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 51
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. However, the committee was actively involved in all the investment
decision of the company.
52 VFD Group plc 2021 Annual Report & Financials
BOARD CHANGES
RESIGNATION
The following Directors resigned in during the Financial Year:
• Dr. Samuel Onyishi
• Mr. Victor Fagbamila
BOARD APPOINTMENTS
1. The following Directors were appointed to the Board as Non-Executive Directors on May
28, 2021. The Securities and Exchange Commission was duly notified of the appointment
and same was approved by the Corporate Affairs Commission. These appointments shall be
presented to members for ratification at the Annual General Meeting.
• Mr. Kelvin Orogun
• Mr. Femi Akinware
• Mr. Folajimi Adeleye
2. 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 appointment and same was approved by the Corporate Affairs Commission. His
appointment 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 August 20, 2014 as an Executive Director, and
subsequently appointed as a Non-Executive Director effective August 23, 2021.
Consolidation • Stability • Focus 53
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 CAP C20 Laws of the Federation of Nigeria 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, CAP C20, LFN 2020 were as follows:
S/N NAME OF DIRECTOR DIRECT SHAREHOLDING INDIRECT SHAREHOLDING
1. Mr. Olatunde Busari [SAN] 174,787 Nil
2. Mr. John Okonkwo 122,516 Nil
3. Mr. Folajimi Adeleye Nil
4. Mr. Gbenga Omolokun 100,113 361,675
5. Mr. Azubike Emodi 159,375 2,848,068
6. Mr. Mobolaji Adewumi 1,485,715
7. Ms. Jewel Okwechime 1,893,296 7,818,637
8. Mr. Suleiman Lawal 156,060
9. Mr. Kelvin Orogun 4,552,820 330,991
10. Mr. Nonso Okpala 2,194,726 Nil
11. Mr. Adeniyi Adenubi Nil
12. Mrs. Ngozi Aghanya Nil
13. Mr. Femi Akinware 1,489,458 26,578,032
14. Mr. Chuks Celestine Ozigbo 106,250 8,827,858
15. Mr. Ayodele Onawunmi 8,710,924
Nil 3,994,837
Nil 11,454,451
Nil 4,878,048
54 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 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 55
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 no donations during the year ended December 31, 2021.
PROPERTY, PLANT AND EQUIPMENT
Information relating to changes in property, plant and equipment is given in Note 17 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 lines of responsibilities. Annually, trainings are identified for staff and followed through
56 VFD Group plc 2021 Annual Report & Financials
in accordance with an approved training plan There are contributory retirement benefit
meant to ensure that this objective is achieved. schemes for both management and
The Company encourages easy interaction employees of the Company in conformity
between Management and other staff of the with the Pensions Reform Act 2004.
Company to foster an atmosphere of warmth
at work and to kindle the necessary synergy EMPLOYEES’ INVOLVEMENT AND
required for the Company’s success. TRAINING
EMPLOYMENT OF DISABLED The Company has an effective employer/
PERSONS employee communication system aimed at
enhancing industrial harmony. Employees are
The Company operates a non-discriminatory kept fully informed as much as practicable of
policy on recruitment. Applications by the Company’s activities which particularly
disabled persons are always fully considered affect them as employees and are also
bearing in mind the respective aptitudes and encouraged to communicate any information
abilities of the applicants concerned. During useful to management through use of
the year under review, there was no disabled suggestion boxes and other channels. Regular
person in the Company’s employment. training programmes are usually arranged
for employees locally and where applicable,
HEALTH, SAFETY AND WELFARE overseas for the improvement of skills and
OF EMPLOYEES enhancement of career prospects.
The Company approaches Health, Safety POST BALANCE SHEET EVENTS
and Welfare issues affecting Staff with every
sense of seriousness and therefore maintains There were no post balance sheet events
an insurance health care scheme with Avon, which could have a material effect on the
a Health Maintenance Organization [HMO], financial position of the Company as at
licensed by the National Health Insurance December 31, 2021 and results attributable to
Scheme [NHIS] to provide health insurance to equity holders.
employees in the private sector. Through this
arrangement, each employee, their respective FIXED ASSETS
spouses, and dependents below the age of
eighteen [18] years are entitled to medical In the opinion of the Directors, the market
treatments in well-equipped, qualitative value of the Company’s fixed assets is not less
network of hospitals under the scheme. than as shown in the Balance Sheet.
Safety regulations are in place within the
Company’s premises and employees are
regularly informed of the regulations.
Consolidation • Stability • Focus 57
STATUTORY AUDIT COMMITTEE
The Company has a Statutory Audit Committee as follows:
S/N NAME OF DIRECTOR POSITION
1. Mr. Mobolaji Adewumi Chairman
2. Mr. Akinola Oladapo Shareholder
3. Mr. Afolabi Adegbayo Shareholder
4. Mr. Adeyemi Lawal Shareholder
5. Mr. Chuks Ozigbo Member
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,
CAP C20, LFN 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.
……………………….., 2022
58 VFD Group plc 2021 Annual Report & Financials
Consolidation • Stability • Focus 59
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.
60 2020 Annual Report
& 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.
61 Navigatin2g02a0vAernynual R6e1port
Uncertain World& 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 their aspirations.
Signed
Nerus Ekezie, MBA, MNIM, FIMD, FIMC, FIMS (UK)
Ag. Chief Executive Officer, IoDCCG
62 2020 Annual Report
& 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, 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.
Consolidation • Stability • Focus 63
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 stage 1, 2 and 3 to verify that they
a key audit matter. 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.
64 VFD Group plc 2021 Annual Report & Financials
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 CAP 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.
Consolidation • Stability • Focus 65
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 for 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. Evaluate the overall presentation, structure
66 VFD Group plc 2021 Annual Report & Financials
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.
• Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, an whether the 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
Consolidation • Stability • Focus 67
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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
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 9,945,509 6,653,993 5,240,186 4,411,832
Interest and Similar Income 5 7,053,147 3,687,407 3,797,562 1,633,440
Interest and Similar Expense 6 (1,043,033) (4,020,350) (982,459)
Net trading income 7 (7,628,374) 2,939,850 3,436,696 2,827,027
6,243,381 5,584,224 3,213,907 3,478,007
Net operating income 8 5,668,154 1,654,825 2,135,403 1,105,045
Other income 9 4,786,687
Dividend income from subsidiaries 10 - - - -
Impairment charge for credit losses 21/22 (509,331) (659,587) (109,122) (245,751)
Net gains on financial assets at fair valued -
through profit or loss 11 74,531 - 74,531
9,945,509
Total Revenue 35 (1,963,760) 6,653,993 5,240,186 4,411,832
Personnel expenses (3,454,091) (1,033,921) (640,514) (399,164)
Other operating expenses 35.1 (1,277,416) (1,175,747) (886,130)
Depreciation and amortisation (591,683) (187,608) (139,371)
Impairment allowance - (191,564)
(75,439) - -
Total Expenses (6,009,534) (2,578,340) (2,003,869) (1,424,665)
Profit before income tax 3,935,976 4,075,652
Income tax expense (529,369) (726,360) 3,236,316 2,987,167
3,406,607 3,349,292 (180,750) (387,462)
Profit for the year 3,055,566 2,599,705
Other comprehensive income, net -- --
of income tax Items that will not be
reclassified subsequently to profit or loss - 914,923 120,788 832,704
Net fair value loss on investments in
equity instruments designated as at - 914,923 120,788 832,704
FVTOCI 3,406,607 4,264,216 3,176,353 3,432,410
Items that may be reclassified
subsequently to profit or loss 3,294,693 3,193,929 3,055,566 -
Net fair value gain/(loss) on investments 173,421 155,364 - -
in financial instruments designated as 2,599,705
FVTOCI 3,406,607 3,349,292 3,055,566
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 - 901,768 120,788 832,704
attributable to: - 13,155 - -
Equity holders of the Company - 914,923
120,788 832,704
Non Controlling Interest
Earnings per share-basic (kobo) 14 2,689 2,809 2,412 2,180
70 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
2021 2020 2021 2020
=N=' 000 =N=' 000 =N=' 000 =N=' 000
ASSETS 15 3,880,378 4,490,804 2,306,643 4,077,652
Cash and cash equivalents
Funds under Management 18 15,170,586 12,792,413 --
Investment in financial assets
Investments in subsidiaries 19 63,552,349 25,899,754 41,496,668 17,997,509
Investment in associates
Property, plant and equipment 20 - - 4,181,406 2,414,124
Intangible assets
Investment Property 3,878,151 3,878,151
Trade and other receivables
Statutory Deposit 18 1,079,896 1,808,409 340,368 1,424,005
Special Placement with CBN
Deferred tax assets 22 612,822 113,007 89,708 98,670
TOTAL ASSETS
23 4,570,436 6,080,258 2,389,201 3,825,175
LIABILITIES
Managed funds 24 10,142,845 5,373,563 7,005,362 4,060,099
Borrowings
Other liabilities 16 1,780 - --
Deposit Liabilities
Current tax liabilities 17 - 25,000,000 - 25,000,000
Deferred tax liabilities
TOTAL LIABILITIES 25 244,521 117,076 95,944 95,944
SHAREHOLDERS FUND 103,133,764 81,675,284 61,783,451 58,993,178
Share capital
Share Premium 26 26,062,482 25,248,777 --
Retained earnings
Regulatory risk reserve 27 8,379,397 7,366,178 33,536,150 22,161,396
Other reserves
28 25,884,681 29,068,807 13,619,042 28,487,798
TOTAL SHAREHOLDERS FUND
Non-Controling Interest 29 25,820,007 9,285,817 --
TOTAL LIABILITIES AND 30 817,421 812,396 527,869 499,038
SHAREHOLDERS FUND
25 - 12,630 --
86,963,988 71,794,605 47,683,061 51,148,232
31 63,342 59,616 63,342 59,616
32 7,912,098 3,822,062 7,912,098 3,822,062
33 5,776,543 4,199,113 5,360,428 3,197,496
141,235 13,486 --
35 975,641 820,379 764,522 765,772
14,868,859 8,914,656 14,100,390 7,844,946
1,300,917 966,023 - -
103,133,764 81,675,284 61,783,451 58,993,178
1 (1,721,333) (0) 1,721,333
Olatunde Busari (SAN) Nonso Okpala
(CHAIRMAN) (GROUP MANAGING DIRECTOR)
FRC/2013/ICAN/00000004697
FRC/2019/NBA/00000019449
Folajimi Adeleye Consolidation • Stability • Focus 71
(GROUP CHIEF FINANCE OFFICER)
FRC/2017/ICAN/00000017043
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
=N=' 000
(a) Group 59,616 4,199,113 3,822,062 13,486 820,379 966,023 9,880,679
At 1 January 2021 - - - - - 183,873 183,873
Share of newly
consolidated subsidiary 3,726 4,090,036 4,093,762
Right Issue - -
Transfer from profit or loss 3,294,693 - - 173,421 3,468,114
account
Dividend paid - (1,014,672) - - - (22,400) (1,037,072)
Transfer to/(from) (127,749) 127,749
regulatory reserve -- -
Fair value reserves
- - - - 155,261 - 155,261
At 31 December 2021 63,342 5,776,543 7,912,098 141,235 975,641 1,300,917 16,169,777
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 3,055,566 4,090,037 --
- - -- - 3,055,566
Transfer from profit or loss
account - (1,014,672) - (122,038) -
Dividend paid - 120,788 (1,014,672)
- 122,038 - - 764,522 -
Reclassification 63,342 - 7,912,099
Fair value reserve - 120,788
At 31 December 2021 5,360,428 - 14,100,390
72 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 73
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 3,406,607 3,349,293 3,055,566 2,599,705
Adjustments for; 11 529,369 726,360 180,750 387,462
Income tax recognised in profit or loss 21/22 591,683 191,564 187,608 139,371
Depreciation & Amortization (291,688) (303,465) (80,282)
Dividend income 19.1 (1,447,921) (64,504) 109,122
Impairment losses recognised on - -
amortised cost 2,788,050 3,229,582
4,202,713 3,046,256
Movement in working capital (4,769,282) (2,945,263)
Decrease/(increase) in trade receivables (1,564,468) 758,253 - 2,153,212
Increase in managed funds 15,106,026 - -
Increase in deposit liabilities 16,534,189 -
Increase/ (decrease) in other liabilities (2,178,510) 9,285,817 (14,868,756)
22,863,850 22,467,933
Cash generated from operations
Income taxes paid 30 10,809,979 52,216,659 (14,584,436) 27,667,401
Net cash generated by/(used in) (210,985) (243,639) (151,920) (56,686)
operating activities 51,973,020
10,598,994 (14,736,356) 27,610,715
