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2007 Annual Report and Accounts

Sharpening our

Chams Nigeria PLC

Innovation is our culture at Chams. We call it working in the future tense.

Contents
The Spirit of Chams ....................... 4 Notice of AGM ............................. 10 The Chairmans Statement .......... 12 Managing Directors Review ......... 16 Directors Report ......................... 22 Board of Directors ....................... 24 Management Team ...................... 26 Subsidiaries ................................. 28 Report of the Audit Committee .... 30 Report of the Independent
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Auditors ....................................... 31 Statement of Significant Accounting Policies ..................... 32 Profit and Loss Account .............. 34 Balance Sheet ............................. 35 Statement of Cash Flows............. 36 Financial Statements ................... 37 Five Year Financial Statements..... 46

Chams
The Spirit of
Who We Are
A Company of Nigerian Origin, we will be extremely influential and highly visible in global technology. Our trusted cutting edge technology will enhance the quality of lives in a manner that glorifies God. We would be employer of first choice.

Our Vision
To become the leading provider of innovative technologies that improve the quality of life.

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

THE

SPI R I T

OF

CHA M S

What We Do:
Chams, an acronym for Computer Hardware and Maintenance Services has moved from Computer Maintenance to the future of ICT. We provide total solution for e-payment platforms. Our business supports transactional cardbased services, E-commerce and mobile payment schemes. We stay true to our mission of designing and providing innovative and beneficial technologies by giving Nigerians access to ICT infrastructures that add value and convenience to their everyday life through our payments solutions. We have exposed our people to the variety of opportunities that avail in the ICT world. We provide the solution of the future by making sure that Nigeria gradually moves into a cashless, contact-less economy. We have evolved in such a way that we have changed the meaning of Information Technology to Innovative Technology. We are Chams.

THE

SPI R I T

O F

CHA M S

The world has moved from a cash based economy to a cashless one, and we at Chams Nigeria Plc and its various subsidiaries are committed to helping Nigeria move seamlessly with the world trend of cashless, contact-less based economy with the various solutions and products we deploy.

Sucess demands a constant focus on quality and innovation as well as exceptional customer service. Chams will continue to adapt to market conditions, but our philosophy, which has served us well for over 23 years will not change

How we Shape the future:


In keeping with our tagline - Innovation in the future tense, Chams Nigeria Plc has stepped up another gear with the addition of three new subsidiaries. These subsidiaries would consolidate our past achievements and define our future as the foremost provider of e-payment solutions in Nigeria and beyond. These new subsidiaries are: ChamSwitch: Established to provide transactional and Identification switching services. ChamSwitch is committed to providing a platform that would allow e-payment processing i.e. financial transactions and identification management. ChamSwitch is poised to serve all existing payment platforms. ChamsMobile: Conceptualized to create an enabling environment for the development of e-commerce

by encouraging e-payment at consumers fingertips. ChamsMobile is geared towards making payments an enjoyable experience. We intend to allow payment applications on our CAST to be integrated with our mobile application platform. ChamsCity: This is a transactional centre where all types of online transactions can be performed. Its going to be the worlds largest cybercaf, we would build complexes that would house approximately 1000 computers, this would give more Nigerians the opportunity to see and communicate with the world. The e-commerce centre would offer the following services: bill payments, internet surfing, sale and purchase of goods and services, conduct of protometric examinations, online registration for various products and services.

C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

I multitask and nuture people. I am CHAMS.

My name is Olufunke Veronica AlomoOluwa. I joined Chams in 1997 with a B.SC in Computer Science, working as part of a strong sales team. rough the evaluation process, HR advised that I explore my other skills. I trained and became a chartered accountant and I am now Chief Accountant. I implement the companys nancial policies and provide accurate nancial information to aid decision-making. As a volunteer part-time teacher, I am thrilled when I lead students to discover the additional applications of mathematics. I multi-task and nurture talents. I am Chams.

Chams Nigeria PLC


www.chams.com

Innovation in the future tense

Notice of Annual General Meeting


Notice is hereby given that the Annual General Meeting of Chams Nigeria PLC is scheduled to hold on Friday 6th June 2008 at Muson Centre, LaScala Restaurant, Lagos, at 10a.m to transact the following businesses:
ORDINARY BUSINESS
1. To present to the members the Audited accounts f or the year ended 31st December, 2007. 2. To declare a dividend. 3. To authorize the Directors to fix the remuneration of the Auditors. 4. Retirement and re-appointment of Directors 5. Election of Audit Committee Members SPECIAL BUSINESS 6. To consider and if thought fit, pass the following as an ordinary resolution: The Directors having so recommended, it is desirable to pay and appropriate the sum of Eighty Six Million, One Hundred and Three Thousand Naira (N86,103,000.00) as dividend to shareholders at Five (5) Kobo per share and to be funded from the balance of General Reserve account and accordingly that such sum be set free for distribution amongst the members on the Register of Members at the close of business on Monday 31 December, 2007 7. To consider and if thought fit pass the following resolutions which will be proposed as Ordinary Resolutions: i. That the authorised share capital of the company be increased from Two Billion Five Hundred Million Naira (N2,500,000,000) to Five Billion Naira (N5,000,000,000) by the creation and addition thereto of 5,000,000,000 Ordinary Shares of 50kobo each, such shares to rank pari passu in all respects with the existing ordinary shares in the capital of the company. ii. That the Board of Directors be authorized to take all required actions to list the shares of the Company on the Nigerian Stock Exchange. iii. That the Board of Directors be and is hereby authorized to undertake an Initial Public Offer on the newly created shares of the company or any part thereof on terms to be determined by the Board of Directors. 8. To consider and if thought fit, pass the following resolutions as Special Resolution: I. That the Board of Directors be authorized to allot 975,000,000 units of the ordinary shares of the company at N2.50kobo per share by way of a special placement offer in respect of the deposit for shares of the sum of N2,437,500,000.00 II. That the name of the company be changed from Chams Nigeria PLC to CHAMS PLC III. That the Memorandum and Articles of Association be amended as follows: a. Amending clause 1 of the Memorandum of Association to read: The name of the company is CHAMS PLC b. Delete Clauses 3(1)- 3(7), 3(17) 3(19), 3(22), 3(24)3(27), 3(29) and replace with the following sub clauses and renumber the sub clauses in the Memorandum of Association accordingly: 3(1) To carry on the business of information technology service providers and to develop, deploy, implement and maintain technology based systems, computing and solution platforms, communication infrastructure and any other business support services designed to facilitate the operations of all forms of electronic business. 3(2) To engage in all kinds of electronic businesses and all related transactions and provide all kinds of technology based support services to any business or non-profit organization. 3(3) To develop, acquire, deploy and operate identification systems, electronic payment switches and solutions and to engage in payment transaction handling and facilitation and to apply and secure all necessary approvals, licenses required for engaging in such businesses. 3(4) To install, deploy and maintain an electronic payment solution that will amongst other things enable true remote settlement transactions, and also act as a launch pad for electronic business in any location around the world. 3(5)To maintain solutions that will adequately handle and

