Audited financial statements for the year ended 31 december 2025

Corporate information 1

Results at a glance 2

Report of the Directors 3

Statement of Directors' responsibility 8

Certificate of No Misstatements and Adequate Internal Control System 9

Statement of Management Discussion and Analysis 10

Certification pursuant to section 60 11

Report of the Audit Committee 12

Certification of Internal Control over Financial Reporting 13

Management Assessment on Internal Control over Financial Reporting 14

Independent Auditor's Limited Assurance Report on Internal control over Financial

Reporting 15

Independent Auditor report 18

Statement of Financial Position 23

Statement of Comprehensive Income 24

Statement of Changes in Equity 25

Statement of Cash Flows 26

Notes to the Financial Statements 27

Other national disclosure

Statement of Value Added 51

Five-year financial summary 52

Pastor Akin Laoye- Managing Director

Otunba' Wale Jubril Nathaniel Durant Jr. Titilayo Ayoka Aderonmu

Tel. 234-7035051231

E-mail: alphagenasec@bakertillynigeria.com

Tel. 234-1-7409651

Website: https://www.ftncocoa.com.ng E-mail: info@ftncocoa.com.ngg

Tel. 234-2-7404744

Kresta Laurel Complex (4th Floor), 376, Ikorodu Road, Maryland, Lagos. Tel. 234-9031613983

E-mail: btnlag@bakertillynigeria.comm

213, Herbert Macaulay Street, Yaba, Lagos.

Tel.: 234-1-8920491, 234-1-8920492

E-mail: info@meristemregistrars.com

United Bank for Africa Plc

1. The Directors hereby submit their report and the financial statements of the Company for the year ended 31 December 2025.

2. Review of Operating Performance N'000

   Loss before taxation (273,397)

   Current taxation -

   Deferred taxation -

   Loss after taxation (273,397)

   =======

3. Legal Form

   FTN Cocoa Processors Plc started as Fantastic Abiola Nigeria Limited, a private Company Limited by shares which was incorporated on 26 August, 1991. The name Fantastic Abiola Nigeria Limited was changed to Fantastic Traders Nigeria Limited on 26 August, 1998 and further changed to FTN Cocoa Processors Limited on 3 December, 2007. The status of the Company was changed to a public Company and renamed FTN Cocoa Processors Plc on 29 February, 2009 and the shares of the Company were listed on the Nigerian Stock Exchange on 24 July, 2009.

4. Principal Activities

   The principal activities of the Company are the processing of cocoa beans and palm kernel into cocoa cake, liquor, butter, powder, palm kernel oil and palm kernel cake. cocoa cake, liquor and butter are exported while cocoa powder, palm kernel oil and palm kernel cakes are marketed locally to manufacturing companies.

5. Review of Operational Performance

   The Company sustained a loss after tax of N273 million compared with a loss after tax of N9.530 billion in the preceding year. This represents decrease of 97% from the loss after tax of the prior year.

6. Directors

The names of the Directors of the Company are as stated on page 1 of these Reports and financial statements.

7 Directors' Interests

1. The interest of the Directors in the issued share capital of the Company are as follows: -

   Shareholdings as at

   	31/12/2025	31/12/2024
   High Chief (Sir) S. O. Oguntimehin, OON	100,000	100,000
   Pastor Akin Laoye	165,200,000	165,250,000
   Otunba' Wale Jubril - Direct	200,000	200,000
   - Indirect	9,000,000	9,000,000
   Nathaniel Durant Jr	349,182,953	349,182,953
   	=========	=========

2. None of the Directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters Act No 3 of 2020 to the effect that he had interest in any contract with which the Company was involved during the year under review.

1. Substantial Interest in Shares

   According to the Register of Members, the following persons held more than 5% of the issued share capital of the Company on 31 December 2025:

   Shareholders	Number of shares	Percentage
   Estate of Late Mr. A. A. Aderonmu	520,490,000	13.34
   OH Origins Global Commodities Inc	1,700,000,000	43.59
   Nathaniel Durant Jr	349,182,953	8.95

2. Directors' Responsibility

   In accordance with the provisions of Sections 374 and 377 of the Companies and Allied Matters Act 2020, the Directors of the Company are responsible for the preparation of financial statements which give a true and fair view of the state of affairs of the Company at the end of each financial year, and of the profit or loss for that year, and comply with the provisions of the Companies and Allied Matters Act 2020. In doing so, they ensure that: -

   • Proper accounting records are maintained;

   • Applicable accounting standards are followed;

   • Suitable accounting policies are adopted and consistently applied;

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

   • Adequate internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets and prevent and detect fraud and other irregularities.

3. Analysis of shareholding as at 31 December 2025

   Range		No. of Holders	Holders %	Holders Comm	Units	Unit %	Units Comm.
   1	- 1,000	668	10.65	628	374,011	0.02	374,011
   1,001	- 10,000	2,206	35.18	2,874	11,786,108	0.54	12,160,119
   10,001	- 50,000	1,692	26.99	4,566	42,794,954	1.95	54,955,073
   50,001	- 100,000	520	8.29	5,086	42,169,545	1.92	97,124,618
   100,001	- 500,000	820	13.72	5,946	178,594,397	8.12	275,719,015
   500,001	- 1,000,000	148	2.36	6,094	110,108,234	5.00	385,827,249
   1,000,001	- 10,000,000	155	2.47	6,249	395,960,956	18.00	781,788,205
   10,000,001	- Above	21	0.33	6,270	1,418,211,795	64,46	3,900,000,000
   		6,230 =====	100.00 =====		3,900,000,000 ==========	100.00 =====

4. Property, Plant and Equipment

   Movements in property, plant and equipment during the year are shown in Note 5 to the financial statements on page 40. In the opinion of the Directors, the market value of the company's property, plant and equipment is not lower than the value shown in the financial statements.

5. Dividend

   The Directors do not recommend the payment of any dividend in view of the loss sustained.

6. Personnel

   1. Employment of Disabled Persons:

      The Company does not discriminate in considering applications for employment including those from disabled persons. All employees are given equal opportunities to develop their knowledge and skills within the organization. As at 31 December 2025 there were, however, there is one disabled person in the company's employment.

   2. Employee's Involvement and Training:

      The Company is committed to keeping employees fully informed as far as possible regarding its performance and progress and seeking their views wherever practicable on matters which particularly affect them as employees. The Company provides a range of training from time to time with potential broadening opportunities for employees' career development within the organization.

   3. Staff Welfare and Safety at Work:

   The Company places high premium on its human resources and there is existing provision for lunch, rent and transport allowances. The Company conducts its activities in a way to take foremost account of the safety of its employees and other persons.

7. Donations

   There were no donations during the year in review.

8. Compliance with the Code of Corporate Governance

   The Directors confirm that the affairs of the Company are managed in accordance with the provisions of the code of corporate governance in Nigeria with regards to matters stated concerning the Board of Directors, the Shareholders and the Audit Committee.

