Year end - financial statement for 2026

Compliance Certification 3 - 4

Security Trending Policy 5

Shareholding Structure 6

Compliance 7 - 8

Consolidated Statement of Comprehensive Income 9

Consolidated Statement of financial Position 10

Statement of Cash flows 11

Statement of Changes in Equity 12 - 13

Summary 14

Notes to the Financial Statements 15 - 33

The Company has securities trading policy applicable and circulated to directors, insiders, external advisers and all employees that may at any time possess any inside or material information about our company.

The Company has adopted a code of conduct regarding securities transaction by the directors on terms no less exacting than the required standard set out in the Listing Rules of the Nigerian StockExchange.

The Company made specific enquiry of all directors whether they have complied with the required standard set out in the listing rules and the Company's code of conduct regarding securities transactions by directors and the company is unaware of any non-compliance.

The Directors' interest in the issued share capital of the Company as recorded in the Register of Members for the purposes of Section 301 and 302 of the Companies and Allied Matters Act, 2020 and the listing requirements of the Nigerian Exchange Ltd (NGX) for the period under review are as follows:

• Asiwaju S. K. Onafowokan represents the interest of Eskay Investment Limited

• Chief S. M. Chellaram represents the interest of Chellsons (Bermuda) Limited

• Mr. A. S. Chellaram represents the interest of Westfield Consultants Limited

The following is the analysis of shareholdings in the Register of Members as at 31 March, 2023:

CHELLARAMS PLC AND ITS SUBSIDIARY COMPANIES REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED 31 MARCH 2025

In compliance with Section 404(7) of the Companies and Allied Matters Act, 2020 ('The Act'), we, the members of the Audit Committee have reviewed and considered the Financial Statements of the Company for the year ended 31 March, 2025 and the reports thereon and confirm as follows:

1. The accounting and reporting policies of the Company are in accordance with legal requirements and ethical practices.

2. The scope and planning of the audit requirements were in our opinion adequate,

3. We have reviewed the findings on management matters, in conjunction with the External Auditors and are satisfied with the responses of management thereon.

4. The Company's system of accounting and internal controls were adequate.

5. We have made the recommendations required to be made in respect of the Auditors.

   
   
   

   Chairman, Audit Committee Mr. Ezekiel M. Faniyi - FCA

   FRC/2015/PRO/ICAN/004/00000010981

   Other Members:

   Alhaji Ahmed A. Abdulkadir Mrs. Morenike Agbe-Davies Prince Yomi Ogunsowo

   Mr. Peter Eyanuku

   CHELLARAMS PLC
   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
   For the period ended 31st March 2026								N'000
   Particulars	Company	Group	Company	Group	Company	Group	Company	Group
   	Jan'26 to Mar'26	Jan'26 to Mar'26	April'25 to Mar'26	April'25 to Mar'26	Jan'25 to Mar'25	Jan'25 to Mar'25	April'24 to Mar'25	April'24 to Mar'25
   REVENUE	3,283,343	7,849,619	9,855,568	25,971,066	2,965,737	6,398,795	9,003,068	23,097,696
   COST OF SALES	2,897,215	6,677,823	8,905,528	23,011,526	2,571,182	5,732,193	8,236,069	20,832,588
   GROSS PROFIT	386,128	1,171,796	950,040	2,959,541	394,555	666,601	766,999	2,265,108
   DISTRIBUTION EXPENSES	42,143	131,653	90,212	406,690	34,479	125,164	68,941	335,282
   ADMINISTRATIVE EXPENSES	350,832	625,721	1,039,831	1,783,245	199,367	383,917	777,546	1,353,884
   OTHER INCOME	(213,409)	(207,168)	(769,999)	(765,785)	(181,306)	(181,330)	(636,981)	(637,260)
   FINANCE COST	142,220	301,655	506,893	1,017,636	114,849	308,273	535,471	1,487,475
   FAIR VALUE GAINS ON INVESTMENT PROPERTIES	-	-	-	-	-	-	-	-
   FAIR VALUE LOSS IN INVESTMENT IN ASSOCIATES	-	-	-	-	-	-	-	-
   GAIN ON DISPOSAL OF INVESTMENT EQUITY
   SHARE OF LOSS FROM ASSOCIATES	-		-		-		-
   PROFIT BEFORE TAXATION	64,342	319,935	83,103	517,754	227,166	30,577	22,022	(274,273)
   INCOME TAX EXPENSES	-	8,237	-	29,236	-	(3,115)	-	21,259
   PROFIT AFTER TAXATION FROM CONTINUING OPERATIONS	64,342	311,698	83,103	488,519	227,166	33,692	22,022	(295,532)
   ATTRIBUTABLE TO :
   OWNERS OF THE PARENT COMPANY	64,342	279,654	83,103	463,508	227,166	70,595	22,022	(181,996)
   NON CONTROLLING INTEREST	-	40,472	-	33,440	-	(36,903)	-	(113,536)
   	64,342	320,127	83,103	496,947	227,166	33,692	22,022	(295,532)
   OTHER COMPREHENSIVE INCOME
   REVALUATION SURPLUS	-	-	-	-	-	-	-	-
   ACTURIAL GAIN / (LOSS)	-	-	-	-	-	-	-	-
   TOTAL OTHER COMPREHENSIVE INCOME	-	-	-	-	-	-	-	-
   TOTAL COMPREHENSIVE INCOME	64,342	320,127	83,103	496,947	227,166	33,692	22,022	(295,532)
   ATTRIBUTABLE TO :
   OWNERS OF THE PARENT COMPANY	64,342	279,654	83,103	463,508	227,166	70,595	22,022	(181,996)
   NON CONTROLLING INTEREST	-	40,472	-	33,440	-	(36,903)	-	(113,536)
   	64,342	320,127	83,103	496,947	227,166	33,692	22,022	(295,532)
   Chief S.M.Chellaram			Aditya Chellaram			Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM			MR. ADITYA S. CHELLARAM			MR. EMMANUEL E. EBOSELE
   Managing Director			Chief Executive Officer			General Manager (Finance)
   FRC/2013/IODN/00000005335			FRC/2013/IODN/00000005336			FRC/ 2022/PRO/ICAN/001/467370

