eTranzact - 2013 Annual Report & Accountsetranzact.com/etranzact/ETRANZACT_2013_ANNUAL_REPORT.pdfWe maintain effective relationship with all our stakeholders' sustaining their

ANNUAL REPORT & FINANCIAL STATEMENTS

20132013

2013 ANNUAL REPORT & F INANCIAL STATEMENTS

01


02


03

TABLE OF CONTENTS

Our Vision & Values 4

Directors, Officers and Professional Advisers 5

Company Profile 6

Result at a Glance 8

Notice of Annual General Meeting 9

Chairman’s Statement 10

Corporate Governance Report 13

Directors’ Report 21

Audit Committee Report 25

Statement of Directors' Responsibilities 26

Report of the Independent Auditors 27

Statement of Profit or Loss and Other Comprehensive Income 28

Statement of Financial Position 29

Statement of Changes in Equity 30

Statement of Cashflows 31

Notes to the Financial Statements 33

Statement of Value Added 66

Financial Summary 67

List of Unclaimed Dividend Warrants 68

Proxy Form 69


04

OUR VISION & VALUES

Our Vision

To be a leading global provider of mobile transaction services leveraging on our award winning

mobile switching platform to provide secured electronic payment solutions.

Our Mission

To provide secured, convenient and cost effective means to make and receive payments

Our Values (STEAM)

* Security - Fulfilling our pledge to provide a safe and easy way to pay

* Transparency - Ensuring accountability in all processes and procedures

* Excellence - Adding value beyond what is expected

* Agility - Adapting quickly to opportunities and emerging trends

* Motivation - Providing a business environment that encourages productivity

QUALITY POLICY STATEMENT

eTranzact is at the forefront of delivering innovative electronic and mobile payment services to meet

customers' requirements at all times. Leveraging on our award winning switching platform, we

ensure our deliverables are secure, cost effective and compliant with globally recognized standards.

We maintain effective relationship with all our stakeholders' sustaining their satisfaction by

continually improving our processes to meet their changing needs.


05

DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS

Board of Directors: Felix Ohiwerei - Chairman

Valentine Obi - MD/CEO

Wole Abegunde

Bayo Adeyemo

Rasheed Mumuni

Tony Egbuna

Sullivan Akala

Victor Etuokwuth Ike Eze - Appointed 16 January, 2014

th Benson Akpati - Resigned 14 April, 2014

Company Secretary: PAC SOLICITORS

16, Kofo Abayomi Street

Victoria Island, Lagos

Telephone: 01- 7611191, 09099298887

E-mail: [email protected]

Registered Office: eTranzact International PLCth 5 Floor, Fortune Towers

27/29 Adeyemo Alakija Street

Victoria Island, Lagos

Telephone: 01- 4628946-9


Registrars: Meristem Registrars Limited

213 Herbert Macaulay Way

Yaba, Lagos

Telephone: 01-8920491-2


Auditors: Akintola Williams Deloitte

235 Ikorodu Road

Ilupeju, Lagos

Telephone: 01- 4930720-4



06

COMPANY PROFILE

About eTranzact

eTranzact International Plc is a publicly quoted company on the Nigerian Stock Exchange with fully paid up capital

of 2.1 billion Naira of 50 kobo per value. The eTranzact platform is Nigeria's first award winning multi-application

and multi-channel electronic transaction switching and payment processing platform.

eTranzact, which was launched in September 2003, has today evolved into a brand with a global reach extending

its innovative services to include products which cut across various e-channels and aims to provide Nigerians,

Africans and ultimately the world with cutting edge payment solutions. eTranzact offers easy payment channels to

its numerous customers while providing security, convenience and affordability.

Our strategy is to achieve significant growth and become a global leader in electronic payment services through

rapid expansion in the areas of mobile payments and remittances worldwide. With eTranzact, cardholders can

transact through any of the following channels:

* Web

* Mobile Phones

* POS Terminals

* ATM (Automated Teller Machines)

* Bank Branches

Awards and Accolades

In 2003, the Company enjoyed global recognition as she was honored as the first African company to receive a

gold medal from the prestigious COMPUTERWORLD HONORS AWARD in San Francisco California for

innovative and visionary use of information technology to produce and promote positive social, economic and

educational change in the society.

Furthermore, The Central Bank of Nigeria (CBN) in January 2008 applauded eTranzact by bestowing her with an

award for the MOST INNOVATIVE PRODUCT in recognition of the company's contribution in the

transformation of the economy from a cash based to a cashless society.


07

COMPANY PROFILE

Other Awards include:

* Best Mobile payment initiative in Africa (2012)

* Achievement Award (Corporate Category) by Intermac during Card Expo (2009)

* AITEC Africa Award in May, 2008 during African Banking Technology

* Award of Excellence as Best SMEEIS Enterpreneur under the Most Innovative Product

(Services) Category of the year 2007 by Central Bank of Nigeria

* Partnership award during Card Expo 2006, West Africa by Intermarc

* Partnership award during Smart Card Expo and ATM World in 2004.

In addition to its operations in Nigeria, the company has associations in Ghana, Zimbabwe, Cote d'Ivoire,

Kenya, South Africa and United Kingdom and aims to provide Nigerians, Africans and ultimately the world

with cutting edge payment solutions.


08

RESULT AT A GLANCE

2012

N'000(Restated)

Turnover 3,062,952

Gross profit 961,423

Operating profit 46,748

Profit before Tax 178,694

Profit After Tax 127,758

Earnings/(loss) per share (kobo) 3.04

Share Capital 2,100,000

Shareholders Funds 2,639,941

% Increase

54%

9%

304%

38%

51%

51%

0%

8%

2013

N'000

4,706,834

1,044,316

188,667

246,401

192,684

2,100,000

4.59

2,575,923


09

NOTICE OF ANNUAL GENERAL MEETING

thNOTICE IS HEREBY GIVEN that the 10 Annual General Meeting of the Members of eTranzact International thPLC will hold on the 27 of November, 2014 at Oriental Hotel, Victoria Island, Lagos at 12.00 noon to transact

the following businesses:

ORDINARY BUSINESS

1. To lay before the members the Audited Financial Statements for the year ended December 31, 2013, and the Reports of the Directors, Auditors and Audit Committee thereon.

2. To elect/re-elect Directors.

3. To authorise the Directors to fix the remuneration of the Auditors.

4. To elect/re-elect members of the Audit Committee.

SPECIAL BUSINESS

5. To fix the remuneration of Directors

thDated this 5 day of November, 2014

BY ORDER OF THE BOARD

Ifeoma OnuboguPAC SOLICITORS (Company Secretary)FRC/2014/NBA/00000006266

NOTES

1. ProxyA member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his/her place. A proxy need not be a member of the Company. A form of proxy is attached to the Annual Reports and Accounts and if intended to be used, it must be executed and returned to the office of the Registrars, Meristem Registrars Limited, 213, Herbert Macaulay Way, Yaba, Lagos or the office of the Company Secretary, PAC Solicitors, Suite 18, East Pavilion, Tafawa Balewa Square Complex, Race Course, Lagos, not later than 48 hours before the time fixed for the meeting.

2. Audit Committee

Pursuant to Section 359(5) of the Companies and Allied Matters Act CAP C20, LFN 2004, any Shareholder may

nominate another shareholder as member of the Audit Committee by giving notice in writing to the Company

Secretary at least 21 days before the Annual General Meeting. Please note that The Code of Corporate

Governance for Public Companies issued by the Securities and Exchange Commission provides that members

of the Audit Committee should be financially literate and able to read financial statements. We therefore

request that all nominations to the Audit Committee should be accompanied with the Curriculum Vitae of the

Nominees.

3. Closure of Register and Transfer Booksth stThe Register of Members and Transfer Books will be closed from 17 to 21 of November, 2014 both days

inclusive for the purpose of updating the Register.


10

CHAIRMAN'S STATEMENT

Distinguished Shareholders, Members of the Board of Directors, invited guests, ladies and gentlemen, it is my thpleasure to welcome you all to the 10 Annual General Meeting of our Company, eTranzact International PLC.

BUSINESS ENVIRONMENT

eTranzact International PLC remains at the forefront of delivering innovative electronic and mobile payment

solutions to the public and private sectors of the economy leveraging on its award winning switching platform. We

have maintained our leadership position in the sector and we continue to set the pace.

As a Company, we pride ourselves as one of the pioneer organizations in the business of electronic and mobile

payment technology in Africa and as such we continue to hold ourselves to very high professional, ethical,

technical and operating standards.

As we continue to position our business and operations to take advantage of the various opportunities in the

industry, we will continue to align our business processes, operating standards as well as financial processes with

global best practice which is required of businesses such as ours.

KEY MILESTONE

The year 2013 was a phenomenal year in the life history of this company.

Our operating performance improved significantly:

· We delivered record gross revenues of about N4.7bn which represents 54% growth on the 2012 numbers

· We recorded 400% growth in operating profit from N46.7m in the prior period to N188.7m in the period

under review

· Profit before tax grew by 40% from the 2012 numbers

· Profit after tax also grew by 51% compared to 2012 numbers

· Operating expenses dropped by about 7%

We endeavored to manage our overheads efficiently while we ensured we improved on our operating

performance. The business continues to improve on its efficiency and judicious use of its resources.

Our strategic alliance and sector and product focus contributed significantly to this encouraging performance:

· We completed our integration with MasterCard International and we are now a MasterCard Third Party

Processor (TPP). This alliance has opened up the eTranzact platform to processing international

transactions

· We have completed our integration with Western Union Money Transfer and MoneyGram Money

transfer platforms. This enables us receive and process inbound remittance into the country. This is a fast

growing sector of the economy and we have now positioned the company to take full advantage of the

opportunities in the space

· We are also working closely with the National Identity Card Management Commission (NIMC). This is the

government agency that will execute on the country's identity card project which involves issuing identity

cards to all Nigerians. These cards will also function as prepaid cards that can be used for making

payments for goods and services. This is a government initiative. We have been selected as one of the

processors of this initiative


11

· Our Mobile Money business continues to evolve as we are continuously identified by global donor

agencies as the platform to partner with to help facilitate the distribution of grants and donations to

individuals and corporations that qualify based on the agencies criteria. We are currently running 2 of

such projects and expect this to grow significantly as the donor agencies adopt electronic payment

disbursement processes

REVIEW OF PERFORMANCE

As highlighted above, our operating performance continues to improve significantly. Our top line gross revenue

grew by over 400% over the last 4 years from 2010 to 2013. The Company still maintains its profitable

positionsince 2011 and our profit after tax continues to grow. We anticipate continuous improvement and

significant progress in our growth pattern in 2014 and beyond.

Find below a brief comparison of our operating results over the past 4 years:

BOARD EVALUATION

The Structure of the Board has changed since the last Annual General Meeting. Mr. Ike Eze was appointed to the

Board at its meeting which held on the 16th of January, 2014. Mr. Benson Akpati, on the other hand, resigned from

the Board on the 14th of April, 2014.

The Board believes that a business built on the principles of good governance will succeed in the long term and

will maximize shareholder value. As an organization, we responded constructively to an increased number of

government and regulatory consultation exercises in the period under review.

Our various Board Committees continue to meet regularly to maintain the required interphase with the executive

management of the company. This ensures we are close to the affairs of the company as much as we should and

are fully aware of the operating situations of every aspect of the business.

Following a Resolution passed by the Board at its meeting which held on the 28th of November, 2013, the Annual

Fees of the Directors was reviewed as follows:


12

As a board we will continue to guide the company as much as is required to ensure that it achieves its full potential

as an extremely profitable business that is run ethically.

CONCLUSION

We are poised and committed to be a regional and global leader in the electronic and mobile payment industry. We

will continue to deliver secure, cost effective and innovative electronic and mobile payment services that are

compliant with globally recognized standards.