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NO T I C E

O F

A NNU A L

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ME ET ING

remit payments of telephone bills, airtime, all ticketing systems, e-commerce web based transactions and transaction based on website, merchant goods and services, cable TV monthly subscriptions, Business to Business transactions, fees, hotel charges and other utilities. 3(6) To provide technical and advisory backup and infrastructure for the implementation and use of its Payment, Identification and transactional solutions to users, cardholders and potential cardholders and to devise and supply programmes for future development, upgrade and improvement of its solution and provide facilities that will enhance the use of its applications. 3(7)To commission person(s), organisation(s), banks etc to participate by forming a network or consortium of service providers of its solution all over the world. 3(8) To apply for, purchase, or otherwise acquire any patents, patent rights, copyrights, trade marks, formulas, licences, concessions, and the like, conferring any exclusive or nonexclusive or limited right to the use of any secret or other information as to, any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company; and to use, exercise, develop, or grant licences in respect of, or otherwise turn to account, the property, rights or information so acquired. 3(9) To design, modify, and develop Software and to commission any person or organisation to design, modify and /or develop Software and to acquire intellectual property in any Software either by outright purchase or license. 3(10) To carry on the business of Identity Management and Identity Repository services; develop policies and practices that properly collate, sort and store biometric information on persons, individuals and organisations. Make available virtual directory services for administrative purposes; provide historical records via interface to data sources. 3(11) To engage in the business of Data Management and data warehousing. To develop and design policies, practices and procedures that properly manage the full data lifecycle needs of businesses, organisations, Local, State and National Governments. Provide data repository of historical data and online Data Repository network

of Information. Provide online, real time information on individuals businesses and organizations. c. Amending all relevant Articles or any part thereof to reflect the change of name of the Company from Chams Nigeria Plc to read: CHAMS PLC d. Amending Article 54 to read: No business shall be transacted at any General Meeting unless a quorum of Members is present at the time when the meeting proceeds to business. Save as herein otherwise provided, one third of the total number of members of the Company or twenty five members (which ever is less) present in person or by proxy shall constitute a quorum. e. Amending article 63 to read: Unless and until otherwise determined by the Company in general meeting, the number of the Directors shall not be less than three (3) or more than eleven (11). 9. Any other business Dated this 22nd day of April 2008 BY ORDER OF THE BOARD

PAC SOLICITORS
COMPANY SECRETARY Notes
1. Proxy A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the company. A blank form of proxy is enclosed and if intended to be used, it should be returned to the company not less than forty-eight hours before the Annual General Meeting duly completed. 2. Dividends If approved warrants for the sum of Five (5) Kobo per ordinary share of 50kobo will be posted on 20 June 2008 to shareholders whose names appeared in the register of Members at the close of business on 31st December 2007.

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Statement
THE 25TH ANNUAL GENERAL MEETING HELD ON FRIDAY 6TH JUNE, 2008.

Chairmans

Esteemed Shareholders Special Guests Fellow Directors Gentlemen of the Press Distinguished Ladies and Gentlemen:
Before I proceed with my statement, I would like to express my appreciation to every one of you who participated in the last private placement for your overwhelming response to our N5Billion Private Placement offer, which was significantly oversubscribed. Your overwhelming response to the offer is a clear testimony to your unwavering confidence in the Board and Management of our company. Hence, I will like to use the medium to reaffirm Chams Nigeria Plcs commitment to creating value for all stakeholders.

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CHAIRMANS

STAT EMEN T

It is my privilege and honour to welcome you all to this historic Annual General Meeting of our dear Company.I feel particularly delighted to be here today and to present the annual report.

2.

NEw VISION fOR ThE COmPANY

To give effect to the new strategic direction of Chams aimed at redefining its business focus, your company in 2007 adopted a new Spirit of Chams:

Who We are 1. ThE DOmESTIC ECONOmY A company of Nigerian origin, we will be extremely influential and highly visible in global technology. Our trusted cutting edge technology will enhance the quality of lives in a manner that glorifies God. We would be employer of first choice. Our Vision To become the leading provider of Innovative technologies that improve quality of life To ensure a successful buy-in, the new Vision has been communicated to all stakeholders of the company. We have no doubt that the Vision is capable of taking Chams to the next level stakeholders desire it to be.

For the first time in the history of this country, Nigeria successfully transited from one civilian administration to another, following the April 2007 general elections and the inauguration of President Umaru Musa YarAdua as the new President. The uncertainties that dominated the polity prior to the general elections are giving way to stability and renewed faith in the Nigeria State and economy. Though, the crisis in the Niger Delta region remains a major challenge to a stable economic environment, economic prospects for 2007 and 2008 remain positive. The Federal Governments expressed desired to tackle the infrastructure challenge in the country portends a positive outlook for the economy. The Vision 2020 project, if properly implemented and supported with the right policies will take Nigeria to the league of top 20 economies in the world. The Nigeria Information, Communication and Telecommunication (ICT) industry continue to expand and as at April 2007 telephone subscribers base in the country reached 38million while Nigeria is expected to attain 50% tele-density by 2010. The payment and card sector is preparing for complete migration of all the current 12Million magnetic stripe cards to EMV platform. This would mean re-issuance of all the cards before the end of 2009.

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CHAI R M AN S

S TATEM ENT

3.

ThE NEw fACE Of ChAmS GROUP

5.

DIVIDEND

The CHAMS brand has continued to be more virile in the ICT industry. We are also already implementing a broad strategic plan that will see CHAMS emerge a major market leader on the continent by year 2010. This is primarily being achieved through; Aggressive marketing Proactive management Market development and Increased visibility amongst others. In our quest to continue to dominate our industry as well as to have a better stake in implementing some of our projects some of which are national in scope, we have formed the subsidiaries shown below with various competencies and focus to provide services and products in specific areas of the market and infrastructural requirement.

The Board of Directors, based on the impressive performance of the company hereby proposes a dividend of N86,103,000.00 only which translates to a dividend of 5kobo per share Appropriate resolution will be proposed at this meeting.

6.

ThE STAff

Our staff rose to the occasion by embracing the new challenges spurred by the Companys new structural changes and drive for the top spot in the industry. This has resulted in the improved performance we are presenting here today. I thank all the staff for their dedication and commitment. I assure them of continuous improved welfare package as much as the fortunes of the company continue to improve.

These subsidiaries you will observe are formed to build specific infrastructures and earn commission from all users of the system. This is in line with our long term objective of becoming a major infrastructure provider in Nigeria and beyond as against the contracting models we operate now. The subsidiaries will generate steady and continuous income for your company.

7.