   Board of Directors Meeting

   Board meetings are scheduled well in advance. Also, the agenda of Board meetings and reports on full business review, full report from the various Board Committees and reports from the Audit Committee are circularized to all Directors.

   The Board met during the year under review:

   Names Number of Meetings held meetings attended

   High Chief (Sir) Simeon Olusola Oguntimehin, OON	2	2
   Pastor Akin Laoye	2	2
   Otunba 'Wale Jubril	2	2
   Nathaniel Durant Jr	2	2
   Titilayo Ayoka Aderonmu	2	2

9. Audit Committee

   In accordance with Section 404(6) of the Companies and Allied Matters Act 2020, the Audit Committee members of the Company elected at the last Annual General Meeting are as follows:

   Emmanuel Oladosu Chinwendu Achara Otunba 'Wale Jubril Nathaniel Durant Jr

   The functions of the audit committee are as stated in Section 404(7) of the Companies and Allied Matters Act 2020.

   Committee Meetings
   1. Audit Committee Meetings

      The audit committee met twice during the year under review. Membership and attendance at meetings during the year were as follows: -

      ‌Names Designation			Number of	Number of
      			Meetings held	Meetings
      				‌attended
      	Emmanuel Oladosu	Chairman	2	2
      	Chinwendu Achara	Member	2	2
      	Otunba 'Wale Jubril	Member	2	2
      	Nathaniel Durant Jr	Member	2	2
      ii.	Finance and Control Committee
      Names		Designation Number of Number of
      			meetings held	meetings
      				attended
      	Pastor Akin Laoye	Chairman	2	2
      	Otunba 'Wale Jubril	Member	2	2
      iii.	Corporate Governance
      	Names	Designation	Number of	Number of
      			meetings held	meetings
      	Otunba 'Wale Jubril	Chairman	2	attended 2
      	Pastor Akin Laoye	Member	2	2

      Management Team

      The day-to-day management of the business is the responsibility of the Managing Director and the Executive Director who are assisted by a management team made up of heads of all the departments in the Company. The management team holds scheduled meetings weekly to deliberate on critical issues affecting the day to day running of the Company.

10. Risk Management Policy

    FTN Cocoa Processors Plc recognizes the need for fast and efficient service delivery. At the same time, necessary attention is given to risk management. The Company's approach is to minimize risk complexity whilst improving efficiency in the workplace.

    Financial Risks

    FTN Cocoa Processors Plc is an active player in the economy. In the course of its operations, the Company uses various financial instruments including cash and its equivalents, bonds, equities and trade debtors. FTN Cocoa Processors Plc is exposed to likely losses arising from market risk. Such risks comprise fluctuations in interest rates, equity prices and rate of exchange of foreign currencies and default in collection of receivables.

    FTN Cocoa Processors Plc has developed a comprehensive financial management policy taking into account the relevant regulatory investment guidelines. Appropriate manuals are provided detailing administrative and accounting procedures. These manuals set out the framework for the investing function and specify the conditions and benchmarks for the acceptable levels of exposure to credit, currency and interest rate risks, etc.

    Liquidity and Credit Risks

    Liquidity or cash flow risk relate to the possibility that the Company may encounter some difficulty to mobilize funds to discharge its obligation to clients as and when the need arises.

    FTN Cocoa Processors Plc's investment guidelines are formulated such that minimum levels of financial assets are held in cash and cash equivalents with short maturity periods and easily convertible to cash at short notice.

    Credit risk refers to the likelihood that one party to a financial transaction may fail to fulfill its obligation as and when due thereby causing the other party to a transaction to suffer financial loss. Our Company is exposed to credit risks through its investment in financial assets such as short-term deposits, fixed interest securities and receivables.

    FTN Cocoa Processors Plc's approach is to ensure that short-term deposits are placed with financial institutions with high credit rating. Moreover, deposits are spread amongst high quality institutions to avoid undue concentration on any one organization.

    Credit risks associated with receivables are managed through a deliberate assessment of present and potential customers to ensure their ratings meet with our set criteria for granting credit and making necessary provision for doubtful and irrecoverable debts.

11. Independent Auditor

Messrs. Baker Tilly Nigeria, (Chartered Accountants), have indicated their willingness to continue as auditor in accordance with Section 401(2) of the Companies and Allied Matters Act 2020. A resolution will be proposed to authorize the Directors to fix their remuneration.

The Directors accept responsibility for the preparation of the annual financial statements that give a true and fair view of the statement of financial position of the Company at the end of the year and of its comprehensive income in the manner required by the Companies and Allied Matters Act 2020. The responsibilities include ensuring that the Company:

1. Keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company to comply with the requirements of the Companies and Allied Matters Act 2020.

2. Establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and

3. Prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, that are consistently applied.

   The Directors accept responsibility for the financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in compliance with:

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

   The Directors are of the opinion that the financial statements give a true and fair view of the financial position of the Company and of the loss for the year. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.

   The Directors have made assessment of the Company's ability to continue as a going concern and have no reason to believe that the Company will not remain a going concern in the year ahead.

   Signed on behalf of the Board of Directors by:

   
   
   

   ………………….……..… ……………………………

   Pastor Akin Laoye Otunba Wale Jubril FRC/2021/003/00000023888 FRC/2014/CISN/00000006703 30 March 2026 30 March 2026 FTN COCOA PROCESSORS PLC Certification of 'No Misstatements and Adequate Internal Control System'

   The Managing Director and the Chief Financial Officer accept the responsibilities for the preparation of these financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgement and estimates, in compliance with International Financial Reporting Standards, and with the requirements of the Companies and Allied Matters Act 2020. These responsibilities include designing, implementing and maintaining adequate internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and preparing its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates which are consistently applied.

   The Managing Director and the Chief Financial Officer further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate internal control system.

   
   
   

   ………………….………..…. ……………………….………………….

   Pastor Akin Laoye Mr. Mayowa Jimoh FRC/2021/003/00000023888 FRC/2022/PRO/ICAN/001/00000024076 30 March 2026 30 March 2026 FTN COCOA PROCESSORS PLC STATEMENT OF MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 DECEMBER 2025 Forward-Looking Statements

   This Management's Discussion and Analysis may contain statements relating to strategies used by FTN Cocoa Processors Plc or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "could," "should," "would," "suspect," "expect," "anticipate," "intend," "plan," "believe," "estimate," and "continue" (or the negative thereof), as well as words such as "objective" or "goal" or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of Securities laws. Forward-looking statements include, but are not limited to, information concerning the Company's possible or assumed future operating results. These statements are not historical facts; they represent only the Company's expectations, estimates and projections regarding future events.

   Documents Related to the Financial Results

   All documents related to the financial results of FTN Cocoa Processors Plc are available in the Company's website at https://www.ftncocoa.com.ng, in the section under Financial Reports.