I would like to take this opportunity to thank our shareholders for their support and understanding. I congratulate

the Managing Director and his team (Management and Staff) for their innovation, drive and efficient and judicious

use of the company's resources to deliver the encouraging performance in the period under review.

I thank my colleagues on the Board of Directors for their dedication, co-operation and commitment.

May the good Lord continue to guide us and bless our efforts to achieve our Vision and Mission while we maximize

the shareholder value.

Ladies and gentlemen, thank you for your attention.

Felix Ohiwerei


13

CORPORATE GOVERNANCE REPORT

BOARD STRUCTUREBoard Composition

The Board of Directors of eTranzact International PLC is comprised of experienced people with significant

achievements in their respective professions.

As at December 31, 2013, there were nine (9) members of the Board of Directors comprising seven (7) Non-

Executive Directors one of whom is the Chairman and two (2) Executive Directors. The composition of the Board

during the year is presented as follows:

Names of Directors Designation

Mr. Felix Ohiwerei Non-Executive Director (Chairman)

Mr. Valentine Obi Managing Director/CEO

Mr. Wole Abegunde Non-Executive Director (NED)

Mr. Bayo Adeyemo Non-Executive Director (NED)

Mr. Rasheed Mumuni Non-Executive Director (NED)

Mr. Benson Akpati Non-Executive Director (NED)

Mr. Tony Egbuna Non-Executive Director (NED)

Mr. Victor Etuokwu Non-Executive Director (NED)

By way of update, it is important to note that:

Mr. Ike Eze was appointed by the Board of Directors as Executive Director, Strategy and Corporate thDevelopment at the Board meeting held on 16 January, 2014.

Mr. Benson Akpati resigned his appointment from Ecobank PLC and being the Bank's representative on the

Board of eTranzact International PLC, consequently resigned from the Board on the 14th of April, 2014.

Board Committees

There are three (3) Committees of the Board namely;

I. Finance and General Purpose Committee;

II. Strategy and Technical Committee; and

III. Governance and Establishment Committee.

Mr. Sullivan Akala Executive Director


14

The composition of each Committee is detailed in the table below:

ROLES AND TERMS OF REFERENCE

Board

The Board is primarily responsible for ensuring the proper management of the affairs of the Company. The

Board has a good relationship with Management with adequate information flow between them. The Board's

specific responsibilities include:

a. Setting the Company's strategic objectives and monitoring implementation;

b. Ensuring an effective risk management and system of internal controls,;

c. Annual budget approval and performance monitoring;

d. Review and approval of financial statements;

e. Ensuring compliance with applicable laws and regulatory requirements;

f. Appointment of Senior Management and succession planning;

g. Ensuring disclosure and communication to all stakeholders; and

h. Ensuring that the Company's business is conducted with integrity and ethical

standards.

The Board carries out its responsibilities through its committees.


15

Finance and General Purpose Committee (F&GPC)

The F&GPC assists the Board in effectively addressing financial and general administration matters including

overseeing and reviewing significant financial planning and budgeting, risk management strategy, internal control

policies, compliance with regulatory requirements and other matters delegated to it by the Board.

The Terms of Reference of the Committee include:

a. Review financial statements and related reports prior to presentation for Board approval.

b. Review the adequacy of policies related to financial management including financial controls.

c. Periodic review of the Company's operational result in line with budget.

d. Formulate strategies for improving the Company's financial position.

e. Review the adequacy and effectiveness of the Company's risk policy, management and control.

f. Review and recommend risk management procedures and controls for Board approval.

g. Review the Company's system of internal controls, performance reporting, policies and procedures.

Strategy and Technical Committee

The Strategy and Technical Committee assists the Board in ensuring that the Company's strategies align with the

vision and business objective of the Company including reviewing strategic/business plans, reviewing the

adequacy and efficiency of Company's software/platforms and other matters delegated to it by the Board.


a. Review of strategic/business plans and policies prior to presentation for Board approval.

b. Identify potential risks in strategic plans and recommend appropriate mitigation strategies.

c. Review processes necessary to ensure effective implementation, monitoring and reporting of strategic

plans.

d. Review corporate performance to ensure alignment and consistency with Strategic plans and objectives.

e. Keep under review trends, technologies and emerging opportunities in the industry and impact on

Company's strategic direction.

f. Keep under review the adequacy and effectiveness of the Company's software and platforms.

Governance and Establishment Committee

The Governance and Establishment Committee make recommendations to the Board on the Company's policy and

structure for remuneration of all Board members and Senior Management. The Committee keeps under review the

structure, size and composition of the Board. It recommends policies and structures for effective corporate

governance in line with best practices and carries out other matters delegated to it by the Board.


a. Make recommendations to the Board on the Company's policies and structure for remuneration of

Directors and Senior Management.

b. Make recommendations to the Board on the remuneration of non-executive directors.

c. Determine the specific remuneration packages of all executive Directors and senior Management,

including fees, salaries, allowances, bonuses, options, benefits in kind and compensation payments

including any compensation payable for loss or termination of their offices or appointments, subject to the

approval of the Board.

d. Review, on an annual basis, the Board structure, size, composition (including the skills, knowledge and

experience) and make relevant recommendations to the Board.

e. Review and make recommendations to the Board on the Company's organizational structure and any

amendments thereto.

f. Recommend policies and structures for effective corporate governance in line with best practices.


16

MEETINGS AND ATTENDANCE

Board

The Board meets every quarter in accordance with its Schedule of meetings for the year and when it deems

necessary. The Board held six (6) meetings in 2013 as follows:

i. 8 March, 2013th

ii. 22 March, 2013nd

iii. 25 April, 2013th

iv. 14 August, 2013th

v. 24 October, 2013th

vi. 28 November, 2013th

The attendance of the Members of the Board at the meetings is presented in the table below:

Mr. Wole Abegunde

Finance and General Purpose Committee (F&GPC)

The Committee held four (4) meetings during the year as follows:ndi. 22 January, 2013

stii. 1 February, 2013rdiii. 23 July, 2013thiv. 25 November, 2013

NAMES OF DIRECTORS

ATTENDANCE

8-3-13 22-3-13 25-4-13 14-8-13 24-10-13 28-11-13

Mr. Felix Ohiwerei x

Mr. Valentine Obi

x

Mr. Benson Akpati x x

Mr. Bayo Adeyemo

Mr. Rasheed Mumuni

Mr. Tony Egbuna x

Mr. Victor Etuokwu x x x x

Mr. Sullivan Akala


17

The attendance of the Finance and General Purpose Committee members at the meetings is presented in the

table below:

Strategy and Technical Committee

The Committee held two (2) meetings during the year as follows:thI. 7 August, 2013

thII. 19 October, 2013

The attendance of the Strategy and Technical Committee members at the meetings is presented in the table

below:

Governance and Establishment Committee

The Committee held four (4) meetings during the year as follows:thI. 18 June, 2013

ndII. 2 July, 2013thIII. 7 August, 2013

thIV. 18 October 2013

The attendance of the Governance and Establishment Committee members at the meetings is presented in the table below:


18

INFORMATION FLOW

Board papers are circulated electronically and in print to the Directors before each meeting. The Board papers

detail and address the agenda items and areas requiring approvals and decisions of the Board.The Board can

request the presence of any Senior Management Staff to provide information when required at its meetings.

DIRECTOR FOR ELECTION

Since the last Annual General Meeting, one (1) Director; Mr. Ike Eze, was appointed to the Board and is hereby thpresented for approval. Mr. Ike Eze was appointed to the Board on the 16 of January, 2014 as Executive Director,

Strategy and Corporate Development.

Mr. Eze holds an MBA in Finance and Strategic Management from THE WHARTON SCHOOL, University of

Pennsylvania, Philadelphia and a B.Sc in Mechanical Engineering from the San Francisco State University, School of

Engineering San Francisco, California where he graduated as an Osberg Scholar and Top Mechanical Engineering

Student. He has over Twenty (20) years' experience in Finance and Strategy Management. He was the founder, CEO

and Chairman of QSpace which was acquired by Experian. He was the CEO to an online gaming membership

company that was built and sold over 3 years. He founded and led, as CEO, Centrro, a financial services company.

He completed a buyout of an automotive marketing services company from Fortune 500 company. He has sourced

strategic partnerships with blue-chip companies including Microsoft, Sony, Sega, Nintendo, DaimlerChrysler,

Intuit, VeriSign and Experian.

DIRECTORS FOR RE-ELECTION

The following Directors retiring by rotation in accordance with Section 259 of the Companies and Allied Matters

Act 2004 and Article 36 of the Company's Articles of Association being eligible are presenting themselves for re-

election:

1. Mr. Valentine Obi: Mr Valentine Obi is the founder and Chief Executive Officer of of the Company. He holds a

Bachelor of Science degree in Computer Science, a Masters degree in Computer Information System and an

MBA from the prestigious Instituto de Empressa, Spain. He is an Alumnus of The Harvard Business School and a

doctorate student with International School of Management, Paris, France.

He has an extensive experience in Information Technology and has served in various capacities both locally

and internationally as a project director of various business and IT projects including World Bank assisted

projects in Nigeria and Ghana. He received the coveted Computerworld Honors Gold Medal of Achievement in

San Francisco, California, April 6, 2003, for creating eTranzact.In January 2008 he received "The Most

Innovative Product of the Year" award from the Central Bank of Nigeria.

He is a member of the Board of Regents of Covenant University and a member of the Central Bank of Nigeria's,

National Payment Technical Committee.

2. Mr. Wole Abegunde: Mr. Abegunde is a Non-Executive Director of the Company. He holds a Bachelor of

Science degree in Agricultural Economics from University of Ibadan in 1987 and earned Masters in Business

Administration from the University of Ilorin in 1990. He is a Fellow of the Chartered Institute of Stockbrokers

(FCS) and an authorized Dealing Clerk of The Nigerian Stock Exchange. He has varied experience in the

manufacturing and banking industries as well as the capital market.


19

He was General Manager of Investment Centre Limited a subsidiary of Broad Bank Ltd. He worked with NAL

Bank Plc from where he joined Meristem Securities Ltd as Managing Director and Chief Executive Officer.

3. Mr Sullivan Akala: Mr. Akala is the company's Executive Director, Business Development. He joined the

Company as the Chief Business Development Officer in February, 2011.Mr. Akala holds an MBA from Kellogg-

Schulich, York University, Toronto, Canada, a M.Sc. and a Bachelors degree in Banking and Finance both from

the University of Lagos.

He has over twenty (20) years' experience in banking and financial management. He worked in United Bank for

Africa PLC and Zenith Bank PLC respectively in various managerial capacities and has attended several Executive

Management Programmes in Nigeria and abroad. He is an Associate of the Chartered Institute of Bankers,

Nigeria.

THE AUDIT COMMITTEE

The Audit Committee is a requirement of Section 359 (4) of the Companies and Allied Matters Act (Cap. C20) 2004.

The Committee is constituted of an equal number of directors and representatives of the shareholders, but is

subject to a maximum limit of six members.

The members of the Audit Committee during year were:

The Audit Committee's Terms of Reference are stated in Section 359(6) of the Company and Allied Matters Act CAP

C20, Laws of the Federation of Nigeria 2004. The Audit Committee is also guided by the provisions of Section 30 of

the Code of Corporate Governance for Public Companies issued by the Securities and Exchange Commission. The

functions of the Audit Committee include review of accounting and reporting policies of the Company, scope and

planning of audit requirements and effectiveness of the Company's system of accounting and internal control.

The Audit Committee meetings are usually attended by the Chief Finance Officer,Internal Auditor and the External

Auditor.