ThE BOARD

We have the very rare priviledge of having Chief Olusegun Oladipo Osunkeye join your Board of Directors in May 2008. Chief Osunkeye, is a Chartered Accountant and a Fellow of the Institute of Directors, and the Nigeria Institute of Management. He is the Chairman of Nestle Nigeria Plc, GlaxoSmithKline Consumer Nigeria Plc, and the International Chamber of Commerce, Nigeria Chapter. He is also on the Board of many other companies including LaFarge Cement Wapco Plc. He is a past President of Nigerian Employers Consultative Association (NECA). He is a guest lecturer at the Lagos Business School and was a member of Senate of the University of Lagos. He had earlier served WAPCO as Company Secretary/ Accountant (1969-72). In the very short period he joined, your company has benefited enormously from his wealth of experience and expertise. We welcome Chief Osunkeye and wish him the very best as he contributes to the growth of our company.

4.

ADDITIONAL CAPITAL

The last private placement was oversubscribed by over 300%. We are proposing an appropriate resolution at this meeting seeking your approval to absorb the additional 25% of the over subscription of N2.44billion. The additional funds is expected to be used for increased expansion of the company and her subsidiaries

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CHAIRMANS

STAT EMEN T

8.

ThE fUTURE

Together, we will continue to set the pace in the local and regional market.

From all indications, the future of Chams is bright. The company has successfully put in place structures that can withstand any challenge the market or the industry may present.

By the grace of God, our shares shall be publicly quoted and traded within the Year 2008.

Thank You

9.

CONCLUSION & APPRECIATION Prof. A. D Akinde

The Board appreciate the contributions of shareholders in the task to take Chams to a higher level in the ICT industry. The level of support and understanding shareholders demonstrated over the years was outstanding and deserves special commendation. We are grateful to the sense of commitment to the growth of the company which made it achieve the current level of success.

We are also thankful to our customers who believed in the ability of Chams to add value to their lives and businesses. Their patronage no doubt has continued to keep us in business and makes our outing this year more memorable and historic.

I must thank the regulatory authorities for providing a conducive environment for business. We must appreciate our various consultants who facilitated our private placement and transition into a publicly quoted company.

I must thank my colleagues on the board as well as various board committees for a job well done.

Finally, I wish to appreciate the management, the entire staff and their families for their understanding and commitment to the success of the company.
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Managing Directors
Review
Chams nigeria plc: Sharpening our focus eXeCutIVe summaRY It is my great pleasure to welcome you all to another Annual General Meeting (AGM) of your company Chams Nigeria Plc. The operational successes achieved by your company since the last AGM are indicative of greater things to come, as your company continues in its confident strides to a new level of prominence. It is my great joy to provide you with the scorecard for the financial year 2007 as well as our strategies to sharpen our focus in the 2008 financial year.
The following are the major highlights of your companys financial performance for the Year 2007
2007 N000 Turnover Profit After Tax Earnings Per share (adjusted) (Naira) Proposed Dividend (adjusted) 5 kobo 6 kobo (17%) 0.46 0.21 119 4,467,186 799,316 2006 N000 1,095,310 361,691 308% 121% % Increase

At the last AGM held on the 24th October 2007, you gave your mandate to the Board of Directors to raise additional capital by way of private placement for the purpose of expanding our businesses. To the glory of God, the private placement was successful and was more than three hundred percent (300%)

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over subscribed. In fact, the private placement was almost turned to a public offer by the market. The period under review witnessed achievements in our business operations; as we continue our determined strive to assert ourselves as the dominant force in Identification, Transaction and e-Payment solutions in the market place; while staying faithful to our core purpose to: Glorify God, by serving humanity.

across Nigerian universities to undergo a year long training, starting at the Obafemi Awolowo University Ile-Ife through to Chams offices where they pass through all departments and companies in the group to internalize and absorb culture, systems, business and management skills. Successful candidates are absorbed into the organisation on a fast track but challenging career path to becoming future leaders of the company. Pioneer trainees of the program graduated in February 2007 and a second set graduated May 2008. There are currently 20 of these ChamsVarsity graduates in the employ of the company. The third batch of about 50 will be starting shortly to further cater for the growing needs of your company. We would also start a new track of this program designed specifically for engineers and technologists.

OUR PEOPLE- the substratum of our successes We recognize that our people are our greatest asset, and we do not just pay lip service to this conviction; which is the reason for starting this review by first focusing on this great asset of the company that made the success of the past year possible. At the same forum in the past year, I informed this august gathering of a series of human capital development strategies to be undertaken in the year under review to serve

Chams Campus

as thrust for increased productivity and motivated performance. Going by our performances, this has greatly paid-off. Your company will not relent in its self -imposed mandate to make Chams the best place to work and the employer of first choice while keeping faith with our employees.

Your company acquired l0.5 hectares of prime property land at Ibeju-Lekki Local Government Area of Lagos State for the development of a world-class campus of office, manufacturing, residential, and recreational complex. The campus when completed would also house the new corporate head office of Chams and a technology park to be leased out to companies that offer complementary solutions to Chams. Our subsidiary companies have also secured hectares of land within the same vicinity.

ChamsVarsity In view of the skills gap in the current crop of university graduates and the prevailing manpower requirements of society, Chams developed ChamsVarsity to recruit smart young graduates from

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M AN AG I NG

D IRECTOR S

REVIEW

PRIVATE PLACEmENT Item 4 under special business in the order of business at the last AGM recommended to shareholders the authorisation of the Board of Directors of the company to raise additional capital by way of private placement; which was duly approved by you, our esteemed shareholders. Im pleased to inform you of the massive success of the full subscription of the 2Billion share at =N=2.50K on offer. The shares have been duly registered with the Securities and Exchange Commission (SEC). Though the offer was a private placement to selected individuals, we received more than =N=16.2B unsolicited offers as against the =N=5B targetted. Though we appreciate the market confidence and support, we returned most of these funds, as they are not needed at this point in time. We thank our well-wishers for this and we hope to give them the opportunity to join the company when we become listed on the floor of the Nigerian Stock Exchange. We are seeking your approval to accept the deposits we have for additional 975M ordinary shares at =N=2.50k to meet our expansion projects.

secretaries, PAC Solicitors, Tax consultants Ijewere & Co, Legal Advisers Tony Uponi & Co, First Registrars and the joint issuing houses (UBA Global market, Skye Bank, Fidelity Bank and Santrust) were very helpful and supported us with all their might towards meeting our very tight timelines.

QUALITY mANAGEmENT SYSTEm In the period under review your company achieved one of our BHAG (Big Hairy Audacious Goals) by attaining ISO 9001:2000 certification by Standards organization of Nigeria (SON). With the attainment of the ISO 9001 your company joins the list of the enviable companies around the globe with world best practices in processes and operational efficiency.

Solution Offerings:
Identification: Public Sector Projects and Card Plant: Card Plant: You would recall that we announced at last years AGM that your company recorded the feat of having the largest ID card personalization plant in the world capable of producing 1.75M cards a day. The plant located in Abuja is currently being upgraded to handle smartcards also. The plant currently services two major national projects: the continuous voters registration for Independent National Electoral Commission (INEC) and Health Cards for the National Health Insurance Commission.