   Description of FTN Cocoa Processors Plc

   FTN Cocoa Processors Plc is an agro-allied Company. The principal activities of the Company are the processing of Cocoa Beans and Palm Kernel into Cocoa Cake, Liquor, Butter, Powder, Palm Kernel Oil and Palm Kernel Cake. Cocoa Cake, Liquor and butter are exported while Cocoa powder, Palm Kernel Oil and Palm Kernel Cakes are marketed locally to manufacturing companies.

   Legal Constitution

   FTN Cocoa Processors Plc started as Fantastic Abiola Nigeria Limited, a Private Company Limited by shares which was incorporated on 26 August, 1991. The name Fantastic Abiola Nigeria Limited was changed to Fantastic Traders Nigeria Limited on 26 August, 1998 and further changed to FTN Cocoa Processors Limited on 3 December, 2007. The status of the Company was changed to FTN Cocoa Processors Plc on 29 February, 2009 and the shares of the Company were listed on the Nigerian Stock Exchange on 24 July, 2009.

   Business Strategy of the Company and Overall Performance

   The Company is registered and incorporated in Nigeria and is primarily engaged in the processing of Cocoa Beans and Palm Kernel into Cocoa Cake, Liquor, Butter, Powder, Palm Kernel Oil and Palm Kernel Cake.

   Over the years, various strategies have been put in place to achieve the objectives such as networking by expanding its distribution channels, products offering reappraisal, refocusing and managing the existing talents to create value.

   Operating Result, Cash Flow and Financial Condition

   The entity's critical performance measurement and indicators to evaluate the entity's performance against stated objectives includes budgeting, ratio analysis and bench marking with industry average.

   FTN COCOA PROCESSORS PLC CERTIFICATION PURSUANT TO SECTION 60(2) OF INVESTMENT AND SECURITIES ACT NO.29 OF 2007

   We the undersigned hereby certify the following with regards to our audited reports and financial statements for the year ended 31 December 2025 that:

   1. We have reviewed the report;

   2. To the best of our knowledge, the report does not contain:

      1. Any untrue statement of a material fact, or

      2. Omit to state a material fact, which would make the statements, misleading in the light of circumstances under which such statements were made;

   3. To the best of our knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operation of the Company as of, and for the periods presented in the report;

   4. We:

      1. Are responsible for establishing and maintaining internal controls;

      2. Have designed such internal controls to ensure that material information relating to the Company and its consolidated subsidiaries is made known to such officers by others within those entities particularly during the period in which the periodic reports are being prepared;

      3. Have evaluated the effectiveness of the Company's internal controls as of date within 90 days prior to the report;

      4. Have presented in the report our conclusions about the effectiveness of our internal controls based on our evaluation as of that date;

   5. We have disclosed to the auditors of the Company and Audit Committee:

      1. All significant deficiency in the design or operation of internal controls which would adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weakness in internal controls; and

      2. Any fraud, whether or not material, that involves management or other employees who

         have significant role in the Company's internal controls;

   6. We have identified in the report whether or not there were significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of our evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

…………………………...................... ………………………….......

FRC/2022/PRO/ICAN/001/00000024076 FRC/2021/003/00000023888

We, the Audit Committee members of FTN Cocoa Processors Plc, in compliance with the provision of Section 404(6) of the Companies and Allied Matters Act have carried out the following functions:-

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

2. Reviewed the scope and plan for the audit for the year ended 31 December 2025; and

3. Reviewed the external and internal auditors' recommendations on accounting procedures and

   internal controls and management's responses to the Auditors' findings were satisfactory.

   In our opinion, the scope and planning of the audit for the year ended 31 December 2025 were adequate and management's responses to the auditors' findings were satisfactory.

   
   
   Chinwendu Achara Member, Audit Committee FRC/2013/IODN/00000002851 Dated this 30 March 2026 Members of the committee:

   Emmanuel Oladosu Shareholders' representative

   Chinwendu Achara Shareholders' representative

   Otunba 'Wale Jubril Non-executive Directors' representative

   Nathaniel Durant Jr. Executive Director Representative

   FTN COCOA PROCESSORS PLC CERTIFICATION OF INTERNAL CONTROL OVER FINANCIAL REPORTING FINANCIAL REPORTING FOR THE YEAR ENDED 31 DECEMBER 2025

   Management of FTN Cocoa Processors Plc ("the Company") is responsible for establishing and maintaining an adequate system of internal control over financial reporting, including safeguarding of assets against unauthorized acquisition, use or disposition. This system is designed to provide reasonable assurance to Management and the board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

   The Company's internal control system is supported by written policies and procedures, incorporates self-monitoring mechanisms, and is subject to internal audit reviews. When deficiencies are identified, Management takes appropriate corrective actions. However, like all internal control systems, inherent limitations exist, including the potential for circumvention or overriding of controls.

   As of 31 December 2025, Management conducted an assessment of the effectiveness of internal control over financial reporting using the COSO 2013 Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

   Based on this assessment, Management ascertain that, as of 31 December 2025, the Company's internal control over financial reporting was properly designed and effectively operating. Furthermore, no material weaknesses were identified in the Company's internal control over financial reporting.

   The effectiveness of the Company's internal control over financial reporting as of 31 December 2025, has been audited by an independent registered accounting firm.

   
   
   

   …………………………...................... ………………………….......

   Mr. Mayowa Jimoh Pastor Akin Laoye FRC/2022/PRO/ICAN/001/00000024076 FRC/2021/003/00000023888 Chief Finance Officer Chief Executive Officer 30 March 2026 30 March 2026 FTN COCOA PROCESSORS PLC MANAGEMENT ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING FOR THE YEAR ENDED 31 DECEMBER 2025

   We, Akin Laoye (Chief Executive Officer) and Mayowa Jimoh (Chief Financial Officer) of FTN Cocoa Processors Plc, certify that:

   We have reviewed the Management Report on the Assessment of Internal Control Over Financial Reporting of FTN Cocoa Processors Plc;

   Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to ensure that the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

   Based on our knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

   We

   1. are responsible for establishing and maintaining internal controls;

   2. have designed such internal controls and procedures, or caused such internal controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, is made known to us by others, particularly during the period in which this report is being prepared;

   3. have designed such internal control system, or caused such internal control system to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

   4. have evaluated the effectiveness of the Company's internal controls and procedures as of a date within 90 days prior to this report and presented in this report our conclusions about the effectiveness of the internal controls and procedures, as of the end of the period covered by this report based on such evaluation.

Based on our most recent evaluation of internal control system, we have disclosed to the Company's auditor and the audit committee of the board of directors (or persons performing the equivalent functions):

1. that there are no significant deficiencies or material weaknesses in the design or operation of the internal control system that could reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information.

2. that no fraud, whether material or not, involving management or employees with a significant role in the internal control system has been identified.

   We have also disclosed in this report whether there have been any significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of their evaluation including any corrective actions with regard to significant deficiencies and material weaknesses.

   
   
   

   …………………………...................... ………………………….......

