VINCO CONSTRUCTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER, 2025
1. GENERAL INFORMATION
Vinco Construction Limited (the "Company") is a company incorporated in Ghana, with company registration number [insert number]. The address of its registered office and principal place of business is [insert address]. The Company's main business is dealing in the wholesale and retail of building construction raw materials.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
These are not the first set of financial statements prepared by Vinco Construction Limited in accordance with the IFRS for Small and Medium-sized Entities (IFRS for SMEs) issued by the International Accounting Standards Board (IASB). The financial statements are presented in Ghana Cedis (GHS), which is the Company's functional currency.
2.1 Going Concern
The Company's management has assessed its ability to continue as a going concern and is satisfied that it has sufficient resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the financial statements have been prepared on a going concern basis.
2.2 Revenue Recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when payment is made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined payment terms and excluding taxes and duties.
2.3 Property, Plant and Equipment
Property, plant and equipment (PPE) are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The Company adds to the carrying amount of an item of PPE the cost of replacing parts when that cost is incurred, provided the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss in the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets over their estimated useful lives using the reducing balance method. The following annual depreciation rate is applied:
| Asset Category |
Depreciation Rate (Reducing Balance) |
| Furniture & Equipment |
25.0% |
Assets' useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, whenever there is any indication of significant change since the last reporting date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised within "other gains/(losses) – net" in profit or loss.
2.4 Impairment of Assets
At each reporting date, property, plant and equipment, intangible assets, and investments in associates are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the affected assets (or group of related assets) is estimated and compared with their carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
Similarly, at each reporting date, inventories are assessed for impairment by comparing the carrying amount of each item of inventory (or group of similar items) with the selling price less costs to complete and sell. If impaired, the carrying amount is reduced to the selling price less costs to complete and sell, and an impairment loss is recognised immediately in profit or loss.
2.5 Inventories
Inventories are stated at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses.
2.6 Foreign Currency Translations
The Company's financial statements are presented in Ghana Cedis (GHS), which is also the Company's functional currency. Items included in the financial statements are measured using that functional currency.
Transactions and Balances
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rate ruling at the reporting date. All differences are taken to profit or loss. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction and are not subsequently restated. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. Any gains or losses on conversion and translation are dealt with through profit or loss.
2.7 Cash and Cash Equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash at banks and in hand, and short-term fixed deposits with an original maturity of three months or less that are repayable on demand. All components of cash and cash equivalents form an integral part of the Company's cash management. Cash and cash equivalents are subsequently measured at amortised cost.
2.8 Trade and Other Receivables
Trade receivables are carried at the original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified.
2.9 Trade Payables
Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
2.10 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.11 Taxation – Income Tax
Income tax expense represents the sum of current tax payable and deferred tax. The Company is subject to income tax in Ghana. Where the final tax outcome differs from the amount initially recorded, such differences will impact income tax and deferred tax provisions in the period in which such determination is made. Current income tax is the amount payable on taxable profit for the year in accordance with the Income Tax Act, 2015 (Act 896).
2.12 Deferred Tax
Deferred income tax is calculated on all temporary differences under the liability method using the enacted tax rate of 25%. The charge for the year relates primarily to accelerated tax allowances on property, plant and equipment.
2.13 Employee Benefits
The Company operates a defined contribution plan. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Under the National Pension Scheme, the Company contributes 13% of each employee's basic salary to the Social Security and National Insurance Trust (SSNIT) for employee pension. The Company's obligation is therefore discharged to SSNIT. The Company does not operate a defined benefit plan.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATING UNCERTAINTY
In the application of the Company's accounting policies (described in Note 2), the directors are required to make judgements, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. These estimates and associated assumptions are based on historical experience and other factors considered relevant. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both.
3.1 Key Sources of Estimating Uncertainty
The following are the key assumptions concerning the future, and other key sources of estimating uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4. USEFUL LIVES OF PROPERTY, PLANT AND EQUIPMENT
As described in Note 2.3, the Company reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. During the current year, the directors determined that the useful lives of certain items of equipment should be shortened due to developments in technology.
5. LIQUIDITY RISK
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations arising from its financial liabilities.
5.1 Management of Liquidity Risk
The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Company maintains a portfolio of short-term liquid assets, largely made up of short-term liquid government securities, to ensure that sufficient liquidity is maintained. Liquidity risk management is under the auspices of the Asset and Liability Committee (ALCO), which is responsible for both statutory and prudential liquidity requirements.
6. MARKET RISKS
The Company takes on exposure to market risk, which is the risk of potential loss of earnings or economic value due to adverse changes in financial market rates or prices. Market risk arises from open positions in interest rate, currency, and equity products, all of which are exposed to general and specific market movements. The Company's exposure to market risk arises principally from customer-driven transactions. The Company does not engage in proprietary trading.
6.1 Management of Market Risks
Overall responsibility for the management of market risk rests with the Asset and Liability Committee (ALCO). The Risk Department is responsible for the development of detailed market risk management policies (subject to review and approval by ALCO) and for the day-to-day implementation of those policies.
7. OPERATIONAL RISKS
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company's processes, personnel, technology, and infrastructure, and from external factors other than credit, market, and liquidity risks (such as legal and regulatory requirements). Operational risks arise from all of the Company's operations.
7.1 Management of Operational Risks
The Company's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Company's reputation with overall cost effectiveness, and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each business unit. This responsibility is supported by the development of overall Company standards for the management of operational risk in the following areas:
- Requirements for appropriate segregation of duties, including the independent authorisation of transactions.
- Requirements for the reconciliation and monitoring of transactions.
- Compliance with regulatory and other legal requirements.
- Documentation of controls and procedures.
- Requirements for the reporting of operational losses and proposed remedial action.
- Development of contingency plans.
- Training and professional development.
- Ethical and business standards.
- Risk mitigation, including insurance where effective.
Compliance with the Company's standards is supported by a programme of periodic reviews undertaken by the Internal Audit division. The results of internal audit reviews are discussed with the management of the relevant business unit, with summaries submitted to the Audit Committee and senior management of the Company.