REGULATORY APPROVALS In the past eighteen months your Company undertook a most daunting and ambitious set of programs to transform to a public Company through registration with the Securities and Exchange Commission (SEC), raised additional capital through the private placement with the approval of SEC. With resounding success of the placement, your company received the approval of the Nigerian Stock Exchange (NSE) to list its shares within the year 2008. The listing would allow the trading of the shares of our beloved company on the floor of the Nigeria Stock Exchange. We appreciate the effort and support of the regulatory agencies especially the management and staff of SEC and NSE. We thank specially our auditors Akintola Williams Delloitte (AWD) for their professional accounting and auditing services. Our company

National Identity management Solution (NImS): We announced last year the award of this noble Public-Private-Partnership based project to Chams. Steady progress is being made on this project towards starting implementation in last quarter of 2008. The legal, finance and technical committees are at advanced stages of work in defining roles and responsibilities of the various partners of the

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consortium to enable optimal success of this highly sensitive project that will ensure the delivery of high-end benefits to Nigerians in terms of easy access to credit, pension, identification, social services and secured payment platforms; on its list of limitless possibilities.

National health Insurance Scheme (NhIS): Your Company again won the partnership relationship to design and deliver an identification solution for the National Health Insurance Scheme. This started off with a pilot of 385,000 enrollees and cards. We are creating a comprehensive database for this project and would deliver smartcard based solution. Within the next twenty four months, about Twenty Five million (25M) Nigerians would have enrolled with NHIS and smartcards issued to them. This solution would allow them access to a good and modern healthcare facility. Our partnership with NHIS will generate enormous returns to our stakeholders while meeting our mission of deploying beneficial technologies and solutions to our communities. SUBSIDIARIES In the Chams group, we take pride in our ability to offer complete end-to-end solution to small and large projects within the family. Independent National Electoral Commission (INEC). In 2007, we delivered 70 Million Voters ID Cards to INEC. The project was delivered on time and we were commended by the client and the Presidency. The visitation and commendation of the National Council of State comprising of three former Nigerian Presidents, twenty nine governors, ministers, SGF etc to our Abuja In the period under review your company bought over the 35% stake of First Funds Limited in Card In 2007, we commenced the process of incorporating 4 new subsidiaries to offer services to fill demand gap in the card industry in Nigeria. offices in 2007 was heart warming and it generated a lot of goodwill for your company. Our relationship with INEC is still robust as a preferred service partner who delivered when multinationals failed. We are currently delivering on the Continuous Voters Registration solution to INEC and building up their Voters database.
ChamsVarsity

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M AN AG I NG

D IRECTOR S

REVIEW

Centre Nigeria Limited, effectively making Chams the majority shareholder in the company. The Chams shareholdings in the respective subsidiaries stand at: Card Centre (51%); Supercard (85%) and Paymaster (38%). As a group we benefit from strong business synergies that ensure that we maintain market motivated competitive advantage in all our business areas, while ensuring as a company that we are not over-reliant on a single source of income. The gestation period in technological based offerings varies when you are a pioneer; but the results are always worth the wait. The following are the subsidiaries and their activities:

African and International market up for our company. Our Cardcentre is also into solution development, e.g., the Development Tax/Levy Card for Ondo State. ChamsCity: Your Company is about setting another world record towards increasing and improving our financial performance while still delivering technologies that would improve qualities of lives in our communities. The ChamsCity concept delivers mega transaction centres to most urban areas, where through a one stop solution for payment of all utility bills, e-banking for all the 24 Nigerian banks, electronic examination centre, e-tutoring centre, internet browsing, access email messages, insurance solutions, local and foreign ticketing and access to cash via ATM machines. Each ChamsCity will occupy a minimum 4,000 square meter space and will have 1,000 computer systems, 50 ChamsAccess Terminals and 20 ATM machines installed. The first ChamsCity will go live in July 2008 at Ikeja, Lagos while the second we go live in Abuja by August 2008. These would be the worlds biggest transaction centres and should transform the way business is done. These ChamsCities would gradually grow in a phased expansion to 30 locations across the country, covering all major cities over a two-year period and would be driven by a cashless payment system. We have invited the Guinness Book of World Records for their evaluation and certification.

Supercard: Supercard is a leading name in Identification and payment systems. The company continues to forge ahead with their mass enrolment, Ghost Workers elimination and e-Learning solution for state governments and corporate institutions in Nigeria. The company through extended research and development is about to launch two major payment solutions that will revolutionize the transport and petroleum industry in Nigeria. Supercard has also developed competence in local development of application software that drives processes and operations in the card Industry.

Card Centre: Cardcentre is the largest card personalization service solution provider in Nigeria with about 50% of the financial cards market share and 20% of scratch card market share. Cardcentre was the first company in the card personalization industry in Nigeria to achieve ISO 9001:2001 certification and they recently completed their re-certification successfully. The company aims to complete their Visa/MasterCard certification before the end of this year. This is expected to open up the Paymaster: Paymaster has continuously rolled out Point of Sale terminals running on the Interswitch and e-Tranzact networks. They are presently in partnership with National Sports Lottery to configure and deploy 20,000 Ingenico terminals. Paymaster also markets their own locally developed loyalty application on Point of Sales Terminal.

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ChamsSwitch: Our various projects (NationalID, National Health Insurance, etc) come bundled with payment transactions components. It is projected that there will be over 100Million payment cards in Nigeria in the next 3 years. Since these projects are Private-Public Partnerships, we cannot leave our fate in the hands of third party transaction switching and processors. ChamsSwitch is currently rolling out a high performance transaction switch for our projects and for the use of the entire African continent. The project is expected to be completed by the end of 2008. Chamsmobile: ChamsMobile is a multi application, multi bank payment platform that allows secure access to bank accounts using mobile phones. This is to provide mobile payments while riding on the high Chams switch. We are specifically, targeting the un-banked population, which is over 100Million ChamsAccess: ChamsAccess will embark on nationwide deployment of the ChamsAccess terminal under the partnership with NITDA. The partnership is expected to solve the rural telephony and computerization problems in Nigeria. The project is to deploy the services in all the 774 local government headquarters in Nigeria.

culture in our country as well as add value to you, our Shareholders. Your Company has also partnered with Valucard to distribute 1,000 Kingteller ATM Machines alongside the ChamsAccess Terminals. Printers: Our Company recently sold Card personalisation Machines to INEC under the first phase of her partnership with the electoral body. We now have partnerships with First Bank Plc, Afribank Plc, Diamond Bank Plc, and UNIC Health Ltd (under the Health Management Scheme) just to mention a few. COPORATE SOCIAL RESPONSIBILITY (CSR) Our commitment is to give back by helping to feed the hungry and the needy, through periodic provision of food for the less privileged in our society. Our company does this through voluntary contributions of resources by members of staff, who then go on to engage in the cooking and distribution of the meals. Tagged the Chams soup kitchen, the first in the series was held in March of 2008 at a destitute colony in Ebute Metta area of Lagos State. The second experience took us to the Ikoyi Prisons in April of 2008. As at May 2008 over 4,000 of meals have so far been delivered. From all perspectives, the future of your company is bright. As we continue sharpening our focus we strongly believe in the positive direction Chams is headed and are confident our new structure will lay a solid foundation for future growth Thank you and May God bless you all.

Terminals: Chams has signed a partnership agreement with Valucard Nigeria Plc (20% VISA owned) to distribute 20,000 Bitel POS (Point of Sales) terminals. We are working with Paymaster Ltd to deploy these terminals into the Nigerian payment market. We believe that these activities will greatly improve the e-payment Demola Aladekomo. Managing Director
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Directors Report
The Directors have the pleasure in presenting the Annual Report and Financial Statements for year ended 31st December, 2007.
PRINCIPAL ACTIVITY AND BUSINESS REVIEw: The Directors believe that the Company continues to be dependable on its business of Identification and Payment Solutions through effective customer response, a developer of a highly motivated work force and satisfied shareholders as well as a good corporate citizen. OPERATING RESULTS: Turnover Cost of Sales Gross Profit Profit before Taxation Earnings per share (Naira) (adjusted) DIRECTORS AND ThEIR INTERESTS: The Directors who served during the year together with their interests in the shares of the company were as follows: NUMBER OF 50K ORDINARY SHARES Shareholding 1. 2. 3. 4. 5. 6. 7. Chief Bankole Moroti Engr. Akin Sawyerr Demola Aladekomo Sunday Olufemi Williams Rt Rev (Prof) A. D. Akinde Alhaji Tunde Yusuf Alhaji Idi Farouk, MfR 53,240,000 3,240,000 477,885,000 8,000,000 28,215,000 50,000,000 13,240,000 % 3.09 0.19 26 0.46 1.64 2.91 0.77 Year 2007 N000 4,467,186 (2,508,536) 1,958,650 1,046,818 0.46 Year 2006 N000 1,095,310 (478,034) 617,276 399,542 0.21

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Sunday Olufemi Williams

8,000,000

0.46

I work to Global Standards. I am CHAMS.

Getting a dish of beans right, as every culinary enthusiast knows, starts with correctly sorting out good from bad seed. at foundation ensures later success in avour and taste. Only one set of standards apply in Information and Communication Technology. As Head, Innovation & Human Capital Development of Chams Nigeria Plc, I sort out the most critical elements in ensuring that Chams operates to global standards. Our recent ISO 9001: 2000 certication attests to this. I manage the recruitment, deployment, training and evaluation of the Chams people. My name is Omoyemi Oluleye. I am a trainer and builder. I am CHAMS

Chams Nigeria PLC


www.chams.com

Innovation in the future tense

Directors

The Board of

Rt. Rev. (Prof.) A. D. Akinde (Chairman)

Mr. Demola Aladekomo

Chief Olusegun Osunkeye OON

Engr. Akin Sawyer

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

Alhaji Tunde Yusuf

Alhaji Idi Farouk MfR

Chief Moroti Bankole

Mr Femi Williams

C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

25

Management Team

Chams

CHAMS

MANAGEMENT

TEA M

Sola Omotayo -GM, Public Sector

Demola Aladekomo - Managing Director

Idowu Logile - Head, Corporate Services

Funke AlomoOluwa - Chief Accounting Officer

Ayo Lawani - Marketing Manager

Omoyemi Oluleye - Head, ICHD

Yinka Odukoya - Chief Financial Officer

Tunji Adekoya -Acting Head, T&P

Sola Bickersteth - AGM ChamsCity

Seye Femi-Gureje -GM Chams Mobile

Sadiq Abubakar - GM ChamsSwitch

Subsidiaries
Chams has grown strong sinews in the ICT arena in Nigeria and birthed nichemarket leaders as offspring. Each of the firms has been a focused entrepreneurial response to market opportunities and the need to provide higher levels of satisfaction to clients and customers. The firms include Paymaster Nigeria Limited, Cardcentre Limited and SuperCARD Ltd
PAYmASTER LImITED Paymaster Limited is Nigerias foremost provider of point of sale systems using multi-brand platforms to deliver unique solutions and providing management support. Incorporated in 2004, Paymaster Limited applies electronic technology to ease transactions for both clients and end users. We provide linkages for cards, payment points and multiple transactions. Paymaster Limited manages the largest network of Electronic Funds Transfer Point of Sale terminals in Nigeria. Paymaster has world-class skills in development of applications on POS terminals and management of POS networks. Paymaster can match the best devices and communication protocols to any task. It has relationships with and experience in developing software to work with equipment from world leaders such as Ingenico, Lipman, Xiring and Britel brands. Paymaster has developed applications for payments, banking-on-POS, loyalty, time and attendance records etc.

CARDCENTRE NIGERIA LImITED The story of CardCentre Nigeria Limited is akin to the mustard seed that grew to a big oak. CardCentre Nigeria Limited commenced as a department in Chams Nigeria to become the lead player in the production of plastic cards in Nigeria. It also has the record of the largest card personalisation facility in Africa. The beginnings of the company owes to the successful foray of Chams Nigeria into card personalisation and the production of identity cards, enrolment logistics and access control in 1992. Success in these areas emboldened the company to go into smartcards, prepaid cards and other card-based solutions. CardCentre continues to work closely with Chams Nigeria PLC. Together, the companies have delivered several key projects including the first successful roll out of the Nigerian national ID card, the multi-state Consortium for Administration of Salaries and Pensions deployed successfully in Ogun, Kano and Plateau states and well as the Valucard Consortium responsible for the introduction of electronic purse in Nigeria.

SUBSIDIAR I ES

electronic purse in Nigeria. Cardcentre has issued more than 300, 000 cards for Valucard Nigeria Plc for the member banks involved in the nationwide electronic purse project. The cards are secure and reliable. CardCentre also produces directly debit cards for interested
Goke Idris -MD, CardCentre

identification cards for various other higher institutions. The Smart I.D. is a major product of Supercard. It provides five convenient features including smart status being the ability to offer identification and verification as well as provision of comprehensive, authentic, and pictorial demographics of all students. It also provides Internet access that helps with registration, transcripts, results checking and virtual libraries; financial and banking service through electronic purse and debit cards, access control as well as access to health insurance services. Supercard Limited also developed and manages the Consortium for Administration of Salaries and Pensions that participating states, about three now, deploy for the administration of
Femi Williams - MD, Supercard

banks that aid the growing deployment of

automatic teller machines across the country. Other major projects include supply and personalisation of cards for the Interswitch ATM scheme through which a consortium of 14 banks in Nigeria issues debit/ATM cards to customers. CardCentre produces unique identification cards made with micro lettering, holographic overlay, rainbow print watermarks and UV technologies. CardCentre manufactures cards to specification for customers. The growth in Nigerias telephony sector has led to increased demand for scratch cards. CardCentre Nigeria Limited has one of the largest scratch card facilities with capacity to produce over 800 million cards a year.

their public service records.

Supercard provides electronic learning systems through Learning System, web-based software that powers rich virtual learning environments. As a value added reseller for Blackboard Inc. (USA), Supercard delivers curriculum, assessment, communication, collaboration, and enterprise administration tools for educational systems. Blackboard Inc has a 45% share of the worldwide market for e-learning software. Other products include work on a Financial Data Repository to guaranteed the veracity of databases and provide a secure platform for identification in consumer banking and the evolution of a proper credit system based on reliable data.

