THE IN ITIA TES P L C N OTES TO THE FIN AN CIAL STATEM EN TS SUM M AR Y OF SIGN IFICAN T ACCOUN TIN G POLICIES The estimated useful lives for the current and comparative periods are as follows: % Land N il Building 2.00 P lant a nd M a chine ry 5.00 M otor V e hic le s 25.00 O ffic e and H SE Equipment 20.00 Furniture and Fittings 33.33 Land has unlimited useful life, so it is not depreciated. iv D e re cognition of prope rty, plant and e quipme nt 4.4 Inve ntorie s Allowance is made for obsolete, slow moving or defective items where appropriate. 4.5 I m pairm e nt of n on -fin an cial ass e ts Inventories are measured at the lower of cost and net realisable value. The cost of inventory includes expenditure incurred in acquiring the inventory, production costs and other costs incurred in bringing them to their existing location and condition. C ost incurred in bringing each product to its present location and condition is based on weighted average cost. N et realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. T he c arrying am ounts of the Com pany’s non-financ ial ass ets, other than inventories are review ed at eac h r eporting date to determ ine w hether there is any indic ation of im pairm ent. If any s uc h indic ation exists, then the ass et’s rec overable am ount is estim ated. F or goodw ill and intangible ass ets that have indefinite us eful lives or that are not yet available for us e, the r ec over able am ount is estim ated eac h year at the s am e tim e. A n item of prope rty, plant and equipme nt is de re cognised upon disposa l or w hen no future e c onomic bene fits a re e xpe c te d from its use or disposa l. A ny ga in or loss a rising on de re cognition of the a sse t (c a lcula te d a s the diffe renc e be tw e en the ne t disposa l proc e e ds and the c a rrying amount of the a sse t) is inc luded in the inc ome sta teme nt w hen the a sse t is de re cognised. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the C ompany will obtain ownership by the end of the lease term in which case the assets are depreciated over the useful life. 50 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
T H E IN IT IA T E S P L C N O T E S T O T H E F IN A N C IA L S T A T E M E N T S S U M M A R Y O F S IG N IF IC A N T A C C O U N T IN G P O L IC IE S 4 .6 E m p lo y e e b e n e fits a D e fin e d c o n trib u tio n p la n s b T e rm in a tio n b e n e fits A n im p a ir m e n t lo s s is r e c o g n iz e d if th e c a r r y in g am o u n t o f a n a s s e t o r its C G U e x c e e d s its e s tim a t e d r e c o v e r a b le am o u n t. I m p a ir m e n t lo s s e s a r e r e c o g n iz e d in p r o f it o r lo s s . I m p a ir m e n t lo s s e s r e c o g n iz e d in r e s p e c t o f C G U s a r e a llo c a t e d f irs t to r e d u c e th e c a r r y in g am o u n t o f a n y g o o d w ill a llo c a t e d t o t h e u n its , a n d th e n to r e d u c e th e c a rr y in g am o u n ts o f th e o th e r a s s e ts in th e u n it ( g r o u p o f u n its ) o n a p r o r a t a b a s is . In re s p e c t o f o the r a ss e ts (e xc lud ing G o o d w ill fo r w hic h im p a irm e nt lo ss is no t re ve rs e d ), im p a irm e nt lo ss e s re c o gnize d in p rio r p e rio d s a re a ss e ss e d a t e a c h re p o rting d a te fo r a ny ind ic a tio ns tha t the lo ss ha s d e c re a s e d o r no lo nge r e xists. A n im p a irm e nt lo ss is re ve rs e d if the re ha s b e e n a c ha nge in the e stim a te s us e d to d e te rm ine the re c o ve ra b le a m o unt. A n im p a irm e nt lo ss is re ve rs e d o nly to the e xte nt tha t the a ss e t’s c a rrying a m o unt d o e s no t e xc e e d the c a rrying a m o unt tha t w o uld ha ve b e e n d e te rm ine d , ne t o f d e p re c ia tio n o r a m o rtiza tio n, if no im p a irm e nt lo ss ha d b e e n re c o gnis e d . T h e r e c o v e r a b le am o u n t o f a n a s s e t o r c a s h - g e n e r a tin g u n it is th e g r e a t e r o f its v a lu e in u s e a n d its f a ir v a lu e le s s c o s ts to s e ll. I n a s s e s s in g v a lu e in u s e , t h e e s tim a t e d f u tu r e c a s h flo w s a r e d is c o u n t e d to th e ir p r e s e n t v a lu e u s in g a p r e - t a x d is c o u n t r a t e th a t r e f le c ts c u r r e n t m a r k e t a s s e s s m e n ts o f th e tim e v a lu e o f m o n e y a n d th e r is k s s p e c if ic to th e a s s e t o r c a s h g e n e r a tin g u n it(C G U ) . F o r th e p u r p o s e o f im p a ir m e n t t e s tin g , a s s e ts th a t c a n n o t b e t e s t e d in d iv id u a lly a r e g r o u p e d to g e th e r in to th e s m a lle s t g r o u p o f a s s e ts th a t g e n e r a t e s c a s h in f lo w s f r o m c o n tin u in g u s e t h a t a r e la r g e ly in d e p e n d e n t o f th e c a s h in flo w s o f o th e r a s s e ts o r g r o u p s o f a s s e ts (th e “ c a s h - g e n e r a tin g u n it, o r C G U ” ). T e rm in a tio n b e n e fits a r e r e c o g n is e d a s a n e x p e n s e w h e n th e C o m p a n y is c om m itte d d e m o n str a b ly , w ith o u t r e a listic p o ssib ility o f w ith d r a w a l, to a f o rm a l d e ta ile d p la n to e ith e r te rm in a te e m p lo ym e n t b e f o r e th e n o rm a l r e tir e m e n t d a te , o r to p r o v id e te rm in a tio n b e n e fits a s a r e s u lt o f a n o ff e r m a d e to e n c o u r a g e v o lu n ta r y r e d u n d a n c y . T e rm in a tio n b e n e fits f o r v o lu n ta r y r e d u n d a n c ie s a r e r e c o g n is e d a s a n e x p e n s e if th e C o m p a n y h a s m a d e a n o ff e r o f v o lu n ta r y r e d u n d a n c y , it is p r o b a b le th a t th e o ff e r w ill b e a c c e p te d , a n d th e n um b e r o f a c c e p ta n c e s c a n b e e stim a te d r e lia b ly . If b e n e fits a r e p a y a b le m o r e th a n 1 2 m o n th s a fte r th e r e p o rtin g p e rio d , th e n th e y a r e d is c o u n te d to th e ir p r e s e n t v a lu e . A d e fine d c o ntrib utio n p la n is a p o st- e m p lo ym e nt b e ne fit p la n und e r w hic h a n e ntity p a ys fixe d c o ntrib utio ns into a s e p a ra te e ntity a nd w ill ha ve no le ga l o r c o nstruc tive o b liga tio n to p a y furthe r a m o unts. O b liga tio ns fo r c o ntrib utio ns to d e fine d c o ntrib utio n p la ns a re re c o gnis e d a s a n e m p lo ye e b e ne fit e xp e ns e in p ro fit o r lo ss in the p e rio d d uring w hic h s e rvic e s a re re nd e re d b y e m p lo ye e s. P re p a id c o ntrib utio ns a re re c o gnis e d a s a n a ss e t to the e xte nt tha t a c a s h re fund o r a re d uc tio n in future p a ym e nts is a va ila b le . T he c o m p a ny m a k e s p ro visio ns fo r e m p lo ye e b e ne fits in a c c o rd a nc e w ith the P e nsio n R e fo rm A c t 2 0 1 4 . 8 % o f the e m p lo ye e 's b a sic s a la ry, ho using a nd tra ns p o rt c o ntrib ute d m o nthly b y the e m p lo ye e a nd 1 0 % c o ntrib ute d b y the e m p lo ye r. T he m o nthly c o ntrib utio n is re m itte d to the P e nsio n F und A d m inistra to rs. 51 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIA TES P LC N OTES TO THE FIN AN CIAL STATEM EN TS SUM M AR Y OF SIGN IFICAN T ACCOUN TIN G POLICIES c Short-te rm e mploye e be ne fits 4.7 Provisions 4.8 Continge nt liabilitie s 4.9 State me nt of cas h flows A liability is recognised for the amount expected to be paid under short-term cash bonus or profit sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Short-term employee benefit obligations are measured on an un-discounted basis and are expensed as the related service is provided. The statement of cash flows is prepared using the indirect method. C hanges in Statement of Financial Position items that have not resulted in cash flows such as translation differences, fair value changes, equity-settled share-based payments and other non- cash items, have been eliminated for the purpose of preparing the statement. Dividends paid to ordinary shareholders are included in financing activities. Finance cost is also included in financing activities while finance income received is included in investing activities. A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.The unwinding of the discount is recognised as finance cost. A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are only disclosed and not recognised as liabilities in the Statement of Financial Position. If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent liability and no disclosure is made. 52 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEM ENTS SUM M ARY OF SIGNIFICANT ACCOUNTING POLICIES 4.10 Re ve nue from contracts with custome rs IFRS 15 A Re ve nue Revenue is recognised by applying a five-step approach: - Identify the contract - Identify the separate performance obligations in the contract - Determine the transaction price - Allocate the transaction price to separate performance obligations - Recognise revenue when (or as) each performance obligation is satisfied i Ide ntify the contract ii Ide ntify the s e parate pe rformance obligations in the contract iii De te rmine the trans action price iv Allocate the trans action price to pe rformance obligations v Re cognis e re ve nue whe n (or as) e ach pe rformance obligation is s atisfie d Transaction price is the amount of the consideration a company is entitled to receive in exchange for transferring goods or services to customers. The total consideration in a contract is between each of the distinct performance obligations in that contract on the basis of the standalone selling price. Revenue is recognised in the Income Statement when or as the company fulfils its performance obligations, that is when the promised goods or services are transferred to the customer and the customer obtains control. This may be over time or a point in time. In the case of services, the obligation is satisfied over the period of provision of the services. Variable consideration is estimated and recognised as revenue when it is highly probable that a significant reversal of the cumulative revenue recognised will not occur in future periods. Any agreement that creates enforceable rights and obligations is a contract. The transaction price is determined when the contract price is fixed. Performance obligations are the explicit or implicit promises made to the customer in a contract. In a multi-element arrangement, it is necessary to determine if the promises made are distinct from each other or should be accounted for together as a bundle. A contract modification is accounted for as a separate contract or continuation of the original contract prospectively or with cumulative catch-up, depending on facts and circumstances. 53 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B Contract balances i Trade re ce ivable s ii Contract Asset iii Contract liabilities 4.11 Income tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been statutorily enacted by the reporting date. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates statutorily enacted at the reporting date, and any adjustment to tax payable in respect of previous years. A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract. Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e.,only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets. A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. 54 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE IN ITIATES P LC N OTES TO THE FIN AN CIAL STATEM EN TS SUM M AR Y OF SIGN IFICAN T ACCOUN TIN G POLICIES 4 .1 2 D iv ide nds Dividends are recognised as liability in the period they are declared. 4 .1 3 Earnings pe r share 4 .1 4 Se gme nt R e porting 4 .1 5 R e late d partie s D e fe rred tax a sse ts and de fe rred tax liabilitie s a re c la ssified a s non-current a sse ts a nd liabilitie s, re spe c tive ly. In the c a se of tra nsa c tions re c ognised dire c tly in e quity, the re la ted de fe rre d tax a sse t and lia bility a lso a ffe c ts equity. Dividends which remained unclaimed for a period exceeding twelve (12) years from the date of declaration and which are no longer actionable by shareholders in accordance with Section 385 of Companies and Allied M atters Act of N igeria are written back to retained earnings. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. Related parties include the holding company and other group entities. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the Company are also considered to be related parties. K ey management personnel are also regarded as related parties. K ey management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the company components. All operating segments are reviewed over time by management for resource allocation and performance assessment. The Company's primary format for segment reporting is based on business segments. The business segments are determined by management based on the Company's internal reporting structure. Revenue and cost represent operating revenues and expenses respectively that are directly attributable to each business segment. The Company's business segments are presented by line of business. 55 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES P LC N OTES TO THE FIN AN CIAL STATEM EN TS 5 . Significant accounting judge me nts, e stimate s and assumptions 5.1 Critical accounting judge me nts 5 .2 Ke y s ource s of e stimation unce rtainty a. Estimate d us e ful live s and re sidual value s of prope rty, plant and e quipme nt b. Provision for e xpe cte d cre dit loss e s (ECL) of trade re ce ivable s CR ITICAL ACCOUN TIN G JUD GEM EN T AN D KEY SOUR CES OF ESTIM ATION UN CER TAIN TY The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The management of the Company revises its estimates and assumptions on a regular basis to ensure that they are relevant regarding the past experience and the current economic and political environment. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The accounting for certain provisions, certain financial instruments and the disclosure of financial assets, contingent assets and liabilities at the date of the financial statements is judgmental. The items, subject to judgment, are detailed in the corresponding notes to the financial statements. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are discussed below: In the process of applying the Company’s accounting policies, management has made some judgements, which have the most significant effect on the amounts recognised in the financial statements: The Company uses a provision matrix to calculate expected credit losses (ECLs) for trade receivables. The provision rates are based on days past due for groupings of various customer segments. The Company’s management determines the estimated useful lives and related depreciation charge for its items of property, plant and equipment on an annual basis. The Company has carried out a review of the residual values and useful lives of property, plant and equipment as at year end and that has not highlighted any requirement for an adjustment to the residual values and remaining useful lives of the assets for the current or future periods. 56 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TES P L C N O T E S T O T HE F IN AN C IAL ST AT E M E N T S YE AR E N D E D 3 1 D E C E M B E R 2 0 2 2 2 0 2 2 2 0 2 1 N N 6 . R e v e nue Re nde ring of se rvic e s 8 4 1 ,4 6 9 ,2 1 5 3 3 3 ,8 9 9 ,0 0 8 Se g m e nt info rm atio n The Compa ny ha s tw o (2) re porta ble s e gme nts ba se d on the busine ss ope ra tions. Se g m e nt re v e nue and re s ults The fo llowing is an analysis o f the C omp any's revenue and results from continuing op erations by rep ortable segment: Se g m e nt R e v e nue Se g m e nt C o st o f Sale s Se g m e nt Gro s s Pro fit Se g m e nt R e v e nue Se g m e nt C o st o f Sale s Se g m e nt Gro s s Pro fit N N N N N N Industria l c le a ning s e rvic e s 362,635,384 (190,818,138) 171,817,246 136,458,363 (90,168,942) 46,289,421 W a ste ma na geme nt se rvic e s 478,833,831 (451,172,295) 27,661,536 197,440,645 (181,696,867) 15,743,778 8 4 1 ,4 6 9 ,2 1 5 (6 4 1 ,9 9 0 ,4 3 3 ) 1 9 9 ,4 7 8 ,7 8 2 3 3 3 ,8 9 9 ,0 0 8 (2 7 1 ,8 6 5 ,8 0 9 ) 6 2 ,0 3 3 ,1 9 9 2 0 2 2 2 0 2 1 7 . C o s t o f s ale s N N W a ste Colle c tion a nd H a ula ge 175,785,194 50,295,663 W a ste D ispos a l 21,909,378 6,388,341 H iring of e quipme nt 137,402,303 37,371,255 D ie s e l a nd lubric a nts 22,490,507 3,258,187 Re pa irs a nd M a inte na nc e 35,603,096 9,717,493 Employe e c osts (note 10) 26,349,347 15,392,369 Tra nsport a nd tra ve lling 8,010,542 1,332,958 Consuma ble s 81,051,060 31,251,821 D e pre c ia tion (note 15) 36,261,211 35,638,604 D ire c t w a ge s 48,923,200 20,969,577 Community re la tions a nd se c urity 21,737,295 43,436,919 Complia nc e 21,446,439 12,921,784 O the r dire c t c osts 5,020,861 3,890,838 6 4 1 ,9 9 0 ,4 3 3 2 7 1 ,8 6 5 ,8 0 9 8 . O the r inc o m e Sa le of s e c onda ry produc t (note 8.1) - 21,211,250 Inte re st re c e ive d 640 - D e bt re c ove ry 3,415,250 1,710,000 Re a lize d fore ign e xc ha nge ga ins (note 8.2) 13,705,820 4,185,362 Sundry inc ome 325,769 222,955 1 7 ,4 4 7 ,4 7 9 2 7 ,3 2 9 ,5 6 7 8 .1 Sale o f s e c o ndary pro duc t E-w a ste se rvic e s - 12,455,200 W a ste ma na geme nt se rvic e s - 8,756,050 - 2 1 ,2 1 1 ,2 5 0 8 .2 R e alize d fo re ig n e x c hang e g ains The s e re pre s e nt e xc ha nge ga ins a rising from tra nsla tion of fore ign c urre nc y tra ns a c tions in the ye a r. 2 0 2 1 The s e re pre s e nts inc ome e a rne d from sa le of s c ra p me ta ls, use d c hemic a ls a nd ba tte rie s e tc . The y a re re porte d ba s e d on the s e gme nt a s follow s: 2 0 2 2 57 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
