Quarter 5 - financial statement for 2019

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

TABLE OF CONTENT Pages

Corporate information i

Consolidated financial highlighlights iv

Directors' report v

Certification pursuant to section 60(2) of investment Act No 29 of 2007 viii

Management comments and analysis ix

Report of the Audit and Compliance Committee xi

Statement of Directors' Responsibilities 1

Independent auditors report 2

Summary of significant accounting policies 7

Consolidated and separate statement of financial position 34

Cosolidated and separate statement of profit or loss and other comprehensive income 35

Statement of changes in equity - Group 36

Statement of changes in equity - Company 37

Consolidated and separate statement of cash flows 38

Notes to consolidated financial statements 39

Other national disclosures:

Statement of value added - Group 104

Statement of value added - Company 105

Financial summary - Group 106

Financial summary - Company 107

Incorporation Certificate - RC 167274 of 10 October, 1994

Nature of business

The principal activity of the Company is underwriting of Non-life insurance business while its subsidiary is engaged in the underwriting of Life and Non-life insurance businesses.

Directors:

Mr. Muhammad Sidi-Aliyu - Group Chairman

Mr. Omotola Talabi - Chairman, Finance, Investment and General Purpose Committee

Member, Enterprise Risk Management and Governance Committee

Ms Helen Emore - Chairman, Enterprise Risk Management and Governance Committee

Member, Finance, Investment and General Purpose Committee

Prince Sam Turoti - Member, Enterprise Risk Management and Governance Committee

Member, Finance, Investment and General Purpose Committee Mr. Bayo Fakorede - Ag. Group Managing Director/CEO

Mr. Tayo Ajibulu - Executive Director (Management Services) Mr. Sakiru Oyefeso - Director

Registered Office/Head Office

209, Herbert Macaulay Way, Ebute-Metta, Sabo, Yaba, Lagos State.

Tel: (234) 01 - 7741181, 7740571, 4758852 - 3 Fax: 013425466

E-mail: info@stacoplc.com Website: https://www.stacoplc.com

Group Secretary

Jackson, Etti & Edu

3-5, Sinari Daranijo Street, Off Ajose Adeogun Street, Victoria Island, Lagos State.

Legal Adviser

Idowu Sofola and Co. 4/5 Floor, Ereke House, Plot 15 CIPM Road, Alausa Road,

Ikeja, Lagos State.

Lagos Control Office

292F, Ajose Adeogun Street, Victoria Island, Lagos Branch Manager: Mr. Shogo Mojeed

Tel No: 017410184

Mobile No: 08023187896

Ikeja Branch

Skymit Compound

32, Mobolaji Bank Anthony Way, Ikeja, Lagos State. Branch Manager: Mr Adebisi Adewale

Tel No: 012806996 Mobile No: 08033206806

Ibadan Branch

49, Ring Road, by Ajeigbe B/Stop, Ibadan, Oyo State. Branch Manager: Mr. Oyekan Adesina

Mobile No: 08033448216

Abeokuta Branch

23, Quarry Road, Ibara, Abeokuta, Ogun State. Branch Manager. Sola Osiberu

Mobile No: 08036710286

Ilorin Branch

170, Ibrahim Taiwo Road, Ilorin, Kwara State. Branch Manager: Taiwo Ayanbadejo

Mobile No: 08037222882

Akure Branch

1st Floor, BOI House (left wing), Opp. Olam Nig. Ltd, Ado/Owo Road, Alagbaka, Akure, Ondo State.

Branch Manager: Mr. Ayedogbon Olanipekun Mobile Nos: 08035746695

Abuja Branch

118, Aminu Kano Crescent, Wuse, Abuja. Regional Head: Mr. Joseph Adebayo Mobile Nos: 08033454504

Kano Branch

36, Ibrahim Taiwo Road, Kano, Kano State.

Branch Manager: Mr. Wahab Adelekan Mobile No: 09032678677

Kaduna Branch

4, Constitution Road, Kaduna State. Branch Manager: Mr. Sunday Otusami Mobile No: 08023005225

Port Harcourt Branch

31, King Perekule Street, G.R.A. Phase II, Port Harcourt, Rivers State. Branch Head: Mr Idowu Osikoya

Mobile No: OB037323770

Uyo Branch

174, Ikot-Ekpene Road, Uyo, Akwa Ibom State.

Branch Manager: Mr. Friday Meme Nike Mobile No: 08060741263

Warri Branch

255, Effurun/Sapele Road, Efurun, Delta State. Branch Manager: Mr Mene Otubu

Mobile No: 08033247681, 07029954959

Aba Branch

143, Azikwe Road, Aba, Abia State. Branch Manager: Mr Charles Iheagwara Mobile No: 07029322563

Enugu Branch

111, Chime Avenue, 2nd Floor, New Haven Zanda's Plaza, Enugu State. Branch Manager: Mr. Henry Ugweje

Mobile No: 08113890096

Bankers

First Bank of Nigeria Ltd Wema Bank Plc Ecobank Plc

Access Bank Plc

United Bank for Africa Plc Zenith Bank Plc

Auditors

PKF Professional Services

PKF House, 205A, Ikorodu Road, Obanikoro, Lagos State.

Office Tel: +234 9030001351

https://www.pkf-ng.com

Registrar

First Registrars Limited

Plot 2, Abebe Village Road, Iganmu, Lagos State Lagos Tel: 0127991334

Mobile No: 08023795612

Email:firstregistrarsnigeria@yahoo.com Contact person: Mr Yaya Lawal

Reinsurers

African Reinsurance Corporation Continental Reinsurance Plc WAICA Reinsurance Pool Nigeria Reinsurance Corporation

Actuary

Logic Professional Services

Rear Wing, 4th Floor, Oshopey Plaza, 17/19, Allen Avenue, Ikeja, Lagos State.

