Seplat Petroleum Development Company Plc ("seplat" Or the "company") Confirms Annual Report and Accounts

Company SEPLAT Petroleum Development Company Ltd 
Tags Reserve Update, Strategy - Upstream, Capital Spending, Guidance, Strategy - Corporate, Financial & Operating Data
Date April 30, 2019

Seplat Petroleum Development Company Plc ("Seplat" or the "Company"), a leading Nigerian independent oil and gas company listed on both the Nigerian Stock Exchange and London Stock Exchange, today announces its first quarter results. Information contained within this release is un-audited and is subject to further review.

Commenting on the results Austin Avuru, Seplat's Chief Executive Officer, said:

"Our operations have continued to perform in line with expectation, with the phasing of our 2019 work programme such that the production uplift will be felt throughout the second half of the year as we step up drilling activities to focus on capturing the numerous high margin and short-cycle cash return opportunities within our current portfolio. The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with governments first tranche of equity investment received. We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria."

Q1 2019 Results Highlights

Working interest production  Gross    Working Interest 
    Liquids(1)  Gas  Oil equivalent    Liquids  Gas  Oil equivalent 
  Seplat %  Bopd  MMscfd  Boepd    Bopd  MMscfd  Boepd 
OMLs 4, 38 & 41  45.0%  43,915  318  98,795    19,762  143  44,458 
OPL 283  40.0%  3,199  3,199    1,280  1,280 
OML 53  40.0%  2,107  2,107    843  843 
Total    49,221  318  104,101    21,885  143  46,581 

(1)      Liquid production volumes as measured at the LACT unit for OMLs 4, 38 and 41 and OPL 283 flow station.  Volumes stated are subject to reconciliation and will differ from sales volumes within the period.

-  Production uptime in Q1 stood at 85%; Reconciliation losses are yet to be finalised but are expected to remain at levels consistent with prior periods; Full year 2019 production guidance maintained at 49,000 to 55,000 boepd on a working interest basis, comprising 24,000 to 27,000 bopd liquids and 146 to 164 MMscfd (25,000 to 28,000 boepd) gas production

-  Sequencing of the 2019 work programme means the corresponding production uplift will be realised progressively throughout H2; 2019capex guidance maintained at US$200 million (excluding investment in the ANOH joint venture)

Financial performance summary

-  Revenue of US$160 million (2018: US$181 million) and gross profit of US$81 million (2018: US$93 million) represents a 51% gross profit margin (unchanged year-on-year);  Revenue reflects the lower oil production and oil price realisation of US$61.7/bbl (2018: US$65.78/bbl). Average realised gas price of US$3.24/Mscf in the period (2018: US$2.79/Mscf)

-  Operating profit of US$33 million (2018: US$84 million) reflects adjustments for a US$16 million overlift position and US$12 million charge in relation to the Company's oil price hedges, comprising US$5 million cost of hedges and US$7 million fair value loss (reversing the US$9 million fair value gain booked at the end of 2018)

-  Positive impact of the 2018 debt refinancing and subsequent deleveraging has resulted in a 38% year-on-year reduction in finance costs to US$16 million (2018: US$26 million); Net profit stood at US$33 million after adjusting for a tax credit of US$13 million

-  Net cash generated from operations up 73% year-on-year at US$80 million (2018: US$46 million) versus capex incurred of US$16 million (2018: US$3 million). Further receipt in the period of US$17 million from liftings at OML 55

Further deleveraged with significant headroom preserved in the capital structure

-  Repaid US$100 million on the four-year RCF bringing balance drawn to zero while retaining significant headroom in the capital structure to fund growth initiatives.  US$4.5 million RCF fees written off in finance costs.

-  Gross debt of US$350 million at 31 March 2019 solely comprised of the Company's bond issuance due 2023. Cash at bank stood at US$644 million (which includes US$100 million temporarily held on behalf of Nigerian Gas Company ("NGC") as the government's initial equity investment into ANOH Gas Processing Company ("AGPC")); Normalised cash at bank therefore stood at US$544 million with an effective resultant net cash position of US$194 million

Gas business

-  FID for the large scale ANOH gas and condensate project was announced in March and initial equity investment of US$100 million from government received; Project to comprise a Phase One 300 MMscfd midstream gas processing development with first gas targeted for Q1 2021

-  Gas revenue from the existing business up 5% year-on-year at US$42 million (2018: US$40 million)

Project Updates

-  Amukpe to Escravos pipeline anticipated to be operational in Q2 2019 with ramp up to initial permitted capacity of 40,000 bopd expected during Q3 2019

Important notice

The information contained within this announcement is unaudited and deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

Certain statements included in these results contain forward-looking information concerning Seplat's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which Seplat operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within Seplat's control or can be predicted by Seplat. Although Seplat believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. Actual results and market conditions could differ materially from those set out in the forward-looking statements. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Seplat or any other entity, and must not be relied upon in any way in connection with any investment decision. Seplat undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Enquiries:

Seplat Petroleum Development Company Plc   
Roger Brown, CFO  +44 203 725 6500 
Andrew Dymond, Head of Investor Relations   
Ayeesha Aliyu, Investor Relations  +234 1 277 0400 
Chioma Nwachuku, GM - External Affairs and Communications    
FTI Consulting Ben Brewerton / Sara Powell seplat@fticonsulting.com  +44 203 727 1000 
Citigroup Global Markets Limited Tom Reid / Luke Spells   +44 207 986 4000 
Investec Bank plc Chris Sim / Jonathan Wolf   +44 207 597 4000  

Notes to editors

Seplat Petroleum Development Company Plc is a leading indigenous Nigerian oil and gas exploration and production company with a strategic focus on Nigeria, listed on the Main Market of the London Stock Exchange ("LSE") (LSE:SEPL) and Nigerian Stock Exchange ("NSE") (NSE:SEPLAT).

Seplat is pursuing a Nigeria focused growth strategy and is well-positioned to participate in future divestment programmes by the international oil companies, farm-in opportunities and future licensing rounds.  For further information please refer to the company website, 

Interim condensed consolidated statement of profit or loss and other comprehensive income

for the first quarter ended 31 March 2019

    3 months ended 31 Mar 2019  3 months ended 31 Mar 2018  3 months ended 31 Mar 2019  3 months ended 31 Mar 2018 
    Unaudited  Unaudited  Unaudited  Unaudited 
  Note  ₦ million  ₦ million  $ '000  $ '000 
Revenue from contracts with customers   48,941   55,236   159,517                180,588 
Cost of sales   (23,955)   (26,833)   (78,078)                (87,728) 
Gross profit     24,986   28,403   81,439   92,860 
Other (losses)/income - net   (5,031)   3,200   (16,395)  10,461 
General and administrative expenses  10   (6,272)   (4,919)   (20,445)   (16,078) 
Reversal of impairment losses on financial assets  11   44   669   144  2,186 
Fair value loss  12   (3,753)   (1,730)   (12,230)   (5,653) 
Operating profit     9,974   25,623   32,513   83,776 
Finance income  13   869   437   2,834   1,429 
Finance costs                         13   (4,886)   (8,073)   (15,922)   (26,395) 
Profit before taxation     5,957   17,987   19,425   58,810 
Income tax credit/(expense)  14   4,065   (11,700)   13,251   (38,253) 
Profit for the period     10,022   6,287   32,676   20,557 
Other comprehensive (loss)/income:           
Items that may be reclassified to profit or loss:           
Foreign currency translation difference    (71)   227 
Total comprehensive income for the period    9,951   6,514  32,676  20,557 
Earnings per share for profit attributable to the equity shareholders           
Basic earnings per share (₦)/($)  15  17.63   11.16   0.06   0.04 
Diluted earnings per share (₦)/($)  15  17.56   11.11   0.06   0.04 

The above interim condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Interim condensed consolidated statement of financial position

As at 31 March 2019

    As at 31 Mar 2019  As at 31 Dec 2018   As at 31 Mar 2019  As at 31 Dec 2018  
    Unaudited  Audited  Unaudited  Audited 
  Note  ₦ million  ₦ million  $ '000  $ '000 
ASSETS           
Non-current assets           
Oil and gas properties     397,288   399,475   1,294,309   1,301,220 
Other property, plant and equipment     1,342   1,300   4,374   4,237 
Right-of-use assets  28   3,079   -      10,028 
Other assets     46,154   51,299   150,362   167,100 
Prepayments      7,947   7,950  25,893  25,893 
Tax paid in advance    9,708   9,708   31,623  31,623 
Deferred tax assets     47,506   42,487   154,770  138,393 
Total non-current assets                                 513,024   512,219    1,671,359   1,668,466 
Current assets           
Inventories     30,148   31,485   98,219   102,554 
Trade and other receivables  17      45,606   41,874      148,609   136,393 
Contract assets  19   3,666   4,327   11,947   14,096 
Prepayments     542   3,549   1,766   11,561 
Derivative financial instruments  18   535   2,693   1,742   8,772 
Cash and bank balances  20    199,459   179,509  649,806   584,723 
Total current assets        279,956   263,437  912,089   858,099 
Total assets    792,980   775,656     2,583,448   2,526,565 
EQUITY AND LIABILITIES           
Equity           
Issued share capital  21a   286   286   1,834   1,834 
Share premium     82,080   82,080   497,457   497,457 
Share based payment reserve  21b   8,103   7,298   30,122   27,499 
Capital contribution     5,932   5,932   40,000   40,000 
Retained earnings     202,745   192,723   1,063,630   1,030,954 
Foreign currency translation reserve     203,082   203,153   3,141   3,141 
Total shareholders' equity     502,228   491,472   1,636,184   1,600,885 
Non-current liabilities           
Interest bearing loans and borrowings  16   94,252   133,799   307,063   435,827 
Lease liabilities  28   952   -      3,100   -    
Contingent consideration     5,687   5,676   18,529   18,489 
Provision for decommissioning obligation     43,818   43,514   142,754   141,737 
Defined benefit plan                      2,027   1,819   6,605   5,923 
Total non-current liabilities     146,736   184,808   478,051   601,976 
Current liabilities           
Interest bearing loans and borrowings  16   10,647   3,031   34,685   9,872 
Lease liabilities  28   277   -      903   -    
Trade and other payables  22     123,149   87,360     401,232   284,565 
Current tax liabilities     9,943   8,985   32,393   29,267 
Total current liabilities       144,016   99,376     469,213   323,704 
Total liabilities       290,752   284,184     947,264   925,680 
Total shareholders' equity and liabilities       792,980   775,656     2,583,448   2,526,565 

The above interim condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.