T H E I N IT I A T E S P L C N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 2 0 2 2 2 0 2 1 N N 9 . A d m i n is t r a t i v e e x p e n s e s D ir e c t o r s ' e m o lu m e n t 1 8 ,5 0 0 ,0 0 0 1 1 ,2 9 7 ,5 2 0 D ir e c t o r s ' a llo w a n c e s a n d e x p e n s e s 6 ,5 8 4 ,4 8 3 3 ,9 1 6 ,5 1 3 D ir e c t o r s ' f e e s 2 ,7 5 0 ,0 0 0 2 ,2 5 0 ,0 0 0 T r a n s p o r t a n d tr a v e llin g e x p e n s e s 5 ,3 0 2 ,8 7 5 3 ,1 1 0 ,9 2 4 L e g a l a n d p r o f e s s io n a l f e e s 4 2 ,7 1 3 ,8 3 4 4 ,4 0 9 ,5 7 7 E m p lo y e e c o s ts ( n o t e 1 0 ) 6 5 ,8 7 4 ,4 1 6 4 9 ,5 2 0 ,5 8 5 E le c tr ic it y 2 ,8 5 6 ,2 7 5 2 ,4 0 0 ,8 8 9 F u e l a n d d ie s e l 1 0 ,8 1 9 ,4 0 1 4 ,9 6 4 ,9 3 6 L ic e n s e s a n d le v ie s 1 ,9 1 9 ,8 4 8 1 ,7 0 8 ,8 5 7 D o n a t io n & G if t 1 ,0 8 0 ,0 0 0 5 6 0 ,0 0 0 D e p r e c ia t io n ( n o t e 1 5 ) 7 ,6 5 6 ,6 7 3 8 ,6 2 2 ,3 4 3 R e p a ir s a n d m a in t e n a n c e 6 ,3 7 8 ,7 1 3 3 ,0 5 0 ,0 3 3 P r in t in g a n d s t a t io n e r y 2 ,0 9 0 ,1 3 1 7 8 7 ,2 6 6 I n s u r a n c e 4 ,5 0 9 ,3 4 6 4 ,4 4 2 ,5 2 7 T e le p h o n e a n d p o s t a g e 1 ,0 4 4 ,2 5 8 7 3 2 ,2 2 4 E n t e r t a in m e n t 4 3 7 ,3 1 0 3 6 9 ,6 0 0 I n t e r n e t e x p e n s e s 2 ,2 1 6 ,3 1 4 2 ,4 7 6 ,1 5 0 I n d u s tr ia l T r a in in g F u n d 1 ,0 3 5 ,6 2 6 1 ,0 1 1 ,9 3 7 B a n k c h a r g e s 4 ,5 1 3 ,5 1 9 1 ,2 1 2 ,9 4 5 T r a in in g e x p e n s e s 1 7 1 ,5 0 0 1 ,5 4 8 ,7 0 0 L o c a l c o n t e n t t a x 5 ,6 2 1 ,7 7 1 2 ,2 7 7 ,3 4 1 S u b s c r ip t io n 1 ,2 5 5 ,8 6 8 1 ,2 6 3 ,9 5 0 M e a l e x p e n s e s 3 ,8 2 4 ,5 4 0 3 ,1 7 6 ,7 9 0 C o r p o r a t e s o c ia l r e s p o n s ib ilit y 5 ,0 0 0 ,0 0 0 - B a la n c e s w r it t e n o f f 1 7 ,3 4 4 ,9 3 5 3 9 3 ,4 8 8 A u d it o r s ' r e m u n e r a t io n 2 ,5 0 0 ,0 0 0 2 ,0 0 0 ,0 0 0 S e c u r it y e x p e n s e s 2 ,7 8 0 ,3 7 3 2 ,4 2 7 ,3 7 6 P r o v is io n f o r d o u b tf u l d e b ts - 2 4 3 ,7 5 2 U n r e a liz e d f o r e ig n e x c h a n g e lo s s ( n o t e 9 . 1 ) 8 ,6 4 0 ,1 9 5 - O f f ic e a n d g e n e r a l e x p e n s e s 5 ,1 7 7 ,5 8 6 2 ,1 4 6 ,2 0 9 2 4 0 , 5 9 9 , 7 9 0 1 2 2 , 3 2 2 , 4 3 2 9 . 1 . U n r e a l i z e d fo r e i g n e x c h a n g e l o s s 1 0 . E m p l o y e e i n fo r m a t i o n E m p l o y e e c o s t s S a la r ie s a n d a llo w a n c e s 7 3 ,4 7 6 ,8 9 7 5 4 ,0 8 4 ,9 8 8 E m p lo y e r 's p e n s io n c o n tr ib u t io n 6 ,0 6 3 ,0 9 2 3 ,8 7 9 ,9 1 0 S t a f f w e lf a r e 1 ,9 3 5 ,6 0 0 4 8 7 ,2 5 0 T e r m in a l b e n e f its 3 ,3 2 3 ,9 6 6 2 ,6 7 0 ,1 4 6 M e d ic a l e x p e n s e s 7 ,4 2 4 ,2 0 8 3 ,7 9 0 ,6 6 0 9 2 , 2 2 3 , 7 6 3 6 4 , 9 1 2 , 9 5 4 T h is r e p r e s e n ts e x c h a n g e lo s s a r is in g f r o m tr a n s la t io n o f f o r e ig n c u r r e n c y tr a n s a c t io n s a s a t y e a r e n d . 58 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 2022 2021 Total e mploye e costs re cognis e d in profit or loss N N Cost of sales 26,349,347 15,392,369 Administrative expenses 65,874,416 49,520,585 92,223,763 64,912,954 Ave rage numbe r of pe rsons e mploye d during the ye ar Numbe r Numbe r Management 10 9 Senior Staff 11 11 Junior Staff 28 26 49 46 Numbe r Numbe r N100,000 - N500,000 - 3 N500,001 - N1,000,000 20 19 N1,000,001 - N1,500,000 12 12 N1,500,001 and above 17 12 49 46 11. 2022 2021 N N Directors' emoluments: - Fees 2,750,000 2,250,000 - Others 25,084,483 15,214,033 Depreciation 43,917,884 44,260,947 Auditors' remuneration 2,500,000 2,000,000 12. Finance cost Re sult from ope rating activitie s is state d afte r taking into account the unde rnote d ite ms; The table shows the numbe r of e mploye e s (e xcluding Dire ctors), whos e e arnings during the ye ar, fe ll within the range s shown be low: This represents interests charged on loan facility of N700.0 million obtained from Bank of Industry, interests charged by Guaranty Trust Bank Plc on loan of N5 million, and also current portion of charges by Providus Bank on the Bank Guarantee for loan facility from Bank of Industry. 58 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE IN ITIA TES P LC N O T E S T O T HE F IN AN C IAL ST AT E M E N TS YE AR E N D E D 3 1 D E C E M B E R 2 0 2 2 2 0 2 2 2 0 2 1 N N O ther financ ia l cha rges 16,625,415 8,977,108 Inte re st on loans 3,072,670 20,299,715 1 9 ,6 9 8 ,0 8 5 2 9 ,2 7 6 ,8 2 3 1 3 . Tax atio n 1 3 .1 Incom e tax e x pe ns e Company income tax (note 13.1.1) 4,207,346 834,748 Educa tion tax 690,285 - 4,897,631 834,748 P rior ye a r unde r-provision (note 13.1.2) 45,998,585 - Current tax expense 50,896,216 834,748 D e ferred tax (note 13.4) (40,565,162) 14,170,061 Incom e tax e x pe ns e as pe r pro fit o r lo ss 1 0 ,3 3 1 ,0 5 4 1 5 ,0 0 4 ,8 0 9 1 3 .1 .1 C o mpany inco m e tax 1 3 .1 .2 Prio r ye ar unde r-pro v isio n 1 3 .2 C urre nt tax liabilitie s M o v e m e nt in Inco me tax liabilitie s A t 1 Janua ry 834,428 61,106,615 P rior ye a r unde r-provision (note 13.1.2) 45,998,585 - P ayments during the ye a r - (999,500) Tax cha rge for the yea r 4,897,631 834,748 W ithholding tax c redit note s applied (44,180,574) (60,107,435) A t 31 D e c embe r 7 ,5 5 0 ,0 7 0 8 3 4 ,4 2 8 1 3 .3 R e conc iliatio n o f e ffe c tiv e tax rate Loss for the ye a r be fore tax (43,371,614) (62,236,489) M inimum tax 4,207,346 834,748 Income tax using the company's dome stic tax rate of 30% - - Educa tion tax using tax ra te of 2.5% 690,285 - Tax e ffe c t on expenses not deduc tible for tax purpose s - - Tax e ffe c t on c apita l allow ance s - - Tax e ffe c t on tax inc entive s - - U nder-provision in prior ye a r - - 4 ,8 9 7 ,6 3 1 8 3 4 ,7 4 8 Effe ctiv e tax rate -1 1% -1% Incom e tax e x pe ns e e x c luding de fe rre d tax This repre sents tax liabilitie s a rising from the tax audit c arried out in 2022 by the Fede ra l Inland Revenue Se rvic e on the a c counts of 2018 - 2020. The company made a loss during the yea r. H ow eve r, minimum tax liability ha s be en provided in these financ ia l sta tements in a c cordanc e w ith the Financ e A c t 2020. 60 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 13.4 De fe rre d tax Acce le rate d tax Re valuation Total de pre ciation s urplus N N N At 1 January 2021 86,787,992 22,126,300 108,914,292 Movement in the year 14,170,061 - 14,170,061 At 31 December 2021 100,958,053 22,126,300 123,084,353 Movement in the year - - (40,565,162) At 31 December 2022 100,958,053 22,126,300 82,519,191 14. De fine d be ne fit plan The Company does not have gratuity as at 31 December 2022. 