Investors /Shareholders Relations: Amos Olalere (Mobile 08027574933) Tayo Ajibulu (Mobile 08023154582)

CONSOLIDATED FINANCIAL HIGHLIGHTS

Group Company

iv

The Directors are pleased to submit their report together with the audited financial statements of Staco Insurance Plc ("the Company") and its subsidiary ("the Group") for the year ended 31 December 2019.

Legal form and Principal activities

The Company, Staco Insurance Plc (formerly known as Standard Trust Assurance Plc) was incorporated on October 10, 1991 as a public limited liability company with incorporation No. RC 167274. The compamy acquired Alpha Insurance Plc and commenced non-life insurance business on 1st October, 1994 having been duly licensed by National Insurance Commission (NAICOM) with certificate of registration No. RIC-038.

The Company changed its name to Staco Insurance Plc by special resolution on the 30th of October, 2006 following the merger of Standard Trust Assurance Plc and Summit Insurance Company Limited as a result of the directive by NAICOM on the increase in share Capital of insurance companies in Nigeria. The company became listed on The Nigerian Stock Exchange on 25th June, 2007.

The Company has one subsidiary called Staco Sierra Leone

Principal activities

The Group is principally engaged in the provision of non-life and life insurance businesses.

Operating results

The following is a summary of the Group

operating results for the year ended 31 December 2019:

Group Company

Directors and their interests

The Directors’ interests in the issued share capital of the Company as recorded in the register of members and as advised by the Company’s registrars for the purposes of Sections 275 and 276 of the Companies and Allied Matters Act, Cap C20, LFN 2004 and the listing requirements of the Nigerian Stock Exchange in units are as follows:

31 December 2019

31 December 2018

Directors' interest in contracts

In accordance with Section 277 of the Companies and Allied Matters Act, Cap C20 LFN, 2004 none of the Directors has notified the Company of any declarable interests in contracts or proposed contracts with the Company.

Retiring Directors

In accordance with Section 259 of Companies and Allied Matters Act, Cap C20 LFN, 2004, Ms Helen Emore and Mr Tola Talabi will retire by rotation and being eligible, they offer themselves for re-election.

Major Shareholding

The called-up and fully paid-up shares of the Company were beneficially held as follows at 31 December 2019:

According to the register of members, no shareholder other than the ones mentioned above held more than 5% of the issued share capital of the Company as at 31 December 2019.

Donations and charitable gifts

The Company identifies with the aspirations of the community as well as the environment within which it operates.The Company identifies with the aspiration of the communuity as well as the environment within which it operates and therefore makes charitable donations for commnuity development activities. However, there was no donation during the year. The year 2018: ₦400,000 donations are as follows:

Employment of disabled persons

The Company’s recruitment and staff development policies and practices are non-discriminatory.

Employee involvement and training

The Company ensures that employees are informed of matters concerning them through formal and informal fora with an appropriate two-way feedback mechanism. In accordance with the Company’s policy of continuous development, in-house training is provided on various aspects of the organisation. In addition, employees are nominated to attend both local and international courses and workshops which are complemented by on-the-job trainings.

Health, safety at work and welfare of employees

Health and safety regulations are in force within the Company’s premises and employees are aware of existing regulations. The Company gives priority to the health and safety of its employees by ensuring that health and safety procedures are substantally complied with and maintained in its daily operations.

Acquisition of own shares

The Company did not purchase any of its own shares during the year.

Research and development

The Company is on a continous basis carrying out research into Insurance Products and Services.

Investment in subsidiary

Consistent with its expansion program, the Company set up a subsidiary in the preceding years. Below is the name and the percentage of holdings in the subsidairy:

Name

Staco's % Holding

Status

Staco Sierra Leone 60% Set up

Consolidated financial statements

The consolidated results for the year ended 31 December 2019 were prepared in accordance with International Financial Reporting Standards (IFRS).

The financial statements of Staco Sierra Leone was consolidated with that of the Company.

Related party Transactions

There were no material related party transactions amongst the members of the Group except for the following transactions that have been carried out at arm's length:

i-CFS Financial Services Limited:The company Granted loans to the related company iii-Staco Cooperative: The company staff contributions

iii-Staco Insurance Company (Sierra Leone) Limited: The company Granted loans to the subsidiary

Post balance sheet events

There were no post balance sheet events which could have a material effect on the financial position of the Group as at 31 December 2019 and the profit attributable to equity holders on that date other than as disclosed in the financial statements.

Auditors

PKF Professional Services have indicated their willingness to continue in office in accordance with section 357(2) of the Companies and Allied Matters Act, Cap C20, LFN 2004. A resolution will be proposed authorising the Directors to determine their remuneration.

By order of the Board

Jackson, Etti & Edu Company Secretary FRC/2013/NBA/00000003320

Date: 4 September 2024

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 consolidated and separate audited financial statements for the year ended 31 December 2019 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 consolidated and separate financial statements misleading in the light of circumstances under which such statements were made;

3. To the best of our knowledge, the consolidated and separate 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 entries 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;

1. We have disclosed to the auditors of the Company and Finance, Investment and General-Purpose Committee:

   1. All significant deficiencies 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;

2. 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

Mr. Bayo Fakorede

significant deficiencies and material weaknesses.

Mr. Jide Omotere

Chief Financial Officer Ag. Managing Director

FRC/2013/ICAN/00000002180 FRC/2013/CIIN/00000004099

Date: 4 September 2024 Date: 4 September 2024

In order to give an insight to our structure, strategy and mode of operation, we have outlined this MC & A at 31 December, 2019. It should be read in conjunction with the audited financial statements of Staco insurance Plc and its subsidiary. All figures are in thousands of Nigerian Naira except otherwise stated.

Nature of business

The Staco Group is made up of Staco Insurance Plc (The Company) and its subsidiary in Sierra Leone. The principal activity of the Company is underwriting of Non-life insurance business while its subsidiary is engaged in the underwriting of Life and Non-life insurance businesses. The Company's portfolio cuts across Nigeria's public and private sectors covering Oil and Gas, Engineering/Construction, Manufacturing, Trade, Aviation, Marine, etc. The Company is also developing its micro insurance arm.

