Investor Presentaiton
ANNUAL REPORT 2020
62
Notes to the Financial Statements
For the year ended 31 December 2020
Subsequent measurement
Right of use asset
After the commencement date, a lessee shall measure the right-of-use asset applying a cost model.
To apply a cost model, a lessee shall measure the right-of-use asset at cost (IFRS 16.30):
Agricultural produce harvested from an entity's biological assets shall be measured at its fair value less costs to sell
at the point of harvest. Such measurement is the cost at that date when applying the accounting policy Inventories
(e.g. raw milk) or another applicable accounting policy;
Gains and losses from changes in fair value less costs to sell shall be included in profit or loss for the period in which
it arises;
All costs of producing and harvesting biological assets should be expensed when incurred.
1.
Less any accumulated depreciation and any accumulated impairment losses; and
2.
Adjusted for any remeasurement of the lease liability or for any modifications.
i)
Employee Benefits
Defined contribution plans
Lease liability
After the commencement date, a lessee shall measure the lease liability by (IFRS 16.36):
1.
Increasing the carrying amount to reflect interest on the lease liability;
2.
Reducing the carrying amount to reflect the lease payments made; and
3.
g)
Remeasuring the carrying amount to reflect any reassessment or lease modifications, or to reflect revised
in-substance fixed lease payments.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories includes expenditure
incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and
condition. The basis of costing is as follows:
Raw and packaging materials, spares and purchased purchase cost on a first-in, first-out basis, including
finished goods
Finished goods in process
Goods-in-transit
transportation and clearing costs
cost of direct materials and labour plus a reasonable
proportion of manufacturing overheads based on
normal levels of activity
purchase cost incurred to date
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
Engineering spares are classified as inventory and are recognised in the profit and loss account as consumed.
Allowance is made for obsolete, slow moving or defective items where appropriate.
h)
Biological Assets (Agricultural Assets)
Agricultural assets comprise tangible assets related to agricultural activity:
biological assets (defined as a living animal or plant);
(a)
(b)
harvested product of the entity's biological assets (agricultural produce).
This policy is only applied to agricultural produce at the point of harvest. Thereafter, the accounting policy
Inventories or another applicable policy is applied. As such, raw milk is in scope of the accounting policy Inventories.
Agricultural assets are recognised at its fair value less costs to sell, except for the case where the fair value cannot
be measured reliably;
i.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into
a separate entity and has no legal or constructive obligation to pay further amounts in respect of all employee
benefits relating to employee service in current and prior periods.
In line with the provisions of the Pension Reform Act 2014 (as amended), the Company has instituted a defined
contribution pension scheme for their permanent staff. Staff contributions to the scheme are funded through
payroll deductions. Obligations for contributions to the defined contribution plan are recognised as an employee
benefit expense in profit or loss in the periods which related services are rendered by employees. Employees
contribute 8% each of the relevant emoluments to the fund on a monthly basis while the Company contributes 10%
to the pension fund and an additional 5% to an investment fund.
ii.
Defined benefit plans
The Company's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating
the amount of future benefit that employees have earned in the current and prior periods, discounting that amount
and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected
unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is
limited to the net of any unrecognised past service cost and actuarial losses plus the present value of economic
benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
To calculate the present value of economic benefits, consideration is given to any applicable minimum funding
requirements.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation.
This cost is included in employee benefit expense in the statement of profit or loss.
The discount rate is the yield on Federal Government of Nigeria issued bonds that have maturity dates approximating
the terms of the company's obligation.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses are recognised
immediately in other comprehensive income. The Company's defined benefit plan is unfunded.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to
past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises
gains and losses on the settlement of a defined benefit plan when the settlement occurs.
iii.
Other long-term employee benefits
The Company's net obligation in respect of long-term employee benefits other than pension plans is the amount of
future benefit that employees have earned in return for their service in the current and prior periods. The company's
other long-term employee benefits comprise of a long service award scheme that it has for its employees. The
Company's liability with respect to this scheme is determined by an independent actuarial valuation every year
by discounting to determine its present value. In determining the liability for employee benefits under the defined
benefit scheme, consideration is given to future increases in salary rates and the Company's experience with staff
turnover. Actuarial gains and losses arising from differences between the actual and expected outcome in the
valuation of the obligation are recognized in profit or loss in the period they arise. The effect of any curtailment
FrieslandCampina WAMCO Nigeria PLC
FrieslandCampina WAMCO Nigeria PLC
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