The Audit Committee met five (5) times during the year as follows:th1. 25 March, 2013th2. 25 April, 2013th3. 30 July, 2013th4. 29 October, 2013th5. 10 December, 2013


20

The attendance of the Committee members at the meetings is presented in the table below:

Note

1. Mr Robert Adinuba Ibekwe and Mr Tohir Folorunsho Ismaila were elected to the Audit Committee at the thAnnual General Meeting held on the 6 of June, 2013.

BOARD EVALUATION

An independent evaluation of the Board was conducted for the year ended. The members of the Board participated

actively in the evaluation exercise and cooperated adequately with the coordinating Consultant. The evaluation

confirmed that the Board has the capacity, quality and structure to realize the objectives of the Company. The areas

of improvement necessary for Board effectiveness have been noted by the Board and are being addressed.

NAMES

ATTENDANCE

25-3-13 25-4-13 30-7-13 29-10-13

10-12-13

Mr. Dominic Ichaba Mr. Wole Abegunde x x x x x Mr. Bayo Adeyemo x x x x Mr. Rasheed Mumuni x

Mr. Robert Adinuba Ibekwe1 N/A N/A

Mr. Folorunsho Ismaila Tohir 1 N/A N/A


21

REPORT OF THE DIRECTORSSTFOR THE YEAR ENDED 31 DECEMBER 2013

The Directors are pleased to present their annual report on the affairs of the Company together with stthe Audited Financial Statements for the year ended 31 December 2013.

LEGAL FORM AND PRINCIPAL ACTIVITIESthThe Company was incorporated as a Private Limited Company on 7 May, 2003. It converted and

thregistered as a Public Limited Liability Company on the 25 June 2009 and its shares were listed on the thNigerian Stock Exchange on the 8 July 2009. The Company's principal activity is the provision of all

facets of electronic payment technology and maintenance services.

OPERATING RESULTS

The summary of the operating results for the year is as follows:

SHAREHOLDERS WITH MORE THAN 5% INTEREST

Company is owned by Nigerian ci�zens and Foreign Investors.

2013

2012

N'000

N'000

(Restated)

Turnover

4,706,834

3,062,952

Gross profit

1,044,316

961,423

Opera�ng profit/(loss)

188,667

46,748 Profit Before Tax

246,401

178,694

Taxa�on

(53,717)

(50,936)

Profit a�er Tax

192,684

127,758


22

SHARE CAPITALstAs at 31 December 2013, the authorised share capital of the Company is 4,200,000,000 ordinary shares

of 50k each.

SHARE CAPITAL HISTORY

The Company was incorporated in 2003 as a Private Limited Liability Company with an initial authorized

share capital of N1,000,000 divided into 1,000,000 ordinary shares of N1.00 each. In 2005, the Company

increased its share capital to N350,000,000 divided into 350,000,000 ordinary shares of N1.00 each. In 2008,

the Company increased its share capital to N2,100,000,000 divided into 4,200,000,000 ordinary shares of

50kobo each and was listed on the Nigerian Stock Exchange in 2009.

As at date, the Company has an authorised share capital of N2,100,000,000 divided into 4,200,000,000

ordinary shares of 50kobo each and a paid up share capital of N2,100,000,000 divided into 4,200,000,000

ordinary shares of 50kobo each.

The initial authorized share capital of the Company and subsequent changes to it are shown in the table

below:

Year Authorised Share Capital (N) Increase

FROM (N) TO (N)

2003 1,000,000

2005 1,000,000 350,000,000

2008 350,000,000 2,100,000,000

SHAREHOLDING ANALYSIS

Range No. Of

Holders

Holders

%

Holders

Cum.

Units Units % Units Cum.

1‐1,000

1,001‐5,000

5,001‐10,000

10,001‐50,000

50,001‐100,000

100,001‐500,000

500,001‐1,000,000

1,000,001‐5,000,000

5,000,001‐10,000,000

10,000,001‐ABOVE

61

9

1

50

15

112

3

16

3

12

21.63

3.19

0.35

17.73

5.32

39.72

1.06

5.67

1.06

4.26

61

70

71

121

136

248

251

267

270

282

25,045

25,700

10,000

2,434,100

1,453,100

23,996,900

2,200,000

51,395,695

30,000,000

4,088,459,460

0.00

0.00

0.00

0.06

0.03

0.57

0.05

1.22

0.71

97.34

25,045

50,745

60,745

2,494,845

3,947,945

27,944,845

30,144,845

81,540,540

111,540,540

4,200,000,000

Grand Total 282 100.00 4,200,000,000 100.00


23

DIRECTORS AND THEIR INTERESTS

The Directors of the Company, who held office during the year together with their interests (including op�on) in the stshares of the Company at 31 December 2013 are shown below:

PROPERTY, PLANT AND EQUIPMENT

Movements in property, plant and equipment for the period are shown in notes 13 in the Financial Statements. In

the opinion of the Directors, market value of property, plant and equipment is not less than the value shown in

the Financial Statements.

POST BALANCE SHEET EVENTS

There are no significant post balance sheet events which could have had a material effect on the state of affairs of stthe Company as at 31 December 2013 and on the profit for the year ended on that date which have not been

adequately provided for or disclosed.

PENALTIES

Due to the delay of the Company to file its Audited Financial Statements for the year ended December 31, 2013 to

The Nigerian Stock Exchange (NSE), the Company has been penalized in the sum of Two Million, Seven Hundred

Thousand Naira (N2,700,000.00) by The NSE.

HUMAN RESOURCES

I Employment Policy

The Company gives equal opportunity to all applicants including disabled persons. All employees stwhether or not disabled are given equal opportunity for career growth and development. As at 31

December 2013, no disabled person applied for employment in the Company.

II Health, Safety and Welfare of Employees

eTranzact places high importance on the health, safety and welfare of its employees. The Company

ensures that the work environment is safe. Employees are entitled to graduated medical allowances.

Hazard allowances are also paid to employees who are exposed to hazards in the course of their duties.

Incentive schemes which include bonus, promotions, salaries and wage increase and employers

contribution to pension schemes are also implemented.


24

III Employees Consultation and Training

The Company is of the opinion that its employees are an invaluable asset and as such equip them with skills

and knowledge necessary to keep them up to date and enhance efficiency on their jobs. The employees

are considerably involved in major policy matters affecting them and are informed on various factors

affecting the performance of the Company. This is achieved through formal and informal meetings.All

employees are exposed to trainings, workshops and seminars that are necessary to enhance their

knowledge and skill. The Company encourages continuing knowledge development of its employees.

CHARITABLE GIFTS AND DONATIONS

There were no gifts and/or donations made during the year.

FORMAT OF ACCOUNTS

The Financial Statements have been prepared in accordance with the standards and requirements of the

International Financial Reporting Standards (IFRS). The Directors consider that the format adopted in this

account is the most suitable for the Company's purposes.

AUDITORS

The Auditors, Akintola Williams Deloitte have indicated their willingness to continue in accordance with

section 357(2) of the Companies and Allied Matters Act Cap C20 LFN 2004.

BY ORDER OF THE BOARD

Ifeoma Onubogu

PAC SOLICITORS (Company Secretary)

FRC/2014/NBA/00000006266


25

REPORT OF THE AUDIT COMMITTEE TO

THE MEMBERS OF eTRANZACT INTERNATIONAL 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, the members of the Audit

Committee of eTranzact International PLC confirm that:

The accounting and reporting policies of the Company are in accordance with legal

requirements and agreed ethical practices;

st The plan and scope of both the external and internal audit for the period ended 31

December 2013 were satisfactory and reinforce the Company's internal control.

We have reviewed presentations from both the External Auditors and the Internal

Auditor on the accounting procedures and internal controls and are satisfied with

the presentations that were made to us.

Dominic Ichaba

Chairman, Audit Committee

FRC/2014/NBA/00000006264

th Dated 13 November, 2014

Members of the Audit Committee

1. Mr. Dominic Ichaba - Chairman

2. Mr. Wole Abegunde - Member

3. Mr. Bayo Adeyemo - Member

4. Mr. Rasheed Mumuni - Member

5. Mr. Robert Ibekwe - Member

6. Mr. Folorunsho Ismaila Tohir - Member


26

•

•

•

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS

For the year ended 31 December 2013

The Directors of eTranzact International PLC are responsible for the preparation of the financial statements

that present fairly the financial position of Company as at 31 December 2013, and the results of its operations,

cash flows and changes in equity for the period ended, in compliance with International Financial Reporting

Standards ("IFRS").

In preparing the financial statements, the Directors are responsible for:

properly selecting and applying accounting policies;

presenting information, including accounting policies, in a manner that provides relevant, reliable,

comparable and understandable information;

providing additional disclosures when compliance with the specific requirements in IFRSs are

insufficient, to enable users understand the impact of particular transactions, and conditions on the

Company's financial position and financial performance; and

making an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for:

designing, implementing and maintaining an effective and sound system of internal controls

throughout the Company;

maintaining adequate accounting records that are sufficient to show and explain the Company's

transactions and disclose with reasonable accuracy at any time the financial position of the Company,

and which enable them to ensure that the financial statements of the Company comply with IFRS;

maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS;

taking such steps as are reasonably available to them to safeguard the assets of the Company; and

preventing and detecting fraud and other irregularities.

The financial statements of the Company for the year ended 31 December 2013 were approved by

management on 31 July, 2014

Signed on behalf of Board of Directors of the Company

•

•

•

•

•

•


27

Report on the Financial StatementsWe have audited the accompanying financial statements of eTranzact International PLC which comprise the Statement of financial position as at 31 December 2013, Statement of profit or loss and other comprehensive income, Statement of changes in equity, Statement of cashflows for the year ended 31 December 2013, a summary of significant accounting policies and other explanatory information.

Directors' Responsibility for the Financial StatementsThe Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011, the International Financial Reporting Standards and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal controls relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the financial statements.

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

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of eTranzact International PLC as at 31 December 2013, and the financial performance and cash flows for the year ended 31 December 2013; the company has kept proper books of account which are in agreement with the financial statements in the manner required by the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011 and the International Financial Reporting Standards.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for more detailed description of DTTL and its member firms. Akintola Williams Deloitte, a member firm of Deloitte Touche Tohmatsu Limited, is a professional services organisation that provides audit, tax, consulting, accounting and financial advisory, corporate finance, and risk advisory services.

Akintola Williams Deloitte 235 Ikorodu Road, Ilupeju

P.O Box 965, Marina Lagos

Nigeria Tel: +234 (1) 271 7800 Fax: +234 (1) 271 7800www.deloitte.com/ng

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF

eTRANZACT INTERNATIONAL PLC


28

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

There is no other comprehensive income for the year; hence the profit for the year is equal

to the total comprehensive income.

The notes on pages 33 to 65, and the additional statements on pages 66 and 67 form part

of these financial statements.


29

STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2013

12/31/2013

12/31/2012

1/1/2012

Note

N'000

N'000

N'000

Non-current assets

(Restated)

(Restated)

Property, plant and equipment

13

161,551

138,208

127,404 Investment property

14

645,917

645,917

645,917

Intangible assets

15

227,590

243,880

254,841 Financial assets

16

27,000

27,000

27,000

Deferred tax asset

17

72,239

107,603

108,466 Deposit for shares

232,275

231,723

-

Total non-current assets

1,366,572

1,394,331

1,163,628

Current assets Inventories

19

292,913

235,167

197,017 Trade and other receivables

20

785,644

821,790

733,456

Other assets

18

45,803

32,994

78,503 Cash and cash equivalents

21

1,104,864

801,645

739,376

Total current assets

2,229,224

1,891,596

1,748,352

Total assets

3,595,796

3,285,927

2,911,980

Equity

Share capital 23 2,100,000 2,100,000

2,100,000 Share premium account 24 646,875 646,875

646,875

Retained earnings 25 (170,952) (363,636)

(491,394)

Total equity attributable to owners of the company 2,575,923

2,383,239

2,255,481

Current liabilities Trade and other payables

22

921,654

800,084

576,919 Current tax l iabilities

10.2

98,219

102,604

79,580

Total current liabilities

1,019,873

902,688

656,499

Total liabilities

1,019,873

902,688

656,499

Total equity and Liabilities

3,595,796

3,285,927

2,911,980

The financial statements on pages 28 to 67 were approved by the Board of Directors on 31 July 2014 and

signed on its behalf by:

The notes on pages 33 to 65 and the additional statements on page 66 and 67 form an integral part of these

financial statements.