Business objective and strategy

The Company is registered and incorporated in Nigeria while its subsidiary is registered and incorporated in Sierra Leone. The Company provides non-life insurance services to both retail and corporate clients all over Nigeria. The Company aims to rank among the highly rated insurance companies in Nigeria by the year 2019. To achieve this, it is the company's wish to strengthen service delivery through the deployment of modern Information Technology techniques and branch/agency network expansion. Intensification of direct and indirect marketing activities by awareness creation amongst others will also contribute to the achievement of target.

Quality policy statement

Staco Insurance Plc is committed to delivering insurance and financial services of superior quality, surpassing customers expectations and ensuring strict compliance with regulatory and statutory requirements. We continually improve the effectiveness of our quality management system in line with Global Credit Rating Company Rate- 2009 (A-).

We establish measurable goals and objectives at departmental levels which we review as the need arises ensuring timely and effective implementation of company strategy.

1. Performance indicators

   Operating results, cash flow and financial position

   Group Company

   	2019 ₦'000		2018 ₦'000		Change %		2019 ₦'000	2018 ₦'000	Change %
   Gross written premium	3,315,048		5,186,631		(0.36)		2,393,682	4,252,855	(0.44)
   Net premium earned	3,316,397		4,046,074		(0.18)		2,488,721	3,214,257	(0.23)
   Underwriting results	1,801,327		449,217		3.01		1,247,454	18,644	65.91
   Investment income Operating and	156,694		225,141		(0.30)		112,582	117,012	(0.04)
   administrative expenses	(1,836,197)		(2,275,404)		(0.19)		(1,572,177)	(1,957,758)	(0.20)
   Loss before tax	(909,914)		(6,275,308)		(0.86)		(1,405,212)	(6,396,375)	(0.78)
   Loss per share (k)	(9)		(76)		(0.89)		(15)	(72)	(0.79)

   There was a decrease of 36% and 44% in gross written premium for group and company respectively in 2019 in comparison with 2018 (10% and 19%) due to decline in performance in the reporting period.

   The decrease in performance also had near significant effect on the net premium income decreasing from ₦4,046,074,000 (2018) to ₦3,316,397,000 (2019) and ₦3,214,257,000 to ₦2,488,721,000 (2019)

   for group and company respectively .

   Group underwriting results increased to ₦1,805,242,000 (2019) from ₦449,218,000 (2018) and

   ₦1,251,369,000 (2019) from ₦18,645,000 (2017) for the group and company respectively.

   The Group's investment income decreased from ₦225,141,000 (2018) to ₦156,694,000 (2019) representing an decrease of 30%.

   The Group's operating expenses summed up to ₦1.67 billion (2019) and ₦2.28 billion (2018).

   At the reporting date, the Group had ₦955.13 million in the cash and cash equivalents, including short-

   term deposits of ₦529.29 million with maturity of not more than three months.

2. Liquidity, capital resources and risk factors

   As at 31 December 2019, the Group had a negative ₦7.57 billion (2018: negative ₦10.57 billion) in net cash reserves. The Company’s cash investment is in accordance with its investments policy and complies with the regulatory requirements. The company’s investment strategy is influenced by a focus on highly liquid financial instruments such as term deposit, equity and debt instruments. At the end of December 2019, the Group had approximately ₦794.14 million (2018: 675.87) invested in fixed income and ₦180.19 (2018:236.56) million in equity instruments.

3. Forward-looking statements

This MC&A contains expectations, estimates, forecasts, projections and targets which the group should attain provided all other factors end up being equal. Experience has however shown that projections, expectations, etc. are subject to risks and uncertainties that result in actual achievements being different from projections. This is buttressed by the use of words like "anticipate", "believe", "estimate", "expect", "may", "plan", "project", "should", "will", or the adverse variants of such which appear within the body of this document.

Without prejudice to the group, such projections, expectations, estimates, forecasts and targets reflect management's current belief and are based on available information which are subject to risks and uncertainties as identified. Therefore the eventual action and/or outcome could differ materially/immaterially from those expressed or implied.

The forward-looking statements, which are subject to change after 31 December, 2019 reflect the group's expectations as at the time the Board of Directors approved this document. No obligation is undertaken by the group to update this document publicly or to review the forward looking statements unless required by law.

REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE IN RESPECT OF THE 2019 AUDITED ACCOUN

To the Members of Staco Insurance Plc

In compliance with the provision of section 359(3) to 6 of the Companies and Allied Matters Act (Cap C20) Laws of the Federation of Nigeria 2004, the Committee considered the Audited Financial Statements for the year ended 31 December 2019 together with the Management Control Report from the Auditors and the Group's responses to this report at its meeting held on 4 September 2024.

In our opinion, the scope and planning of the audit for the year ended 31 December 2019 were adequate.

After due consideration, the committee accepted the report of the auditors that the consolidated financial statements were in accordance with ethical practice, International Financial Reporting Standards (IFRSs), Companies and Allied matters act CAP C20 LFN 2004, Nigerian Insurance Act and Financial Reporting Council and give a true and fair view of the state of the group's financial affairs.

The Committee reviewed management's responses to the Auditor's findings in respect of Management matters both the Auditors and our members are satisfied with management's responses thereto. On the review of insider/related party transactiona, the Committee was satisfied with their status.

The Committee therefore recommended that the audited consolidated financial statements of the Group for the yer ended 31 December 2019 and the Auditor's report thereon be presented for adoption at the Annual General Meeting.

The Committee also approved the provision made in the consolidated financial statements in relation to the remuneration of the auditors.

Mr. M.O. Kassim

Chairman, Audit and Compliance Committee FRC/2013/IODN/00000004302

Date: 4 September 2024

Members of the Audit and Compliance Committee are:-

Mr. M.O. Kassim - Chairman - Shareholders' Representative

Mr. E. Rewane - Member - Shareholders' Representative

Mr. Olusegun Alimson - Member - Non Executive Director

Mr. Omotola Talabi - Member - Non Executive Director

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

The Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria, 2004, requires the Directors to prepare consolidated and separate financial statements for each financial year that give a true and fair view of the state of financial affairs of the group at the end of the year and of its profit or loss and other comprehensive income. The responsibilities include ensuring that the group:

1. keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the group and comply with the requirements of the companies and allied matters act, CAP C20, Laws of the Federation of Nigeria, 2004;

2. establishes adequate internal controls to safeguard its asset and to prevent and detect fraud and other irregularities; and

3. prepares its consolidated and separate financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, and are consistently applied.

The Directors accept responsibility for the annual consolidated and separate financial statement, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgment and estimates, in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board; in compliance with Financial Reporting Council of Nigeria Act No. 6, 2011 and in the manner required by the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria, 2004.

The Directors are of the opinion that the consolidated and separate financial statements give a true and fair view of the state of the financial affairs of the Group and of its profit for the year ended 31 December 2019. the Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of consolidated and separate financial statements, as well as adequate systems of internal financial control.

Mr. Muhammad Sidi Aliyu

Nothing has come to the attention of the Directors to indicate that the Group will not remain a going concern for at least twelve months from the date of this statement.

Mr. Bayo Fakorede

Ag. Managing Director Chairman

FRC/2013/CIIN/00000004099 FRC/2020/003/00000021442

Date: 4 September 2024 Date: 4 September 2024

1

'^rQ PKF

PKF Professional Services PKF House

205A Ikorodu Road, Obanikorn, Lagos,

P.O Box ?. . , I'V iriria, ” i.

Independent Auditor's Report

To the Shareholders of 5taCO lf3BLlFance Plc Opinion

We have audited the consolidated and separate financial statements of Staco Insurance Plc. ("the Company") and its subsidiary ("the Group"), which comprise the consolidated and separate statement of financial position at 31 December 2019, and the consolidated and separate statement of profit or loss and other comprehensive income, consolidated and separate statement of changes in equity and consolidated and separate statement of cash flows for the year ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the Group at 31 Oecember 201B, and its consolidated and separate financial performance and its consolidated and separate cBsh flows for the year then ended in acoordance with International Financial Reporting Standards (lFRSs) and with the requirements of the Financial Reporting Council of Nigeria Act, No 6, 2011, Companies and Allied Matters Act, Cap C20, LFN 2004 , the Insurance Act, Cap 1 17, LFN 200B and relevant policy guidelines issued by the National Insurance Commission (NAICOM).

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 Consolidated and separate Financial Statements section of our report. We are independent of the Group in accordance with the Intsmational Ethics StandBrds Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated and separate financial statements in Nigeria, and we have fulfilled our othar ethical responsibilities in accordance with these requirements and the IES8A Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter

Material Uncertainty Related to Going Concern

We draw your attention to the following notes in the consolidated financial statements:

1. Note 46.b. which indicates that, as of 31 December, 2019, the Company had deficiencies in asset cover (Hypothecation of assets) for Policy Holder's fund and shareholders fund for General Business of N2.54 billion (2018: N2.794 billion) and N5.25 billion ( 2018: N3.652 billion} respectively.

2. Note 5.j. which indicates that, as of 31 December, 2019, the company had a negative solvency margin of HB.754 biliion (2018 : N7.572 billion) which was below the minimum requirement of N3 billion for a general insurance business by H11.754 billion (2018 : 1410.572 billion).

These conditions as set forth in the notes mentioned above, indicate the existence of a material uncenainty that may cast significant doubt on the company's ability to continue as a going concern.

The note also explains the Directors' remedial plans whiCh formed the basis for preparing the financial statements using accounting policies applicable to going concern.

Our opinion is not modified in respect of this matter.

The following summarises how the matter was addressed in the audit:

• We checked adverse market conditions, trends and events and also pertorrrted other risk assessment procedures to identify any adverse events or conditions.

• We asked management whether they have identified any events or conditions that may cast significant doubts on the company's ability to continue as a going concern.

Offices In: Abuja, ' i

Partners/ Partner equivalent: ’.. krnde (Manage ng›, N Abdus-wlaam, ( EA Akapo, EA Akande, SO Olaoku n

d ” 1, 7 ” oi ’ i, ED A'. cola, II

PKF Professional Services is a member of PDF Gloo6i. •e e work or member firms of PDF International Limited, each of which is a separate and independent legal enti a*d doe» at aszep* a=y responsib)hty or liability for the actions or inactions of any individual member or correspondent firm(s).

• We reviewed all caurt casas. against the Group in order to obtain reasonable assurance that no stg zb‹zn threatens the going .concern of the Group either by suppiiers, government, customers employees sggrieyed third parties or shareholder of the Group.

We reviewed minutes of baard meetings held for all the quarters in the reporting period to assass any issues that could border on regulatory or legal challenges as it relates to.tha going concern of the Group.

We obtained assurance from management that significant accounting and reporting judgments are supported by a degree of rigor and analysis.appropriate to the. drcumstancea of the Grotjp.

Key audit mattara

Key audit matters are thase matters that, in our ptofesstonal judgmeM, were of most signIcance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial. statements as a whole, and in forming our opinion theraon, and we do not provide a separate opinion on these matters..

3

Other information

The directors are responsible for the other information. The other information comprises the Chairman's statement, Directors' Report; Audit Commixee's Report, Corporate Governance Fteport and Company Secreta s report which is expected to be made available to us after that date. Tha other information does not

›ncude me consolidated and separate financial statements and our auditor's report thereon.

Our opinion on the consolidated and separate financial statemems does not saver the other information and we do not and will not express any form of assurance conclusion thereon.

In connection vjith our audit of tY›e consolidated and separate financial statemems, our responsibility is to read the other information and, in doing so, consider whether the other information iB materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appeared to be materially misstated.

