Value Added Statement and Five-Year Financial Summary: CAMA 2020 National Disclosures

The income statement shows what profit was left after everyone had been paid. Two other statements, which Nigerian companies publish after the notes, tell a different story: how much wealth the business created and who shared in it, and how the company has done over five years. Section 378 of the Companies and Allied Matters Act 2020 describes both.

In published annual reports they are headed “other national disclosures”, and the syllabus requires candidates to prepare them. This topic covers the value added statement, how value added is calculated and distributed, the five-year financial summary, and what each one tells a reader. The next topic starts group accounts.

In the diets reviewed for this page none of the questions tests the value added statement or the five-year summary directly. They are specific syllabus items for the single-entity part of the paper, so the formats are worth learning, and the numbers follow from the statements already covered. Read investing and financing activities first.

The legal basis

Section 378 of the Companies and Allied Matters Act 2020 deals with the form and content of individual financial statements.

Its subsections (4) and (5) say that the value added statement shall report the wealth created by the company during the year and its distribution among various interest groups such as the employees, government, creditors, proprietors and the company, and that the five-year financial summary shall provide a report for a comparison over a period of five years or more of vital financial information.

In practice, listed companies present both after the notes as other national disclosures. They sit outside the financial statements prepared under International Financial Reporting Standards (IFRS), so they are not covered by those standards, and the figures should agree with the audited statements.

The value added statement

Value added is the wealth the business creates by its activities: the revenue it earns less the cost of the goods and services it bought from outside. It is a different view from profit. Profit is what is left after paying employees, lenders and the government; value added is the amount available for all of them before those payments.

• Revenue (turnover) for the year.
• Less bought-in materials and services: the cost of materials, goods, services and overheads purchased from other parties. Employee costs, finance costs, depreciation and tax are not bought-in costs; they are shares of value added.
• Add other income that forms part of the wealth created, such as investment income and the share of results of associates, to reach the total value added.

How value added is shared

The statement shows each share in naira and as a percentage of value added:

• Employees: salaries, wages, pensions and other benefits.
• Government: income and other taxes.
• Providers of capital: interest to lenders and dividends to shareholders.
• Retained for replacement of assets and expansion of the business: depreciation and amortisation, deferred tax and the profit retained after dividends.

For example, revenue is ₦900 million and bought-in materials and services ₦560 million, with interest income of ₦10 million, so value added is ₦900m − ₦560m + ₦10m = ₦350 million. Employees receive ₦140m (40%), the government ₦38m in taxes (11%), lenders ₦8m (2%), shareholders ₦35m (10%), and ₦129m is retained: depreciation ₦30m (9%) and retained profit ₦99m (28%). Total ₦350m, 100%.

The statement answers questions that profit alone does not: how much of the wealth went to staff compared with shareholders, how much the government took, and how much the company kept for growth. It also gives value added per employee and compares the years, if the previous year is shown.

The five-year financial summary

The five-year financial summary sets out, in columns for each of the last five years, the main figures from the financial statements: revenue, profit before and after tax, dividends, share capital and reserves (equity), total assets or net assets, and per-share figures such as earnings per share, dividend per share and net assets per share. Many companies add the number of employees. Rules for preparing it:

• Figures for each year are taken from the audited statements for that year, and restated if a later year’s statements restated them, for example for a change of accounting policy or a prior period error.
• Per-share figures for earlier years are adjusted for bonus issues, share splits and the bonus element of rights issues, so that the series is comparable.
• Group and company figures may be shown separately.

For example, profit after tax rose from ₦40m to ₦72m over five years and revenue from ₦500m to ₦800m. A one-for-four bonus issue in year 4 raised shares from 200 million to 250 million, so earnings per share is restated on 250 million shares: ₦72m ÷ 250m = 28.8 kobo in year 5, 25.2 kobo in year 4, and for year 3, 22.0 kobo, year 2, 18.4 kobo, year 1, 16.0 kobo, not the figures originally published on 200 million shares.

The ideas in more depth

Why value added shows a different picture from profit

A company with a small profit may still create a lot of wealth: its employees and the government may take most of it. The statement reminds readers that a company is a partnership of employees, lenders, shareholders and the state, and it makes the employees’ share visible.

Why the summary is restated

A table of five years only works if each year is on the same footing. A bonus issue changes the number of shares without changing the business, and a restated policy changes past profit, so the earlier columns are adjusted.

Sources and references

• Companies and Allied Matters Act 2020, section 378(4) and (5): value added statement and five-year financial summary.
• International Accounting Standard (IAS) 33 Earnings per Share, for the adjustment of per-share figures.

These points are stated as at 5 November 2026.

Worked examples

1. Value added.
   ₦900m − ₦560m + ₦10m = ₦350m.
2. Retained profit.
   ₦350m − ₦140m − ₦38m − ₦8m − ₦35m − ₦30m = ₦99m.
3. Employees’ share.
   ₦140m ÷ ₦350m = 40%.

1. Shares after the issue.
   200m + 200m ÷ 4 = 250m.
2. Earnings per share. Year 1 16.0k, year 2 18.4k, year 3 22.0k, year 4 25.2k, year 5 28.8k.

How to answer in the exam

• Start with value added: revenue less bought-in costs plus other income. Do not deduct wages, interest, depreciation or tax.
• List the distribution in the usual order and compute each percentage from value added.
• Check that the shares add to value added.
• For the summary, restate earnings per share for bonus issues, and give year-on-year trends.

Common mistakes in the exam

• Deducting employee costs or depreciation as bought-in costs.
• Using profit as the base for the percentages instead of value added.
• Leaving depreciation or retained profit out of the distribution.
• Not restating earnings per share for a bonus issue.
• Presenting only four years in a five-year summary.

Quick revision

• Value added = revenue − bought-in materials and services + other income.
• Shared among employees, government, providers of capital and retained in the company.
• Five-year summary: revenue, profit, dividends, equity, assets, per-share data; restate for bonus issues and policy changes.
• Basis: Companies and Allied Matters Act 2020, section 378(4) and (5).

Practice questions

These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.

Recall check: multiple choice

Section B style: written questions

A further written question

Model answers

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