NOTORE CHEMICAL INDUSTRIES : QUARTER 3 - FINANCIAL STATEMENT FOR 2023

RC: 640303

NOTORE CHEMICAL INDUSTRIES PLC UNAUDITED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

	Page
Financial statements
Consolidated and separate statements of financial position	1
Consolidated and separate statements of profit or loss and other comprehensive income	2
Consolidated and separate statements of profit or loss and other comprehensive income(Three months)	3
Consolidated and separate statements of cash flows	4
Consolidated and separate statements of changes in equity	5
Notes to the financial statements	7

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)

Group

Company

Notes

30 Sept 2023

31 Dec 2022

30 Sept 2023

31 Dec 2022

		N'000	N'000	N'000	N'000
Non-current assets
Property, plant and equipment	14	241,890,978	187,632,461	241,890,975	187,632,460
Right of use assets	15	153,278	227,001	153,278	227,001
Investment property	16	75,224,605	75,161,244	75,161,244	75,161,244
Investments in subsidiaries	27	-	-	50,255	50,255
Total non-current assets		317,268,861	263,020,706	317,255,752	263,070,960
Current assets
Inventories	18	8,717,967	9,732,537	8,593,993	9,688,013
Trade and other receivables	19a	16,638,284	1,851,217	17,588,564	2,865,035
EEG Receivable	19b	-	4,036,546	-	4,036,546
Cash at bank and in hand	20	997,695	570,161	492,124	462,672
Total current assets		26,353,946	16,190,461	26,674,681	17,052,266
Total assets		343,622,807	279,211,167	343,930,433	280,123,226
Equity
Ordinary shares	21	806,033	806,033	806,033	806,033
Share premium		27,995,916	27,995,916	27,995,916	27,995,916
Asset revaluation reserves		128,332,618	86,584,932	128,332,618	86,584,932
Accumulated losses	22	(105,166,099)	(38,928,014)	(104,506,693)	(38,202,884)
Treasury shares reserve		(1,080,831)	(1,080,831)	(1,080,831)	(1,080,831)
Total equity		50,887,637	75,378,036	51,547,043	76,103,166
Liabilities
Non-current liabilities
Borrowings	24a	156,890,812	109,760,326	156,890,812	109,760,326
Employee benefit obligation	23	2,250,197	2,048,125	2,250,197	2,048,125
Grant liability	24b	732,299	1,270,430	732,299	1,270,430
Deferred tax liability	12a	20,265,443	2,373,579	20,265,443	2,373,579
Total non-current liabilities		180,138,751	115,452,460	180,138,751	115,452,460
Current liabilities
Borrowings	24a	47,274,306	32,619,809	47,274,306	32,619,809
Lease liability	15(b)	138,177	202,722	138,177	202,722
Trade and other payables	25	64,427,285	54,627,577	64,075,505	54,814,506
Grant liability	24b	717,508	717,508	717,508	717,508
Current tax liabilities	12	39,143	213,055	39,143	213,055
Total current liabilities		112,596,419	88,380,671	112,244,639	88,567,600
Total liabilities		292,735,170	203,833,131	292,383,390	204,020,060
Total equity and liabilities		343,622,807	279,211,167	343,930,433	280,123,226

The financial statements on pages 7 to 33 were approved and authorised for issue by the board of directors on 27th October 2023 and signed on its behalf by:

Mr. Ohis Ohiwerei		Mr. Onajite P. Okoloko		Ms. Chekwubechukwu Onianwa
Managing Director/CEO		Director		Chief Financial Officer
FRC/2017/CIBN/00000016412		FRC/2014/NIM/00000007662		FRC/2022/PRO/ICAN/001/704370

The notes on pages 7 to 33 are an integral part of these financial statements.