   Mr. Mayowa Jimoh Pastor Akin Laoye

   FRC/2022/PRO/ICAN/001/00000024076 FRC/2021/003/00000023888

   Chief Finance Officer Chief Executive Officer 30 March 2026 30 March 2026
   
   
   
   

   BAKER TILLY NIGERIA

   4thFloor- Kresta Laurel Complex, 376, Ikorodu Road,

   Maryland,

   Lagos.

   Tel: +234 (0)903-161-3983 and 08023378194

   E-mail: btnlag@bakertillynigeria.com Website: https://www.bakertilly.ng

   FTN COCOA PROCESSORS PLC INDEPENDENT AUDITOR'S LIMITED ASSURANCE REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

   Independent Auditor's Limited Assurance Report To: The Management of FTN Cocoa Processors Plc

   Report on Limited Assurance Engagement Performed on Management's Assessment of Internal Control Over Financial Reporting Conclusion

   We have performed a limited assurance engagement on whether internal control over financial reporting of FTN Cocoa Processors Plc ("the Company") as of 31 December 2025 is effective in accordance with the provisions of Section1.3 of Securities and Exchange Commission Guidance on Implementation of Sections 60 - 63 of Investments and Securities Act 2007, we hereby make the following statements regarding the Internal controls of FTN Cocoa Processors Plc for the year ended 31 December 2025.

   Based on the procedures performed and evidence obtained, nothing has come to our attention to cause us to believe that the Company's internal control over financial reporting as of 31 December 2025 is not effective, in all material respects, in accordance with the COSO Framework and the Securities and Exchange Commission Guidance on Implementation of Sections 60 - 63 of Investments and Securities Act 2007.

   Basis for conclusion

   We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE)3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the International Auditing and Assurance Standards Board (IAASB) and the Financial Reporting Council of Nigeria Guidance on Assurance Engagement Report on Internal Control over Financial Reporting. Our responsibilities are further described in the "Our responsibilities" section of our report.

   ADVISORY ∙ ASSURANCE ∙ TAX

   Baker Tilly Nigeria is a member of the global network of Baker Tilly International Ltd; the members of which are separate and independent legal entities

   We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA).

   Our firm applies International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, issued by the IAASB. This standard requires the firm to design, implement and operate a system of quality management, including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

   We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

   Other matter

   We have audited the financial statements of FTN Cocoa Processors Plc in accordance with the International Standards on Auditing, and our report dated March 27, 2026 expressed an unmodified opinion of those financial statements. Our conclusion is not modified in respect of this matter.

   Responsibilities for Internal Control over Financial reporting

   The Board of Directors of FTN Cocoa Processors Plc is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report. Our responsibility is to express a conclusion on the Company's internal control over financial reporting based on our assurance engagement.

   Our responsibilities

   The Financial Reporting Council of Nigeria Guidance on Assurance Engagement Report on Internal Control over Financial Reporting ("the Guidance") requires that we plan and perform the assurance engagement and provide a limited assurance report on the Company's internal control over financial reporting based on our assurance engagement.

   Summary of the work we performed as the basis for our conclusion.

   As prescribed in the Guidance, the procedures we performed included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our engagement also included performing such other procedures as we considered necessary in the circumstances. We believe the procedures performed provide a basis for our report on the internal control put in place by management over financial reporting.

   The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.

   Definition and Limitations of Internal Control Over Financial reporting

   A company's internal control over financial reporting is a process designed to provide reasonable

   assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that:

   1. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

   2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

   3. provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

   
   
   

   Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

   …………………………….……………

   Lagos, Nigeria 30 March 2026 Oluwole O. Ogundeji FRC/2017/PRO/ICAN/004/00000002825

   for: Baker Tilly Nigeria (Chartered Accountants) FRC/2024/COY/096262

   
   
   
   
   

   BAKER TILLY NIGERIA

   4thFloor- Kresta Laurel Complex, 376, Ikorodu Road,

   Maryland,

   Lagos.

   Tel: +234 (0)903-161-3983 and 08023378194

   E-mail: btnlag@bakertillynigeria.com Website: https://www.bakertilly.ng

   REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF FTN COCOA PROCESSORS PLC Opinion

   We have audited the accompanying financial statements of FTN Cocoa Processors PLC ("the Company") which comprise the statement of financial position as at 31 December 2025, and the statement of profit or loss and other comprehensive income, the statement of changes in equity, and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory notes.

   In our opinion, the Company has kept proper accounting records and the financial statements are in agreement with the records in all material respects and give in the prescribed manner, information required by the Companies and Allied Matters Act 2020. The financial statements give a true and fair view of the financial position of FTN Cocoa Processors PLC as at 31 December 2025 and of its financial performance and its Cash flows for the year then ended in accordance with the International Financial Reporting Standard (IFRS) as adopted by the Financial Reporting Council of Nigeria (FRC).

   Basis for Opinion

   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 section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants (IESBA), the provisions of the Companies and Allied Matters Act 2020, and other independence requirements applicable to performing audits of financial statements of FTN Cocoa Processors PLC. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and CAMA applicable to performing the audits of FTN Cocoa Processors PLC. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

   ADVISORY ∙ ASSURANCE ∙ TAX

   Baker Tilly Nigeria is a member of the global network of Baker Tilly International Ltd; the members of which are separate and independent legal entities

   Going Concern

   The Company's financial statements have been prepared using the going concern basis of accounting. The use of this basis of accounting is appropriate unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

   Management has not identified a material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern, and accordingly none is disclosed in the financial statements. Based on our audit of the financial statements, we also have not identified such a material uncertainty.

   Key Audit Matters

   Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

   We have fulfilled the responsibilities described in the Auditors' responsibilities for the audit of the financial statements section of our report, including in relation to this matter.

   Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures, performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

   Key Audit Matters

   How the matters were addressed in the Audit

   Revenue Revenue represents amounts received and receivable from third parties for goods supplied to customers. It is recognized in the profit and loss account when the amount of revenue can be measured reliably, the significant risk and rewards are transferred to the buyer, recovery of the consideration is probable and the associated cost and possible return of products can be reliably estimated and there is no management involvement in the product. Revenue is derived from export and local sales of cocoa cake, liquor, cocoa powder, palm kernel oil, butter and palm kernel cake.

   In this regard, our audit procedures included:

   • Understanding the policies and procedures applied to revenue recognition, as well as compliance therewith, including an analysis of the effectiveness of controls related to revenue recognition processes employed by the Group's key components.

   • Company had commercial sales of N5,647,812 majorly driven by sales of butter during period under review.

   Recoverability of Accounts Receivables We identified the recoverability of accounts receivables as a key audit matter due to the significance of the balance to the financial statements as a whole, combined with the significant degree of judgments made by the management in assessing the impairment of accounts receivables and determining the allowance for doubtful debts. As at 31 December 2025, the carrying amount of accounts receivables was N5.813 billion; allowance for doubtful debts in the sum of N14 million was made for debt aged in excess of one year. The other debts are current and required no provision.	Our procedures concerning the recoverability of accounts receivables included:
   	subsequent settlement of the accounts receivables, on a sample basis;
   Repayment of liabilities Management's inability to meet its obligation to the Company's Trade and other payables is a key audit matter. This amounted to N23.7 billion naira as	the previous financial year.