SUPERCARD LTD Supercard Limited is in the business of managing identification systems for all categories of clients and sectors of the economy. Chams incorporated Supercard Limited as a wholly owned subsidiary in 2002. Supercard grew from the effort of Chams Nigeria in designing and implementing a National Students Identity Card project. The pilot scheme commenced in December 2002 with projects at the University of Lagos and the Yaba College of Technology. Since then, Supercard has produced

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29

Report of the Audit Committee


TO THE MEMBERS OF CHAMS NIGERIA PLC

In accordance with the provision of section 359 (6) of the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004, we confirm that we have reviewed the audit plan and scope, and the Management Letter on the audit of the accounts of the Company and the responses to the said Letter.

In our opinion, the plan and scope of the audit for the period ended 31st December 2007 were adequate. We have reviewed the Auditors findings and we are satisfied with the Management responses thereon.

We also confirm that the accounting and reporting policies of the Company are in accordance with legal requirements and ethical practices.

. Chairman Audit Committee Dated June 2, 2008

Members of the Audit Committee 1........................................................................... Chief J.O. Sanusi - Chairman 2........................................................................... Mrs. Moji Osiyemi - Member 3........................................................................... Engr. Akin Sawyerr - Member 4........................................................................... Mr. Femi Williams - Member

30

C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

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31

Statement of Significant Accounting Policies

The following is a summary of the principal accounting policies adopted by the Company in the preparation of these financial statements: 1. BASIS Of ACCOUNTING The financial statements have been prepared under the historical cost convention as modified by the inclusion of motor vehicles, furniture, fittings and equipment at professional valuation. 2. TURNOVER Turnover comprises the value of sales invoiced to third parties. 3. fIxED ASSETS Fixed assets are stated at cost or valuation less accumulated depreciation. 4. DEPRECIATION Fixed assets are depreciated on a straight line basis at the following annual rates which are expected to write off their cost or valuation over their anticipated useful lives: Motor vehicles Furniture, fittings and equipment Plant and machinery Workshop tools Hire equipment Lease building 5. INVESTmENTS Investments held in other companies are stated at cost after adjusting for any diminution in value. 6. STOCkS These comprise saleable goods held and services rendered by the company at the balance sheet date. These are valued at the lower of cost and net realizable value. Costs include purchase cost, conversion cost, (materials, labour and overhead) and other costs incurred in bringing the stocks to present location and condition. 7. DEBTORS Debtors are stated after deduction of specific provision for any debts considered to be doubtful of collection. - 25% - 25% - 15% - 25% - 15% over the unexpected period of lease.

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

S TATEM ENT

OF

SIGNIFICANT

ACCOUNT ING

POLIC I ES

8.

DEfERRED TAxATION Deferred taxation is provided by the liability method which represents taxation at current rate on the difference between the net book values of fixed assets qualifying for capital allowances and their corresponding income tax values. This is in accordance with SAS 19 on Accounting for Taxes.

9.

fOREIGN CURRENCIES Transactions in foreign currencies are recorded in naira at the rates of exchange ruling at the time they arise. Foreign currency balances are converted to Naira at the applicable rates at the balance sheet date. All differences arising therefrom are dealt with in the profit and loss account.

10

RETIREmENT BENEfITS The company operates staff gratuity scheme which is based on the length of service of the employee and computed in accordance with the existing conditions of service. The charge arising on the scheme is recognized in the profit and loss account. The Company and employees each contribute 7.5% and 7.5% respectively. The Company has started implementing the New Pensions Act but is yet to appoint the Administrator.

11.

PROVISIONS Provision is recognized when the Company has a present obligation, whether legal or constructive, as a result of past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation in accordance with Statement of Accounting Standard (SAS) 23.

C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

33

Profit and Loss Accounts


FOR THE YEAR ENDED 31 DECEMBER 2007

2007 Note N000

2006 N000

Turnover Cost of sales Gross profit Other income Administrative expenses Operating profit Interest payable and similar charges Profit on ordinary activities before taxation Taxation on profit Profit after taxation transferred to revenue reserve

4,467,186 (2,508,536) 1,958,650

1,095,310 (478,034) 617,276 41,796 (164,740) 494,332 (94,790) 399,542 37,851) 361,691

78,542 (825,801) 1,211,391 (164,573)

4 5 21

1,046,818 (247,502) 799,316

Earnings per share (Naira) (Basic)

0.46

3.62

The accounting policies on pages 32 and 33 and the explanatory notes on pages 37 to 44 form part of these financial statements.

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Balance Sheet
AT 31 DECEMBER 2007
Note fIxED ASSETS LONG TERm INVESTmENTS CURRENT ASSETS Stocks Trade debtors Other debtors Due from related companies Cash and bank balances 6 7 2007 N000 1,850,363 568,509 2006 N000 571,034 427,209

8 9 10 11

183,119 680,590 309,287 19,929 4,655 1,197,580

7,315 1,049,366 105,166 26,025 5,186 1,193,058

CREDITORS: Amounts falling due within one year Bank overdraft(secured) Short-term loans Trade creditors Other creditors Dividend Payable Deposit for shares Taxation Directors current accounts

12 13 14 18 5

219,048 443,841 246,292 444 4,600 269,930 1,006 1,185,161 12,418 2,431,291

1,627 440,705 410,454 207,382 247,650 91,665 6,932 1,406,415 (213,357) 784,886 (11,951) (46,414) 726,521

NET CURRENT ASSETS/(LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES Deferred taxation Provision for liabilities and charges Staff gratuity 16 15

(199,377) (47,701) 2,184,213

CAPITAL AND RESERVES Share capital Share Premium Fixed assets revaluation reserve Revenue reserve 17 19 20 21 861,030 172,478 1,063,702 87,003 2,184,213 100,000 550,010 76,511 726,521

The financial statements on pages 32 to 46 were approved by the Board of Directors on May 2008 and signed on its behalf by: } } }Directors } The accounting policies on pages 32 to 33 and the explanatory notes on pages 37 to 44 form part of these financial statements.
C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

35

Statement of Cash Flow


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 Note Cash flows from Operating Activities Cash receipts from customers Cash paid to suppliers and employees Net cash provided by operating activities Cash flows from Investing Activities Proceeds from sale of fixed assets Purchase of fixed assets Interest received Purchase of investments Net cash provided by investing activities Cash flows from financing Activities Short-term loans paid Deposit for shares Proceeds of shares issued Share issue expenses Dividend paid Interest paid Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 23 (440,705) 30,540 (28,906) (99,556) (164,573) (703,200) (217,952) 3,559 (214,393) (94,790) 289,395 214,535 (210,976) 3,559 278,123 6,162 99,900 6 (885,002) 48,177 (141,300) (978,126) 88 (18,208) 137 (38,741) (56,724) 22 4,857,516 (3,394,142) 1,463,374 96,727 (114,863) (18,136) N000 2006 N000

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 1. The Company ChAmS Nigeria Plc was incorporated in Nigeria as a private limited liability company on 10 September 1985 and commenced operations on 10 October 1985. It became a public limited company on 19 October 2007. The company is into the business of distribution of smart cards and management of point of sale infrastructure. 2007 N000 2. Turnover Turnover is made up of: Chams Access Services and Terminals Terminals and Printers Public Sector and Projects 2006 N000

41,035 66,215 4,359,936 4,467,186

72585 22725 1,000,000 1,095,310

3.

