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CHAMS PLC AND ITS SUBSIDIARY COMPANIES

AUDITED FINANCIAL STATEMENTS

31 DECEMBER 2018

Chams Plc Audited

Financial Statement

31 December 2018

CONTENT

PAGE

Corporate Information i-ii

Directors' Report iii-x

Statement of Directors' Responsibilities xi

Audit Committee's Report xii

Independent Auditor's Report 1-3

Statement of Profit or Loss and Other Comprehensive income 4

Statement of Financial Position 5

Statement of Changes in Equity 6-7

Statement of Cashflows 8

Notes to the Financial Statements 9-51

Value Added Statement 52

Five Year Financial Summary 53

i

CORPORATE INFORMATION

Date of incorporation: 10 September 1985

Registration number: RC 76807

Company's Website: www.chamsplc.com

Registered Office:

8, Louis Solomon Close, off Ahmadu bello Way, Victoria

Island, Lagos

Directors: Dr. (Mrs.) ‘Dere Awosika MFR, mni------------------Chairman

Mr. Olufemi Williams ---------- -----Group Managing Director

Sir Demola Aladekomo --------- ------------------------ Director

Prof. Oyewusi Ibidapo-Obe-----------------------------Director

Alhaji Yusufu Modibbo - --------------------------------Director

Dr. Evans Woherem--------------------------------------Director

Mr. Wim Tappij Gielen ---------- -----------------------Director

Pastor Ituah Ighodalo ------------ -----------------------Director

Mrs. Funke AlomoOluwa --------- -----------------------Director

Mrs. Mayowa Olaniyan ----------- -----------------------Director

Company Secretary: Yetunde Emmanuel

Independent Auditors: BDO Professional Services

ADOL House 15, CIPM Avenue, CBD, Alausa

Registrars: First Registrars Plot 2 Abebe Village Road, Iganmu, Lagos

http://www.chamsplc.com/

ii

Bankers: UBA PLC

35 Broad Street Marina Lagos

First Bank of Nigeria Ltd

Adeola Odeku Street Victoria Island lagos

Zenith Bank Plc

Ajose Adeogun Street Victoria Island Lagos

GTBank Plc

Awolowo Road Ikoyi Lagos

FCMB Plc

38 Adeola Hopewell Street Victoria Island Lagos

Polaris Bank Plc

Adeola Hopewell Street Victoria Island Lagos

Access Bank Plc

Awolowo Road Ikoyi Lagos

Wema Bank Plc

WEMA Towers Marina, Lagos

Eco Bank Plc

Akin Adesola Street Victoria Island Lagos Stanbic IBTC Bank Plc Plot 1712 Idejo Street, Off Adeola Odeku Victoria Island Lagos

iii

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

The Directors present their annual report on the affairs of Chams Plc (“the Company”), and

subsidiaries (“the Group”), together with the group audited financial statements and the

auditor’s report for the year ended 31 December 2018.

1. PRINCIPAL ACTIVITIES

The principal activities of Chams Plc and its subsidiaries continue to be provision of

technology and business intelligent solutions. This includes the development, deployment,

implementation and maintenance of technology based systems, computing and solutions

platforms, communication infrastructure and other services designed to facilitate the

operations of all forms of electronic business.

2. LEGAL FORM

The company was incorporated as a private limited company on September 10th 1985 and

became a public limited company in 2007. At the 23rd Annual General Meeting of the

Company on 6 June 2008, the shareholders authorized the Directors to change the name

Chams Nigeria PLC to CHAMS PLC. Subsequent to the Placements authorized by the

shareholders, an application was made to the Council of the Nigeria Stock Exchange for

the admission of all the issued and paid up shares of the Company to the Daily Official List

of the Exchange through Listing by Introduction.

3. SUBSIDIARIES

The company has three subsidiaries; CardCentre Nigeria Limited, engaged in the

production and manufacturing of Cards – Identity, payments, Smart cards etal;

ChamsAcccess Limited, licensed consortium for the deployment of ATMs in the country also

involved in the deployment of multi-application terminals; and ChamsSwitch Limited ,

engaged in provision of the e-payment transaction processing platform for the Nigerian

Market.

4. OPERATING RESULTS

The following is a summary of the Company’s operating results:

OPERATING RESULT SUMMARY

GROUP COMPANY

2018 2017 2018 2017

=N='000 =N='000 =N='000 =N='000

Turnover 3, 012, 513 1, 956, 517

584, 392 608, 314

Cost of Sales (2, 226, 979) (1, 213, 524)

(346, 230) (238, 887)

Gross Profit 785, 534 742, 993

238, 162 369,427

Profit After Tax 380, 148 (1, 269, 217)

385, 796 (1, 734, 120)

EPS 7K (27)k

8k (37)k

5. DIVIDENDS

The Board of Directors, pursuant to the powers vested in it by the provisions of section 379 of

the Companies and Allied Matters Act (CAMA) of Nigeria, proposed a final dividend of 3k

per share as at December 31, 2018. This will be presented for ratification by the Shareholders

at the next Annual General Meeting.

Payment of dividends is subject to withholding tax at the rate of 10% in the hand of qualified

recipients.

iv

6. SHARE CAPITAL HISTORY

SHARE CAPITAL HISTORY

Year

Authorized Issued Share Capital Consideration

Increase

Cumulative Increase Cumulative

1985 100,000

100,000 100,000 100,000 Cash

2004 99,900,000

100,000,000 0 100,000 Cash

2005

200,000,000 300,000,000 0 100,000 Cash

2006

0 300,000,000 99,900,000 100,000,000 Cash

2007

2,200,000,000 2,500,000,000 72,060,000 172,060,000 Cash

2007

2,500,000,000 5,000,000,000 172,060,000 344,120,000 Cash

2007

0 5,000,000,000 1,378,480,000 1,720,600,000 4 for 1 Bonus

2008

0 5,000,000,000 2,000,000,000 3,720,600,000 Cash

2008

0 5,000,000,000 975,000,000 4,695,600,000 Cash

2009

0 5,000,000,000 0 4,696,060,000.00 Cash

2010

0 5,000,000,000 0 4,696,060,000 Cash

2011

0 5,000,000,000 0 4,696,060,000 Cash

2012

0 5,000,000,000 0 4,696,060,000 Cash

2013

0 5,000,000,000 0 4,696,060,000 Cash

2014

0 5,000,000,000 0 4,696,060,000 Cash

2015

0 5,000,000,000 0 4,696,060,000 Cash

2016 0 5,000,000,000 0 4,696,060,000 Cash

2017

0 5,000,000,000 0 4,696,060,000 Cash

2018

0 5,000,000,000 0 4,696,060,000 Cash

7. DIRECTORS WHO SERVED DURING THE YEAR

The following Directors served during the year under review:

Name Designation

1. Dr. (Mrs.) ‘Dere Awosika MFR, mni Chairman

2. Sir Demola Aladekomo Non-Executive Director

v

3. Prof. Oyewusi Ibidapo-Obe Non-Executive Director

4. Dr. Evans Woherem Non-Executive Director

5. Pastor Ituah Ighodalo Non-Executive Director

6. Alhaji Yusufu Modibbo Non-Executive Director

7. Mr. Wim Tappij Gielen Non-Executive Director

8. Mr. Femi Williams Group Managing Director

9. Mrs. Mayowa Olaniyan Executive Director

10. Mrs. Funke AlomoOluwa Executive Director

8. DIRECTORS’ INTEREST IN SHARES

The Directors who served during the year and their interests in the shares of the Company are as

follows:

S/N

NAME HOLDINGS

1 Dr. (Mrs.) ‘Dere Awosika MFR, mni

NIL

2 Mr. Demola Aladekomo

69,090,000

3 Dr. Evans Woherem

NIL

4 Prof. Oyewusi Ibidapo-Obe

2,000,000

5 Pastor Ituah Ighodalo

NIL

6 Mr. Wim Tappij Gielen

NIL

7 Alhaji Yusufu Modibbo

NIL

8 Mr. Femi Williams

8, 000, 000

9 Mrs. Mayowa Olaniyan

500, 000

10 Mrs. Funke AlomoOluwa

16,000, 000

DISCLOSURE OF SUBSTANTIAL SHAREHOLDING (ABOVE 5%) AS AT DECEMBER 2018

S/N AC NAME ADDRESS HOLDING HOLDINGS

1 11789 STANBIC NOM./ AMCON /

ACCESS BANK PLC

C/O

STANBIC

NOMINEES

NIG LTD,

PLOT 1712

IDEJO

494,900,229 10.54

2 11715 FC/AMC/SKYESTB/SMARCITY

RESORTS PLC – F

C/O FIRST

PENSIONS

CUSTODIAN

LTD, 124

352,526,737 7.51

TOTAL 847,427,036 18.05%

vi

9. ANALYSIS OF SHAREHOLDING

The analysis of the distribution of the shares of the Company as at 31 December 2018 is as

follows:

ANALYSIS OF SHAREHOLDING

CATERGORY CAT DESCRIPTION NO OF HOLDERS HOLDINGS % HOLDINGS

1

FOREIGN 32 13,975,940 0.30

2

CORPORATE BODY 544 2,593,557,206 55.23

3

INDIVIDUALS 8,034 2,088,526,854 44.47

TOTAL

8,610 4,696,060,000 100.00

10. ELECTION, RETIREMENT AND RE-ELECTION OF DIRECTORS

The following persons are retiring and being eligible their intentions for re-election as

Directors of the Company:

1. Dr. Evans Woherem

2. Sir Demola Aladekomo

The following person was appointed as a Director at the Board of Directors meeting held on

the 16th October, 2018:

Alhaji Yusufu Modibbo (Non-Executive Director)

The following person resigned from the Board as a Non-executive Director of the Company:

Mr. Wim Tappij Gielen (Non-Executive Director)

Subject to ratification at the Annual General meeting in accordance with the provisions of

CAMA.

11. STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS FOR THE YEAR

ENDED 31 DECEMBER 2018

In accordance with the provisions of the Companies and Allied Matters Act of Nigeria, the

Directors are responsible for the preparation of financial statements, which give a true and

fair view of the state of affairs of the Company and of the profit or loss for that year. In so

doing, the Directors are required to ensure that:

a. Proper accounting records are maintained which disclose with reasonable accuracy the

financial position of the Company and which ensures the financial statements comply

with the requirements of the Companies and Allied Matters Act.

b. Applicable accounting standards are followed.

c. Suitable accounting policies are adopted and consistently applied.

d. Judgments and estimates made are reasonable and prudent.

e. The going concern basis is used, unless it is inappropriate to presume that the Company

will continue in business.

f. Internal control procedures are instituted which, as far as is reasonably possible,

safeguard the assets of the Company and prevent and detect fraud and other

irregularities.

12. DONATIONS AND CHARITABLE GIFTS

The Company identifies with the aspirations of the community as well as the environment

within which it operates and made voluntary donations to various charitable organizations

vii

and other institutions in the country details of which are shown below. No donation was

made to any political organization.

The Company during the year donated a total sum of =N=3, 250, 000 to charitable causes.

The details are as follows;

BENEFICIARIES

Donation to Nigerian Computer Society (NCS) Ogun State

Chapter.

Donation of Apple Computers to HallMark University.

13. EMPLOYMENT AND EMPLOYEES

a. Employment of physically challenged persons

The Company has a non-discriminatory policy on recruitment. Applications would always

be welcomed from suitably qualified disabled persons and are reviewed strictly on

qualification. The Company’s policy is that the highest qualified and most experienced

persons are recruited for appropriate job levels irrespective of an applicant’s state of

origin, ethnicity, religion or physical condition.

b. Health safety and welfare of employees

Health and safety regulations are in force within the Company’s premises and

employees are aware of existing regulations. The Company provides subsidies to all level

of employees for medical expenses, transportation, housing, lunch etc.

c. Employees involvement and training

The Company is committed to keeping employees fully informed as much as possible

regarding the Company’s performance and progress and seeking their opinion where

practicable on matters, which particularly affect them as employees.

Training is carried out at various levels through both in-house and external courses.

Incentive schemes designed to encourage the involvement of employees in the

Company’s performance are implemented whenever appropriate.

14. POST BALANCE SHEET EVENTS

There were no post balance sheet events which could have had a material effect on the

state of affairs of the Company as at 31 December 2018 or the profit for the year ended on

that date, which have not been adequately provided for or disclosed.

15. COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

Chams Plc continuously strives to comply with global standards of corporate governance.

The Company has separated the posts of Managing Director and Chairman and the

Chairman is not involved in the day-to-day running of the Company. This is geared towards

avoiding the concentration of too much power in a single individual.

The Board as a whole is comprised of a number of sub-Committees which are Audit,

Finance, Appointment, Promotion and Governance, and Innovation, Marketing and

Technology Committees. The Board is also comprised of high profile non-executive

members serving in various capacities at the sub-Committees mentioned above and

involved in setting the emoluments of the Managing Director and other Directors of the

Company. The non-executive directors are appointed for a fixed period and have to be re-

elected by the shareholders at an AGM. The Company is committed to full disclosure and

transparency in providing information to all stakeholders because of its belief that this is the

most important driving force in any good governance process.

16. FINANCE COMMITTEE

viii

The Committee acts on behalf of the Board on matters relating to Financial Management. It

reviews the Budget and Audited Accounts and is responsible for providing useful advice to

the Company’s management team as and when required.

The members are as follows:

S/N

NAME STATUS

1.

Dr. Evans Woherem Chairman

2.

Sir Demola Aladekomo Member

3. Mrs. Mayowa Olaniyan

Member

4.

Mrs. Funke AlomoOluwa Member

5.

Mr. Dumebi Obodo Member

17. AUDIT COMMITTEE

This is established in accordance with part C of the Code of Corporate Governance. It

comprises dedicated individuals with proven integrity that have a thorough understanding

of the Company’s business affairs including the associated risks and controls put in place to

mitigate those risks. The Company Secretary is the secretary of the Committee and they

meet regularly. The members are as follows:

S/N

NAME STATUS

1

Mr. Emmanuel Onochie Chairman

2

Mr. Moses Igbrude Member

3

Mr. Doyin Owolabi Member

4 Dr. Evans Woherem

Member

5 Pastor Ituah Ighodalo Member

6 Mrs. Mayowa Olaniyan Member

18. APPOINTMENT, PROMOTION AND GOVERNANCE COMMITTEE

This Committee is responsible for defining and assessing the qualifications for Board of Director

membership and identifying qualified individuals, responsible for assisting the Board organize

itself in the discharge of its duties and responsibilities properly and effectively, ensuring proper

attention and effective response to shareholders concerns regarding corporate governance,

assisting the Board in the fulfilment of its oversight responsibility for the Group’s broad enterprise

risk management program in connection with the Groups governance structures.