Cash flows from investing activities 23 (4,570,436) (6,080,258) 6,950,000 (3,825,175)
Disposal/(Purchase) of investment
property 21 (2,376,670) (670,414) (156,191) (307,162)
1,200,000 -
Purchase of property and equipments 21 - 120,000
Proceeds on disposal of property and - (56,145)
equipment 22 (562,493) (66,486) (23,500,409) (13,836,321)
(15,000,000)
Purchase of intangible assets (37,497,333) (18,692,304) 19,555,504
Purchase of financial assets (1,767,282) (900,001)
Placement with CBN 25,000,000 (15,000,000) (3,878,151) -
Investment in subsidiary
Investment in associates --
--
Net cash (used in) investing activities (20,006,932) (40,389,462) (1,596,532) (33,924,804)
74 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 291,688 64,504 303,465 80,282
Dividend received - (394,249) (1,014,672) (392,196)
Dividend paid to owners of equity capital 4,093,763
Proceeds from share issue 27 334,894 - -
Contribution by NCI 27 - - 11,374,754 -
Proceeds from borrowings (8,377,698) (63,986) 15,619,394
Repayment of borrowings 15 1,013,220 (8,707,443) (6,101,655)
1,639,802 14,693,323
Net cash (used in)/generated by 9,205,826
financing activities
(7,768,136) 2,876,113 (1,639,566) 2,891,735
Net increase/(decrease) in cash and cash 7,157,710 153,366 (131,443) -
equivalents 1,461,325 4,077,652
Effect of foreign exchange changes on 4,490,804 4,490,804 1,185,918
cash 3,880,378 2,306,643 4,077,653
Cash and cash equivalents at beginning
of period
Cash and cash equivalents at end of year
Consolidation • Stability • Focus 75
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 16.
“The financial statements is the
consolidated financial statements of VFD The consolidated financial statements
Group Plc, a company incorporated in for the year ended 31 December 2020
Nigeria and its subsidiaries (hereafter comprise the Company and its subsidiaries
referred to as ‘the Group’). “ (together referred to as “the Group” and
individually as “Group entities”). The
VFD Group Plc was incorporated on 7 separate financial statements comprise
July 2009 as a private limited liability the Company. The consolidated and
company under the Companies and separate financial statements for the year
Allied Matters Act, CAP C20 LFN 2004. It ended 31 December 2020 were approved
commenced operations on 21 December for issue by the Board of Directors on 30
2010. Its name formerly Viadaz FD April 2021.
Limited was changed to VFD Group
Limited by a special resolution of the 2 SUMMARY OF SIGNIFICANT
Board on 1 February 2016. The change of ACCOUNTING POLICIES
name was registered at Corporate Affairs
Commission on 14 March 2016.
The principal accounting policies
The name of the Company was again
changed to VFD Group Plc by a special adopted by the Group in the preparation
resolution of the Board and with the of these consolidated and separate
authority of the Corporate Affairs financial statements are set out below.
Commission on 28 January 2019. These policies have been consistently
applied to all the years presented, unless
The principal activity of the Company otherwise stated.
is to carry on business as an investment
company and for that purpose to acquire
and hold either in its name or that of any 2.1 Going concern
nominee, shares, stocks, debentures and
other securities issued by any company These financial statements have been
wherever incorporated prepared on the going concern basis.
The group has no intention or need
. to reduce substantially its business
VFD Group Plc is domiciled in Nigeria oeprations. The management believes
that the going concern assumption
and its registered address is at Foresight is approprate for the group due to
House, 163/165, Broad Street, Lagos. sufficient capital adequacy ratio and
projected liquidity, based on historical
The Company’s parent and ultimate experience that short term obligations
holding company is Premium Green will be refinanced in the normal
Limited, a company incorporated in course of business. Liquidity ratio
and continuous evaluation of current
76 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
ratio of the group is carried out by International Financial Reporting
the group to ensure that there are no Standards (“IFRS”) issued by the
going concern threats to the operation International Accounting Standards
of the group. Board (IASB) and adopted by the
Financial Reporting Council of Nigeria.
2.2 Basisofpreparationandmeasurement The Consolidated and Separate
financial statements comply with
The Consolidated financial statements the requirement of the International
for the year ended 31 December 2020 Financial Reporting Standard,
have been prepared in accordance Companies and Allied Matters Act
with International Financial Reporting 2020, Investment and Securities Act
Standards (IFRS) as issued by the Cap S127 LFN 2004, the Financial
IASB. Additional information required Reporting Council Act 2011 to the
by national regulations is included extent that they are not in conflict with
where appropriate. the International Financial Reporting
Standards (IFRS).
The preparation of financial
statements in conformity with IFRS 2.2.2 Adoption of new and revised
requires the use of certain critical
accounting estimates. It also requires Standards
the Directors to exercise its judgement
in the process of applying the Group’s
accounting policies. Changes in In the current year, the Company has
assumptions may have a significant applied a number of amendments
impact on the financial statements to IFRSs issued by the International
in the period the assumptions Accounting Standards Board (IASB)
changed. The Directors believe that that are mandatorily effective for an
the underlying assumptions are accounting period that begins on or
appropriate and that the Group’s after 1 January 2020.
financial statements therefore present
the financial position and results fairly. New and amended IFRS Standards that
The areas involving a higher degree are effective for the current year
of judgement or complexity, or areas
where assumptions and estimates are Impact of the initial application of
significant to the financial statements, Interest Rate Benchmark Reform
are disclosed in the Notes. amendments to IFRS 9 and IFRS 7.