Other income Miscellaneous income Rental Income Profit on disposal of assets Interest received Provisions written back Exchange gain 1,422 28,836 48,177 107 78,542 4,589 25,842 88 137 11,140 41,796

C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

37

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 2006 N000 4. Profit on ordinary activities before taxation This is stated after charging/(crediting) : Directors emoluments Others Auditors remuneration Depreciation Interest and similar charges Exchange (gain)/loss 5. Tax on profit on ordinary activities (a) Per profit and loss account Income tax Education tax Deffered Tax (b) Per balance sheet Balance as at 1 January Charge for the year Deffered tax (Note 15) Payment during the year

3,960 4,875 5,000 237,553 164,573 (107)

3,500 4,453 3,000 56,348 94,790 72

150,860 27,405 69,237 247,502 91,665 247,502 (69,237) 269,930 269,930

29,302 8,549 37,851 53,814 37,851 91,665 91,665

6. fixed assets Land and buildings N000 Cost/valuation At 1 January 2007 Additions Revaluation 489,211 610,789 1,100,000 Depreciation At 1 January 2007 Charge for the year Revaluation At 31 December 2007 Net book value At 31 December 2007 At 31 December 2006 21,092 10,802 (21,092) 10,802 1,089,198 468,119 Plant and machinery N000 94,318 16,453 110,771 31,140 15,205 46,345 64,426 63,178 Motor vehicles N000 13,533 22,494 36,027 8,038 6,243 14,281 21,746 5,495

Furniture, fittings and equipment N000 114,270 846,055 960,325 80,029 205,303 285,332 674,993 34,241

Total N000 711,332 885,002 610,789 2,207,123 140,299 237,553 (21,092) 356,760 1,850,363 571,034

6.a Revaluation Leasehold land and buildings were revalued by Messrs Jide Taiwo & Co, Estate Surveyors & Valuers on 10 December 2007. The leasehold land and building were also professionally revalued by Messrs Diya Fatimilehin & Co., Estate Surveyors and Valuers on 19 May 1998 and 19 October 2004. The valuation was on Open Market Basis and are stated in these financial statements at those valuations. The surplus arising on revaluation is included in revaluation reserve. The revaluation of fixed assets is done when it is considered necessary by the Directors.

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Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 7. Long-term investments Unitec Nigeria Limited Card Centre Nigeria Limited Supercard Nigeria Limited Paymaster Nigeria Limited Provision for diminution in value of Unitex Nigeria Limited (1,500) 568,509 427,209 1,500 277,114 92,748 198,647 570,009 1,500 135,314 92,748 197,647 427,209 2006 N000

The Directors are of the opinion that the market value of the unquoted investments is not lower than the cost.

8. 9.

Stocks Terminals and consumables Trade debtors Trade debtors Provision for doubtful debts 740,713 (60,123) 680,590 1,089,357 (39,991) 1,049,366 69,553 35,613 105,166 1,724 10,014 14,287 26,025 59,489 201,216 130,000 50,000 440,705 183,119 7,315

10.

Other debtors Other debtors Prepayments 238,159 71,128 309,287

11.

Due from related companies Paymaster Nigeria Limited Card Centre Nigeria Limited Supercard Nigeria Limited 6,680 2,766 10,483 19,929

12.

Short term loans Intercontinental Bank Loan Wema Bank Plc Skye Bank Plc United bank for Africa Plc -

C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

39

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 13. Other Creditors Accrued expenses Other credit balances 14. Dividend Payable Balance as at 1 January Dividend declared (Note 21) 100,000 100,000 Payment during the year (99,556) Balance at 31st December 15. a. Deferred taxation Income Tax Balance as at 1 January Charge for the year (Notes) b. Capital Gains Tax Balance at 1 January Transfer from revaluation reserve (Note 20) 11,951 69,237 81,188 118,189 118,189 199,377 16. Staff Gratuity Balance as at 1 January Provision for the year Payment during the year 17. Share capital Authorised: 5 billion ordinary shares of 50 kobo each Issued and fully paid: 1,722,060,000 Ordinary shares of 50 kobo each (2006 - 100,000,000 of N1 each) Balance at 1 January Additional Shares issued during the year Bonus Issue (Note 21) Balance at 31 December 861,030 100,000 72,206 688,824 861,030 100,000 100,000 100,000 2,500,000 100,000 46,414 1,287 47,701 47,701 47,831 2,432 50,263 (3,849) 46,414 11,951 11,951 11,951 444 121,875 124,417 246,292 66,405 140,977 207,382 2006 N000

At the Annual General Meeting held on 24 October 2007, the authorised share capital was increased from 100 million ordinary shares of N1 each to 2.5 billion shares of N1 each. The share capital was then redenominated to ordinary shares of 50 kobo each in November 2007.

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 18. Deposit for shares Private Placement Rights Issue 4,525 75 4,600 Balance at 1 January Additional deposit Share allotment Share premium on allotment Balance at 31 December During the year 72,206,000 units of shares were allotted and approved by the Board of Directors. 19. Share Premium Balance at 1 January Share premium on allotment Share issue expenses Balance at 31 December 20. fixed assets revaluation reserve Balance at 1 January Revaluation surplus Transfer to deferred taxation (Note 15) Balance at 31 December 21. Revenue reserve Balance at 1 January Dividend declared Bonus Issue (Note 17) Profit for the year Balance at 31 December 76,511 (100,000) (688,824) 799,316 87,003 (285,180) 361,691 76,511 550,010 631,881 (118,189) 1,063,702 550,010 550,010 201,384 (28,906) 172,478 247,650 30,540 (72,206) (201,384) 4,600 181,025 66,625 247,650 241,488 6,162 247,650 2006 N000

At the AGM held on 24 October 2007, a dividend of 70 kobo per ordinary shares totalling N100,000,000 was approved by the shareholders and subsequently paid. Also, a bonus of four for one ordinary shares of 50k each was declared at the same Annual General Meeting. The sum was capitalised from the balance of general reserves and distributed among shareholders on the Register of Members at the close of business on Wednesday October 24, 2007.