   CONSOLIDATED STATEMENT OF FINANCIAL POSITION
   As at 31st March 2026								N'000
   Particulars			Company	Group			Company	Group
   			As at 31st March'26	As at 31st March'26			As at 31st March'25	As at 31st March'25
   ASSETS
   NON CURRENT ASSETS
   PROPERTY PLANT EQUIPMENT			13,936,008	15,090,485			14,073,372	15,271,805
   INVESTMENT PROPERTY			-	-
   HELD TO MATURITY ASSETS			148,019	-			148,019
   INVESTMENT IN ASSOCIATED UNDERTAKINGS			-	-
   DEPOSIT FOR SHARES			-	-
   INVESTMENT IN SUBSIDIARIES			10,000	-			10,000
   DEFERRED TAX ASSETS			-	-
   OTHER ASSETS			-	-
   			14,094,027	15,090,486			14,231,391	15,271,805
   CURRENT ASSETS
   INVENTORIES			1,650,758	3,433,933			1,214,716	2,729,070
   PREPAYMENTS			78,206	154,429			47,822	285,150
   TRADE AND OTHER RECEIVABLES			836,020	2,759,892			605,929	2,134,935
   DUE FROM SUBSIDIARIES			56,549	473,911			59,579	2,394,071
   CASH AND CASH EQUIVALENT			35,003	194,113			281,940	490,336
   			2,656,536	7,016,278			2,209,986	8,033,562
   LIABILITIES
   CURRENT LIABILITIES
   TRADE AND OTHER PAYABLES			5,392,327	13,397,214			4,639,996	11,354,239
   OVERDRAFT			-	-
   BANK IMPORT FINANCE			-	1,698,909				3,461,659
   COMMERCIAL PAPER			-	-
   CURRENT PORTION OF TERM LOAN			-	73,000
   CURRENT PORTION OF BONDS			-	-
   FINANCE LEASE			-	-
   CURRENT TAX PAYABLE			119,897	259,162			125,343	220,618
   DUE TO RELATED PARTIES			237,585	237,585			253,115	1,720,635
   EMPLOYEE BENEFITS			-	1,879
   	-		5,749,809	15,667,749			5,018,454	16,757,151
   NET CURRENT ASSETS			(3,093,273)	(8,651,471)			(2,808,468)	(8,723,589)
   NON CURRENT LIABILITIES
   LONG TERM LOANS			1,639,137	1,760,804			2,144,411	2,364,068
   LONG TERM BONDS			-	-
   FINANCE LEASE			-	-
   EMPLOYEE BENEFITS			-	272				3,441
   SUBORDINATED DEBT			1,310,791	1,310,791			1,310,791	1,310,791
   DEFERRED TAX LIABILITY			511,174	574,577			511,174	574,293
   	-	-	3,461,102	3,646,444			3,966,376	4,252,593
   NET ASSETS			7,539,652	2,792,571			7,456,549	2,295,623
   EQUITY TO EQUITY HOLDERS OF PARENT
   SHARE CAPITAL			361,463	361,463			361,463	361,463
   PREFERENCE SHARE CAPITAL			-
   REVALUATION RESERVE			13,179,826	13,179,826			13,179,826	13,179,827
   GENERAL RESERVE			(6,001,637)	(9,105,506)			(6,084,740)	(9,511,468)
   Sub Total	-	-	7,539,652	4,435,783			7,456,549	4,029,822
   NON CONTROLLING INTEREST			-	(1,643,213)				(1,734,199)
   TOTAL EQUITY			7,539,652	2,792,571			7,456,549	2,295,623
   Chief S.M.Chellaram			Aditya Chellaram			Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM			MR. ADITYA S. CHELLARAM			MR. EMMANUEL E. EBOSELE
   Managing Director			Chief Executive Officer			General Manager (Finance)
   FRC/2013/IODN/00000005335			FRC/2013/IODN/00000005336			FRC/ 2022/PRO/ICAN/001/467370

   CONSOLIDATED STATEMENT OF CASH FLOWS
   For the period ended 31st March 2026								N'000
   Particulars			Company	Group			Company	Group
   			April'25 to Mar'26	April'25 to Mar'26			April'24 to Mar'25	April'24 to Mar'25
   Cash Flows from Operating activities:
   Cash received from Customers			10,398,508	28,125,089			5,883,845	12,926,322
   Cash Payment to Suppliers and Employees			(9,606,530)	(24,975,750)			(4,805,665)	(10,952,512)
   Income Tax Paid			(5,446)	9,592			(104,728)	(246,290)
   Dividend from Subsidiaries
   Net Cash from/(used) in Operating activities			786,532	3,158,931			973,453	1,727,519
   Cash Flows from Investing activities:
   Held to Maturity Assets			-	-			-	-
   Fair Value through Profit/Loss
   Investment in Associated undertakings			-	-			-	-
   Investment in Subsidiaries			-	-			-	6,519
   Purchase/(Sale) of Property, Plant & Equipment			(21,302)	(144,504)			(27,153)	(2,785,472)
   Deferred Expenditure
   Dividend from Investments
   Proceeds from disposal of Investment
   Purchase of Property, Plant & Equipment (Inv. Property)
   Net Cash from/(used) in Investing activities			(21,302)	(144,505)			(27,153)	(2,778,953)
   Cash Flows from Financing activities:
   Term Loan			(505,274)	(530,264)			(456,862)	1,543,137
   Finance Lease			-	-			-	-
   Bonds			-	-			-	-
   Commercial Papers			-	-			-	-
   Bank Import Finance			-	(1,762,750)			-	300,742
   Preference Share Capital			-	-			-	-
   Subordinated Debt			-	-			-	-
   Dividend Paid
   Equity -Deposit for Shares				-				-
   Finance cost			(506,893)	(1,017,636)			(438,153)	(663,439)
   Net Cash from/(used) in Financing activities			(1,012,167)	(3,310,649)			(895,015)	1,180,440
   Net Increase/(decrease) in Cash and Cash equivalents			(246,937)	(296,223)			51,285	129,007
   Opening Cash and Cash equivalents			281,940	490,336			87,645	(149,817)
   Closing Cash and Cash equivalents			35,003	194,113			138,930	(20,810)
   Chief S.M.Chellaram			Aditya Chellaram			Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM			MR. ADITYA S. CHELLARAM			MR. EMMANUEL E. EBOSELE
   Managing Director			Chief Executive Officer			General Manager (Finance)
   FRC/2013/IODN/00000005335			FRC/2013/IODN/00000005336			FRC/ 2022/PRO/ICAN/001/467370

   CHELLARAMS PLC
   STATEMENT OF CHANGES IN EQUITY
   Attributable to Equity holders of the Company				N'000
   	Issued	Revaluation	Retained	Total Equity
   	Share Capital	Reserves	Earnings
   Balance at 1st April 24	361,463	6,409,404	(6,148,564)	622,303
   Change in Equity from April'24 to March'25
   Profit for the period			63,825	63,825
   Other Comprehensive Income for the period
   Revaluation Surplus		6,770,422		6,770,422
   Total Comprehensive Income for the period	-	6,770,422	63,825	6,834,247
   Transaction with Owners , recorded directly in Equity
   Dividend Paid during the period
   Balance at 31st March 2025	361,463	13,179,826	(6,084,739)	7,456,549
   STATEMENT OF CHANGES IN EQUITY
   Attributable to Equity holders of the Company				N'000
   	Issued	Revaluation	Retained	Total Equity
   	Share Capital	Reserves	Earnings
   Balance at 1st April 25	361,463	13,179,826	(6,084,739)	7,456,550
   Change in Equity from April'25 to March'26
   Profit for the period			83,103	83,103
   Other Comprehensive Income for the period
   Total Comprehensive Income for the period	-	-	83,103	83,103
   Transaction with Owners , recorded directly in Equity
   Dividend Paid during the period
   Balance at 31st March 2026	361,463	13,179,826	(6,001,636)	7,539,652
   Chief S.M.Chellaram	Aditya Chellaram		Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM	MR. ADITYA S. CHELLARAM		MR. EMMANUEL E. EBOSELE
   Managing Director	Chief Executive Officer		General Manager (Finance)
   FRC/2013/IODN/00000005335	FRC/2013/IODN/00000005336		FRC/ 2022/PRO/ICAN/001/467370

   CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
   Attributable to Equity holders of the Group								N'000
   	Issued		Revaluation	Retained	Total Equity	Non-Controlling		Total Equity
   	Share Capital		Reserves	Earnings		Interest
   Balance at 1st April 24	361,463		6,409,404	(7,620,953)	(850,086)	(1,047,747)		(1,897,834)
   Prior period Restatement					-			-
   Change in Equity from April'24 to March'25
   Profit for the period				(1,890,514)	(1,890,514)	(686,451)		(2,576,965)
   Other Comprehensive Income for the period
   -Revaluation Surplus			6,770,422		6,770,422			6,770,422
   Total Comprehensive Income for the period	-	-	6,770,422	(1,890,514)	4,879,908	(686,451)	-	4,193,457
   Transaction with Owners , recorded directly in Equity
   Contributions by and distributions to Owners
   Issue Share								-
   Balance at 31st March 2025	361,463	-	13,179,826	(9,511,467)	4,029,822	(1,734,198)	-	2,295,623
   CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
   Attributable to Equity holders of the Group								N'000
   	Issued		Revaluation	Retained	Total Equity	Non-Controlling		Total Equity
   	Share Capital		Reserves	Earnings		Interest
   Balance at 1st April 25	361,463		13,179,826	(9,511,467)	4,029,822	(1,734,198)		2,295,624
   Prior period Restatement
   Change in Equity from April'25 to March'26
   Profit for the period				463,508	463,508	33,440		496,947
   Other Comprehensive Income for the period					-			-
   Total Comprehensive Income for the period	-	-	-	463,508	463,508	33,440	-	496,947
   Transaction with Owners , recorded directly in Equity
   Non Controlling Interest Reserve					-			-
   Preference Share Capital					-			-
   Balance at 31st March 2026	361,463	-	13,179,826	(9,047,959)	4,493,330	(1,700,758)	-	2,792,570
   					4,493,330
   Chief S.M.Chellaram			Aditya Chellaram			Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM			MR. ADITYA S. CHELLARAM			MR. EMMANUEL E. EBOSELE
   Managing Director			Chief Executive Officer			General Manager (Finance)
   FRC/2013/IODN/00000005335			FRC/2013/IODN/00000005336			FRC/ 2022/PRO/ICAN/001/467370

   below has to be Group Information as per CS mail dated 29'4'22
   CHELLARAMS PLC
   UNAUDITED RESULTS FOR THE IVth QUARTER ENDED MARCH 31, 2026
   REVENUE MAR 2026 N 25.971 BN MAR 2025 N 23.097 BN PROFIT BEFORE TAX MAR 2026 N 0.518 BN MAR 2025 N (0.274) BN
   PROV. FOR TAX MAR 2026 N 29.236 MN MAR 2025 N 21.259 MN PROFIT AFTER TAX MAR 2025 N 488.519 MN MAR 2024 N (295.532) MN
   Chief S.M.Chellaram	Aditya Chellaram		Emmanuel E. Ebosele
   CHIEF SURESH M. CHELLARAM	MR. ADITYA S. CHELLARAM		MR. EMMANUEL E. EBOSELE
   Managing Director	Chief Executive Officer		General Manager (Finance)
   FRC/2013/IODN/00000005335	FRC/2013/IODN/00000005336		FRC/ 2022/PRO/ICAN/001/467370

   CHELLARAMS PLC AND ITS SUBSIDIARY COMPANIES FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2022 NOTES TO THE FINANCIAL STATEMENTS

   1. The Company - Corporate information and principal activities

      Chellarams Plc (The Company) was incorporated on 13 August 1947 as a private limited liability Company with the primary aim of doing business of distribution, trading and manufacturing. The entity later became a public limited liability Company and was admitted to the official list of the Nigerian Stock Exchange on 29 November 1974 as a PublicCompany. The entity comprises three subsidiaries namely: Dynamic Industries Limited,United Technical and Allied Services Limited and Chellarams DMK Limited. United Technical and Allied Services Limited is wholly owned subsidiary while the Company has 77.71% and 74% shareholding in Dynamic Industries Limited and Chellarams DMK Limited respectively. The principal activities of Chellarams Plc are trading and distribution of fast moving consumer goods, ingredients and consumer durables and industrial chemicals.

      Its registered office is at Plot 110/114 Oshodi Apapa Expressway, Isolo, Lagos.

   2. Basis of preparation

      1. Statement of compliance

         The consolidated 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, 2020.

         The financial statements were authorised for issue by the Board of Directors on 6 July 2025.

      2. Basis of measurement

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

         Financial instruments, land and building and investment properties which are measured at fair value.

      3. Functional and presentation currency

         These financial statements are presented in Naira, which is the holding and subsidiary Companies functional currency. Amounts are rounded to the nearest thousands, unless otherwise stated.

      4. Use of estimates and judgement

         The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgments. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4.

         3(a) New standards, interpretations and amendments effective from 1 April 2020

         New standards that were adopted in the annual financial statements for the year ended 31 March 2021, but had no significant effect or impacts on the group are:

         • IAS 1 Presentation of Financial Statements and

         • IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Disclosure Initiative - Definition of Material); and

         • Revisions to the Conceptual Framework for Financial Reporting.

         • Definition of a Business (Amendments to IFRS 3);

         • Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39 and IFRS 7); and

         • COVID-19-Related Rent Concessions (Amendments to IFRS 16).

1. New standards, interpretations and amendments issued 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 group has decided not to adopt early.

   The following amendments have not been adopted in preparing the financial statements for the year ended 31 March 2021:

   • Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37 - 1 Jan 2022

   • Property, Plant & Equipment: Proceeds before Intended Use - Amendments to IAS 16

     - 1 Jan 2022;

   • Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);

   • Reference to the Conceptual Framework - Amendments to IFRS 3 - 1 Jan 2022;

   • IFRS 17 Insurance Contracts (effective 1 January 2023) - In June 2020, the IASB issued amendments to IFRS 17, including a deferral of its effective date to 1 January 2023.

   • Classification of Liabilities as Current and Non-current - Amendments to IAS 1 - 1 Jan 2022

1. Critical accounting judgments and key sources of estimation of uncertainty

   The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The management of the Company revises its estimates and assumptions

   on a regular basis to ensure that they are relevant regarding the past experience and the current economic and political environment. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in theperiod in which the estimates are revised and in any future periods affected. The accounting for certain provisions, certain financial instruments and the disclosure of financial assets, contingent assets and liabilities at the date of the financial statements is judgmental. Theitems subject to judgment are detailed in the corresponding notes to the financial statements.

   In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on theamounts recognised in the financial statements are discussed below:

   1. Revenue recognition and distinct performance obligations

      Contracts may include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately or together requires significant judgment. A product or service is distinct if the customer can benefit from the product or service either on its own or together with other resources that are readily available to the customer and the group's promise to transfer the product or service to the customer is separately identifiable from other promises in the contract. Such judgments could impact the timing of revenue recognition

   2. Impairment of financial assets

      The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The group uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the group's past history, existing market conditions and forward-looking estimates at the end of each reporting period. Such estimates and judgments could impact trade receivables, contract assets for unbilled revenue on customer contracts and office and other operating expenses.

   3. Income and deferred taxation

      The group incurs income taxes and also recognises changes to deferred tax assets anddeferred tax 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 apply at times very complex sets 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.

   4. Impairment of property, plant and equipment

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The group uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the groups past history, existing market conditions and forward-looking estimates at the end of each reporting period. Such estimates and judgments could impact trade receivables, contract assets for unbilled revenue on customer contracts and office and other operating expenses.

The estimated future cash flows applied are based on reasonable and supportable assumptions and represent management's best estimates of the range of economic conditions that will exist over the remaining useful life of the cash flow generating assets.

The group reviews outstanding legal cases following developments in the legal proceedings 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 opinions 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, claim or assessment.

The estimates of useful lives and residual values of property, plant and equipment impact the annual depreciation charge. The useful lives and residual values are based on management experience and the condition of the assets. Consideration is given to management's intended usage policy for the assets in the future and potential market prices of similar assets.

1. Summary of significant accounting policies

   The accounting policies set out below have been applied consistently to all years presented in these financial statements.

   1. Foreign currency

      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 and any exchange differences arising are included in the income statement of the reporting period.

      At the end of each reporting period , 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 translated using the exchange rate at the date of the transaction (i.e. 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.

   2. 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 company 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 parent and subsidiary Companies") as if they formed a single entity. Intercompany transactions and balances between parent and subsidiary 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 statement of comprehensive income from the date on which control is obtained. They aredeconsolidated from the date on which control ceases.

   3. Associates

      When the parent and subsidiary Companies 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 parent and subsidiary Companies's share of post-acquisition profits and losses is recognised in the consolidated statement of comprehensive income except that losses in excess of the parent and subsidiary Companies's investment in the associate are not recognised unless there is obligation to make good those losses.

      Profit or losses arising on transactions between the parent and subsidiary Companies 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 parent and subsidiary Companies'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.

   4. Revenue

      Revenue is recognized upon transfer of control of the promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

      (i). Sales of goods

      "Performance obligations and timing of revenue recognition"

      The group's revenue is derived from sales of industrial chemicals, fast moving consumer goods, machinery, plastic films with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer.

      There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the group no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.

      None of the group's contract of sales is negotiated on a bill and hold basis

      Goods sold by the group do not include warranties which may require the group to either replace or mend a defective product during the warranty period.

      Determining the transaction price

      The group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices. Exceptions are as follows:

      • Variable consideration relating to volume rebates has been constrained in estimating contract revenue in order that it is highly probable that there will not be a future reversal in the amount of revenue recognised when the amount of volume rebates has been determined.

      Allocating amounts to performance obligations

      For most contracts, there is a fixed unit price for each product sold, with reductions given for bulk orders placed at a specific time by particular customers. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (itis the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the group is able to determine the split of the total contract price between each type by reference to each product's stand-alone selling prices (all product lines

      are capable of being, and are, sold separately).

      In order to win significant repeat business with key customers, the group might enter into contracts entitling them to discounts. Such discounts are usually agreed before the sales are made to the extent that the price agreed is adjusted to reduce the selling price. For such arrangements, there is no need to adjust the stand-alone selling price.

      Since the discounts are not tied to future sales, the group does need to estimate both the probability that the customer will take up its future discount offer and the value of future purchases that might be made in order to estimate the value of the rights granted. In addition, there is not a significant number of such contracts.

      Costs of obtaining and fulfilling contracts

      Incremental cost of obtaining contracts are capitalised when they relate to long-term customer contracts.

      Costs to obtain customer contracts represent commissions incurred and such commissions would not have been incurred if the contracts had not been obtained. These costs are incremental and the group expects to recover these costs. The asset is amortised over the term of the specific contract it relates to, consistent with the associated pattern of revenue recognition, and is recorded in employee compensation expenses. As a practical expedient, incremental costs of obtaining a contract have been expensed when incurred if the amortization period of the asset is one year or less.

      The costs of fulfilling contracts do not result in the recognition of a separate asset because such costs are included in the carrying amount of inventory for contracts involving the sale ofgoods.

      Significant Financing Components

      The group has taken the advantage of the practical exemption not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less.

      (ii) Other income

      This comprises profit from sale of financial assets, plant and equipment, foreign exchange gains, fair value gains of non-financial assets measured at fair value through profit or loss and impairment loss no longer required written back.

      Income arising from disposal of items of financial assets, plant and equipment and scraps is recognised at the time when proceeds from the disposal have been received by the group. The profit on disposal is calculated as the difference between the net proceeds and the carrying amount of the assets. The group recognises impairment no longer required as other income when the group receives cash on an impaired receivable or when the value of an impaired investment increased and the investment is realisable.

   5. Expenditure

      Expenditures are recognised as they accrue during the course of the year. Analysis of expenses recognised in the statement of comprehensive income is presented in classification based on the function of the expenses as this provides information that is reliable and more relevant than their nature.

      The group classifies its expenses as follows:

      • Cost of sales;

      • Administration expenses;

      • Selling and distribution expenses; and

      • Other allowances and amortizations

   6. Finance income and finance costs

      Finance income comprises interest income on short-term deposits with banks, dividend income, changes in the fair value of financial assets at fair value through profit or loss and foreign exchange gains.

      Dividend income from investments is recognised in profit or loss when the shareholder's right to receive payment has been established (provided that it is probable that the economic benefits will flow to the entity and the amount of income can be measured reliably).

      Interest income on short-term deposits is recognised by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

      Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and deferred consideration, losses on disposal of available for sale financial assets, impairment losses on financial assets (other than trade receivables).

   7. Income tax expenses

      Income tax expense comprises current income tax, education tax and deferred tax. (See policy 'w' on income taxes)

   8. Earnings per share

      The group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

   9. Property, plant and equipment

      Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. The cost of property plant and equipment includes expenditures that

      are directly attributable to the acquisition of the asset. Property, plant and equipment under construction are disclosed as capital work-in-progress.

      Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as a separate item of property, plant and equipment and are depreciated accordingly. Subsequent costs and additions are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that futureeconomic benefits associated with the item will flow to the holding and subsidiary Companies and the cost of the item can be measured reliably.

      All other repairs and maintenance costs are charged to the profit and loss component of the statement of comprehensive income during the financial period in which they are incurred.

      Freehold land and buildings are subsequently carried at revalued amounts, based on periodic valuations by external independent valuers; less accumulated depreciation and accumulated impairment losses. All other items of property, plant and equipment are subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

      Increases in the carrying amounts arising on revaluation are recognised in other comprehensive income and accumulated in equity under the heading of revaluation reserve. Decreases that offset previous increases of the same asset are recognised in other comprehensive income. All other decreases are charged to the Income statement.

      Depreciation is recognised so as to write off the cost of the assets less their residual values over their useful lives, using the straight-line method on the following bases:

      Major overhaul expenditure, including replacement spares and labour costs, is capitalised and amortised over the average expected life.

      Building	2%
      Furniture and fittings	10%
      Motor Vehicles	25%
      Plant and Machinery	10%
      Office Equipment	15%
      Assets under lease	over the lease period

      The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

      Derecognition

      An item of property, plant and equipment is derecognised upon disposal or when no future economic benefit is expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss component of the statement of comprehensive income within 'Other income' in the year that the asset is derecognised.

      The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if necessary.

   10. Intangible Assets Computer software

       This represents computer software purchased from third parties. They are measured at cost less accumulated amortisation and accumulated impairment losses. Purchased computer software is capitalised on the basis of costs incurred to acquire and bring into use the specific software. These costs are amortised on a straight line basis over the useful life of theintangible asset.

       Expenditure that enhances and extends the benefits of computer software beyond their original specifications and lives, is recognised as a capital improvement cost and is added to the original cost of the software. All other expenditure is expensed as incurred.

       Amortisation is recognised in the income statement on a straight-line basis over the estimated useful life of the software, from the date that it is available for use. The residual values and useful lives are reviewed at the end of each reporting period and adjusted if appropriate. An Intangible asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

       The estimated useful lives for the current and comparative period are as follows: Computer software 5 years

       Derecognition of intangible assets

       An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of intangible assets, measured are as the difference between the net disposal proceeds and the carrying amount of the assets, are recognised in profit or loss when the asset is derecognised.

   11. Investment property

       An investment property is an investment in land and buildings held primarily for generating income or capital appreciation and not occupied substantially for use in the operations of the holding and subsidiary Companies.

       Initial measurement is at cost, while subsequent recognition is at fair value. Investment property measured at fair value is reassessed every year and changes in carrying value are recognised in the statement of profit or loss.

   12. Impairment of non-financial assets

       Non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date for impairment whenever events or changes in circumstances indicate that the

       carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use.

       If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

       Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment is treated as a revaluation increase.

   13. Financial instruments

       1. Financial assets

          Financial assets are initially recognised at fair value plus directly attributable transaction costs. Subsequent re-measurement of financial assets is determined by their designation that is revisited at each reporting date.

          1. Classification

             The group classifies its financial assets in the following measurement category:

             Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in othergains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

             The group holds the following financial assets:

             1. Trade and other receivables

                Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

             2. Cash and cash equivalents

                Cash and cash equivalents consist of cash at bank and in hand and short-term deposits with an original maturity of three months or less.

                Bank overdrafts are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

                ii) Measurement

                At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

                Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

       2. Financial liabilities and equity instruments

       Financial liabilities are initially recognised at fair value when the group becomes a party to the contractual provisions of the liability. Subsequent measurement of financial liabilities is based on amortized cost using the effective interest method. The Company financial liabilities include trade and other payables.

       1. De-recognition of financial liabilities

          The group derecognizes financial liabilities when, and only when, the group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognised inincome statement.

       2. 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.

       3. Impairment of financial instruments

          The group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at fair value through other comprehensive income (FVOCI)

          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. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against theassociated 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 arerecognised.

       4. Derecognition of financial assets

       The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expires, or when it transfers substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the income statement.

   14. 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.

   15. Inventory

       Inventory is stated at the lower of cost and net realisable value, with appropriate provisions for old and slow moving items. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs to completion and selling expenses.

       Cost is determined as follows:-

       Raw materials

       Raw materials which include purchase cost and other costs incurred to bring the materials to their location and condition are valued using weighted average cost.

       Finished goods

       Cost is determined using the weighted average method and includes cost of material, labour, production and attributable overheads based on normal operating capacity.

       Spare parts and consumables

       Spare parts which are expected to be fully utilized in production within the next operating cycle and other consumables are valued at weighted average cost after making allowance for obsolete and damaged stocks.

   16. Employee benefits

       The group operates the following contribution and benefit schemes for its employees:

       i) Defined Benefit gratuity scheme

       The company had defined benefit gratuity scheme with employees which is funded. Under this scheme a specified amount in accordance with gratuity scheme agreements is contributed by the company and charged to profit and loss account over the service life of the employee. These employee entitlements are calculated based on their actual salaries and fixed with EcoBank Plc.

       The management has discontinued the scheme. No additional provisions were made during the year.

       1. Defined contribution pension scheme

          In line with the provisions of the Nigerian Pension Reform Act, 2014, Chellarams Plc and its subsidiaries has instituted a defined contributory pension scheme for its employees. The scheme is funded by fixed contributions from employees and the Company at the rate of 8% by employees and 10% by the Company of basic salary, transport and housing allowances invested outside the Company through Pension Fund Administrators (PFAs) of the employees choice.

          The holding and subsidiary Companies has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employees' service in the current and prior periods.

          The matching contributions made by the holding and subsidiary Companies to the relevant PFAs are recognised as expenses when the costs become payable in thereporting periods during which employees have rendered services in exchange for those contributions. Liabilities in respect of the defined contribution scheme are charged against the profit of the period in which they become payable.

          Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

       2. Short-term benefits

       Short term employee benefit obligations which include wages, salaries, bonuses and other allowances for current employees are measured on an undiscounted basis and

       recognised and expensed by Chellarams Plc in the income statement as the employees render such services.

       A liability is recognised for the amount expected to be paid under short - term benefits if the holding and subsidiary Companies has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee and theobligation can be estimated reliably.

   17. Provisions

       A provision is recognized only if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provisionis recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

   18. Income Taxes - Company income tax and deferred tax

       Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or in other comprehensive income. Current income tax is the estimated income tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

       The tax currently payable is based on taxable results for the year. Taxable results differs from results as reported in the income statement because it includes not only items of income or expense that are taxable or deductible in other years but it further excludes items that are never taxable or deductible. The group's liabilities for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.

       Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability differs from its tax base. Deferred taxes are recognized using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes (tax bases of the assets or liability). The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted by the reporting date.

       Deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. 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 dividends are recognised at the same time as the liability to pay the related dividend is recognised.

   19. 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 oftax.

   20. Dividend on ordinary shares

       Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the group's shareholders. Interim dividends are deducted from equity when they are declared and no longer at the discretion of the shareholders. Dividends for the year that are approved after the statement of financial position date are disclosed as an event after the statement of financial position date.

   21. Retained earnings

       General reserve represents amount set aside out of profits of the group which shall at the discretion of the directors be applied to meeting contingencies, repairs or maintenance of any works connected with the business of the group, for equalising dividends, for special dividend or bonus, or such other purposes for which the profits ofthe group may lawfully be applied.

   22. Contingent liability

       A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. Where the group is jointly and severally liable for an obligation, the part of the obligation that is expected to be met by other parties is treated as a contingent liability. The entity recognises a provision for the part of the obligation for which an outflow of resources embodying economic benefits is probable, except in the extremely rare circumstances where no reliable estimate can be made. Contingent liabilities are assessed continually to determine whether an outflow of resources embodying economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability, a provision is recognised in the financial statements of the period under consideration except in the extremely rare circumstances where no reliable estimate can be made.

   23. Related party transactions or insider dealings

       Related parties include the related companies, the directors, their close family members and any employee who is able to exert significant influence on the operating policies of

       the group. Key management personnel are also considered related parties. Key management personnel are those persons including any director (whether executive or otherwise) having authority and responsibility for planning, directing and controlling the activities of the entity directly or indirectly. The group considers two parties to be related if, directly or indirectly one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions.

       Where there is a related party transactions within the group, the transactions are disclosed separately as to the type of relationship that exists within the group and the outstanding balances necessary to understand their effects on the financial position and the mode of settlement.

   24. Off Statement of financial position events

       Transactions that are not currently recognized as assets or liability in the statement of financial position but which nonetheless give rise to credit risks, contingencies and commitments are reported off statement of financial position. Such transactions include letters of credit, bonds and guarantees, indemnities, acceptances and trade related contingencies such as documentary credits. Outstanding unexpired commitments at the year-end in respect of these transactions are shown by way of note to the financial statements.

   25. Effective Interest Method

       The effective interest method is a method of calculating the amortised cost of an interest bearing financial instrument and of allocating interest income and expense overthe relevant period. The effective interest rate is the rate that exactly discounts estimated future cash-flows (including all fees and points paid or received that form an integral part of the effective interest rate, translation costs and other premiums or discounts) through the expected life of the debt instruments, or where appropriate, a shorter period, to the net carrying amount on initial recognition.

   26. Segment reporting

An operating segment is a component of the group that engages in business activities from which it can earn revenues and incur expenses, including revenues and expenses that relates to transactions with any of the group's other components, whose operating results are reviewed regularly by the Chief Executive Officer (being the Chief Operating Decision Maker) to make decisions about resources allocated to each segment and assess its performance, and for which discrete financial information is available.

A number of the group's accounting policies and disclosures require the determination of fair value for the both financial and non-financial assets and liabilities. Fair values have been

determined for measurement and /or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that assets or liabilities. Significant valuation issues are reported to the Audit Committee.

When measuring the fair value of an asset or a liability, the group uses market observable data as far as possible. Fair values are categorised into different levels in a fair valuehierarchy based on the inputs used in the valuation techniques as follows:

Level 1 : quoted market prices: financial assets and liabilities with quoted prices for identical instruments in active markets.

Level 2: valuation techniques using observable inputs: quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial assets and liabilities values using models where all significant inputs are observable.

Level 3: valuation techniques using significant unobservable inputs: financial assets and liabilities valued using valuation techniques where one or more significant inputs are unobservable. The best evidence of fair value is a quoted price in an active market. In the event that the market for a financial asset or liability is not active, a valuation technique is used.

1. Financial risk management i General

   Pursuant to a financial policy maintained by the Board of Directors, the group uses several financial instruments in the ordinary course of business. The group's financial instruments are cash and cash equivalents, trade and other receivables, interest-bearing loans and bank overdrafts and trade and other payables.

   The group has exposure to the following risks from its use of financial instruments:

   • Credit risk

   • Liquidity risk

   • Market risk, consisting of: currency risk, interest rate risk and price risk

Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The group is mainly exposed to credit risk from group's receivables from customers. It is the group's policy to assess the credit risk of new customers before entering into contracts.

The Management 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. The group's review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval from the Management.

The Management 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, customers of the group are classified according to their credit characteristics. Customers classified as "high risk" are placed on a restricted customers list, and future credit services are made only with approval of the Management, otherwise payment in advance is required.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. Banks with good reputation are accepted by the group for business transactions.

The maximum credit risk as per statement of financial position, without taking into account the aforementioned financial risk coverage instruments and policy, consists of the book values of the financial assets as stated below:

As at the reporting date there was no concentration of credit risk with certain customers. For Chellarams Plc