30

Share capital

Share premium

Retained earnings Total

N'000 N'000 N'000 N'000

Balance at 1 January 2012 (as previously reported)

2,100,000 646,875 (234,693) 2,512,182

Prior Year Adjustment (See note 25.1) - - (311,147) (311,147) Tax effect on prior year adjustment - - 54,446 54,446

Balance at 1 January 2012 as Restated

2,100,000 646,875 (491,394) 2,255,481

Profit for the year

- - 127,758 127,758 Other comprehensive income - - - - Total comprehensive income - - 127,758 127,758

Balance at 31 December 2012

2,100,000 646,875 (363,636) 2,383,239

Profit for the year - - 192,684 192,684 Other comprehensive income for the year - - - -

Balance at 31 December 2013

2,100,000 646,875 (170,952) 2,575,923

STATEMENT OF CHANGES IN EQUITY


31

STATEMENT OF CASHFLOWS

2013

2012

Note

N'000

N'000

Cash flows from operating activities

(Restated) Cash receipt from customers

4,747,097

2,523,566

Cash paid to suppliers and employees

(4,381,776)

(2,168,934)

Cash generated from operations

365,321

354,632

Income taxes paid 10

(22,738)

(27,050)

Net cash generated by operating activities 28

342,583

327,582

Cash flows from investing activities

Purchase of property, plant and equipment 13

(77,654)

(80,362) Additions to intangible assets 15

(15,459)

(11,631)

Interest receivable and similar income

53,617

58,403 Deposit for shares

-

(231,723)

Proceeds from sale of property, plant and equipment

132

-

Net cash used in investing activities

(39,364)

(265,313)

Net increase in cash and cash equivalents

303,219

62,269

Cash and cash equivalents at beginning of year

801,645

739,376

Cash and cash equivalents at end of year 21

1,104,864

801,645


32

YOUR BANK


33

NOTES TO THE FINANCIAL STATEMENTS

1.0 Description of business eTranzact International PLC was incorporated as a Private Limited Liability Company in 2003. It became a Public Limited Liability Company in 2009 and has since been quoted on The Nigerian Stock Exchange. The majority shareholder is eTranzact Global, a Company incorporated in British Virgin Islands, with a shareholding of 50.33% while the remaining shareholding cut across diverse shareholders including institutional investors.

The Company is principally engaged in the provision of all facets of electronic payment technology and

maintenance services. They include transactions via: - Mobile Phones (GSM, CDMA or Analog) - Web (using any internet browser in a secured transaction) - POS (Point of Sale) - ATM (Automated Teller Machines) - Other mobile devices - Bank branches

1.1 Composition of financial statements

The financial statements are drawn up in Naira, the functional currency of eTranzact International PLC in accordance with International Financial Reporting Standards (IFRS): - Statement of profit or loss and other comprehensive Income - Statement of financial position - Statement of changes in equity - Statement of cash flows - Notes to the financial statements.

1.2 Basis of preparation

The financial statements have been prepared using the historical cost convention as stated in the accounting policies.

1.3 Financial period

These financial statements cover the financial year ended 31 December 2013, with comparative amounts for the financial year ended 31 December 2012 and relevant disclosures as at 31st December 2013.

2. Application of new and revised International Financial Reporting Standards (IFRSs) 2.1 New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements

Amendments to IAS 1 – Presentation of Items of Other Comprehensive IncomeThe Company has applied the amendments to IAS 1 – Presentation of Other Comprehensive Income for the first time in the current year. The amendments introduced new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the “Statement of Comprehensive Income” is renamed as the “Statement of Profit or Loss and Other Comprehensive Income”. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section:

a) Items that will not be reclassified subsequently to profit or loss andb) Items that may be classified subsequently to profit or loss when specific conditions are met.

IAS 19 – Employee Benefits (as revised in 2011)All actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension liability or asset recognised in the consolidated statement of financial position to reflect full value of the plan surplus or deficit. The interest cost used in the previous version of IAS 19 is replaced with a 'net interest' amount under IAS 19 (as revised in 2011), which is calculated by applying the discount rate to the net benefit liability or asset. In addition, IAS 19 (as revised in 2011) introduces certain changes in the presentation of the defined benefit cost including more extensive disclosures.


34


2.1 New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements (cont'd)

Impact of application of IFRS 10

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with

consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities. IFRS 10 changes the

definition of control such that an investor has control over an investee when:

a) It has power over the investee

b) It is exposed, or has rights, to variable returns from its involvement with the investee and

c) Has the ability to use its power to affect its returns.

All three of these criteria must be met for an investor to have control over an investee. Previously, control was

defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from

its activities. Additional guidance has been included in IFRS 10 to explain when an investor has control over an

investee. Some guidance included in IFRS 10 that deals with whether or not an investor that owns less than

50% of the voting rights in an investee has control over the investee is relevant to the Group.

The entity does not have interest in other entities; hence this standard does not have any impact on the

company.

Impact of the application of IFRS 12

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint

arrangements, associates and/or unconsolidated structured entities. This standard does not have any impact

on the company as it does not have interest in other entities.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value

measurements. The scope of IFRS 13 is broad; fair value measurement requirements of IFRS 13 apply to both

financial instruments items and non-financial instrument items for which other IFRSs require or permit fair

value measurements and disclosures about fair value measurements, except for share-based payment

transactions that are within the scope of IFRS 2 – Share-based Payment, leasing transactions that are within

the scope of IAS 17 – Leases, and measurement that have some similarities to fair value.

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer liability in an

orderly transaction in the principal (or most advantageous) market at the measurement date under current

market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly

observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure

requirements.

IFRS 13 requires prospective application from 1 January, 2013. In addition, specific transitional provisions

were given to entities such that they need not apply the disclosure requirements set out in the Standard in

comparative information provided for periods before the initial application of the Standard. Other than the

additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised

in the consolidated financial statements.


35


2.1 New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements (cont'd)

Impact of application of IFRS 11

IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation,

SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Ventures, has been incorporated in IAS

28 (as revised in 2011). IFRS 11 deals with how a joint arrangement of which two or more parties have joint

control should be classified and accounted for. Under IFRS 11, there are only two types of joint arrangements

- joint operations and joint ventures. The classification of joint arrangements under IFRS 11 is determined

based on the rights and obligations of parties to the joint arrangements by considering the structure, the

legal form of the arrangements, the contractual terms agreed by the parties to the arrangement, and, when

relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have

joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the

liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have

joint control of the arrangement (i.e. joint ventures) have rights to the net assets of the arrangement.

Previously, IAS 31 contemplated three types of joint arrangements - jointly controlled entities, jointly

controlled operations and jointly controlled assets. The classification of joint arrangements under IAS 31 was

primarily determined based on the legal form of the arrangement (e.g. a joint arrangement that was

established through a separate entity was accounted for as a jointly controlled entity).

The initial and subsequent accounting of joint ventures and joint operations is different. Investments in joint

ventures are accounted for using the equity method (proportionate consolidation is no longer allowed).

Investments in joint operations are accounted for such that each joint operator recognises its assets

(including its share of any assets jointly held), its liabilities (including its share of any liabilities incurred jointly),

its revenue (including its share of revenue from the sale of the output by the joint operation) and its expenses

(including its share of any expenses incurred jointly). Each joint operator accounts for the assets and liabilities,

as well as revenues and expenses, relating to its interest in the joint operation in accordance with the

applicable Standards.

This standard does not have any impact on the company as it does not have any joint arrangement with

another entity.

2.2 Accounting standards and interpretations issued but not yet effective

The following revisions to accounting standards and pronouncements that are applicable to the company

were issued but are not yet effective. Where IFRSs and IFRIC Interpretations listed below permits, early

adoption is permitted; the company has elected not to apply them in the preparation of these financial

statements.

The full impact of these IFRSs and IFRIC Interpretations is currently being assessed by the company, but none

of these pronouncements are expected to result in any material adjustments to the financial statements.


36


2.2 Accounting standards and interpretations issued but not yet effective

Pronouncement N ature of change

Required to be

im plemented for

periods beginning

on or after

Recoverable Amount

D isclosures for Non-

F inancial Assets

(Amendments to IAS

36)

The amendm ent reduces the circumstances in which the

recoverable amount of assets or cash-generating units is

required to be d isclosed, clarify the d isclosures required ,

and to introduce an explicit requirement to d isclose the

d iscount rate u sed in determ ining im pairment (or

reversals) where recoverable am ount (based on fair value

less costs of d isposa l) is determined using a present value

technique.

Applicable to annual

periods beginn ing

on or after 1 January

2014

N ovat ion of

D er ivat iv es and

Cont inuation of

H edge Account ing'

(Amendments to

IAS 39)

Am ends IAS 39 Financial Instruments: Recognition and

Measurement make it clear that there is no need to

d iscontinue hedge accounting if a hedging derivative

is novated, provided certain criter ia are met.


periods beginn ing


2014

A revised version of IFRS 9 incorporating revised

requirements for the classification and m easu rement of

financial liab ilities, and carrying over the existing

derecognition requirements from IAS 39 Financial

Instruments: Recognition and Measurement.

Applies to annual

periods beginn ing


2015

IFRS 9( 2 010)

Of fsett ing F inancia l

A sset s and

F inancia l Liab ilit ies

( Am endm ents to IAS 32 )

The amendment clarify certain aspects because of diversity

in application of the requirem ents on offsett ing, focused

on four main areas: the meaning of 'cu rrently has a legally

enforceable r ight of set-off', the application ofsimultaneous rea lisation and settlement, the offsetting of

co llateral amounts and the unit of account for applying

the offsetting requirements.


periods beginn ing


2014

Investm ent Ent it ies

( Am endm ents to I FRS 1 0,

I FRS 12 and IAS 27 )

The amendment provide 'investment ent ities' (as defined)

an exemption from the consolidation of particular

subsidiaries and instead require that an investment en tity

m easure the investment in each elig ible subsidiary at fair

va lue th rough profit or loss in accordance w ith IFRS 9

F inancial Instrum ents or IAS 39 Financial Instruments:

Recognition and Measurement. Require additional

d isclosure about why the entity is considered an

inves tment entity, details of the entity's unconsolidated

subsidiaries, and the natu re of relationship and certain

transactions between the investment entity and its

subsidiaries. Require an investment entity to account for

its investment in a relevant subsidiary in the sam e way in

its consolidated and separate financial statements (or to

only provide separate financial statements if a ll

subsidiaries are unconsolidated).

Applicable to

annual periods

beginning on or

after 1 January

2014

Provides guidance on when to recognise a liability for a

levy imposed by a governm ent, both for levies that are

accoun ted for in accordance with IAS 37 Provisions,

Contingent Liabilities and Contingent Assets and those

where the tim ing and amount of the levy is certa in. The

liability is recogn ised progressively if the obligating event

occurs over a period of time. If an obligation is triggered

on reaching a m inimum threshold , the liability is

recognised when that minimum threshold is reach ed.

IFRIC 21 Levies

Applies to

annual periods

beginning on or

after 1 January

2014


37


3. Significant accounting policies

3.1 Statement of Compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

3.2 Basis of preparation The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the

fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

Judgments made by management in the application of IFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 4.