If, based on the work we have performed cm tha ather information that we obtained prior to the dste of this auditor's report, wa conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Reaponalbflltles of the Directors and those charged with Governance for tha consolidated and separate

The Directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards (lFRSs) and with the requirements of the Financial Reporting Council of Nigeria Act, No 6, 2011, Companies and Allied Matters Act, Cap C20, LFN 2004 , the Insurance Act, Cap 1 17, LFN 200:3 and relevant pole guideines IgsJed by the Hationa) Insurance Commission (NAICOM) and for such internal control as the Directors determine is necgssary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consoidated and separate financial stateme'nts, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, maaers related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

AuditoP• responsibilities for the audit of the consolidated and separate financial atatamenta

Ow objectives are to obtain reasonable assurance about whether the conadidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to Issue au auditor's raport that includes our opinion. Reasonable assurance ia a high level of assurance, but is nz›t a guarantee that an audit conduoed in accordance with lSAa will always detect .a material misstatamant when it exista. Misstatements can arise from fraud or error and ara considered material if, Individualy or in the aggregate, thay could reasonabiy ba expected to influence the economic declglons. of users taken on the basis of these consolidated and.separate financial atatemerrls.

As part of an audii in accordance with ISAs, we exarcise professional judgment and makzlaln professional skepticism throughout the audit. We abo:

• Identified and assessed the ri8ks of material misstatement of ihe consolidated and separate financial statements, whether due to fraud. or error, designed and oerf.•rmed audit prooeduras responsive to lhose ñsks, and obtain audit evidence that is sufficient 8nd"appropriate to provide a basis for our opinion. The risk of not detecting 8 material misstatement resulting from fraud IS highsr than for ooa resulting ffom error, as fraud may involve cation, forgery, intentional omissions, misrepfe6entations, or the overilde of internal control.

• Obtained an undbrstanding of internal control relevant to .the audit in order to deslgn audit procedures that

  are appropñate in the drcumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluated the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related dfBclo8ures made by the directors.

• Concluded on the appropriateness of the director's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast sIgnifr>tnt doubt on the Groups abiIty to coninue as a polng concam. if we conclude that a material uncertainty exists, we are required to draw attention in our auditor's. report to the ralated disdosuras in the consolidated financial statemanta or, if such diacloaures are inadequate, to modify our opinon. Our conclusions are Dased on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cauBe the Group to cease to continue as a going concern.

  Evaluated tha overall presentation, structure and content of tha consolidated and separate financial statements, including tha discDsures, and whether the consolidated and aaparate financial statements represent the underlying transactions and events in a manner that achieves fair preaentatlon.

• Obtained sufficient appropriate audit evidence reqardlng the financial Information of the entitles or business activities within the Group to express an opinion on the consolidated and separate financial statements. We are responsible for tha direction, supervision and performance of the group audit. We remain solely responsible for our audit apinion.

We communicated wkh the AudX Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findinga, Induding any. significant defioencles in Internal cornrol that we identify during our audit.

We aISo provided the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all reletionahlpa and other matters thaf may reasonably be thought to bear on our independence, and where applicable, related safaguards.

From the matters communicated with tha Audit Committee, we determine those. matters that were of most

.significance in the audit of ihe consolidated financial statements ef the current year and are therefore tha key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or whan, in extremely rare drcumstancBa, we determine that a matter 8houtd not be

communicated in our report because !ne adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Compliance with the requirements of Schedule 6 of the Companies and A|J/eJ Matters Act, Cap C20, LFN 2004 and Section 28(2) of the Insurance ACt, Cap 117, LFN 2003.

In our opinion, proper books of account have been kept by the Company. so far as appears from our examination of those books and the Company s statement of financial pos tion and statement of comprehensive income are in agreement with the books of account

Contraventions and Penalties

The Company paid fines and penalty in respect of contravention of the requirements of the National Insurance Commission and Securities and exchange Commission of Nigeria's Operational Guidelines durlng the year ended 31 December 2019. Details of penailty and fines paid are disclosed in Note 43 to the consolidated financial statements.

Benso O. dejayan, FcA FRC/2013 CAN/0D000002226

For PKF Professional Services Chartered Accountants FRC/2023/COY/141906

Lagos, Nigeria

Date: 4 September 2024

1. Reporting entity:

   The Company known as Staco Insurance Plc has a partly owned (60%) subsidiary known as Staco Insurance Company Limited in Sierra Leone, West Africa. The subsidiary was floated as a private limited liability company on 27th February, 2008 and is a composite insurance company engaged in the provision of life and non-life insurance cover to retail and corporate customers in Sierra Leone, West Africa.

   The Group is principally engaged in the provision of non-life and life insurance businesses.

   The issuance of these Group consolidated financial statement were authorised by the Board of Directors on 4 September 2024.

   The principal activities of the Group is mainly the underwriting of non-life businesses insurance risks.

2. Going Concern

   The company's solvency margin is below the requirements of the Insurance Act CAP I17, LFN 2004. The Company reported a solvency margin deficit of N8.75 billion for the year ended 31 December, 2019 (2018 : N7.572 billion) which occurred as a result of the backing out or derecognition of the unsubstantiated balances.

   The Group's management has performed an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future.This conclusion is based on the Group Executive Management’s plans aimed at returning the Group to profitability and a healthy financial position and would enhance the Group's Going Concern assumption consideration. These plans are as follows:

   • Recapilisation: The Board is in the process to re-capitalize the Company and has opened up discussion with a prospective investor to inject funds that would enable the Company meets up with its capital requirement.Part of the conditions of the investor is to put a new management in place to oversee the affairs of the company which is being worked upon. We hope to conclude the recruitment exercise in due time.

   • Debt part repayment and equity swap: The Board and Management engaged the service of a financial advisor (Cardinal Stone Financial Services) to provide professional advice and guide in negotiations with Daewoo Debenture holders of the JPY 902,000,000 zero coupon bond due 2029 for part payment of $4 million and a debt for equity swap such that the balance debt would give 10% of the ordinary equity in Staco Insurance Plc. Egerton Global Services Limited (the Investor) has been involved in further negotiation with Daewoo agents (Mirae).

   • Grow activities level: The Board and Management has put some strategies in place for a focus and rigorous marketing activities to improve the turnover and general activities level in order to return the company to profitability and viability.

   • Expenditure management: The Company has made plans to reduce overhead and administrative expenditures and also put in place practical capital expenditure strategies to delay any form of capital expenditure, postpone major maintenance activities and for critical assets that needed to be acquired, the Company will lease rather than outrightly purchase.

   The liquidity generated through the asset restructuring,expenditure management and capital raise will be applied to grow and manage the business profitably through aggressive marketing, service delivery, efficient internal control and investment activities to the satisfaction of all stakeholders. We believe that the above action plan will help reverse the current loss position to profitability in the near future. The going concern status of the business of Staco Insurance Plc. is therefore assured.

3. Basis of preparation

   These consolidated and separate financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), IFRS interpretations committee and in compliance with the Financial Reporting Council Act, No 6 2011, the Companies and Allied Matters Act, Cap C20, LFN 2004, the Insurance Act 2003 and National Insurance Commission (NAICOM) Guidelines and Circulars.Additional requirements issued by national regulators have been included where appropriate., to the extent that they do not conflict with IFRS.

   The principal accounting policies adopted in the preparation of these consolidated and separate financial statements are set out below. These policies have been consistently applied to all periods presented unless otherwise stated.

   1. Statement of compliance with IFRS

      These financial statements of the group have been prepared in accordance with International Financial Reporting Standards (IFRS), as published by the International Accounting Standards Board (IASB).

      These financial statements of the group comply with the requirement of the Companies and Allied Matters Act, 2020, Insurance Act of Nigeria, 2003, the Financial Reporting Council Act, 2011 and the Guidelines issued by the the National Insurance Commission to the extent that they are not in conflict with the International Financial Reporting Standards (IFRS).

      3.2 Basis of measurement

      The financial statements have been prepared under the historical cost convention as modified by the remeasurement of investment properties, available for sale investments and financial assets at fair value.

      3.3. Use of estimates and judgements

      The presentation of the group's consolidated financial statements requires management to make estimates and judgement that affect the reported amounts of assets and liabilities at the reporting date and the reported amount of income and expenses during the year ended. Management bases and evaluates its estimates and judgements on an ongoing basis. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The following estimates and judgements are considered key significant judgements and estimates uncertainty in relation to the financial position and performance of the group.

      1. Functional and presentation currency

         Items included in the consolidated financial statements of each entity of the group are measured using the currency that best reflects the economic substance of the underlying events and circumstance relevant to that entity (“the functional currency”). These consolidated financial statements are presented in Nigerian Naira (N), which is the Company's functional currency. The financial information has been rounded to the nearest thousand, except as otherwise indicated.

      2. 'Basis of consolidation

         The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (Subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

         The results of subsidiary set up, acquired or disposed off during the year are included in the consolidated statement of profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate.

         Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, incomes and expenses have been eliminated on consolidation.

      3. Offsetting

      Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Income and expense are not offset in the income statement unless required or permitted by any accounting standard or interpretation, and as specifically disclosed in the accounting policies of the group.

4. Application of new and revised International Financial Reporting Standards (IFRS)

   The accounting policies adopted are consistent with those of the previous financial year despite the adoption of IFRS. For the preparation of these financial statements, the following new, revised or amended requirements are mandatory for the first time for the financial year beginning 1 January 2019.

   4.1 Summary of Standards and Interpretations effective for the firs t time

   1. IFRIC 23 - Uncertainty over Income Tax Treatments

      The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

      Effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.

   2. IFRS 16 - Leases

      IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. Lessor accounting however remains largely unchanged from IAS 17 and the distinction between operating and finance leases is retained.

      Effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted, if IFRS 15, Revenue from Contracts with Customers, has also been applied.

   3. 'IFRS 9 - Financial instruments

   IFRS 9 introduces a new approach for classification and measurement of financial instruments, a more forward looking Impairment methodology and a new general hedge accounting requirement.

   Classification and Measurement

   IFRS 9 requires financial assets to be classified into one of three measurement categories: fair value through profit or loss, fair value through other comprehensive income and amortised cost. Financial assets will be measured at amortised cost if they are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and their contractual cash flows represent solely payments of principal and interest.

   Financial assets will be measured at fair value through other comprehensive income if they are held within a business model whose objective is achieved by collecting both contractual cash flows and selling financial assets and their contractual cash flows represent solely payments of principal and interest.

   Financial assets not meeting either of these two business models; and all equity instruments (unless designated at inception to fair value through other comprehensive income); and all derivatives are measured at fair value through profit or loss. An entity may, at initial recognition,designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch. The Group has undertaken an assessment to determine the potential impact of changes in classification and measurement of financial assets. Our assessment revealed that the adoption of IFRS 9 is unlikely to result in significant changes to existing asset measurement bases. IFRS 9 retains most of the existing requirements for financial liabilities. However, for financial liabilities designated at fair value through profit or loss, gains or losses attributable to changes in own credit risk shall be presented in other comprehensive Income.

   IFRS 9 retains most of the existing requirements for financial liabilities. However, for financial liabilities designated at fair value through profit or loss, gains or losses attributable to changes in own credit risk shall be presented in other comprehensive Income.

   The hedge accounting requirements in IFR S 9 are optional. If certain eligibility and qualification criteria are met, hedge accounting allows an entity to reflect risk management activities in the financial statements by matching gains or losses on financial hedging instruments with losses or gains. The amendments had no material effect on the Group’s Financial Statements.

   Impairment Methodology

   The IFRS 9 impairment model will be applicable to all financial assets at amortised cost, debt instruments measured at fair value through other comprehensive income, lease receivables, loan commitments and financial guarantees not measured at fair value through profit or loss.

   IFRS 9 replaces the existing ‘incurred loss’ impairment approach with an Expected Credit Loss (‘ECL’) model, resulting in earlier recognition of credit losses compared with IAS 39. Expected credit losses are the unbiased probability weighted average credit losses determined by evaluating a range of possible outcomes and future economic conditions. The ECL model has three stages. Entities are required to recognise a 12 month expected loss allowance on initial recognition (stage 1) and a lifetime expected loss allowance when there has been a significant increase in credit risk since initial recognition (stage 2). Stage 3 requires objective evidence that an asset is credit-impaired, which is similar to the guidance on incurred losses in IAS 39.