1

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED AND SEPARATE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)

Group

Company

Notes

Nine months	Nine months	Nine months	Nine months
30 Sept 2023	30 Sept 2022	30 Sept 2023	30 Sept 2022
N'000	N'000	N'000	N'000

Revenue from contracts with customers	7	12,713,206	32,948,073	11,994,172	32,176,418
Cost of sales	8	(18,300,270)	(23,088,401)	(17,941,321)	(22,709,687)
Gross (loss)/Profit		(5,587,064)	9,859,672	(5,947,149)	9,466,731
Administrative expenses	9	(9,449,021)	(5,178,390)	(9,156,932)	(4,872,361)
Selling and distribution expenses	9b	(230,706)	(162,004)	(228,434)	(146,688)
Other income	10	556,793	7,537,016	556,793	7,537,016
Operating (loss)/income		(14,709,998)	12,056,294	(14,775,722)	11,984,698
Finance income	11a	130	101	130	101
Finance cost	11b	(51,528,217)	(13,005,991)	(51,528,217)	(13,005,991)
Finance costs - (net)	11	(51,528,087)	(13,005,890)	(51,528,087)	(13,005,890)
Loss/profit before income tax		(66,238,085)	(949,596)	(66,303,809)	(1,021,192)
Income tax	12	-		-	-
Loss/profit for the period		(66,238,085)	(949,596)	(66,303,809)	(1,021,192)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation surplus on property, plant and equipment	14	59,639,552	-	59,639,552	-
Deferred tax charge on revaluation surplus	12a	(17,891,866)	-	(17,891,866)	-
Total items that will not be reclassified to profit or loss		41,747,686	-	41,747,686	-
Items that may be subsequently reclassified to profit or loss
Total items that may be reclassified to profit or loss		-	-	-	-
Other comprehensive income for the period-
net of tax		41,747,686	-	41,747,686	-
Total comprehensive loss/profit) for the period		(24,490,399)	(949,596)	(24,556,123)	(1,021,192)
Total comprehensive loss/profit) for the period attributable to:
Equity holders of the parent company		(24,490,399)	(949,596)	(24,556,123)	(1,021,192)
Non controlling interest		-	-	-	-
Earnings per share for loss attributable to the equity
holders of the company
Basic EPS (Naira)	13	(41.09)	(0.59)	(41.13)	(0.63)

The notes on pages 7 to 33 are an integral part of these financial statements.

2

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS PERIOD ENDED 30 SEPT 2023

(All amounts are in thousands of Naira, unless otherwise stated)
		Group	Company
		Three months	Three months	Three months	Three months
	Note	30 Sept 2023	30 Sept 2022	30 Sept 2023	30 Sept 2022
		N'000	N'000	N'000	N'000
Revenue from contracts with customers	29	4,794,406	6,661,974	4,551,857	6,462,625
Cost of sales	30	(7,009,874)	(4,906,020)	(6,872,123)	(4,827,745)
Gross loss/profit		(2,215,468)	1,755,954	(2,320,266)	1,634,880
Administrative expenses	31a	(3,415,556)	(1,735,613)	(3,311,464)	(1,661,672)
Selling and distribution expenses	31b	(69,033)	(50,425)	(69,032)	(43,009)
Other income	32	197,235	1,235,417	197,235	1,235,417
Operating loss/income		(5,502,823)	1,205,332	(5,503,528)	1,165,615
Finance income	33	-	101	-	101
Finance cost	33b	(22,729,470)	(4,761,342)	(22,729,470)	(4,761,342)
Finance costs - (net)	33	(22,729,470)	(4,761,241)	(22,729,470)	(4,761,241)
Loss/profit before income tax		(28,232,293)	(3,555,909)	(28,232,999)	(3,595,627)
Income tax		-	-	-	-
(Loss)/Profit for the period		(28,232,293)	(3,555,909)	(28,232,999)	(3,595,627)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Total items that will not be reclassified to profit or loss		41,747,686	-	41,747,686	-
Items that may be subsequently reclassified to profit or loss
Total items that may be reclassified to profit or loss		-	-	-	-
Other comprehensive income for the period-
net of tax		41,747,686	-	41,747,686	-
Total comprehensive (loss)/profit for the period		13,515,393	(3,555,909)	13,514,687	(3,595,627)
Total comprehensive loss/profit for the period attributable to:
Equity holders of the parent company		13,515,393	(3,555,909)	13,514,687	(3,595,627)
Non controlling interest		-	-	-	-
Earnings per share for loss attributable to the equity
holders of the company
Basic EPS (Naira)		(17.51)	(2.21)	(17.51)	(2.23)

3

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)
		Group		Company
		Nine months		Nine months	Nine months	Nine months
	Notes	30 Sept 2023		30 Sept 2022	30 Sept 2023	30 Sept 2022
		N'000	N'000	N'000	N'000
Cash flows from operating activities:
		(66,238,085)		(949,596)	(66,303,809)	(1,021,192)
Loss/profit on ordinary activities before taxation
Adjustments for :
Depreciation	14	6,311,391		5,344,270	6,311,391	5,342,206
Depreciation of right of use assets	15	73,723		70,865	73,723	70,865
Interest expense on leases	15(b)	16,042		13,950	16,042	13,950
Current service cost and interest on gratuity	23	341,213		341,217	341,213	341,217
Fair value adjustment on investment property	16	-		(6,000,000)	-	(6,000,000)
Transfer from investment property to subsidiary	16	-		-	-	646,245
Grant income	10	(538,131)		(805,514)	(538,131)	(805,514)
Interest accrued	24a	-		86,316	-	86,316
Decrease/(increase) of gratuity plan assets		-		(20,596)	-	(20,596)
(Gain)/Loss on disposal of fixed assets		1,647		(9,562)	1,647	(9,562)
Net adjustments for non-cash items		7,457,623		(977,025)	7,457,623	(334,874)
Adjustments for non-operating cash flow items:
Interest received	11	(130)		(101)	(130)	(101)
Interest expense	11	51,512,174		12,905,724	51,512,174	12,905,724
Net adjustments for non-operating cash flow items		51,512,044		12,905,623	51,512,044	12,905,623
Changes in working capital:
		1,014,570		349,218	1,094,020	350,233
(Increase)/decrease in inventories
decrease/(increase) in trade and other receivables		(10,750,521)		1,410,851	(10,686,983)	477,394
Increase in trade and other payables		9,799,708		1,228,034	9,260,999	1,353,073
Cash generated from operating activities		(7,204,665)		13,967,109	(7,666,108)	13,730,256
Gratuity paid	23	(139,141)		(369,548)	(139,141)	(369,548)
Income taxes paid	12	(173,912)		-	(173,912)	-
Net cash generated from operating activities		(7,517,716)		13,597,561	(7,979,160)	13,360,708
Cash flows from investing activities:
Purchases of property, plant and equipment	14	(2,183,737)		(2,435,108)	(2,183,737)	(2,179,271)
Proceeds from disposal of fixed assets		-		9,563	-	9,563
Addition to right of use		-		(272,830)	-	(272,830)
Addition to Intangible asset	17	-		(26,756)	-
Addition to investment property		(63,361)			-
Interest received	11	130		-	130	-
				101		101
Net cash used in investing activities		(2,246,968)		(2,725,031)	(2,183,607)	(2,442,438)
Cash flows from financing activities:
Proceeds from borrowings	24a	-		-	-	-
Addition to lease liability		-		272,830	-	272,830
Repayments of borrowings	24a	(4,352,207)		(11,301,111)	(4,352,207)	(11,301,111)
Changes in long term payables
		-		-	-	0
Principal elements of lease payments		(74,860)		(97,042)	(74,860)	(97,042)
Refinancing of loan repayment maturities	24a	63,659,606		14,329,490	63,659,606	14,329,490
Interest paid on lease		(5,728)		(8,546)	(5,728)	(8,546)
Interest paid	11	(51,512,174)		(12,905,724)	(51,512,174)	(12,905,724)
Net cash (used in)/generated from financing activities		7,714,638		(9,710,102)	7,714,638	(9,710,102)
Net increase/ (decrease)in cash and cash equivalents		(2,050,050)		1,162,427	(2,448,130)	1,208,169
Cash and cash equivalents at beginning of period		(1,106,911)		(2,264,577)	(1,214,401)	(2,399,581)
Cash and cash equivalents at end of period	20	(3,156,961)		(1,102,150)	(3,662,531)	(1,191,412)

The notes on pages 7 to 33 are an integral part of these financial statements.

4

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)
Group
			Foreign
			currency
	Share	Share	translation	Asset revaluation		Treasury shares
	capital	premium	reserve	reserve	Accumulated losses	reserve	Total equity
	N'000	N'000	N'000	N'000	N'000	N'000	N'000
Balance at 1 January 2022	806,033	27,995,916	-	60,124,144	(34,816,713)	(1,080,831)	53,028,549
Profit for the period	-	-	-	-	(949,596)		(949,596)
Other comprehensive income:							-
Total comprehensive profit for the period	-	-	-	-	(949,596)	-	(949,597)
Transaction with owners	-	-	-	-	-		-
Balance at 30 September 2022	806,033	27,995,916	-	60,124,144	(35,766,309)	(1,080,831)	52,078,952
Group
			Foreign
			currency
	Share	Share	translation	Asset revaluation		Treasury shares
	capital	premium	reserve	reserve	Accumulated losses	reserve	Total equity
	N'000	N'000	N'000	N'000	N'000	N'000	N'000
Balance at 1 January 2023	806,033	27,995,916	-	86,584,932	(38,928,014)	(1,080,831)	75,378,035
Loss for the period	-	-	-	-	(66,238,085)		(66,238,085)
Other comprehensive income:
PPE revaluation surplus, net of tax	-	-	-	41,747,686	-		41,747,686
Total comprehensive loss for the period	-	-	-	41,747,686	(66,238,085)	-	(24,490,399)
Transaction with owners	-	-	-	-	-	-	-
Balance at 30 September 2023	806,033	27,995,916	-	128,332,618	(105,166,099)	(1,080,831)	50,887,638

Foreign currency translation reserve refers to foreign currency exchange difference arising on translation of Notore Supply & Trading, a wholly owned subsidiary of the Company, from its functional and reporting currency of US dollars to Naira.

Treasury shares reserve relates to receivables from Employee share ownership plan (ESOP) reclassified to equity

5

NOTORE CHEMICAL INDUSTRIES PLC

UNAUDITED CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)

Company

		Share	Asset revaluation		Treasury shares
	Share capital	premium	reserve	Accumulated losses	reserve	Total equity
	N'000	N'000	N'000	N'000	N'000	N'000
Balance at 1 January 2022	806,033	27,995,916	60,124,144	(34,681,330)	(1,080,831)	53,163,932
Profit for the period	-	-	-	(1,021,192)	-	(1,021,192)
Other comprehensive income:						-
Total comprehensive profit for the period	-	-	-	(1,021,192)	-	(1,021,192)
Transaction with owners	-	-	-	-	-	-
Balance at 30 September 2022	806,033	27,995,916	60,124,144	(35,702,522)	(1,080,831)	52,142,740
Company
		Share	Asset revaluation		Treasury shares
	Share capital	premium	reserve	Accumulated losses	reserve	Total equity
	N'000	N'000	N'000	N'000	N'000	N'000
Balance at 1 January 2023	806,033	27,995,916	86,584,932	(38,202,884)	(1,080,831)	76,103,166
Loss for the period	-	-	-	(66,303,809)		(66,303,809)
Other comprehensive income:
PPE revaluation surplus, net of tax	-	-	41,747,686	-		41,747,686
Total comprehensive loss for the period	-	-	41,747,686	(66,303,809)	-	(24,556,123)
Transaction with owners	-	-	-	-	-	-
Balance at 30 September 2023	806,033	27,995,916	128,332,618	(104,506,693)	(1,080,831)	51,547,043

Treasury shares reserve relates to receivables from Employee share ownership plan (ESOP) reclassified to equity

6

NOTORE CHEMICAL INDUSTRIES PLC

NOTES TO THE ANNUAL, CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

(All amounts are in thousands of Naira, unless otherwise stated)

1.0 General information

Notore Chemical Industries Plc (''the Company'') was incorporated in Nigeria on 30 November 2005 to manufacture and deal in nitrogenous fertilizers and all substances suited to improving the fertility of soil and water. The company fully rehabilitated a 500,000 metric tonne Urea Plant in Onne, Rivers State, Nigeria and commenced commercial production in the first quarter of 2010. It is a subsidiary of Notore Chemical Industries (Mauritius) Limited.