3.3 Revenue

Revenue is measured at the fair value of the consideration received or receivable. Revenue represents Mobile purchases of air-time, service and transaction fees on mobile devices, sale of Point-

of-Sale device (POS) net of discounts and support incentives, VAT and other sales-related taxes. Discounts and support incentives are offset against revenue when it is probable that the criteria for the discount or incentive will be met and the amount can be reliably estimated.

The company earns revenue from the provision of all facets of electronic payment technology and maintenance

services.

3.3.1 Revenue from sale of goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: - the company has transferred to the buyer the significant risks and rewards of ownership of the goods; - the company retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the economic benefits associated with the transaction will flow to the company; and- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

3.3.2 Rendering of services Revenue from services rendered is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows: - Installation fees are recognised by reference to the stage of completion of the installation, determined as

the proportion of the total time expected to install that has elapsed at the end of the reporting period excluding idle time;

- Servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the servicing for the product sold; and

- Revenue from time and material contracts is recognised at the contractual rates as labour hours and direct expenses are incurred.

Service fees predominantly represent payments by members with respect to their card programmes carrying the

eTranzact brand. Maintenance and other professional fees are recognised when services have been performed. Transaction fees represent user fees for authorisation, clearing, settlement and other activities that facilitate

transaction and information flow within the company. Revenue from electronic transaction is recognised based on the company's share of transaction fees.

The Company also earns revenue on inward money transfers into the country. This is generated from two sources, a transaction fee on each money transfer activity through the platform and a markup on the foreign exchange value being transferred for sourcing the naira equivalent required to settle local beneficiaries.


38


3.3.3 Interest Income

Interest income from financial assets is recognised when it is probable that the economic benefits will flow

to the company and the amount can be reliably measured.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective

interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the

expected life of the financial asset to that asset's net carrying amount.

3.3.4 Dividend Income

Dividend income from investment is recognized when the shareholder's right to receive payment has been

established (provided that it is probable that economic benefits will flow to the company and the amount of

income can be measured reliably).

3.4 Segment reporting

The company's business segments are presented based on the information reported to the chief operating

decision maker for resource allocation and performance assessment.

3.5 Foreign currency translation

The financial statements of eTranzact are presented in Naira, which is the company's functional currency. In

preparing the financial statements, transactions in currencies other than the company's functional currency

(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.

Monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates

prevailing at each reporting date. Non-monetary items carried at fair value that are denominated in foreign

currencies are translated at the rates prevailing at the date when the fair value was determined.

Any resulting exchange differences are included in administration expenses in the income statement,

except for differences on available-for-sale non-monetary financial assets, which are included in the

available-for-sale reserve in other comprehensive income. Non-monetary items of historic cost that are

denominated in foreign currencyare translated at the date of the original transaction, and are not re-

translated.

Exchange differences arising on the settlement of monetary items are included in the income statement for

the year.

3.6 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are

recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax

are also recognised in other comprehensive income or directly in equity respectively.

3.6.1 Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax

as reported in the statement of profit or loss because of items of income or expense that are taxable or

deductible in other years and items that are never taxable or deductible. The company's liability for current

tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.


39


3.6.2 Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities

in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets

are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled

or the asset is realised based on tax laws and rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset.

3.7 Earnings per share Earnings per share is calculated by dividing net income by the number of ordinary shares outstanding

during the period. 3.8 Employee Benefits 3.8.1 Defined Contribution Plans Payments to defined contribution retirement benefit plans are recognised as an expense in the period in

which employees have rendered services entitling them to the contributions.

3.8.2 Other employee benefits Other short and long-term employee benefits are recognised as an expense over the period in which they

accrue.

3.9 Inventories Inventory of Point-of-Sale (POS) machines are measured at the lower of cost and net realizable value using

the First-In-First-Out (FIFO) Method. Net realizable value represents the estimated selling price for inventories less estimated cost to make the sale.

Airtime is valued at the cost of acquisition from the telecommunication operators.

3.10 Property plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation and any

impairment losses. The cost of self-constructed assets includes the costs of materials and direct labour. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the company's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.


40


3.10 Property plant and equipment (cont'd) Depreciation on property plant and equipment is charged to the income statement using the straight-line

method so as to write off the cost less their residual values over their estimated useful lives on the following bases:

Useful Life (years) Motor Vehicles 4 Information technology equipment 5 Furniture fittings and equipment 5

Plant and machinery 5 Computer Equipment 3 VSAT equipment 4

Land is not depreciated. No depreciation is charged on capital work in progress. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each

reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between

the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit or loss. 3.11 Investment property Investment properties comprise land held to earn rentals and/or for capital appreciation. Investment

properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties which comprise only land are measured at cost

and are not depreciated. Gains and losses arising from disposal of investment properties are included in profit or loss in the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

3.12 Intangible assets 3.12.1 Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated

amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Computer Software Costs Costs associated with developing or maintaining computer software programs are recognised as an

expense as incurred.

Costs that are directly associated with identifiable and unique software products controlled by the company and are expected to generate economic benefits exceeding beyond costs beyond one years are recognised as intangible assets.

Expenditures which enhance or extend the performance of computer software programs beyond their original specifications are capitalised and added to the original cost of the software. Computer software development costs recognised as assets are amortized using the straight-line method over their useful lives.


41


3.12.1 Intangible assets acquired separately

eTranzact Enterprise Software

In 2011 and prior years, the Company's management had assessed the useful life of the original eTranzact

enterprise software in line with that assessed at the start of its use, of 15 years. At 31 December 2012, the

Company's management determined that the life of the original software will extend beyond the

remaining useful life of 8 years, and have estimated that the software will remain useful for at least a further

18 years (25 years since initial implementation). Hence a remaining useful of life of 18 years has been

adopted. The effect of the change on the current year's financial statements of this has been to decrease

the depreciation charge by N12.45million than that which would have been derived with the previous

useful life.

eRemit Platform

In 2011 and prior years, the Company's management had assessed the useful life of the UK e-Remit

Platform in line with that assessed at the start of its use, as 15 years. As at 31 December 2012, the

Company's management determined that the life of the original software will extend beyond the

remaining useful life of 12 years, and have estimated that the software will remain useful for at least a

further 22 years (25 years since initial implementation). Hence a remaining useful of life of 22 years has

been adopted. The effect of the change on the current year's financial statements of this has been to

decrease the depreciation charge by N3.42million than that which would have been derived with the

previous useful life.

Other Software

Other software costs are amortised using the straight-line method over their estimated useful lives, but not

exceeding a period of three years.

3.12.2 Internally-generated intangible assets - Research and development expenditure

- Research expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

- Development expenditure

An internally-generated intangible asset arising from development (or from the development phase

of an internal project) is recognised when all of the following have been demonstrated:

a. the technical feasibility of completing the intangible asset so that it will be available for use or

sale;

b. the intention to complete the intangible asset and use or sell it;

c. the ability to use or sell the intangible asset;

d. how the intangible asset will generate probable future economic benefits;

e. the availability of adequate technical, financial and other resources to complete the

development and to use or sell the intangible asset; and

f. the ability to measure reliably the expenditure attributable to the intangible asset during its

development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure

incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no

internally-generated intangible asset can be recognised, development expenditure is recognised in profit

or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less

accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that

are acquired separately.


42


3.12.3 Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from

use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

3.13 Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets

to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate independent cash flows from other assets, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount

of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the

revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.14 Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a

past event, and it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as provisions is the best estimate of the consideration required to settle the present

obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of these cashflows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from

a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

3.15 Financial Instruments Financial assets and financial liabilities are recognised when the Company becomes a party to the

contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly

attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition, except for transaction costs relating to financial assets or financial liabilities at fair value through profit or loss, which are recognised immediately in profit or loss.


43


3.15.1 Financial assets Financial assets are classified into: (a) loans and receivables, (b) held-to-maturity investments (c) Available-for-sale and

(d) financial assets at fair value through profit or loss. Financial assets are subsequently measured based on their nature and purpose as determined at initial recognition. The company does not have financial assets classified as held-to-maturity and at fair value through profit or loss.

- Available-for-sale financial assets (AFS financial assets)

Available-For-Sale (AFS) financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss.

Available-for-sale investments are initially measured at fair value at the date of trade plus directly attributable

acquisition costs and are subsequently measured at fair value. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in other comprehensive income is included in the income statement for the period.

Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates, interest income calculated using the effective interest method and dividends on AFS equity investments are recognised in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

- Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market. Loans and receivables including [trade and other receivables and cash and bank balances] are subsequently measured at amortised cost using the effective interest method, less any impairment.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate "EIR". The "EIR" amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalents Cash and cash equivalents are comprised of cash in hand and highly liquid short-term investments that are

easily convertible into known amounts of cash and are subject to insignificant risks of changes in value.

- Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each

reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Available for sale assets For available-for-sale investments, a significant or prolonged decline in the fair value below its cost is

considered to be objective evidence of impairment. Impairment losses are recognised in the profit or loss for equity investments and are not subsequently reversed through the profit or loss. Cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

For available-for-sale debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.


44


3.15.1 Financial assets (cont'd)

Loans and receivables For financial assets carried at amortised cost, the amount of the impairment loss recognised is the

difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If, in a subsequent period, the amount of the impairment loss decreases as a result of an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

· Derecognition of financial assets Financial assets are derecognised only when the contractual rights to the cash flows from the asset

expire, or when the company transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the company retains an option to repurchase part of a transferred asset), the company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

3.15.2 Financial Liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

Derecognition of financial liabilities · The company derecognises financial liabilities when, and only when, the company's obligations are

discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

· Other financial liabilities Other financial liabilities (including borrowings and trade and other payables) are subsequently

measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and

of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.


45


4 Critical accounting judgments and key sources of estimation uncertainty

In the application of the company's accounting policies, described in note 3, the directors are required to

make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are

not readily apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant. Actual results may differ from these

estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only that

period, or in the period of the revision and future periods if the revision affects both current and future

periods.

4.1 Critical judgments in applying accounting policies

The following are the critical judgments, apart from those involving estimations (see note 4.2 below), that

the directors have made in the process of applying the company's accounting policies and that have the

most significant effect on the amounts recognised in the financial statements.

4.1.1 Fair Value of financial instruments

Available-for-sale assets

Available-for-sale financial investments are required to be initially recognised at fair value and

subsequently held at fair value with gains and losses arising from changes in fair value of such assets to be

included as a separate component of equity.

Citylink shares held by the company are classified as available for sale assets. These shares are however

carried at cost as Citylink is an unlisted company with a lack of public information available, and no reliable

comparative data exists. The directors are of the opinion that the investment is not impaired and thus no

provision for impairment is required against the cost of this shares.

4.2 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimating uncertainty at the

reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year, are discussed below.

4.2.1 Useful life of intangible assets

Intangible assets comprise mainly of the eTranzact Switching platform and the eRemit Remittance

platform. As described in Note 3 to the financial statements, the directors are required to assess the

remaining useful lives of intangibles assets at the end of each reporting period. Such assessment is

subjective and involves a significant element of judgment, and the resultant estimate may or may not be

borne out by future events. The effect on the financial statements of this assessment impacts the carrying

value of intangible assets and profit for the year. The effect of the re-assessment made in 2012 is quantified

in Note 3.

4.2.2 Impairment of financial assets

Provisions are made for receivables that are past their due date of collection. For debts over 365 days old;

specific provisions are made for all amounts on which no agreement has been made for collection from

existing switching operations. Furthermore all balances are reviewed for evidence of impairment and

provided against once recovery is doubtful. Based on prior experience of recovery of debts, for amounts

older than 180 days, a 50% general provision has been made. These assessments are subjective and involve

a significant element of judgment by management of the ultimate recoverability of amounts receivable.