15. Prope rty, Plant and Equipment 15.1 Summary The carrying amount of property, plant and equipment is stated as follows: 2022 2021 N N Land 65,500,000 43,600,000 Buildings 160,436,456 163,693,178 Capital work-in-progress 309,396,912 - Plant and Machinery 594,820,385 619,595,034 Motor vehicles 5,643,396 - Furniture and Fittings 116,414 344,240 Office & HSE Equipment 4,291,004 6,631,032 1,140,204,567 833,863,484 61 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THEINITIATESPLC NOTESTOTHEFINANCIALSTATEMENTS YEARENDED31 DECEMBER2022 15.2 Analysis ofProperty, Plant andEquipment Land Buildings Capital Work-inProgress (note 15.4) Plant and Machinery Motor Vehicles Furniture andFittings Office & HSE Equipment Total DeemedCost N N N N N N N At 1January2021 43,600,000 174,696,120 - 705,562,357 - 6,378,400 15,099,642 945,336,519 Additionsinthe year - - - 22,321,719 - 135,000 530,000 22,986,719 Disposals - - - - - - - - At 31December 2021 43,600,000 174,696,120 - 727,884,076 - 6,513,400 15,629,642 968,323,238 Assets writtenoff - - - (18,689,272) - (713,101) (2,144,592) (21,546,965) Additionsinthe year 21,900,000 240,000 309,396,912 28,754,679 7,128,500 - 1,199,480 368,619,571 Disposals - - - - - - - - At 31December 2022 65,500,000 174,936,120 309,396,912 737,949,483 7,128,500 5,800,299 14,684,530 1,315,395,844 AccumulatedDepreciationandimpairment loss At 1January2021 - 7,509,020 - 72,437,102 - 4,017,170 6,235,515 90,198,807 Charge for the year - 3,493,922 - 35,851,940 - 2,151,990 2,763,095 44,260,947 Disposals - - - - - - - - At 31December 2021 - 11,002,942 - 108,289,042 - 6,169,160 8,998,610 134,459,754 Writtenoff - - - (1,421,155) - (660,424) (1,104,782) (3,186,361) Charge for the year - 3,496,722 - 36,261,211 1,485,104 175,149 2,499,698 43,917,884 Disposals - - - - - - - - At 31December 2022 - 14,499,664 - 143,129,098 1,485,104 5,683,885 10,393,526 175,191,277 Carrying amount At 31December 2022 65,500,000 160,436,456 309,396,912 594,820,385 5,643,396 116,414 4,291,004 1,140,204,567 At 31December 2021 43,600,000 163,693,178 - 619,595,034 - 344,240 6,631,032 833,863,484 62 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TE S P L C N O T E S T O T HE F IN AN C IAL S T AT E M E N T S YE AR E N D E D 3 1 D E C E M B E R 2 0 2 2 1 5 .3 D e e m e d c o s t 1 5 .4 C apital wo rk -in-pro g re s s 2 0 2 2 2 0 2 1 N N The rma l D e sorption U nit (TD U ) w ith c ompone nts 148,968,234 - H igh P re ssure P ump 144,698,678 - 500K V A Soundproof P e rkins Ge ne ra tor 15,730,000 - 3 0 9 ,3 9 6 ,9 1 2 - 1 5 .5 D e pre c iatio n C ost of sa le s 36,261,211 35,638,604 A dministra tive e xpe ns e s 7,656,673 8,622,343 4 3 ,9 1 7 ,8 8 4 4 4 ,2 6 0 ,9 4 7 1 5 .6 Se c urity A ll the Compa ny's prope rty, pla nt a nd e quipme nt w e re ple dge d a s se c urity a s a t 31 D e c embe r 2022. 1 6 . A s s e t-in-trans it 2 6 5 ,0 5 7 ,8 8 4 - 1 7 . O the r no n-curre nt ass e ts P re pa id fe e s on Loa n (note 17.1) 19,608,067 29,048,667 D e fe rre d c osts (note 17.2) 11,610,000 - 3 1 ,2 1 8 ,0 6 7 2 9 ,0 4 8 ,6 6 7 1 7 .1 Pre paid fe e s o n lo an 1 7 .2 D e fe rre d c o s ts O n 5 N ovembe r 2018, the c ompa ny's prope rty, pla nt a nd e quipme nt w e re re va lue d by M e ssrs. Jide Ta iw o & C o (Esta te Surve yors a nd V a lue rs - FR C /2012/00000000254) on the ba sis of ope n ma rke t va lue of N 880,800,000. The re va lue d amount w a s inc orpora te d in the se fina nc ia l sta teme nts.The surplus of N 221,263,007 a rising the re from w a s tra nsfe rre d to re va lua tion re se rve a c c ount. The se re pre se nt c osts of prope rty, pla nt a nd e quipme nt a c quire d in the c urre nt ye a r w hic h ha ve not be e n put to use a s a t 31 D e c embe r 2022. This re pre se nts Robotic Ta nk C le a ning Equipme nt w hic h w a s not re c e ive d by The Initia te s P lc a s a t 31 D e c embe r 2022. The se re pre se nt non-c urre nt portion of c osts on e nvironme nta l e va lua tion study a s re quire d by the M inistry of Environme nt. The se re pre se nt non-c urre nt portion of the fe e s c ha rge d by P rovidus B a nk P lc on B a nk Gua ra nte e for loa n fa c ility of N 700.0 million obta ine d from B a nk of Industry in 2021 by The Initia te s P lc . This a lso inc lude le ga l fe e s pa id to Ba nk of Industry a nd a lso fe e s c ha rge d by C onsulta nts. The loa n fa c ility ha s a te nor of 5 ye a rs. 63 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
T H E IN IT IA T E S P L C N O T E S T O T H E F IN A N C IA L S T A T E M E N T S Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 2 0 2 2 2 0 2 1 N N 1 8 . I n v e s t m e n ts 1 0 5 , 1 4 0 , 2 4 7 6 , 3 0 7 , 0 0 1 2 0 2 2 2 0 2 1 N N T h e b a la n c e is m a d e u p o f th e f o llo w in g : P r e -I n c o r p o r a tio n e x p e n s e s 6 ,3 0 7 ,0 0 1 6 ,3 0 7 ,0 0 1 C o st o f T D U P la n t 8 5 ,5 6 2 ,9 0 3 - F u n d s p r o v id e d a s w o r k in g c a p ita l 8 ,6 7 4 ,3 8 8 - O th e r e x p e n s e s 4 ,5 9 5 ,9 5 5 - 1 0 5 , 1 4 0 , 2 4 7 6 , 3 0 7 , 0 0 1 1 9 . E a rn in g s p e r S h a r e B a s ic e a rn in g s p e r s h a r e 2 0 2 2 2 0 2 1 N N L o ss a ttrib u t a b le to o r d in a r y s h a r e h o ld e rs (in n a ir a ) ( 5 3 , 7 0 2 , 6 6 8 ) ( 7 7 , 2 4 1 , 2 9 8 ) 8 8 9 , 9 8 1 , 5 5 2 8 8 9 , 9 8 1 , 5 5 2 8 8 9 , 9 8 1 , 5 5 2 8 8 9 , 9 8 1 , 5 5 2 B a sic a n d d ilu te d e a r n in g s p e r s h a r e ( k o b o ) ( 6 ) ( 9 ) 2 0 . I n v e n t o r ie s D ie s e l 5 ,4 2 2 ,7 5 0 7 7 1 ,9 0 3 Q H S E C o n s u m a b le s 2 ,2 7 2 ,8 6 7 3 ,0 9 6 ,0 4 5 S ta tio n e rie s 2 8 6 ,9 9 4 6 3 0 ,6 5 0 T e c h n ic a l/E le c tric a l ite m s 6 ,8 9 6 ,0 7 9 1 ,8 7 4 ,9 0 5 O th e r c o n s u m a b le s 5 3 ,2 5 7 4 8 ,0 5 2 1 4 , 9 3 1 , 9 4 7 6 , 4 2 1 , 5 5 5 N u m b e r o f o r d in a r y s h a r e s iss u e d a n d f u lly p a id f o r b a sic e a r n in g s p e r s h a r e (in n u m b e r) N u m b e r o f o r d in a r y s h a r e s iss u e d a n d f u lly p a id f o r d ilu te d e a r n in g s p e r s h a r e (in n u m b e r) B a sic e a rn in g s p e r s h a r e is d e te rm in e d b y d iv id in g p ro fit o r lo ss a ttrib u ta b le to th e o rd in a ry e q u ity h o ld e rs b y w e ig h te d a v e r a g e n um b e r o f o rd in a ry s h a r e s o u tsta n d in g d u rin g th e y e a r. I n F e b r u a r y 2 0 1 8 , th e C o m p a n y e n t e r e d in to a jo in t v e n tu r e a g r e e m e n t w ith a lo c a l c o m p a n y in U g a n d a w ith a v ie w to t e n d e rin g f o r w a s te m a n a g e m e n t c o n tr a c ts in T o ta l U g a n d a . T h is w a s f o llo w e d u p b y th e in c o r p o r a tio n o f a c o m p a n y (T h e I n itia t e s U g a n d a L im ite d ) in N o v e m b e r 2 0 1 8 . T h e a u th o riz e d s h a r e c a p ita l o f T h e I n itia te s U g a n d a L im it e d is U G X 1 0 0 ,0 0 0 ,0 0 0 ( O n e H u n d r e d M illio n U g a n d a s h illin g s) i. e . 1 0 0 o r d in a r y s h a r e s o f U G X 1 ,0 0 0 ,0 0 0 ( O n e M illio n U g a n d a s h illin g s) e a c h . T h e s h a r e h o ld e rs o f th e c o m p a n y a r e T h e I n itia te s P lc a n d D a g & B r a g a n O il & G a s S e r v ic e s L im ite d w ith o w n e rs h ip s tr u c tu r e o f 6 0 :4 0 . 64 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
T H E IN IT IA T E S P L C N O T E S T O T H E F IN A N C IA L S T A T E M E N T S Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 N o inv e n to ry w a s p le d ge d a s s e c u rity d u rin g th e ye a r. T h e C om p a n y u s e s F irst In F irst O u t m e th o d in v a lu in g its in v e n to ry. 2 0 2 2 2 0 2 1 N N 2 1 . T rad e an d o th e r re c e iv ab le s T r a d e r e c e iv a ble s (n o te 2 1 .1 ) 2 9 2 ,02 9 ,7 4 8 1 5 8 ,4 5 1 ,6 0 0 S ta ff lo a n s a n d a d v a n c e s (2 1 .2 ) 1 ,84 4 ,7 5 3 6 4 2 ,3 9 6 D ir e c to r's c u rre n t a c c ou n t - 2 7 O th e r r e c e iv a ble s 9 ,0 0 0 9 ,0 0 0 2 9 3 ,8 8 3 ,5 0 1 1 5 9 ,1 0 3 ,0 2 3 2 1 .1 T rad e re c e iv ab le s R e c e iv a b le s from c u stom e rs 3 0 5 ,99 4 ,5 9 3 1 7 5 ,8 3 1 ,6 9 5 A llow a n c e fo r e x p e c te d c r e d it loss e s (n ote 2 1 .1 .1 ) (1 3 ,96 4 ,8 4 5 ) (1 7 ,3 8 0 ,09 5 ) 2 9 2 ,0 2 9 ,7 4 8 1 5 8 ,4 5 1 ,6 0 0 A g e in g o f t rad e re c e iv ab le s C u rr e n t 9 8 ,13 0 ,5 9 8 6 ,9 1 0 ,8 7 3 1 - 3 0 d a y s p a st d u e - - 3 1 - 60 d a y s p a st d u e - 1 0 9 ,0 5 9 ,5 7 6 6 1 - 90 d a y s p a st d u e - - O v e r 9 0 d a y s pa st d u e 2 0 7 ,86 3 ,9 9 5 5 9 ,8 6 1 ,2 4 6 3 0 5 ,9 9 4 ,5 9 3 1 7 5 ,8 3 1 ,6 9 5 2 1 .1 .1 M o v e m e n t in a llo w an c e fo r c re d it lo s s e s A t 1 J a n u a ry 1 7 ,38 0 ,0 9 5 1 8 ,8 4 6 ,3 4 3 D e b t r e c o v e ry (3 ,41 5 ,2 5 0 ) (1 ,7 1 0 ,00 0 ) A llow a n c e fo r th e y e a r - 2 4 3 ,7 5 2 A t 3 1 D e c e m be r 1 3 ,9 6 4 ,8 4 5 1 7 ,3 8 0 ,0 9 5 2 1 .2 K e y m an a g e m e n t p e rs o n n e l an d s ta ff lo an s L o a n to k e y m a n a g e m e n t p e rs o nn e l - - S ta ff lo a n s a n d a d v a n c e s 1 ,84 4 ,7 5 3 6 4 2 ,3 9 6 A llow a n c e fo r e x p e c te d c r e d it loss e s - - 1 ,8 4 4 ,7 5 3 6 4 2 ,3 9 6 T h e va lu e o f inv e n to rie s r e c o g n is e d a s a n e x p e n s e d u rin g the y e a r w a s N 5 1 .2 5 m illio n (2 0 2 1 : N 1 6 .99 m illio n). 65 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 Re lations hip with ke y manage me nt Pe rs onne l Key management personnel include the Directors and the management staff of the Company. Trans actions 22. Cas h and cas h e quivale nts Cash and cash equivalents represent cash in hand and at bank as at year end. 2022 2021 N N Cash in hand 59,900 161,649 Cash at bank 153,381,150 651,493,558 153,441,050 651,655,207 - Short term deposit (note 22.1) 5,587,677 6,520,523 159,028,727 658,175,730 22.1 Short te rm de posit 23. Curre nt tax ass e ts These represent withholding tax receivable as at year end. 2022 2021 N N At 1 January 78,079,975 125,401,944 Withholding tax in the year 29,010,834 12,785,467 Withholding tax utilised during the year (44,180,574) (60,107,436) At 31 December 62,910,235 78,079,975 24. Othe r curre nt ass e ts Prepaid security and community expenses - 10,000,000 Prepaid insurance 4,332,699 4,009,652 Prepaid fees on loan 9,440,600 9,440,600 Deferred costs 3,870,000 - 17,643,299 23,450,252 In 2021, N6.01 million was invested in Apel Investment Trust which had tenors of 173 days and 91 days with the interest rates of 5.25% and 6% per annum respectively. This investment was rolled over in the current year for 182 days (from 21 February - 22 August 2022) and from 22 August 2022 - 20 February 2023) with the interest rates of 7.25% and 8.25% per annum respectively. . During the year, funds were not provided by the key management personnel of the Company. However, the Directors' fees, allowances and other entitlements are stated in Note 33. 66 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 2022 2021 25. Share capital N N Authorised: (note 25.1) 900,000,000 ordinary shares of N0.50 each 450,000,000 450,000,000 Issued and fully paid: (note 25.2) 889,981,552 ordinary shares of N0.50 each 444,990,776 444,990,776 25.1 Authorized share capital 25.2 Paid up share capital 2022 2021 N N 26. Share premium At 1 January 17,780,000 17,780,000 Additional share premium - - At 31 December 17,780,000 17,780,000 27. Re valuation Re s e rve 2022 2021 N N At 1 January 303,473,535 303,473,535 Revaluation surplus - - At 31 December 303,473,535 303,473,535 At the 12th - 16th Annual General Meeting held on 23rd March 2015, the authorized share capital of the company which was formerly 350,000,000 ordinary shares of N1.00 each was converted to 900,000,000 ordinary shares of N0.50 each. At the 12th - 16th Annual General Meeting held on 23rd March 2015, the paid up share capital of the company was increased by the capitalization of dividends for 2013 and 2014 and also issue of bonus shares to shareholders. On 5 November 2018, the company's property, plant and equipment were revalued by Messrs. Jide Taiwo & Co (Estate Surveyors and Valuers - FRC/2012/00000000254) on the basis of open market value of N880,800,000. The revalued amount was incorporated in these financial statements.The surplus of N221,263,007 arising therefrom was transferred to revaluation reserve account. 67 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 2022 2021 28. Retained earnings N N At 1 January 323,300 77,564,598 Loss for the year (53,702,668) (77,241,298) At 31 December (53,379,368) 323,300 29. Trade and other payables Trade payables 401,816,766 36,002,797 Dividend payable (note 29.1) 6,191,409 7,124,254 Advances from customer (note 29.2) 35,488,893 63,320,246 Other payables 155,621 116,800 Accruals 14,354,247 15,607,986 458,006,936 122,172,083 29.1 Dividend payable At 1 January 3,603,731 3,603,731 Unclaimed dividends 3,010,623 3,010,623 Interest on unclaimed dividends 876,315 509,900 Payments made during the year (1,299,260) - At 31 December 6,191,409 7,124,254 29.2 Advances from customer These represent payments made by Belbop Nigeria Limited in the previous year for which jobs were not completely executed as at 31 December 2022. 68 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
T H E IN IT IA T E S P L C N O T E S T O T H E F IN A N C IA L S T A T E M E N T S Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 2 0 2 2 2 0 2 1 N N 3 0 . O th e r c u r re n t t a x lia b ilitie s P a y A s Y o u E a r n 1 ,4 7 5 ,3 4 8 6 3 4 W ith h o ld in g ta x p a y a b le 3 9 ,9 7 0 ,0 1 7 2 3 ,8 3 4 ,5 9 3 V a lu e A d d e d T a x - S u p p lie rs 4 0 ,9 6 2 ,0 1 2 2 3 ,2 5 5 ,9 0 9 L o c a l c o n te n t ta x p a y a b le 1 ,2 6 6 ,7 9 6 1 ,2 4 0 ,0 8 6 V a lu e A d d e d T a x - C u sto m e rs 4 2 ,4 6 5 ,6 2 4 3 2 ,5 3 3 ,0 4 5 1 2 6 , 1 3 9 ,7 9 7 8 0 ,8 6 4 , 2 6 7 3 1 . E m p lo y e e s ' b e n e fits D e fin e d c o n trib u tio n p la n s ( n o te 3 1 . 1 ) 2 , 9 3 7 ,5 3 7 9 2 6 , 9 4 5 3 1 .1 D e fin e d c o n t r ib u tio n p la n s 2 0 2 2 2 0 2 1 N N A t 1 J a n u a r y 9 2 6 ,9 4 5 2 ,6 1 8 ,2 9 2 P r o v isio n f o r th e y e a r 1 0 ,9 7 1 ,7 0 7 8 ,4 8 2 ,0 1 4 P a y m e n ts m a d e d u rin g th e y e a r ( 8 ,9 6 1 ,1 1 5 ) ( 1 0 ,1 7 3 ,3 6 1 ) A t 3 1 D e c e m b e r 2 , 9 3 7 ,5 3 7 9 2 6 , 9 4 5 3 2 . B o r ro w in g s - Irr e vo c a b le d o m ic ilia tio n o f c o ntra c t p ro c e e d s to P ro vid us B a nk . - P e rs o na l G ua ra nte e o f the M a na ging D ire c to r a nd a no the r d ire c to r s up p p o rte d b y no ta rize d S ta te m e nts o f N e tw o rth. T h e s e r e p r e s e n t p e n sio n c o n trib u tio n . It is c om p u te d a s f o llo w s: 8 % o f th e e m p lo y e e 's b a sic s a la r y , h o u sin g a n d tr a n s p o rt is c o n trib u te d m o n th ly b y th e e m p lo y e e a n d 1 0 % o f th e e m p lo y e e 's b a sic s a la r y , h o u sin g a n d tr a n s p o rt is c o n trib u te d b y th e e m p lo y e r. T h e m o n th ly c o n trib u tio n is r e m itte d to th e P e n sio n F u n d A d m in istr a to rs in a c c o r d a n c e w ith th e N ig e ria n P e n sio n R e f o rm A c t 2 0 1 4 . T h e s e r e p r e s e n t lo a n f a c ility o f N 7 0 0 . 0 m illio n o b ta in e d b y T h e I n itia te s P lc fr om B a n k o f I n d u str y in 2 0 2 1 f o r p r o c u r e m e n t o f p la n t a n d m a c h in e r y f o r th e tr e a tm e n t a n d d is p o s a l o f o il d rillin g w a ste a s w e ll a s in d u stria l c le a n in g a n d d e c o n ta m in a tio n s e r v ic e s. T h e lo a n h a s a te n o r o f 5 y e a rs w ith o n e ( 1 ) y e a r m o r a to riu m a n d in te r e st r a te o f 8 % p e r a n n u m c om m e n c in g fr o m th e d a te o f first d is b u rs e m e n t. - M o rtga ge D e b e nture o n the C o m p a ny's a ss e ts situa te d a t P lo t 4 0 0 L o c a tio n R o a d , U m ue b ule 5 , A b a /P H E xp r e ssw a y, P o rt H a rc o urt, R ive rs S ta te , to b e va lue d b y a B a nk a c c re d ite d va lue r. T h e lo a n w a s s e c u r e d w ith a B a n k G u a r a n te e fr o m P r o v id u s B a n k P lc . T h e s e c u rity f o r th e g u a r a n te e is a s f o llo w s: - D e p o sit o f a m inim um o f 2 5 % o f the fa c ility a m o unt in a D S R A a c c o unt to b e utilize d to s e rvic e b o th the p rinc ip a l a nd a c c rue d inte re st o n the fa c ility fo r the 1 st ye a r. T his m ust b e re p le nis he d o n a re gula r b a sis fro m the C o m p a ny's o p e ra tio na l c a s h flo w . - L e ga l M o rtga ge o n a p ro p e rty in a c c e p ta b le lo c a tio n in L a go s o r A b uja . 69 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 32.1 Long Term Borrowings 2022 2021 N N Loan facility from Bank of Industry (note 32.1.1 ) 700,000,000 700,000,000 32.1.1 Loan facility from Bank of Industry At 1 January - - Loan obtained in the year 700,000,000 700,000,000 Repayments in the year - - 700,000,000 700,000,000 32.2 Short Term Borrowings 2022 2021 N N At 1 January - - Invoice Discounting Facility in the year - 24,500,000 Loan in the year 5,000,000 5,000,000 Repayments in the year (5,000,000) (29,500,000) At 31 December - - These represent loan facility of N5 million obtained in 2022 from Guaranty Trust Bank Plc with a tenor of 6 months and interest rate of 5% per annum. 70 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THEINITIATES PLC NOTES TO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER 2022 2022 2021 33. Information regarding directors N N 33.1. Directors Directors' emoluments comprises: Fees 2,750,000 2,250,000 Others - salaries and allowances 25,084,483 15,214,033 27,834,483 17,464,033 Emolument of the highest paid Director (Managing Director) 18,500,000 11,297,520 Number Number Other directors with emoluments Nil Nil Number Number Below N3,000,000 - - N3,000,001 - N7,000,000 - - N7,000,001 and above 1 1 1 1 The number of directors with gross emoluments within the band stated were: 71 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TE S P L C N O T E S T O T H E F IN A N C IA L S T A T E M E N T S Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 3 4 . Fina nc ia l R is k M a na g e m e nt R is k m a na g e m e nt fra m e wo rk The C o mp a ny ha s e xp o sure to the fo llo w ing risk s fro m its use o f fina nc ia l instrume nts: a c re d it risk b liq uid ity risk c ma rk e t risk d o p e ra tio na l risk a . C re dit ris k Inte rna l A ud it und e rta k e s b o th re gula r a nd a d ho c re view s o f risk ma na geme nt c o ntro ls a nd p ro c e d ure s, the re sults o f w hic h a re re p o rte d to the A ud it C o mmitte e . The Bo a rd o f D ire c to rs ha s o ve r a ll re sp o nsib ility fo r the e sta b lishme nt a nd o ve rsight o f the C o mp a ny’s risk ma na geme nt framew o rk . The Bo a rd ha s e sta b lishe d the Risk M a na geme nt C o mmitte e w hic h is re sp o nsib le fo r d e ve lo p ing a nd mo nito ring the C o mp a ny’s risk ma na geme nt p o lic ie s w hic h a re e sta b lishe d to id e ntify a nd a na lyse the risk s fa c e d b y the C o mp a ny, to se t a p p ro p ria te risk limit a nd c o ntro ls, a nd mo nito r risk s a nd a d he re nc e to limits. Risk ma na geme nt p o lic ie s a nd systems a re re view e d re gula rly to re fle c t c ha nge s in ma rk e t c o nd itio ns a nd the C o mp a ny’s a c tivitie s. The C o mp a ny’s Risk M a na geme nt C o mmitte e o ve rs e e s ho w ma na geme nt mo nito rs c o mp lia nc e w ith the C o mp a ny’s risk ma na geme nt p o lic ie s a nd p ro c e d ure s, a nd re view s the a d e q ua c y o f the risk ma na geme nt framew o rk in re la tio n to the risk s fa c e d b y the C o mp a ny. The C o mmitte e re p o rts re gula rly to the Bo a rd o f D ire c to rs o n its a c tivitie s. The C o mp a ny, thro ugh its tra ining a nd ma na geme nt sta nd a rd s a nd p ro c e d ure s, a ims to d e ve lo p a d isc ip line d a nd c o nstruc tive c o ntro l e nviro nme nt in w hic h a ll emp lo ye e s und e rsta nd the ir ro le s a nd o b liga tio ns. C re d it risk is the risk tha t a c o unte rp a rty w ill no t me e t its o b liga tio ns und e r a fina nc ia l instrume nt o r c usto me r c o ntra c t, le a d ing to a fina nc ia l lo ss. The C o mp a ny is e xp o se d to c re d it risk fro m its o p e ra ting a c tivitie s (p rima rily tra d e re c e iva b le s), c a sh a nd c a sh e q uiva le nts, inc lud ing d e p o sits w ith b a nk s, amo unt d ue fro m re la te d p a rtie s a nd sta ff lo a ns. The C o mp a ny ma na ge s emp lo ye e lo a ns b y e nsuring tha t e a c h emp lo ye e d o e s no t e xc e e d a lo a n gre a te r tha n 4 0 % o f his o r he r a nnua l p a y, a nd o nly emp lo ye e s w ho me e t this re q uireme nt re c e ive s a lo a n fa c ility fro m the C o mp a ny. C usto me r c re d it risk is ma na ge d b y e a c h b usine ss unit sub je c t to the C o mp a ny's e sta b lishe d p o lic y, p ro c e d ure s a nd c o ntro ls re la ting to c usto me r c re d it risk ma na geme nt. O utsta nd ing c usto me r re c e iva b le s a re re gula rly mo nito re d b y the c re d it c o ntro l unit a nd ma na geme nt c o nd uc ts fre q ue nt re view s. The C o mp a ny’s p rinc ip a l e xp o sure to c re d it risk is influe nc e d ma inly b y the ind ivid ua l c ha ra c te ristic s o f e a c h c usto me r. 72 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TES P L C N O T E S T O T HE F IN AN C IAL ST AT E M E N T S YE AR E N D E D 3 1 D E C E M B E R 2 0 2 2 The carrying amount of financial assets represents the maximum credit exposure. i Expos ure to cre dit ris k The maximum exposure to credit risk at the reporting date was: 2022 2021 N ote N N Trade and other receivables 21 293,883,501 159,103,023 C ash and cash equivalents 22 159,028,727 658,175,730 452,912,228 817,278,753 N ote C ustomers 21 292,029,748 158,451,600 Staff loans and advances 21 1,844,753 642,396 293,874,501 159,093,996 C ash and cash equivalents are placed with banks which are regulated. The maximum exposure to credit risk for trade and other receivables at the reporting date by type of counterparty was: C redit risk from balances with banks and financial institutions is managed by the C ompany in accordance with the C ompany’s policy. C ounterparty credit limits are reviewed periodically, and may be updated at any point in the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments. The C ompany establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. The C ompany’s most significant customer accounts for N 144.3 million (2021: N 99.2 million) of the trade and other receivables carrying amount at 31 December 2022. 73 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 ii Impairment losse s Trade receivables 31 De cembe r 2022 Trade Receivables Days Past Due Current 1 - 30 days 31 - 60 days 61 - 90 days > 90 days Total Expected credit loss rate 32.07% 0.00% 0.00% 0.00% 67.93% 98,130,598 - - 207,863,995 305,994,593 Expected credit loss - - - - (13,964,845) (13,964,845) 98,130,598 - - - 193,899,150 292,029,748 31 De cembe r 2021 Trade Receivables Days Past Due Current 1 - 30 days 31 - 60 days 61 - 90 days > 90 days Total Expected credit loss rate 3.93% 0.00% 62.02% 0.00% 34.05% 6,910,873 - 109,059,576 59,861,246 175,831,695 Expected credit loss - - - - (17,380,095) (17,380,095) 6,910,873 - 109,059,576 - 42,481,151 158,451,600 Expe cted credit loss me asurement - othe r financial asse ts For trade receivables, the Company applied the simplified approach in computing expected credit losses (ECL). Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses (ECL). The provision rates are based on days past due for groupings of various customer segments. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 34 (i). The Company does not hold collateral as security. Set out below is the information about the credit risk exposure on the Company’s trade receivables as at 31 December 2022 using a provision matrix: The Company applied the general approach in computing expected credit losses (ECL) for its other receivables. The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. Estimated total gross carrying amount at default Estimated total gross carrying amount at default 74 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER 2022 b. Liquidity risk ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit lossesthat result fromdefault events that are possible within the next 12-months(a 12-monthECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance isrequired for credit losses expected over the remaining life ofthe exposure, irrespective ofthe timing ofthe default (a lifetime ECL). The Company considers a financial asset in default when contractual payments are 90 days pastdue. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amountsin fullbefore taking into account any credit enhancement held by the Company. A financial asset is written offwhen there is no reasonable expectation ofrecovering the contractual cashflows. Liquidity risk isthe risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity isto ensure, asfar as possible, that it will always have sufficient liquidity to meet itsliabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’sreputation. Typically, the Company ensures that it hassufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludesthe potentialimpact of extreme circumstancesthat cannot reasonably be predicted, such as naturaldisasters. 75 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEM ENTS YEAR ENDED 31 DECEM BER 2022 31 De ce mbe r 2022 Carrying Contractual Le ss than 1 ye ar 1-2 Ye ars 2-5 Ye ars Amount Cas h flows Non de rivative financial liabilitie s Long Term Borrowings 700,000,000 700,000,000 - - 700,000,000 Trade and other payables 458,006,936 458,006,936 - 458,006,936 - 1,158,006,936 1,158,006,936 - 458,0 06,936 700,000,000 31 De ce mbe r 2021 Carrying Contractual Le ss than 1 ye ar 1-2 Ye ars 2-5 Ye ars Amount Cas h flows Non de rivative financial liabilitie s Long Term Borrowings 700,000,000 700,000,000 - - 700,000,000 Trade and other payables 122,172,083 122,172,083 - 122,172,083 - 822,172,083 822,172,083 - 122,1 72,083 700,000,000 c. M arke t ris k i Curre ncy ris k ii Inte re st rate ris k The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements. Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, foreign currency risk, commodity price risk and other price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Company monitors the movement in currency rates on an ongoing basis to mitigate the risk that the movements in the exchange rates may adversely affect the Company’s income or value of their holdings of financial instruments. The Company adopts a policy of ensuring that a significant element of its exposure to changes in interest rates on borrowings is on a fixed rate basis. This is achieved by entering into loan arrangements with mixed interest rate sources.Variable interest rates are marked against the ruling rates to reduce the risk arising from interest rates. The Company manages market risks by keeping costs low through different cost optimization initiatives and productivity agenda. Furthermore, market developments are monitored constantly through scenario planning and events assessed regularly with a view to taking mitigating actions where necessary. The Company manages its currency risk by converting its transactions denominated in foreign currency to its functional currency on the date of receipt of invoice and records any exchange gain or loss on settlement of the invoice as they arise, without hedging. The Company invoices for services rendered to some of its customers in the functional currency - the Nigerian Naira (100% NGN) and others partly in the functional currency - the Nigerian Naira (40% NGN) and foreign currency - (60% USD). The Company's currency risk is mainly as a result of exposure to the USD and arises predominantly as a result of amounts receivable from customers, and payable to vendors. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (i.e. when revenue/expenses and assets/liabilities are denominated in a different currency from the Company's functional currency). The Company's exposure for the reporting periods shown is mainly due to trade receivables and payables denominated in foreign currencies. 76 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TE S P L C N O TE S TO TH E F IN A N C IA L STA TE M E N TS Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 2 d. O pe ra tiona l ris k - req uirements fo r the ap p ro p ria te segrega tio n o f d utie s, inc lud ing the autho risa tio n o f transa c tio ns - req uirements fo r the re co nc ilia tio ns and mo nito ring o f transa c tio ns - comp lianc e w ith regula to ry and o the r lega l req uirements - d o cumenta tio n o f co ntro ls and p ro c ed ure s - tra ining and p ro fe ssio na l d eve lo pment - e thic a l and b usine ss stand a rd s - risk mitiga tio n, inc lud ing insuranc e w hen it is e ffe c tive 3 4 .1 D e te rmina tio n o f fa ir v a lue s O p e ra tio na l risk is the risk o f d ire c t o r ind ire c t lo ss a rising from a w id e va rie ty o f c ause s a sso c ia ted w ith the C omp any’s p ro c e sse s, p e rso nne l, te chno lo gy and infra struc ture , and from exte rna l fa c to rs o the r than c red it, ma rk e t and liq uid ity risk s such a s tho se a rising from lega l and regula to ry req uirements a nd gene ra lly a c c ep te d stand a rd s o f co rp o ra te b ehavio r. O p e ra tio na l risk s a rise from a ll o f the C omp any’s o p e ra tio ns. - d eve lo pment o f co ntingency p la ns C omp lia nc e w ith the C omp any’s stand a rd s is sup p o rted b y a p ro gramme o f p e rio d ic review s und e rtak en b y Inte rna l A ud it. The re sults o f Inte rna l A ud it review s a re d iscusse d w ith the manageme nt o f the b usine ss unit to w hich they re la te , w ith summa rie s submitted to the A ud it C ommitte e and senio r management o f the C omp any. A numb e r o f the C omp any’s a c co unting p o lic ie s and d isc lo sure s req uire the d e te rmina tio n o f fa ir va lue , fo r b o th financ ia l and no n-financ ia l a sse ts and liab ilitie s. F a ir va lue s have b e en d e te rmined fo r me a surement and /o r d isc lo sure p urp o se s b a se d o n the fo llo w ing me tho d s. W hen ap p lic ab le , furthe r info rma tio n ab o ut the a ssump tio ns ma d e in d e te rmining fa ir va lue s is d isc lo sed in the no te s sp e c ific to tha t a sse t o r liab ility. Inte re st ra te risk comp rise s inte re st p ric e risk tha t re sults from b o rro w ings a t fixed ra te s and the inte re st c a shflow risk tha t re sults from b o rrow ings a t va ria b le ra te s. The Bo a rd o f D ire c to rs is re sp o nsib le fo r se tting the o ve r a ll d ura tio n and inte re st mana gement ta rge ts. The C omp any's o b je c tive is to manage its inte re st ra te exp o sure thro ugh c a re ful b o rro w ing p ro filing and use o f he te ro geneo us b o rrow ing so urc e s. The C omp any’s o b je c tive is to manage o p e ra tio na l risk so a s to b a lanc e the avo id anc e o f financ ia l lo sse s and d amage to the C omp any’s rep uta tio n w ith o ve ra ll co st e ffe c tivene ss and to avo id co ntro l p ro c ed ure s tha t re stric t initia tive and c re a tivity. The p rima ry re sp o nsib ility fo r the d eve lo pment and imp lementa tio n o f co ntro ls to ad d re ss o p e ra tio na l risk s is a ssigned to senio r management w ithin e a ch b usine ss unit. This re sp o nsib ility is sup p o rted b y the d e ve lo pment o f o ve ra ll C omp any stand a rd s fo r the management o f o p e ra tio na l risk in the fo llo w ing a re a s: - req uirements fo r the p e rio d ic a sse ssment o f o p e ra tio na l risk s fa c ed , and the ad eq ua cy o f co ntro ls a nd p ro c ed ure s to ad d re ss the risk s id entified - req uirements fo r the rep o rting o f o p e ra tio na l lo sse s and p ro p o sed remed ia tio n a c tio n 77 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 i Trade and other receivables ii Non-derivative financial liabilities iii Share-based payment transactions Fair values Fair values versus carrying amounts 2022 2021 Carrying amount Fair value Carrying amount Fair value Financial assets N N N N Long termreceivables - - - - Loans and receivables 293,883,501 293,883,501 159,103,023 159,103,023 Cash and cash equivalents 159,028,727 159,028,727 658,175,730 658,175,730 452,912,228 452,912,228 817,278,753 817,278,753 2022 2021 Carrying amount Fair value Carrying amount Fair value Financial liabilities N N N N Borrowings 700,000,000 700,000,000 700,000,000 700,000,000 Trade and other payables 458,006,936 458,006,936 122,172,083 122,172,083 1,158,006,936 1,158,006,936 822,172,083 822,172,083 The fair values offinancial assets and liabilities, together with the carrying amounts shown in the statement offinancial position, are as follows: The fair value ofthe restricted stock unit plan is measured based on market prices ofthe awarded shares on the grant date adjusted for the present value of dividends that participants are not entitled to receive during the restricted period of 3 years. The fair value oftrade and other receivables is estimated as the present value offuture cashflows, discounted at the market rate ofinterest at the measurement date. Fair value for short-termreceivables with no stated interest rate are measured at the original invoice amount ifthe effect of discounting is immaterial. Fair value is determined at initial recognition and for disclosure purposes, at each annualreporting date. Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate ofinterest at the reporting date. 78 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 34.2 Capital management 2022 2021 N N Total liabilities 1,377,153,531 1,027,882,076 Cash and cash equivalents (159,028,727) (658,175,730) Net debt 1,218,124,804 369,706,346 Total Equity 712,864,943 766,567,611 Debt to capital ratio as at December 31 1.71 0.48 At year end, the carrying amounts of loans and receivables and trade and other payables reasonable estimated their fair values. There were no changes in the Company’s approach to capital management during the year. The Board’s policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders’equity. The Board of Directors also monitors the level of dividends to ordinary shareholders. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Company’s debt to capital ratio at the end of the reporting period was as follows: 79 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THEINITIATESPLC NOTES TOTHEFINANCIALSTATEMENTS YEARENDED31 DECEMBER2022 35. Guarantees andother financial commitments 36. Financial commitments 37. Contingent liabilities 38. Capital commitments There were nocapital commitments as at 31December 2022. 39. ReclassificationofBalances 40. Events after the reporting date 41. Non-auditservices The company did not guarantee any loan to the directors and officers of the company during the year. There were nocontingent liabilities arising fromlitigationsin the ordinary course of business. There were noevents after the reporting periodwhich couldhave had a material effect on the financial position of the Companyas at 31December 2022, and itsfinancial performance for the year ended, that have not been adequately provided for or disclosedin these financialstatements. TheExternalAuditors also provide taxservicesto theCompany. Inthe current yearthe total amount ofnon-auditfees paid to our auditors amounted to N1.5million(2021 - N1.2million). The non-auditfee is part ofthe professionalfeesinNote 9. The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the company'sfinancialstatements have been taken into account in the preparation of the financialstatements under review. Certain comparative balances have been reclassifiedto provide a more meaningful comparison. 80 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THEINITIATES PLC NOTES TO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER 2022 42. Professional firms Audit Firm Estate Surveyors andValuers Company Secretary Registrars The followingfirms provided professionalservicesto theCompanyand their FRCregistration numbers are stated asfollows: The audit firmis Madu,Onyekwena &Co. The firmisresponsible for the audit ofthe Company's records and provisionoftaxconsultancyservices. The FRC number is FRC/2013/ICAN/00000004886. Jide Taiwo &Co. isthe firmthat valuesthe Company's assets. The FRC registrationnumber is FRC/2012/00000000254. Mrs. Olaide Odejobiisthe Company's Secretary. She isresponsible for filingaccounts with Corporate Affairs Commission, Securities and Exchange Commissiontogether withother secretarialfunctions. The FRC registrationnumber is FRC/2017/NBA/00000016739. ApelCapitalRegistrars Limited isthe Company's Registrars. Theyare responsible for keepingthe records ofshareholders and payingdividends. The FRC registrationnumber is FRC/2017/ICAN/00000014821. 81 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
OTHER NATIONAL DISCLOSURES 82 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
THE INITIATES PLC STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 DECEMBER 2022 2022 2021 N % N % Revenue 841,469,215 333,899,008 Other income 17,447,479 27,329,567 858,916,694 361,228,575 Less: Bought in materials and services Imported Local 812,145,246 314,291,163 Value added 46,771,448 100 46,937,412 100 Applied as follows: To pay employees' salaries, wages and 92,223,763 197 64,912,954 138 other benefits To pay Government taxation 4,897,631 11 834,748 2 To provide for enhancement of assets and expansion: - deferred tax (40,565,162) (87) 14,170,061 30 - depreciation of fixed assets 43,917,884 94 44,260,947 95 - retained in the business (53,702,668) (115) (77,241,298) (165) 46,771,448 100 46,937,412 100 Note : "Value added" represents the additional wealth which the company has been able to create by its own and its employees' efforts. This statement shows the allocation of that wealth amongst employees, capital providers, government, and that retained for future creation of wealth. 83 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
TH E IN ITIA TES P L C F IVE YE AR S F IN AN C IAL S UM M AR Y 3 1 D e c e m be r 2 0 2 2 2 0 2 1 2 0 2 0 2 0 1 9 2 0 1 8 N N N N N S ta te m e nt o f F ina nc ia l P o sitio n A ss e ts e m plo ye d N on-c urre nt A sse ts 1,140,204,567 833,863,484 855,137,712 864,209,717 655,833,451 A sse t-in-tra nsit 265,057,884 - - - - O the r non-c urre nt a sse ts 31,218,067 29,048,667 10,000,000 - - Inve stme nts 105,140,247 - - - - Curre nt A sse ts 548,397,709 931,537,536 279,201,154 285,090,412 473,650,809 To tal A ss e ts 2 ,0 9 0 ,0 1 8 ,4 7 4 1 ,7 9 4 ,4 4 9 ,6 8 7 1 ,1 4 4 ,3 3 8 ,8 6 6 1 ,1 4 9 ,3 0 0 ,1 2 9 1 ,1 2 9 ,4 8 4 ,2 6 0 Equity Issue d c a pita l 444,990,776 444,990,776 444,990,776 444,990,776 444,990,776 Sha re premium 17,780,000 17,780,000 17,780,000 17,780,000 17,780,000 Re va lua tion re se rve 303,473,535 303,473,535 303,473,535 303,473,535 82,210,528 Re ta ine d e a rnings (53,379,368) 323,300 77,564,598 161,389,109 163,619,341 712,864,943 766,567,611 843,808,909 927,633,420 708,600,645 Liabilitie s N on-c urre nt lia bilitie s 782,519,191 823,084,353 108,914,292 92,186,159 54,377,713 Curre nt lia bilite s 594,634,340 204,797,723 191,615,665 129,480,550 366,505,902 To tal liabilitie s and e quity 2 ,0 9 0 ,0 1 8 ,4 7 4 1 ,7 9 4 ,4 4 9 ,6 8 7 1 ,1 4 4 ,3 3 8 ,8 6 6 1 ,1 4 9 ,3 0 0 ,1 2 9 1 ,1 2 9 ,4 8 4 ,2 6 0 S ta te m e nt o f P ro fit o r Lo ss a nd O the r C o m pre he nsive Inc o m e Re ve nue 8 4 1 ,4 6 9 ,2 1 5 3 3 3 ,8 9 9 ,0 0 8 4 4 8 ,0 1 3 ,5 3 1 5 5 0 ,2 1 8 ,7 7 9 7 0 0 ,7 9 8 ,7 5 3 (Loss)/profit be fore ta xa tion (43,371,614) (62,236,489) (5,683,148) 95,820,558 134,864,469 Inc ome ta x e xpe nse (10,331,054) (15,004,809) (78,141,363) (53,551,712) (43,884,152) (Loss)/profit a fte r ta xa tion (5 3 ,7 0 2 ,6 6 8 ) (7 7 ,2 4 1 ,2 9 8 ) (8 3 ,8 2 4 ,5 1 1 ) 4 2 ,2 6 8 ,8 4 6 9 0 ,9 8 0 ,3 1 7 O the r C o m pre he nsiv e inc o m e - - - 221,263,007 - O the r c o m pre he nsiv e inc o m e fo r the ye ar - - - 2 2 1 ,2 6 3 ,0 0 7 - To tal c o m pre he ns iv e (lo ss)/ inc o m e fo r the ye ar (5 3 ,7 0 2 ,6 6 8 ) (7 7 ,2 4 1 ,2 9 8 ) (8 3 ,8 2 4 ,5 1 1 ) 2 6 3 ,5 3 1 ,8 5 3 9 0 ,9 8 0 ,3 1 7 (Loss)/ba sic e a rnings pe r sha re (kobo) (6) (9) 5 5 62 N e t a sse ts pe r sha re (kobo) 80 86 95 104 80 N et assets p er share are b ased o n the net a ssets and the number of fully p aid o rd inary shares at the end o f ea ch year. Re va lua tion surplus on prope rty, pla nt a nd e quipme nt (Loss)/ba sic e a rnings pe r sha re a re c a lc ula te d on the (loss)/profit a fte r ta x a nd the numbe r of fully pa id ordina ry sha re s a t the e nd of e a c h ye a r. 84 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
SHARE CAPITAL HISTORY AS AT 31ST , DECEMBER 2022: SHARE CAPITAL HISTORY DECEMBER 31ST 2022 Year Authorized Share Capital (N) Issued & Fully Paid-up Capital (N) Consideration No of Shareholders 1995 50,000 50,000 50,000 50,000 CASH 2 1999 4,950,000 5,000,000 4,950,000 5,000,000 CASH 4 2007 95,000,000 100,000,000 68,750,908 73,750,908 CASH 4 2008 100,000,000 200,000,000 123,750,908 197,501,816 CASH 12 2009 100,000,000 300,000,000 96,969,292 294,471,108 CASH 36 2014 50,000,000 350,000,000 47,019,669 341,490,777 BONUS CASH 36 2015 100,000,000 450,000,000 103,499,999 444,990,777 BONUS CASH 91 2016 - 900,000,000 889,981,552 889,981,552 CASH 105 2017 - 900,000,000 889,981,552 889,981,552 CASH 145 2018 - 900,000,000 889,981,552 889,981,552 CASH 196 2019 - 900,000,000 889,981,552 889,981,552 CASH 224 2020 - 900,000,000 889,981,552 889,981,552 CASH 248 2021 - 900,000,000 889,981,552 889,981,552 CASH 280 2022 - 900,000,000 889,981,552 889,981,552 CASH 287 THE INITIATES PLC RANGE ANALYSIS AS OF 31ST DECEMBER 2022 RANGE HOLDERS VOLUMN % 1 1000 135 45,335 0.01 1001 5000 22 55,667 0.01 5001 10000 12 101,382 0.01 10001 50000 26 828,896 0.09 50001 100000 18 1,399,728 0.16 100001 500000 40 7,715,516 0.87 500001 1000000 5 3,386,259 0.38 1000001 AND ABOVE 29 876,448,769 98.48 TOTALS 287 889,981,552 100.00 85 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
86 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
ADMISSION FORM FOR THE YEAR ENDED DECEMBER 31ST,2022 87 2022 Annual Report & Accounts The Initiates Plc... Powered by Innovation and Consolidated experience
ST PROXY FORM FOR THE YEAR ENDED DECEMBER 31 , 2022 88 2022 Annual Report & Accounts 5. Chief Oboh-Ozoherebe Gordon has offered himself for election as a Director of the Company while Prof.E.A.Alikor has offered himself for re-election as a Director of the Company The Initiates Plc... Powered by Innovation and Consolidated experience
Plot 400, Location (New Road), off Aba/PH expressway, by Oyigbo Junction, Umuebule 5, Port-Harcourt, Rivers State. [email protected], www.initiatesgroup.com, 084-669510