   The requirement to recognise lifetime ECL for assets which have experienced a significant increase in credit risk since origination, but which are not credit impaired, does not exist under IAS 39. The assessment of whether an asset is in stage 1 or 2 considers the relative change in the probability of default occurring over the expected life of the instrument, not the change in the amount of expected credit losses. Reasonable and supportable forward looking information will also be used in determining the stage allocation. In general, assets more than 30 days past due, but not credit impaired, will be classed as stage 2.

   IFRS 9 requires the use of more forward looking information including reasonable and supportable forecasts of future economic conditions. Reporting entities will be required to develop the capability to model a number of economic scenarios and capture the impact on credit losses to ensure the overall ECL represents a reasonable distribution of economic outcomes.

   Appropriate governance and oversight needs to be established around the process.

   An assessment of the ECL in the Group’s balance sheet reflects an increase in the provisions for credit losses. However, this increase does not have a significant impact on regulatory capital and invariably the Capital adequacy due to the Group’s strong earnings and retention capacity over the years.

   The Group conducted an initial predominance assessment and having met the criteria for exemption, the Board opted for temporary exemption option (deferral approach). The result of the predominance assessment using 2015 financial report as stated in IFRS 4 amended 2016 section 20D of the standard is stated below;

   The carrying amount of its liabilities arising from insurance contracts and insurance connected liabilities for the group sum up to N4.83 billion as at 31 Dec 2019 (31 Dec 2018 : N5.39 billion), Company N4.14 billion (31 Dec 2018: 4.58 billion) which is greater than 60 per cent of the total carrying amount of all its liabilities as at 31 Dec 2019 and 31 Dec 2018 respectively.

   The Company is registered with C.A.C. to carryout insurance activities and its activities are predominantly connected with insurance contracts.

   Predominance Assessment
   Using 2015 Financial Report	Gr Carrying	oup Admissible for predominance	Co Carrying	mpany Admissible for predominance
   Insurance Liabilities	amount N'000	test N'000	amount N'000	test N'000
   Insurance contract liabilities	5,541,750	5,541,750	5,335,335	5,335,335
   Financial liabilities	2,128,187	-	2,124,405	-
   Trade payables	94,230	94,230	2,085	2,085
   Bank overdraft	69,252	-	69,252	-
   Other payables and accruals	98,143	-	67,190	-
   Deferred tax liabilities	102,615	-	98,050	-
   Employee benefit liability	1,306	-	-	-
   Current tax liability	66,772	66,772	32,374	32,374
   Deposit for shares	1,475,000 -		1,475,000		-
   	9,577,255 5,702,752		9,203,691		5,369,794
   Predominance ratio	60%				58%

   Given a score of 60% for the Group(Parent: 58%), we assessed whether the Group engages in a significant activity unconnected with insurance. Based on our assessment, we concluded that the Group does not engage in a significant activity unconnected with insurance since majority of the activities from which the Group earns income and incur expenses are insurance-related.

   The Group has elected to apply the temporary exemption from IFRS 9 (deferral approach) and qualifies for the temporary exemption based on the following;

   (a).Its activities are predominantly connected with insurance contracts;

   (b).As at 31 December 2015, which is the reporting date that immediately precedes 1 April 2016, the carrying amount of its liabilities arising from insurance contracts was =N=5.70 billion (Parent: =N=5.34 billion) which was 60% (Parent: 58%) of the total carrying amount of all its liabilities as at that date.

   (c) The company’s activities have remained the same and are predominantly connected with insurance contracts. The majority of the activities from which the Group earns income and incur expenses are insurance-related.

   The impact assessment of IFRS 9 on the Group’s financial assets as December 31, 2017 which is the reporting date that immediately precedes January 1, 2018, , i.e. the effective implementation date of the standard and that of the year 2018 & 2019, after the deferral of IFRS 9, are stated below:

   Group

   2017 impact analysis on Financial Assets

   2017 Group

   Financial Assets:	IAS 39 N'000	IFRS 9 N'000	Impact N'000
   At fair value through profit or loss	-	-	-
   Available for sale(FVOCI)	293,384	293,384	-
   Held to maturity(Amortised Cost)	429,634	386,671	42,963
   Loans and receivables (Amortised Cost)	118,140	106,326	11,814
   Trade receivables	347,200	312,480	34,720
   	1,188,358	1,098,861	89,497

   Company

   2017 impact analysis on Financial Assets 2017 Company
   Financial Assets:	IAS 39 N'000		IFRS 9 N'000		Impact N'000
   At fair value through profit or loss		-		-		-
   Available for sale(FVOCI)	264,889			264,889		-
   Held to maturity(Amortised Cost)	11,748			10,573		1,175
   Loans and receivables (Amortised Cost)	115,437			103,893		11,544
   Trade receivables	60,137			54,123		6,014
   	452,211			433,478		18,733
   Group
   2018 impact analysis on Financial Assets 2018 Group
   Financial Assets:	IAS 39 N'000		IFRS 9 N'000		Impact N'000
   At fair value through profit or loss		-		-		-
   Available for sale(FVOCI)	236,562			236,562		-
   Held to maturity(Amortised Cost)	84,190			76,345		7,845
   Loans and receivables (Amortised Cost)	11,750			10,789		961
   Trade receivables	297,375			297,375		-
   	629,877			621,071		8,806
   Company
   2018 impact analysis on Financial Assets Financial Assets:	IAS 39 N'000		2018 Company IFRS 9 N'000		Impact N'000
   At fair value through profit or loss	-		-			-
   Available for sale(FVOCI)	178,607		178,607			-
   Held to maturity(Amortised Cost)	11,109		10,573			536
   Loans and receivables (Amortised Cost)	9,784		8,805			979
   Trade receivables	55,700		55,700			-