46


5 Revenue

An analysis of the company…s revenue is as follows:

12/31/2013

31/12/2012

N'000

N'000

Mobile purchases

3,176,844

2,144,521

Other commissions

1,271,145

712,182

Maintenance and support services, software development and others 262,962

207,800

4,710,951

3,064,503

Less: Commission and discount

(4,117)

(1,551)

4,706,834

3,062,952

6 Segment Reporting

Products and services from which reportable segments derive their revenues

Information reported to the entity's Chief Executive for the purposes of resource allocation and assessment of

segment performance is focused on the category of products for each type of activity. The principal categories are

pin sales, commissions, point of sales machines and maintenance and support services, software development and

others. The entity's reportable segments under IFRS 8 are therefore as follows:

Segments Mobile purchases

Other commissions

Maintenance and support services, software development and others

6.1 Segm ent Revenue and results

12/31/2013

Segment Revenue

Cost of sales

Gross Profit

N'000

N'000

N'000

Mobile purchases

3,176,844

(2,953,821)

223,023

Other commissions

1,267,028

(570,817)

696,211


(137,880)

125,081

4,706,834

(3,662,518)

1,044,315

12/31/2012

Segment Revenue

Cost of sales

Gross Profit

N'000

N'000

N'000

Mobile purchases

2,144,521

(1,956,180)

188,341

Other commissions

710,631

(25,250)

685,381


(120,099)

87,701

3,062,952

(2,101,529)

961,423

There was no intersegment transaction as all revenue generated above was from external customers. The accounting policies of the reportable segments are the same as the Company's accounting policies described in Note 3. Segment profit represents the gross profit earned by each segment without allocation of general operating expenses, other gains and losses recognised on investment income, other gains and losses as well as finance costs. This is the measure reported to the Chief Operating Decision Maker for the purpose of resource allocation and assessment of segment performance. Business and geographical segments The Company operates in one geographical area. Segment assets and liabilities All assets and liabilities are jointly used by the reportable segments.


47


48


Đ Investment income

12/31/2013

31/12/2012

N'000

N'000

Interest income:

Bank deposits (Note 8.1)

53,617

58,403

53,617

58,403

7.1 This represents interest earned on placement of funds in short term deposits with banks.

12/31/2013 31/12/2012

8 Other gains and losses

N'000

N'000

Discount received

4,117

-

Bad Debts no longer required

-

34,140

Rent accrual no longer required

-

39,403

4,117

73,543

Other income is made up of discount received and write-back of provisions no longer required in the form of recovered bad debts, and rent accruals no longer required.

9. Profit for the year is arrived at after charging:

12/31/2013

31/12/2012

N'000

N'000

Directors' remuneration

126,070

113,969

Auditors' remuneration

8,000

8,000

Depreciation

54,180

69,559

Amortisation of intangible assets

31,749

36,939



10 Taxation

10.1 Income tax recognised in profit or loss

12/31/2013

31/12/2012

N'000

N'000

Current tax

Current tax expense in respect of the current year:

Income tax

67,369

75,892

Education tax

5,431

6,579

72,800

82,472

Adjustments in the current year for current tax of prior years (54,447)

(32,398)

18,353

50,074

Deferred tax

Deferred tax expense for current year

-

862

Write-downs (reversals) of deferred tax assets

35,364

-

35,364 862

Total income tax expense recognised in current year for continuing operations

53,717

50,936

Corporation tax is calculated at 30 per cent (2012: 30 per cent) of the estimated taxable profit for the year.

The charge for taxation in these financial statements is based on the provisions of the Companies Income

Tax Act, CAP C21, LFN, 2004 as amended.

The charge for education tax of 2 per cent (2012: 2 per cent) is based on the provisions of the Education Tax

Act, CAP E4, LFN, 2004.

Reconciliation of income tax expense for the year to the accounting profit as per profit or loss:

12/31/2013

31/12/2012

N'000

N'000

Profit before tax on continuing operations

246,401

178,694

Tax at the statutory corporation tax rate of 30% and 2% (2012: 30 % and 2%)

78,848

57,182

Effect of:

Exempted income from taxation

-

(1,727)

Non-deductible expenses in determining taxable profit

-

975

Effect of adjustments in fixed assets

-

(1,565)

Effect of prior year deferred tax (43,484) -

Effects of unused tax losses and tax offsets not recognized as deferred tax assets -

27,607

35,364

82,472

Effect of minimum tax 18,353 -

Adjustments in the current year for current tax of prior years

-

(32,398)

Income tax expense recognised in profit or loss for continuing operations

53,717

50,074

49



10.2 Current tax liabilities

12/31/2013

31/12/2012

N'000

N'000

At 1 January

102,604

79,580

Charged for the year

18,353

50,936

Deferred taxation

-

(862)

Payments during the year

(22,738)

(27,050)

98,219

102,604

12 Earnings per share

Earnings per share are calculated on the basis of profit after taxation and the number of issued and fully paid

ordinary shares of each financial year.

12/31/2013

12/31/2012

Basic/diluted earnings per share - kobo

4.59

3.04

Total basic/diluted earnings per share

4.59

3.04

12.1 Basic/diluted earnings per share

Basic/diluted earnings per share are calculated on the basis of profit after taxation and weighted average

number of ordinary shares of each financial year.

12/31/2013

31/12/2012

N'000

N'000

Earnings from continuing operations

Profit for the year attributable to owners of the Company 192…684

127,758

Number of shares

Number of ordinary shares for the purposes of basic earnings per share 4,200,000

4,200,000

Earnings per share (kobo) - Basic

4.59

3.04

The denominators for the purposes of calculating both basic earnings per share is based on issued and paid ordinary shares of 50 kobo each.

12.2 Impact of changes in accounting policies There were no changes in the company's accounting policies during the year that impacted earnings per share.

50


Motor vehicles

Plant and machinery

Furniture, fittings

and equipm ent

Capital work in

progress Computer

Equipm ent Total

N'000 N'000 N'000 N'000 N'000 N'000

Cost or Valuation

At 1 January 2012 114,012 18,000 155,675 980 12,072 300,739

Additions

- 12,748 21,110 46,504 80,362

At 31 December 2012

114,012 18,000 168,423 22,090 58,576 381,101

Additions

13,939 - 25,859 34,538 3,319 77,655

Reclassification - - 9,334 (9,334)

-

Disposals (3,174) - - -

(3,174)

At 31 December 2013

124,777 18,000 203,616 47,294 61,895 455,582

Accumulated depreciation and im pairm ent

At 1 January 2012 71,567 2,890 88,493 - 10,384 173,334

Charge for the year

24,474 3,600 25,999 - 15,486 69,559

At 31 December 2012

96,041 6,490 114,492 - 25,870 242,893

Charge for the year 11,317 3,497 22,111 - 17,255 54,180

Elim inated on disposals

(3,042) - - -

(3,042)

At 31 December 2013

104,316 9,987 136,603 - 43,125 294,031

Carrying amount

At 31 December 2013

20,461 8,013 67,013 47,294 18,770 161,551

At 31 December 2012

17,971 11,510 53,931 22,090 32,706 138,208


13.1 Impairment losses recognized in the year

There were no impairment losses recognized during the year.

13.2 Contractual commitments

At 31 December 2013, the company had no contractual commitments for the acquisition of property, plant

and equipment

14 Investment property

12/31/2013 12/31/2012

N'000 N'000

Cost

Land

645,917 645,917

The company's investment property is held under freehold interests.

Investment property is recognized at cost in the books and subsequently tested for impairments.

As at the 31 December 2013, the Fair value of the investment property has been estimated as N645m (2012,

N645m). The fair value has been determined by the management of the company by reference to market

evidence of transaction prices for similar properties in comparable areas.

51


15 Intangible assets

This represents the cost incurred in acquiring e-portal and other technologies which form the basis of the

Company's e-payment Technology solutions.


eTranzact enterprise

platform eRemit

platform Other

software Total

N'000 N'000 N'000 N'000

Cost

At 1 January 2012

293,510 105,858 21,851 421,219

Additions for the Year

- - 11,631 11,631

At 31 December 2012

293,510 105,858 33,482 432,850

Additions for the Year

- - 15,459 15,459

At 31 December 2013 293,510 105,858 48,941 448,309

Amortisation

At 1 January 2012

136,971 25,154 4,253 166,378

Charge for the year

19,567 13,822 3,550 36,939

Adjustments

(10,871) (3,476) - (14,347)

At 31 December 2012 145,667 35,500 7,803 188,970

Charge for the year

8,697 3,750 19,302 31,749

At 31 December 2013 154,364 39,250 27,105 220,719

Carrying amount

At 31 December 2013

139,146 66,608 21,836 227,590

At 31 December 2012 147,843 70,358 25,679 243,880

15.1 Significant intangible assets

In line with the IFRS reporting and disclosure standards, management has reviewed in detail the intangible

assets and is of the opinion that the useful lives of the Enterprise software platform and eRemit platform

should be 25 years from its original implementation and this will be adjusted accordingly from the year

2012. The carrying amounts of eTranzact enterprise software of N139.15m (31 December 2012: N147.8m)

will be fully amortized in 17 years, the eRemit platform with a carrying amount of N66.6m (31 December

2012: N70.36m) will be fully amortised in 21 years and 4 months while that of other software of N21.8m (31

December 2012: 25.67m) will be fully amortized in 2 years.

16 Financial assets

12/31/2013

12/31/2012

N'000

N'000

Available-for-sale investments

Opening Balance (Shares :Note 16.1)

27,000

27,000

Additions during the year

-

-

27,000

27,000

Less:Impairment

-

-

27,000

27,000

Non-current

27,000

27,000

27,000

27,000

52


16.1 The Company holds 5.6% of the ordinary share capital of Citylink Transit Systems Limited, a company

involved in the Transport Sector. The Directors are of the opinion that the market value of the investment is

not lower than the cost.

17 Deferred taxation

2013

2012

N’000

N’000

Deferred tax liab ilities

-

-

Deferred tax assets

72,239

107,603

72,239

72,239

17.1 Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The

following is the analysis of the deferred tax assets/liabilities after offset presented in the Statement of

Financial Position:

18.1 Other assets

N71million out of the total Other assets balance represents amounts recoverable from the banks on

unauthorized withdrawals on the reloadable customers float account in various banks, which were initially

refunded by eTranzact pending the outcome of investigations into the cases.


53


19 Inventories

12/31/2013

31/12/2012

N'000

N'000

Virtual airtime

133,434

68,488

SMS Printers Stock

3,768

4,253

Point of Sales (POS) - (Note 19.1)

141,332

149,509

EMV

13,206

12,917

Bulk SMS

1,173

-

292,913

235,167

Provision for obsolete spares and slow moving stock -

-

292,913

235,167

19.1 Point of Sales (POS)

POS

141,332

149,509

Stocks in transit

-

-

141,332

149,509


19.2 The cost of inventories recognised as an expense during the year in respect of continuing operations was

N2.16m (2012: N1.97m)

19.3 There was no write down of inventory during the year ended 31st December 2013 (2012: Nil) neither

was there any reversal of any write downs from previous year in the current year.

20 Trade and other receivables

12/31/2013

31/12/2012

N'000

N'000

Trade receivables

251,927

346,920

Allowance for doubtful debts

(194,730)

(237,801)

57,197

109,119

Other receivables

Staff debtors (Note 20.1)

9,422

12,154

Other debtors

145,800

121,630

Due from related parties (Note 30.1)

573,225

578,887

785,644

821,790

Other debtors represents advance deposit payments with card manufacturers, withholding tax receivable,

cash advance and other sundry debtors.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their

fair value.

54


20.3 Trade receivables

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at

amortised cost.