C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

41

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 22. Reconciliation of net profit to net cash provided by operating activities 2006 N000

Profit after taxation Adjustment to reconcile net income to net cash provided Profit on sale of fixed assets Interest payable Defered tax on revaluation Depreciation Interest and dividend received Changes in assets and liabilities: Increase in stock Decrease/(increase) in trade debtors (Increase)/decrease in other debtors Decrease in amount due from related companies Increase in trade creditors Increase in other creditors and accruals (Decrease)/increase in directors current accounts Increase/(decrease) in staff gratuity Increase in tax payable Increase in deferred tax Net Adjustments Net cash provided by operating activities

799,316

361,691

164,573 (118,189) 237,553 (48,177)

(88) 94,790 56,348 (137)

(175,804) 368,776 (204,121) 6,096 33,387 38,910 (5,926) 1,287 178,265 187,426 664,058 1,463,374

(7,192) (1,040,154) 6,279 51,746 394,691 20,526 6,932 (1,417) 37,851 (379,826) (18,136)

23. Reconciliation of cash and cash equivalents Bank and cash balances Bank overdrafts 4,655 (219,048) (214,393) 5,186 (1,627) 3,559

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

Notes to the Financial Statements


YEAR ENDED 31 DECEMBER 2007 24. Information regarding Directors and Employees 24.1 Analysis of the Companys average weekly number of employees including directors were :2007 Number Management Staff Senior Staff Junior Staff 10 28 10 48 Staff costs including Directors relating to the above were N000 Wages and salaries Retirement Benefits 110,398 1,287 111,685 24.2 Emoluments of Directors of the company were Fee: Chairman Other Directors 8,835 8,835 7,953 7,953 N000 39,066 2,432 41,498 2006 Number 6 20 7 33

Fees (excluding pensions contributions) include amounts paid to The Chairman The highest paid Director 3,960 3,500 1,150 1,150

The table below shows the number of Directors of the Company and senior employees of the company whose emoluments during the year excluding pension contributions were within the bands stated. Number of Emoluments N 0 300,001 500,001 700,001 900,001 Above N 300,000 500,000 700,000 900,000 1,100,000 1,100,000 2007 6 2006 6 Employees 2007 4 15 12 5 2 8 2006 3 17 4 8

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43

Notes to the Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 25. Earnings per share The calculation of earnings per share is based on the profit after taxation and the number of ordinary shares issued and fully paid at 31 December 2007. 26. Guarantees and other financial commitments Capital commitments There were no capital commitments authorised by the Directors at 31 December, 2007 (2006 Nil). Contingent liabilities The Directors are of the opinion that there are no contingent liabilities in respect of actions against the company of which no provision has been made in these financial statements.

27. major suppliers The Companys suppliers include: - Data Card Incorporation - Data Strip - Gemplus PLC 28. Related Party Transactions Related party transactions arose from transfer of fixed assets rents due, payments to suppliers and other transactions conducted at an arms length. As at 31 December 2007 balances due were as stated on Note 11 to the financial statements. 29. Comparative figures Certain comparative figures have been restated in order to provide more meaningful comparison.

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Value added statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N,000 % 2006 N,000 %

Sales of Productsand services Other Income

4,467,186 78,542 4,545,728

1,095,310 41,796 1,137,106

Bought in materials and services -Imported -Local Value added Applied as follows: To pay employees -Employees wages, salaries and other benefits To pay government -Tax To pay providers of capital -Interest on loans, debenture and overdrafts To provide replacements of assets, dividends to shareholders and business development: -Deprerciation -Deferred tax -Profit for the Year 237,553 69237 799,316 1,560,629 15 4 51 100 56,348 361,691 592,178 1 61 100 164,573 11 94,790 16 178,265 12 37,851 6 111,685 7 41,498 7 (2,095,513) (889,586) 1,560,629 100 (14,598) (530,330) 592,178 100

Value added represents the additional wealth which the company has been able to create by its own and its employees efforts. This statement shows the allocation of that wealth among all stakeholders and amount retained for the future creation of more wealth.
C h a m s 2 0 0 7 a n n u a l R e p o Rt s a n d a C C o u n t s

45

Five Year Financial Statements


FOR THE YEAR ENDED 31 DECEMBER 2007 2007 N000 CAPITAL AND RESERVES Share capital Revaluation reserve Revenue reserve Share premium Shareholders fund Represented by Fixed assets Long term investments Net current assets/(liabilities) Deferred taxation Provision for liabilities and charges (47,701) 2,184,213 Turnover Profit/(loss) before taxation Profit/(loss) after taxation PER ShARE DATA (Naira): Earnings/(loss) per share (basic) Earnings/(loss) per share (adjusted) 0.46 0.46 3.62 0.21 0.22 0.01 1.54 0.09 (0.71) ( 0.04) 4,467,186 1,046,818 799,316 (46,414) 726,521 1,095,310 399,542 361,691 (47,831) 282,718 136,747 24,166 21,779 (41,140) 260,938 295,524 155,861 153,670 (149,750) (437,974) 127,985 (69,634) (71,043) 1,850,363 568,509 12,418 (199,377) 571,034 427,209 (213,357) (11,951) 609,173 388,468 (667,092) 832,875 195,821 (726,618) 144,415 69,248 (501,887) 861,030 1,063,702 87,003 172,478 2,184,213 100,000 550,010 76,511 726,521 100 550,010 (267,392) 282,718 100 550,010 (289,172) 260,938 100 4,768 (442,842) (437,974) 2006 N000 2005 N000 2004 N000 2003 N000

Earnings per share is based on profit/(loss) after taxation and the number of ordinary shares issued and fully paid at the end of each financial year. Net assets per share are calculated based on the Companys net assets and on the number of issued and fully paid ordinary shares at the end of each financial year.

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C ha ms 2007 a nnu a l R ep oRts a n d a C C o u n t s

I am a strategist. I am CHAMS.

Knowing the right move to make at the opening, middle and end game is key to success in chess. As in chess, so in business. My name is Olayinka Ajibola Odukoya and I am the Chief Financial O cer of Chams Nigeria Plc. I draw on my training in Finance and playing competitive chess at the Nigeria University Games to execute the strategic vision of the board. Strategy is knowing what moves to make and when, and this has seen Chams grow from a start up computer hardware and maintenance company to a giant in transactional and nancial payment systems as well as cards and identication solutions. It requires sta who know what goals to accomplish and are focused on attaining them. I am a strategist. I am Chams.

Chams Nigeria PLC


www.chams.com

Innovation in the future tense

I am a team player. I am CHAMS.


My name is Ayo Lawani. I lead the Chams marketing team, developing the business strategy for successfully promoting Chams in all sectors of the economy. I build and maintain constant market demand for Chams innovative products and services. I nurture a group of self-motivated, independent and highly committed sales people. Teamwork is the name of the game. As a former football player for my University team, I appreciate teamwork. I also know what it means to work as a team. I am CHAMS.

Chams Nigeria PLC


www.chams.com

Innovation in the future tense

Chams 2007 annual Re p oRts a nd a C C ou nts

notes

Chams 2007 annual Re p oRts a nd a C C ou nts

notes

Chams Nigeria PLC


8, Louis Solomon Close, Victoria Island, Lagos Tel: 234-1-2700070-8 Fax: 2700079. E-mail: info@chams.com

www.chams.com

insiderLagos

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