The Group financial statements of Seplat Petroleum Development Company Plc and its subsidiaries for the three months ended 31 March 2019 were authorised for issue in accordance with a resolution of the Directors on 30 April 2019 and were signed on its behalf by

A. B. C. Orjiako  A. O. Avuru  R.T. Brown  
FRC/2013/IODN/00000003161  FRC/2013/IODN/00000003100  FRC/2014/ANAN/00000017939 
Chairman  Chief Executive Officer  Chief Financial Officer 
30 April 2019   30 April 2019   30 April 2019 
For the first quarter ended 31 March 2018               
  Issued share capital  Share premium  Share based payment reserve  Capital contribution  Retained earnings  Foreign currency translation reserve  Total equity      
  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million   
At 1 January 2018   283   82,080   4,332   5,932  166,149  200,870  459,646   
Impact of change in accounting policy:                 
Adjustment on initial application of IFRS 9  (1,779)  (1,779)   
Adjusted balance at 1 January 2018   283   82,080   4,332   5,932  164,370   200,870   457,867   
Profit for the period  6,287  6,287   
Other comprehensive income  227  227   
Total comprehensive income for the period  6,287  227  6,514   
Transactions with owners in their capacity as owners:                 
Share based payments  599  599   
Vested shares   13   -      (13)   -      
Total   13   -      586   -     599   
At 31 March 2018 (unaudited)   296   82,080   4,918   5,932  170,657  201,097  464,980   
                     
                       
For the first quarter ended 31 March 2019   
  Issued share capital  Share premium  Share  based payment reserve  Capital contribution  Retained earnings  Foreign currency translation reserve  Total equity      
  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million   
At 1 January 2019  286  82,080  7,298  5,932  192,723   203,153  491,472   
Profit for the period     -      -      -     10,022   -      10,022   
Other comprehensive loss   -      -      -      -      -      (71)   (71)   
Total comprehensive income/(loss) for the period   -      -      -      -       10,022   (71)   9,951   
Transactions with owners in their capacity as owners:                 
Share based payments   -      -      805   -      -      -      805   
Total   -      -      805   -      -      -      805   
At 31 March 2019 (unaudited)   286   82,080   8,103   5,932   202,745   203,082  502,228   
                       
                                       

For the first quarter ended 31 March 2019

The above interim condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

For the first quarter ended 31 March 2018               
  Issued share capital  Share premium  Share based payment reserve  Capital contribution  Retained earnings  Foreign currency translation reserve  Total equity      
  $ '000  $ '000  $ '000  $ '000  $ '000  $ '000  $ '000   
At 1 January 2018   1,826   497,457   17,809   40,000   944,108   1,897   1,503,097   
Impact of change in accounting policy:                 
Adjustment on initial application of IFRS 9  (5,816)  (5,816)   
Adjusted balance at 1 January 2018   1,826   497,457   17,809   40,000   938,292   1,897   1,497,281   
Profit for the period   20,557   20,557   
Total comprehensive income for the period   20,557   20,557   
Transactions with owners in their capacity as owners:                 
Share based payments  1,958  1,958   
Vested shares   41   -      (41)   -      
Total   41   -     1,917   -     1,958   
At 31 March 2018 (unaudited)   1,867   497,457  19,726   40,000  958,849  1,897  1,519,796   
     
     
For the first quarter ended 31 March 2019   
  Issued share capital  Share premium  Share based payment reserve  Capital contribution  Retained earnings  Foreign currency translation reserve  Total equity      
  $ '000  $ '000  $ '000  $ '000  $ '000  $ '000  $ '000   
At 1 January 2019   1,834   497,457    27,499   40,000   1,030,954   3,141   1,600,885   
Profit for the period   -      -      -      -      32,676   -      32,676   
Total comprehensive income for the period   -      -      -      -      32,676   -      32,676   
Transactions with owners in their capacity as owners:                 
Share based payments   -   -   2,623   -   -      -   2,623   
Total   -      -      2,623   -      -      -      2,623   
At 31 March 2019(unaudited)   1,834   497,457   30,122   40,000    1,063,630   3,141  1,636,184   
                     
                                         

The above interim condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Interim condensed consolidated statement of cash flow

For the first quarter ended 31 March 2019

  3 months ended
31 Mar 
3 months ended
31 Mar 
3 months ended
31 Mar 
3 months ended
31 Mar 
  2019  2018  2019  2018 
  ₦ million  ₦ million  $ '000  $ '000 
                                                                       Note                                   Unaudited  Unaudited  Unaudited  Unaudited 
Cash flows from operating activities         
Cash generated from operations                         23                                                     24,407   14,067      79,523   45,989 
Net cash inflows from operating activities     24,407   14,067     79,523   45,989 
Cash flows from investing activities         
Investment in oil and gas properties   (4,887)   (783)   (15,920)   (2,560) 
(Investment in)/proceeds from disposal of other property plant and equipment   (242)   34   (790)   110 
Receipts from other assets   5,138   4,510   16,738   14,744 
Interest received   869   437   2,834   1,429 
Net cash flows from investing activities  878   4,198  2,862   13,723 
Cash flows from financing activities         
Repayments of loans   (30,695)   (176,791)   (100,000)   (578,000) 
Proceeds from loans   -      163,653   -      535,045 
Principal repayments on crude oil advance   -      (23,175)   -      (75,769) 
Interest payment on crude oil advance   -      (530)   -      (1,730) 
Payments for other financing charges   (351)   (27)   (1,146)   (87) 
Interest paid on bank financing   (5,395)   (4,475)   (17,583)   (14,629) 
Advance from the Nigerian Gas Company Limited (NGC)*   30,695  100,000   - 
Net cash flows used in financing activities   (5,746)   (41,345)   (18,729)   (135,170) 
Net decrease in cash and cash equivalents  19,539   (23,080)    63,656   (75,458) 
Cash and cash equivalents at beginning of period   178,460   133,699   581,305   437,212 
Effects of exchange rate changes on cash and cash equivalents   (301)   (142)   (891)   (658) 
Cash and cash equivalents at end of period    197,698   110,477    644,070   361,096 

*Advance from the Nigerian Gas Company Limited (NGC) represents the first instalment of their equity investment in ANOH Gas Processing Company Limited (AGPC). Approval from the Corporate Affairs Commission (CAC) recognising NGC's 50% equity interest in AGPC was not received until 18 April 2019. The investment was temporarily held in the Group's Bank and cash balance in Q1 2019 (see note 22d).

The above interim condensed consolidated statement of cashflows should be read in conjunction with the accompanying notes.

Notes to the interim condensed consolidated financial statements

1.    Corporate structure and business

Seplat Petroleum Development Company Plc ('Seplat' or the 'Company'), the parent of the Group, was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014, under the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004. The Company commenced operations on 1 August 2010. The Company is principally engaged in oil and gas explorationand production and gas processing activities.

The Company's registered address is: 25a Lugard Avenue, Ikoyi, Lagos, Nigeria.

The Company acquired, pursuant to an agreement for assignment dated 31 January 2010 between the Company, SPDC, TOTAL and AGIP, a 45% participating interest in the following producing assets:

OML 4, OML 38 and OML 41 located in Nigeria. The total purchase price for these assets was ₦50.4 billion ($340 million) paid at the completion of the acquisition on 31 July 2010 and a contingent payment of ₦4.8 billion ($33 million) payable 30 days after the second anniversary, 31 July 2012, if the average price per barrel of Brent Crude oil over the period from acquisition up to 31 July 2012 exceeds ₦11,850 ($80) per barrel. ₦53.1 billion ($358.6 million) was allocated to the producing assets including ₦2.8 billion ($18.6 million) as the fair value of the contingent consideration as calculated on acquisition date. The contingent consideration of ₦5.1 billion ($33 million) was paid on 22 October 2012.

In 2013, Newton Energy Limited ('Newton Energy'), an entity previously beneficially owned by the same shareholders as Seplat, became a subsidiary of the Company. On 1 June 2013, Newton Energy acquired from Pillar Oil Limited ('Pillar Oil') a 40% Participant interest in producing assets: the Umuseti/Igbuku marginal field area located within OPL 283 (the 'Umuseti/Igbuku Fields').

On 21 August 2014, the Group incorporated a new subsidiary, Seplat Petroleum Development UK. The subsidiary provides technical, liaison and administrative support services relating to oil and gas exploration activities.

On 12 December 2014, Seplat Gas Company Limited ('Seplat Gas') was incorporated as a private limited liability company to engage in oil and gas exploration and production and gas processing. On 12 December 2014, the Group also incorporated a new subsidiary, Seplat East Swamp Company Limited with the principal activity of oil and gas exploration and production.

In 2015, the Group purchased a 40% participating interest in OML 53, onshore north eastern Niger Delta (Seplat East Onshore Limited), from Chevron Nigeria Ltd for ₦43.5 billion ($259.4 million).

In 2017, the Group incorporated a new subsidiary, ANOH Gas Processing Company Limited. The principal activities of the Company is the processing of gas from OML 53.

The Company together with its other wholly owned subsidiaries namely, Newton Energy Limited, Seplat Petroleum Development Company UK Limited ('Seplat UK'), Seplat East Onshore Limited ('Seplat East'), Seplat East Swamp Company Limited ('Seplat Swamp'), Seplat Gas Company Limited ('Seplat gas') and ANOH Gas Processing Company Limited are collectively referred to as the Group.

Subsidiary  Date of incorporation  Country of incorporation and place of business  Principal activities 
Newton Energy Limited  1 June 2013  Nigeria  Oil & gas exploration and production 
Seplat Petroleum Development Company UK Limited  21 August 2014  United Kingdom  Technical, liaison and administrative support services relating to oil & gas exploration and production 
Seplat East Onshore Limited  12 December 2014  Nigeria  Oil & gas exploration and production 
Seplat East Swamp Company Limited  12 December 2014  Nigeria  Oil & gas exploration and production 
Seplat Gas Company Limited  12 December 2014  Nigeria  Oil & gas exploration and productionand gas processing 
ANOH Gas Processing Company Limited  18 January 2017  Nigeria  Gas processing 

2.    Significant changes in the current reporting period

The following significant changes occurred during the reporting period ended 31 March 2019:

§ The Group's interest bearing borrowings included a four year revolving loan facility of N61 billion ($200 million). In October 2018, the Group made principal repayments on the four-year revolving facility for a lump sum of ₦30.7 billion ($100 million). In the reporting period, the Group repaid the outstanding principal amount of ₦30.7 billion ($100 million) on the revolving loan facility.

§ The Group adopted the new leasing standard IFRS 16 Leases (see note 28).

3.    Summary of significant accounting policies

3.1     Basis of preparation

i)       Compliance with IFRS

The interim condensed consolidated financial statements of the Group for the first quarter ended 31 March 2019 have been prepared in accordance with the accounting standard IAS 34 Interim financial reporting.

This interim condensed consolidated financial statements does not include all the notes normally included in an annual financial statements of the Group. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2018 and any public announcements made by the Group during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year end corresponding interim reporting period, except for the adoption of new and amended standard which is set out below.

ii)      Historical cost convention

The financial information has been prepared under the going concern assumption and historical cost convention, except for contingent consideration, and derivate financial instruments measured at fair value through profit or loss on initial recognition. The financial statements are presented in Nigerian Naira and United States Dollars, and all values are rounded to the nearest million (₦'million) and thousand ($'000) respectively, except when otherwise indicated.

iii)     Going concern

Nothing has come to the attention of the directors to indicate that the Group will not remain a going concern for at least twelve months from the date of these financial statements.

iv)    New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time in the reporting period commencing 1 January 2019.

a.    IFRS 16 Leases

IFRS 16: Leases was issued in January 2016 and became effective for reporting periods beginning on or after 1 January 2019. It replaces the provisions of IAS 17 Leases and IFRIC 4 Determining whether an arrangement contains a lease. The Group has adopted IFRS 16 from 1 January2019 using the simplified transitional approach, and thus has not restated comparative figures for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. There was no impact on the Group's retained earnings at the date of initial application (i.e. 1 January 2019).

The adoption of IFRS 16 resulted in the recognition of right-of-use assets and corresponding lease liabilities for leases that were formerly classified as operating leases under the provisions of IAS 17, with the exception of the Group's short-term leases, as the distinction between operating and finance leases has been removed.