“In September 2020, the IASB issued
2.2.1 Statement of Compliance
Interest Rate Benchmark Reform
The Consolidated and Separate
financial statements have been (Amendments to IFRS 9, IAS 39 and
prepared in accordance with
IFRS 7). These amendments modify
specific hedge accounting requirements
to allow hedge accounting to continue
Consolidation • Stability • Focus 77
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
for affected hedges during the period (a) The change in lease payments
of uncertainty before the hedged items results in revised consideration
or hedging instruments affected by the for the lease that is substantially
current interest rate benchmarks are the same as, or less than, the
amended as a result of the on-going consideration for the lease
interest rate benchmark reforms. immediately preceding the
change;
The amendments also introduce new
disclosure requirements to IFRS 7 for (b) Any reduction in lease payments
hedging relationships that are subject affects only payments originally
to the exceptions introduced by the due on or before 30 June 2021
amendments to IFRS 9.” (a rent concession meets this
condition if it results in reduced
lease payments on or before 30
Impact of the initial application of June 2021 and increased lease
payments that extend beyond 30
Covid-19-Related Rent Concessions June 2021); and
Amendment to IFRS 16 (c) There is no substantive change to
other terms and conditions of the
In May 2020, the IASB issued Covid-19- lease.
Related Rent Concessions (Amendment
to IFRS 16) that provides practical relief to
lessees in accounting for rent concessions New and revised Standards that are
occurring as a direct consequence of
COVID-19, by introducing a practical effective but with no material effect on
expedient to IFRS 16. The practical
expedient permits a lessee to elect not the financial statements
to assess whether a COVID-19-related
rent concession is a lease modification. In the current year, the Company has
A lessee that makes this election
shall account for any change in lease applied the below amendments to IFRS
payments resulting from the COVID-19- Standards and Interpretations issued by
related rent concession the same way it the Board that are effective for an annual
would account for the change applying period that begins on or after 1 January
IFRS 16 if the change were not a lease 2020. Their adoption has not had any
modification. material impact on the disclosures or on
The practical expedient applies only to the amounts reported in these financial
rent concessions occurring as a direct statements.
consequence of COVID-19 and only if all
of the following conditions are met:
78 VFD Group plc 2021 Annual Report & Financials
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.
Consolidation • Stability • Focus 79
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
80 VFD Group plc 2021 Annual Report & Financials
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 –
Amendments to IAS 1 – Classification of
Sale or Contribution of Assets between
Liabilities as Current or Non-current
an Investor and its Associate or Joint The amendments to IAS 1 affect only the
Venture presentation of liabilities as current or
The amendments to IFRS 10 and IAS 28 non-current in the statement of financial
position and not the amount or timing of
deal with situations where there is a sale recognition of any asset, liability, income
or contribution of assets between an or expenses, or the information disclosed
investor and its associate or joint venture. about those items.
Specifically, the amendments state that
gains or losses resulting from the loss The amendments clarify that the
of control of a subsidiary that does not classification of liabilities as current or
contain a business in a transaction with non-current is based on rights that are
an associate or a joint venture that is in existence at the end of the reporting
accounted for using the equity method, period, specify that classification is
are recognised in the parent’s profit or unaffected by expectations about
loss only to the extent of the unrelated whether an entity will exercise its right to
investors’ interests in that associate or defer settlement of a liability, explain that
joint venture. rights are in existence if covenants are
complied with at the end of the reporting
Similarly, gains and losses resulting period, and introduce a definition of
from the remeasurement of investments ‘settlement’ to make clear that settlement
retained in any former subsidiary (that refers to the transfer to the counterparty
has become an associate or a joint of cash, equity instruments, other assets
venture that is accounted for using or services.
the equity method) to fair value are
recognised in the former parent’s profit The amendments are applied
or loss only to the extent of the unrelated retrospectively for annual periods
investors’ interests in the new associate beginning on or after 1 January 2023,
or joint venture. The effective date of with early application permitted.
the amendments has yet to be set by
the Board; however, earlier application
of the amendments is permitted.
Consolidation • Stability • Focus 81
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
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
82 VFD Group plc 2021 Annual Report & Financials
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
of equity, as appropriate) at the beginning 2018–2020
of that earliest period presented. The Annual Improvements include
amendments to four Standards.
The amendments are effective for annual IFRS 1 First-time Adoption of
periods beginning on or after 1 January
2022, with early application permitted International Financial Reporting
Standards.
Amendments to IAS 37 – Onerous The amendment provides additional
Contracts—Cost of Fulfilling a Contract relief to a subsidiary which becomes a
The amendments specify that the ‘cost of first-time adopter later than its parent.
in respect of accounting for cumulative
fulfilling’ a contract comprises the ‘costs translation differences. As a result of the
that relate directly to the contract’. Costs amendment, a subsidiary that uses the
that relate directly to a contract consist exemption in IFRS 1:D16(a) can now also
of both the incremental costs of fulfilling elect to measure cumulative translation
that contract (examples would be direct differences for all foreign operations at the
labour or materials) and an allocation of carrying amount that would be included
other costs that relate directly to fulfilling in the parent’s consolidated financial
contracts (an example would be the statements, based on the parent’s date
allocation of the depreciation charge for of transition to IFRS Standards, if no
an item of property, plant and equipment adjustments were made for consolidation
used in fulfilling the contract). procedures and for the effects of the
business combination in which the parent
The amendments apply to contracts for acquired the subsidiary. A similar election
which the entity has not yet fulfilled all its is available to an associate or joint venture
obligations at the beginning of the annual that uses the exemption in IFRS 1: D16 (a).
reporting period in which the entity first
applies the amendments. Comparatives The amendment is effective for annual
are not restated. Instead, the entity periods beginning on or after 1 January
shall recognise the cumulative effect 2022, with early application permitted.
of initially applying the amendments
as an adjustment to the opening
balance of retained earnings or other IFRS 9 Financial Instruments
component of equity, as appropriate, The amendment clarifies that in applying
at the date of initial application.