   255,200 253,685 1,515

   Group

   2019 impact analysis on Financial Assets

   2019 Group

   Financial Assets:	IAS 39 N'000		IFRS 9 N'000		Impact N'000
   At fair value through profit or loss	-		-		-
   Available for sale(FVOCI)	180,186		180,186		-
   Held to maturity(Amortised Cost)	196,920		194,950		1,970
   Loans and receivables (Amortised Cost)	67,939		67,260		679
   Trade receivables	477,303		477,303		-
   	922,348		919,699		2,649
   Company
   2019 impact analysis on Financial Assets 2019 Company
   Financial Assets:	IAS 39 N'000		IFRS 9 N'000		Impact N'000
   At fair value through profit or loss	-		-			-
   Available for sale(FVOCI)	115,139		115,139			-
   Held to maturity(Amortised Cost)	88,177		87,295			882
   Loans and receivables (Amortised Cost)	2,791		2,763			28
   Trade receivables	5,280		5,280			-
   	211,387		210,477			910

   Fair value disclosures

   Financial assets with contractual terms that give rise to cash flows that are solely payments of principal and interest:

   The group financial assets with contractual terms that give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding are as follows;

   31 December

   	2019	2018
   	N'000	N'000
   Premium receivables	477,303	297,375
   Loans and receivables	67,939	11,750
   Other receivables net off prepayments	23,246	192,430
   Short term placement	529,285	579,932
   Investment securities: Treasury bills	116,221	79,716
   Bonds	80,699	4,474
   	1,294,693	1,165,677

   Financial assets with contractual terms that do not give rise to cash flows that are solely payments of principal and interest:

   These are financial assets that meets the definition of held for trading in line with IFRS 9; or that is managed and whose performance is evaluated on a fair value basis. These assets are as follows:

   31 December

   	2019	2018
   	N'000	N'000
   Quoted equity securities	65,047	159,882
   Unquoted equity securities	115,139	76,680
   	180,186	236,562

   1. Standards and interpretations issued/amended but not yet effective.

      At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations were in issue, but not yet effective: This includes:

      1. IAS 1 — Presentation of Financial Statements

         IAS 1 "Presentation of Financial Statements" sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction.

         The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.

         IAS 1 has been revised to incorporate a new definition of “material” and IAS 8 has been revised to refer to

         this new definition in IAS 1.

         The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

      2. IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors

         IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors. The standard requires compliance with any specific IFRS applying to a transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information.

         Changes in accounting policies and corrections of errors are generally retrospectively accounted for, whereas changes in accounting estimates are generally accounted for on a prospective basis.

         The amendment is effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

      3. IFRS 17 — Insurance Contracts

         IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity's financial position, financial performance and cash flows.

         The IASB tentatively decided to defer the effective date of IFRS 17, Insurance Contracts to annual periods beginning on or after January 1, 2022. The IASB also tentatively decided to defer the fixed expiry date for the temporary exemption to IFRS 9 in IFRS 4 by one year so that all insurance entities must apply IFRS 9 for annual periods on or after January 1, 2022.

         The Group is assessing the potential impact of the new standard which will be effective for annual reporting periods beginning on or after 1 January 2022.

         4.3 New standards, amendments and interpretations issued but without an effective date

         At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations were in issue, but without an effective: This includes:

         Amendments to IFRS 10 and IAS 28 Consolidated Financial Statements and Investments in Associates and Joint Ventures

         Amends IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associ-ates and Joint

         Ventures (2011) to clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows:

         -.Require full recognition in the investor's financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations).

         -.Require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain

         or loss is recognized only to the extent of the unrelated investors’ interests in that associate or joint venture.

         These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves.

      4. The following new or amended standards are not expected to have a s ignificant impact on the Group's consolidated financial statements

   4.4.4.1 Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) IFRS 14 Regulatory Deferral Accounts

   Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11).

   Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38). Equity Method in Separate Financial Statements (Amendments to IAS 27).

   Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28).

   Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28).

5. Significant accounting policies

1. Consolidation

   The financial statements of the consolidated subsidiaries used to prepare the consolidated financial statements were prepared as of the parent company’s reporting date. The consolidation principles are statements were prepared as of the parent company’s reporting date. The consolidation principles are unchanged as against prior year.

   1. Investment in subsidiaries

      Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that, presently, are exercisable are taken into account.

      The Group has adopted IFRS 3 Business Combination (2008). Its adoption though prospectively applied had no material impact on earnings per share. The new accounting policy in respect to business combinations is presented as follows:

      Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

      Accounting method of consolidation

      Subsidiaries are fully consolidated from the date on which control is transferred to the Group. The results of the subsidiaries acquired or disposed of during the year are included in the consolidated financial statement from the effective acquisition date and or up to the effective date on which control ceases, as appropriate. The integration of the subsidiaries into the consolidated financial statements is based on consistent accounting and valuation methods for similar transactions and other occurrences under similar circumstances. Subsidiaries are not consolidated from the date on which control ceases.

      Transactions eliminated on consolidation

      Intra-group balances, and income and expenses (except for foreign currency translation gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

      Non-controlling interest

      The group applies IAS 27 Consolidated and Separate Financial Statements (2008) in accounting for non-controlling interests. Under this accounting policy, non-controlling interests are accounted for as transactions with equity holders in their capacity as owners, and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on the proportionate amount of the net assets of the subsidiary.

2. Foreign currency translation

   Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period.

   Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognized in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognized in other comprehensive income. 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. Cash and cash equivalents

   Cash and cash equivalents comprise cash in hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

4. Financial assets

   1. Non-derivative financial assets

      The Company classifies its financial assets into the following categories: at fair value through profit and loss, loans and receivables, held to maturity and available for sale. The classification is determined by management at initial recognition and depends on the purpose for which the investments were acquired.

      The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expires, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.

      Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

      The Company has the following non-derivative financial assets: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.

      1. Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy. Upon initial recognition attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.