The impact of the adoption of this standard and the related new accounting policy are disclosed in note 28.

b.    Amendments to IAS 19 Employee benefits

These amendments were issued in February 2018. The amendments issued require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement. They also require an entity to recognise in profit or loss as part of past service cost or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. These amendments had no impact on the consolidated financial statements of the Group as at the reporting date.

c.    Amendments to IAS 23 Borrowing costs

These amendments were issued in December 2017. The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. These amendments had no impact on the consolidated financial statements of the Group as at the reporting date.

d.    Amendments to IFRS 11 Joint arrangements

These amendments were issued in December 2017. These amendments clarify how a company accounts for increasing its interest in a joint operation that meets the definition of a business. If a party maintains (or obtains) joint control, then the previously held interest is not remeasured. If a party obtains control, then the transaction is a business combination achieved in stages and the acquiring party remeasures the previously held interest at fair value. In addition to clarifying when a previously held interest in a joint operation is remeasured, the amendments also provide further guidanceon what constitutes the previously held interest. This is the entire previously held interest in the joint operation. These amendments had no impact on the consolidated financial statements of the Group as at the reporting date.

e.    Amendments to IAS 12 Income taxes

These amendments were issued in December 2017. These amendments clarify that all income tax consequences of dividends (including payments on financial instruments classified as equity) are recognized consistently with the transactions that generated the distributable profits. In effect, the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. These amendments had no impact on the consolidated financial statements of the Group as at the reporting date.

f.    Amendments to IFRS 9: Prepayment Features with Negative Compensation

Under IFRS 9, a debt instrument can be measured at amortised cost or at fair value through other comprehensive income, provided that the contractual cash flows are 'solely payments of principal and interest on the principal amount outstanding' (the SPPI criterion) and the instrument is held within the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of an event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract. These amendments had no impact on the consolidated financial statements of the Group as at the reporting date.

g.  IFRIC 23 Uncertainty over income tax treatment

This interpretation was issued in June 2017. IAS 12 Income taxes specifies requirements for current and deferred tax assets and liabilities. An entity applies the requirements in IAS 12 based on applicable tax laws. It may be unclear how tax law applies to a particular transaction or circumstance. The acceptability of a particular tax treatment under tax law may not be known until the relevant taxation authority or a court takes a decision in the future. Consequently, a dispute or examination of a particular tax treatment by the tax authority may affect an entity's accounting for a current or deferred tax asset or liability.

This Interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognise and measure its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation. This interpretation had no impact on the consolidated financial statements of the Group as at the reporting date.

v)     New standards and interpretations not yet adopted

The following standards are issued but not yet effective and may have a significant impact on the Group's consolidated financial statements.

Conceptual framework for financial reporting - Revised

These amendments were issued in March 2018. Included in the revised conceptual framework are revised definitions of an asset and a liability as well as new guidance on measurement and derecognition, presentation and disclosure. The amendments focused on areas not yet covered and areas that had shortcomings.

These amendments are mandatory for annual periods beginning on or after 1 January 2020. The Group does not intend to adopt the amendments before its effective date and does not expect it to have a material impact on its current or future reporting periods.

a.    Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

These amendments were issued in 31 October 2018. The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. In addition, the explanations accompanying the definition have been improved. The amendments ensure that the definition of material is consistent across all IFRS Standards.

These amendments are mandatory for annual periods beginning on or after 1 January 2020. The Group does not intend to adopt the amendments before its effective date and does not expect it to have a material impact on its current or future reporting periods.

3.2   Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 March 2019.

This basis of consolidation is the same adopted for the last audited financial statements as at 31 December 2018.

3.3   Functional and presentation currency

Items included in the financial statements of each of the Group's subsidiaries are measured using the currency of the primary economic environment in which the subsidiaries operate ('the functional currency'), which is the US dollar except for the UK subsidiary which is the Pound Sterling. The interim condensed consolidated financial statements are presented in the Nigerian Naira and the US Dollars.

The Group has chosen to show both presentation currencies side by side and this is allowable by the regulator.

a)    Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end are generally recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss or other comprehensive income depending on where fair value gain or loss is reported.

ii)    Group companies

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

·      assets and liabilities for statement of financial position presented are translated at the closing rate at the reporting date.

·      income and expenses for statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not - a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the respective exchange rates that existed on the dates of the transactions), and all resulting exchange differences are recognised in other comprehensive income.

On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

4.    Significant accounting judgements, estimates and assumptions

4.1    Judgements

Management judgements at the end of the first quarter are consistent with those disclosed in the recent 2018 Annual financial statements. The following are some of the judgements which have the most significant effect on the amounts recognised in this consolidated financial statements.

i)       OMLs 4, 38 and 41

OMLs 4, 38, 41 are grouped together as a cash generating unit for the purpose of impairment testing. These three OMLs are grouped together because they each cannot independently generate cash flows. They currently operate as a single block sharing resources for the purpose of generating cash flows. Crude oil and gas sold to third parties from these OMLs are invoiced together.

ii)      Deferred tax asset

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

iii)     Lease liability

In 2018, the Group entered into a lease agreement for its new head office building. The lease contract contains an option to purchase and right of first refusal upon an option of sales during the initial non-cancellable lease term of five (5) years.

In determining the lease liability/right-of-use assets, management considered all fact and circumstances that create an economic incentive to exercise the purchase option. Potential future cash outflow of $45 million, which represents the purchase price, has not been included in the lease liability because the Group is not reasonably certain that the purchase option will be exercised. This assessment will be reviewed if a significant event or a significant change in circumstances occurs which affects the initial assessment and that is within the control of the management.

iv)      Lease term

Management assessed that the purchase option in its head office lease's contract would not be exercised. If management had assessed that it will be reasonably certain that the purchase option will be exercised, the lease term used for depreciating the right-of-use-asset will have been be fifty (50) years rather than the non-cancellable lease term of five (5) years. For the lease contracts, the Group assessed that it could not reasonably determine if the leases would be renewed at the end of the lease term. As a result, the lease term used in determining the lease liability was the contractual lease term. The sensitivity of the Group's profit and net assets to purchase options is disclosed in note 28.2.

v)       Defined benefit plan

The Group has placed reliance on the actuarial valuations carried out at the previous year end reporting period as it does not expect material differences in the assumptions used for that period and the current period assumptions. All assumptions are reviewed annually.

4.2    Estimates and assumptions

The key assumptions concerning the future and the other key source of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are disclosed in the most recent 2018 annual financial statements.

The following are some of the estimates and assumptions made.

i)       Defined benefit plans

The cost of the defined benefit retirement plan and the present value of the retirement obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and changes in inflation rates.

Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, management considers market yield on federal government bonds in currencies consistent with the currencies of the post-employment benefit obligation and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation. The rates of mortality assumed for employees are the rates published in 67/70 ultimate tables, published jointly by the Institute and Faculty of Actuaries in the UK.

ii)      Income taxes

The Group is subject to income taxes by the Nigerian tax authority, which does not require significant judgement in terms of provision for income taxes, but a certain level of judgement is required for recognition of deferred tax assets. Management is required to assess the ability of the Group to generate future taxable economic earnings that will be used to recover all deferred tax assets. Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. The estimates are based on the future cash flow from operations taking into consideration the oil and gas prices, volumes produced, operational and capital expenditure. 

iii)     Impairment of financial assets

The loss allowances for financial assets are based on assumptions about risk of default, expected loss rates and maximum contractual period. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

iv)      Revenue recognition

Definition of contracts

The Group has entered into a non-contractual promise with PanOcean where it allows Panocean to pass crude oil through its pipelines from a field just above Seplat's to the terminal for loading. Management has determined that the non-existence of an enforceable contract with Panocean means that it may not be viewed as a valid contract with a customer. As a result, income from this activity is recognised as other income when earned.

Performance obligations

The judgments applied in determining what constitutes a performance obligation will impact when control is likely to pass and therefore when revenue is recognised i.e. over time or at a point in time. The Group has determined that only one performance obligation exists in oil contracts which is the delivery of crude oil to specified ports. Revenue is therefore recognised at a point in time.

For gas contracts, the performance obligation is satisfied through the delivery of a series of distinct goods. Revenue is recognised over time in this situation as the customer simultaneously receives and consumes the benefits provided by the Group's performance. The Group has elected to apply the 'right to invoice' practical expedient in determining revenue from its gas contracts. The right to invoice is a measure of progress that allows the Group to recognise revenue based on amounts invoiced to the customer. Judgement has been applied in evaluating that the Group's right to consideration corresponds directly with the value transferred to the customer and is therefore eligible to apply this practical expedient.

Significant financing component

The Group has entered into an advance payment contract with Mercuria for future crude oil to be delivered. The Group has considered whether the contract contains a financing component and whether that financing component is significant to the contract, including both of the following;

(a) The difference, if any, between the amount of promised consideration and cash selling price and;

(b) The combined effect of both the following:

§ The expected length of time between when the Group transfers the crude to Mecuria and when payment for the crude is received and;

§ The prevailing interest rate in the relevant market.

The advance period is greater than 12 months. In addition, the interest expense accrued on the advance is based on a comparable market rate. Interest expense has therefore been included as part of finance cost.

Transactions with Joint Operating arrangement (JOA) partners

The treatment of underlift and overlift transactions is judgmental and requires a consideration of all the facts and circumstances including the purpose of the arrangement and transaction. The transaction between the Group and its JOA partners involves sharing in the production of crude oil, and for which the settlement of the transaction is non-monetary. The JOA partners have been assessed to be partners not customers. Therefore, shortfalls or excesses below or above the Group's share of production are recognised in other income/ (expenses) - net.

5.    Financial risk management

5.1    Financial risk factors

The Group's activities expose it to a variety of financial risks such as market risk (including foreign exchange risk and commodity price risk), credit risk and liquidity risk. The Group's risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.                                                                                                                                                      

Risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.        

Risk  Exposure arising from  Measurement  Management 
Market risk - foreign exchange  Future commercial transactions Recognised financial assets and liabilities not denominated in US dollars.  Cash flow forecasting Sensitivity analysis  Match and settle foreign denominated cash inflows with relevant cash outflows to mitigate any potential exchange risk. 
Market risk - commodity  prices  Derivative financial instruments  Sensitivity analysis  Oil price hedges 
Credit risk  Cash and bank balances, trade receivables, contract assets and derivative financial instruments.  Aging analysis Credit ratings  Diversification of bank deposits 
Liquidity risk  Borrowings and other liabilities  Rolling cash flow forecasts  Availability of committed credit lines and borrowing facilities 

5.1.1   Liquidity risk"

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by ensuring that sufficient funds are available to meet its commitments as they fall due."

The Group uses both long-term and short-term cash flow projections to monitor funding requirements for activities and to ensure there are sufficient cash resources to meet operational needs. Cash flow projections take into consideration the Group's debt financing plans and covenant compliance. Surplus cash held is transferred to the treasury department which invests in deposit bearing current accounts, time deposits and money market deposits.                                                          

The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed maturity periods. The table has been drawn based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the Group can be required to pay.                                                                                   

  Effective interest rate  Less than 1 year  1 -2 years  2 - 3 years  3 - 5 years  Total 
  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million 
31 March 2019             
Non - derivatives             
Fixed interest rate borrowings             
Senior notes  9.25%   10,130   10,075   10,048   122,220   152,473 
             
Other non - derivatives             
Trade and other payables**      21,318   -      -      -       21,318 
Contingent consideration      5,755   -      -      -       5,755 
Lease liabilities     405   405   405   809   2,024 
    37,608  10,480  10,453  123,029  181,570 
  Effective interest rate  Less than
1 year 
1 - 2
year 
2 - 3
years 
3 - 5
years 
Total 
  ₦ million  ₦ million  ₦ million  ₦ million  ₦ million 
31 December 2018             
Non - derivatives             
Fixed interest rate borrowings             
Senior notes  9.25%   10,130   10,075   10,048   122,220   152,473 
Variable interest rate borrowings             
Stanbic IBTC Bank Plc  6.0% +LIBOR   312   313   312   3,789   4,726 
The Standard Bank of South Africa  6.0% +LIBOR   208   209   208   2,526   3,151 
Nedbank Limited, London Branch  6.0% +LIBOR   434   434   434   5,263   6,565 
Standard Chartered Bank  6.0% +LIBOR   390   391   390   4,736   5,907 
Natixis  6.0% +LIBOR   304   304   304   3,684   4,596 
FirstRand Bank Limited Acting  6.0% +LIBOR   304   304   304   3,684   4,596 
Citibank N.A. London  6.0% +LIBOR   260   261   260   3,158   3,939 
The Mauritius Commercial Bank Plc  6.0% +LIBOR   260   261   260   3,158   3,939 
Nomura International Plc  6.0% +LIBOR   130   130   130   1,579   1,969 
    2,602   2,607  2,602  31,577  39,388 
Other non - derivatives             
Trade and other payables**    48,152  48,152 
Contingent consideration    5,756   5,756 
    60,884   18,438   12,650   153,797   245,769 

** Trade and other payables (excludes non-financial liabilities such as provisions, taxes, pension and other non-contractual payables).