   • Obtaining an understanding of how the allowance for doubtful debts is estimated by the management and assessing the management's process in determining the estimated future cash flows of accounts receivables;

   • Discussing with the management and obtaining a list of accounts receivables with relevant small amount of settlement, during the year or subsequent to the end of the reporting period identified by the management and their assessment on the recoverability of accounts receivables;

   • Checking the aging analysis and

   • Assessing the reasonableness of allowance for doubtful debts for accounts receivables with reference to the credit history including default or delay in payments, settlement records, subsequent settlements, and aging analysis of the accounts receivables on a sample basis;

   • Evaluating the historical accuracy of the management's assessment of impairment for accounts receivables on a sample basis by examining the actual write-offs, the reversal of previously recorded allowance, and new allowances recorded in the current year in respect of accounts receivables at the end of

   • Confirming the existence of the transactions and ascertain the authenticity

   at 31 December 2025. It is noteworthy however, that the Company now has a major investor in the name of OH Origins Global Commodities, Inc that will inject funds into the Company

   and accuracy of the balances outstanding with respect to the debts;

   • Reviewed the repayment pattern during the year and ascertaining the accuracy of recording of such postings to confirm the outstanding balances;

   • We circularized the creditors and received responses confirming the debts;

   • Tracing the history of outstanding debts to confirm the length of time debts have been outstanding.

   Responsibilities of the Directors for the Financial Statements

   The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the provisions of the Companies and Allied Matters Act 2020, the Financial Reporting Council Act No.6, 2011 (as amended), and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

   In preparing the financial statements, the Directors are responsible for assessing 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 the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

   Auditor's Responsibilities for the Audit of the Financial Statements

   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 an auditor's 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 ISAs 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.

   As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism 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 the Directors.

     Conclude on the appropriateness of the Directors' 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 disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

   • Obtain sufficient appropriate audit evidence regarding the financial information of the entity or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

   Report on Other Legal and Regulatory Requirements

   In accordance with the requirement of the Companies and Allied Matters Act (CAMA), 2020 we expressly state that:

   1. 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

   2. proper accounting records have been kept by the Company, so far as appears from our examination of those books;

      ……………..…….……………….

      
      
      

   3. The Company's statement of financial position and statement of profit or loss and other comprehensive income are in agreement with the proper accounting records.

   Oluwole O. Ogundeji FRC/2013/PRO/ICAN/004/00000002825 For: Baker Tilly Nigeria (Chartered Accountants) FRC/2024/COY/096262 Lagos, Nigeria 30 March 2026 FTN COCOA PROCESSORS PLC STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2025

   Non-Current Assets	Note	2025 N'000	2024 N'000
   Property, Plant and Equipment	5	15,513,485	16,255,664
   Available for sale financial assets	6	300	300
   Other Receivables	7.3	1,106,115	1,106,115
   Total Non-Current assets		16,619,900	17,362,079
   Current assets Trade and other receivables	7	4,706,992	2,178,377
   Deferred tax	13	1,148,353	1,148,353
   Inventories	8	1,037,698	329,114
   Cash and cash equivalents	9	622,211	76,391
   Total Current Assets		7,515,254	3,732,235
   Total Assets Non-Current Liabilities		24,135,154 ========	21,094,314 ========
   Borrowings	10.1	23,212,033	17,152,770
   Total Non-Current Liabilities Current Liabilities		23,212,033 --------------	17,152,770 --------------
   Trade and other payables	11	501,338	393,264
   Current taxation	12	-	103,382
   Total current liabilities		501,338	496,646
   Total Liabilities Equity:		23,713,371 ========	17,649,416 ========
   Share capital	14	1,950,000	1,950,000
   Share premium	15	1,045,577	1,045,577
   Revaluation reserve	16	14,266,309	14,266,309
   Revenue reserve	17	(16,840,103)	(13,816,988)
   Total equity		421,783	3,444,898
   Total Liabilities and Equity		24,135,154 ========	21,094,314 ========

   The financial statements were approved by the Board of Directors on 30 March 2026 and signed on its behalf by:

   
   
   

   ………………………….……..……….	……………………..……...	……………………………………..
   Otunba Wale Jubril	Pastor Akin Laoye	Olumayowa P Jimoh
   Director	Managing Director	Chief Finance Officer
   FRC/2014/CISN/00000006703	FRC/2021/003/00000023888	FRC/2022/PRO/ICAN/001/00000024076

   
   
   
   
   

   The accounting policies and notes on pages 27 to 49 form an integral part of these financial statement

   FTN COCOA PROCESSORS PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2025

   Note	2025 N'000	2024 N'000
   Revenue 18	5,647,812	1,375,813
   Cost of sales 19.1	(6,333,735)	(536,592)
   Gross (loss)/profit	(685,923)	839,221
   Selling and distribution cost 19.2	(116,577)	(17,423)
   Operating expenses 19.3	(847,917)	(409,559)
   Impairment loss 7.1	(14,086)	-
   Other operating income 20	124,889	950,211
   Exchange gain/(loss)	1,844,335	(11,675,249)
   Operating profit/(Loss)	304,721	(10,312,799)
   Finance cost 20.1	(578,118)	(307,224)
   Loss before taxation 21	(273,397)	(10,620,023)
   Current taxation	-	(58,421)
   Deferred taxation	-	1,148,354
   Loss after taxation transferred to revenue reserve 17	(273,397)	(9,530,090)
   Other Comprehensive Income
   Net appreciation on revaluation of Property, plant & equipment 16	-	5,517,709
   	(273,397)	4,012,381
   	=======	========
   Loss per share	(N0.07k)	(₦ 2.44k)

   The accounting policies and notes on pages 27 to 49 form an integral part of these financial statements

   FTN COCOA PROCESSORS PLC STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2025

   Issued share Capital	Share Premium	Fair value Reserve	Retained Earnings	Total Equity
   N'000	N'000	N'000	N'000	N'000
   Fund as at January 2025 1,950,000	1,045,577	14,266,309	(13,816,988)	3,444,898
   Restatement of export sales overbooked -	-	-	(245,665)	(245,665)
   Equity statement of convertible bond -	-	-	(2,504,053)	(2,504,053)
   Total comprehensive income
   for the year -	-	-	(273,397)	(273,397)
   Balance as at 31 December 2025 1,950,000	1,045,577	14,266,309	(16,840,103)	421,783
   =======	=======	========	=========	========
   Fund as at January 2024 1,950,000	1,045,577	8,748,602	(8,460,912)	3,283,267
   Increase in share capital expenses -	-	5,517,707	-	5,517,707
   Provision no longer required -	-	-	985	985
   Equity statement of convertible bond -	-	-	4,173,029	4,173,029
   Total comprehensive income for the year -	-	-	(9,530,090)	(9,530,090)
   Balance as at 31 December, 2024 1,950,000	1,045,577	14,266,309	(13,816,988)	3,444,898
   =======	=======	========	=========	========
   Fund as at January 2023 1,950,000	1,413,439	4,017,369	(8,935,347)	(1,554,539)
   Revaluation Surplus -	-	4,731,233	-	4,731,232
   Increase in share capital -	(367,862)	-	-	(367,862)
   Other loan restatement -	-	-	2,755,914	2,755,914
   Equity statement of convertible bond -	-	-	8,368,868	8,368,868
   Total comprehensive income for the year -	-	-	(10,650,347)	(10,650,347)
   Balance as at 31 December 2023 1,950,000	1,045,577	8,748,602	(8,460,912)	3,283,267
   =======	=======	=======	=========	=========