S/N

NAME STATUS

1 Prof. Oyewusi Ibidapo-Obe

Chairman

2

Pastor Ituah Ighodalo Member

ix

3

Mrs. Mayowa Olaniyan Member

4

Mrs. Funke AlomoOluwa Member

19. INNOVATION, MARKETING AND TECHNOLOGY COMMITTEE

The purpose of the Committee is to assist the Board with understanding of Chams Plc innovative

and technological developments and marketing framework for the projects or programs,

priorities and resource allocation, so that the Board can discharge its responsibilities and

oversight functions more effectively.

20. BOARD MEETING

The Board and its Committees met as follows:

Board/ Committee Meetings

No of Meetings

Board of Directors

4

Board Audit Committee

4

Board Appointments, Promotions and Governance Committee

4

Board Finance Committee

4

Innovation, Marketing and Technology Committee

4

ATTENDANCE AT BOARD MEETINGS FOR THE YEAR ENDED 31ST DECEMBER 2018

S/N

Director No of Meetings Attendance

1

Dr. (Mrs.) ‘Dere Awosika MFR, mni

4 4

2

Sir Demola Aladekomo

4 4

3

Dr. Evans Woherem

4 4

4

Prof. Oyewusi Ibadapo-Obe

4 4

5

Pastor Ituah Ighodalo

4 2

6

Alhaji Yusufu Modibbo

4 1 ( He was appointed

on 18th October 2018)

7

Mr. Wim Tappij Gielen

4 1

S/N

NAME STATUS

1

Sir Demola Aladekomo Chairman

2

Prof. Oyewusi Ibidapo-Obe Member

3

Mr. Emmanuel Ojo Member

4

Mr. Tomiwa Aladekomo Member

x

8

Mr. Olufemi Williams

4 4

9

Mrs. Mayowa Olaniyan

4 4

10

Mrs. Funke AlomoOluwa

4 4

21. AUDITORS

BOD Professional Services have indicated their willingness to continue in office. In

accordance with Section 357(2) of the Company and Allied Matters Act of Nigeria, a

resolution will be proposed at the Annual General Meeting to authorize the Directors to fix

their remuneration.

BY ORDER OF THE BOARD

Yetunde Emmanuel

Company Secretary

FRC/2018/NBA/00000018086

INDEPENDENT AUDITORS REPORT

TO THE SHAREHOLDERS OF CHAMS PLC AND ITS SUBSIDIARY COMPANIES

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Risk

Response

We have audited the accompanying financial statements of Chams Plc and its subsidiary Companies

('together the Group') for the financial year ended 31 December 2018, which comprises the

consolidated and separate statement of financial position, consolidated and separate statement of

profit or loss and other comprehensive income, consolidated and separate statement of changes in

equity, consolidated and separate statement of cash flows for the year then ended, and notes to the

consolidated and separate financial statements which include the significant accounting policies and

other explanatory notes

Key audit matters are those matters that, in our professional judgement, were of most significance in

our audit of the financial statements of the current year. These matters were addressed in the context

of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on these matters.

Some of the parent and its subsidiaries revenue stream are recognised overtime depending on the

agreed performance obligation. Under ISA 240 (the auditor's responsibilities relating to fraud in an

audit of financial statements) there is a presumed risk that revenue may be misstated due to the

improper recognition.

Revenue is recognised when performance obligation has been satisfied, this is signified by the trasfer

of control, risk and rewards to customers. In addition, existence and completeness of the revenue is

verified by:

In our opinion, the accompanying financial statements give a true and fair view of the Group's and the

Company's financial position as at 31 December 2018 and of its financial performance and cash flows

for the year then ended in accordance with International Financial Reporting Standards issued by the

International Accounting Standards Board, and in compliance with the relevant provisions of the

Financial Reporting Council of Nigeria, Act No 6, 2011 and the Companies and Allied Matters Act, CAP

C20, LFN 2004.

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditor’s Responsibilities for the

Audit of the Financial Statements attached as an appendix to our report. We are independent of the

Company and its subsidiaries in accordance with the International Ethics Standards Board for

Accountants’ Code of Ethics for Professional Accountants together with the ethical requirements that

are relevant to our audit of the financial statements in Nigeria, and we have fulfilled our other ethical

responsibilities in accordance with these requirements and the International Ethics Standards Board

Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion

1

2

● Vouching revenue recorded in ledger to sales invoices raised/ certificate of completion

●

● Ascertaining revenue recognition criteria and policy are consistently applied

●

Accounts receivable

Risk

Response

Test the reliability of the ageing analysis by:

●

● In making allowance for doubtful balances, we made reference to the Group's policy and

b) Check whether allowance is required by reference to:

i) payment history

ii) Subsequent to year end receipts

iii) customers correspondences

●

●

●

●

● Requested for customers to confirm direct to BDO:

· The year end balance

· Details of the reconciling items if in disagreement

Other Information

Test completeness of revenue throughout the year by tracing, on sample basis, the delivery notes,

waybills etc to the ledger.

The existence of trade receivables was considered a risk of material misstatement and our response

below was designed to address the risk.

In connection with our audit of the financial statements, our responsibility is to read the other

information and in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the audit or otherwise appears to be materially

misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this information, we are required to report that fact, we have nothing to report in

this regard.

Reviewed job completed forms and the award letters and considered whether these have been

accounted for in the correct year.

Obtained status report from Project Management Office and ensured receivables are booked in

accordance with the milestones reached

Reviewed material journals throughout the year and all journals raised after the year end.

Selected samples of trade receivables balances on the receivables ledger and traced invoices from

the ledger to supporting documents

Management is responsible for the other information. The other information comprises the information

included in the Chairman's and Directors' statements, but does not include the financial statements

and our auditors report thereon. Our opinion on the financial statements does not cover the other

information and we do not express any form of assurance conclusion thereon.

a) Check if receivables are not past due by ensuring that the credit granted have not exceeded

365 days.

Reviewing ageing of trade receivables and ensure that the trade receivable included therein exist

and recoverable and that they are appropriately included in the schedule of trade receivables

allowances.

Vouching sales invoices to supporting documentation such as contract/award letter, ensuring

contract is duly signed.

Appendix

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit, and significant audit findings and any significant deficiencies in internal

control that we identify during our audit.

As part of an audit in accordance with International Standards on Auditing, we exercise professional

judgment and maintain professional scepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal

* Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company's internal control.

* Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

* Conclude on the appropriateness of Management's use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company's ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditor's

report to the related disclosures in the financial statements or, if such disclosures are inadequate, to

modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our

auditor's report. However, future events or conditions may cause the Company to cease to continue as

a going concern.

* Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

CHAMS PLC AND ITS SUBSIDIARY COMPANIES 4

CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

Notes 2018 2017 2018 2017

N’000 N’000 N’000 N’000

Revenue 9 3,012,513 1,956,517 584,392 608,314

Cost of sales 10 (2,226,979) (1,213,524) (346,230) (238,887)

Gross profit 785,534 742,993 238,162 369,427

Other operating income 11 838,978 129,516 845,018 127,248

Administrative expenses (1,311,429) (2,102,427) (817,142) (2,217,281)

Profit/(loss)from operations 313,083 (1,229,918) 266,038 (1,720,606)

Finance expenses 12 (15,739) (23,815) - (5,327)

Finance income 12 4,270 14,813 3,402 9,284

Net finance (expenses)/income (11,469) (9,002) 3,402 3,957

Profit/(loss) before taxation 301,614 (1,238,920) 269,440 (1,716,649)

Tax expense 24(a) 78,534 (30,297) 116,356 (17,471)

Profit/(loss) after taxation 380,148 (1,269,217) 385,796 (1,734,120)

Other comprehensive income:

Item that will not be reclassified to profit or loss - - - -

Gain on revaluation of intangible assets 16(a) 571,069 - - -

Item that may be reclassified to profit or loss - - - -

Total other comprehensive income net of tax 571,069 - - -

Total comprehensive income/(loss) 951,217 (1,269,217) 385,796 (1,734,120)

Profit/(loss) for the year attributable to:

Owners of the parent 338,799 (1,254,664) 385,796 (1,734,120)

Non-controlling interest 41,349 (14,553) - -

Income/(loss) after taxation 380,148 (1,269,217) 385,796 (1,734,120)

Total comprehensive income/(loss) attributable to:

Owners of the parent 855,349 (1,254,664) 385,796 (1,734,120)

Non-controlling interest 95,868 (14,553) - -

Total comprehensive Income/ (loss) 951,217 (1,269,217) 385,796 (1,734,120)

Basic profit/(loss) per share (Kobo) 13 7K (27)k 8K (37)k

Diluted profit/(loss) per share (Kobo) 13 7K (27)k 8K (37)k

Auditors' report, pages 1 and 2.

Group Company

The accompanying notes to the financial statements on pages 9 to 51 and other national disclosures on pages 52 and

53 form part of these financial statements.


CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY


Group Share

capit

al

Share

pre

miu

m

Revalu

ati

on

rese

rve

Capit

al

rese

rve

Reta

ined

earn

ings

Tota

l

att

ributa

ble

to

equit

y h

old

ers

of

pare

nt

Non-

contr

ollin

g

inte

rest

Tota

l equit

y

N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

1 January 2018 2,348,030 5,458,750 959,065 145,522 (7,683,783) 1,227,584 (650,560) 577,024

Profit for the year - - - - 338,799 338,799 41,349 380,148

Other comprehensive Income - - - - - - -

Gain on revaluation of intangible assset - - 523,099 - - 523,099 47,970 571,069

Total comprehensive income - - 523,099 - 338,799 861,898 89,319 951,217

Transaction with owners recorded

directly in equity

Transferred of share premium to retained earning- (5,423,742) - 5,423,742 - - -

Issued share - - - - - - 125,000 125,000

31 December 2018 2,348,030 35,008 1,482,164 145,522 (1,921,242) 2,089,482 (436,241) 1,653,241

Share

capit

al

Share

pre

miu

m

Revalu

ati

on

rese

rve

Capit

al

rese

rve

Reta

ined

earn

ings

Tota

l

att

ributa

ble

to

equit

y h

old

ers

of

pare

nt

Non-

contr

ollin

g

inte

rest

Tota

l equit

y

N’000 N’000 N’000 N’000 N’000 N’000 N’000

1 January 2017 2,348,030 5,458,750 959,065 145,522 (6,429,119) 2,482,248 (646,507) 1,835,741

Loss for the year - - - - (1,254,664) (1,254,664) (14,553) (1,269,217)

Other comprehensive Income - - - - - - - -

Total comprerhensive loss - - - - (1,254,664) (1,254,664) (14,553) (1,269,217)

Transaction with owners recorded

directly in equity - - - - - - 10,500 10,500

Dividend - - - - - - - -

31 December 2017 2,348,030 5,458,750 959,065 145,522 (7,683,783) 1,227,584 (650,560) 577,024


The accompanying notes to the financial statements on pages 9 to 51 and other national disclosures on pages 52 and 53 form part of these financial statements.

7


CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECENBER 2018

Company

Share

capit

al

Share

pre

miu

m

Revalu

ati

on

rese

rve

Reta

ined

earn

ings

Tota

l equit

y

N’000 N’000 N’000 N’000 N’000

1 January 2018 2,348,030 5,458,750 959,065 (5,423,742) 3,342,103

Profit for the year - - - 385,796 385,796

Other comprehensive income, net of tax - - - -

Total comprehensive income - - - 385,796 385,796

Transaction with owners and recorded directly in equity - - - - -

Transferred of share premium to retained earning - (5,423,742) - 5,423,742 -

31 December 2018 2,348,030 35,008 959,065 385,796 3,727,899

Share

capit

al

Share

pre

miu

m

Revalu

ati

on

rese

rve

Reta

ined

earn

ings

Tota

l equit

y

N’000 N’000 N’000 N’000 N’000

1 January 2017 2,348,030 5,458,750 959,065 (3,689,622) 5,076,223

Loss for the year - - - (1,734,120) (1,734,120)

Other comprehensive income, net of tax - - - - -

Total comprehensive income - - - (1,734,120) (1,734,120)

Transaction with owners and recorded directly in equity - - - - -

Dividend paid - - - - -

31 December 2017 2,348,030 5,458,750 959,065 (5,423,742) 3,342,103


The accompanying notes to the financial statements on pages 9 to 51 and other national disclosures on pages 52 and 53 form part of these financial statements.


CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS


Group

2018 2017 2018 2017

Notes N’000 N’000 N’000 N’000

Profit/(loss) after taxation 380,148 (1,269,217) 385,796 (1,734,120)

Adjustments for:

Finance costs 12 15,739 23,815 - 5,327

Finance income 12 (4,270) (14,813) (3,402) (9,284)

Tax income/ expense 24(a) (78,534) 30,297 (116,356) 17,471

Depreciation of property plant and equipment 14(a)&(b) 212,259 170,165 145,093 146,331

Amortisation of intangible assets 16(a)&(b) - 92,545 - 75,652

Impairment allowance for Investment in subsidiaries 17(e) - - - 599,251

Profit on disposal 11 (36,893) (5,250) (36,743) (5,250)

Changes in assets and liabilities:

Decrease/(Increase) in inventories 221,759 (181,956) 19,344 12,670

(Increase)/decrease in trade and other receivables (322,316) 1,281,417 392,649 1,245,315

(Decrease)/Increase in trade and other payables (481,281) 365,976 (848,564) (18,601)

(93,389) 492,979 (62,183) 334,762

Tax paid 24(d) (70,078) (247,541) (49,939) (243,333)

Net cash generated from operating activities (163,467) 245,438 (112,122) 91,429

Cash flows from investing activities

Purchase of property, plant and equipment 14(a)&(b) (65,468) (47,949) (21,427) (1,640)

Additions to investment projects 15 - (460) - (460)

Sales proceed on disposal of property plant and equipment 36,893 10,148 36,743 5,250

Purchase of intangible assets 16(a)&(b) (30,786) (56,391) - -

Finance income 12 4,270 14,813 3,402 9,284

Net cash used in investing activities (55,091) (79,839) 18,718 12,434

Cash flows from financing activities

Finance expenses 12 (15,739) (23,815) - (5,327)

Contribution from Minority shareholders 125,000 10,500 - -

Net cash outflow from financing activities 109,261 (13,315) - (5,327)

Net (decrease)/ increase in cash and cash equivalents (109,297) 152,284 (93,404) 98,536

Cash and cash equivalents at the beginning

of the year 109,418 (42,866) 123,111 24,575

Cash and cash equivalents at the end of the year 32 121 109,418 29,707 123,111


The accompanying notes to the financial statements on pages 9 to 51 and other national disclosures on pages 52 and 53 form

part of these financial statements.

Company


FINANCIAL STATEMENTS, 31 DECEMBER 2018 9

NOTES TO THE FINANCIAL STATEMENTS

1. History of the Company and nature of operations

2 Basis of preparation

a) Summary of significant accounting policies

b) Statement of compliance

c) Basis of measurement

d) Functional and presentation currency.

e) Use of estimates and judgement

3) Changes in accounting policies

(a) New standards, interpretations and amendments effective from 1 January 2018

• IFRS 9 Financial Instruments ; and

• IFRS 15 Revenue from Contracts with Customers

(b) New standards, interpretations and amendments not yet effective

•

•

•

•

Chams Plc (The Company) was incorporated as a limited liability Company on 10 September 1985 and became a

public Company on 4 September 2008. The Company was listed on the floor of the Nigerian Stock Exchange on 8

September 2008. The principal activities of Chams Plc and its subsidiaries (the Group) include identity

management, payment collections and transactional systems. The Company’s registered office is located at 8,

Louis Solomon Close, Victoria Island, Lagos.

The consolidated and separate financial statements have been prepared in accordance with International

Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and

interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) and the

requirements of the Companies and Allied Matters Act, CAP C20, LFN, 2004.

The consolidated financial statements have been prepared on the historical cost basis except for revalued

property, plant and equipment.

The preparation of financial statements in compliance with IFRS requires management to make certain critical

accounting estimates. It also requires management to exercise judgement in applying the Group's accounting

policies. Areas where assumptions and estimates are significant to the financial statements are disclosed in Note

4.

These financial statements are presented in Naira, which is the Group's functional currency. Amounts are rounded

to the nearest thousand, unless otherwise stated.

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out

in note 5. The policies have been consistently applied to all the years presented, unless otherwise stated.

The financial statements were authorised for issue by the Board of Directors on 7 March 2019.

IFRIC 23 Uncertainty over Income Tax Positions (effective 1 January 2019).

Prepayment features with Negative Compensation-Amendments to IFRS

Plan Amendment, Curtailment or Settlement-Amendments to IAS 19

New standards impacting the Company have been adopted in the annual financial statements for the year ended

31 December 2018, and which have given rise to changes in the Company’s accounting policies are:

There are a number of standards, amendments to standards, and interpretations which have been issued by the

IASB that are effective in future accounting periods that the Company has decided not to adopt early. The most

significant of these are:

IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019).

Details of the impact of these standards are stated in note 7(c) below. Other new and amended standards and

Interpretations issued by the International Accounting Standards Board that will apply for the first time in the

next annual financial statements are not expected to impact the Company as they are either not relevant to the

Company’s activities or require accounting which is consistent with the Company’s current accounting policies.


FINANCIAL STATEMENTS, 31 DECEMBER 2018


Title Key requirements Effective Date

IFRS 16 Leases IFRS 16 will affect primarily the accounting by leases and will result in the

recognition of almost all leases on balance sheet. The standard removes

the current distinction between operating and financing leases and

requires recognition of an asset (the right to use the leased item) and a

financial liability to pay rentals for virtually all lease contracts. An

optional exemption exists for short-term and low-value leases.

The income statement will also be affected because the total expense is

typically higher in the earlier years of a lease and lower in later years.

Additional, operating expense will be replaced with interest and

depreciation, so key metrics like EBITDA will change.

Operating cash flows will be higher as cash payments for the principal

portion of the lease liability are classified within financing activities. Only

the part of the payments that reflects interest can continue to be

presented as operating cash flows.

The accounting by lessors will be not significantly change. Some

differences may arise as a result of the new guidance on the definition of

a lease. Under IFRS 16, a contract is, or contain, a lease if the contract

conveys the right to control the use of an identified asset for a period of

time in exchange for consideration.

1 January 2019

Early adoption is

permitted only if

IFRS 15 is adopted

at the same time.

Interpretation 23

Uncertainty over

Income Tax

Treatments

The interpretation explains how to recognize and measure deferred and

current income tax assets and liabilities where there is uncertainty over a

tax treatment. In particular, it discusses:

• how to determine the appropriate unit of account, and that each

uncertain tax treatment should be considered separately or together as a

group, depending on which approach better predicts the resolution of the

uncertainty

• that the entity should assume a tax authority will examine the uncertain

tax treatments and have full knowledge of all related information, ie that

detection risk should be ignored

1 January 2019

• that the entity should reflect the effect of the uncertainty in its income

tax accounting when it is not probable that the tax authorities will accept

the treatment.

• that the impact of the uncertainty should be measured using either the

most likely amount or the expected value method, depending on which

method better predicts the resolution of the uncertainty, and

• that the judgments and estimates made must be reassessed whenever

circumstance have changed or there is new information that affects the

judgements.

While there are no new disclosure requirements, entities are reminded of

the general requirement to provide information about judgments and

estimates made in preparing the financial statements.




Prepayment

Features with

Negative

Compensation-

Amendments to

IFRS 9

The narrow-scope amendments made to IFRS 9 Financial instruments in

December 2017 enable entities to measure certain prepayable financial

assets with negative compensation at amortised cost. These assets, which

include some loan and debt securities, would otherwise have to be

measured at fair value through profit or loss.

To qualify for amortised cost measurement, the negative compensation

must be reasonable compensation for early termination of the contract’

and the asset must be held within a ‘held to collect’ business model.

1 January 2019

Plan Amendment,

Curtailment or

Settlement –

Amendments to

IAS 19

The amendments to IAS 19 clarify the accounting for defined benefit plan

amendments, curtailments and settlements. They confirm that entities

must:

• calculate the current service cost and net interest for the remainder of

the reporting period after a plan amendment, curtailment or settlement

by using the updated assumptions from the date of the change

• any reduction in a surplus should be recognized immediately in profit or

loss either as part of past service cost, or as a gain or loss on settlement.

In order words, a reduction in a surplus must be recognized in profit or

loss even if that surplus was not previously recognized because of the

impact of the asset ceiling.

• separately recognize any changes in the asset ceiling through other

comprehensive income.

1 January 2019




4 Critical accounting estimates and judgements

a. Power to exercise significant influence

b. Legal proceedings

c. Income and deferred taxation

d. Impairment of property, plant and equipment and intangible assets

The Group makes certain estimates and assumptions regarding the future. Estimates are based on

factors including historical experience and expectations of future events that management believes to

be reasonable. However, given the judgmental nature of such estimates, actual results could be

different from assumptions used. The estimates and assumptions that can have significant risks of

causing material adjustments to the carrying amounts of assets and liabilities are set out below:

In accordance with IFRS, the Group recognizes a provision where there is a present obligation from a

past event, a transfer of economic benefits is probable and the amount of cost of the transfer can be

estimated reliably. In instances where the criteria are not met, a contingent liability may be disclosed in

the notes to the financial statements. Application of these accounting principles to legal cases requires

the Group’s management to make determinations about various factual and legal matters beyond

control. The Group reviews outstanding legal cases following developments in the legal proceedings and

at each reporting date in order to assess the need for provisions and disclosures in its financial

statements. Among the factors considered in making decisions on provisions are the nature of litigation,

claim or assessment, the legal process and potential level of damages in the jurisdiction in which the

litigation, claim or assessment has been brought, the progress of the case( including the progress after

the date of the financial statements but before those statements are issued), the opinion or views of

legal advisers, experience on similar cases and any decision of the Group’s management as to how it will

respond to the litigation, claims or assessment.

When the Group holds less than 20% of voting rights in an investment but the Company has the power to

exercise significant influence, such an investment is treated as an associate. Where the Company holds

over 20% of voting rights (but not over 50%) and the Group does not exercise significant influence, the

investment is treated as an available – for – sale investment.

The Group assesses assets or groups of assets for impairment annually or whenever events or changes in

circumstances indicate that carrying amounts of those assets may not be recoverable. In assessing

whether a write-down of the carrying amount of a potentially impaired asset is required, the asset's

carrying amount is compared to the recoverable amount. Frequently, the recoverable amount of an

asset proves to be the Group's estimated value in use. The estimated future cash flows applied are based

on reasonable and supportable assumptions and present management's best estimates of the range of

economic conditions that will exist over the remaining useful life of the cash flow generating assets.

Chams Plc and its subsidiary Companies annually incure significant amounts of income taxes payable and

also recognises significant changes to deferred tax assets and liabilities, all of which are based on

management's interpretations of applicable laws and regulations. The quality of these estimates is highly

dependent upon management's ability to properly at times apply a complex set of rules, to recognise

changes in applicable rules and in the case of deferred tax assets, management's ability to project future

earnings from activities that may apply loss carry forward positions against future income taxes.




5 Significant accounting policies

i) Foreign currency translation

(ii) Revenue recognition

Performance obligation and timing of revenue recognition

There is limited judgement needed in identifying the point control passes:

(a) Once delivery of service to agreed location or client have occurred.

(d) Retains none of the significant risks and rewards of the service or goods in question.

Determining the transaction price

Allocating amounts to performance obligations

Incremental costs of obtaining contracts and costs to fulfilling contracts

(b) The customer has accepted the services being deliver as evidenced with a Job Acceptance /delivery

or Completion Certificate.

(c) The entity has a present right to receive payment from the customer as signed by parties to the

contract in the agreement, memorandum of understanding or invoice.

The Company provides applications developed to fit in to the specific need of client and price are fixed

per client per service rendered , therefore the amount of revenue to be earned from each contract is

determined by reference to those fixed prices. Exceptions are as follows

Where tansaction is done in large volume like in the case of confirmme price can be varied through

discount depending on the volume of transaction. Commission is also earned from continous transaction

by client.

All prices has been allocated to each performance obligation identified in the contract on a relative

stand-alone selling price basis. Chams only provide services, so each service are invoiced in accordance

with agreement signed and the priced agreed with the customer. Therefore, there is no judgement

invloved in allocating contract price to performance obligations(all perfomance obligations are capable

of being, and are, sold separately).

The Company does not incur significant costs in obtaining contracts (e.g. Administration costs related to

the tender process). Also the Company is not expected to recover those costs. The costs to fulfill the

contracts comprises the cost of application developed, hardware and the installation and other

deliverable costs are charged separately to a customer.

In preparing the financial statements of the Group, transactions in currencies other than the entity's

presentation currency (foreign currencies) are recognised at the rates of exchange prevailing at the

dates of the transactions.

At the end of each reporting year, monetary items denominated in foreign currencies are retranslated at

the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in

foreign currencies are retranslated at the rates prevailing at the date when the fair value was

determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are

not retranslated.

Foreign currency differences on loans and other borrowings are recognised as finance income and

expenses. Other foreign currency differences as a result of transactions are recognised in the related

items within the operating results.

Revenue is derived from the sales of various product lines which span across delivery of business

solutions , biometric data capture, e-voting platform, business process outsourcing, contract and

supplies. Revenue is recognised at a point in time when control of services has transferred to the

customer as evidenced by the Job Completion and Acceptance Certificate.




(iii) Finance costs and finance income

(iv) Basis of consolidation

-

-

-

-

a. Associates

Substantive potential voting rights held by the group and by other parties

Other contractual arrangements

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes

in the fair value of financial assets at fair value through profit or loss where the Company holds such

financial assets and impairment losses recognised on financial assets (other than trade receivables).

Borrowing costs that are not directly attributable to the acquisition, construction or production of a

qualifying asset are recognised in profit or loss.

Finance income comprises interest income on short-term deposits with bank, dividend income, changes

in the fair value of financial assets at fair value through profit or loss and foreign exchange gains.

Historic patterns in voting attendance.

The consolidated financial statements present the results of the company and its subsidiaries ("the

Group") as if they formed a single entity. Intercompany transactions and balances between group

companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the

acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities

and contingent liabilities are initially recognised at their fair values at the acquisition date. The results

of acquired operations are included in the consolidated and separate statement of profit or loss and

other comprehensive income from the date on which control is obtained. They are deconsolidated from

the date on which control ceases.

When the Group has the power to participate in (but not control) the financial and operating policy

decisions of another entity, it is classified as an associate. Associates are initially recognised in the

consolidated statement of financial position at cost. The Group’s share of post-acquisition profits and

losses is recognised in the consolidated and separate statement of profit or loss and other

comprehensive income except that losses in excess of the Group’s investment in the associate are not

recognised unless there is obligation to make good those losses.

Profit and losses arising on transactions between the Group and its associates are recognised only to the

extent of unrelated investor’s interest in the associate. The investor’s share in the associate’s profits

and losses resulting from these transactions is eliminated against the carrying value of the associates.

Where the company has control over an investee, it is classified as a subsidiary. The company controls

an investee if all three of the following elements are present: power over the investee, exposure to

variable returns from the investee, and the ability of the investor to use its power to affect those

variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a

change in any of these elements of control.

De-facto control exists in situations where the company has the practical ability to direct the relevant

activities of the investee without holding the majority of the voting rights. In determining whether de-

facto control exists the company considers all relevant facts and circumstances, including:

The size of the company’s voting rights relative to both the size and dispersion of other parties who hold

voting rights




b. Joint venture

v) Segment reporting

An operating segment is a component of an entity:

(a) That engages in business activities from which it may earn revenues and incur expenses

(including inter group transactions).

(b)

(c) For which discrete financial information is available

The Company has three main business segments:

● Identity Management and solutions

● Payments, Collections and Transactional Systems

● ICT Training

All reported revenue and related costs of each segments are reconciled.

a. Identity management

●

Whose operating results are regularly reviewed by the entity’s chief operating decision maker to make

decisions about resources to be allocated to the segments and assess its performance and

Revenue and cost reporting are directly related to the segments. Operating segments are reported in a

manner consistent with the internal reporting provided to the chief operating decision makers. The

chief operating decision makers have been identified as the members of the management team including

the Group Managing Director.

The Group's identity management activities will include prometrics, biometrics identification with

applications in the financial, healthcare, corporate and other public fields.

Chamscity: is the major hub for large and nationwide Biometrics, data management, online real-time

examinations and conferences etc. It offers a unique infrastructural backbone for the realisation of net

national identification schemes and projects.

Chams Plc is a regional resource centre for identification solutions for clients ranging from corporations,

educational bodies to national government.

Any premium paid for an associate above the fair value of the Group’s share of the identifiable assets,

liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the

associate. Where there is objective evidence that the investment in the associate has been impaired,

the carrying amount of the investment is tested for impairment in the same way as other non financial

assets.

A joint venture is a contractual arrangement whereby the Group and other parties undertake an

economic activity that is subject to joint control; that is, when the strategic financial and operating

policy decisions relating to the activities require the unanimous consent of the parties sharing control.

The Group reports its interests in jointly controlled entities using the equity method, which involves

recognition in the consolidated income statement of Chams Plc’s share of the net results of the joint

ventures for the year. Accounting policies of joint ventures have been changed where necessary to

ensure consistency with the policies adopted by the Group. Chams Plc’s interest in a joint venture is

carried in the statement of financial position at its share in the net assets of the joint venture together

with goodwill paid on acquisition, less any impairment loss. When the share in the losses exceeds the

carrying amount of an equity-accounted company (including any other receivables forming part of the

net investment in the company), the carrying amount is written down to nil and recognition of further

losses is discontinued, unless we have incurred legal or constructive obligations relating to the company

in question




Card Centre Limited

b. Payments, collections and transactional systems

ChamsAccess Limited

ChamsSwitch Limited

ChamsMobile Limited/Naira.com

c. All non current assets under each segment are geographically analysed.

d. Others: Terminal and printers and recharge card aspect of Card Center

Geographical location

The Company has presence in both Lagos and Abuja.

vi) Property, plant and equipment

Set up to build an enabling infrastructure to ensure unimpeded expansion of all other E-payment

initiatives of Chams Group.

Setting up mobile payment platforms that will allow users carry out transactions through their mobile

phones. These transactions ranges from funds transfer and airtime top-up to balance equiry etc.

Under the Group Operations it provide identity management through our subsidiary companies such as:

This is an operator of one of the world’s largest card manufacturing and personalising factory. It also

has Smart and Chip Card expertise engaging efficient and effective technologies for card personalisation,

identity card enrolment logistic and access control.

Deploys across the nation the premium automated teller machines and self-service Chams Access Service

Terminals (CAST) and acess control.

Freehold buildings are subsequently carried at fair value, based on year valuations by a professionally

qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying

amount does not differ materially from that which would be determined using fair value at the end of

the reporting year. Changes in fair value are recognised in other comprehensive income and

accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the

credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in profit or

loss.

Freehold land is not depreciated. Depreciation on assets under construction does not commence until

they are complete and available for use. Depreciation is provided on all other items of property, plant

and equipment so as to write off their carrying value over their expected useful economic lives.

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price,

cost includes directly attributable costs and the estimated present value of any future unavoidable costs

of dismantling and removing items. The corresponding liability is recognised within provisions.

The payment systems involve building, developing and maintenance of ICT infrastructures across the

nation through its companies by helping Nigeria move seamlessly with the world’s trend of cashless

economy. Under the Group Operations, it provide payment platforms through our subsidiary companies

such as:




The expected useful lives of property, plant and equipment are as follows:

Leasehold improvement Over the shorter of the useful life of the item

Building 50 years

Computers and other IT equipment 4 years

Furniture and fittings 4 years

Plant and machineries 7 years

Motor vehicles 4 years

IT Software 5 years

Derecognition

vii) Leases

viii) Intangible assets

At the date of revaluation, the accumulated depreciation on the revalued freehold property is

eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued

amount of the asset. The excess depreciation on revalued freehold buildings, over the amount that

would have been charged on a historical cost basis, is transferred from the revaluation reserve to

retained earnings when freehold buildings are expensed through the consolidated and separate

statement of profit or loss and other comprehensive income (e.g. through depreciation, impairment). On

disposal of the asset the balance of the revaluation reserve is transferred to retained earnings.

If there is an indication that an asset is impaired, the carrying amount of the asset is reduced to its

recoverable amount. Impairment losses are recognised immediately in the income statement.

An item of property, plant and equipment is derecognised on disposal when no future economic benefits

are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in

profit and loss in the year the asset is derecognised.

Internally generated intangible assets primarily comprised internally developed software. Such

software as well as other internally generated assets for internal use are valued at cost and amortised

over their useful lives. Impairments are recorded if the carrying amount of the asset exceeds the

recoverable amount.

At each statement of financial position date, the Group assesses whether there is any indication that an

asset may be impaired. If any such exists, the recoverable amount of the asset is estimated in order to

determine the extent of the impairment loss, if any.

When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates

the recoverable amount of the smallest generating unit to which the asset belongs.

Leases in which substantially all the risks and rewards incidental to the ownership of the leased asset

have been transferred to the Group (a finance lease), the asset is treated as if it has been purchased

outright. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its

fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the

asset is accounted for in accordance with the accounting policy applicable to that asset. The interest

element of the lease is charged to the consolidated statement of comprehensive income over the year of

the lease. Leases order than finance lease are operating lease and are not recognised as assets in the

books. lease expenses are charged to the statement of profit or loss and other comprehensive income.




ix) Inventory

x) Financial Instruments

Financial assets

Amortised cost

a) Trade receivables

b) Other receivables

c) Loan receivable from related company

Development costs include, in addition to those costs attributable to the development of the asset, an

appropriate proportion of overhead costs. Borrowing costs are capitalised to the extent that they are

material and related to the year over which the asset is generated. The estimated useful life of

software is 10 years which is assessed for impairment every year.

Inventories are stated at the lower of cost and net realisable value. Inventories include Scanner and

Computers for biometric data capture and versity books for training and are stated at cost, which is

arrived at using the average cost method. Net realisable value is the estimated selling price in the

ordinary course of business. Cost comprises purchase price and other incidental cost in bringing the

inventory to the warehouse.

Write down on inventories of spare parts and consumables are calculated by comparing book value and

probable net realizable value after a specific analysis of obsolescence of inventory.

Naira.com is a software that was internally developed by the Company. It is an internet based payment

solution platform with an indefinite life. The software will not be subjected to annual amortisation, but

will be review for an impairment on an annual basis. The software which was initially recognised at cost

will be subsequent carried at the revalued amount. The revaluation will be carried out at interval of

every three years.

The Group classifies its financial assets into one of the categories discussed below, depending

on the purpose for which the asset was acquired. The Group's accounting policy for each category is as

follows:

The Group's financial assets measured at amortised cost comprise trade and other receivables, loan

receivables and cash and cash equivalents in the consolidated statement of financial position.

These assets arise principally from the provision of goods and services to customers (e.g trade

receivables), but also incorporate other types of financial assets where the objective is to hold

these assets in order to collect contractual cash flows and the contractual cash flows are solely

payments of principal and interest. They are initially recognised at fair value plus transaction

costs that are directly attributable to their acquisition or issue, and are subsequently carried

at amortised cost using the effective interest rate method, less provision for impairment.

Trade receivables arise principally from the provision of services to customers perfomed in the ordinary

course of business. They are generally due for settlement 30 days after performance obligations have

been fulfilled, while some services are piad immediately per transaction and therefore can be classified

as current.Trade receivables are initially recognised at fair value plus transaction costs that are directly

attributable to their acquisition or issue, and are subsequently carried at amortised cost using the

effective interest rate method, less provision for impairment.

These amounts generally arise from transactions outside the usual operating activities of the Company

and collateral is not normally obtained. The non-current other receivables are due and payment within

three years from the end of the reporting period.

Loan receivable from either subsidiaries or associates due after one year will attract calculation of

interest at ruling rate in order to reflect the effect of time value for money.




d) Cash and cash equivalents

xi) Impairment of financial assets

Fair value through other comprehensive income

xii) Prepayments

xiii) Financial liabilities

a) Trade and other payables

The Group classifies its financial liabilities into one of two categories, depending on the purpose

for which the liability was acquired. the Group's accounting policy for each category is as follows:

The Group has an investment in unlisted entities which are not accounted for as subsidiaries, associates

or jointly controlled entities. For this investments,the Group has made an irrevocable election to classify

the investments at fair value through other comprehensive income rather than through profit or loss as

the Group considers this measurement to be the most representative of the business model for these

assets. They are carried at fair value with changes in fair value recognised in other comprehensive

income and accumulated in the fair value through other comprehensive income reserve. Upon disposal

any balance within fair value through other comprehensive income reserve is reclassified directly to

retained earnings and is not reclassified to profit or loss.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term

highly liquid investments with original maturities of three months or less.

For the purpose of reporting cash flows, cash and cash equivalents include cash on hand and bank

balances held with financial institutions.

Impairment provisions for current and non-current trade receivables are recognised based on the

simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected

credit losses. During this process the probability of the non-payment of the trade receivables is assessed.

This probability is then multiplied by the amount of the expected loss arising from default to determine

the lifetime expected credit loss for the trade receivables. On confirmation that the trade receivable

will not be collectable, the gross carrying value of the asset is written off against the associated

provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised

based on a forward looking expected credit loss model. The methodology used to determine the amount

of the provision is based on whether there has been a significant increase in credit risk since initial

recognition of the financial asset. For those where the credit risk has not increased significantly since

initial recognition of the financial asset, twelve month expected credit losses along with gross interest

income are recognised. For those for which credit risk has increased significantly, lifetime expected

credit losses along with the gross interest income are recognised. For those that are determined to be

credit impaired, lifetime expected credit losses along with interest income on a net basis are

recognised.

Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of

part of the cost of the investment, in which case the full or partial amount of the dividend is

recorded against the associated investments carrying amount.

Prepayments are payments made in advance relating to the following year and are recognised and

carried at original amount less amounts utilised in the statement of profit or loss and other

comprehensive income.

Trade payables and other short-term monetary liabilities, which are initially recognised at

fair value and subsequently carried at amortised cost using the effective interest method.




b) Customer Deposits (Transit Account)

c)Borrowings

De-recognition of financial liabilities

xiv) Borrowings costs

xv) Employee benefits

a) Short - term employee benefits

b) Defined contribution plans

c) Termination benefits

Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable

to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised

cost using the effective interest rate method, which ensures that any interest expense over the period

to repayment is at a constant rate on the balance of the liability carried in the consolidated statement

of financial position. For the purposes of each financial liability, interest expense includes initial

transaction costs and any interest payable while the liability is outstanding.

Advance payment from customer where performance obligation is not yet fulfiled, will be recognised as

loan. Interest will be calculated at the ruling rate where performance obligation will be fulfiled after

12months period.

The Company derecognises financial liabilities when, and only when, the Company's obligations are

discharged, cancelled or they expire. The difference between the carrying amount of the financial

liability derecognised and the consideration paid and payable is recognised in income statement.

All short term employee benefits payable within 12 months after service is rendered, the undiscounted

amount of the benefits expected to be paid in respect of service rendered by employees in a year

should be recognized in that year. All benefits that are due or outstanding as at the end of the year are

accrued for.

The Company operates a defined contribution plan as stipulated in the Pension Reform Act, 2004. Under

the defined contributory scheme, the Company contributes 10%, while its employees contribute 8% of

their annual basic, housing and transport allowances to the scheme. Once the contributions have been

paid, the Company retains no legal and constructive obligation to pay further contributions if the fund

does not hold sufficient assets to finance benefits accruing under the retirement benefit plan. The

Company's obligations are recognised in the statements of comprehensive income as administrative

expenses (employee benefits) when they are due. Prepaid contributions are recognised as an asset to

the extent that a cash refund or reduction in the future payments is available.

Termination benefits would be recognized when and only when, the Group is demonstrably committed to

either terminate the employment of an employee or group of employees before the normal retirement

date or provide termination benefits as a result of an offer made in order to encourage voluntary

redundancy. The Group shall recognize termination benefits as an expense when the Group is

demonstrably committed with a detailed formal plan for the termination without realistic possibility of

withdrawal.

Borrowing costs are interest and other costs that the entity incurs in connection with the borrowing of

funds. Borrowing costs on qualifying capital expenditure are capitalized while others are expensed.




xvi) Income tax

xvii) Share capital and share premium

The Group's ordinary shares are classified as equity instruments.

xviii) Reserves

Reserves include all current and prior year retained earnings.

xix) Dividends on ordinary shares

xx) Offsetting financial instruments

xxi) Impairment of financial instruments

Additional income taxes that arise from the distribution of dividend by the Group are recognized at the

same time as the liability to pay the related dividend is recognized.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be

available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting

date and are reduced to the extent that it is no longer probable that the related tax benefit will be

realised.

Dividends on ordinary shares are recognised as a liability and deducted from equity when they become

legally payable. Interim dividends are deducted from equity when they are declared and no longer at

the discretion of the shareholders. In the case of final dividends, this is when approved by the

shareholders at the Annual General Meeting.

Shares are classified as equity when there is no obligation to transfer cash or other assets. Any amounts

received over and above the par value of the shares issued are classified as ‘share premium’ in equity.

Incremental costs directly attributable to the issue of equity instruments are shown in equity as a

deduction from the proceeds, net of tax. Financial instruments issued by the Group are classified as

equity only to extent that they do not meet the definition of a financial liability or financial asset.

Financial assets and liabilities are offset and the net amount reported in the statement of financial

position when there is a legally enforceable right to offset the recognised amounts and there is an

intention to settle on a net basis or realise the asset and settle the liability simultaneously.

The Company assesses at the end of each reporting year whether there is objective evidence that a

financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is

impaired and impairment losses are incurred only if there is objective evidence of impairment as a result

of one or more events that occurred after initial recognition of the asset (a 'loss event') and that loss

event (or events) has an impact on the estimated future cash flows of the financial asset or group of

financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing

significant financial difficulty, default or delinquency in interest or principal payments, the probability

that they will enter bankruptcy or other financial reorganisation, and where observable data indicates

that there is a measurable decrease in the estimated future cash flows such as changes in arrears or

economic conditions that correlate with defaults.