  Effective interest rate  Less than 1 year  1 -2 years  2 - 3 years  3 - 5 years  Total 
  $'000  $'000  $'000  $'000  $'000 
31 March 2019             
Non - derivatives             
Fixed interest rate borrowings             
Senior notes  9.25%   33,094   32,915   32,825   399,282   498,116 
             
Other non - derivatives             
Trade and other payables**      69,450   -      -      -       69,450 
Contingent consideration    18,750    18,750 
Lease liabilities     1,318   1,318   1,318   2,636   6,590 
    122,612  34,233  34,143  401,918  592,906 
  Effective interest rate  Less than
1 year 
1 - 2
year 
2 - 3
years 
3 - 5
years 
Total 
  $'000  $'000  $'000  $'000  $'000 
31 December 2018             
Non - derivatives             
Fixed interest rate borrowings             
Senior notes  9.25%   33,094   32,915   32,825   399,282   498,116 
Variable interest rate borrowings              
Stanbic IBTC Bank Plc  6.0% +LIBOR   1,020   1,023   1,020   12,378   15,441 
The Standard Bank of South Africa  6.0% +LIBOR   680   682   680   8,252   10,294 
Nedbank Limited, London Branch  6.0% +LIBOR   1,417   1,421   1,417   17,192   21,447 
Standard Chartered Bank  6.0% +LIBOR   1,275   1,279   1,275   15,473   19,302 
Natixis  6.0% +LIBOR   992   995   992   12,035   15,014 
FirstRand Bank Limited Acting  6.0% +LIBOR   992   995   992   12,035   15,014 
Citibank N.A. London  6.0% +LIBOR   850   853   850   10,315   12,868 
The Mauritius Commercial Bank Plc  6.0% +LIBOR   850   853   850   10,315   12,868 
Nomura International Plc  6.0% +LIBOR   425   426   425   5,158   6,434 
    8,501  8,527  8,501  103,153  128,682 
Other non - derivatives             
Trade and other payables**     156,847   -      -      -      156,847 
Contingent consideration     -     18,750   18,750 
     198,442  60,192  41,326   502,435   802,395 
                   

** Trade and other payables (excludes non-financial liabilities such as provisions, taxes, pension and other non-contractual

payables).

5.1.2 Credit risk

Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Group. Credit risk arises from cash and bank balances, derivative financial assets, deposits with banks and financial institutions as well as credit exposures to customers (i.e. Mercuria, Pillar, Axxela and NGMC receivables) and other parties, i.e. NPDC receivables and other receivables.

Risk management

The Group is exposed to credit risk from its sale of crude oil to Mecuria. The off-take agreement with Mercuria runs for five years until 31 July 2020 with a 30 day payment term. The Group is exposed to further credit risk from outstanding cash calls from Nigerian Petroleum Development Company (NPDC) and National Petroleum Investment Management Services (NAPIMS).

In addition, the Group is exposed to credit risk in relation to its sale of gas to Nigerian Gas Marketing Company (NGMC) Limited, a subsidiary of NNPC, its sole gas customer during the quarter.

The credit risk on cash is limited because the majority of deposits are with banks that have an acceptable credit rating assigned by an international credit agency. The Group's maximum exposure to credit risk due to default of the counterparty is equal to the carrying value of its financial assets.

5.2  Fair value measurements

Set out below is a comparison by category of carrying amounts and fair value of all financial instruments:

  Carrying amount  Fair value 
  As at 31 Mar 2019  As at 31 Dec 2018   As at 31 Mar 2019  As at 31 Dec 2018  
  ₦ million  ₦ million  ₦ million  ₦ million 
Financial assets at amortised cost         
Trade and other receivables*    24,341   29,466    24,341    29,466 
Contract assets   3,666   4,327   3,666   4,327 
Cash and bank balances    199,459    179,509   156,716    179,509 
    227,466   213,302    227,466  213,302 
Financial assets at fair value         
Derivative financial instruments   535   2,693   535   2,693 
   535  2,693   535  2,693 
Financial liabilities at amortised cost         
Interest bearing loans and borrowings   104,899   136,830   114,643   143,158 
Contingent consideration   5,687  5,676   5,687  5,676 
Trade and other payables   21,318  48,152   21,318  48,152 
   131,904  190,658   141,648  196,986 
  Carrying amount  Fair value 
  As at 31 Mar 2019  As at 31 Dec 2018   As at 31 Mar 2019  As at 31 Dec 2018  
  $'000  $'000  $'000  $'000 
Financial assets at amortised cost         
Trade and other receivables*    79,299   95,982    79,299    95,982 
Contract assets   11,947   14,096   11,947   14,096 
Cash and bank balances    649,806   584,723    649,806  584,723 
  741,052   694,801  741,052  694,801 
Financial assets at fair value         
Derivative financial instruments   1,742   8,772   1,742   8,772 
   1,742  8,772   1,742  8,772 
Financial liabilities at amortised cost         
Interest bearing loans and borrowings   341,748   445,699   373,490   466,314 
Contingent consideration   18,529   18,489   18,529   18,489 
Trade and other payables   69,450   156,847   69,450   156,847 
   429,727   621,035   461,469   641,650 

* Trade and other receivables exclude VAT receivables, cash advances and advance payments.

In determining the fair value of the interest bearing loans and borrowings, non-performance risks of the Group as at the end of the reporting period were assessed to be insignificant.

Trade and other payables (excludes non-financial liabilities such as provisions, taxes, pension and other non-contractual payables), trade and other receivables (excluding prepayments), contract assets and cash and bank balances are financial instruments whose carrying amounts as per the financial statements approximate their fair values. This is mainly due to their short term nature.

5.2.1 Fair Value Hierarchy

As at the reporting period, the Group had classified its financial instruments into the three levels prescribed under the accounting standards. These are all recurring fair value measurements. There were no transfers of financial instruments between fair value hierarchy levels during this first quarter.

The fair value of the Group's derivative financial instruments has been determined using a proprietary pricing model that uses marked to market valuation. The valuation represents the mid-market value and the actual close-out costs of trades involved. The market inputs to the model are derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models.                                                                                        

The fair value of the Group's interest bearing loans and borrowings is determined by using discounted cash flow models that use market interest rates as at the end of the period. The derivative financial instruments are in level 1, interest-bearing loans and borrowings are in level 2 and contingent consideration is in level 3. The carrying amounts of the other financial instruments are the same as their fair values.

The fair value of the Group's contingent consideration is determined using the discounted cash flow model. The cash flows were determined based on probable future oil prices. The estimated future cash flow was discounted to present value using the 5 year US daily treasury yield curve rates as at the inception date, 05 Feb 2015. The 5 year US daily treasury yield curve rates represents a good proxy for a risk-free pre-tax rate as it is the currency in which the obligation arose and it also matches the maturity of the liability.

The Valuation process

The finance & planning team of the Group performs the valuations of financial and non financial assets required for financial reporting purposes. This team reports directly to the Finance Manager (FM) who reports to the Chief Financial Officer (CFO) and the Audit Committee (AC). Discussions of valuation processes and results are held between the FM and the valuation team at least once every quarter, in line with the Group's quarterly reporting periods.

The main level 3 inputs used by the Group are derived and evaluated as follows:

§ Discount rates for financial assets and financial liabilities are determined using a government risk free rate to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.

§ Contingent consideration - Fair value is determined by using the discounted cash flow model. Expected cash inflows are determined based on the terms of the contract and the entity's knowledge of the business and how the current economic environment is likely to impact it.

§ Changes in level 3 fair values are analysed and the reason for the change explained at the end of each reporting period during the quarterly discussion between the FM and the valuation team and eventually with the CFO and Audit Committee.

5.2.2 Sensitivity of level 3 significant unobservable inputs

The following table demonstrates the sensitivity of the Group's profit/ (loss) before tax to changes in the discount rate of the contingent consideration, with all other variables held constant.

Increase/decrease in discount rate    Effect on profit  before tax 31 Mar 2019 ₦ million  Effect on other components of equity before tax 31 Mar 2019 ₦ million  Effect on profit before tax 31 Mar 2019   $'000  Effect on other components of equity before tax 31 Mar 2019  $'000 
+1%    42   -     136   -    
-1%    (43)   -     (139)   -    
Increase/decrease in discount rate    Effect on profit  before tax 31 Dec 2018 ₦ million  Effect on other components of equity before tax 31 Dec 2018 ₦ million  Effect on profit before tax  31 Dec 2018   $'000  Effect on other components of equity before tax 31 Dec 2018  $'000 
+1%     181   -      56 
-1%     (185)   -      (57) 

The fair value of the contingent consideration of US$18.5 million for OML 53 was estimated by calculating the present value of the deferred payment ofUS$18.75 million over the contractual maximum period of five (5) years till 31 January 2020.

The estimates are calculated using the 5 year US daily treasury yield curve rates as at the inception date, 05 Feb 2015. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. The market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York.

They represent "bond equivalent yields" for securities that pay semiannual interest, which are expressed on a simple annualized basis.  This is consistent with market practices for quoting bond yields in the market and makes the constant Maturity Treasury (CMT) yield directly comparable to quotations on other bond market yields. 

The 5 year US daily treasury yield curve rates  represents a good proxy for a risk-free pre-tax rate as it is the currency in which the obligation arose and it also matches the maturity of the liability. Given that the possible obligation will be paid as a single payment, the discount rate has not been adjusted to reflect different timing of the cash flows.

6.    Segment reporting

Business segments are based on Seplat's internal organisation and management reporting structure. Seplat's business segments are the two core businesses: Oil and Gas. The Oil segment deals with the exploration, development and production of crude oil while the Gas segment deals with theproduction and processing of gas. These two reportable segments make up the total operations of the Group.

For the three months ended 31 March 2019, revenue from the gas segment of the business constituted 26% of the Group's revenue. Management believes that the gas segment of the business will continue to generate higher profits in the foreseeable future. It also decided that more investments will be made toward building the gas arm of the business. This investment will be used in establishing more offices, creating a separate operational management and procuring the required infrastructure for this segment of the business. The gas business is positioned separately within the Group and reports directly to the ('chief operating decision maker'). As this business segment's revenues and results, and also its cash flows, will be largely independent of other business units within Seplat, it is regarded as a separate segment.

The result is two reporting segments, Oil and Gas. There were no intersegment sales during the reporting periods under consideration, therefore all revenue was from external customers.

Amounts relating to the gas segment are determined using the gas cost centers, with the exception of depreciation. Depreciation relating to the gas segment is determined by applying a percentage which reflects the proportion of the Net Book Value of oil and gas properties that relates to gas investment costs (i.e. cost for the gas processing facilities).

The Group accounting policies are also applied in the segment reports.