The average credit period taken on sales of goods is 30 days. No interest is charged on the overdue

receivables. The company has recognised an allowance for doubtful debts of 100% against all receivables

over 360 days because historical experience has shown that receivables that are past due beyond 360 days

are not recoverable. Allowances against doubtful debts are recognised against trade receivables

outstanding for more than 360 days based on estimated irrecoverable amounts determined by reference to

past default experience of the counterparty and an analysis of the counterparty's current financial position.

Furthermore as part of the company's function as a Transaction Switching Platform, transactionsare

processed on behalf of partner banks and partner merchants and as such, transaction value and transaction

income to banks and merchants are settled on a daily basis for services routed through the company's

platform. On a periodic basis evaluation of partner banks and partner merchants whose outstanding

receivables are long overdue are carried out. The company takes necessary steps to recover all outstanding

balances due by withholding transaction income that should be settled to them up to the amounts owed.

This helps us recover our outstanding balances.

Before accepting any new customer, the company uses an internal credit process to assess the potential

customer's credit quality and defines credit limits by customer.

Trade receivables disclosed above include amounts (see below for aged analysis) which are past due at the

reporting date but against which the company has not recognised an allowance for doubtful receivables

because there has not been a significant change in credit quality and the amounts (which include interest

accrued after the receivable is over 360 days outstanding) are still considered recoverable. The company

does not hold any collateral or other credit enhancements over these balances nor does it have a legal right

of offset against any amounts owed by the company to the counterparty.

20.1 Staff debtors

N'000

N'000

Staff debtors

11,064

13,796

Allowance for staff debtors

(1,642)

(1,642)

9,422

12,154


Age of receivables past due but not impaired

12/31/201

3

12/31/201

2

N'000

N'000

30-60 days

12,773

6,633

60-90 days

2,436

1,724

90-120 days

2,514

1,020

Total

17,723

9,377

Movement in the allowance for doubtful debts

Balance at the beginning of the period

(237,801)

(285,893)

Impairment losses recognised

(42,153)

(24,886)

Amounts written off during the year as uncollectible

-

47,298

Amounts recovered during the year

2,684

-

Impairment losses reversed

82,540

25,680

Balance at the end of the period

(194,730)

(237,801)

55


21 Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, short term investments with an original maturity of three months or less, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:


12/31/2013

31/12/2012

N'000

N'000

Cash and bank balances

599,144

290,840

Short term investments (Note 21.1)

505,720

510,805

1,104,864

801,645

The carrying amount of these assets is approximately equal to their fair value.

21.1 Short term investment

These represent cash held in fixed deposits in various banks. These investments are placed in short term deposits

and are continuously rolled over throughout the year.

22 Trade and other payables

12/31/2013

31/12/2012

N'000

N'000

Trade payable

77,854

33,798

Other payables:

Accruals

30,383

24,701

Pension contribution (Note 22.1)

1,184

513

Information technology development levy

2,464

1,182

Other Bank Payable

234,551

486,304

Other accruals

246,563

126,918

Other creditors

328,655

126,666

921,654

800,084

Trade creditors and other payables principally comprise amounts outstanding for trade purchases and ongoing

costs. The average credit period taken for trade purchases is 6 days. The company has financial risk management

policies in place as well as efficient and effective treasury management policies to ensure that all payables are paid

within the pre-agreed credit terms.

Included in other accruals for 2013 is an amount of about N85m which represents VAT payable. These amounts are

withheld from proceeds from sales to third parties and commissions earned on switching transactions performed

on the platform.

The directors consider that the carrying amount of trade and other payables approximates to their fair value.

22.1 Pension Contribution

12/31/201

3

31/12/2012

N'000

N'000

At 1 January

513

-

Provisions

21,870

18,298

Payment

(21,199)

(17,785)

1,184

513

22.2 Information Technology Development Levy

The computation for Information Technology Development Levy is 1% of profit before tax in accordance with the

provisions of Section 12 (2a) of the National Information Technology Development Agency (NITDA) Act 2007.

56



23 Share capital

12/31/2013

31/12/2012

N'000

N'000

Authorised, Issued and fully paid:

4,200,000,000 ordinary shares of 50k each

2,100,000

2,100,000

The Company has one class of ordinary shares which carry no right to fixed income.

24 Share premium

12/31/2013

31/12/2012

N'000

N'000

At 1 January

646,875

646,875

At 31 December

646,875

646,875

25

Retained earnings

At 1 January as previously reported

-

(234,693)

Prior year adjustment (See note 25.1)

-

(311,147)

Tax effect of prior year adjustment - 54,446

At 1 January as Restated

(363,636)

(491,3943)

Profit attributable to owners of the company

192,684

127,758

At 31 December

(170,952)

(363,636)

25.1 Prior Year Adjustment

During the financial year ended 31 December 2013, the company established an amount of N486 million

relating to various operating expenses incurred between financial year 2009 and financial year 2011 which

were not previously recorded in the financial statements in those periods. These amounts were initially

thought to represent unreconciled balances in the bank settlement accounts relating to net settlement

positions.

These errors arising from irregular bank settlement transactions were detected in the 2013 financial year

and in accordance with IAS 8 on Accounting Policies, Changes in Accounting Estimates and Errors the

expenses were now recognized retrospectively and certain comparative figures restated to reflect the

accurate position of the affairs of the business. The accounts impacted are retained earnings in the prior

period, related party receivables and other payables.

The adjustments will impact the following balances:

1) Retained earnings

2) Due from related parties balance included in the total for trade and other receivables

3) Other payables balance included in the total for trade and other payables

57



Summary reconciliation of prior year restated balances to year end 2013 balances

Trade and

Trade and

Retained

other

other

Earnings

receivables

payables

(Note 25)

(Note 20)

(Note 22)

N'000

N'000

N'000

1st January 2012 as previously reported

(234,693)

558,300

90,616

Prior year adjustment***

(311,147)

175,156

486,303

Tax effect of prior year adjustment 54,446 - -

1st January 2012 as restated

(491,394)

733,456

576,919

Movement in the year

127,758

88,334

764,845

31st December 2012 as restated

(363,636)

821,790

1,341,764

Movement in the year

192,684

(36,146)

157,264

31st December 2013

(170,952)

785,644

1,499,028

25.1P rior Year Adjustment (cont'd)

*** Included in prior year adjustment for retained earnings and trade and other receivables is an amount of about

N3.2m which relates to prior period POS machine sales returns which is now adjusted into reserves and no longer

required in receivables. This is included as part of the adjustments of N311.1m and N175.2m to restate the 2012 opening

retained earnings balance and trade and other receivables balance respectively.

26 Retirement benefit plan

26.1 Defined Contribution Plan

The company operates a contributory pension scheme for the benefit of its staff with the company and employees

contributing 7.5% each of the employees' emoluments.

The total expense recognised in the income statement of N12.711million (2012: N12.7 million) represents

contributions payable to this plan by the company at rates specified in the rules of the plan. As at 31 December 2013,

contributions of N1.1m (2012: N0.513m) due in respect of the 2013 reporting period had not been paid over to the

plans. The amounts were paid subsequent to the end of the reporting period.

27 Directors and employees

27.1 Directors

12/31/2013

12/31/2012

N'000

N'000

Emoluments:

Fees

2,900

2,900

Other remuneration and allowances

123,170

111,069

126,070

113,969

The number of Directors whose gross emoluments were within the following ranges are:

Range (N)

Number

Number Less than 1,000,000

1

-

1,000,001 - 2,000,000

3

3 2,000,001 - 5,000,000

2

1

5,000,001 - 20,000,000

-

- 20,000,001 and above

2

2

8

6

The Chairman's emolument for the period was N2m. (2012 N1.75m)

58



27.2 Employees

The average number of employees employed during the year:

Number

Number

Technical

56

58

Non-Technical

62

52

118

110

Aggregate payroll costs

N'000

N'000

Wages, salaries, allowances and benefits

467,557

421,032

Pension costs

12,711

18,298

Staff training

3,763

12,775

484,031

452,105

The number of higher paid employees with gross emoluments within the ranges below were:

Range (N)

Number

Number

Up to 500,000

10

9

500,001 - 2,000,000

52

49

2,000,001 - 3,000,000

16

17

3,000,001 and above

40

35

118

110

29 Non-cash transactions

There were no non-cash transactions during the year ended 31st December 2013.

59



30 Related party transactions

Details of transactions and outstanding balances between the company and its related parties during the

period are disclosed below:

eTranzact Global Limited maintains a controlling interest of 50.33% in the equity of eTranzact International

Plc. as at the reporting date. Mr. Valentine Obi, the CEO of eTranzact International Plc. is the Ultimate

Controlling Party through his controlling interest in eTranzact Global Limited

30.1 Trading transactions

The company entered into transactions with its related parties during the year and transactions conducted

resulted to the balances analyzed below:

Sale of goods and services

Purchase of goods and services

12/31/2013

12/31/2012

12/31/2013

12/31/2012

N'000

N'000

N'000

N'000

African Capital Alliance 5,176

9,159

-

- Meristem Securities -

-

25

81

Puzzles Technology Limited -

-

538,383

5,176

9,159

538,408

81

Analysis of the outstanding at the reporting date:

Due from related parties

Due to related parties

12/31/2013

12/31/2012

12/31/2013

12/31/2012

N'000

N'000

N'000

N'000

eTranzact Global Limited 558,729

565,494

-

- Puzzles Technology Limited -

-

78,761

33,186

eTranzact Ghana 14,496 16,241 - -

573,225

581,735

78,761

33,186

Sales of goods to related parties are made at the company's usual listed prices, which is the fair value of

goods sold. Purchases are made at market price.

30.2 Remuneration of key management personnel

The remuneration of the directors, who are the key management personnel of the company, is set out below

in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

12/31/2013

12/31/2012

N'000

N'000

Short-term employee benefits

97,887

99,102

Post-employment benefits

1,746

1,707

Other long-term benefits

-

-

Termination benefits

-

-

Share-based payments

-

-

99,632

100,809

No dividend was paid or proposed to be paid in the year in respect of ordinary shares held by the Company's

directors.

60



31 Financial Instruments

31.1 Capital risk management

The company manages its capital to ensure that the company will be able to continue as a going concern

while maximising the return to stakeholders through the optimisation equity. The company's overall

strategy remains unchanged from 2013.

The capital structure of the company consists of equity attributable to equity holders of the company,

comprising issued capital, reserves and retained earnings.

The company is not subject to any externally imposed capital requirements.

Equity includes all capital and reserves of the company that are managed as capital.

31.2 Significant accounting policies

Details of the significant accounting policies and methods adopted (including the criteria for

recognition, the basis of measurement and the bases for recognition of income and expenses) for each

class of financial asset, financial liability and equity instrument are disclosed in note

31.3 Categories of financial instruments

12/31/2013

12/31/2012

N'000

N'000

Financial assets

(Restated)

Loans and receivables

Cash and bank balances

1,104,864

801,645

Trade receivables

785,644

821,790

1,890,508

1,623,435

Available-for-sale financial assets

27,000

27,000

Financial liabilities

Financial liabilities at amortized cost

Trade payables

77,854

33,798

Other bank payables 234,551 486,304

312,405

520,102

31.4 Financial risk management objectives

A financial risk management framework is in place, where appropriate, to mitigate any negative impact that

financial risks that may arise will have on the company's reported results.

The Company's senior management oversees the management of risks to ensure that financial risks are

identified, measured and managed in accordance with Company's policies for risk.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised

below.

The company does not trade in financial instruments, nor does it take on speculative or open positions

through the use of derivatives.

61


31.5 Market risk Market risk is the risk that the fair values of financial instruments will fluctuate because of changes in market

prices. The financial instruments held by the company that are affected by market risk are principally the non-derivative financial instruments which include investment in equity, trade and other receivables, cash and cash equivalents and trade and other payables).

31.5.1 Interest rate risks eTranzact is exposed to fluctuations in interest rates on its investments. The company has cash and cash

equivalents held as deposits with banks with less than three months maturity. They are readily accessible and receive fixed/floating rate interest. The company actively monitors interest rate exposures on its investment portfolio so as to minimise the effect of interest rate fluctuations on the income statement. The company's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative

instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company's profit for the year ended 31 December 2013 would decrease/increase by N2.4m (2012: decrease/increase by N2.6m). This is mainly attributable to the Company's exposure to interest rates on its fixed deposits.


12/31/2013

12/31/2012

N'000

N'000

Cash and cash equivalents

1,104,864

801,645

Trade and other receivables

785,644

821,790

1,890,508

1,623,435

31.5.2 Foreign currency risk management

The company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange

rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters.

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities

at the end of the reporting period are as follows.

Liabilities

Assets

12/31/2013

12/31/2012

12/31/2013

12/31/2012

N'000

N'000

N'000

N'000

USD -

-

90,333

135

Foreign currency sensitivity analysis

The Company is mainly exposed to the currency of USD

The following table details the Company's sensitivity to a 10% increase and decrease in the Naira against the

relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key

management personnel is 10% and represents management's assessment of the reasonably possible change in

foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated

monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A

positive number below indicates an increase in profit or equity where the Naira strengthens 10% against the

relevant currency. For a 10% weakening of the Naira against the relevant currency, there would be a comparable

impact on the profit or equity, and the balances below would be negative.

62


Currency USD

12/31/2013

31/12/2012

N'000

N'000

Profit or loss 60,795

2,030

31.5.2 Foreign currency risk management (cont'd)

12/31/2013

12/31/2012

N'000

N'000


1,104,864

801,645


785,644

821,790

1,890,508

1,623,435

(i) This is mainly attributable to the exposure outstanding on USD balances held in banks at the end of the reporting period. The Company's sensitivity to foreign currency has increased during the current year mainly due to the increase of USD balances held in bank accounts In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year. USD denominated balances usually fluctuate during the year.

31.6 Other price risks The Company is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.

31.6.1 Equity price sensitivity analysis The company holds an amount of equity risk through its investment in non-quoted equities. The directors review its exposure annually to assess the level of impairment of such investments and thus make necessary provisions where necessary. As at date of reporting, the directors are of the opinion that none of the company's investment in equity is impaired.

31.7 Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company uses publicly available financial information and its own trading records to rate its major customers. The company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. The company does not have any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The company defines counterparties as having similar characteristics if they are related entities. The credit risk on liquid funds and non-derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The carrying amount of financial assets represents the company's maximum exposure, which at the reporting date, was as follows:

31.7.1 Collateral held as security and other credit enhancements

The carrying amount of financial assets recorded in the financial statements, which is net of impairment

losses, represents the company's maximum exposure to credit risk as no collateral or other credit

enhancements are held.


63



31.8 Liquidity risk management

Liquidity risk is the risk that the company is unable to meet its current and future cash flow obligations as and when they

fall due, or can only do so at excessive cost. This includes the risk that the company is unable to meet settlement

obligations to the acquiring banks due to failure of an issuing bank to pay.

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an

appropriate liquidity risk management framework for the management of the company's short-, medium- and long-

term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate

reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows,

and by matching the maturity profiles of financial assets and liabilities.

To mitigate this risk, back-up liquidity facilities are in place with a syndicate consisting of high credit, quality financial

institutions, in addition to the company's own liquid investments.

31.8.1 Maturity risk

The following tables show the company's contractual maturities of financial liabilities:

12/31/2013

Carrying amount

Contractual cashflows

Less than one year

More than one year

N'000 N'000 N'000 N'000

Financial liabilities at amortised cost Trade and other payables

312,405 312,405 312,405 -

312,405 312,405 312,405 -

12/31/2012 (Restated)

Carrying amount

Contractual cashflows

Less than one year

More than one year

N'000 N'000 N'000 N'000 Financial liabilities at amortised cost

Trade and other payables

520,102 520,102 520,102 -

520,102 520,102 520,102 -

Financial liabilities that can be repaid at any time have been assigned to the earliest possible time period. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

31.9 Fair value of financial instruments

The directors consider that the carrying amounts of financial assets and financial liabilities recorded in the financial statements approximate their fair values.

Carrying amount

Fair value

12/31/2013 12/31/2012

12/31/2013 12/31/2012

N'000 N'000

N'000 N'000

(Restated)

(Restated)

Financial assets

Loans and receivables:


785,644 821,790

785,644 821,790


1,104,864 801,645

1,104,864 801,645

1,890,508 1,623,435

1,890,508 1,623,435

Available-for-sale financial assets (Note 29.9.1) 27,000 27,000

27,000 27,000

Financial liabilities

Financial liabilities held at amortised cost:

Trade and other payables

312,405 520,102

312,405 520,102

64


65


31.9.1 Valuation techniques and assumptions applied for the purposes of measuring fair value

No fair valuation has been carried out on the investment in Unlisted shares (Citylink). The financial

statements include investment in unlisted shares which are measured at cost as the fair value could not be

determined.

32 Capital Commitments

The Company has committed to paying the amount of N232m which represents the 50% balance

outstanding as at 31 December 2013 on the price for the 4th and 5th Floors of the Fortune Towers Building

on Adeyemo AlakijaStreet in Victoria Island, Lagos. The initial payment of 50% was made in September

2012.

33 Contingent liabilities and contingent assets

There were no other contingent liabilities and assets that materialized during the year ended 31st

December 2013 (2012: Nil).

As at the end of the year there exists a disputed balance of about N19.873m between the company and a

participating partner bank relating to transactions processed via the company's switching platform. This

transactions date as far back as 2010/2011 and as at the date of this report the situation remains

unresolved. The company is of the opinion that no material losses will arise from these transactions because

the records show that they are valid transactions duly authorised by the participatingpartner bank.

In the 2012 financial year, eTranzact International Plc. initiated the process of acquiring shares in Collendus

Limited, a company with significant investment in Cowry Limited, which owns Fortune Towers. eTranzact

has committed to acquiring a total investment to the tune of N463 million, that will give it the direct control

of the 4th and 5th floor of Fortune Towers. As at date of report, eTranzact International Plc. has made

payments to the tune of N232 million, Thus there is a Commitment to the tune of N232m that will crystallize

in the future. As at date of this report, the sale of the Fortune Towers building is under litigation. The

outcome of the litigation has a possibility of resulting in a contingent liability in the form of legal costs and

relative additional acquisition cost for the 4th and 5th floor of Fortune Towers. As at date of this report, the

value of any contingent liability in this respect cannot be estimated.

Linked with the documented agreements between the existing occupants of Fortune Towers and Cowrie

Business Solutions Limited, the current owners of Fortune Towers, there is a commitment that no liability

for rent (or arrears of rent) will be sought from the existing occupants. Hence, although such rental liability

is theoretically possible, the directors' assessment of the likelihood of any such liability arising for the

company is remote.

As at 31 December 2013, the company had a contingent liability of N577.3 million (2012: N541.7million) in

respect of potential liabilities which could arise from the reloadable card and pocket money schemes.

However, as at 31 December 2013, the company held matching funds in the form of restricted bank

accounts.

34 Events after the reporting period

There were no events after the reporting period that could have material effect on the state of affairs of the

company at 31 December 2013 and on the profit for the year ended on that date that have not been taken

into accounts in these financial statements.

35 Approval of financial statements

The financial statements were approved by the Board and authorised for issue on _________.


66

STATEMENT OF VALUE ADDED

2013

2012

N'000

%

N'000

%

Turnover 4,706,834

3,062,952 Other operating income 57,735

131,946

4,764,569

3,194,898 Bought in materials and services:

- Local (3,964,682)

(2,508,556) - Import

VALUE ADDED 799,887

100

686,342

100

APPLIED AS FOLLOWS :

To pay employees -

Wages, salaries and other benefits 467,557

59

421,032

61

To pay government -

Income tax and education tax 18,353

1

50,074

7

To provide for assets replacement, payment

of dividend and future expansion : Depreciation of fixed assets 54,180

7

56,386

9

Deferred tax 35,364

5

862

1 Amortisation of intangible assets 31,749

3

30,230

4

Profit/(Loss) for the year 192,684

25

127,758

18

799,887

100

686,342

100

Value added statement 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 between the employees, government and

that retained for the future creation of more wealth.


67

FINANCIAL SUMMARY

2013

2012

2011

2010

2009

N'000

N'000

N'000

N'000

N'000 BALANCE SHEET

(Restated)

(Restated)

Non-current assets

Property, plant and equipment 161,551

138,208

127,404

121,676

732,230 Intangible assets

227,590

243,880

254,841

267,813

195,673

Deferred assets

72,239

107,603

108,466

76,140

- Investments

-

-

-

-

563,355

Investment Property

645,917

645,917

645,917

645,917

- Financial Assets

27,000

27,000

27,000

27,000

27,000

Advance for deposit for shares 232,275

231,723

-

-

- Net Current assets

1,209,351

988,908

1,091,854

1,292,350

1,116,993

2,575,923

2,383,239

2,255,482

2,430,896

2,635,251

Equity

Share capital

2,100,000

2,100,000

2,100,000

2,100,000

2,100,000 Share premium account

646,875

646,875

646,875

646,875

646,875

Retained earnings

(170,952)

(363,636)

(491,393)

(315,979)

(111,624)

Total equity attributable to owners of the company 2,575,923

2,383,239

2,512,182

2,430,896

2,635,251

TURNOVER AND PROFIT

Turnover

4,706,834

3,062,952

2,244,156

917,824

422,623

(Loss)/profit before taxation

246,401

178,694

126,035

(200,230)

(167,394)

Taxation

(53,717)

(50,936)

(44,749)

61,926

(7,294)

(Loss)/profit after taxation

192,684

127,758

81,286

(138,304)

(174,688)

Basic (Loss)/basic earnings per share - kobo 4.59

3.04

1.93

N/A

N/A

Net assets per share - kobo 59

63

60

347

376

Net assets per share is calculated based on the net assets and the number of issued and fully paid ordinary shares at

the end of each financial year.


68

LIST OF UNCLAIMED DIVIDEND WARRANTS


69

PROXY FORM

th10 Annual General Meeting to be held at Oriental Hotel, Victoria Island, Lagos at 12.00 noon.

I/We______________________________________________

being member/members of eTranzact International PLC hereby appoint ___________________________________________________

or failing him/her____________________________________

as my/our proxy to vote to on my/our behalf for/against the resolution(s) at the Annual General Meeting of the Company to be held on Thursday

th27 November, 2014 and at any adjournment thereof.

To elect/re-elect Directors

To authorize Directors to fix the remuneration of the Auditors

To elect/re-elect members of the Audit Committee

Please indicate with “X” in the appropriate box how you wish your votes to be cast on the resolutions set out above. Unless otherwise instructed, the proxy will vote or abstain from voting at his discretion

Dated this _______ day of _____________________2014

Shareholder's Signature________________

Notes

1. To be valid this Proxy Form must be completed, signed and stamped in compliance with the Stamp duties

Act CAP A8, Laws of the Federation of Nigeria 2004.

2. If the shareholder is a Company, this form should be sealed under the Company's common seal or under

the hand of an officer duly authorized.

3. All executed Proxy Forms must be deposited at the office of the Registrars, Meristem Registrars Limited,

213 Herbert Macaulay Way, Yaba, Lagos or the office of the Company Secretary, PAC Solicitors, Suite 18,

East Pavilion, Tafawa Balewa Square Complex, Race Course, Lagos, not later than 48 hours before the

time fixed for the meeting.

Documents

eTranzact - 2013 Annual Report & Accountsetranzact.com/etranzact/ETRANZACT_2013_ANNUAL_REPORT.pdfWe maintain effective relationship with all our stakeholders' sustaining their