   The accounting policies and notes on pages 27 to 49 form an integral part of these financial statements

   FTN COCOA PROCESSORS PLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2025

   Note Cash flows from Operating Activities	2025 N'000	2024 N'000
   Operating loss before working capital changes 22	(694,667)	1,711,702
   Income tax paid	(24,048)	(20,967)
   Working capital changes 23	(3,129,125)	(3,967,393)
   Net cash outflow from operating activities	(3,847,839)	(2,276,658)
   Cash flows from Investing Activities
   Purchase of property, plant and equipment	(75,343)	(207,030)
   Interest expense	(578,118)	(307,224)
   Revaluation surplus	-	-
   Proceeds from disposal	6,718	-
   Net cash outflow from Investing Activities	(646,743)	(514,254)
   Cash flows from Financing Activities
   Borrowing	5,700,122	9,494,693
   Revenue reserve movement	(659,718)	(7,502,220)
   Share increase	-	-
   Net cash generated from Financing Activities	5,040,403	1,992,473
   Net increase/(decrease) in cash and cash equivalents	545,820	(798,439)
   Cash and cash equivalents at beginning of year	76,391	874,830
   Cash and cash equivalents at end of year 9	622,211 ======	76,391 ======

   The accounting policies and notes on pages 27 to 49 form an integral part of these financial statements

   NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2025
   1. General Information

      FTN Cocoa Processors Plc was incorporated on 26 August 1991 in Nigeria as a private Company limited by shares under the name Fantastic Abiola Nigeria Limited which later became Fantastic Traders Nigeria Limited on 26 August, 1998. The Company became a public limited liability Company on 29 February, 2008 and got listed on the Nigeria Stock Exchange. The principal activities of the Company is the processing of cocoa beans and palm kernel into cocoa cake, liquor, butter, palm kernel oil and palm kernel cake for export and sales to local manufacturing companies.

   2. Statement of Compliance

      The financial statement has been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) with the Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

   3. Significant Accounting Policies

      The principal accounting policies adopted in the preparation of the Company's financial statements are set out below.

      1. Basis of preparation of the financial statements

         1. Basis of Measurement

            The accounts have been prepared on an accrual basis and under the historical cost convention except for available for certain financial instruments which are measured at fair value.

            These financial statements are presented in Nigerian Naira (N), which is the Company's functional currency. All financial information presented in Naira has been rounded to the nearest thousand unless otherwise stated.

         2. Use of Estimates and Judgements

         The preparation of financial statements requires management to exercise judgement and to make estimates and assumptions that affect the application of policies, reported amounts of revenues, expenses, assets and liabilities and disclosures. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

      2. Foreign Currency

         1. Foreign Currency Translation

            The Company's transactions in foreign currency are translated to its functional currency for inclusion in the financial statements. Functional currency is the currency of the primary economic environment in which the entity operates. For FTN Cocoa Processors Plc the functional currency is the Nigerian Naira which is also its presentation currency.

         2. Foreign Currency Transactions

            • Foreign currency transactions are recorded on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

              Foreign currency monetary items are translated using the closing rate. 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.

         3. Exchange Differences

            • Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss within 'finance income or cost' except where translation reserve is required it is then recognized in other comprehensive income.

      3. Property, plant and equipment

         The Company uses the cost model for property, plant and equipment. All property, plant and equipment are stated at cost less accumulated depreciation and impairments.

         Cost includes

         • The purchase price, including import duties, and non-refundable purchase taxes, after deducting trade discounts and rebates.

         • Any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management including costs associated with site preparation.

           Subsequent costs

         • The costs of replacing part of an item of property, plant and equipment are recognized in the asset's carrying amount, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

         • All repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred

           1. Depreciation

              Depreciation on property, plant and equipment is calculated on the straight-line basis to write-off the costs of components that have homogenous useful lives to their residual values over their estimated useful lives.

              Depreciation begins when an asset is available for use and ceases at the earlier of the date that the asset is derecognized or classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

              Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives.

              Buildings	2%	50 years
              Office Equipment	10%	10 years
              Plant and machinery	5%	20 years
              Motor vehicles	20%	5 years
              Furniture and fittings	10%	10 years

              The asset's residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period.

              An 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.

           2. De-recognition

           An item of property, plant and equipment is de-recognized on disposal or when no future economic benefit is expected to flow to the Company from its continuing use. Any gain or loss arising from de-recognition of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the assets) is recognized in the income statement, in the year the asset is de-recognized.

      4. Intangible Assets

         i. Acquired Computer Software

         Software acquired by the Company is stated at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over the estimated useful life of the computer software, the estimated useful life and Amortization is reviewed at the end of each reporting period, with the effect of any changes being accounted for on a prospective basis. Acquired computer software is amortized over a three (3) year period.

         Acquired computer software is de-recognized when no future economic benefit is expected from its use.

      5. Inventories

         These are measured at the lower of cost and net realizable value. The net realizable value is the amount the inventories are expected to realize less the estimated costs of completion and selling expenses. The estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realize.

         The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is determined using the weighted average cost formula. Any write down or reversals are recognized in the profit or loss account.

         1. Raw materials

            These are measured using the weighted average cost formula. It comprises of the purchase price and all other cost incurred that are necessary to bring it to its present location and condition. Raw materials are sourced locally and internationally.

         2. Spare parts

            These are stated at their purchase price and are generally expensed. However, where they are used specifically for the enhancement of an equipment or machinery it is capitalized.

         3. Finished Goods and Work-in-progress

         These are measured at production cost based on weighted average cost taking into account the stage of production. It includes an apportionment of the factory production overheads incurred based on the normal operating capacity.

      6. Revenue

         Revenue represents amounts received and receivable from third parties for goods supplied to customers. It is recognized in the profit and loss account when the amount of revenue can be measured reliably, the significant risk and rewards are transferred to the buyer, recovery of the consideration is probable and the associated cost and possible return of products can be reliably estimated and there is no management involvement in the product. Revenue is derived from export and local sales of cocoa cake, liquor, cocoa powder, palm kernel oil, butter and palm kernel cake.