6.1.  Segment profit disclosure

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦'million  ₦'million  $'000  $'000 
Oil   (996)   452   (3,237)   1,482 
Gas   11,018   5,835   35,913   19,075 
Total profit for the period   10,022   6,287   32,676   20,557 

                                                                                                                             Oil

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦'million  ₦'million  $'000  $'000 
Revenue         
Crude oil sales   36,132   43,138   117,768   141,035 
Operating profit before depreciation, amortisation and impairment   5,395   24,663   17,587   80,637 
Depreciation, amortisation and impairment   (6,439)   (4,875)   (20,987)   (15,936) 
Operating (loss)/profit   (1,044)   19,788   (3,400)   64,701 
Finance income   869   437   2,834   1,429 
Finance costs   (4,886)   (8,073)   (15,922)   (26,395) 
(Loss)/profit before taxation   (5,061)   12,152   (16,488)   39,735 
Taxation   4,065   (11,700)   13,251   (38,253) 
(Loss)/Profit for the period   (996)   452   (3,237)   1,482 

                                                                                                                                    Gas

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦'million  ₦'million  $'000  $'000 
Revenue         
Gas sales   12,809   12,098   41,749   39,553 
Operating profit before depreciation, amortisation and impairment   11,971   10,961   39,023   35,836 
Depreciation, amortisation and impairment   (953)   (5,126)   (3,110)   (16,761) 
Operating profit   11,018   5,835   35,913   19,075 
Finance income   -      -      -      -    
Finance costs   -      -      -      -    
Profit before taxation   11,018   5,835   35,913   19,075 
Taxation   -      -      -      -    
Profit for the period   11,018   5,835   35,913   19,075 

6.1.1. Disaggregation of revenue

The Group derives revenue from the transfer of commodities at a point in time or over time and from different geographical regions.

  3 months ended 31 March 2019  3 months ended 31 March  2019  3 months ended 31 March 2019  3 months ended 31 March  2018  3 months ended 31 March  2018  3 months  ended 31 March  2018 
  Oil  Gas  Total  Oil  Gas  Total 
  ₦'million  ₦'million  ₦'million  ₦'million  ₦'million  ₦'million 
Geographical markets             
Nigeria  3,665  12,809  16,474  591  12,098  12,689 
Switzerland  32,467  32,467  42,547  42,547 
Revenue  36,132  12,809  48,941  43,138  12,098  55,236 
Timing of revenue recognition             
At a point in time  36,132  36,132  43,138  43,138 
Over time  12,809  12,809  12,098  12,098 
Revenue  36,132  12,809  48,941  43,138  12,098  55,236 
  3 months ended 31 March 2019  3 months ended 31 March  2019  3 months ended 31 March 2019  3 months ended 31 March  2018  3 months ended 31 March  2018  3 months  ended 31 March  2018 
  Oil  Gas  Total  Oil  Gas  Total 
  $'000  $'000  $'000  $'000  $'000  $'000 
Geographical markets             
Nigeria  11,943  41,749  53,692  1,933  39,553  41,486 
Switzerland  105,825  105,825  139,102  139,102 
Revenue  117,768  41,749  159,517  141,035  39,553  180,588 
Timing of revenue recognition             
At a point in time  117,768  117,768  141,035  141,035 
Over time  41,749  41,749  39,553  39,553 
Revenue  117,768  41,749  159,517  141,035  39,553  180,588 

The Group's transactions with its major customer, Mercuria, constitutes more than 10% (₦32 billion, $105 million) of the total revenue from the oil segment and the Group as a whole. Also, the Group's transactions with NGMC (₦4.3 billion, $14 million) accounted for more than 10% of the total revenue from the gas segment and the Group as a whole.

6.1.2. Reversal of impairment losses by reportable segments

  3 months ended 31 March 2019  3 months ended 31 March  2019  3 months ended 31 March 2019  3 months ended 31 March  2018  3 months ended 31 March  2018  3 months  ended 31 March  2018 
  Oil  Gas  Total  Oil  Gas  Total 
  ₦'million  ₦'million  ₦'million  ₦'million  ₦'million  ₦'million 
Reversal of previous impairment losses  (44)  (44)  (669)  (669) 
  (44)  (44)  (669)  (669) 
  3 months ended 31 March 2019  3 months ended 31 March  2019  3 months ended 31 March 2019  3 months ended 31 March  2018  3 months ended 31 March  2018  3 months  ended 31 March  2018 
  Oil  Gas  Total  Oil  Gas  Total 
  $'000  $'000  $'000  $'000  $'000  $'000 
Reversal of previous impairment losses  (144)  (144)  (2,186)  (2,186) 
  (144)  (144)  (2,186)  (2,186) 

6.2.  Segment assets

Segment assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the reporting segment and the physical location of the asset. The Group had no non-current assets domiciled outside Nigeria.

  Oil  Gas   Total  Oil  Gas   Total 
Total segment assets          ₦'million  ₦'million  ₦'million  $'000  $'000  $'000 
31 March 2019  550,742  242,238  792,980  1,794,274  789,174  2,583,448 
31 December 2018  623,017  152,639  775,656  2,029,374  497,191  2,526,565 
               

6.3.  Segment liabilities

Segment liabilities are measured in a manner consistent with that of the financial statements. These liabilities are allocated based on the operations of the segment.

  Oil  Gas   Total  Oil  Gas   Total 
Total segment liabilities   ₦'million  ₦'million  ₦'million  $'000  $'000  $'000 
31 March 2019  155,080  135,672  290,752  505,257  442,007  947,264 
31 December 2018  257,564  26,620  284,184  838,971  86,709  925,680 
               

6.4.  Contingent consideration

The contingent consideration of ₦5.7 billion, Dec 2018: ₦5.7 billion ($18.5 million, Dec 2018: $18.5 million) for OML 53 relates solely to the oil segment. This was contingent on oil price rising above ₦27,626/bbl ($90/bbl) over a one year period and expiring on 31st January 2020. The fair value loss arising during the reporting period is ₦13 million, March 2018: ₦1.4 billion ($40,000, March 2018: $4.6 million).

7.    Revenue from contracts with customers

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Crude oil sales   36,132  43,138   117,768   141,035 
Gas sales              12,809  12,098   41,749   39,553 
   48,941   55,236   159,517   180,588 

The major off-taker for crude oil is Mercuria. The major off-taker for gas is the Nigerian Gas Marketing Company.

8.    Cost of sales

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Crude handling fees   4,459   4,567   14,534   14,932 
Royalties   8,252   9,758   26,895   31,902 
Depletion, depreciation and amortisation   7,004   9,704   22,831   31,727 
Nigerian Export Supervision Scheme (NESS) fee   32   60   103   195 
Niger Delta Development Commission levy   631   519   2,056   1,696 
Rig related expenses   -      8   -      25 
Operations & maintenance expenses   3,577   2,217   11,659   7,251 
   23,955   26,833   78,078   87,728 

Operational & maintenance expenses mainly relates to maintenance costs, warehouse operations expenses, security expenses, community expenses, clean up costs, fuel supplies and catering services.

9.    Other (losses)/income - net

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
(Overlift)/underlift   (4,868)  2,628   (15,866)  8,591 
(Loss)/gains on foreign exchange   (163)  572   (529)  1,870   
   (5,031)  3,200   (16,395)  10,461   

Shortfalls may exist between the crude oil lifted and sold to customers during the period and the participant's ownership share of production. The shortfall is initially measured at the market price of oil at the date of lifting and recognised as other income. At each reporting period, the shortfall is remeasured at the current market value. The resulting change, as a result of the remeasurement, is also recognised in profit or loss as other income.

Gains or losses on foreign exchange are principally as a result of translation of naira denominated monetary assets and liabilities.

10.  General and administrative expenses

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Depreciation of other property, plant and equipment   200   297   653   970 
Depreciation of right-of-use assets (note 28)   188   613 
Employee benefits   2,080   2,355   6,777   7,699 
Professional and consulting fees   1,996   1,088   6,505   3,554 
Auditor's remuneration   -      38   -      122 
Directors emoluments (executive)   200   87   653   283 
Directors emoluments (non-executive)   238   199   775   652 
Rentals   119   121   388   395 
Flights and other travel costs   664   248   2,167   814 
Other general expenses   587   486   1,914   1,589 
   6,272   4,919   20,445   16,078 

Directors' emoluments have been split between executive and non-executive directors. There were no non-audit services rendered by the Group's auditors during the period. (2018: nil)

Other general expenses relate to costs such as office maintenance costs, rentals, telecommunication costs, logistics costs and others. Share based payment expenses are included in the employee benefits expense.

Rentals for the three months ended 31 March 2019 relate to expenses on short term leases for which no right-of-use assets and lease liability were recognised on application of IFRS 16. See note 28 for further details.

11.  Reversal of impairment losses on financial assets

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Reversal of impairment loss on NDPC receivables  622  2,035 
Reversal of impairment loss on NAPIMS receivables  47  151 
Reversal of impairment loss on other receivables  44  144 
Total reversal of impairment loss  44   669  144   2,186 

The reversal of previously recognised impairment losses on other receivables is due to settlement of the outstanding receivables amount.

12.  Fair value loss

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Cost of hedging  1,583   380  5,160   1,242 
Unrealised fair value loss on derivatives  2,157  7,030 
Fair value loss on contingent consideration  13   1,350  40   4,411 
  3,753   1,730  12,230   5,653 

Fair value loss on derivatives represents changes arising from the valuation of the crude oil economic hedge contracts charged to profit or loss. Fair value loss on contingent consideration arises in relation to remeasurement of contingent consideration on the Group's acquisition of participating interest in OML 53. The contingency criteria are the achievement of certain production milestones.

13.  Finance income/(costs)

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Finance income         
Interest income  869  437  2,834  1,429 
Finance costs         
Interest on bank loan   (4,534)   (7,350)   (14,778)   (24,033) 
Interest on lease liabilities (note 28.2)  (39)   (127) 
Interest on advance payments for crude oil sales   -      (530)   -      (1,730) 
Unwinding of discount on provision for decommissioning    (313)   (193)   (1,017)   (632) 
   (4,886)  (8,073)   (15,922)  (26,395) 
Finance costs - net   (4,017)  (7,636)   (13,088)  (24,966) 

Finance income represents interest on fixed deposits.

14.  Taxation

Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rates used for the period to 31 March 2019 were 85% and 65.75% for crude oil activities and 30% for gas activities. As at 31 December 2018, the applicable tax rates were 85%, 65.75% for crude oil activities and 30% for gas activities.

The effective tax rate for the period was 68.2% (March 2018: 65%).

14a.  Unrecognised deferred tax assets

The unrecognised deferred tax assets relates to the Group's subsidiaries and will be recognised once the entities return to profitability. There are no expiration dates for the unrecognized deferred tax assets.

  As at 31 March
2019 
As at 31 March
2019 
As at 31 Dec
2018 
As at 31 Dec
2018 
  ₦ million  ₦ million  ₦ million  ₦ million 
  Gross amount  Tax effect  Gross amount  Tax effect 
Other deductible temporary differences   20,673   15,026   17,894   11,206 
Tax losses   6,508   2,457   10,224   6,011 
   27,181   17,483   28,118   17,167 
  As at 31 March
2019 
As at 31 March
2019 
As at 31 Dec
2018 
As at 31 Dec
2018 
  $'000  $'000  $'000  $'000 
  Gross amount  Tax effect  Gross amount  Tax effect 
Other deductible temporary differences   67,349   48,953   58,288   36,502 
Tax losses   21,204   8,006   33,303   19,580 
   88,553   56,959   91,591   56,082 

Other deductible temporary differences relate to temporary differences arising from unutilised capital allowance, provision for decommissioning obligation, deferred benefit plan, share based payment reserve, unrealized foreign exchange gain/(loss), other income and trade and other receivables.

14b.  Unrecognised deferred tax liabilities

There were no temporary differences associated with investments in the Group's subsidiaries for which a deferred tax liability would have been recognised in the periods presented.