The principal activities of the Company are to manufacture, treat, process, produce, supply and deal in nitrogenous fertilizer and all substances suited to improving the fertility of soil and water.

The address of the Company's registered office is: Notore Industrial Complex

Onne Rivers State Nigeria

The consolidated financial statements have been prepared through the consolidation of the subsidiaries with the Company. The subsidiaries are: Notore Supply and Trading Mauritius Limited, Notore Power Limited, Notore Foods Limited, Notore Seeds Limited, Notore Industrial City Limited, Notore Supply and Trading Limited BVI and Notore Train II Limited. Except Notore Power and Infrastructure Limmited, all the subsidiaries are non-operating as at the reporting date.

These financial statements are presented in Nigerian Naira which is the functional currency of the primary economic environment in which the parent company operates. The financial statements have been rounded to the nearest thousands Naira (NGN'000), except where otherwise indicated.

2.0 Basis of preparation and adoption of IFRSs

1. Statement of compliance
   The consolidated financial statements of Notore Chemical Industries Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS and in the manner required by the Companies and Allied Matters Act (CAMA) and Financial Reporting Council of Nigeria (FRC) Act.
   The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and separate financial statements are disclosed in Note 5.
2. Basis of measurement
   The consolidated and separate financial statements have been prepared under the historical cost basis except for the under mentioned areas which are measured as indicated:
3. • Investment properties measured at fair value;
   • Defined benefit asset measured at fair value;
   • Financial instruments (borrowings) measured at fair value;
   • Inventory is measured at lower of cost and net realisable value;
   • Land and building and plant and machinery are carried at revalued amount;
   • Gratuity valuation based on independent actuarial valuation performed by independent actuaries using the projected unit credit method

These financial statements were authorised for issue by the board of directors on 27th October 2023.

1. Changes in accounting policy and disclosures
2. New accounting standards adopted by the group
   There was no new standard adopted in the current period.

7

3.0 Changes in accounting policy and disclosures (cont'd)

3.2 New accounting standards issued but not yet adopted

A number of new standards, amendments to standards and interpretations in issue but not yet effective ;Amendments to IAS 16 - Property, Plant and Equipment-Proceeds before Intended Use,IFRS 9 Financial Instruments, Impact of the initial application of COVID-19-Related Rent Concessions beyond 30 June 2021, have not been applied in preparing these financial statements. None of these is expected to have significant effect on the financial statement of the Group.

4.0 Summary of significant accounting policies

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

4.1 Foreign currency translation

1. Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Naira which is the group's functional currency.

1. Transactions and balances
   Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. 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 within 'administrative expenses'.
2. Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

1. assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
2. income and expenses for each statement of profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
3. all resulting exchange differences are recognised in other comprehensive income.

1. Trade receivables
   Trade receivables are amounts due from customers for sale of fertilizer products in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
   Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
2. Revenue recognition
   Revenue is measured at the fair value of the consideration received or receivable for goods or services, in the ordinary course of the Group's activities and it is stated net of value added tax (VAT), discounts, rebates and returns. A valid contract is recognised as revenue after;
3. • The contract is approved by the parties.
   • Rights and obligations are recognised.
   • Collectability is probable.
   • The contract has commercial substance.
   • The payment terms and consideration are identifiable.

The probability that a customer would make payment is ascertained based on the credit evaluation done on the customer at the inception of the contract.

Revenue is recognised when the control of the goods is transferred to the customer. This occurs where goods are delivered to the customer's location or picked up from the Company's site.

Revenue from sale of fertiliser is recognised based on the price specified in the contract (sales order), net of the estimated discounts, rebates and returns. Discounts are applied immediately on sale and are all utilized within period ascertained by the Group. Rebates and returns on goods are estimated at the inception of the contract and deducted from transaction price.

The delivery service provided by the Group is a sales fulfillment activity and the income earned is recognised at the point in time when control passes to the customer.

8