is recognized when the
Group becomes a party to the contractual
Income tax expense comprises current provisions of the instrument.

and deferred tax.
Income tax expense is recognized in Initial recognition and measurement
profit or loss except to the extent that Financial assets are classified, at initial
results of transactions relate to items
recognized directly in equity, in which recognition, and subsequently measured
case it is recognized in equity. at amortized cost, fair value through
other comprehensive income (OCI), and
Current income tax is calculated on fair value through profit or loss.
the basis of estimated taxable income
for the year using tax rates enacted or The classification of financial assets
substantively enacted at the reporting at initial recognition depends on the
date, and any adjustment to tax financial asset’s contractual cash flow
recoverable or payable in respect of characteristics and the Company’s
previous years business model for managing them.
The Group initially measures a financial
asset at its fair value plus, in the case of

Consolidation • Stability • Focus 91

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

a financial asset not at fair value through example through trading revenue,
profit or loss, directly attributable enhancing yields or other costs and how
transaction costs. such economic activities are evaluated
and reported to key management
In order for a financial asset to be personnel; The significant risks affecting
classified and measured at amortized the performance of our businesses, for
cost or fair value through OCI, it needs example, market risk, credit risk, or other
to give rise to cash flows that are ‘solely risks and the activities undertaken to
payments of principal and interest (SPPI)’ manage those risks; and Historical and
on the principal amount outstanding. This future expectations of sales of the loans
assessment is referred to as the SPPI test or securities portfolios managed as part
and is performed at an instrument level. of a business model.

The Group’s business model for The Group’s business models fall into
managing financial assets refers to how three categories, which are indicative
it manages its financial assets in order to of the key strategies used to generate
generate cash flows. The business model returns.
determines whether cash flows will result
from collecting contractual cash flows,
selling the financial assets, or both. Subsequent measurement

Purchases or sales of financial assets For purposes of subsequent
that require delivery of assets within a measurement, financial assets are
time frame established by regulation or classified in three categories:
convention in the market place (regular
way trades) are recognized on the trade (a) Financial assets at amortized cost
date, i.e., the date that the Group commits (loans and receivables and debt
to purchase or sell the asset. instruments).

(b) Financial assets designated at
Business model assessment fair value through OCI with no
recycling of cumulative gains
The Company determines the business and losses upon derecognition
models at the level that best reflects (equity instruments)
how portfolios of financial assets
are managed to achieve the Group’s (c) Financial assets at fair value
business objectives. Judgment is used through profit or loss
in determining the business models,
which is supported by relevant, objective
evidence including: Financial assets at amortized cost
(loans and receivables and debt
How the economic activities of our instruments)
businesses generate benefits, for
The Group measures financial assets at
amortized cost if both of the following
conditions are met:

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AS AT 31 DECEMBER 2021

The financial asset is held within a business designated at fair value through OCI
model with the objective to hold financial when they meet the definition of equity
assets in order to collect contractual cash under IAS 32 Financial Instruments:
flows; and The contractual terms of the Presentation ,and are not held for trading.
financial asset give rise on specified dates The classification is determined on an
to cash flows that are solely payments instrument-by instrument basis.
of principal and interest on the principal
amount outstanding. Gains and losses on these financial
assets are never recycled to profit or
loss. Dividends are recognized as other
income in the statement of profit or loss
Financial assets at fair value through when the right of payment has been
OCI (debt instruments) established, except when the Group
The Group measures debt instruments benefits from such proceeds as a recovery
at fair value through OCI if both of the of part of the cost of the financial asset,
following conditions are met: in which case, such gains are recorded
in OCI. Equity instruments designated at
The financial asset is held within a fair value through OCI are not subject to
business model with the objective of impairment assessment.
both holding to collect contractual cash
flows and selling; and The contractual
terms of the financial asset give rise on
specified dates to cash flows that are Financial assets at fair value through
solely payments of principal and interest profit or loss
on the principal amount outstanding. Financial assets at fair value through
profit or loss include financial assets held
For debt instruments at fair value through for trading, financial assets designated
OCI, interest income, foreign exchange upon initial recognition at fair value
revaluation and impairment losses or through profit or loss, or financial assets
reversals are recognized in the statement mandatorily required to be measured at
of profit or loss and computed in the same fair value.
manner as for financial assets measured
at amortized cost. The remaining fair Financial assets are classified as held
value changes are recognized in OCI. for trading if they are acquired for the
Upon derecognition, the cumulative purpose of selling or repurchasing in
fair value change recognized in OCI is the near term. Derivatives, including
recycled to profit or loss. separated embedded derivatives, are
also classified as held for trading unless
they are designated as effective hedging
instruments. Financial assets with cash
Financial assets designated at fair value flows that are not solely payments of
through OCI (equity instruments) principal and interest are classified and
Upon initial recognition, the Group can measured at fair value through profit or
elect to classify irrevocably its equity
investments as equity instruments

Consolidation • Stability • Focus 93

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

loss, irrespective of the business model. provided above. Loans are carried at
Notwithstanding the criteria for debt amortized cost using the effective
instruments to be classified at amortized interest method, which represents the
cost or at fair value through OCI, as gross carrying amount less allowance
described above, debt instruments may for credit losses. Interest on loans is
be designated at fair value through profit recognized in interest income using
or loss on initial recognition if doing so the effective interest method. The
eliminates, or significantly reduces, an estimated future cash flows used in this
accounting mismatch. calculation include those determined by
the contractual term of the asset and all
Financial assets at fair value through fees that are considered to be integral to
profit or loss are carried in the statement the effective interest rate. Also included
of financial position at fair value with net in this amount are transaction costs and
changes in fair value recognized in the all other premiums or discounts.
statement of profit or loss.
Fees that relate to activities such as
This category includes derivative originating, restructuring or renegotiating
instruments and listed equity investments loans are deferred and recognized as
which the Group had not irrevocably Interest income over the expected term
elected to classify at fair value through of such loans using the effective interest
OCI. Dividends on listed equity method. Where there is a reasonable
investments are also recognized as other expectation that a loan will be originated,
income in the statement of profit or loss commitment and standby fees are also
when the right of payment has been recognized as interest income over the
established. expected term of the resulting loans using
the effective interest method. Otherwise,
Financial assets are reclassified when such fees are recorded as other liabilities
and only when the business model for and amortized into other operating
managing those assets changes. The income over the commitment or standby
reclassification takes place from the start period. Impairment losses on loans are
of the first reporting period following the recognized at each balance sheet date..
change. Such changes are expected to
be very infrequent and none occurred
during the period.
Derecognition
A financial asset (or, where applicable, a
Loans
part of a financial asset or part of a group
Loans are debt instruments recognized of similar financial assets) is primarily
initially at fair value and are subsequently derecognized (i.e., removed from the
measured in accordance with the Company’s statement of financial
classification of financial assets policy position) when:

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AS AT 31 DECEMBER 2021

The rights to receive cash flows from that the Group could be required to
the asset have expired, or The Company repay.
has transferred its rights to receive cash
flows from the asset or has assumed
an obligation to pay the received cash Impairment of financial assets
flows in full without material delay to The Group recognizes an allowance for
a third party under a ‘pass-through’
arrangement; and either expected credit losses (ECLs) for all
debt instruments not held at fair value
(a) The Company has transferred through profit or loss. ECLs are based on
substantially all the risks and the difference between the contractual
rewards of the asset, or cash flows due in accordance with the
contract and all the cash flows that the
(b) The Company has neither Group expects to receive, discounted
transferred nor retained at an approximation of the original
substantially all the risks and effective interest rate. The expected
rewards of the asset, but has cash flows will include cash flows from
transferred control of the asset. the sale of collateral held or other credit
enhancements that are integral to the
contractual terms.

When the Group has transferred its rights ECLs are recognized in two stages. For
to receive cash flows from an asset or has credit exposures for which there has
entered into a pass through arrangement, not been a significant increase in credit
it evaluates if, and to what extent, it risk since initial recognition, ECLs are
has retained the risks and rewards of provided for credit losses that result from
ownership. When it has neither transferred default events that are possible within
nor retained substantially all of the risks the next 12-months (a 12-month ECL).
and rewards of the asset, nor transferred For those credit exposures for which
control of the asset, the Group continues there has been a significant increase in
to recognize the transferred asset to the credit risk since initial recognition, a loss
extent of its continuing involvement. In allowance is required for credit losses
that case, the Group also recognizes an expected over the remaining life of the
associated liability. The transferred asset exposure, irrespective of the timing of
and the associated liability are measured the default (a lifetime ECL).
on a basis that reflects the rights and
obligations that the Group has retained. For trade receivables and contract assets,
the Group applies a simplified approach
Continuing involvement that takes the in calculating ECLs. Therefore, the Group
form of a guarantee over the transferred does not track changes in credit risk, but
asset is measured at the lower of the instead recognizes a loss allowance based
original carrying amount of the asset and on lifetime ECLs at each reporting date.
the maximum amount of consideration The Group has established a provision

Consolidation • Stability • Focus 95

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

matrix that is based on its historical credit Subsequent measurement
loss experience, adjusted for forward- The measurement of financial liabilities
looking factors specific to the debtors
and the economic environment. depends on their classification, as
described below:

The Group considers a financial asset in Financial liabilities at fair value through
default when contractual payments are profit or loss
90 days past due. However, in certain
cases, the Group may also consider a
financial asset to be in default when Financial liabilities at fair value through
internal or external information indicates
that the Company is unlikely to receive profit or loss include financial liabilities
the outstanding contractual amounts in held for trading and financial liabilities
full before taking into account any credit designated upon initial recognition as at
enhancements held by the Group. A fair value through profit or loss.
financial asset is written off when there is
no reasonable expectation of recovering Financial liabilities are classified as held
the contractual cash flows. for trading if they are incurred for the
purpose of repurchasing in the near term.
This category also includes derivative
Financial liabilities financial instruments entered into by the
Group that are not designated as hedging
Initial recognition and measurement instruments in hedge relationships as
defined by IFRS 9. Separated embedded
Financial liabilities are classified, at initial derivatives are also classified as held for
recognition, as financial liabilities at fair trading unless they are designated as
value through profit or loss, loans and effective hedging instruments.
borrowings, payables, or as derivatives
designated as hedging instruments in an Gains or losses on liabilities held for
effective hedge, as appropriate. trading are recognized in the statement
of profit or loss. Financial liabilities
All financial liabilities are recognized designated upon initial recognition at fair
initially at fair value and, in the case of value through profit or loss are designated
loans and borrowings and payables, net at the initial date of recognition, and only
of directly attributable transaction costs. if the criteria in IFRS 9 are satisfied. The
Group has not designated any financial
The Group’s financial liabilities include liability as at fair value through profit or
trade and other payables, loans and loss.
borrowings including bank overdrafts,
and derivative financial instruments. Loans and borrowings
This is the category most relevant to

the Group. After initial recognition,
interest-bearing loans and borrowings

96 VFD Group plc 2021 Annual Report & Financials

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AS AT 31 DECEMBER 2021

are subsequently measured at amortized 2.8 Revenue recognition
cost using the EIR method. Gains and
losses are recognized in profit or loss
when the liabilities are derecognized (a) Interest income and interest
as well as through the EIR amortisation expense
process. Interest income and interest expense for
all interest-bearing financial instruments
Amortized cost is calculated by taking are recognized within ‘interest income’
into account any discount or premium and ‘interest expense’ in profit or loss
on acquisition and fees or costs that using the effective interest method.
are an integral part of the EIR. The EIR
amortisation is included as finance costs The effective interest rate is the rate
in the statement of profit or loss. that exactly discounts estimated future
cash payments or receipts through the
expected life of the financial asset or
financial liability to the gross carrying
Derecognition amount of a financial asset (i.e. its
A financial liability is derecognized when amortized cost before any impairment
allowance) or to the amortized cost of
and only when the obligation under a financial liability. The calculation does
the liability is discharged or cancelled not consider expected credit losses and
or expires. When an existing financial includes transaction costs, premiums or
liability is replaced by another from the discounts and fees and points paid or
same lender on substantially different received that are integral to the effective
terms, or the terms of an existing liability interest rate, such as origination fees.
are substantially modified, such an
exchange or modification is treated as Once a financial asset or a group of similar
the derecognition of the original liability financial assets has been written down as
and the recognition of a new liability. a result of an impairment loss, investment
The difference in the respective carrying income is recognised using the rate of
amounts is recognized in the statement interest used to discount the future cash
of profit or loss. flows for the purpose of measuring the
impairment loss.

Offsetting of financial instruments (b) Fees and commission income
Financial assets and financial liabilities Fee and commission income and expense

are offset and the net amount is reported that are integral to the effective interest
in the statement of financial position rate on a financial asset or liability are
when and only when there is a currently included in the measurement of the
enforceable legal right to offset the effective interest rate. For other fees
recognized amounts and there is an and commission income, it is the Group’s
intention to settle on a net basis, to policy to recognize revenue from a
realize the assets and settle the liabilities
simultaneously.

Consolidation • Stability • Focus 97

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

contract when it has been approved by be derived from the use of the asset and, if
both parties, rights have been clearly significant and reasonably determinable,
identified, payment terms have been from its disposal at the end of its useful
defined, the contract has commercial life, net of disposal costs are discounted
substance, and collectability has been to their present value using a pre-tax
ascertained as probable. Revenue is discount rate that reflects current market
recognized when control of goods or assessments of the time value of money
services have been transferred. Control and the risks specific to the asset.
of an asset refers to the ability to direct
its use and obtain substantially all of the Cash flows are determined on the basis of
remaining benefits associated with the reasonable and documented assumptions
asset. that represent the best estimate of
the future economic conditions during
the remaining useful life of the asset,
(c) Dividend income giving more importance to independent
Dividends are recognized when the assumptions.