14c.  Deferred tax assets

  Balance at 1 January 2019  Charged/ credited to profit or loss  Balance at 31 March 2019  Balance at  1 January 2019  Charged/ credited to profit or loss  Balance at 31 March 2019 
  ₦ million  ₦ million  ₦ million  $'000  $'000  $'000 
Tax losses   (12)  12   -    
Other cumulative timing differences:             
Fixed assets   (85,706)   (4,816)   (90,522)   (280,282)   (15,699)   (295,981) 
Unutilised capital allowance   116,068   5,207   121,275   379,592   16,971   396,563 
Provision for decommissioning obligation   818   230   1,048   2,674   749   3,423 
Defined benefit plan   1,540   178   1,718   5,035   579   5,614 
Share based payment reserve   3,294   684   3,978   10,778   2,230   13,008 
Unrealised foreign exchange loss on trade and other receivables   1,258   -      1,258   4,123   -      4,123 
Other income   5,246   3,550   8,796   17,159   11,571   28,730 
Impairment provision on trade and other receivables   2,071   (2,295)   (224)   6,770   (7,480)   (710) 
Derivative financial instruments   (2,282)   2,288   6   (7,456)   7,456   -    
Exchange difference   192   (19)   173 
   42,487   5,019   47,506  138,393   16,377  154,770 

15.  Earnings per share (EPS)

Basic

Basic EPS is calculated on the Group's profit after taxation attributable to the parent entity and on the basis of weighted average of issued and fully paid ordinary shares at the end of the period.

Diluted

Diluted EPS is calculated by dividing the profit after taxation attributable to the parent entity by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares (arising from outstanding share awards in the share based payment scheme) into ordinary shares.

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Profit for the period  10,022   6,287  32,676   20,557 
  Shares '000  Shares '000  Shares '000  Shares '000 
Weighted average number of ordinary shares in issue   568,497   563,445   568,497   563,445 
Outstanding share based payments (shares)   2,253   2,294   2,253   2,294 
Weighted average number of ordinary shares adjusted for the effect of dilution  570,750   565,739  570,750  565,739 
  ₦  ₦ 
Basic earnings per share   17.63   11.16   0.06   0.04 
Diluted earnings per share              17.56   11.11   0.06   0.04 
  ₦ million  ₦ million  $'000  $'000 
Profit used in determining basic/diluted earnings per share  10,022   6,287  32,676  20,557 

The shares were weighted for the proportion of the number of months they were in issue during the reporting period.

16.  Interest bearing loans and borrowings

Below is the net debt reconciliation on interest bearing loans and borrowings:

  Borrowings  due within
1 year 
Borrowings  due above
1 year 
 Total  Borrowings  due within
1 year 
Borrowings due above
1 year 
 Total 
  ₦ million  ₦ million  ₦ million  $'000  $'000  $'000 
Balance as at 1 January 2019   3,031   133,799   136,830   9,872   435,827   445,699 
Principal repayment   -      (30,695)   (30,695)   -      (100,000)   (100,000) 
Interest repayment   (5,395)   -      (5,395)   (17,583)   -      (17,583) 
Interest accrued   4,534   -      4,534   14,778   -      14,778 
Transfers   8,825   (8,825)   -      28,764   (28,764)   -    
Other financing charges   (352)   -      (352)   (1,146)   -      (1,146) 
Exchange differences   4   (27)   (23) 
Carrying amount as at 31 March 2019   10,647   94,252   104,899   34,685   307,063   341,748 

Interest bearing loans and borrowings include a revolving loan facility and senior notes. In March 2018 the Group issued ₦107 billion ($350 million) senior notes at a contractual interest rate of 9.25% with interest payable on 1 April and 1 October, and principal repayable at maturity. The notes are expected to mature in April 2023. The interest accrued up at the reporting date is ₦4.3 billion ($14.2 million) using an effective interest rate of 10.4%. Transaction costs of ₦2.1 billion ($7 million) have been included in the amortised cost balance at the end of the reporting period.

The Group entered into a four year revolving loan agreement with interest payable semi-annually and principal repayable on 31 December of each year. The revolving loan has an initial contractual interest rate of 6% +Libor (7.7%) and a settlement date of June 2022.

The interest rate of the facility is variable. The Group made a drawdown of ₦61 billion ($200 million) in March 2018. The interest accrued at the reporting period is ₦0.2 billion, March 2018: ₦0.13 billion ($0.6 million, March 2018: $0.44 million) using an effective interest rate of 9.8% (March 2018: 8.4%). The interest paid was determined using 3-month LIBOR rate + 6 % on the last business day of the reporting period. The amortised cost for the senior notes at the reporting period is N104.9 billion ($341.7 million).

In October 2018, the Group made principal repayments on the four-year revolving facility for a lump sum of ₦30.7 billion ($100 million). The repayment was accounted for as a prepayment of the outstanding loan facility. The gross carrying amount of the facility was recalculated as the present value of the estimated future contractual cash flows that are discounted using the effective interest rate at the last reporting period. Gain or loss on modifications are recognised immediately as part of interest accrued on the facility. Transaction costs of ₦1.4 billion ($4.5 million) have been included in the amortised cost balance at the end of the reporting period. In the reporting period, the Group repaid the outstanding principal amount of ₦30.7 billion ($100 million) on the revolving loan facility.

17. Trade and other receivables           
  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec   
  2019  2018  2019  2018   
  ₦ million  ₦ million  $'000  $'000   
Trade receivables   31,697     29,127   103,267   94,875   
Underlift   -     1,325   -     4,313   
Advances to suppliers    4,274   1,822  13,925   5,933   
Other receivables    9,635     9,600    31,417   31,272   
Net carrying amount  45,606   41,874  148,609   136,393   

17a.  Trade receivables

Included in trade receivables is an amount due from Nigerian Gas Marketing Company (NGMC) and Central Bank of Nigeria (CBN) totaling ₦15.3 billion, Dec 2018: ₦14 billion ($49.9 million, Dec 2018: $46 million) with respect to the sale of gas.

17b.  NPDC receivables

The outstanding cash calls due to Seplat from its JOA partner, NPDC is nil, Dec 2018: nil ($ nil, Dec 2018: nil). The outstanding

NPDC receivables at the end of the reporting period has been netted against the gas receipts payable to NPDC as Seplat has

a legally enforceable right to settle outstanding amounts on a net basis.

  31 Mar 2019  31 Mar 2019  31 Mar 2019  31 Mar 2019 
  ₦'million  ₦'million  ₦'000  ₦'000 
  Gross amounts  Loss allowance  Gross amounts offset in the balance sheet  Net amounts presented  in the balance sheet 
Financial assets         
Trade receivables  14,827  (2,475)  (12,352) 
Financial liabilities         
Payable to NPDC  (28,091)  12,352  (15,739) 
  31 Mar 2019  31 Mar 2019  31 Mar 2019  31 Mar 2019 
  $'000  $'000  $'000  $'000 
  Gross amounts  Loss allowance  Gross amounts offset in the balance sheet  Net amounts presented  in the balance sheet 
Financial assets         
Trade receivables  48,439  (8,086)  (40,353) 
Financial liabilities         
Payable to NPDC  (91,629)  40,353  (51,276) 

17c.  Other receivables

Other receivables are amounts outside the usual operating activities of the Group. Included in other receivables is a receivable amount on an investment that is no longer being pursued. The outstanding receivable amount as at the reporting date is ₦9.7 billion, Dec 2018: ₦9.6 billion ($31.5 million, Dec 2018: $31.3 million).

17d.  Reconciliation of trade receivables

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦'million  ₦'million  $'000  $'000 
Balance as at 1 January   29,127   33,236   94,875   108,685 
Additions during the period   59,668   217,553   194,486   710,725 
Receipts for the period   (57,094)   (221,659)   (186,094)   (724,127) 
Exchange difference   (4)   123   -   - 
Gross carrying amount   31,697   29,253   103,267   95,283 
Less: impairment allowance   -   (126)   -   (408) 
Balance as at 31 March   31,697   29,127   103,267   94,875 

18.  Derivative financial instruments

The Group uses its derivatives for economic hedging purposes and not as speculative investments. However, where derivatives do not meet the hedge accounting criteria, they are accounted for at fair value through profit or loss. They are presented as current assets.

The derivative financial instrument of ₦0.5 billion, Dec 2018: 2.7 billion ($1.7 million, Dec 2018: $ 8.8 million) as at 31 March 2019 is as a result of a fair value gain on crude oil hedges. The fair value has been determined using a proprietary pricing model which generates results from inputs. The market inputs to the model are derived from observable sources. Other inputs are unobservable but are estimated based on the market inputs or by using other pricing models.

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦'million  ₦'million  $'000  $'000 
Foreign currency option - crude oil hedges   535   2,693   1,742   8,772 

19.  Contract assets

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦ million  ₦ million  $'000  $'000 
Revenue on gas sales  3,666  4,327  11,947  14,096 

A contract asset is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer. The Group has recognised an asset in relation to a contract with NGMC for the delivery of Gas supplies which NGMC has received but which has not been invoiced as at the end of the reporting period.

The terms of payments relating to the contract is between 30- 45 days from the invoice date. However, invoices are raised after delivery between 14-21 days when the right to the receivables crytallises. The right to the unbilled receivables is recognised as a contract asset.

At the point where the final billing certificate is obtained from NGMC authorising the quantities, this will be reclassified from the contract assets to trade receivables.

19.1.  Reconciliation of contract assets

The movement in the Group's contract assets is as detailed below:

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦'million  ₦'million  $'000  $'000 
Balance as at 1 January  4,327  4,217  14,096              13,790 
Additions during the period  7,593  39,120  24,744  127,803 
Receipts for the period  (8,253)  (39,027)  (26,893)  (127,497) 
Exchange difference  (1)  17 
Gross carrying amount  3,666  4,327  11,947  14,096 
Less: impairment allowance   
Balance as at 31 March  3,666  4,327  11,947  14,096 

20.  Cash and bank balances      

Cash and bank balances in the statement of financial position comprise of cash at bank and on hand, fixed deposits with a maturity of three months or less and restricted cash balances.

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦'million  ₦'million  $'000  $'000 
Cash on hand   4   2   12   7 
Restricted cash    1,761   1,049    5,736   3,418 
Cash at bank*    197,694   178,494  644,058   581,416 
   199,459   179,545    649,806   584,841 
Less: impairment allowance  (36)  (118) 
  199,459  179,509  649,806  584,723 

Included in the restricted cash balance is an amount set aside in the Stamping Reserve account for the revolving credit facility (RCF). The amount is to be used for the settlement of all fees and costs payable for the purposes of stamping and registering the Security Documents at the stamp duties office and at the Corporate Affairs Commission (CAC). The amounts are restricted for a period five (5) years, which is the contractual period of the RCF. These amounts are subject to legal restrictions and are therefore not available for general use by the Group. These amounts have therefore been excluded from cash and bank balances for the purposes of cash flow.

*Included in Cash & bank balances is ₦30.7 billion ($100 million) temporarily held by the Group on behalf of Nigerian Gas Company (NGC) for its equity share in ANOH Gas Processing Company (AGPC).  Funds were transferred by NGC in Q1 2019 before NGC's equity investment in AGPC wasapproved by the Corporate Affairs Commission (CAC) on 18 April 2019 (see note 22d). ₦12 billion ($39.25 million) is also being held in an escrow account against a potential investment, pending agreement with the counter-party.