The amendments are effective for annual the ‘10 per cent’ test to assess whether
periods beginning on or after 1 January to derecognise a financial liability, an
2022, with early application permitted. entity includes only fees paid or received
between the entity (the borrower) and
the lender, including fees paid or received
by either the entity or the lender on the
other’s behalf. The amendment is applied
Consolidation • Stability • Focus 83
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
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.
84 VFD Group plc 2021 Annual Report & Financials
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
Consolidation • Stability • Focus 85
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 provisions of the instrument.
current 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 recognition, and subsequently measured
recognized directly in equity, in which at amortized cost, fair value through
case it is recognized in equity. other comprehensive income (OCI), and
fair value through profit or loss.
Current income tax is calculated on The classification of financial assets
at initial recognition depends on the
the basis of estimated taxable income financial asset’s contractual cash flow
for the year using tax rates enacted or characteristics and the Company’s
substantively enacted at the reporting business model for managing them.
date, and any adjustment to tax The Group initially measures a financial
recoverable or payable in respect of asset at its fair value plus, in the case of
previous years
86 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
a financial asset not at fair value through enhancing yields or other costs and how
profit or loss, directly attributable such economic activities are evaluated
transaction costs. and reported to key management
personnel; The significant risks affecting
In order for a financial asset to be the performance of our businesses, for
classified and measured at amortized example, market risk, credit risk, or other
cost or fair value through OCI, it needs risks and the activities undertaken to
to give rise to cash flows that are ‘solely manage those risks; and Historical and
payments of principal and interest (SPPI)’ future expectations of sales of the loans
on the principal amount outstanding. This or securities portfolios managed as part
assessment is referred to as the SPPI test of a business model.
and is performed at an instrument level. The Group’s business models fall into
The Group’s business model for three categories, which are indicative
managing financial assets refers to how of the key strategies used to generate
it manages its financial assets in order to returns.
generate cash flows. The business model
determines whether cash flows will result
from collecting contractual cash flows, Subsequent measurement
selling the financial assets, or both. For purposes of subsequent
Purchases or sales of financial assets
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
The Company determines the business recycling of cumulative gains
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:
How the economic activities of our Financial assets at amortized cost
businesses generate benefits, for
example through trading revenue, (loans and receivables and debt
instruments)
The Group measures financial assets at
amortized cost if both of the following
conditions are met:
Consolidation • Stability • Focus 87
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
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
88 VFD Group plc 2021 Annual Report & Financials
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:
Consolidation • Stability • Focus 89
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
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
When the Group has transferred its rights contractual terms.
to receive cash flows from an asset or has ECLs are recognized in two stages. For
entered into a pass through arrangement, credit exposures for which there has
it evaluates if, and to what extent, it not been a significant increase in credit
has retained the risks and rewards of risk since initial recognition, ECLs are
ownership. When it has neither transferred provided for credit losses that result from
nor retained substantially all of the risks default events that are possible within
and rewards of the asset, nor transferred the next 12-months (a 12-month ECL).
control of the asset, the Group continues For those credit exposures for which
to recognize the transferred asset to the there has been a significant increase in
extent of its continuing involvement. In credit risk since initial recognition, a loss
that case, the Group also recognizes an allowance is required for credit losses
associated liability. The transferred asset expected over the remaining life of the
and the associated liability are measured exposure, irrespective of the timing of
on a basis that reflects the rights and the default (a lifetime ECL).
obligations that the Group has retained.
For trade receivables and contract assets,
Continuing involvement that takes the the Group applies a simplified approach
form of a guarantee over the transferred in calculating ECLs. Therefore, the Group
asset is measured at the lower of the does not track changes in credit risk, but
original carrying amount of the asset and instead recognizes a loss allowance based
the maximum amount of consideration on lifetime ECLs at each reporting date.
The Group has established a provision
90 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
matrix that is based on its historical credit Financial liabilities at fair value through
loss experience, adjusted for forward- profit or loss
looking factors specific to the debtors
and the economic environment. Financial liabilities at fair value through
profit or loss include financial liabilities
The Group considers a financial asset in held for trading and financial liabilities
default when contractual payments are designated upon initial recognition as at
90 days past due. However, in certain fair value through profit or loss.
cases, the Group may also consider a
financial asset to be in default when Financial liabilities are classified as held
internal or external information indicates for trading if they are incurred for the
that the Company is unlikely to receive purpose of repurchasing in the near term.
the outstanding contractual amounts in This category also includes derivative
full before taking into account any credit financial instruments entered into by the
enhancements held by the Group. A Group that are not designated as hedging
financial asset is written off when there is instruments in hedge relationships as
no reasonable expectation of recovering defined by IFRS 9. Separated embedded
the contractual cash flows. derivatives are also classified as held for
trading unless they are designated as
effective hedging instruments.
Financial liabilities Gains or losses on liabilities held for
Initial recognition and measurement trading are recognized in the statement
Financial liabilities are classified, at initial of profit or loss. Financial liabilities
designated upon initial recognition at fair
recognition, as financial liabilities at fair value through profit or loss are designated
value through profit or loss, loans and at the initial date of recognition, and only
borrowings, payables, or as derivatives if the criteria in IFRS 9 are satisfied. The
designated as hedging instruments in an Group has not designated any financial
effective hedge, as appropriate. liability as at fair value through profit or
All financial liabilities are recognized loss.
initially at fair value and, in the case of
loans and borrowings and payables, net Loans and borrowings
of directly attributable transaction costs. This is the category most relevant to
The Group’s financial liabilities include
trade and other payables, loans and the Group. After initial recognition,
borrowings including bank overdrafts, interest-bearing loans and borrowings
and derivative financial instruments. are subsequently measured at amortized
cost using the EIR method. Gains and
losses are recognized in profit or loss
Subsequent measurement when the liabilities are derecognized
The measurement of financial liabilities
depends on their classification, as
described below:
Consolidation • Stability • Focus 91
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
as well as through the EIR amortisation 2.8 Revenue recognition
process.
Amortized cost is calculated by taking (a) Interest income and interest
into account any discount or premium
on acquisition and fees or costs that expense
are an integral part of the EIR. The EIR Interest income and interest expense for
amortisation is included as finance costs
in the statement of profit or loss. all interest-bearing financial instruments
are recognized within ‘interest income’
and ‘interest expense’ in profit or loss
using the effective interest method.
Derecognition
A financial liability is derecognized when The effective interest rate is the rate
that exactly discounts estimated future
and only when the obligation under cash payments or receipts through the
the liability is discharged or cancelled expected life of the financial asset or
or expires. When an existing financial financial liability to the gross carrying
liability is replaced by another from the amount of a financial asset (i.e. its
same lender on substantially different amortized cost before any impairment
terms, or the terms of an existing liability allowance) or to the amortized cost of
are substantially modified, such an a financial liability. The calculation does
exchange or modification is treated as not consider expected credit losses and
the derecognition of the original liability includes transaction costs, premiums or
and the recognition of a new liability. discounts and fees and points paid or
The difference in the respective carrying received that are integral to the effective
amounts is recognized in the statement interest rate, such as origination fees.
of profit or loss.
Once a financial asset or a group of similar
financial assets has been written down as
Offsetting of financial instruments a result of an impairment loss, investment
Financial assets and financial liabilities income is recognised using the rate of
interest used to discount the future cash
are offset and the net amount is reported flows for the purpose of measuring the
in the statement of financial position impairment loss.
when and only when there is a currently
enforceable legal right to offset the (b) Fees and commission income
recognized amounts and there is an Fee and commission income and expense
intention to settle on a net basis, to
realize the assets and settle the liabilities that are integral to the effective interest
simultaneously. rate on a financial asset or liability are
included in the measurement of the
92 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
effective interest rate. For other fees costs to sell. In assessing value in use, the
and commission income, it is the Group’s estimated future cash flows expected to
policy to recognize revenue from a be derived from the use of the asset and, if
contract when it has been approved by significant and reasonably determinable,
both parties, rights have been clearly from its disposal at the end of its useful
identified, payment terms have been life, net of disposal costs are discounted
defined, the contract has commercial to their present value using a pre-tax
substance, and collectability has been discount rate that reflects current market
ascertained as probable. Revenue is assessments of the time value of money
recognized when control of goods or and the risks specific to the asset.
services have been transferred. Control Cash flows are determined on the basis of
of an asset refers to the ability to direct reasonable and documented assumptions
its use and obtain substantially all of the that represent the best estimate of
remaining benefits associated with the the future economic conditions during
asset. the remaining useful life of the asset,
giving more importance to independent
assumptions.
(c) Dividend income
Dividends are recognized when the An impairment loss is recognized if
the carrying amount of an asset or
Group’s right to receive the payment its cash-generating unit exceeds its
is established, which is usually when recoverable amount. Impairment losses
shareholders approve the dividend. are recognized in profit or loss.
2.9 Impairment of non-financial assets Impairment losses recognized in respect
of cash-generating units are allocated
The carrying amounts of the Group’s first to reduce the carrying amount of
any asset allocated to the units and then
non-financial assets other than deferred to reduce the carrying amount of the
tax assets are assessed at the end of each other assets in the unit (group of units)
reporting date to determine whether on a pro rata basis.
there is any indication of impairment. If
any such indication exists then the asset’s Impairment losses recognized in prior
recoverable amount is estimated. periods are assessed at each reporting
date for any indications that the loss
The recoverable amount of an asset has decreased or no longer exists. An
or, if the recoverable amount of single impairment loss is reversed if there has
assets cannot be determined, for the been a change in the estimates used to
smallest identifiable group of assets determine the recoverable amount. An
that generates independent cash inflows impairment loss is reversed only to the
from their continuous use, referred to
as cash generating units, is the greater
of its value in use and its fair value less
Consolidation • Stability • Focus 93
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
extent that the asset’s carrying amount in the carrying amount of the item if it
does exceed the carrying amount that is probable that the future economic
would have been determined, net of benefits embodied within the part will
depreciation or amortisation, if no flow to the Group and its cost can be
impairment loss had been recognized. measured reliably. The carrying amount
Reversals of impairment losses are of the replaced is derecognized. The
recognized in profit or loss. costs of ordinary day-to-day servicing
and maintenance of property and
2.10 Property, Plant and Equipment equipment are recognized in profit or
loss as incurred.
The Group’s Property, Plant and
Depreciation
Equipment comprise leasehold The depreciable amount of an asset
is its cost less the estimated residual
improvement, plant and machinery, office value at the end of its useful life, if this
is significant and can be reasonably
equipment, furniture and fittings and determined. Depreciation begins when
an asset is available for use and ceases
motor vehicle. at the earlier of the date that the asset is
derecognized.
Recognition and measurement
All categories of property, plant and Depreciation is recognised in profit or
loss on a straight line basis to write down
equipment are initially recognized at the cost of each asset, to their residual
their purchase cost including any costs values over the estimated useful lives of
directly attributable to bringing the each part of an item of property, plant and
asset into operation when the following equipment. Leased assets under finance
conditions are met lease are depreciated over the shorter of
the lease term and their useful lives. The
(a) their values can be reasonably following annual rates are applied.
determined,
(b) the economic benefit will accrue to
the Group.
Property, plant and equipment are
subsequently stated at cost less
accumulated depreciation and
impairment losses, if any.