         1. Export Sales

            Revenue is recognized on exported goods in the income statement when the significant risk and rewards of ownership of the goods has been transferred to the buyer and this is mainly upon shipment. This is also when the final invoice and bill of lading is raised. Export sales are measured at the agreed price based on current market situation.

         2. Local Sales

            Revenue on local sales is recognized in the income statement upon delivery of the goods to the buyer's warehouse. This is when the significant risk and rewards of ownership on the goods are transferred to the buyer. It is measured at the fair value of consideration received or receivable net of VAT, excise duties, returns, customer discounts and other sales related discounts.

         3. Other Income

            Other income comprises grants on export (Export expansion grant receivable from the Federal Government as a rebate on export costs), interest income, dividend received, bad debt recovered, exchange gain and others.

            • Export Expansion Grant

              Export expansion grants are grants receivable from the Federal Government of Nigeria through the Nigerian Export Promotion Council. The grant is backed by the Export (incentives and miscellaneous provisions) Act to encourage companies engaged in exportation of locally manufactured products by reducing the cost borne by local producers/non-oil exporters through giving a rebate of 30% on goods exported. It is recognized as an income in the period in which the export is made. The export grant is not given in monetary value but as certificate known as the Export Credit Certificate (ECC).

              A Company is entitled to receive the export expansion grant only if it has fulfilled the relevant conditions and has made necessary application to the Nigerian Export Promotion Council. The certificate on the average is issued on submission of necessary export documents.

              Export expansion grants are initially recognized at fair value and subsequently discounted at the point of sale.

            • Dividend and Interest Income

         Dividend income from investments is recognized only when shareholders right to receive payment has been established and the amount of income can be reliably measured. Interest income from a financial asset is recognized when it is probable that economic benefits will flow to the Company and the amount of income can be reliably measured. Interest income is accrued on a time basis with reference to the principal outstanding and the effective interest rates applicable.

      7. Borrowing Cost

         Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. Other borrowing costs are recognized as an expense. Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

      8. Income Tax Expense

         Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized 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 balance sheet date, and any adjustment to tax payable in respect of previous years.

         Deferred tax assets and liabilities are recognized where the carrying amount differs from the tax base of the assets. 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 and liability). The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted by the reporting date.

         A deferred tax asset is recognized only to the extent that it is probable that future taxable profits 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 realized.

      9. Provisions, Contingent Liabilities and Contingent Assets

         1. Provisions

            Provisions are recognized when there is a present obligation, whether legal or constructive, as a result of a past event for which it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are calculated on a discounted basis where the effect is material to the original undiscounted provision. The Company reviews provisions existing at the end of each reporting period and makes appropriate adjustment to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

         2. Contingent Liability

            A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. Where the Company 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 recognizes 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 recognized in the financial statements of the period in which the change in probability occurs except in the extremely rare circumstances where no reliable estimate can be made.

         3. Contingent Assets

         Contingent assets arising from unplanned or other unexpected events giving rise to the possibility of an inflow of economic benefits are disclosed in the financial statements. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, an entity discloses the contingent asset.

      10. Financial Assets Financial Assets and Liabilities Recognition

          Financial assets are initially recognized at their fair value plus, in the case of financial asset

          not carried at fair value through profit or loss, directly attributable costs to their acquisition. All other financial assets and liabilities are initially recognized on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

          Classification and Measurement

          Initial measurement of a financial asset or liability is at fair value plus transaction costs that are directly attributable to its purchase or issuance. For instruments measured at fair value through profit or loss, transaction costs are recognized immediately in profit or loss.

          Financial assets are classified into one of the following measurement categories:

          • Amortized cost

          • Fair Value through Other Comprehensive Income (FVOCI)

          • Fair Value through Profit or Loss (FVTPL) for trading related assets

          • Equity Instruments

          The Company classifies all of its financial assets based on the business model for managing the assets and the asset's contractual cash flow characteristics.

          1. Financial assets measured at amortized cost

             Financial assets are measured at amortized cost if they are held within a business model whose objective is to hold for collection of contractual cash flows. After initial measurement, debt instruments in this category are carried at amortized cost using the effective interest rate method. Amortized cost is calculated considering any discount or premium on acquisition, transaction costs and fees that are an integral part of the effective interest rate. Amortization is included in Interest income in the Statement of Income. Impairment on financial assets measured at amortized cost is calculated using the expected credit loss approach. Loans measured at amortized cost are presented net of the allowance for credit losses (ACL) in the statement of financial position.

          2. Financial Assets measured at FVOCI

             Financial assets are measured at FVOCI if they are held within a business model whose objective is to hold for collection of contractual cash flows and for selling financial assets. Subsequent to initial recognition, unrealized gains and losses on debt instruments measured at FVOCI are recorded in other comprehensive Income (OCI). Upon de-recognition, realized gains and losses are reclassified from OCI and recorded in Other Income in the Statement of Income. Premiums, discounts and related transaction costs are amortized over the expected life of the instrument to Interest income in the Statement of Income using the effective interest rate method. Impairment on financial assets measured at FVOCI is calculated using the expected credit loss approach.

          3. Financial Assets measured at FVTPL

             Debt instruments measured at FVTPL include assets held for trading purposes, assets held as part of a portfolio managed on a fair value basis and assets whose cash flows do not represent payments that are solely for business transaction. Financial assets may also be designated at FVTPL if by so doing eliminates or significantly reduces an accounting mismatch which would otherwise arise. These instruments are measured at fair value in the Statement of Financial Position, with transaction costs recognized immediately in the Statement of Income as part of Other Income. Realized and unrealized gains and losses are recognized as part of Other Income in the Statement of Income.

          4. Equity Instruments

             Equity instruments are instruments that meet the definition of equity from the issuer's perspective; that is, any contract that evidences a residual interest in the issuer's net assets. Equity instruments are measured at FVTPL, unless an election is made to designate them at FVOCI upon purchase. For equity instruments measured at FVTPL, changes in fair value are recognized as part of Other Income in the Statement of Income.

             The Company can elect to classify non-trading equity instruments at FVOCI. This election will be used for certain equity investments for strategic or longer -term investment purposes. The FVOCI election is made upon initial recognition, on an instrument-by-instrument basis and once made is irrevocable. Gains and losses on these instruments including when derecognized/sold are recorded in OCI and are not subsequently reclassified to the Statement of Income. Dividends received are recorded in other income in the Statement of Income. Any transaction costs incurred upon purchase of the security are added to the cost basis of the security and are not reclassified to the Statement of Income on sale of the security. Transaction cost on disposal of equity instruments is recognized as an expense in the income statement.

             Financial liabilities are classified into one of the following measurement categories:

             • Amortized cost

             • Fair Value through Profit or Loss (FVTPL)

          5. Financial Liabilities at Amortized Cost

             Financial liabilities that are not classified at fair value through profit or loss fall into this category and are measured at Amortized cost using the effective interest rate method.