For the purpose of the statement of cashflows, cash and cash equivalents comprise the following:

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦'million  ₦'million  $'000  $'000 
Cash on hand   4   2   12   7 
Cash at bank  197,694   178,458  644,058   581,298 
  197,698  178,460  644,070  581,305 

21.  Share capital

21a.  Authorised and issued share capital

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec 
  2019  2018  2019  2018 
  ₦ million  ₦ million  $'000  $'000 
Authorised ordinary share capital         
1,000,000,000 ordinary shares denominated in  Naira of 50 kobo per share  500  500  3,335  3,335 
Issued and fully paid         
568,497,025 (2018: 568,497,025) issued shares denominated in Naira of 50 kobo per share  286  286  1,834  1,834 

The Group's issued and fully paid as at the reporting date consists of 568,497,025 ordinary shares (excluding the additional shares held in trust) of ₦0.50k each, all with voting rights. Fully paid ordinary shares carry one vote per share and the right to dividends. There were no restrictions on the Group's share capital.

21b.  Movement in share related reserves

  Number of shares  Issued share capital  Share based payment reserve  Total 
  Shares  ₦'million  ₦'million  ₦'million 
Opening balance as at 1 January 2019  568,497,025  286  7,298  7,584 
Share based payments  805  805 
Closing balance as at 31 March 2019  568,497,025  286  8,103  8,389 
  Number of  shares  Issued share capital  Share based payment reserve  Total 
  Shares  $'000  $'000  $'000 
Opening balance as at 1 January 2019  568,497,025  1,834  27,499  29,333 
Share based payments  2,623  2,623 
Closing balance as at 31 March 2019  568,497,025  1,834  30,122  31,956 

21c.  Employee share based payment scheme

As at 31 March 2019, the Group had awarded 40,410,644 shares (Dec 2018: 40,410,644 shares) to certain employees and senior executives in line with its share based incentive scheme. During the three months ended 31 March 2019 no shares were vested (Dec 2018: 5,052,464 shares).

22.  Trade and other payables

  As at 31 March  As at 31 Dec  As at 31 March  As at 31 Dec   
  2019  2018  2019  2018   
  ₦ million  ₦ million  $'000  $'000   
Trade payable   13,927   12,073   45,375   39,328   
Nigerian Petroleum Development Company (NPDC)   18,214   10,022   59,362   32,643   
National Petroleum Investment Management Services (NAPIMS)   2,535   2,785   8,261   9,073   
Receipts for investment  30,695  100,000   
Accruals and other payables   48,833   53,296   159,093   173,603   
Pension payables   144   107   469   350   
NDDC levy   1,438   345   4,684   1,124   
Royalties payable   7,363   8,732   23,988   28,444   
  123,149   87,360   401,232   284,565   

22a.    Accruals and other payables 

Included in accruals and other payables are field-related accruals ₦19.06 billion, Dec 2018: ₦22.7 billion ($62.11million, Dec 2018: $74 million), and other vendor payables of ₦29.74 billion, Dec 2018: ₦31 billion ($96.98 million, Dec 2018: $101 million). Royalties payable include accruals in respect of crude oil and gas production for which payment is outstanding at the end of the period.

22b.   NPDC payables

NPDC payables relate to cash calls paid in advance in line with the Group's Joint operating agreement (JOA) on OML 4, OML 38 and OML 41.The outstanding NPDC receivables at the end of the reporting period was used to calculate the impairment losses for the year. The impairment losses was then netted against the outstanding receivables to arrive at a net receivables amount. At the end of the reporting period, this net receivables amount has been netted against payables to NPDC as the Group has a right to offset.

22c. NAPIMS payables

In 2018, NAPIMS receivables related to cash calls from its JOA with Seplat East Onshore. At the end of the reporting period, NAPIMS settled their cash calls and advanced monies for the Jisike Oil project, which is yet to commence. The amount advanced has therefore been recognised as a payable.

22d. Receipts for investment

The Group entered into a Shareholder Agreement and Share Subscription Agreement in August 2018 with the Nigerian Gas Company ("NGC") for it to subscribe for fifty per cent of the shares in ANOH Gas Processing Company Limited ("AGPC"), 100% owned by the Group.  The Approval from Corporate Affairs Commission (CAC) in Nigeria for the new shareholding structure was not received until April 18, 2019.

During Q1 2019, NGC injected its share of the first tranche of equity injection of ₦30.7 billion ($100 million) into funding the project before the share transfer was effected.  The funds were temporarily held by the Group in Cash at Bank in Q1 2019.

23.  Computation of cash generated from operations

    3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  Notes  ₦ million  ₦ million  $'000  $'000 
Profit before tax    5,957   17,987  19,425   58,810 
Adjusted for:           
Depletion, depreciation and amortisation     7,204   10,001   23,484   32,697 
Depreciation of right-of-use assets     188   -      613   -    
Interest on bank loans  13   4,534   7,350   14,778   24,033 
Interest on lease liabilities  13   39   -      127   -    
Interest on advance payments for crude oil sales  13   -      530   -      1,730 
Unwinding of discount on provision for decommissioning liabilities  13   313   193   1,017   632 
Finance income  13   (869)   (437)   (2,834)   (1,429) 
Fair value loss on contingent consideration  12   13   1,350   40   4,411 
Unrealised fair value loss on derivatives     2,157                              -      7,030   -    
Unrealised foreign exchange (gain)/ loss  163   (572)  529   (1,870) 
Share based payments expenses     805   599   2,623   1,958 
Defined benefit expenses     209   (328)   682   (1,073) 
Reversal of impairment loss on trade and other receivables  11  (44)  (669)  (144)  (2,186) 
Changes in working capital (excluding the effects of exchange differences):           
Trade and other receivables    (3,356)   11,943  (10,935)   39,044 
Prepayments      930   -     3,031   
Contract assets     661   (3,876)   2,149   (12,672) 
Trade and other payables    4,878   (30,406)  15,891   (99,408) 
Inventories     1,337   402   4,335   1,312 
Restricted cash       (712)   -     (2,318) 
Net cash from operating activities                                                                                24,407   14,067  79,523   45,989 

24.  Related party relationships and transactions

The Group is controlled by Seplat Petroleum Development Company Plc (the 'parent Company'). The shares in the parent Company are widely held.

24a.  Related party relationships

The services provided by the related parties:

Abbeycourt Trading Company Limited: The Chairman of Seplat is a director and shareholder. The company provides diesel supplies to Seplat in respect of Seplat's rig operations.

Cardinal Drilling Services Limited (formerly Caroil Drilling Nigeria Limited): Is owned by common shareholders with the parent Company. The company provides drilling rigs and drilling services to Seplat.

Charismond Nigeria Limited: The sister to the CEO works as a General Manager. The company provides administrative services including stationery and other general supplies to the field locations.

Helko Nigeria Limited: The Chairman of Seplat is shareholder and director. The company owns the lease to Seplat's main office at 25A Lugard Avenue, Lagos, Nigeria.

Keco Nigeria Enterprises: The Chief Executive Officer's sister is shareholder and director. The company provides diesel supplies to Seplat in respect of its rig operations.

Montego Upstream Services Limited: The Chairman's nephew is shareholder and director. The company provides drilling and engineering services to Seplat.

Nerine Support Services Limited: Is owned by common shareholders with the parent Company. Seplat leases a warehouse from Nerine and the company provides agency and contract workers to Seplat.

Oriental Catering Services Limited: The Chief Executive Officer of Seplat's spouse is shareholder and director. The company provided catering services to Seplat at the staff canteen during the reporting period.

Shebah Petroleum Development Company Limited ('BVI'): The Chairman of Seplat is a director and shareholder of SPDCL (BVI). The company has provided consulting services to Seplat since 2014.

Stage leasing (Ndosumili Ventures Limited): is a subsidiary of Platform Petroleum Limited. The company provides transportation services to Seplat.

The following transactions were carried out by Seplat with related parties:

24b.  Related party relationships

i)          Purchase of goods and services

  3 months ended 31 March 2019  3 months ended 31 March 2018  3 months ended 31 March 2019  3 months ended 31 March 2018 
  ₦ million  ₦ million  $'000  $'000 
Shareholders of the parent company         
SPDCL (BVI)  81  104   263  339 
Total  81  104   263  339 
Entities controlled by key management personnel:         
Contracts > $1million in 2019         
Nerine Support Services Limited  375   1,227 
Cardinal Drilling Services Limited  800   2,606  19 
  800  381   2,606   1,246 
         
Contracts < $1million in 2019         
Montego Upstream Services Limited  26 
Abbey Court trading Company Limited  80   79  260   259 
Charismond Nigeria Limited   2   8 
Keco Nigeria Enterprises          64            7            210   24 
Nerine Support Services Limited        236  -             768 
Stage leasing (Ndosumili Ventures Limited)        306         229            999   748 
Oriental Catering Services Limited          14          45             46   148 
Helko Nigeria Limited   34   111 
        710         396         2,315  1,298 
Total  1,591  882  5,184  2,883 

* Nerine on average charges a mark-up of 7.5% on agency and contract workers assigned to Seplat. The amounts shown above are gross i.e. it includes salaries and Nerine's mark-up. Total costs for agency and contracts during the first quarter ended 31 March 2019 is ₦17.7 million, 2018: ₦375 million ($57,600, 2018: $1.2 million).

All other transactions were made on normal commercial terms and conditions, and at market rates.

24c.  Balances

The following balances were receivable from or payable to related parties as at 31 March 2019:

Prepayments / receivables  As at 31 Mar 2019  As at 31 Dec 2018   As at 31 Mar 2019  As at 31 Dec 2018  
  ₦ million  ₦ million  $'000  $'000 
Entities controlled by key management personnel         
Cardinal Drilling Services Limited  1,495  4,869 
Montego Upstream Services Limited  26 
Oriental Catering Services Ltd 
  1,503  4,895 
Payables  As at 31 Mar 2019  As at 31 Dec 2018   As at 31 Mar 2019  As at 31 Dec 2018  
  ₦ million  ₦ million  $'000  $'000 
Entities controlled by key management personnel         
Keco Nigeria Enterprises   19  61 
Nerine Support Services Limited 
Cardinal Drilling Services Limited  190  619 
Oriental Catering Services Ltd   14  47 
Abbey Court Trading Company Limited   9  28 
Charismond Nigeria Limited   -    
Stage Leasing Limited   13  43 
  191   55  623   180 

25.  Contingent liabilities

The Group is involved in a number of legal suits as defendant. The estimated value of the contingent liabilities is ₦736 million, Dec 2018: ₦736 million ($2.4 million, Dec 2018: $2.4 million). The contingent liability for the period ended 31 March 2019 is determined based on possible occurrences though unlikely to occur. No provision has been made for this potential liability in these financial statements. Management and the Group's solicitors are of the opinion that the Group will suffer no loss from these claims.

26.  Proposed dividend

No interim dividend was proposed by the Group's directors for the reporting period (2018: ₦15, $0.05).

27.  Events after the reporting period

There were no significant events that would have had a material effect on the Group after the reporting period.

28.  Changes in accounting policies

This note explains the impact of adoption of IFRS 16: Leases on the Group's financial statements.

Leases

The Group's leased assets include buildings and land. Lease terms are negotiated on an individual basis and contain different terms and conditions, including extension options. The lease terms are between 1 and 5 years. On renewal of a lease, the terms are renegotiated. Leased assets may not be used as security for borrowing purposes.

Until the 2018 financial year, leases of property, plant and equipment were classified as operating leases. Payments made under operating leases were recognised as rentals in the statement of profit or loss and other comprehensive income on a straight-line basis and disclosed within general and administrative expenses over the period of the lease.

From 1 January 2019, on adoption of IFRS 16, leased assets are recognised as a right-of-use assets and a corresponding liability at the date at which the leased asset is available for use by the Group is also recognised. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'). The Group had no low value leases on adoption of the new standard. Lease liabilities for leases formerly classified as operating leases were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate of 13.1% as at that date.