Subsequent costs
The cost of replacing part of an item of
property or equipment is recognized
94 VFD Group plc 2021 Annual Report & Financials
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 right to use the asset or assets, even if
and method of depreciation are reviewed, that right is not explicitly specified in an
and adjusted prospectively if appropriate, arrangement.
at the end of each reporting period.
The Group engages in finance leases and
De-recognition sale and leaseback transactions.
An item of property, plant and equipment
Finance leases
and any significant part initially Leases are classified as finance leases
recognized is derecognized on disposal
or when no future economic benefits are whenever the terms of the lease transfer
expected from its use or disposal. Any substantially all the risks and rewards of
gain or loss arising on de-recognition of the ownership to the lessee. All other
the asset (calculated as the difference leases are classified as operating leases.
between the net disposal proceeds and
the carrying amount of the asset) is Sale and leaseback transactions
included in profit or loss of the year the This arises when the Group sells an asset
asset is derecognized.
and immediately reacquires the use of
2.11 Leased assets the asset by entering into a lease with the
buyer.
The determination of whether an
arrangement is (or contains) a lease Finance leaseback
is based on the substance of the A profit or loss on sale is not immediately
arrangement at the inception date. The
arrangement is assessed for whether recognized because the seller never
fulfillment of the arrangement is disposes of the risks and rewards of
dependent on the use of a specific asset ownership. Any difference between the
or assets or the arrangement conveys a sale price and the previous carrying value
(profit) is deferred and amortized over
the lease term.
Consolidation • Stability • Focus 95
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
Group as a lessee 2. 12 Intangible assets
Finance leases that transfer substantially
Acquired computer software licenses
all the risks and benefits incidental to
ownership of the leased item to the Group, are capitalized on the basis of the costs
are capitalized at the commencement of incurred to acquire and bring to use the
the lease at the fair value of the leased specific software when their values can
asset or, if lower, at the present value be reasonably determined and economic
of the minimum lease payments. Lease benefits will accrue to the Group.
payments are apportioned between Computer software is stated at cost less
finance charges and reduction of the amortization and impairment losses.
lease liability so as to achieve a constant
rate of interest on the remaining balance Subsequent expenditure
of the liability. Finance charges are Subsequent expenditure is capitalized
recognized in finance costs in the income
statement. only when it increases the future
economic benefits embodied in the
A leased asset is depreciated over the specific asset to which it relates. Costs
useful life of the asset. However, if there associated with maintaining computer
is no reasonable certainty that the Group software programmes are recognized as
will obtain ownership by the end of the expenses when incurred.
lease term, the asset is depreciated over
the shorter of the estimated useful life of Amortisation
the asset and the lease term.
Computer software are amortized over
Operating lease payments are recognized
as an operating expense in the income the useful economic life estimated as the
statement on a straight-line basis over
the lease term. period over which the assets will be used
by the Group. The amortisation period and
Group as a lessor the amortisation method are reviewed at
Leases in which the Group does not
least at the end of each reporting period.
transfer substantially all the risks and
benefits of ownership of an asset are Changes in the expected useful life or
classified as operating leases. Initial direct
costs incurred in negotiating an operating the expected pattern of consumption
lease are added to the carrying amount
of the leased asset and recognized over of future economic benefits embodied
the lease term on the same basis as rental
income. Contingent rents are recognized in the asset are considered to modify
as revenue in the period in which they are
earned. the amortisation period or method, as
appropriate, and are treated as changes
in accounting estimates. Amortisation
rate for intangible asset is as follows:
Computer software 33.33%
96 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
Derecognition of intangible assets 2.14 Provisions
An intangible asset is derecognized on Provisions are recognized when the
disposal, or when no future economic Group has a present obligation (legal or
benefits are expected from its use. Gains constructive) as a result of a past event
or losses arising from derecognition of and it is probable that an outflow of
an intangible asset, measured as the resources embodying economic benefits
difference between the net disposal will be required to settle the obligation
proceeds and the carrying amount of the and a reliable estimate can be made of
asset are recognized in profit or loss. the amount of the obligation. Where
there are a number of similar obligations,
2.13 Employee benefits the likelihood that an outflow will be
required in settlement is determined by
Short-term benefits considering the class of obligation as a
Short-term employee benefit obligations whole. A provision is recognized even if
the likelihood of an outflow with respect
are measured on an undiscounted basis to any one item included in the same class
and are expensed as the related service of obligations may be small. If the effect
is provided. of the time value of money is material,
provisions are discounted using a current
A provision is recognized for the amount pre-tax rate that reflects current market
expected to be paid under short-term assessments of the time value of money
cash, bonus or profitsharing plans if the and the risks specific to the liability.
Group has a present legal or constructive When discounting is used, the increase in
obligation to pay this amount as a result the provision due to the passage of time
of past service provided by the employee is recognized as a finance cost.
and the obligation can be estimated
reliably. When the Group expects some or
all of a provision to be reimbursed,
Post-employment benefits the reimbursement is recognized as
a separate asset, but only when the
Defined contribution plans reimbursement is virtually certain.
The Group operates a defined The expense relating to a provision is
presented in the statement of profit or
contribution plan in accordance with the loss net of any reimbursement.
provisions of the Pension Reform Act.
The contribution of the employee and
employer is 8% and 10% of the qualifying
monthly emoluments (i.e. basic, housing 2.15 Cash and cash equivalents
and transport) of employees respectively.