             Financial liabilities measured at Amortized cost are loans and other borrowed funds

          6. Financial Liabilities at fair value through profit or loss

          Financial liabilities accounted for at fair value through profit or loss fall into two categories: financial liabilities held for trading and financial liabilities designated at fair value through profit or loss on inception. Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified as held for trading if it is incurred principally for the purpose of repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Gains and losses arising from changes in fair value of financial liabilities classified as held for trading are included in the income

          statement and are reported as 'Net gains/(losses) on financial instruments classified as held for trading'. Interest expenses on financial liabilities held for trading are included in 'Net interest income'. Financial Liabilities are designated at FVTPL when either the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise, or the financial liability contains one or more embedded derivatives which significantly modify the cash flows otherwise required. For liabilities designated at fair value through profit or loss, all changes in fair value are recognized in Other Income in the Statement of Income, except for changes in fair value arising from changes in the Company's own credit risk which are recognized in OCI. Changes in fair value of liabilities due to changes in the Company's own credit risk, which are recognized in OCI, are not subsequently reclassified to the Statement of Income upon de-recognition/extinguishment of the liabilities.

      11. Reclassifications

          Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Company changes its business model for managing financial assets. A change in the Bank's business model will occur only when the Company either begins or ceases to perform an activity that is significant to its operations such as significant internal restructuring and any other reason that might warrant a change in the Company's business model as determined by management based on facts and circumstances.

          The following are not considered to be changes in the business model:

          • A change in intention related to particular financial assets (even in circumstances of significant changes in market conditions)

          • A temporary disappearance of a particular market for financial assets.

          • A transfer of financial assets between parts of the Company with different business models.

          When reclassification occurs, the Company reclassifies all affected financial assets in accordance with the new business model. Reclassification is applied prospectively from the 'reclassification date'. Reclassification date is 'the first day of the first reporting period following the change in business model. For example, if the company decides to shut down the corporate mortgage business segment, the reclassification date is the first day of the next reporting period.

      12. Impairment of Financial Assets

In line with IFRS 9, the Company assesses the under listed financial instruments for impairment using Expected Credit Loss (ECL) approach:

• Amortized cost financial assets;

• Debt securities classified as at FVOCI;

  Equity instruments and financial assets measured at FVTL are not subjected to impairment under the standard.

  Expected Credit Loss Impairment Model

  The Company's allowance for credit losses calculations are outputs of models with several underlying assumptions regarding the choice of variable inputs and their interdependencies.

  The expected credit loss impairment model reflects the present value of all cash shortfalls related to default events either over the following twelve months or over the expected life of a financial instrument depending on credit deterioration from inception. The allowance for credit losses reflects an unbiased, probability-weighted outcome which considers multiple scenarios based on reasonable and supportable forecasts. The Company adopts a three-stage approach for impairment assessment.

  Stage 1 - Where there has not been a significant increase in credit risk (SICR) since initial recognition of a financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit loss is computed using a probability of default occurring over the next 12 months. Stage 2 - When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on the probability of default over the remaining estimated life of the financial instrument. Stage 3 - Financial instruments that are considered to be in default are included in this stage. Like Stage 2, the allowance for credit losses captures the lifetime expected credit losses. Measurement of Expected Credit Losses

  The probability of default (PD), exposure at default (EAD), and loss given default (LGD) inputs used to estimate expected credit losses are modelled based on macroeconomic variables that are most closely related with credit losses in the relevant portfolio. Details of these statistical parameters/inputs are as follows:

  Probability of Default - The probability of default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the remaining estimated life, if the facility has not been previously derecognized and is still in the portfolio.
• 12-month PDs - This is the estimated probability of default occurring within the next 12 months (or over the remaining life of the financial instrument if that is less than 12 months). This is used to calculate 12-month ECLs. The Company obtains the constant and relevant coefficients for the various independent variables and computes the outcome by incorporating forward looking macroeconomic variables and computing the forward probability of default.
• Lifetime PDs - This is the estimated probability of default occurring over the remaining life of the financial instrument. This is used to calculate lifetime ECLs for 'stage 2' and 'stage 3' exposures. PDs are limited to the maximum period of exposure required by IFRS 9. Variables and adopts exponentiation method to compute cumulative PD for future time periods for each obligor.

IFRS 9 specifies that ECLs should include a forward-looking element which translates into an allowance for changes in macro-economic conditions and forecasts when estimating lifetime ECLs. It is important to understand the effect of forecasted changes in the macroeconomic environment on ECLs, so that an appropriate level of provisions can be raised. The most acceptable way of allowing for macro-economic conditions is to build a regression model that aims to explain and predict the impact of macro-economic indicators on default rates. Such regression models are usually built on a history of default rates and macroeconomic variables covering at least one economic cycle, but preferable more. Information gathering is based on historical Nigerian macro-economic indicators from a host of reliable sources, including the International Monetary Fund. The following steps were followed in quantifying the impact of macro-economic scenarios on ECLs.

Using the statistical methodology of multiple Regression, estimate the relationship between collected historical non-performing loans and on a list of macro-economic indicators.

Identify variables that are statistically significant (that is variables that have the most significant predictive power)

Forecast macroeconomic forward-looking information for periods over which lifetime PD will be determined

Using the equation derived in step one as, significant coefficient obtained in step 2 as well as forecast macroeconomic forward-looking information in step 3, predict the default probability for relevant periods

Determine Scalars for relevant period. In order to remove the impact of any historical trends included in the data, the scalar denominator is adjusted based on the estimation period used to derive the PDs.

Apply the scalars calculated in Step 5 to the lifetime PDs as derived. A scalar factor of one means that the probability of default for the forecast year is expected to be in line with historical average probability of default. A scalar factor less than one means that the probability of default for the forecast year is expected to be less than the historical average probability of default. A scalar factor greater than one means that the probability of default for the forecast year is expected to be greater than the historical average probability of default.

Allowances for ECL are presented in the statement of financial position as follows:

• Financial assets measured at amortized cost: as a deduction from the gross carrying amount of the assets;

• Loan commitments as a provision; and

• Debt instruments measured at FVOCI: no loss allowance is recognized in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognized in the fair value reserve.

  Write-off

  The Company writes off an impaired financial asset (and the related impairment allowance), either partially or in full, where there is no reasonable expectation of recovery as set out in IFRS 9, paragraph 5.4.4. After a full evaluation of a non-performing exposure, in the event that either one or all of the following conditions apply, such exposure shall be recommended for write-off (either partially or in full):

• continued contact with the customer is impossible;

• recovery cost is expected to be higher than the outstanding debt;

• Where all possible avenues for recoveries have been explored and it is evident that the financial capacity of the borrower makes it impossible to recover part or the whole amount of indebtedness.

All impaired financial asset write-offs shall require endorsement at the appropriate level, as stated in the Company Policy. write-off approval shall be documented in writing and properly initialed by the approving authority. A write-off constitutes a de-recognition event.

The Company presents its basic earnings per share (EPS) and diluted earnings on the statement of comprehensive income. Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential ordinary shares.