Lease liabilities

At commencement date of a lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate is the weighted average interest rate applicable to the Group's general borrowings denominated in dollars during the period. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. The lease term refers to the contractual period of a lease.           

The Group has elected to exclude non-lease components in calculating lease liabilities and instead treat the related costs as an expense in profit or loss.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of a lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

Short-term leases and leases of low value

The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value (i.e. low value assets). Low-value assets are assets with lease amount of less than $5,000 when new. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

28.1.  Impact of adoption

The new Leases standard, IFRS 16 replaces the provisions of IAS 17 Leases and IFRIC 4 Determining whether an arrangement contains a lease. As discussed in Note 3.1, the Group has elected to apply the new standard using the simplified method. Accordingly, the information presented for the three months ended 31 March 2018 has not been restated but is presented, as previously reported, under IAS 17.

On adoption of IFRS 16, the lease liabilities as at 1 January 2019 for leases formerly classified as operating leases were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate as at that date. The Group's weighted average incremental borrowing rate as at 1 January 2019 and 31 March 2019 was 13.1%.

On adoption of the new accounting standard, the Group elected to apply the following practical expedients:

§  The Group relied on previous assessment of existing lease contracts

§  Leases with a remaining lease term of one year with no extension commitments as at 1 January 2019 were treated as short-term leases.

§  The Group excluded initial direct costs in determining the cost of right-of-use assets

§  The same discount rate was applied for a portfolio of leases with reasonably similar characteristics.

28.2.  Impact on financial statements

a)  Impact on statement of financial position

The following table summarises the impact of transition to IFRS 16 on the statement of financial position as at 1 January 2019 for each affected individual line item. Line items that were not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.

    Amounts without impact of IFRS 16  Impact of IFRS 16  As at 1 Jan 2019  Amounts without impact of IFRS 16  Impact of IFRS 16  As at 1 Jan 2019 
    ₦ million  ₦ million  ₦ million  US$ '000  US$ '000  US$ '000 
ASSETS               
Non-current assets               
Right-of-use assets    3,267  3,267  10,641  10,641 
Prepayment    7,950  (275)  7,675  25,893  (893)  25,000 
Total non-current assets    512,219  2,992  515,211  1,668,466  9,748  1,678,214 
Current assets               
Prepayments    3,549  (1,802)  1,747  11,561  (5,872)  5,689 
Total current assets    263,437  (2,077)  261,360  858,099  (6,765)  851,334 
Total assets    775,656  1,190  776,846  2,526,565  3,876  2,530,441 
EQUITY AND LIABILITIES               
Non-current liabilities               
Lease liabilities    952  952  3,100  3,100 
Total non-current liabilities    184,808  952  185,760  601,976  3,100  605,076 
Current liabilities               
Lease liabilities    238  238  776  776 
Total current liabilities    99,376  238  99,614  323,704  776  324,480 
Total liabilities    284,184  1,190  285,374  925,680  3,876  929,556 

§ Right-of-use assets

All the Group's right-of-use assets are non-current assets. A reconciliation of the Group's right-of-use assets as at 1 January 2019 and 31 March 2019is shown below:

  ₦ million  US$ '000 
Opening balance as at 1 January 2019 
Effect of initial application of IFRS 16  3,267  10,641 
Adjusted opening balance as at 1 January 2019  3,267  10,641 
Less: depreciation for the period  (188)  (613) 
Closing balance as at 31 March 2019  3,079  10,028 

The right-of-use assets recognised as at 1 January 2019 and 31 March 2019 comprised of the following asset:

  31 March 2019  1 Jan 2019  31 March 2019  1 Jan 2019 
  ₦ million  ₦ million  US$ '000  US$ '000 
Office buildings  3,079  3,267  10,028  10,641 
Right-of-use assets  3,079  3,267  10,028  10,641 

§ Lease liabilities

A reconciliation of the Group's remaining operating lease payments as at 31 December 2018 and the lease liability as at 1 January 2019 and 31 March 2019 is shown below:

  ₦ million  US$ '000 
Total undiscounted operating lease commitment as at 31 December 2018  2,024  6,595 
Lease liability as at 1 January 2019  1,190  3,876 
Add: interest on lease liabilities  39  127 
Closing balance as at 31 March 2019  1,229  4,003 

The lease liability as at 1 January 2019 is the total operating lease commitment as at 31 December 2018 discounted using the incremental borrowing rate as at that date.

Short term leases relate to leases of residential buildings, car parks and office building with contractual lease term of less than or equal to 12 months at the date of initial application of IFRS 16. At the end of the reporting period, rental expense of ₦119 million ($0.4 million) was recognised within general and administrative expenses for these leases. The Group's future cash outflows from short term lease commitments at the end of the reporting period is ₦62 million ($0.2 million).

The Group's lease payments for drilling rigs are classified as variable lease payments. The variability arises because the lease payments are linked to the use of the underlying assets. These variable lease payments are therefore excluded from the measurement of the lease liabilities. At the end of the reporting period, there was no rental expense recognised within cost of sales for these leases. The expected future cash outflows arising from variable lease payments is estimated at ₦6.7 billion ($21.7 million).

The Group's lease liability as at 1 January 2019 and 31 March 2019 is split into current and non-current portions as follows:

  1 Jan 2019  31 March 2019  1 Jan 2019  31 March 2019 
₦ million  ₦ million  US$ '000  US$ '000 
Non-current  952  952  3,100  3,100 
Current  238  277  776  903 
Lease liability as at 1 January 2019   1,190  1,229  3,876  4,003 

b)  Impact on the statement of profit or loss (increase/(decrease)) for the three months ended 31 March 2019

  ₦ million  US$ '000 
Depreciation expense  (188)  (613) 
Operating profit  (188)  (613) 
Finance cost  (39)  (127) 
Profit for the period  (227)  (740) 

c)  Impact on the statement of cash flows (increase/(decrease)) for the three months ended 31 March 2019:

  ₦ million  US$ '000 
Depreciation of right-of-use assets  188  613 
Interest on lease liabilities  39  127 
Net cash flows from operating activities  227  740 

d)  Sensitivity to purchase options

In 2018, the Group entered into a lease agreement for its new head office building. The lease contract contains an option to purchase and right of first refusal upon an option of sales during the initial non-cancellable lease term of five (5) years. Management has determined that it s not reasonably certain that the Group will exercise the purchase option. This,the purchase price was not included in calculating the lease liability or right-of-use asset. The following tables summarise the impact that exercising the purchase option would have had on the profit before tax and net assets of the Group:

Impact of purchase option       Effect on profit  before tax 31 March 2019 ₦ million  Effect on profit  before tax 31 March 2019 $' 000 
Depreciation      117  382 
Interest payment      (398)  (1,170) 
      (359)  (788) 
Impact of purchase option      Effect on net assets 31 March 2019 ₦ million  Effect on net assets 31 March 2019 $' 000 
Right-of-use assets      11,158  36,355 
Lease liability      (11,322)  (36,887) 
      (164)  (531) 

e)  Impact on segment assets and liabilities

The Group's assets are allocated to segments based on the operations and the geographical location of the assets. All non-current assets of the Group are domiciled in Nigeria. The changes in segment assets and liabilities for each segment as at 31 March 2019 is shown below:

  Amount under IAS 17  Impact of  IFRS 16  Amount under IFRS 16  Amount under IAS 17  Impact of  IFRS 16  Amount under IFRS 16 
  ₦ million  ₦ million  ₦ million  US$ '000  US$ '000  US$ '000 
Segment assets:             
Oil  514,493  3,079  517,572  1,676,160  10,028  1,686,188 
Gas  242,238  242,238  789,174  789,174 
  756,731  3,079  759,810  2,465,334  10,028  2,475,362 
Segment liabilities:             
Oil  120,681  1,229  121,910  393,168  4,003  397,171 
Gas  135,672  135,672  442,007  442,007 
  256,353  1,229  257,582  835,175  4,003  839,178 

f)   Impact on earnings per share

As a result of adoption of IFRS 16, the earnings per share of the Group for the three months ended 31 March 2019 decreased as shown in the table below:

  Amount under IAS 17  Impact of  IFRS 16  Amount under IFRS 16  Amount under IAS 17  Impact of  IFRS 16  Amount under IFRS 16 
  ₦ million  ₦ million  ₦ million  US$ '000  US$ '000  US$ '000 
Profit for the period  10,249  (227)  10,022  33,416  (740)  32,676 
Earnings per share for profit attributable to the equity shareholders             
Basic earnings per share  18.03  (0.40)  17.63  0.06  0.06 
Diluted earnings per share  17.96  (0.40)  17.56  0.06  0.06 

g)  Impact on deferred taxes

As a result of adoption of IFRS 16, there were no impact on deferred taxes as interest expense on lease liabilities and depreciation of right-of-use assets give rise to permanent differences for tax purposes.

29.  Exchange rates used in translating the accounts to Naira

The table below shows the exchange rates used in translating the accounts into Naira.

  Basis  31 March 2019  ₦/$  31 March 2018  ₦/$  31 Dec 2018  ₦/$     
Fixed assets - opening balances  Historical rate  Historical  Historical  Historical   
Fixed assets - additions  Average rate  306.87  305.87  306.10   
Fixed assets - closing balances  Closing rate  306.95  305.95  307.00   
Current assets  Closing rate  306.95  305.95  307.00   
Current liabilities  Closing rate  306.95  305.95  307.00   
Equity  Historical rate  Historical  Historical  Historical   
Income and Expenses  Overall Average rate  306.87  305.87  306.10   
                   

General information

Board of directors     
Ambrosie Bryant Chukwueloka Orjiako  Chairman  Nigerian 
Ojunekwu Augustine Avuru  Managing Director and Chief Executive Officer  Nigerian 
Roger Thompson Brown  Chief Financial Officer (Executive Director)  British 
Effiong Okon  Operations Director (Executive director)  Nigerian 
*Michel Hochard  Non-Executive Director  French 
Macaulay Agbada Ofurhie  Non-Executive Director  Nigerian 
Michael Richard Alexander  Senior Independent Non-Executive Director  British 
Ifueko M. Omoigui Okauru  Independent Non-executive Director  Nigerian 
Basil Omiyi  Independent Non-executive Director  Nigerian 
Charles Okeahalam  Independent Non-executive Director  Nigerian 
Lord Mark Malloch-Brown  Independent Non-executive Director  British 
Damian Dinshiya Dodo  Independent Non-executive Director  Nigerian 
*Madame Nathalie Delapalme acts as alternate Director to Michel Hochard   
Company secretary  Mirian Kachikwu   
Registered office and business address of directors  25a Lugard Avenue Ikoyi Lagos Nigeria   
Registered number  RC No. 824838   
FRC number  FRC/2015/NBA/00000010739   
Auditor  Ernst & Young (10th & 13th Floors), UBA House 57 Marina Lagos, Nigeria.   
Registrar  DataMax Registrars Limited 7 Anthony Village Road Anthony P.M.B 10014 Shomolu Lagos, Nigeria   
Solicitors  Olaniwun Ajayi LP Adepetun Caxton-Martins Agbor & Segun ("ACAS-Law") Templars Law White & Case LLP Whitehall Solicitors Bracewell (UK) LLP Herbert Smith Freehills LLP Chief J.A. Ororho & Co. Ogaga Ovrawah & Co. Consolex LP Banwo & Ighodalo J.E. Okodaso & Company V.E. Akpoguma & Co. Thompson Okpoko & Partners G.C. Arubayi & Co. Streamsowers & Kohn   
Bankers   First Bank of Nigeria Limited Stanbic IBTC Bank Plc United Bank for Africa Plc Zenith Bank Plc Citibank Nigeria Limited Standard Chartered Bank HSBC Bank 
Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd