rise - chams plc...rise o table of contents 5 our envisioned future 6 directors, officers &...

2018 Annual Report and Accounts

RiseREPOSITIONED TO

T A B L E O F C O N T E N T S

5 Our Envisioned Future

6 Directors, Officers & Professional Advisers

8 Notice of 35th Annual General Meeting of Chams PLC

9 Chairman’s Statement

11 Group Managing Director’s Review

12 Corporate Governance

15 Directors’ Report

22 Projects & Events

25 Report of the Audit Committee

26 Independent Auditors Report

29 Details of Auditors responsibilities for the audit of financial statements

30 Consolidated and Separate Statement of Profit or Loss and Other Comprehensive Income

31 Consolidated and Separate Statement of Financial Position

32 Consolidated and Separate Statement of Changes in Equity

34 Consolidated and Separate Statement of Cash Flows

35 Notes to The Financial Statements

75 Consolidated and Separate Statement of Value Added

76 Consolidated Separate Five Year Financial Summary

77 Corporate profile and subsidiary information

79 Corporate Directory

81 Forms

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4 | C H A M S P L C 2 0 1 8 A N N U A L R E P O R T

O U R E N V I S I O N E D F U T U R E

A company of Nigerian origin, we will be extremely influential and highly visible in global technology. Our trusted cutting edge technology will enhance the quality of life in a manner that glorifies God. We would be employer of first choice.

O U R V I S I O N

To be the leading provider of innovative and beneficial technologies that improve the quality of life.

O U R M I S S I O N

To design and deploy innovative and beneficial technologies, while creating value for all our stakeholders.

O U R C O R E V A L U E S

1. Creation of a healthy and dynamic work environment characterized by I-CASE: • I-Inventiveness: Solution oriented, Resourceful, Creative.

• C-Candour: Frankness, Forthrightness, Sincerity.

• A-Agility: Dexterity, Swiftness, Nimble, Adaptability.

• S-Savvy: Knowledgeable, Know-how, Thought Leader.

• E-Excitement: Fun, Enthusiasm, Positivity.

2. Commitment to Corporate Social Responsibility.3. Faith in God.

O U R Q U A L I T Y P O L I C Y S T A T E M E N T

CHAMS is resolutely committed to delivering excellent technology and Business Intelligence solution(s) that are consistently safe and in line with our Quality Management System (QMS), thus enhancing the quality of life.

Management ensures compliance with industry, regulatory and statutory requirements and communicates, same to all stakeholders in line with set quality objectives.

Management also is committed to establishing structures necessary for continual improvement of the ISO 9001:2015 Quality Management System in order to enhance customer satisfaction.

Group Managing DirectorChams/QPS/2017/01


D I R E C T O R S , O F F I C E R S & P R O F E S S I O N A L A D V I S E R S

B O A R D O F D I R E C T O R S

• Dr. Ajoritsedere Awosika MFR, mni ........Chairman

• Mr. Olufemi Williams ........................................Group Managing Director

• Sir Demola Aladekomo ...................................Director

• Dr. Evans Woherem ...........................................Director

• Professor Oye Ibidapo-Obe ........................Director

• Pastor Ituah Ighodalo .......................................Director

• Mr. Wim Tappij Gielen ......................................Director

• Alh. Yusufu A. Modibbo ..................................Director

• Mrs. Funke AlomoOluwa ..............................Executive Director

• Mrs. Mayowa Olaniyan ....................................Executive Director

YETUNDE EMMANUELCompany SecretaryFRC/2018/NBA/00000018086


D I R E C T O R S , O F F I C E R S & P R O F E S S I O N A L A D V I S E R S

L E G A L A D V I S E R S

• Afe Babalola & Co. Emmanuel Chamber, Plot 1, Block 4, CMD/Jubilee Road Behind Mobil Filling Station, Magodo GRA, Lagos.

R E G I S T E R E D O F F I C E

• 8, Louis Solomon Close, off Ahmadu Bello Way, Victoria Island, Lagos

A U D I T O R S

• BDO Professional Services ADOL House 15, CIPM Avenue, CBD, Alausa Ikeja, Lagos

R E G I S T R A R S

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

B A N K E R S

• UBA PLC 57, Marina Street Lagos

• First Bank of Nigeria Ltd Adeola Odeku Street Victoria Island Lagos

• Zenith Bank PLC Ajose Adeogun Street Victoria Island Lagos

• GTB 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 54, Marina Street, Lagos

• EcoBank PLC Akin Adesola Street Victoria Island Lagos

• Stanbic IBTC Bank Plot 1712, Idejo Street, off Adeola Odeku Street, Victoria Island Lagos


N O T I C E O F 3 5 T H A N N U A L G E N E R A L M E E T I N G O F C H A M S P L C

NOTICE IS HEREBY GIVEN that the Thirty-Fifth Annual General Meeting of CHAMS PLC will hold on this 30th day of July, 2019 at Ace-Olivia Hall, 2nd Floor City Mall, Onikan, Lagos at 10.00 a.m. prompt to transact the following businesses:

O R D I N A R Y B U S I N E S S 1. To receive the Audited Financial Statements for the Year

ended 31st December 2018 and the Reports of the Directors, Auditor and Audit Committee thereon;

2. To declare a dividend.3. To elect/re-elect the Directors.4. To authorize the Directors to fix the remuneration of the

Auditors.5. To elect Members of the Audit Committee.

S P E C I A L B U S I N E S STo consider and if thought fit, to pass the following as ordinary resolution:6. To fix the remuneration of the Directors.

B Y O R D E R O F T H E B O A R D

YETUNDE EMMANUELCompany Secretary FRC/2018/NBA/00000018086

Dated this 8th day of July 2019

N O T E S 1. PROXY

A member entitled to attend and vote at an Annual General Meeting is entitled to appoint a proxy to attend and vote in his/her stead. The proxy need not be a member of the Company. For the appointment to be valid, a completed and duly stamped proxy form must be deposited at the office of the Company Secretary, Plot 8, Louis Solomon Close, Victoria Island, Lagos not less than 48 hours before the time fixed for the meeting.

2. CLOSURE OF REGISTER The Register of Members and Transfer book will be closed from 18th day of April 2019 to 24th day of April 2019 (both days inclusive) for the purpose of updating the Register of Members.

3. AUDIT COMMITTEE In accordance with Section 359(5) of the Companies and

Allied Matters Act, CAP C20, LFN 2004, any shareholder may nominate another shareholder for appointment to the Audit Committee by giving notice in writing of such nomination to the Company Secretary at least Twenty-One (21) days before the Annual General Meeting.

4. ELECTION/RE-ELECTION/RESIGNATION OF DIRECTORSElection: Alhaji Yusufu Modibbo is being proposed for election as Non-Executive Director to fill existing vacancy on the Board.

Re-election: In accordance with the provisions of the Articles of Association of the Company, the Directors to retire by rotation are Dr. Evans Woherem and Sir Demola Aladekomo. The Directors being eligible, offer themselves for re-election.

Resignation: Mr. Wim Tappij Gielen is resigning as a Non-Executive Director.

5. PROFILE OF DIRECTORSThe profile of all Directors are available for viewing on the Company’s website, www.chamsplc.com.

6. UNCLAIMED DIVIDENDA list of unclaimed dividend will be circulated with the Annual Report and Financial Statements. Any shareholder affected by this notice is advised to write or to call at the office of the Registrars, First Registrars and Investors Services Limited, 2 Abebe Village Road, Iganmu, Lagos during normal working hours.

7. DIVIDEND WARRANTSIf approved, dividend warrants for the sum of 3k for every share of 50k will be paid via e-mandate on this 31st day of July 2019, to shareholders whose names are registered in the Register of Members at the close of business on the 17th day of April 2019. Shareholders are advised to forward the particulars of their account details to the Registrars to enable direct credit of their dividend.

8. E-DIVIDENDNotice is hereby given to all shareholders to open bank accounts for the purpose of dividend payment in line with the Securities and Exchange Commission (SEC) directives, Detachable application forms for e-dividend and e-bonus are attached to the Annual Report to enable all shareholders furnish the particulars of their bank accounts/CSCS details to the Registrars.

9. RIGHTS OF SHAREHOLDERS TO ASK QUESTIONS Shareholders have the right to ask questions not only at the meeting, but also in writing prior to the meeting, and such questions must be submitted to the Company Secretary not later than the 23rd of July 2019.


C H A I R M A N ’ S S T A T E M E N T

Distinguished Shareholders, Ladies and Gentlemen, it gives me great pleasure to welcome you to the 35th Annual General Meeting of our company, Chams Plc. I shall be presenting to you the annual report for the financial year ended 31st December, 2018.

B A C K G R O U N D

Managing the effects of recession over the previous years required strategic moves towards ensuring that we drive our strategies to positive note. The economic statistics released by the Nigerian Bureau of Statistics (NBS) indicated that the economy improved in the first half of year 2018 specifically. In Q1 of 2018, the GDP growth rate stood at 1.94 per cent compared to the 0.82 percent recorded in the previous year. The delay in budget signing affected the implementation, thus leading to the fall in the GDP rate to 1.51%. However, the GDP grew to 1.81% in Q3 and further to 2.38% in Q4.

Though there were slight fluctuations in the crude oil price in the course of the year, the oil price averaged $66.15 per barrel which is an improvement compared to $49.9 in 2017. The exchange rate of the Naira to the dollar remains flat at about N361 as a result of the continued intervention of the Central Bank of Nigeria (CBN) in the market. This largely mirrored further improvement in the non-oil sector.

The Information Communication Technology (ICT) sector attracted increased Foreign Direct Investment (FDI) from $32 billion in 2015 to $40 billion in 2018. The market overview and trade data for the ICT industry recorded an estimated total market size of $109 million which included a total local production of $3.9 million and total importation of $105 million.

The gross external reserves stood at US$43 billion as at December 2018 and according to the Debt Management Office (DMO) of the Federation, Nigeria’s total debt stock rose from N21 trillion in 2017 to about N22.4 trillion as at September 2018 and N24.4 trillion as at December 2018.

The year 2018 started on a good and firm progress with positive indices that assured sustainability of positive growth. We are hopeful that in 2019 continued growth will be sustained towards making over 100% progress.

F I N A N C I A L R E S U L T S

The group recorded growth in various performance indices compared to last year.

• The Gross revenue grew by 54 percent, from ₦1.96 billion in 2017 to ₦3.01 billion in 2018.

• Group Profit-Before-Tax grew by 124 percent, from ₦1.24 billion loss recorded in year 2017 to ₦302 million profit in 2018.

• Profit-After-Tax thus jumped by a whopping 130 percent during the period, from ₦1.27 billion loss after tax in 2017 to ₦380 million profit in 2018.

• The Group total assets similarly rose by 10 percent, from ₦4.77billion in 2017 to ₦5.25 billion in 2018,

• The total liabilities dropped by 14 percent during the same period, from ₦4.2 billion to ₦3.6billion.

• Finally, Group shareholders’ fund grew impressively by 187 percent from previous year figure of ₦0.57 billion to ₦1.6 billion in 2018.

B A L A N C E S H E E T R E S T R U C T U R I N G

Pursuant to the Shareholders’ approval to restructure the books of the Company at the 2018 Annual General Meeting, the Balance Sheet Restructuring scheme was completed and filed with the necessary regulatory bodies. The scheme has helped to lay the


foundation for better performance for the Company, improved its competitiveness in the ICT sector/industry and the potential for the Company to pay dividends.

D I V I D E N D

In order to meet the expectation of all our shareholders and stakeholders who have patiently waited for improvement in the overall performance of the Company, the Company has declared a dividend of N3k per share. We hope to do more in the subsequent years.

T H E B O A R D O F C H A M S P L C

In the course of 2018, I am happy to inform you that on requisite approval, Alhaji Yusufu Modibbo was appointed as a Non-Executive Director of the Company. He has over 30 years’ experience in Banking, corporate finance, stock market operations and portfolio management both in the public and private sector. Details of his Curriculum Vitae are stated on the Company’s website.

G O I N G F O R W A R D

We will concentrate on the strategies that have given us the greatest dividend and that will drive the vision of the Company. In line with our vision, we are set to achieve the continued delivery of excellent services to our customers and ultimately ensuring that our shareholders are rewarded.

In 2019, we plan to consolidate on the progress made in the previous years to deliver a strong and sustainable performance that enhances returns to our shareholders. We are marching forward in the year with confidence and optimism, knowing fully well that our businesses have been strategically positioned to take advantage of key opportunities as we stay on course in the execution of our growth strategy.

As we continue our transformation journey in 2019, we acknowledge the challenges that may be posed by the rapidly changing geopolitical and social economic dynamics, hence we are committed to our core focus of providing Innovative and Intelligent Business Solutions to our customers both in public and private sectors of the Nigerian economy.

C O N C L U S I O N

In conclusion, on behalf of the Board and Management of the Company, I wish to thank our esteemed shareholders for their patience, support and perseverance all through the years.

I sincerely appreciate the members of the Board for their support and cooperation this past year and our management team and the staff for their diligence, professionalism, tenacity and sacrifice towards ensuring that organizational goals and objectives are achieved.

The Board remains committed to delivery of improved performance and in order to further reiterate these promises, we have been able to translate this performance to payment of dividend this year and we further commit ourselves to exceeding your expectations come year 2019.

Thank you.

God bless you all.

God bless Chams Plc

God bless Nigeria.

Dr. (Mrs) 'Dere Awosika MFR, mniChairman

C H A I R M A N ' S S T A T E M E N T

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G R O U P M A N A G I N G D I R E C T O R ’ S R E V I E W

2018 was the 33rd year of operations for Chams and my 4th year as the GMD. So far, our result was good, and our business developed moderately. Measured in terms of expense loading, operating income grew more than 54 per cent on the previous year, and the company’s expense ratio improved to the best level in the past years of operations.During the 2018 financial year,* we redefined our strategic focus in four major areas namely; to Rethink Solutions and Streamline Product Portfolios, Achieve Operational Excellence, Transform marketing and Sales Approach, Raise Capital and deftly Allocate Recourses. These strategies were meant to support in the achievement of set goals for 2018

It will please you to know that your company recorded a plausible financial success in 2018, despite the losses made in the 2017. In consolidation, the Company made a revenue of N3.01b in 2018 as opposed to N1.95b in 2017 which is a major increase of 54% in 2018. The gross profit increased by 5% to N786m in 2018 as against N743m in 2017. The bottom line improved significantly from a loss of N1.2b in 2017 to a profit of N380m in 2018. This advancement in profit and capital is an attestation to the credibility of our commitment and our business model.

The nervousness on the capital markets at the beginning of the year is expected to continue, and the low interest rate level will probably weaken returns on investments for the current year, too. With respect to investment insurance and savings products, which have been the company’s strongest-growing products in recent years, we also fear that the taxation report, currently being prepared and due for completion after the first quarter, may reduce demand for these products in the future.

The Group strategy for 2018–2022, launched at the end of 2017, sets the following strategic objectives: increase in the corporate customer base, efficient management of household customers, personnel’s capacity for renewal and the maintenance of good solvency. The needs and behaviour of our customers are changing with the development of technology, demography and the changes in companies’ operations and their internationalisation. Responding to these challenges is a precondition for our continued operations.

In this strategy period, Chams main goal will be to increase the volume of business and the expense loading and to significantly improve the expense ratio to secure the company’s price competitiveness now and in the future.

Achieving this goal will require success in increasing the volume of our operations and further improvements in the efficiency of processes through automation. Through digitalisation we also seek to meet customer demands concerning online transactions and customer service. New web services will also be launched during the current year.

Finally, I extend my humble thanks to our customers whose needs are the reason we exist. Our vision is to offer the best customer experience. This means a lot of work for us. Our personnel and administration deserve thanks for their excellent work and co-operation in 2018.

Thank you All

God bless you all

Femi Williams Group Managing Director

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C O R P O R A T E G O V E R N A N C E

The companies that make up Chams Group are advocates and practitioners of corporate governance. The practice of corporate governance fosters openness, transparency, accountability, honesty, selflessness, integrity, leadership, monitoring of performance and leadership. This is visible through the adherence to international best practice in the following areas:

C O M P L I A N C E W I T H T H E C O D E O F C O R P O R A T E G O V E R N A N C E

The Board as a whole is comprised of a number of sub-committees amongst which are Audit, Finance and Appointment, Promotions and Governance 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.

R I S K M A N A G E M E N T F U N C T I O N

Across the group, there is an internal audit function that ensures both compliance, operational and financial controls are in place, in order to minimize risk. The Internal Audit unit ensures that these functions are performed. The Audit Committee also has a risk management oversight function to ensure full compliance.

P U B L I S H I N G O F F I N A N C I A L S T A T E M E N T S A N D A U D I T O R S R E P O R T

The implementation of audit exercises and the publishing of company annual reports as well as group annual reports help to foster transparency and openness .The use of highly qualified external auditors from a reputable audit firm helps to minimize external risks as well as ensuring that information contained in financial reports are accurate. Your company is continuously working on improving the free flow of information to all

stakeholders and the general public.

C O M M U N I C A T I O N B E T W E E N B O A R D O F D I R E C T O R S A N D S H A R E H O L D E R S

Apart from the Annual General Meetings your company has recognized the need to carry the shareholders along through periodic sensitization of developments in the organization. This is to ensure that there is an avenue for continuous flow of information and to foster better understanding.

S E C U R I T I E S T R A D I N G P O L I C Y

The Board of Directors has approved a Securities Trading Policy which prescribes a code of behavior for Directors, management of the Company, external advisers and other related persons in possession of market sensitive information. The Code prohibits these persons from dealing in the Company’s securities during closed periods in accordance with the provisions of the Investments and Securities Act and Post Listing Rules of the Nigerian Stock Exchange. All insiders are notified of closed periods through written or electronic communication from the Company Secretary. The Securities Trading Policy is available on the website of the Company.

C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y

Corporate Social Responsibility is an integral part of the activities of the companies in the Chams Group. We believe in giving back to the society and this is done through activities such as the Chams Theatre Series, a strategic contribution of Chams Plc to the rejuvenation and growth of the Arts in Nigeria and the Soup Kitchen through which we reach the under-privileged and disadvantaged in the society. Your Company was also involved with voluntary work through partnering with a not-for-profit organization, the Volunteer Corp thereby contributing to the education of young persons in our society.

In the year under review your company made donations and charitable gifts amounting to ₦3,250,000 in 2018. The details are as follows;


B E N E F I C I A R I E S

Donation to Nigerian Computer Society (NCS) Ogun State Chapter.Donation of Apple Computers to HallMark University.

G O A L C O N G R U E N C E A M O N G S T A K E H O L D E R G R O U P S

This has to do with ensuring that there is synergy between directors and shareholders thereby reducing conflict and ensuring that directors fully maximize the wealth of shareholders. Other stakeholders are also taken into consideration such as suppliers, employees and so on, in order to ensure that components of each organization are working in tandem towards the realization of stated objectives.

R E M U N E R A T I O N

The remuneration of Directors and all members of staff are performance based. This is to ensure that the company does not reward directors and managers for failure and non-compliance.

Q U A L I T Y C O N T R O L :

• QUALITY MANAGEMENT SYSTEM NIS ISO 9001:2015

The company in the year under review continually ensures that the Company and subsidiaries within the Group maintain high level quality standard in all transactions within the organization and stipulated processes are strictly adhered to. Other certified companies within the group with valid ISO certification are in checks to ensure adherence to stated quality standards.

C O M P L A I N T S M A N A G E M E N T P O L I C Y

The Company has put in place a Complaints Management Policy framework to resolve all complaints and issues in compliance with the Securities and Exchange Rules on Complaints Management. The policy is available for viewing on the Company’s website.

F I N A N C E C O M M I T T E E

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 advices to the company’s management team as and when required. The members are as follows;

DATE OF MEETING FEB

RU

AR

Y 5

, 20

18

AU

GU

ST 7

, 20

18

OC

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ER 1

6, 2

018

DEC

EMB

ER 2

9, 2

018

TOTA

L AT

TEN

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NC

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Dr. Evans Woherem 1 1 1 1 4

Mr. Demola Aladekomo 1 1 1 1 4

Mrs Mayowa Olaniyan 1 1 1 1 4

Mrs Funke Alomooluwa 1 1 - 1 3

Mr. Dumebi Obodo 1 1 1 1 4

A U D I T C O M M I T T E E

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 standard practice.

DATE OF MEETING FEB

RU

AR

Y 5

, 20

18

AU

GU

ST 7

, 20

18

OC

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ER 1

6, 2

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DEC

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EMr. Emmanuel Onochie (Chairman) 1 1 1 1 4Mr. Igbrude Moses 1 1 1 1 4Mr. Doyin Owolabi 1 1 1 1 4Dr. Evans Woherem 1 1 1 1 4Pastor Ituah Ighodalo N/A - - 1 1Mrs. Mayowa Olaniyan N/A 1 1 1 3

A P P O I N T M E N T S , P R O M O T I O N S A N D G O V E R N A N C E C O M M I T T E E

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

DATE OF MEETING MAR

CH 2

8, 2

018

AUGU

ST 8

, 201

8

OCTO

BER

17, 2

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DECE

MBE

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Prof. Oyewusi Ibidapo-Obe 1 1 1 1 4

Mrs Mayowa Olaniyan 1 1 1 1 4

Mrs. Funke AlomoOluwa 1 1 1 1 4

Pastor Ituah Ighodalo 1 - - 1 2

I N N O V A T I O N , M A R K E T I N G A N D T E C H N O L O G Y M E E T I N G S

DATE OF MEETING MA

RC

H 2

8, 2

018

AU

GU

ST 8

, 20

18

OC

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ER 1

7, 2

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DEC

EMB

ER 1

2,

2018

TOTA

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Sir. Demola Aladekomo - 1 1 1 3Prof Ibidapo Obe 1 1 1 1 4Emmanuel Ojo 1 1 1 1 4Tomiwa Aladekomo 1 1 1 1 4

A T T E N D A N C E A T B O A R D M E E T I N G S F O R T H E Y E A R E N D E D 3 1 S T D E C E M B E R 2 0 1 8

DATE OF MEETING AP

RIL

24,

20

18

AU

GU

ST 9

, 20

18

OC

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ER 1

8, 2

018

DEC

EMB

ER 1

3,

2018

TOTA

L AT

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DA

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Dr Mrs. ‘Dere Awosika (chairman) 1 1 1 1 4

Mr. Demola Aladekomo 1 1 1 1 4Prof. Ibidapo-Obe 1 1 1 1 4Dr. Evans woherem 1 1 1 1 4Pastor Ituah Ighodalo N/A - 1 1 2Alhaji Yusufu Modibbo N/A N/A N/A 1 1Mr. Wim Tappij Gielen N/A - - 1 1Mr. Femi Williams 1 1 1 1 4Mrs. Mayowa Olaniyan 1 1 1 1 4Mrs. Funke Alomooluwa 1 1 1 1 4

B O A R D M E E T I N G S

The Board and its Committees met as follows:BOARD/ COMMITTEE MEETING NO OF MEETINGS

Board of Directors 4Audit Committee 4Appointment, Promotions and Governance Committee 4Board Finance Committee 4Innovation, Marketing and Technology Committee 4

A U D I T O R S

The Auditor, Messrs BDO Professionals Service have indicated their willingness to continue in office in accordance with Section 357 (2) of the Companies and Allied Matters Act CAP C20, LFN 2004, a resolution will be proposed at the Annual General Meeting to authorise the Directors to fix their remuneration.BY ORDER OF THE BOARD

Yetunde EmmanuelCompany SecretaryFRC/2018/NBA/00000018086



D I R E C T O R S ’ R E P O R T F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

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 . P R I N C I P A L A C T I V I T I E S 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 . L E G A L F O R MThe 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.

a. 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.

3 . O P E R A T I N G R E S U L T SThe following is a summary of the Company’s operating results:

O P E R AT I N G R E S U L T S U M M A R Y

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’000

Turnover 3,012,513 1, 956, 517 584,392 608,314Cost of Sales (2,226,979) (1, 213, 524) (346,230) (238,887)Gross Profit 785,534 742,993 238,162 369,427Profit After Tax 380,148 (1,269,217) 385,796 (1,734,120)EPS 7K (27)k 8k (37)k


4 . D I V I D E N D SThe 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 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.

5 . S H A R E C A P I T A L H I S T O R Y

YEARAUTHORIZED ISSUED SHARE CAPITAL

CONSIDERATIONINCREASE CUMULATIVE INCREASE CUMULATIVE

1985 100,000 100,000 100,000 100,000 Cash2004 99,900,000 100,000,000 0 100,000 Cash2005 200,000,000 300,000,000 0 100,000 Cash2006 0 300,000,000 99,900,000 100,000,000 Cash2007 2,200,000,000 2,500,000,000 72,106,000 172,106,000 Cash2007 2,500,000,000 5,000,000,000 172,160,000 344,212,000 Cash2007 0 5,000,000,000 1,376,848,000 1,721,060,000 4 for 1 Bonus2008 0 5,000,000,000 2,000,000,000 3,721,060,000 Cash2008 0 5,000,000,000 975,000,000 4,696,600,000 Cash2009 0 5,000,000,000 0 4,696,060,000 Cash2010 0 5,000,000,000 0 4,696,060,000 Cash2011 0 5,000,000,000 0 4,696,060,000 Cash2012 0 5,000,000,000 0 4,696,060,000 Cash2013 0 5,000,000,000 0 4,696,060,000 Cash2014 0 5,000,000,000 0 4,696,060,000 Cash2015 0 5,000,000,000 0 4,696,060,000 Cash2016 0 5,000,000,000 0 4,696,060,000 Cash2017 0 5,000,000,000 0 4,696,060,000 Cash2018 0 5,000,000,000 0 4,696,060,000 Cash

6 . D I R E C T O R S W H O S E R V E D D U R I N G T H E Y E A RThe following Directors served during the year under review:

NAME DESIGNATION

Dr. (Mrs.) ‘Dere Awosika Chairman Sir Demola Aladekomo Non-Executive DirectorProf Oyewusi Ibidapo-Obe Non-Executive DirectorDr. Evans Woherem Non-Executive Director Pastor Ituah Ighodalo Non-Executive Director Alhaji Yusufu Modibbo Non-Executive DirectorTappij Wim Gielen Non-Executive DirectorMr. Femi Williams Group Managing DirectorMrs. Mayowa Olaniyan Executive DirectorMrs. Funke AlomoOluwa Executive Director

D I R E C T O R S ' R E P O R T F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8


7 . D I R E C T O R S ’ I N T E R E S T I N S H A R E SThe Directors who served during the year and their interests in the shares of the Company are as follows:

S/N NAME

SHAREHOLDING AS AT 31

DECEMBER 2018(DIRECT)


DECEMBER 2018(INDIRECT)


DECEMBER 2017

(DIRECT)


DECEMBER 2017(INDIRECT)

1 Dr. (Mrs.) ‘Dere Awosika NIL NIL NIL NIL2 Sir Demola Aladekomo 69,090,000 600, 000 69,090,000 600, 0003 Dr. Evans Woherem NIL NIL NIL NIL4 Prof. Oyewusi Ibidapo-Obe 2,000,000 NIL 2,000,000 NIL5 Pastor Ituah Ighodalo NIL NIL NIL NIL6 Mr. Tappij Wim Gielen NIL NIL NIL NIL7 Alhaji Yusufu Modibbo NIL NIL NIL NIL

8 Mr. Femi Williams 8,000,000 NIL 8, 000, 000 NIL

9 Mrs. Mayowa Olaniyan 500,000 NIL 500, 000 NIL10 Mrs. Funke AlomoOluwa 16,000,000 NIL 16,000, 000 NIL

The indirect holding relates to the holding of the Director in the underlisted Company:

• Sir Demola Aladekomo: (SmartCity Resorts Plc)

8 . D I S C L O S U R E O F S U B S T A N T I A L S H A R E H O L D I N G ( A B O V E 5 % ) A S A T D E C E M B E R 2 0 1 8S/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%

According to the register of members as at 31 December 2018, only the shareholders listed above having substantial shareholding hold above 5% of the issued and fully paid up capital of the Company.

9 . A N A L Y S I S O F S H A R E H O L D I N GThe analysis of the distribution of the shares of the Company as at 31 December 2018 is as follows:

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

1 0 . E L E C T I O N , R E T I R E M E N T A N D R E - E L E C T I O N O F D I R E C T O R SThe following persons are retiring and being eligible, have made known their intentions for re-election as Directors of the Company:

1. Dr. Evans Woherem2. 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.

1 1 . S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S F O R T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8In 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:

• 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.

• Applicable accounting standards are followed.

• Suitable accounting policies are adopted and consistently applied.

• Judgments and estimates made are reasonable and prudent.

• The going concern basis is used, unless it is inappropriate to presume that the Company will continue in business.

• 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.

1 2 . D O N A T I O N S A N D C H A R I T A B L E G I F T S 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 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 N3,275,000 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.

1 3 . E M P L O Y M E N T A N D E M P L O Y E E Sa. 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 EMPLOYEESHealth 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 TRaININGThe 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.

1 4 . P O S T B A L A N C E S H E E T E V E N T SThere 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.

1 5 . C O M P L I A N C E W I T H T H E C O D E O F C O R P O R A T E G O V E R N A N C EChams 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.

1 6 . F I N A N C E C O M M I T T E EThe 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 Chairman2. Sir Demola Aladekomo Member3. Mrs. Mayowa Olaniyan Member4. Mrs. Funke AlomoOluwa Member5. Mr. Dumebi Obodo Member

1 7 . A U D I T C O M M I T T E EThis 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 Chairman2 Mr. Moses Igbrude Member3 Mr. Doyin Owolabi Member4 Dr. Evans Woherem Member 5 Pastor Ituah Ighodalo Member6. Mrs. Mayowa Olaniyan Member



1 8 . A P P O I N T M E N T S , P R O M O T I O N S A N D G O V E R N A N C E C O M M I T T E EThis 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

3 Mrs. Mayowa Olaniyan Member

4 Mrs. Funke AlomoOluwa Member

1 9 . I N N O V A T I O N , M A R K E T I N G A N D T E C H N O L O G Y C O M M I T T E EThe 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.

S/N NAME STATUS

1 Sir Demola Aladekomo Chairman2 Prof. Oyewusi Ibidapo-Obe Member3. Mr. Emmanuel Ojo Member4. Mr. Tomiwa Aladekomo Member

2 0 . B O A R D M E E T I N GThe 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 4Board Finance Committee 4Innovation, Marketing and Technology Committee 4

2 1 . A T T E N D A N C E A T B O A R D M E E T I N G S F O R T H E Y E A R E N D E D 3 1 S T D E C E M B E R 2 0 1 8S/N DIRECTOR NO OF MEETINGS ATTENDANCE

1 Dr. (Mrs) ‘Dere Awosika 4 42 Sir Demola Aladekomo 4 43 Dr. Evans Woherem 4 44 Prof. Oyewusi Ibadapo-obe 4 45 Pastor Ituah Ighodalo 4 2

6 Alhaji Yusufu Modibbo 4 1 (He was appointed on 18th October 2018)

7 Mr. Wim Tappij Gielen 4 18 Mr. Olufemi Williams 4 49 Mrs. Mayowa Olaniyan 4 410 Mrs. Funke AlomoOluwa 4 4



2 2 . A U D I T O R SBOD 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 EmmanuelCompany SecretaryFRC/2018/NBA/00000018086



Pastor Ituah IghodaloNon-Executive Director

Mrs. Mayowa OlaniyanExecuitve Director

Mrs. Funke AlomoOluwaExecutive Director

B O A R D O F D I R E C T O R S Prof Oye Ibidapo-Obe

Non-Executive Director

Alhaji Yusufu A. ModibboNon-Executive Director

Dr. (Mrs.) 'Dere Awosika MFR, mniChairman

Mr. Femi WilliamsGroup Managing Director

Dr. Evans WoheremNon-Executive Director

Sir Demola AladekomoNon-Executive Director


P R O J E C T S & E V E N T S

SIGNING WITH NIBSS AS SUPER AGENT

CHAMS AND ONDO STATE SIGNING


CHAMS 33RD ANNIVERSARY

P R O J E C T S & E V E N T S


R E P O R T O F T H E A U D I T C O M M I T T E E

TO THE MEMBERS OF CHAMS PLC AND ITS SUBSIDIARIESIn accordance with the provision of section 359(6) of the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria, 2004, we have reviewed the audited financial statements of the Company for the year ended 31st December 2018 and report as follows:

a) The accounting and reporting policies of the Company are consistent with legal requirements and agreed ethical practices

b) The scope and planning of the external audit was adequate

c) The Company maintained effective systems of accounting and internal control during the year

d) We are satisfied with the external auditor's findings and recommendations on management letter and management responses thereon.

Dated this 7th Day of March, 2019

Mr. Onochie EmmanuelChairman, Audit CommitteeFRC/2017/NIM/00000016405

MEMBERS OF THE AUDIT COMMITTEE

• Mr. Emmanuel Onochie - Chairman • Mr. Moses Igbrude - Member • Mr. Doyin Owolabi - Member • Dr. Evans Woherem - Member • Pastor Ituah Ighodalo - Member • Mrs. Mayowa Olaniyan - Member


I N D E P E N D E N T A U D I T O R S R E P O R T T O T H E S H A R E H O L D E R S O F C H A M S P L C A N D I T S S U B S I D I A R Y C O M P A N I E S

R E P O R T O N T H E A U D I T O F T H E F I N A N C I A L S T A T E M E N T S

O P I N I O N

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

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.

B A S I S F O R O P I N I O N

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

K E Y A U D I T M A T T E R S

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.

R E V E N U E R E C O G N I T I O N

Risk

Some of the parent and its subsidiaries revenue stream are recognised overtime depending on the agreed performance obligation.

ADOL House15 CIPM AvenueCentral Business DistrictAlausa, IkejaP. O. Box 4929, GPO, MarinaLagos, Nigeria

Tel: +234 1 4483050-9www.bdo-ng.com

BDO Professional Services, a firm of Chartered Accountants registered in Nigeria, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

Partners: Sanni A. Dosunmu, E. Olaseinde Olabisi, Olugbemiga A. Akibayo, Kamar Salami, Tokunbo L. Oluyemi, Henry B. OmodigboBN: 170585

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.

Response

Revenue is recognised when performance obligation has been satisfied, this is signified by the transfer of control, risk and rewards to customers. In addition, existence and completeness of the revenue is verified by:

• Vouching revenue recorded in ledger to sales invoices raised/ certificate of completion • Vouching sales invoices to supporting documentation such as contract/award letter, ensuring contract is duly

signed. • Ascertaining revenue recognition criteria and policy are consistently applied • Test completeness of revenue throughout the year by tracing, on sample basis, the delivery notes, waybills etc to

the ledger.

A C C O U N T S R E C E I V A B L E

Risk

The existence of trade receivables was considered a risk of material misstatement and our response below was designed to address the risk.

Response

Test the reliability of the ageing analysis by:

• 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.

• In making allowance for doubtful balances, we made reference to the Group’s policy and a) Check if receivables are not past due by ensuring that the credit granted have not exceeded 365 days.b) Check whether allowance is required by reference to:

i) payment history

ii) Subsequent to year end receipts

iii) customers correspondences

• 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 • Requested for customers to confirm direct to BDO:

- The year-end balance - Details of the reconciling items if in disagreement

Other Information

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.

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.

R E S P O N S I B I L I T I E S O F M A N A G E M E N T A N D T H O S E C H A R G E D W I T H G O V E R N A N C E F O R T H E F I N A N C I A L S T A T E M E N T S

Management is responsible for the preparation and fair presentation of the financial statements 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 and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

A U D I T O R ’ S R E S P O N S I B I L I T I E S F O R T H E A U D I T O F T H E F I N A N C I A L S T A T E M E N T S

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located in an appendix to this report. This description forms part of our audit report.

R E P O R T O N O T H E R L E G A L R E Q U I R E M E N T S

The Companies and Allied Matters Act, CAP C20, LFN, 2004 requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit

ii) in our opinion, proper books of account have been kept by the Group and the Company, and

iii) the Group’s and Company’s statement of financial position, and its statement of profit or loss and other comprehensive income are in agreement with the books of account.

Lagos, Nigeria18 March 2019

Olugbemiga A. AkibayoFRC/2013/ICAN/00000001076For: BDO Professional ServicesChartered Accountants


D E T A I L S O F A U D I T O R S R E S P O N S I B I L I T I E S F O R T H E A U D I T O F F I N A N C I A L S T A T E M E N T S

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 control.

• 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.

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.

A P P E N D I X


C H A M S P L C A N D I T S S U B S I D I A R Y C O M P A N I E S

C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E

F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8

GROUP COMPANY

NOTES 2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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 - - - -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 The accompanying notes to the financial statements on pages 35 to 74 and other national disclosures on pages 75 and 76 form part of these financial statements.Auditors’ report, pages 26 to 28.



C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F F I N A N C I A L P O S I T I O N

A S A T 3 1 D E C E M B E R 2 0 1 8

GROUP COMPANYASSETS NOTES 2018 2017 2018 2017NON-CURRENT ASSETS ₦’000 ₦’000 ₦’000 ₦’000Property, plant and equipment 14 2,663,076 2,809,867 1,994,062 2,117,728 Investment project 15 460 460 460 460 Intangible assets 16 722,840 120,986 - - Investment in subsidiaries 17(f) - - 2,453,826 2,453,826 Investment in equity at FVTOCI 19 100,000 100,000 100,000 100,000 Deposit for investments 20 13,249 - - - Loan receivables 21 - - 49,810 192,747

3,499,625 3,031,313 4,598,158 4,864,761 Current assetsInventories 22 247,780 469,538 67,648 86,992 Trade and other receivables 23(a) 1,396,054 1,086,988 510,446 760,158 Cash and cash equivalents 32 111,523 184,294 29,707 123,111

1,755,358 1,740,820 607,801 970,261 LIABILITIESCurrent liabilitiesTrade and other payables 25 3,132,934 3,593,429 1,246,204 2,094,768 Loans and borrowings 26(b) 111,402 74,876 - - Corporate tax liability 24(d) 315,833 464,445 231,856 398,151

3,560,169 4,132,750 1,478,060 2,492,919 Net current liabilities (1,804,812) (2,391,930) (870,259) (1,522,658)Total assets less current liabilities 1,694,813 639,383 3,727,899 3,342,103Non-current liabilitiesDeferred tax liability 24(c) - - - - Loans and borrowings 26(b) 41,572 62,359 - -Net assets 1,653,241 577,024 3,727,899 3,342,103 Issued capital and reserves attributable to owners of the parentShare capital 28 2,348,030 2,348,030 2,348,030 2,348,030 Share premium 29(i) 35,008 5,458,750 35,008 5,458,750 Revaluation reserve 29(iii) 1,482,164 959,065 959,065 959,065 Retained earnings 29(iv) (1,921,242) (7,683,783) 385,796 (5,423,742)Capital reserve 30 145,522 145,522 - -

2,089,482 1,227,584 3,727,899 3,342,103 Non-controlling interest 31 (436,241) (650,560) - - Total equity 1,653,241 577,024 3,727,899 3,342,103 The financial statements and notes on pages 30 to 74 were approved by the Board of Directors on 7 March 2019 and signed on its behalf by:

Dr. (Mrs.) ‘Dere AwosikaChairmanFRC/2019/PCNNG/00000019297

Olufemi S. WilliamsManaging DirectorFRC/2013/NSE/00000004337

Mayowa Olaniyan Executive Director, FinanceFRC/2013/ICAN/00000004330

The accompanying notes to the financial statements on pages 35 to 74 and other national disclosures on pages 75 and 76 form part of these financial statements.Auditors’ report, pages 26 to 28.


CH A M S P L C A N D I TS S UB SI D I A RY C OM P A N I E S

C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F C H A N G E S I N E Q U I T Y


G R O U P

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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 equityTransferred 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

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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 comprehensive 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




C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F C H A N G E S I N E Q U I T Y


C O M P A N Y

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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

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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 35 to 74 and other national disclosures on pages 75 and 76 form part of these financial statements.

Auditors’ report, pages 26 to 28.


CH A M S P L C A N D I TS S UB SI D I A RY C OM P A N I E S

C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F C A S H F L O W S


GROUP COMPANY

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 4(a)&(b) 212,259 170,165 145,093 146,331 Amortisation of intangible assets 6(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 (used)/generated from operating activities (163,467) 245,438 (112,122) 91,429 Cash flows from investing activitiesPurchase 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 5,250Purchase 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 activitiesFinance expenses 12 (15,739) (23,815) - (5,327)Contribution from Minority shareholders 125,000 10,500 - - Net cash inflow/(outflow) from financing activities 109,261 (13,315) - (5,327)Net (decrease)/ increase in cash and cash equivalents (109,297) 152,284 (93,404) 98,536Cash 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



C H A M S P L C A N D I T S S U B S I D I A R Y C O M P A N I E SF I N A N C I A L S T A T E M E N T S , 3 1 D E C E M B E R 2 0 1 8

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

1. HISTORY OF THE COMPANY AND NATURE OF OPERATIONS

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.

2. BASIS OF PREPARATION

a. Summary of significant accounting policies

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.

b. Statement of compliance

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.

c. Basis of measurement

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

The consolidated financial statements have been prepared on the historical cost basis except for revalued property, plant and equipment.

d. Functional and presentation currency.

These financial statements are presented in Naira, which is the Group’s functional currency. Amounts are rounded to the nearest thousand, unless otherwise stated.

e. Use of estimates and judgement

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.

3. CHANGES IN ACCOUNTING POLICIES

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

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:

• IFRS 9 Financial Instruments; and


• IFRS 15 Revenue from contracts with customers

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.

b. New standards, interpretations and amendments not yet effective

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).

• 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

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 recognise, 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, i.e. that detection risk should be ignored

• 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

1 January 2019

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8


TITLE KEY REQUIREMENTS EFFECTIVE DATE

• 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

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:

a. Power to exercise significant influence

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.

b. Legal proceedings

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.

c. Income and deferred taxation

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.

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

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.

5. SIGNIFICANT ACCOUNTING POLICIES

i. Foreign currency translation

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.

ii. Revenue recognition

Performance obligation and timing of revenue recognition

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.

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

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

b) The customer has accepted the services being delivered 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.

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

Determining the transaction price

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 transaction 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 continuous transaction by client.

allocating amounts to performance obligations

All prices have 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 is invoiced in accordance with agreement signed and the priced agreed with the customer. Therefore, there is no judgement involved in allocating contract price to performance obligations (all performance obligations are capable of being, and are, sold separately).

Incremental costs of obtaining contracts and costs to fulfilling contracts

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 fulfil the contracts comprises the cost of application developed, hardware and the installation and other deliverable costs are charged separately to a customer.

iii. Finance costs and finance income

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.

iv. Basis of consolidation

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

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

- Other contractual arrangements



- 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.

a. Associates

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.

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

b. Joint venture

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

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) 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



c) For which discrete financial information is available

The Company has three main business segments:

a) Identity Management and solutions

b) Payments, Collections and Transactional Systems

c) ICT Training

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.

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

a. Identity management

• Chams Plc is a regional resource centre for identification solutions for clients ranging from corporations, educational bodies to national government.

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.

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

• Card Centre Limited

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.

b. Payments, collections and transactional systems

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 provides payment platforms through our subsidiary companies such as:

• ChamsAccess Limited

Deploys across the nation the premium automated teller machines and self-service Chams Access Service Terminals (CAST) and access control.

• ChamsSwitch Limited

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

• ChamsMobile Limited/Naira.com

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 enquiry etc.



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

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.

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.

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 yearsComputers and other IT equipment 4 yearsFurniture and fittings 4 yearsPlant and machineries 7 yearsMotor vehicles 4 yearsIT Software 5 years

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.

Derecognition

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.

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.



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.

vii. Leases

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.

viii. Intangible assets

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.

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.

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.

ix. Inventory

Inventories are stated at the lower of cost and net realisable value. Inventories include Scanner and Computers for biometric data capture and varsity 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.

x. Financial Instruments

Financial assets

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:

Amortised cost

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.

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.

a. Trade receivables

Trade receivables arise principally from the provision of services to customers performed in the ordinary course of business. They are generally due for settlement 30 days after performance obligations have been fulfilled, while some services are paid 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.

b. Other receivables

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.

c. Loan receivable from related company

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

Cash and cash equivalents include 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.

xi. Impairment of financial assets

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.

Fair value through other comprehensive income

The Group has an investment in unlisted entities which are not accounted for as subsidiaries, associates or jointly controlled entities. For this investment, 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.

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.

xii. Prepayments

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.

xiii. Financial liabilities

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:

a. Trade and other payables

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)

Advance payment from customer where performance obligation is not yet fulfilled, will be recognised as loan. Interest will be calculated at the ruling rate where performance obligation will be fulfilled after 12months period.

c. Borrowings

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.

De-recognition of financial liabilities

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.

xiv. Borrowings costs

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.

xv. Employee benefits

a. Short - term employee benefits

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.

b. Defined contribution plans

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.

c. Termination benefits

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.

xvi. Income tax

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.

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.

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.

xvii. Share capital and share premium

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.

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

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.

xx. Offsetting financial instruments

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.

xxi. Impairment of financial instruments

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.

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.

xxii. Provisions, Contingent Assets and Liabilities

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.

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.

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

xxiii. Related party transactions

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.



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 transaction 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

Accounting classification and fair value of financial assets and liabilities

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

AMORTISED COST

INVESTMENT IN EQUITY

FAIR VALUE THROUGH OCI

TOTAL CARRYING

AMOUNT FAIR VALUE

31 December 2018 ₦’000 ₦’000 ₦’000 ₦’000

Financial assetsCash and cash equivalents 111,523 - 111,523 111,523Investment in Joint Komputer Kompany Plc - 100,000 100,000 100,000Trade and other receivables 1,396,055 - 1,396,055 1,396,055

1,507,578 100,000 1,607,578 1,607,578Financial liabilitiesTrade and other payables 3,132,934 - 3,132,934 3,132,934Loans and borrowings 152,974 - 152,974 152,974

3,285,908 - 3,285,908 3,285,90831 December 2017Financial assetsCash and cash equivalents 184,294 - 184,294 184,294Investment in Joint Komputer Kompany Plc - 100,000 100,000 100,000Trade and other receivables 1,086,988 - 1,086,988 1,086,988

1,271,282 100,000 1,371,282 1,371,282Financial liabilitiesTrade and other payables 3,593,429 - 3,593,429 3,593,429Loans and borrowings 137,235 - 137,235 137,235

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

6. FINANCIAL RISK MANAGEMENT

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

- 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.

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:

- 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

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

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.

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.

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.



Cash in bank and short-term deposits

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

2018 2017

₦’000 ₦’000

Zenith International Bank Plc 4,035 83,807First Bank of Nigeria Limited 158 149Access Bank Plc 1,903 -United Bank for Africa Plc 20,883 9,773Skye Bank Plc - 12,101Sterling Bank Plc - 17,281Stanbic IBTC Bank 867 -Guarantee Trust Bank 509 -Others 1,350 -

29,705 123,111

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

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)

Fair value and cash flow interest rate 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 appropriate balance of exposure to these risks.

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.

Foreign exchange risk

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.

Liquidity risk

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:

BELOW 1 YEAR BETWEEN 1 TO 2 YEARS ABOVE 3 YEARS TOTAL

At 31 December 2018 ₦’000 ₦’000 ₦’000 ₦’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 1 YEAR

BETWEEN 1 TO 2 YEARS ABOVE 3 YEARS TOTAL

At 31 December 2017 ₦’000 ₦’000 ₦’000 ₦’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

Capital Disclosures

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)

The Group’s objectives when maintaining capital are:

- 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.

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 consolidated statement of financial position) 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:

GROUP COMPANY

2018

₦’000

2017

₦’000

2018

₦’000

2017

₦’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%

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.

7. EFFECT OF CHANGES IN ACCOUNTING POLICIES

a. IFRS 15 - Revenue from contract with customers

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.

b. IFRS 9 - Financial instruments

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:

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

ii) impairment for financial assets.

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

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.

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.

c. Impact on the financial statements

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.

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

i) Reconciliation of the Group’s statement of profit or loss and other comprehensive income for the year ended 31 December 2017.

31 DECEMBER

2017 AS ORIGINALLY PRESENTED

IFRS 15

31 DECEMBER

2017 AS RESTATED

IFRS 9

31 DECEMBER

2017 AS RESTATED

ADJUSTMENTS ₦’000 ₦’000 ₦’000 ₦’000 ₦’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)



ADJUSTMENTS

31 DECEMBER

2017 AS ORIGINALLY PRESENTED

IFRS 15

31 DECEMBER

2017 AS RESTATED

IFRS 9

31 DECEMBER

2017 AS RESTATED

Non current assets ₦’000 ₦’000 ₦’000 ₦’000 ₦’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 Fair value through other comprehensive income (available -for-sale 2017) investments

100,000 100,000 100,000

3,031,313 - 3,031,313 - 3,031,313 Current assetsInventory 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 liabilitiesTrade 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 liabilitiesLoans and borrowings b 128,747 - 128,747 8,488 137,235 Net liabilities 585,512 - 585,512 (8,488) 577,024 EquityShare 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) 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.



8. SEGMENT INFORMATION (GROUP) 2018

IDENTITY MANAGEMENT &

SOLUTIONOTHERS TOTAL

2018 2018 2018

₦’000 ₦’000 ₦’000

Revenue 3,012,513 - 3,012,513Cost of sales (2,226,979) - (2,226,979)Gross profit 785,534 - 785,534Total gross profit from external customers 785,534 - 785,534Group gross profit per consolidated

statement of comprehensive income 785,534 - 785,534Depreciation -Segment profit 785,534 - 785,534Other operating income 838,978 Depreciation of head office building

Finance expenses (15,739)Finance income 4,270Administrative expenses (1,311,429)Group loss before tax 301,614

Segment financial position as at 31 December 2018 ₦’000 ₦’000 ₦’000

Property plant and equipment (carrying amount) 2,663,076 - 2,663,076Investment project 460 - 460Investment in equities at FVTOCI 100,000 - 100,000Intangible assets 722,840 - 722,840Deposit for investments 13,249 - 13,249Current assets 1,755,358 - 1,755,358Current 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 ₦’000 ₦’000 ₦’000

Revenue 1,956,517 - 1,956,517Cost of sales (1,213,524) - (1,213,524)Gross profit 742,993 - 742,993Group gross profit per consolidated

statement of comprehensive income 742,993 - 742,993Depreciation (130,163) - (130,163)Segment profit 612,830 - 612,830Other operating income 129,516Depreciation of head office building (40,002)Finance expenses (23,815)Finance income 14,813Administrative expenses (1,932,262)Group loss before tax (1,238,920)






Property plant and equipment (carrying amount) 2,809,867 - 2,809,867Long term investments 100,000 - 100,000Investment projects 460 - 460Deferred taxation 120,986 - 120,986Current assets 1,740,820 - 1,740,820Current liabilities (4,132,750) - (4,132,750)Non-current liabilities (62,359) (62,359)Net assets as at 31 December 2017 577,024 - 577,024

Segment information (Company) 2018 ₦’000 ₦’000 ₦’000

Revenue 584,392 - 584,392Cost of sales (346,230) - (346,230)Gross profit 238,162 - 238,162Gross profit per statement of comprehensive income 238,162 - 238,162Depreciation (99,498) - (99,498)Segment Profit 138,664 - 138,664

Other operating income 845,018Depreciation of head office building (45,595)Finance income 3,402Administrative expenses (672,049)Company loss before tax as at 31 December 2018 269,440

Segment financial position as at 31 December 2018

Property plant and equipment (carrying amount) 1,994,062 - 1,994,062Investment projects 460 - 460Investment in Subsidiaries 2,453,826 - 2,453,826Investment in equities at FVTOCI 100,000 - 100,000Investment in Subsidiaries - - -Loan receivables 49,810 - 49,810Current assets 607,801 - 607,801Current liabilities (1,478,060) - (1,478,060)Net assets 3,727,899 - 3,727,899





2017 2017 2017

Segment information Company 31 December 2017 ₦’000 ₦’000 ₦’000

Revenue 608,314 - 608,314Cost of sales (238,887) - (238,887)Gross profit 369,427 - 369,427Gross profit per statement of comprehensive income 369,427 - 369,427Depreciation (106,329) - (106,329)Segment Profit 263,098 - 263,098Other operating income 127,248Depreciation of head office building (40,002)Finance expenses (5,327)Finance income 9,284Administrative expenses (2,070,950)Company loss before tax as at 31 December 2017 (1,716,649)


Property plant and equipment (carrying amount) 2,117,728 - 2,117,728Investment projects 460 - 460Intangible assets - - -Investment in equity at FVTOCI 100,000 - 100,000Investment in Subsidiaries 2,453,826 - 2,453,826Loan receivables 192,747 192,747Current assets 970,261 - 970,261Current liabilities (2,492,919) - (2,492,919)Net assets 3,342,103 - 3,342,103



GROUP COMPANY

2018 2017 2018 2017

9(a) Product line Category ₦’000 ₦’000 ₦’000 ₦’000

Business process outsourcing 22,778 14,399 22,778 14,399Chams core 527,257 461,471 527,257 461,472Membership 1,308 2,799 1,308 2,799E-voting 19,571 9,500 19,571 9,500Confirm me 1,535 6,514 1,535 6,514BVN Sales and Maintenance 1,020,528 540,811 11,103 44,413Sales of computer 840 69,217 840 69,217Data 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 1,956,517 584,392 608,314

(b) Customer categoryN’000 N’000 N’000 N’000

Government ministries 627,168 537,022 490,878 461,471Financial institutions 1,008,479 494,720 -Private companies 1,376,866 924,775 93,514 146,843

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

(c) Geographical spread N’000 N’000 N’000 N’000

Nigeria 3,012,513 1,956,517 584,392 608,314Other countries - - - -

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

10. COST OF SALES

Analysis by operations N’000 N’000 N’000 N’000

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

9. REVENUE FROM CONTRACT WITH CUSTOMERSThe company has disaggregated revenue into various categories as analysed below:



11. OTHER OPERATING INCOME

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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

12. FINANCE INCOME AND EXPENSE

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’000

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

Finance expenses ₦’000 ₦’000 ₦’000 ₦’000

Interest expense on loans and overdraft (15,739) (23,815) - 5,327

Total finance expensesNet finance expenses/income recognised in income statement (11,469) (9,002) 3,402 3,957

13. EARNINGS/(LOSS) PER SHARE

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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



14. (A) PROPERTY, PLANT AND EQUIPMENT (GROUP)

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Cost/valuation ₦’000 ₦’000 ₦’000 ₦’000 ₦’000 ₦’000 ₦’000 ₦’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 Balance at 1 January 2018 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)Balance at 31 December 2018 76,667 2,000,000 926,261 304,602 424,948 1,394,242 206,134 5,332,854 Accumulated depreciationBalance 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 Balance at 1 January 2018 - 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)Balance at 31 December 2018 - 172,409 368,979 298,101 415,702 1,249,023 165,564 2,669,778 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)

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Cost/valuation N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

Balance at 1 January 2017 20,230 2,000,000 78,232 247,283 93,838 1,240,629 116,442 3,796,654 Additions - - - 703 - 937 - 1,640 Reclassification - - - - (20,622) 20,622 - - Disposals - - - (2,148) - (7,378) - (9,526)Balance at 31 December 2017 20,230 2,000,000 78,232 245,838 73,216 1,254,810 116,442 3,788,768 Balance at 1 January 2018 20,230 2,000,000 78,232 245,838 73,216 1,254,810 116,442 3,788,768 Additions - - - 458 - 3,031 17,938 21,427 Disposals - - - (46,075) - (94,169) (6,310) (146,554)Balance at 31 December 2018 20,230 2,000,000 78,232 200,221 73,216 1,163,672 128,070 3,663,641



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Accumulated depreciation N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

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)Balance at 31 December 2017 - 126,814 76,961 244,495 65,379 1,041,955 115,436 1,671,040 Balance at 1 January 2018 - 126,814 76,961 244,495 65,379 1,041,955 115,436 1,671,040 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)Balance at 31 December 2018 - 172,409 78,231 198,863 72,084 1,034,328 113,664 1,669,579 Carrying amount as at:31 December 2018 ₦20,230 ₦1,827,591 ₦1 ₦1,358 ₦1,132 ₦129,344 ₦14,406 ₦1,994,06231 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

: GROUP COMPANY

2018 2017 2018 2017

Investment projects ₦’000 ₦’000 ₦’000 ₦’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

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.

ChamsAccess Limited

Deploys across the nation the premium Automated Teller Machines and self - service Chams Access Service Terminals (CAST)

ChamsSwitch Limited

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

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.



16. (A) INTANGIBLE ASSETS

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Cost ₦’000 ₦’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 AmortisationBalance at 1 January 2017 31,390 4,050 - 150,000 49,696 - 235,136 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 Balance at 1 January 2018 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 Carrying amount as at: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

C O M P A N Y

SOFTWARE DEVELOPMENT TOTAL

N’000 N’000

CostBalance at 1 January 2017 125,349 125,349 Additions - - Balance at 31 December 2017 125,349 125,349 Balance at 1 January 2018 125,349 125,349 Additions - - Balance at 31 December 2018 125,349 125,349



SOFTWARE DEVELOPMENT TOTAL

N’000 N’000

AmortisationBalance at 1 January 2017 49,697 49,697 Amortisation charge for the year 75,652 75,652 Balance at 31 December 2017 125,349 125,349 Balance at 1 January 2018 125,349 125,349 Amortisation charge for the year - - Balance at 31 December 2018 125,349 125,349

Carrying amount as at:31 December 2017 ₦- ₦-31 December 2018 ₦- ₦-

17. INVESTMENT IN SUBSIDIARIES

a. Composition of the Group

NAME OF THE SUBSIDIARY

COUNTRY OF INCORPORATION AND PRINCIPAL PLACE OF BUSINESS

PRINCIPAL ACTIVITIES

PROPORTION OF OWNERSHIP INTERESTS HELD BY THE

GROUP

2018 2017

Card Centre Nigeria Limited Nigeria Printing of payment/ financial cards 90.61% 90.63%

Chams Access Limited Nigeria Development of ATM, POS, printers and terminals 78.02% 97.23%

Chams Switch Limited Nigeria Processing of electronic payment 91.60% 91.60%

As at 31 December 2018

CARD CENTRE NIGERIA LIMITED

CHAMS ACCESS LIMITED

CHAMSSWITCH LIMITED

₦'000 ₦'000 ₦'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)



CARD CENTRE NIGERIA LIMITED

CHAMS ACCESS LIMITED

CHAMSSWITCH LIMITED

₦'000 ₦'000 ₦'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%

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 ₦'000 ₦'000 ₦'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

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.



c. Interest in unconsolidated structured entities

The Group has no interests in unconsolidated structured entities

d. Investment in associate

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.

e. Analysis of investment in subsidiaries

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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 Impairment provision for value of subsidiariesCard 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 Joint Komputer Kompany Limited 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

₦’000 ₦’000 ₦’000 ₦’000

Chams Mobile 13,249 - -



21. LOAN RECEIVABLES

GROUP COMPANY

2018 2017 2018 2017

Loan due from Chams Access ₦’000 ₦’000 ₦’000 ₦’000

Balance at beginning of the year - - 192,747 -Reclassifification from current assets ( 20(d)) - - - 192,747Repayments (142,937)Balance at the end of the year - - 49,810 192,747

22. INVENTORY

₦’000 ₦’000 ₦’000 ₦’000

Terminals and consumables 240,115 434,339 59,983 66,109Work in progress 7,665 35,199 7,665 20,883

247,780 469,538 67,648 86,992

23. TRADE AND OTHER RECEIVABLES

₦’000 ₦’000 ₦’000 ₦’000

a) Trade receivables 3,405,275 3,037,723 2,573,383 2,672,158Less: provision for impairment of trade receivables (23(d)) (2,342,373) (2,119,840) (2,133,477) (1,940,618)Trade receivables - net 1,062,902 917,883 439,906 731,540Receivables from subsidiary companies (Note 23f(i)) - - 7,799 6,417Receivables from related parties (Note 23(f(ii)) - 13,249 -Total financial assets other than cash and cash equivalents classified as loans and receivables 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) 288,276 119,411 45,422 4,748 Total trade and other receivables 1,396,054 1,086,988 510,446 760,158

b) 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.

c) Other receivables₦’000 ₦’000 ₦’000 ₦’000

Withholding tax 198,088 65,056 42,533 2,618Directors current account 67 67 67 67VAT 27,653 27,709 2,428 1,278Staff receivables 90,764 94,595 75,384 79,448Other receivables 46,194 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 288,276 119,411 45,422 4,748



d) Movement in impairment allowance for trade receivables

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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

₦’000 ₦’000 ₦’000 ₦’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 ₦’000 ₦’000 ₦’000 ₦’000

Card Centre Nigeria Limited - - 844,463 1,055,074 Chams Switch Limited - - - 3,315 Chams Access Limited - - - 3,102 Allowance for impairment of amount receivable from subsidiaries - - (836,664) (1,055,074)

- - 7,799 6,417

ii. Receivables from related partiesChams 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:

₦’000 ₦’000 ₦’000 ₦’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.



24. INCOME TAX

a) Income Tax GROUP COMPANY

Current tax expense 2018 2017 2018 2017

Current tax on loss for the year: ₦’000 ₦’000 ₦’000 ₦’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) 17,471Deferred tax expense - - - - Originating and reversal of temporary differences - - - - Total current tax (78,534) 30,297 (116,356) 17,471

b) 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:

₦’000 ₦’000 ₦’000 ₦’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 101,133 658,227 110,711 415,857Losses 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)

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 ₦’000 ₦’000 ₦’000 ₦’000 ₦’000

Excess of NBV over TWDV 259,741 - - - 259,741 Deferred tax liability 259,741 - - - 259,741

Deferred tax assets ₦’000 ₦’000 ₦’000 ₦’000 ₦’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

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 ₦’000 ₦’000 ₦’000 ₦’000 ₦’000

Excess of NBV over TWDV 259,741 - - - 259,741 Deferred tax liability 259,741 - - - 259,741

Deferred tax assets ₦’000 ₦’000 ₦’000 ₦’000 ₦’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

GROUP COMPANY

Corporate tax liability 2018 2017 2018 2017

Per Statement of Financial Position ₦’000 ₦’000 ₦’000 ₦’000

Balance as at the beginning of the year 464,445 681,689 398,151 624,013 - -

Charge/originating timing difference for the year 55,973 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) 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)

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.

25. TRADE AND OTHER PAYABLES

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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 Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost 3,132,934 3,593,429 1,239,362 2,068,382 Payable to subsidiary companies(Note 27) - - 6,842 26,386 Total trade and other payables 3,132,934 3,593,429 1,246,204 2,094,768



a) Other payables and accruals

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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

1,792,635 2,476,534 558,675 1,279,453

26. LOANS AND BORROWINGS

₦’000 ₦’000 ₦’000 ₦’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 - -

a) Movement in bank loans

₦’000 ₦’000 ₦’000 ₦’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 Facility1. Admission into mortgage debenture on Head Office property.2. Domiciliation of contract proceeds upon utilization of CFF3. Personal Guarantee of Sir Demola Aladekomo, Former Group Managing Director 4. Personal Guarantee of two directors of Chams Plc supported by statements of net worth5. All Assets Debenture



b) Movement in other unsecured loans

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’000

Balance at beginning of the year: 112,419 103,931 - - Accrued interest 15,739 8,488 - - Balance at the end of the year 128,158 112,419 - -

₦’000 ₦’000 ₦’000 ₦’000

Current 111,402 74,876 - - Non current 41,572 62,359 - -

27. DUE TO RELATED PARTY

₦’000 ₦’000 ₦’000 ₦’000

Chams Access - - 2,782 - Card Centre - - 26,386 Chams Switch - 4,060 -

- - 6,842 26,386

28. SHARE CAPITAL

GROUP COMPANY

2018 2017 2018 2017

Authorised: ₦’000 ₦’000 ₦’000 ₦’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

₦’000 ₦’000 ₦’000 ₦’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 ₦’000 ₦’000 ₦’000 ₦’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



ii) Share premiumAt 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

The board of directors of Chams Plc was empowered subject to the confirmation of high court to approve 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 ₦5,423,742,000 to be transferred to Balance Sheet Restructuring Account.

That the Negative balance of ₦5,423,742,000 as at 31 December 2017 be written off and transferred from Retained Earnings Account to the Balance Sheet restructuring account.

That the sum of ₦5,423,742,000 in the Balance Sheet Restructuring Account be written off, by using a corresponding amount from the "Balance Sheet Restructuring".

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 13th July 2018

GROUP COMPANY

2018 2017 2018 2017

iii) Revaluation reserve ₦’000 ₦’000 ₦’000 ₦’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 ₦’000 ₦’000 ₦’000 ₦’000

Analysis of revaluation surplus Owners of the parent 523,099 - - - Non-controlling interest 47,970 - - - Intangible assets 571,069 - - -

iv) Retained earnings₦’000 ₦’000 ₦’000 ₦’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

₦’000 ₦’000 ₦’000 ₦’000

Opening balance 145,522 145,522 - - Capital reserve on consolidation - - - - Balance at the end of the year 145,522 145,522 - -



31. NON-CONTROLLING INTERESTS

₦’000 ₦’000 ₦’000 ₦’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: ₦’000 ₦’000 ₦’000 ₦’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 COMMITMENTSCapital commitmentsThere were no capital commitments authorised by the Directors as at 31 December, 2018 (31 December 2017 - Nil).

Contingent liabilitiesa) The contingent liability in respect of a pending litigation with a member of the group is three hundred

and fifty million Naira (₦350,000,000) with respect to certain contracts executed between the group and a third party.

b) In the opinion of the legal counsel, the group has fifty percent chance of winning the suit.

34. SUBSEQUENT EVENTS REVIEW

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.

35. COMPARATIVE FIGURES

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



36. RELATED PARTY TRANSACTIONS

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

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 partiesWorking capital loan to Chams Access Limited and Cards Center Nigeria Limited from Chams Plc were N49.81million and N331million respectively.

37. STAFF COSTS

Information regarding Directors and Employees

Staff Costs (including directors) Comprise:

GROUP COMPANY

2018 2017 2018 2017

₦’000 ₦’000 ₦’000 ₦’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: ₦’000 ₦’000 ₦’000 ₦’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

₦’000 ₦’000 ₦’000 ₦’000

The Chairman 2,500 2,500 2,500 2,500 The highest paid Director 2,500 2,500 2,500 2,500



C H A M S P L C A N D I T S S U B S I D I A R Y C O M P A N I E S F I N A N C I A L S T A T E M E N T S , 3 1 D E C E M B E R , 2 0 1 8 O T H E R N A T I O N A L D I S C L O S U R E

C O N S O L I D A T E D A N D S E P A R A T E S T A T E M E N T O F V A L U E A D D E D

GROUP COMPANY

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)


C H A M S P L C A N D I T S S U B S I D I A R Y C O M P A N I E S F I N A N C I A L S T A T E M E N T S , 3 1 D E C E M B E R , 2 0 1 9 O T H E R N A T I O N A L D I S C L O S U R E

C O N S O L I D A T E D S E P A R A T E F I V E Y E A R F I N A N C I A L S U M M A R Y

GROUP COMPANY

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 RESERVESShare 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 shareBasic(kobo) 7K (27)k (30)k (69)k 7k 8K (37)k (39)k (54)k 10k Earnings/(loss) per shareDiluted(kobo) 7K (27)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


C O R P O R A T E P R O F I L E A N D S U B S I D I A R Y I N F O R M A T I O N

I N T E L L I G E N T B U S I N E S S S O L U T I O N P R O V I D E R

• We are Nigeria’s leading provider of Innovative and Beneficial Technology Solutions in Nigeria since 1985 and have been part of every major success story in Identity management, and payment solutions and transactons in Nigeria since 1992 to date.

• Owing to our experience and expertise, we have built robust, secure and adaptable platforms to drive identity management, identity transactions, payment and verification services for public/private sector initiatives and businesses.

• Chams was Incorporated in 1985 and over the years, we have grown from a privately owned business to a publicly quoted company listed on the Nigerian Stock Exchange.

O U R S O L U T I O N S B O U Q U E T

CONFIRMMEConfirmMe is a unified platform for identity, credit & credential confirmation, physical address verification provided by Chams

PLC. The platform offers the solution to the challenge of the lack of a reliable, secure and real

time means of verifying identities, credentials, and other identity

related data by end users.

VOTA E-VOTING PLATFORM

VOTA is a responsive e-voting web platform where members of an

association can vote from the app or online using any smartphone/tablet/PC. The platform fulfills all security requirements desirable from any voting system/process

while protecting the secrecy and integrity of the ballot.

NAIRAPLUS • Financial Inclusion

• Agent Banking • Identity Services

• Cashless Payments • eCommerce

• Business Loans • Government Programs

NAIJAMARKET.NGAn online ecommerce platform for large scale markets like Computer Village where target audience can

interact and purchase goods online in the comfort of their environment through their desktop, laptop, tablet

or mobile phones.

It creates a unique platform for each shop owner in Computer Village

where they can monitor, interact and upload goods for target audience

benefit.

TIME & ATTENDANCE SOLUTIONS

A robust biometric based automated Time and Attendance solution to

checkmate the identified needs of the government especially as regards

absenteeism and punctuality of her staff.

Our Time and Attendance device uses biometrics(finger prints) in place of paper

signing which employees touch to identify themselves and record their attendance

and movement in and out of their working areas during the working hours. The devices have capability to work both

autonomously or in a network.

CEEDS CHAMS E-EDUCATION

SOLUTIONSA multi-tenant platform built to enable identity management

of students and staff in Higher Institution of learning. CEEDS provide dash board

for management of staff and students identity on campus, It gives parent easy means of

monitoring their children class attendants as well as know

whether they are in school or not.

AUTOMATED HRM/PAYROLL SOLUTIONAutomate the process of civil

servants salary payment for the government on monthly basis a robust HR and payroll system

with the following features:

Deployment of automated, efficient and cloud base Human Resources and integrated Payroll

system that will include active and non-active workers across the state civil service as well as

the LGs.

SCHOOL REGISTERIdentity management portal for

all public and private schools with performance evaluations for both students and teachers. A platform

for all forms of computer aided testing. Central dashboard for

statistics of students’ distribution across the state.


S U B S I D I A R I E S I N F O R M A T I O N

ChamsAccess Limited is a Leading Access and Technology Solutions Company focused on providing Customized Solutions that create instant value for our customers.

Established in 2009, as a subsidiary of Nigeria’s indigenous Identity management and transactional service provider - Chams Plc, ChamsAccess is committed to providing simplified technology solutions to enhance peoples’ lives. With roots in Nigeria, we have set our sights on spreading beyond our shores while maintaining our position as Africa’s first choice in Technology Services. As a Fintech, we avail the banks with the necessary technology leverage to meet their customers’ demands.

Having successfully deployed the BVN project across all the commercial banks in Nigeria; and providing Instant Card Issuance solutions for the banks and corporate organizations in Nigeria, we are poised with the requisite expertise garnered through years of painstaking deployments to deliver IT solutions in the key sectors of the economy.

ChamsSwitch Limited is a subsidiary of Chams Plc established in 2008 to provide payment solutions to Financial Institutions and switching services for identity management platforms supported by the Federal Government of Nigeria. ChamsSwitch has flexible technology models committed to providing a robust and flexible platforms capable of integration with any e-commerce and Mobile system.

ChamsSwitch also offers payment solutions capable of processing closed and open card schemes. We provide high performance and flexible 3rd party software integration supporting a host of merchant services. The flexibility and robustness of our payment system tends to increase corporate organizations’ ability to offer more innovative services to their customers at insignificant cost.

We offer a comprehensive array of services to help corporate organizations meet their business goals. Our Product Solutions that aid Retail and Corporate business needs are; Pre-paid/Debit/Credit processing (TPP), Person-2-Person (P2P) Funds transfers, Bulk e-Salary and e-Pension payments, Airtime Top-Up service and Utility Bill Payment via Web & Mobile Apps and Payment Gateway Internet Service for web processing.

CARDCENTRE is a certified card personalization bureau (card manufacturing company). It specializes in the production, printing and personalization of card products such as PVC pre-printed cards, PVC based ATM/Debit and EMV/Chip cards for the Financial and other related users as well as supply of SIM and RUIM cards for GSM/ CDMA telephone operators and sales of card related solutions.

Prior to its incorporation as a limited liability company in August 2004, CardCentre had existed as a division of Chams Plc and has grown to become the foremost provider of card based solutions and related products and services in Nigeria.

With our installed production capacity of 150 million cards per annum and a projected increase to 500 million cards per annum, we are confident of our ability to satisfy immediate and future needs for timely delivery of quality products.

CardCentre Nigeria Limited is a MasterCard, VISA and Verve certified facility; ISO 9001: 2008 certified card manufacturing company.

Our plant is equipped with the latest range of high-speed card personalization equipment.

We are one of the two Nigerian companies awarded the Nigerian Government National Identity Card personalization project.

C O R P O R A T E P R O F I L E A N D S U B S I D I A R Y I N F O R M A T I O N


C O R P O R A T E D I R E C T O R Y

HEAD OFFICE 8 Louis Solomon Close Off Ahmadu Bello Way Victoria Island Lagos

ABUJA OFFICE Statement House, Suite 1305 Plot 1002, First Avenue off Shehu Shagari Way Central Business District Abuja

WEBSITE AND TELEPHONE NUMBERSE-mail:[email protected] Website:www.chamsplc.com Tel: +234 (01) 4536526

ASSOCIATE ChamsMobile Limited 128a Plot 9bNew Creation StreetOff Maruwa RoundaboutLekkiLagos

SUBSIDIARIES ChamsAccess Limited 8 Louis Solomon Close Off Ahmadu Bello Way Victoria Island Lagos

ChamsSwitch Limited 8 Louis Solomon Close Off Ahmadu Bello Way Victoria Island Lagos

CardCentre Nigeria Limited 8 Louis Solomon Close Off Ahmadu Bello Way Victoria Island Lagos


E - D I V I D E N D M A N D A T E F O R M

The Registrar,First Registrars Nig LtdPlot 2 Abebe Village Road, IganmuP.M.B 12692 Marina Lagos Only Clearing Banks are acceptable

I/ We hereby request that from now on, all dividend warrant(s) due to me/our holding(s) in Chams Plc be paid directly to my/our Bank named below:

Shareholder’s Account Number Date (DD/MM/YYYY)

Surname/ Company’s Name

Other Names (for Individual Shareholder)

Present Postal Address

City State

Email Address

Mobile (GSM) Phone Number

Bank Name

Branch Address

Bank Account Number

Branch Sort Code (Very Important)

SHAREHOLDER’S SIGNATURE OR THUMBPRINT SHAREHOLDER’S SIGNATURE OR THUMBPRINT

AUTHORISED SIGNATURE & STAMP OF BANKER

COMPANY SEAL/INCORPORATION NUMBER (CORPORATE SHAREHOLDER)

P R O X Y F O R M

35th Annual General Meeting to be held at ACE-OLIVIA Hall, 2nd Floor, City Mall, Onikan, Lagos on Tuesday 30th of July 2019 at 10:00am prompt.

I/We________________________________________________________being a member/members of CHAMS Plc hereby appoint

_______________________or failing him________________________ or failing him_________________________ as my proxy to

aend and vote for me/us and on my behalf at the Annual General Meeting of the company to be held on Tuesday 30th of July

2019 and at any adjournment thereof.

Dated this________________________________________________ day of ___________________________________________2019

Shareholder’s name_________________________________________________Shareholder’s Signature________________________

S/N RESOLUTION FOR AGAINST

1 To receive the audited Financial Statement for the year ended 31 December, 2018 and the Reports of the Directors, Auditors and Audit Committee thereon.

2 To declare a Dividend.

3 To elect/re-elect the Directors.

4 To authorize Directors to fix the remuneration of the Auditors.

5 To elect Members of the Audit Committee.

6 To fix the remuneration of the Directors.

Please indicate with an ‘X’ in the appropriate square how you wish your votes to be cast on the resolutions set above. Unless otherwise instructed, the proxy will vote or abstain from voting at his or her discretion.

DIRECTORS FOR ELECTION/RE-ELECTION

S/N NAME OF DIRECTOR FOR AGAINST

Please indicate with an ‘X’ in the appropriate square how you wish your votes to be cast on the resolutions set above. Unless otherwise instructed, the proxy will vote or abstain from voting at his or her discretion.

Before posting the above form please tear off this part and return it for admission to the meeting

A D M I S S I O N C A R D

Please admit the Shareholder named on this Card or his duly appointed proxy to the Annual General Meeting to be held on Tuesday 30th of July 2019 at 10:00am prompt at ACE-OLIVIA Hall, 2nd Floor, City Mall, Onikan, Lagos.

The admission card must be produced by the Proxy in order to gain entrance into the Annual General Meeting.

_______________________ ________________________ ________________________ ________________________

NAME OF SHAREHOLDER NAME OF PROXY SIGNATURE (SHAREHOLDER) NUMBER OF SHARES HELD

rise - chams plc...rise o table of contents 5 our envisioned future 6 directors, officers &...

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