Group’s right to receive the payment An impairment loss is recognized if
is established, which is usually when the carrying amount of an asset or
shareholders approve the dividend. its cash-generating unit exceeds its
recoverable amount. Impairment losses
2.9 Impairment of non-financial assets are recognized in profit or loss.

The carrying amounts of the Group’s Impairment losses recognized in respect
of cash-generating units are allocated
non-financial assets other than deferred first to reduce the carrying amount of
tax assets are assessed at the end of each any asset allocated to the units and then
reporting date to determine whether to reduce the carrying amount of the
there is any indication of impairment. If other assets in the unit (group of units)
any such indication exists then the asset’s on a pro rata basis.
recoverable amount is estimated.
Impairment losses recognized in prior
The recoverable amount of an asset periods are assessed at each reporting
or, if the recoverable amount of single date for any indications that the loss
assets cannot be determined, for the has decreased or no longer exists. An
smallest identifiable group of assets impairment loss is reversed if there has
that generates independent cash inflows been a change in the estimates used to
from their continuous use, referred to determine the recoverable amount. An
as cash generating units, is the greater impairment loss is reversed only to the
of its value in use and its fair value less
costs to sell. In assessing value in use, the
estimated future cash flows expected to

98 VFD Group plc 2021 Annual Report & Financials

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

extent that the asset’s carrying amount Subsequent costs
does exceed the carrying amount that The cost of replacing part of an item of
would have been determined, net of
depreciation or amortisation, if no property or equipment is recognized
impairment loss had been recognized. in the carrying amount of the item if it
Reversals of impairment losses are is probable that the future economic
recognized in profit or loss. benefits embodied within the part will
flow to the Group and its cost can be
2.10 Property, Plant and Equipment measured reliably. The carrying amount
of the replaced is derecognized. The
The Group’s Property, Plant and costs of ordinary day-to-day servicing
and maintenance of property and
Equipment comprise leasehold equipment are recognized in profit or
loss as incurred.
improvement, plant and machinery, office
Depreciation
equipment, furniture and fittings and The depreciable amount of an asset
is its cost less the estimated residual
motor vehicle. value at the end of its useful life, if this
is significant and can be reasonably
Recognition and measurement determined. Depreciation begins when
All categories of property, plant and an asset is available for use and ceases
at the earlier of the date that the asset is
equipment are initially recognized at derecognized.
their purchase cost including any costs
directly attributable to bringing the
asset into operation when the following
conditions are met

(a) their values can be reasonably Depreciation is recognised in profit or
determined, loss on a straight line basis to write down
the cost of each asset, to their residual
(b) the economic benefit will accrue to values over the estimated useful lives of
the Group. each part of an item of property, plant and
equipment. Leased assets under finance
lease are depreciated over the shorter of
the lease term and their useful lives. The
Property, plant and equipment are following annual rates are applied.

subsequently stated at cost less

accumulated depreciation and

impairment losses, if any.

Consolidation • Stability • Focus 99

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2021

Leasehold improvement over the lease period
Building over the unexpired lease period
Plant and Machinery
Office Equipment 33.33%
Furniture and Fittings 33.33%
Motor Vehicle 25.00%
25.00%

The assets’ residual values, useful lives that right is not explicitly specified in an
and method of depreciation are reviewed, arrangement.
and adjusted prospectively if appropriate,
at the end of each reporting period. The Group engages in finance leases and
sale and leaseback transactions.
De-recognition
An item of property, plant and equipment Finance leases
Leases are classified as finance leases
and any significant part initially
recognized is derecognized on disposal whenever the terms of the lease transfer
or when no future economic benefits are substantially all the risks and rewards of
expected from its use or disposal. Any the ownership to the lessee. All other
gain or loss arising on de-recognition of leases are classified as operating leases.
the asset (calculated as the difference
between the net disposal proceeds and Sale and leaseback transactions
the carrying amount of the asset) is This arises when the Group sells an asset
included in profit or loss of the year the
asset is derecognized. and immediately reacquires the use of
the asset by entering into a lease with the
2.11 Leased assets buyer.

The determination of whether an Finance leaseback
arrangement is (or contains) a lease A profit or loss on sale is not immediately
is based on the substance of the
arrangement at the inception date. The recognized because the seller never
arrangement is assessed for whether disposes of the risks and rewards of
fulfillment of the arrangement is ownership. Any difference between the
dependent on the use of a specific asset sale price and the previous carrying value
or assets or the arrangement conveys a (profit) is deferred and amortized over
right to use the asset or assets, even if the lease term.

100 VFD Group plc 2021 Annual Report & Financials