Expenses on income tax comprise current and deferred tax. Current tax is the expected tax payable on

taxable income or loss for the year, using tax rates enacted by the Government. Current tax assets and

liabilities will be offset on the statement of financial position. Deferred tax is provided using the

statement of financial position method, providing for temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amount used for taxation

purposes.




xxii) Provisions, Contingent Assets and Liabilities

Provisions are discounted to their present values when the time value of money is material.

xxiii) Related party transactions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of

past events, and it is probable that an outflow of economic resources will be required from the group

and the amounts can be estimated reliably. Timing or amounts of the outflow may still be uncertain.

The Company considers two parties to be related if, directly or indirectly one party has the ability to

control the other party or exercise significant influence over the other party in making financial or

operating decisions. Where there is a related party transactions with the Company, the transactions are

disclosed separately as to the type of relationship that exists with the Company and the outstanding

balances necessary to understand their effects on the financial position and the mode of settlement

For the loans and receivables category, the amount of the loss is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash flows (excluding future

credit losses that have not been incurred) discounted at the financial asset’s original effective interest

rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income

statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is

the current effective interest rate determined under the contract.

As a practical expedient, the company may measure impairment on the basis of an instrument’s fair

value using an observable market price.

If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognised (such as an improvement in the

debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the

income statement.

Related parties include the related Companies, the directors and any employee who is able to exert

significant influence on the operating policies of the Company. Key management personnel are also

considered related parties. Key management personnel are those persons having authority and

responsibility for planning, directing and controlling the activities of the entity, directly or indirectly,

including any director (whether executive or otherwise) of that entity.

Provisions are measured at the estimated amounts required to settle the present obligation, based on

the most reliable evidence available at the reporting date, including the risks and uncertainties

associated with the present obligation. Where there are a number of obligations, the likelihood that an

outflow will be required in settlement is determined by considering the class of obligations as a whole.




Accounting classification and fair value of financial assets and liabilities

31 December 2018

Financial assets N’000 N’000 N’000 N’000

Cash and cash equivalents 111,523 - 111,523 111,523

Investment in Joint Komputer Kompany Plc - 100,000 100,000 100,000

Trade and other receivables 1,396,055 - 1,396,055 1,396,055

1,507,578 100,000 1,607,578 1,607,578

Financial liabilities

Trade and other payables 3,132,934 - 3,132,934 3,132,934

Loans and borrowings 152,974 - 152,974 152,974

3,285,908 - 3,285,908 3,285,908

31 December 2017

Financial assets

Cash and cash equivalents 184,294 - 184,294 184,294

- 100,000 100,000 100,000

Trade and other receivables 1,086,988 - 1,086,988 1,086,988

1,271,282 100,000 1,371,282 1,371,282

Financial liabilities

Trade and other payables 3,593,429 - 3,593,429 3,593,429

Loans and borrowings 137,235 - 137,235 137,235

3,730,664 - 3,730,664 3,730,664

Investment in Joint Komputer

Kompany Plc

Amortised

cost

Investment in

Equity fair

value through

OCI

Total

carrying

amount Fair value

The table below sets out the carrying amounts and fair values of the Group's financial assets and

financial liabilities:




6 Financial Risk Management

- Reputational risk

- Technology risk

- Legal Risk

- Credit risk

- Fair value or cash flow interest rate risk

- Foreign exchange risk

- Other market price risk, and

- Economic government/political risk.

- Trade receivables

- Cash and cash equivalents

- Investments in unquoted equity securities

- Trade and other payables

- Bank overdrafts

- Floating-rate bank loans

- Forward currency contracts

General objectives, policies and processes

Credit risk

The Group is exposed through its operations to the following risks:

In common with all other business, the Group is exposed to risks that arise from its use of financial

instruments. This note describes the Group's objectives, policies and processes for managing those risks and

the methods used to measure them. Further quantitative information in respect of these risks is presented

throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its

objectives, policies and processes for managing those risks or the methods used to measure them from

previous years unless otherwise stated in this note.

The principal financial instruments used by the Group, from which financial instrument risk arises, are as

follows:

The Board has overall responsibility for the determination of the Group's risk management objectives and

policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing

and operating processes that ensure the effective implementation of the objectives and policies to the

Group's finance function. The Board receives quarterly reports from the Financial Controller through which

it reviews and monitors performance. The Group's internal auditors also review the risk management

policies and processes and report their findings to the Audit Committee.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without

unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set

out below:

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its

contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to

assess the credit risk of new customers before siging contracts. Such credit ratings are taken into account

by business practices.




Cash in bank and short-term deposits

A significant amount of cash is held with the following institutions:

2018 2017

N'000 N'000

Zenith International Bank Plc 4,035 83,807

First Bank of Nigeria Limited 158 149

Access Bank Plc 1,903 -

United Bank for Africa Plc 20,883 9,773

Skye Bank Plc - 12,101

Sterling Bank Plc - 17,281

Stanbic IBTC Bank 867 -

Guarantee Trust Bank 509 -

Others 1,350 -

29,705 123,111

Market risk

Fair value and cash flow interest rate risk

During 2018 and 2017, the Group's borrowings at variable rate were denominated in Naira

The Group analysis the interest rate exposure on a quarterly basis. A sensitivity analysis is performed by

applying a simulation technique to the liabilities that represent major interest bearing positions.

Based on the various scenarios the Group then manages "its cash-flow" interest rate risk by changing from

using floating-to-fixed interest rate.

The Finance Committee monitors the utilisation of the credit limits regularly and at the reporting date

does not expect any losses from non-performance by the counterparties.

Market risk arises from the Group's use of tradable and foreign currency financial instruments. It is the risk

that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

foreign exchange rates (currency risk) or other market factors (other price risk)

The Group is exposed to cash flow interest rate from borrowings at floating rate. It is currently Group

policy that all existing floating rate borrowings are restructured to fixed rates in order to mitigate against

frequent fluctuation in interest rate.This policy is managed across the Group by individual treasury units.

Although the board accepts that this policy neither protects the Group entirely from the risk of paying

rates in excess of current market rates nor eliminates fully cash flow risk associated with variability in

interest payments, it considers that it achieves an apropriate balance of exposure to these risks.

The Finance Committee determines concentrations of credit risk by quarterly monitoring the

creditworthiness rating of existing customers and through a monthly review of the trade receivables' ageing

analysis. In monitoring the customers' credit risk, the Group ensures that substantial amount of the

outstanding balance is paid before future credit sales are made to the customers.

Credit risk also arises from cash and cash equivalents with banks and financial institutions. For banks and

financial institutions, the Group consider banks that have been approved by the Central Bank of Nigeria.

The Finance Committee has established a credit policy under which each new customer is analysed

individually for creditworthiness before the Group's standard payment and delivery terms and conditions

are offered from the Finance Committee.




Foreign exchange risk

Liquidity risk

Below Between Above

1 year 1 to 2 years 3 years Total

At 31 December 2018 N'000 N'000 N'000 N'000

Trade and other payables 3,132,934 - - 3,132,934

Loans and borrowings 111,402 - - 111,402

Total 3,244,336 - - 3,244,336

Between Between Above

At 31 December 2017 1 year 1 to 2 years 3 years Total

N'000 N'000 N'000 N'000

Trade and other payables 3,593,429 - - 3,593,429

Loans and borrowings 74,876 - - 74,876

Total 3,668,305 - - 3,668,305

Liquidity risk arises from the Group's management of working capital and the finance charges and principal

repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its

financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when

they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet

expected requirements for a year of at least 45 days. The Group also seeks to reduce liquidity risk by fixing

interest rates (and hence cash flows) on a portion of its long-term borrowing.

The Board receives rolling 12-month cash flow projections on a monthly basis as well as information

regarding cash balances. At the end of the financial year, these projections indicated that the Group

expected to have sufficient liquid resources to meet its obligations under all reasonably expected

circumstances and will not need to seek for overdraft facilities. The Group currently maintain a "no

borrowing Philosophy".

The liquidity risk of each entity is managed by the treasury function within the entity. To ensure efficiency

in liquidity management, the treasury unit manages the funds for each projects within the Group. Projects

within each entity are seen as being self funding.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows)

of financial liabilities:

Foreign exchange risk arises when individual Group entities enter into transactions denominated in a

currency other than their functional currency. The Group's policy is, where possible, to allow group entities

to settle liabilities denominated in their functional currency with the cash generated from their own

operations in that currency. Where group entities have liabilities denominated in a currency other than

their functional currency (and have insufficient reserves of that currency to settle them), cash already

denominated in that currency will, where possible, be transferred from elsewhere within the Group.

In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forcast,

analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash

reserves.

The Group is currently not exposed to foreign exchange risk as it does not have any liability to be settled in

foreign currency.




Capital Disclosures

The Group's objectives when maintaining capital are:

2018 2017 2018 2017

N'000 N'000 N'000 N'000

Loans and borrowings 111,402 74,876 - -

Less: cash and cash equivalents (111,523) (184,294) 29,707 123,111

Net debt (121) (109,418) 29,707 123,111

Total equity 1,653,241 577,024 3,727,899 3,342,103

Total adjusted capital 1,653,241 577,024 3,727,899 3,342,103

Debt to adjusted capital ratio (%) -% (18)% 1% 4%

Consistent with others in the industry, the Group monitors capital on the basis of the debt to adjusted

capital ratio. This ratio is calculated as net debt adjusted capital as defined above. Net debt is calculated

as total debt (as shown in the consoidated statement of financial positon) less cash and cash equivalents.

The objective of this strategy is to secure access to finance at reasonable cost by maintaining a high credit

rating. The debt-to-adjusted-capital ratios at 31 December 2018 and at 31 December 2017 were as

follows:

The decrease in the debt to adjusted capital ratio during 2017 resulted primarily from the decrease in net

debt arising from settlement of outstanding loans and borrowings during the year.

The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital share

premium, non-controlling interest, retained earnings, and revaluation reserves)

Group Company

- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns

for shareholders and benefits for other stakeholders, and

- to provide an adequate return to shareholders by pricing products and services commensurately with the

level of risk.

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital

structure and makes adjustments to it in the light of changes in economic conditions and the risk

characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may

adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or

sell assets to reduce debt.




7) Effect of changes in accounting policies

a) IFRS 15 - Revenue from contract with customers

b) IFRS 9 - Financial instruments

i) the classification and measurement of financial assets and financial liabilities and

The only significant impact on the Group is in relation to the impairment of trade receivables.

c) Impact on the financial statements

Effect of transition to IFRS 9 and IFRS 15 on the statement of financial position as at 31 December 2017

i.

IFRS 15 IFRS 9

Adjustments N'000 N'000 N'000 N'000 N'000

Revenue 1,956,517 - 1,956,517 - 1,956,517

Cost of sales (1,213,524) - (1,213,524) - (1,213,524)

Gross profit 742,993 - 742,993 - 742,993

Other operating income 129,516 - 129,516 - 129,516

Operating expenses (2,102,427) (2,102,427) - (2,102,427)

Loss from operations (1,229,918) - (1,229,918) - (1,229,918)

Finance income 14,813 - 14,813 - 14,813

Finance expense a (15,327) - (15,327) (8,488) (23,815)

Net finance income (514) - (514) (8,488) (9,002)

Loss before tax (1,230,432) - (1,230,432) (8,488) (1,238,920)

Tax expense (30,297) - (30,297) - (30,297)

Loss after tax (1,260,729) - (1,260,729) (8,488) (1,269,217)

Other comprehensive income - - -

Total comprehensive loss (1,260,729) - (1,260,729) (8,488) (1,269,217)

As at 1 January 2018, the directors of the Group reviewed and assessed the Group’s existing trade receivables for

impairment using reasonable and supportable information that is available without undue cost of effort in

accordance with the requirements of IFRS 9 to determine the credit risk of the respective items at the date they

were initially recognized. No material adjustments were identified.

ii) impairment for financial assets.

In the current financial year the Group has adopted IFRS 15 Revenue from Contracts with Customers. The Group has

elected to restate comparative information from prior periods upon adoption of IFRS 15 and has applied the

practical expedient under which contracts that began and ended in 2017 or that were completed prior to 1 January

2017 are not restated.

The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the entity expects to be entitled in

exchange for those goods or services.

As at 1 January 2018, the directors of the Group reviewed and assessed the Group's revenue for possible impact of

the adoption of IFRS 15 without undue cost of effort in accordance with requirement of IFRS 15. No material

adjustments were identified.

In the current period the Group has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related

consequential amendments to other IFRS 9 introduces new requirements for:

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an

incurred credit loss model under IAS 39. The expected credit loss model required the Group to account for expected

credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk

since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have

occurred before credit losses are recognized.

The Group adopted IFRS 9 and IFRS 15 with a transition date of 1 January 2018. The adoption of IFRS 15 has no

material effect on the Group prior year financial statements and therefore were not restated. The Group has

chosen to restate comparatives on adoption of IFRS 9 and, therefore reflected in the restated prior year financial

statements.

31 December

2017 As originally

Presented

31 December

2017 As

restated

31 December

2017 As

restated

Reconciliation of the Group's statement of profit or loss and other comprehensive income for the year ended

31 December 2017.




Adjustments IFRS 15 IFRS 9

Non current assets N'000 N'000 N'000 N'000 N'000

Property, plant and equipment 2,809,867 - 2,809,867 - 2,809,867

Intangible assets 120,986 - 120,986 - 120,986

Investment projects 460 460 460

100,000 100,000 100,000

3,031,313 - 3,031,313 - 3,031,313

Current assets

Inventory 469,538 469,538 - 469,538

Trade and other receivables 1,086,988 - 1,086,988 - 1,086,988

Cash and cash equivalents 184,294 - 184,294 - 184,294

1,740,820 - 1,740,820 - 1,740,820

Current liabilities

Trade and other payables 3,593,429 3,593,429 3,593,429

Income tax payables 464,445 464,445 464,445

4,057,874 - 4,057,874 - 4,057,874

Non current liabilities

Loans and borrowings b 128,747 - 128,747 8,488 137,235

Net liabilities 585,512 - 585,512 (8,488) 577,024

Equity

Share capital 2,348,030 - 2,348,030 2,348,030

Share premium 5,458,750 5,458,750 5,458,750

Revaluation reserve 959,065 959,065 959,065

Retained earnings (7,676,090) - (7,676,090) (8,488) (7,684,578)

Capital reserve 145,522 145,522 145,522

Non controlling interest (649,765) (649,765) (649,765)

585,512 - 585,512 (8,488) 577,024

a)

Fair value through other

comprehensiveincome( available -for-

sale 2017) investments

In 2017 one of the directors convert its deposit for investment into term loan at interest free rate. The group

accounted for this at cost. In accordance with the requirement of IFRS 9, the financial liability measure at fair

value. The effect of applying IFRS 9 will be to increase the loans and borrowing and hence increase the loss for the

year by N8,488,000.

31 December

2017 As originally

Presented

31 December

2017 As

restated

31 December

2017 As

restated




8 Segment information (Group) 2018

Identity

management &

Solution Others Total

2018 2018 2018

N’000 N’000 N’000

Revenue 3,012,513 - 3,012,513

Cost of sales (2,226,979) - (2,226,979)

Gross profit 785,534 - 785,534

Total gross profit from external customers 785,534 - 785,534

Group gross profit per consolidated

statement of comprehensive income 785,534 - 785,534

Depreciation -

Segment profit 785,534 - 785,534

Other operating income 838,978

Depreciation of head office building

Finance expenses (15,739)

Finance income 4,270

Administrative expenses (1,311,429)

Group loss before tax 301,614

Segment financial position as at 31 December 2018

N’000 N’000 N’000

Property plant and equipment (carrying amount) 2,663,076 - 2,663,076

Investment project 460 - 460

Investment in equities at FVTOCI 100,000 - 100,000

Intangible assets 722,840 - 722,840

Deposit for investments 13,249 - 13,249

Current assets 1,755,358 - 1,755,358

Current liabilities (3,560,169) - (3,560,169)

Non-current liabilities (41,572) - (41,572)

Net liabilities as at 31 December 2018 1,653,241 - 1,653,241

Segment information (Group) 2017 N’000 N’000 N’000

Revenue 1,956,517 - 1,956,517

Cost of sales (1,213,524) - (1,213,524)

Gross profit 742,993 - 742,993

Group gross profit per consolidated

statement of comprehensive income 742,993 - 742,993

Depreciation (130,163) - (130,163)

Segment profit 612,830 - 612,830


Depreciation of head office building (40,002) Finance expenses (23,815) Finance income 14,813


Group loss before tax (1,238,920)




Identity

management &



N’000 N’000 N’000


Long term investments 100,000 - 100,000

Investment projects 460 - 460

Deferred taxation 120,986 - 120,986

Current assets 1,740,820 - 1,740,820


Non current liabilities (62,359) (62,359)

Net assets as at 31 December 2017 577,024 - 577,024

Segment information (Company) 2018

N’000 N’000 N’000

Revenue 584,392 - 584,392

Cost of sales (346,230) - (346,230)

Gross profit 238,162 - 238,162

Gross profit per statement of

comprehensive income 238,162 - 238,162

Depreciation (99,498) - (99,498)

Segment Profit 138,664 - 138,664


Depreciation of head office building (45,595)

Finance income 3,402

Administrative expenses (672,049)

Company loss before tax as at 31 December 2018 269,440




Investment in Subsidiaries 2,453,826 - 2,453,826

Investment in equities at FVTOCI 100,000 - 100,000

Investment in Subsidiaries - - -

Loan receivables 49,810 - 49,810

Current assets 607,801 - 607,801


Net assets 3,727,899 - 3,727,899




Segment information Company 31

December 2017

Identity

management &


2017 2017 2017

N’000 N’000 N’000

Revenue 608,314 - 608,314

Cost of sales (238,887) - (238,887)

Gross profit 369,427 - 369,427

Gross profit per statement of

comprehensive income 369,427 - 369,427

Depreciation (106,329) - (106,329) Segment Profit 263,098 - 263,098

Other operating income 127,248 Depreciation of head office building (40,002) Finance expenses (5,327) Finance income 9,284


Company loss before tax as at 31 December 2017 (1,716,649)


N’000 N’000 N’000

Property plant and equipment (carrying

amount) 2,117,728 - 2,117,728


Intangible assets - - -

Investment in equity at FVTOCI 100,000 - 100,000

Investment in Subsidiaries 2,453,826 - 2,453,826

Loan receivables 192,747 192,747

Current assets 970,261 - 970,261


Net assets 3,342,103 - 3,342,103




Revenue from contract with customers

The Company has disaggregated revenue into various categories as analysed below:

2018 2017 2018 2017

9(a) Product line Category N'000 N'000 N’000 N’000

Business process outsourcing 22,778 14,399 22,778 14,399

Chams core 527,257 461,471 527,257 461,471

Membership 1,308 2,799 1,308 2,799

E- voting 19,571 9,500 19,571 9,500

Confirm me 1,535 6,514 1,535 6,514

BVN Sales and Maintenance 1,020,528 540,811 11,103 44,413

Sales of computer 840 69,217 840 69,217

Data card products 161,665 111,604 - -

Supply of Cards 862,000 408,096 - -

Identity cards 77,342 105,906 - -

Managed service Evolving 155,660 139,576 -

ATM Transaction fees/charges 9,984 9,923 - -

Switching service income 136,290 75,551 -

Access control 15,550 - - -

Sales of Automated teller Machine 205 1,150 - -

Total 3,012,513 1,956,517 584,392 608,313

(b) Customer category

N'000 N'000 N’000 N’000

Government ministries 627,168 537,022 490,878 461,471

Financial institutions 1,008,479 494,720 -

Private companies 1,376,866 924,775 93,514 146,842

3,012,513 1,956,517 584,392 608,313

(c) Geographical spread N'000 N'000 N’000 N’000

Nigeria 3,012,513 1,956,517 584,392 608,313

Other countries - - - -

3,012,513 1,956,517 584,392 608,313

10 Cost of sales N'000 N'000 N’000 N’000

Analysis by operations

Biometric 305,656 528,029 305,656 209,684

Training 40,574 26,803 40,574 26,803

ATM 5,496 16,898 - -

Switching 13,949 21,736 - -

Scratch Cards and consumables 44,364 402,572 - -

Cost of sales data card and evolving 190,032 183,008 - -

Cost of sales - E value 38,082 - - -

BVN 781,755 - - -

Cost of sales access control 8,696 440 - -

Card supply 731,898 214 - -

Virtual airtime 13,238 31,424 - -

Other direct costs 53,239 2,400 - 2,400

2,226,979 1,213,524 346,230 238,887

Company

Group Company

Group




2018 2017 2018 2017

11 Other operating income N'000 N'000 N’000 N’000

Rental Income 3,725 3,500 28,837 27,612

Miscellaneous income 62,867 25,504 - 11,901

Provision for bad debts no longer

required 23,298 12,777 241,708 -

Profit from disposal of property,

plant and equipment 36,893 5,250 36,743 5,250

Exchange difference - 82,485 - 82,485

Accrued expenses no longer

required 151,297 - 151,297 -

Write back of over provistion for

VAT 560,898 - 386,433 -

Total 838,978 129,516 845,018 127,248

2018 2017 2018 2017

12 Finance income and expense N’000 N’000 N’000 N’000

Finance income 4,270 14,813 3,402 9,284

Finance expenses N’000 N’000 N’000 N’000

Interest expense on loans and

overdraft (15,739) (23,815) - 5,327

Total finance expenses

Net finance expenses/income

recognised in income statement (11,469) (9,002) 3,402 3,957

13 Earnings/(loss) per share

N’000 N’000 N’000 N’000

Profit/(loss) for the year used in

basic EPS 338,799 (1,254,664) 385,796 (1,734,120)

Profit/(loss) used in diluted EPS 338,799 (1,254,664) 385,796 (1,734,120)

Denominator ‘000 ‘000 ‘000 ‘000

Weighted average number of

shares used in basic EPS 4,696,060 4,696,060 4,696,060 4,696,060

Weighted average number of

shares used in diluted EPS 4,696,060 4,696,060 4,696,060 4,696,060

7K (27)k 8K (37)k

Company Group

Group Company


FINANCIAL STATEMENTS, 31 DECEMBER 2018.


14(a) Property, plant and equipment (Group)

Land

Buildin

g

Pla

nt

and

machin

ery

Fix

ture

s

and f

itti

ngs

Com

pute

r

equip

ment

Equip

ment

Moto

r

Vehic

le

Tota

l

Cost/valuation N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

Balance at 1 January 2017 76,667 2,000,000 902,703 342,751 437,881 1,458,217 171,048 5,389,267

Additions - - 1,260 4,275 3,406 9,228 29,780 47,949

Reclassifications - - - - (20,622) 20,622 - -

Disposals - - - (2,148) - (7,378) (6,500) (16,026)

Balance at 31 December 2017 76,667 2,000,000 903,963 344,878 420,665 1,480,689 194,328 5,421,190


Additions - - 23,148 5,799 3,433 7,722 25,366 65,468

Reclassifications - - (850) - 850 - - -

Disposals - - - (46,075) - (94,169) (13,560) (153,804)


Accumulated depreciation

Balance at 1 January 2017 - 86,812 322,046 341,751 401,006 1,151,815 149,691 2,453,121

Depreciation charge for the year - 40,002 2,775 2,040 7,998 101,239 16,111 170,165

Accummulated depreciation on assets

transferred - - - - (3,007) 3,007 - -

Write off - - - (2,148) - (7,378) (2,437) (11,963)

Balance at 31 December 2017 - 126,814 324,821 341,643 405,997 1,248,683 163,365 2,611,323


Depreciation charge for the year - 45,595 44,158 2,533 9,705 94,509 15,759 212,259

On disposal - - - (46,075) - (94,169) (13,560) (153,804)


Carrying amount as at:

31 December 2018 ₦76,667 ₦1,827,591 ₦557,282 ₦6,501 ₦9,246 ₦145,219 ₦40,570 ₦2,663,076

31 December 2017 ₦76,667 ₦1,873,186 ₦579,142 ₦3,235 ₦14,668 ₦232,006 ₦30,963 ₦2,809,867

The company building was professionally valued by Jide Alabi & Co (Estate Surveyors and Valuers) as at 31 December, 2014 on the basis of their open market values. The

revised value of the properties was N2,000,000,000 resulting in a surplus on revaluation of N959,065,000 which has been credited to the property, plant and equipment

revaluation account. The revaluation report was dated 31 December 2014.




14(b) Property, plant and equipment (Company)

Land

Buildin

g

Pla

nt

and

machin

ery

Fix

ture

s

and f

itti

ngs

Com

pute

r

equip

ment

Equip

ment

Moto

r

Vehic

le

Tota

l

Cost/valuation N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000


Additions - - - 703 - 937 - 1,640

Reclassification - - - - (20,622) 20,622 - -

Disposals - - - (2,148) - (7,378) - (9,526)



Additions - - - 458 - 3,031 17,938 21,427

Disposals - - - (46,075) - (94,169) (6,310) (146,554)


Accumulated depreciation

Balance at 1 January 2017 - 86,812 76,929 245,393 62,214 956,247 106,640 1,534,235

Depreciation charge for the year - 40,002 32 1,250 6,172 90,079 8,796 146,331

Reclassification - - - - (3,007) 3,007 - -

On disposal - - - (2,148) - (7,378) - (9,526)



Depreciation charge for the year - 45,595 1,270 443 6,705 86,542 4,538 145,093

On disposal - - - (46,075) - (94,169) (6,310) (146,554)



31 December 2018 ₦20,230 ₦1,827,591 ₦1 ₦1,358 ₦1,132 ₦129,344 ₦14,406 ₦1,994,062

31 December 2017 ₦20,230 ₦1,873,186 ₦1,271 ₦1,343 ₦7,837 ₦212,855 ₦1,006 ₦2,117,728

The company building was professionally valued by Jide Alabi & Co (Estate Surveyors and Valuers) as at 31 December, 2014 on the basis of their open market values.

The revised value of the properties was N2,000,000,000 resulting in a surplus on revaluation of N959,065,000 which has been credited to the property, plant and

equipment revaluation account. The revaluation report was dated 31 December 2014.




15 Investment projects:

2018 2017 2018 2017

Investment projects N’000 N’000 N’000 N’000

Chams Varsity 4,083 4,083 4,083 4,083

Chams Consortium 146,589 146,589 146,589 146,589

Chams Mobile Limited 27,620 27,620 27,620 27,620

Allowance for impairment (177,832) (177,832) (177,832) (177,832)

Total 460 460 460 460

ChamsAccess Limited

ChamsSwitch Limited

ChamsMobile Limited

Setting up more mobile payment platforms that will allow users to carry out transactions through their

mobile phones. These transactions range from funds transfer and airtime top-up to balance enquiry etc.

Group Company

Deploys across the nation the premium Automated Teller Machines and self - service Chams Access Service

Terminals (CAST)

Investment projects represent expenses incurred on behalf of Chams Varsity, Chams.Net and Chams Wallet

divisions, and will be converted to shares when these divisions become subsidiaries.

Set up to build an enabling infrastructure to ensure unimpeded expansion of all other E-payment initiatives of

Chams Group




16(a) Intangible assets - Group

Cost Mast

erV

erv

e

Cert

ific

ate

Nair

a .

com

Work

in

pro

gre

ss

NC

C L

icences

Soft

ware

Develo

pm

ent

Konal so

luti

on

Tota

l

N’000 N’000 N’000 N’000 N’000 N’000

Balance at 1 January 2017 48,282 68,645 - 150,000 125,349 - 392,276

Additions - externally acquired - 30,581 5,810 - - 20,000 56,391

Balance at 31 December 2017 48,282 99,226 5,810 150,000 125,349 20,000 448,667

Balance at 1 January 2018 48,282 99,226 5,810 150,000 125,349 20,000 448,667

Additions - externally acquired - 19,019 11,766 - - - 30,785

Revaluation surplus - 571,069 - - - - 571,069

Accummulated amortisation transfer on revaluation- (4,050) - - - - (4,050)

Balance at 31 December 2018 48,282 685,264 17,576 150,000 125,349 20,000 1,046,471

Amortisation


Amortisation charge for the year 16,892 - - - 75,653 - 92,545

Balance at 31 December 2017 48,282 4,050 - 150,000 125,349 - 327,681


Amortisation charge for the year - - - - - - -

Transfer of accummulated amortisation (4,050) (4,050)

Balance at 31 December 2018 48,282 - - 150,000 125,349 - 323,631


31 December 2017 - 95,176 5,810 - - 20,000 120,986

31 December 2018 - 685,264 17,576 - - 20,000 722,840

The Group's intangible assets were independently valued by WisdomHouse Resources and Services Limited

(FRC/2013/ICAN/00000003808) as at 31 December 2018 to ascertain the open market value of the assets. The Valuer's

opinion of the market value was primarily derived from analysis of recent evidence of market transactions on comparable

assets within the neighbourhood. The valuation resulted in a revaluation surplus of N432,247,000 on Naira.com which has

been credited to revaluation reserve.