The Group’s obligations for contributions For the purposes of the consolidated
to the plan are recognized as an expense
in profit or loss when they are due. statement of cash flows, Cash and
cash equivalents include cash in hand,
unrestricted demand, call deposits with
Consolidation • Stability • Focus 97
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
banks, and short term highly liquid Regulatory risk reserve
financial assets (including money market The Nigerian banking regulator requires
funds), with original maturities of three
months or less from the acquisition date, Microfinance Banks to create a reserve
which are subject to insignificant risk of for the difference between impairment
changes in their value and used by the charge determined in line with the
Group in the management of its short- principles of IFRS and impairment charge
term commitments. determined in line with the prudential
guidelines issued by the Central Bank
of Nigeria (CBN). This reserve is not
2.16 Share capital and reserves available for distribution to shareholders.
Fair value reserve
Share capital Comprises fair value movements on
The issued ordinary shares of the
equity instruments
Company are classified as equity
instruments. Incremental costs directly
attributable to the issue of an equity Dividends
instrument are shown in equity as a Dividends on ordinary shares are
deduction, net of tax, from the proceeds.
recognized in equity in the period in which
Share premium they are approved by the Company’s
Premiums from the issue of shares are shareholders. Dividends for the period
that are declared after the reporting date
reported in share premium. are disclosed in the financial statements
as a non-adjusting event
Statutory reserve 2.16 Earnings per share
Nigerian banking regulations require
The Group presents earnings per share
Microfinance Banks to make an annual
appropriation to a statutory reserve. (EPS) for its ordinary shares. Basic EPS
Section 8.1.7(a) of the Central Bank is calculated by dividing profit or loss
of Nigeria Revised Regulatory and attributable to ordinary shareholders of
Supervisory Guidelines for Microfinance the Company by the weighted average
Banks (MFBs) stipulates that an number of ordinary shares outstanding
appropriation of 50% of profit after tax during the reporting period. Where there
is made if the statutory reserve is less are shares that could potentially affect
than 50% of the paid-up share capital, an the number of shares issued, those shares
appropriation of 25% of profit after tax is are considered in calculating the diluted
made if the statutory reserve is 50% or earnings per share. There are currently
more but less than 100% of the paid up no share that could potentially dilute the
share capital and 12.5% of profit after tax total issued shares.
if the statutory reserve is equal to 100%
or more of the paid-up share capital.
98 VFD Group plc 2021 Annual Report & Financials
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
2.17 Fair value measurement fair value of the corresponding asset
held by another market participant at the
Fair value is defined as the price that measurement date. Counterparty credit
risk and own credit risk are taken into
would be received to sell an asset or account in determining the fair value of a
paid to transfer a liability (i.e. the ‘exit liability. In the absence of quoted market
price’) in an orderly transaction that prices, an entity uses valuation techniques
is not a forced sale, liquidation sale appropriate in the circumstances and
or a distressed sale between market for which sufficient data are available
participants at the measurement date. to measure fair value, maximizing the
Fair value is determined based on market use of relevant observable inputs and
conditions at the measurement date and minimizing the use of unobservable
the assumptions that market participants inputs.
would use (i.e. it is a market-based
measurement). Fair value measurement 2.18 Borrowing costs
assumes the transaction to sell the asset
or transfer the liability occurs in a principal Borrowing costs directly attributable
market or, in the absence of a principal
market, in the most advantageous market to the acquisition, construction or
to which the entity has access. It does production of an asset that necessarily
not consider an entity’s intent to sell the takes a substantial period of time to
asset or transfer the liability. Fair value get ready for its intended use or sale
measurements of non-financial assets are capitalized as part of the cost of
take into account a market participant’s the asset. All other borrowing costs are
ability to generate economic benefits by expensed in the period in which they
using the asset in its highest and best occur. Borrowing costs consist of interest
use or by selling it to another market and other costs that an entity incurs in
participant that would use the asset connection with the borrowing of funds.
in its highest and best use. The highest
and best use is determined from the
perspective of market participants, even 2.19 Expense recognition
if the entity intends a different use.
Operating expenses
An entity’s current use of a non-financial Expenses are decreases in economic
asset is presumed to be its highest and
best use unless market or other factors benefits during the accounting period
suggest that a different use by market in the form of outflows, depletion of
participants would maximize the value assets or incurrence of liabilities that
of the asset. In the absence of quoted result in decrease in equity, other than
market prices, the fair value of a financial those relating to distributions to equity
or non-financial liability or an entity’s participants.
own equity instruments is taken as the Expenses are recognized on an accrual
bases regardless of the time of spending
cash. Expenses are recognized in the
Consolidation • Stability • Focus 99
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
income statement when a decrease in for as investment properties and are
future economic benefit related to a measured using the fair value model.
decrease in an assets or an increase of a Gains and losses arising from changes
liability has arisen that can be measured in the fair value of investment properties
reliably. Expenses are measured at are included in profit or loss in the period
historical cost. in which they arise.
Only the portion of cost of a previous An investment property is derecognised
period that is related to the income upon disposal or when the investment
earned during the reporting period is property is permanently withdrawn from
recognized as an expense. Expenses that use and no future economic benefits are
are not related to the income earned expected from the disposal. Any gain
during the reporting period, but expected or loss arising on derecognition of the
to generate future economic benefits, property (calculated as the difference
are recorded in the financial statement between the net disposal proceeds and
as assets. The portion of assets which the carrying amount of the asset) is
is intended for earning income in the included in profit or loss in the period in
future periods shall be recognized as an which the property is derecognised.
expense when the associated income is
earned. 2.21 Related party transactions
Transactions with related parties are
Expenses are recognized in the same conducted and recorded at arms’ length
reporting period when they are incurred and disclosed in accordance with IAS 24
in cases when it is not probable to directly “Related party disclosures”.
relate them to particular income earned
during the current reporting period and 3 FINANCIAL RISK MANAGEMENT
when they are not expected to generate
any income during the coming years.
In 2021, the macro pressures from the
covid pandemic in 2020 slowly eased but
the risks still remain.
2.20 Investment Properties
Investment properties are properties held The economy benefited from government
policy support, rising oil prices and
to earn rentals and/or capital appreciation international financial assistance. Nigeria
(including property under construction exited the recession in 2020 Q4. Headline
for such purposes). Investment properties inflation rose sharply during the pandemic
are measured initially at cost, including reaching 18.2 percent in March 2021 but
transaction costs. Subsequent to initial declined to 15.6 percent in December
recognition, investment properties are 2021.
measured at fair value. All of the Group’s
property interests held under operating
leases to earn rentals or for capital
appreciation purposes are accounted
100 VFD Group plc 2021 Annual Report & Financials
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