16(b) Intangible assets - Company

Total

Cost N’000 N’000

Balance at 1 January 2017 125,349 125,349

Additions - -

Balance at 31 December 2017 125,349 125,349


Additions - -


Amortisation


Amortisation charge for the year 75,652 75,652



Amortisation charge for the year - -



31 December 2017 N- N-

31 December 2018 N- N-

Software Development




17 Investment in subsidiaries

a) Composition of the Group

Country of

incorporation Proportion of ownership

and principal Interests held by the Group

Name of the Subsidiary

place of

business 2018 2017

Card Centre Nigeria Limited Nigeria 90.61% 90.63%90.63%

Chams Access Limited Nigeria 78.02% 97.23%97.23%

Chams Switch Limited Nigeria 91.60% 91.60%

As at 31 December 2018

Card Centre

Nigeria Limited

Chams Access

Limited

ChamsSwitch

Limited

N'000 N'000 N'000

Revenue 939,342 1,352,489 136,290

Cost of sales (829,074) (986,406) (65,269)

Gross profit 110,268 366,083 71,021

Other operating income 184,292 48,006 5,184

Administrative expenses (199,177) (219,060) (98,720)

Profit/(Loss) from operating activities 95,383 195,029 (22,515)

Net finance (expenses)/income (15,172) 301 -

Profit/(loss) before taxation 80,211 195,330 (22,515)

Taxation (6,116) (29,221) (2,485)

Profit/(loss) after tax for the year 74,095 166,109 (25,000)

Profit/(loss) allocated to NCI 6,958 36,212 (2,100)

Other comprehensive income allocated to NCI - - 36,309

Total comprehensive income/(loss) allocated to NCI 6,958 36,212 34,209

Cash generated from operating activities 29,215 37,096 3,342

Cash outflow from investing activities (30,760) (13,774) (30,760)

Cash inflow/(outflow) from financing activities - (17,937) 48,051

Net cash (outflow)/inflow (1,545) 5,385 20,633 -

As at 31 DECEMBER 2018 -

Total assets 1,305,846 507,506 758,947

Total liabilities (2,117,940) (264,293) (647,560)

Equity (812,094) 243,213 111,387

Percentage of holding 90.61% 78.02% 91.60%

Principal Activities

Processing of electronic

payment

Development of ATM, POS,

printers and terminals

Printing of payment/ financial

cards




As at 31 December 2017

Card Centre

Nigeria Limited

Chams Access

Nigeria Limited

ChamsSwitch

Limited

N'000 N'000 N'000

Revenue 514,002 758,650 75,551

Cost of sales (433,997) (518,904) (21,736)

Gross profit 80,005 239,746 53,815

Other operating income 2,582 22,890 908

Administrative expenses (198,022) (216,154) (94,603)

(Loss)/profit from operating activities (115,435) 46,482 (39,880)

Net finance income/(expense) 735 (5,206) -

(Loss)/profit before taxation (114,700) 41,276 (39,880)

Taxation (4,811) - (2,294)

(Loss)/profit after tax for the year (119,511) 41,276 (42,174)

(Loss)/profit allocated to NCI (11,198) 1,143 (3,543)

Other comprehensive income allocated to NCI - - -

Total comprehensive (expense)/income allocated to NCI (11,198) 1,143 (3,543)

Cash generated from operating activities 26,124 42,188 16,209

Cash (outflows)/inflows from investing activities (18,024) (36,501) (39,318)

Cash inflow from financing activities - - 9,000

Net cash inflows/(outflow) 8,100 5,687 (14,109)

As at 31 December 2017 N'000 N'000 N'000

Total assets 1,132,945 304,150 157,805

Total liabilities (2,010,591) (344,212) (592,487)

Equity (877,646) (40,062) (434,682)

Percentage of holding 90.63% 97.23% 91.60%

b) Subsidiary with material non-controlling interests

c) Interest in unconsolidated structured entities

The Group has no interests in unconsolidated structured entities

d) Investment in associate

Name

The Group's only investment in associate is in Paymaster Limited. No dividend were received from Paymaster

Limited during 2018 and 2017. The investment in Paymaster Limited has been fully provided for based on

diminution in value.

The Group includes one subidiary, Chams Access Limited with material non-controlling interests (NCI) as at 31

December 2018. However, as result of additional investment of N1,000,000,0000 by Chams Plc, the non-

controlling interest become insignificant.




e) Analysis of investment 2018 2017 2018 2017

in subsidiaries N’000 N’000 N’000 N’000

Card Centre Nigeria Limited - - 1,531,302 1,531,302

Chams Access Limited (e(i)) - - 1,810,600 1,810,600

Chams Switch Limited - - 806,343 806,343

- - 4,148,245 4,148,245

f) Impairment provision for value of subsidiaries

Card centre Limited - - (981,798) (981,798)

Chams Access - - (113,370) (113,370)

Chams Switch - - (599,251) (599,251)

Net investment in subsidiaries - - 2,453,826 2,453,826

18 Investment in equity accounted entities

Paymaster Nigeria Limited 263,471 263,471 263,471 263,471

Impairment allowance for value of

investment (263,471) (263,471) (263,471) (263,471)

Net investment in associate - - - -

19 Investment in equity at FVTOCI

Unitec Nigeria Limited 1,500 1,500 1,500 1,500

100,000 100,000 100,000 100,000

101,500 101,500 101,500 101,500

Impairment provision (1,500) (1,500) (1,500) (1,500)

Net Investemnt in equity

accounted enties 100,000 100,000 100,000 100,000

20 Deposit for investments N’000 N’000 N’000 N’000

Chams Mobile 13,249 - -

Company Group

Joint Komputer Kompany Limited




21 Loan receivables 2018 2017 2018 2017

Loan due from Chams Access N’000 N’000 N’000 N’000

Balance at beginning of the year - - 192,747 -

Reclassifification from current assets( 20(d)) - - - 192,747

Repayments (142,937)

Balance at the end of the year - - 49,810 192,747

22 Inventory N’000 N’000 N’000 N’000

Terminals and consumables 240,115 434,339 59,983 66,109

Work in progress 7,665 35,199 7,665 20,883

247,780 469,538 67,648 86,992

23(a) Trade and other receivables N’000 N’000 N’000 N’000

Trade receivables 3,405,275 3,037,723 2,573,383 2,672,158

(2,342,373) (2,119,840) (2,133,477) (1,940,618) -

Trade receivables - net 1,062,902 917,883 439,906 731,540

Receivables from subsidiary companies (Note

23f(i)) - - 7,799 6,417

Receivables from related parties (Note 23(f(ii)) - 13,249 - -

1,062,902 931,132 447,705 737,957

Prepayments 29,036 20,605 1,479 1,613

Restricted bank balance(Note 23(b) 15,840 15,840 15,840 15,840

Other receivables (Note 23(c) 288,277 119,411 45,422 4,748

Total trade and other receivables 1,396,055 1,086,988 510,446 760,158

(b)

(c) Other receivables N’000 N’000 N’000 N’000

Withholding tax 198,088 65,056 42,533 2,618

Directors current account 67 67 67 67

VAT 27,653 27,709 2,428 1,278

Staff receivables 90,764 94,595 75,384 79,448

Other receivables 46,195 10,147 - -

Call in arrears 500 500 - -

Less impairment allowance on staff loans and -

directors current account (Note 23(e)) (74,990) (78,663) (74,990) (78,663)

Total other receivables 288,277 119,411 45,422 4,748

Group Company

Total financial assets other than cash and cash

equivalents classified as loans and receivables

Less: provision for impairment of trade

receivables (23(d))

Restricted bank balance represents an amount in Zenith Bank Plc placed under lien as a security over

performance guarantee bond to Osun State Bureau of Public Procurement on the Time and Attendant Device

contract.




(d) Movement in impairment allowance for trade receivables

2018 2017 2018 2017

N’000 N’000 N’000 N’000

Balance at beginning of the year 2,119,840 1,476,202 1,940,618 1,314,748

Additions during the year 243,156 656,415 213,482 625,870

Write off - - - -

Write back during the year (20,623) (12,777) (20,623) -

Balance at the end of the year 2,342,373 2,119,840 2,133,477 1,940,618

(e) Movement in impairment allowance for staff loans

and other receivables N’000 N’000 N’000 N’000

Balance at beginning of the year 78,663 80,698 78,663 80,698

Write off (3,673) - (3,674) -

74,990 80,698 74,989 80,698

Write back during the year - (2,035) - (2,035)

Balance at the end of the year 74,990 78,663 74,989 78,663

Allowance for doubtful receivables was made on trade and other receivables which have been past due.

Receivables are considered to be past due when they exceed the credit granted or are over 365 days.

(f) Receivables from subsidiaries and other related parties

(i) Receivables from subsidiaries N’000 N’000 N’000 N’000

Card Centre Nigeria Limited - - 844,463 1,055,074

Chams Switch Limited - - - 3,315

Chams Access Limited - - - 3,102

- - (836,664) (1,055,074)

- - 7,799 6,417

(ii) Receivables from related parties

Chams Consortium 41,875 41,875 41,875 41,875

Chams mobile 41,587 41,587 28,338 28,338

Provision for impairment on receivables from

related Company (70,213) (70,213) (70,213) (70,213)

Transfer to deposit for investment (13,249) - - -

- 13,249 - -

(g) The ageing analysis of trade receivables that are past due but not impaired is stated below:

N'000 N'000 N'000 N'000

Up to 3 months 341,818 55,600 78,053 55,600

3 to 6 months 14,280 51,254 19 51,254

6 to 12 months 27,477 744,723 17,760 15,284

Over 12 months 3,010,700 2,186,146 2,477,551 2,550,020

3,394,275 3,037,723 2,573,383 2,672,158

Movement in impairment allowance for trade receivables are disclosed in notes 20(d) and 20(e)

Other classes of financial assets included within trade and other receivables do not contain impaired assets.

Group Company

Allowance for impairment of amount receivable

from subsidiaries




24(a) Income tax

Current tax expense 2018 2017 2018 2017

Current tax on loss for the year: N’000 N’000 N’000 N’000

Income Tax/Minimum Tax 43,681 28,419 19,480 17,471

Education tax 7,645 1,586 - -

Information Technology Tax 4,647 292 2,694 -

Write back of overprovision (144,334) - (148,357) -

Additional education tax 9,827 - 9,827 -

(78,534) 30,297 (116,356) 17,471

Deferred tax expense - - - -

Originating and reversal of temporary

differences - - - -

Total current tax (78,534) 30,297 (116,356) 17,471

(b)

N'000 N'000 N'000 N'000

Profit/(loss) for the year 301,614 (1,238,920) 269,440 (1,716,649)

Corporate tax at the domestic rate of

30% (2017: 30%) 156,740 (758,097) 80,832 (514,995)

Effect of income that is exempt from

taxation (190,341) 1,575 (199,465) 1,575

Effect of expenses that are - -

not deductible in -

determining taxable profit 101,133 658,227 110,711 415,857

Losses relieved (3,101) - (3,101) -

Investment allowance - - - -

Adjusted loss/relieved (18,564) 95,988 - 95,988

Capital allowances absorbed (32,867) - - -

Minimum tax 25,804 28,419 19,480 17,471

Education tax 7,645 1,586 - -

Information Technology Tax 4,647 292 2,695 -

Balancing charge 11,201 2,307 11,023 1,575

Back duty assessment (140,830) (138,530)-

Tax expense (78,533) 30,297 (116,355) 17,471

Effective rate (%) (26) (2) (43) (1)

Group Company

The reasons for the difference between the actual tax charge for the year and the standard rate of

corporate tax in Nigeria applied to profits for the year are as follows:




(c) Group

Closing Balance

at 31

December

2017

Recognize in

net income

Recognize in

OCI

Reclassify

from equity

to net

income

Closing Balance

at 31

December 2018

Deferred tax liabilities N'000 N'000 N'000 N'000 N'000

Excess of NBV over TWDV 259,741 - - - 259,741

Deferred tax liability 259,741 - - - 259,741

Deferred tax assets N'000 N'000 N'000 N'000 N'000

Unutilised capital allowances 544,792 - - - 544,792

Write off (285,051) - - - (285,051)

Deferred tax assets 259,741 - - - 259,741

Net deferred tax liability

movement - - - - -

Company

Opening

Balance at 31

December

2017

Recognize in

net income

Recognize in

OCI

Reclassify

from equity

to net

income

Closing Balance

at 31

December

2018

Deferred tax liabilities N'000 N'000 N'000 N'000 N'000

Excess of NBV over TWDV 259,741 - - - 259,741

Deferred tax liability 259,741 - - - 259,741

Deferred tax assets N'000 N'000 N'000 N'000 N'000

Unutilised capital allowances 544,792 - - - 544,792

Write off (285,051) - - - (285,051)

Deferred tax assets 259,741 - - - 259,741

Net deferred tax liability

movement - - - - -

(d) Corporate tax liability 2018 2017 2018 2017

Per Statement of Financial Position N'000 N'000 N'000 N'000

Balance as at the beginning of the year 464,445 681,689 398,151 624,013 - -

Charge/originating timing

difference for the year55,973 30,297 22,174 17,471

Over provision written back (134,507) - (138,530) -

385,911 711,986 281,795 641,484

Payment during the year (70,078) (247,541) (49,939) (243,333)

Per Statement of Financial Position 315,833 464,445 231,856 398,151

(e)

(f) Education tax for the Group and the Company is computed at 2% of assessable profit in line with Education Tax Act

CAP E4 LFN, 2004 as amended.

Group Company

The amount provided as income tax on the results of the Group and the Company is based on the provisions of

Companies Income Tax Act CAP 21 LFN 2004 (as amended)




2018 2017 2018 2017

25 Trade and other Payables N’000 N’000 N’000 N’000

Trade payables 1,340,299 1,116,895 680,687 788,929

Other payables and accruals (Note 25(a)) 1,792,635 2,476,534 558,675 1,279,453

3,132,934 3,593,429 1,239,362 2,068,382

- - 6,842 26,386 Other payables - tax and social security payments - - -

Total trade and other payables 3,132,934 3,593,429 1,246,204 2,094,768

25(a) Other payables and accruals N’000 N’000 N’000 N’000

Advances from customers 58,512 60,326 33,999 60,325

Staff payable 223,802 257,877 82,298 87,105

Sundry creditors 463,306 637,873 196,155 349,330

ChamsCooperative 15,002 12,785 12,305 11,755

Withholdingtax 13,726 61,907 1,761 59,394

Value Added Tax 271,282 698,408 96,088 457,003

Deposit for shares 265,542 22,492 10,030 10,030

Accrued audit fee 4,200 9,200 - 5,600

Accruals 26,590 154,562 - 122,831

Dividend payable 26,303 21,464 21,464 21,464

Pension payable 108,782 80,210 34,691 12,879

Paye payable 78,450 74,364 36,564 30,551

NHF payable 22,888 21,730 17,867 17,147

Industrial training fund payable 17,812 17,186 15,453 16,589

Accrued tax penalty 2,375 27,839 - -

Provision for finance charges 1,665 1,665 - -

Deferred revenue 120,264 220,562 - -

Accrued directors allowance 72,134 96,084 - 17,450 0

1,792,635 2,476,534 558,675 1,279,453

26 Loans and borrowings N’000 N’000 N’000 N’000

Bank Loan (Note 26(a)) 24,816 24,816 - -

Other unsecured loan (Note 26(b)) 128,158 112,419 - -

Total Loans and borrowings 152,974 137,235 - - 0

26(a) Movement in bank loans N’000 N’000 N’000 N’000

Balance at beginning of the year: 24,816 122,263 - 97,447

Repayments - (97,447) - (97,447)

Balance at the end of the year 24,816 24,816 - -

Security on Facility

1. Admission into mortgage debenture on Head Office property.

2. Domiciliation of contract proceeds upon utilization of CFF

3 Personal Guarantee of Sir Demola Aladekomo, Former Group Managing Director

4 Personal Guarantee of two directors of Chams Plc supported by statements of net worth

5 All Assets Debenture

Total financial liabilities, excluding loans and

borrowings, classified as financial liabilities

measured at amortised cost

Payable to subsidiary companies(Note 27)

Group Company




2018 2017 2018 2017

26(b) Movement in other unsecured loans N’000 N’000 N’000 N’000

Balance at beginning of the year: 112,419 103,931 - -

Accrued interest 15,739 8,488 - -


N’000 N’000 N’000 N’000

Current 111,402 74,876 - -

Non current 41,572 62,359 - -

27 Due to related party N’000 N’000 N’000 N’000

Chams Access - - 2,782 -

Card Centre - - 26,386

Chams Switch - 4,060 -

- - 6,842 26,386

28 Share capital

Value Value Value Value

Authorised: N’000 N’000 N’000 N’000

10 billion ordinary shares of 50 kobo each 5,000,000 5,000,000 5,000,000 5,000,000

Number Number Number Number

’000 ’000 ’000 ’000

10 billion ordinary shares of 50k each 10,000,000 10,000,000 10,000,000 10,000,000

Issued and fully paid: Value Value Value Value

N’000 N’000 N’000 N’000

4,696,060,000 ordinary shares

of 50 kobo each 2,348,030 2,348,030 2,348,030 2,348,030

Number Number Number Number

'000 '000 '000 '000

4,696,060,000 ordinary share of 50k each 4,696,060 4,696,060 4,696,060 4,696,060

29 Reserves

(i) Share premium N’000 N’000 N’000 N’000

Share premium 5,458,750 5,458,750 5,458,750 5,458,750

Transfer to retained earning (Note 29(ii)) (5,423,742) - (5,423,742) -

35,008 5,458,750 35,008 5,458,750

Group Company

Group Company




(ii) Share premium

(iii) Revaluation reserve N’000 N’000 N’000 N’000

Opening balance 959,065 959,065 959,065 959,065

Surplus on revaluation 523,099 - - -

Balance at the end of the year 1,482,164 959,065 959,065 959,065

(a) Revaluation surplus

N’000 N’000 N’000 N’000

Analysis of revaluation surplus

Owners of the parent 523,099 - - -

Non-controlling interest 47,970 - - -

Intangible assets 571,069 - - -

At the meeting of extra ordinary general meeting of the Chams Plc held on 24 April 2018 at Louis Solomon

Close, Victoria Island, Lagos. The following resolutions were proposed and duly passed:

That the directors be and hereby authorised to all such incidental consequential and supplimental actions

and to execute all requisite documents as may be necessary to give effect to the above resolutions.

That the Directors be and hereby authorised to consent to any modification(s) of the Scheme subject to such

conditions as the Federal High Court May think fit to impose.

That all acts carried out by Directors and Management hitherto in connection with the above, be hereby

ratified

The above resolution was approved by Corporate Affairs Commission on 13 July 2018

The board of the directors of Chams Plc was empowered subject to the confirmation of high court to

approved the scheme of the balance sheet restructuring and effect all the necessary accounting entries in

line with the statutory requirements.

That a Balance Sheet Restructuring Account (BSRA) be created for the purpose of effecting all necessary

accounting entries in line with the statutory requirement

That the share premium of N5,423,742,000 to be transferred to Balance Sheet Restructuring Account.

That the Negative balance of N5,423,742,000 as at 31 December 2017 be written off and transferred from

Retained Earnings Account to the Balance Sheet restructuring account.

That the sum of N5,423,742,000 in the Balance Sheet Restructuring Account be written off, by using a

corresponding amount from the "Balance Sheet Restructuring".




(iv) Retained earnings 2018 2017 2018 2017

N'000 N'000 N'000 N'000

Balance at the beginning of the year (7,683,783) (6,429,119) (5,423,742) (3,689,622)

Transfer from share premium 5,423,742 - 5,423,742

Transfer from income statement 338,799 (1,254,664) 385,796 (1,734,120)

Balance at the end of the year (1,921,242) (7,683,783) 385,796 (5,423,742)

30 Capital reserve N'000 N'000 N'000 N'000

Opening balance 145,522 145,522 - -

Capital reserve on consolidation - - - -


31 Non-controlling interests N'000 N'000 N'000 N'000

Share capital 642,246 617,246 - -

Share premium 115,119 15,119 - -

Revenue reserves (1,241,576) (1,282,925) - -

Revaluation reserves 47,970 - - -

(436,241) (650,560) - -

32 Cash and cash equivalents

Comprises: N’000 N’000 N’000 N’000

Bank and cash balances 59,691 91,808 12,508 32,525

Short term deposit 51,832 92,486 17,199 90,586

111,523 184,294 29,707 123,111

Bank overdraft/borrowings (111,402) (74,876) - -

121 109,418 29,707 123,111

33. Guarantees and other financial commitments

Capital commitments

Contingent liabilities

a)

b)

34. Subsequent events review

35. Comparative figures

Company Group

Where necessary comparative figures have been adjusted to conform to changes in presentation in the

current year in accordance with International Accounting Standard (IAS)1

There were no capital commitments authorised by the Directors as at 31 December, 2018 (31 December

2017 - Nil).

In the opinion of the Directors, there were no significant subsequent events that could have material

effect on the state of affairs of the Company and its subsidiaries as at 31 December 2018 and on the loss

for the year ended on that date, which have not been adequately provided for or disclosed in these

consolidated financial statements.

The contingent liability in respect of a pending litigation with a member of the group is three hundred

and fifty million Naira (N350,000,000) with respect to certain contracts executed between the group and

a third party.

In the opinion of the legal counsel, the group has fifty percent chance of winning the suit.




36. Related party transactions

Transactions with Subsidiaries

· Rent and service charges to Chams Access Limited is N5.28million

· Rent and service charges to Card Centre Nigeria Limited is N15.83 million

Rent and service charges to Chams Switch Nigeria Limited is N4.00 million

Other related parties

·

37. Staff Costs

Information regarding Directors and Employees

Staff Costs (including directors) Comprise:

2018 2017 2018 2017

N’000 N’000 N’000 N’000

Wages and salaries 369,796 344,154 166,345 181,245

Pension contribution 15,434 19,591 13,455 16,342

385,230 363,745 179,800 197,587

Emoluments of Directors of the Company were -

Fee: N’000 N’000 N’000 N’000

Chairman 3,130 3,130 2,500 2,500

Other Directors 12,420 12,420 10,000 10,000

15,550 15,550 12,500 12,500

Fees (excluding pensions

contributions) include amounts paid to

N’000 N’000 N’000 N’000

The Chairman 2,500 2,500 2,500 2,500

The highest paid Director 2,500 2,500 2,500 2,500

Group Company

The related party transactions arose among others from rents due and payments to suppliers. As at 31 December

2018 balances due from and to related Companies were as stated in Notes 23 and 27 to the consolidated

financial statements respectively. The significants transactions with the related parties are disclosed below:

Related parties include the Board of Directors, the Group Executive Board, the Group Managing Director, close

family members and companies which are controlled by these individuals.

During the year, the Company transacted business to/from its subsidiaries and associated companies

Working capital loan to Chams Access Limited and Cards Center Nigeria Limited from Chams Plc were

N49.81million and N331million respectively.



OTHER NATIONAL DISCLOSURE

CONSOLIDATED AND SEPARATE STATEMENT OF VALUE ADDED

2018 2017 2018 2017

N'000 % N'000 % N'000 % N'000 %

Sales of products and services 3,012,513 1,956,517 584,392 608,314

Other income 838,978 129,516 845,018 127,248

3,851,491 2,086,033 1,429,410 735,562

Bought in materials and services:-

- Imported - - - -

- Local (2,795,015) (2,754,868) (615,820) (2,078,598)

Value eroded 1,056,476 100 (668,835) (100) 813,590 100 (1,343,036) (100)

Applied as follows:

To pay employees:

Employees' wages, salaries and

other benefits 369,796 35 344,154 51 166,345 20 181,245 13

To pay Government:

Income tax 78,534 7 (30,297) (5) 116,356 15 (17,471) (1)

To pay providers of capital:

Finance costs 15,739 2 23,815 5 - - 5,327 0

To provide for replacement of

assets and growth:

- Depreciation of property,

plant and equipment 212,259 20 170,165 25 145,093 18 146,331 11

- Amortisation of intangible assets - - 92,545 14 - - 75,652 6

- Retained earnings/(loss) 380,148 36 (1,269,217) (190) 385,796 47 (1,734,120) (129)

1,056,476 100 (668,835) (100) 813,590 100 (1,343,036) (100)

GROUP COMPANY


OTHER NATIONAL DISCLOSURE

CONSOLIDATED AND SEPARATE FINANCIAL SUMMARY

31 DECEMBER 2018

2018 2017 2016 2015 2014 2018 2017 2016 2015 2014

ASSETS/(LIABILITIES) N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Property, plant and equipment 2,663,076 2,809,867 2,936,146 3,106,027 3,358,528 1,994,062 2,117,728 2,262,419 2,028,171 2,119,959

Intangible assets 722,840 120,986 157,140 84,641 104,615 - - 75,652 83,303 90,953

Long term investments 100,000 100,000 100,000 100,000 100,000 2,553,826 2,553,826 1,945,985 1,945,985 1,945,985

Investment projects 460 460 - 224,048 151,035 460 460 - 224,048 151,035

Deferred tax asset - - - 285,051 249,495 - - - 285,051 249,495

Loan receivables - - - - - 49,810 192,747 - - -

Deposit for investments 13,249 - - - - - - 1,207,092 - -

Net current (liabilities)/assets (1,846,384) (2,454,289) (1,357,545) (445,415) 2,889,915 (870,259) (1,522,658) (414,925) 2,418,098 5,040,324

1,653,241 577,024 1,835,741 3,354,352 6,853,588 3,727,899 3,342,103 5,076,223 6,984,656 9,597,751

CAPITAL AND RESERVES

Share capital 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030 2,348,030

Share premium 35,008 5,458,750 5,458,750 5,458,750 5,458,750 35,008 5,458,750 5,458,750 5,458,750 5,458,750

Fixed assets revaluation reserve 1,482,164 959,065 959,065 959,065 959,065 959,065 959,065 959,065 959,065 959,065

Revenue reserve (1,921,242) (7,683,783) (6,429,119) (5,000,410) (1,654,792) 385,796 (5,423,742) (3,689,622) (1,781,189) 831,906

Capital reserve 145,522 145,522 145,522 145,522 145,522 - - - - - - - - - - - -

Non-controlling interests (436,241) (650,560) (646,507) (556,605) (402,987) - - - - -

Total equity 1,653,241 577,024 1,835,741 3,354,352 6,853,588 3,727,899 3,342,103 5,076,223 6,984,656 9,597,751

REVENUE AND PROFIT -

Revenue 3,012,513 1,956,517 1,482,037 1,610,478 4,115,835 584,392 608,314 641,435 914,929 3,336,359

Profit/(loss) before taxation 301,614 (1,238,920) (1,471,916) (3,393,020) 261,805 269,440 (1,716,649) (1,873,838) (2,516,775) 415,137

Taxation income/expenses 78,534 (30,297) (46,696) (12,296) 18,622 116,356 (17,471) (34,595) (2,399) 31,201

Profit/(loss) after taxation 380,148 (1,269,217) (1,518,612) (3,405,316) 280,427 385,796 (1,734,120) (1,908,433) (2,519,174) 446,338

Attributable to:

Owners of the Company 338,799 (1,254,664) (1,428,709) (3,251,697) 310,739 - - - - -

Non controlling interest 41,349 (14,553) (89,903) (153,619) (30,312) - - - - -

PER SHARE DATA (Kobo):

Earnings/(loss) per share

Basic(kobo) 7K (27)k(30)k (30)k (69)k 7k 8K (37)k (39)k (54)k 10k

Earnings/(loss) per share

Diluted(kobo) 7K (27)k(30)k (30)k (69)k 7k 8K (37)k (39)k (54)k 10k

Net assets per share (kobo) 35 12 39 71 146 79 71 108 149 204

GROUP COMPANY

chams plc and its subsidiary companies audited financial ... · chams plc audited financial...

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