NOTORE CHEMICAL INDUSTRIES : QUARTER 5 - FINANCIAL STATEMENT FOR 2023

RC: 640303

NOTORE CHEMICAL INDUSTRIES PLC

ANNUAL REPORT, CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

Table of Contents

Corporate Information ............................................................................................................................................. i

Directors' report ...................................................................................................................................................... ii

Corporate governance report ................................................................................................................................. xi

Statement of Directors' responsibilities .............................................................................................................. xvii

Activities under corporate social responsibility .................................................................................................. xviii

Management's Annual Assessment of, and Report on, Notore Chemical Industry Plc's Internal Control over

Financial Reporting ............................................................................................................................................... xix

Certification of management's assessment on internal control over financial reporting .................................... xx

Certification of Financial Statements ................................................................................................................... xxi

Report of audit committee ................................................................................................................................... xxii

Independent Auditors' Report ................................................................................................................................. 1

Consolidated and separate statements of profit or loss and other comprehensive income .................................. 5

Consolidated and separate statements of financial position .................................................................................. 6

Consolidated and separate statements of changes in equity ................................................................................. 7

Consolidated and separate statements of cash flows ............................................................................................. 9

Notes to the annual, consolidated and separate financial statements ................................................................ 10

Consolidated and separate statements of value added ........................................................................................ 73

Five-year financial summary - group ..................................................................................................................... 74

Five-year financial summary - company ................................................................................................................ 75

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

Corporate Information

Directors

Mr. Onajite P. Okoloko Mr. Michael Osime Engr. Mike Orugbo, JP Mr. Ike Osakwe

Mr. Michael Jansa Mr. Bashir Lebada Mr. Femi Agbaje Mr. Ohis Ohiwerei Mr. Tseyi Hammond Mr. Ovie Ukiri

Mr. Ebiaho Emafo Mr. Yusufu Pam Mr. Omar TahaGroup Managing Director/CEODeputy Managing Director

(Appointed on 12th June, 2023)

Group Company SecretaryAuditorsRegistered OfficeRegistration Number

Mrs. Otivbo Saleh

6th Floor, Keystone Bank Building 1, Keystone Bank Crescent off Adeyemo Alakija Street Victoria Island

Lagos

Deloitte & Touche Chartered Accountants Civic Towers

Plot GA1, Ozumba Mbadiwe Avenue Victoria Island

Lagos

Notore Industrial Complex Onne

Rivers State Nigeria

640303

Principal Bankers

African Export-Import Bank Ecobank Nigeria Plc

First City Monument Bank Plc Polaris Bank Limited

Union Bank of Nigeria Plc United Bank for Africa Plc

i

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

Directors' report

In accordance with the provisions of the Companies and Allied Matters Act, 2020, the Directors of Notore Chemical Industries Plc hereby present their Report together with the Audited Consolidated and Separate Financial Statements for the year ended 31st December 2023 to the shareholders of the Company.

INCORPORATION AND ADDRESS

Notore Chemical Industries Plc was incorporated in Nigeria on 30th November 2005, as a private limited liability company, and is domiciled in Nigeria. Its registered office address is Notore Industrial Complex, Onne, River State, Nigeria. On 13th June 2014, the Company was re-registered as a public limited liability company and was quoted on the Main Board of The Nigerian Exchange Limited (formerly known as the Nigerian Stock Exchange) on 2nd August 2018.

PRINCIPAL ACTIVITIES

The principal activities of the Company are to manufacture, treat, process, produce, supply and deal in nitrogenous fertilizer and all substances suited to improving the fertility of soil and water. The Company has a 500,000 Metric Tonne Urea Plant and a 600,000 Metric Tonne of NPK Blending Plant in Onne, Rivers State, Nigeria. The principal activities of the Company's subsidiaries are as disclosed in Note 1 to the Financial Statements.

RESULTS

The Group and the Company's results for the year ended 31st December 2023 are as stated on page 5. The net comprehensive loss of the Group and the Company for the year ended 31st December 2023 are N114.3 billion and N114.3 billion (2022: N7.2 billion and N6.8 billion) respectively and same has been transferred to Shareholders' equity.

DIRECTORS

The Directors who held office during the year to the date of this report were:

Mr. Onajite P. Okoloko	Nigerian
Mr. Michael Osime	Nigerian
Engr. Mike Orugbo, JP	Nigerian
Mr. Ike Osakwe	Nigerian
Mr. Michael Jansa	American
Mr. Bashir Lebada	Canadian
Mr. Femi Agbaje	Nigerian
Mr. Ohis Ohiwerei	Nigerian (Group Managing Director/CEO)
Mr. Tseyi Hammond	Nigerian
Mr. Ovie Ukiri	Nigerian
Mr. Ebiaho Emafo	Nigerian (Deputy Managing Director)
Mr. Yusufu Pam	Nigerian
Mr. Omar Taha	British

ii

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

DIRECTORS' SHAREHOLDING

The shareholding interests of the Directors in the Issued Share Capital of the Company as recorded in the Register of

Directors' Shareholdings and/or as notified by the Directors for the purposes of Sections 301 and 302 of the Companies and

Allied Matters Act, 2020 are as follows:

Directors

Number of	Number of
shares held at	shares held at
31st December	31st December
2023	2022
Mr. Onajite P. Okoloko (Indirect - Notore Chemical Industries (Mauritius) Ltd and
Okmine Global Services Ltd)	1,238,274,438	1,238,274,438
Mr. Michael Osime (Indirect - Notore Chemical Industries
(Mauritius) Ltd)	1,234,055,768	1,234,055,768
Engr. Mike Orugbo, JP	34,333,330	34,333,330
Mr. Ike Osakwe	Nil	Nil
Mr. Michael Jansa	Nil	Nil
Mr. Bashir Lebada	Nil	Nil
Mr. Femi Agbaje	Nil	Nil
Mr. Ohis Ohiwerei	Nil	Nil
Mr. Tseyi Hammond	Nil	Nil
Mr. Ovie Ukiri	Nil	Nil
Mr. Ebiaho Emafo	Nil	Nil
Mr. Yusufu Pam	Nil	Nil
Mr. Omar Taha	Nil	Nil

During the year under review, in addition to Mr. Onajite P. Okoloko, Mr. Michael Osime and Mr. Ike Osakwe, the other Directors representing Notore Chemical Industries (Mauritius) Limited on the Board are Mr. Mike Jansa and Mr. Hassan Badrawi. Mr. Tseyi Hammond and Mr. Yusufu Pam represent TY Holdings Limited on the Board of Notore Chemical Industries Plc.

OUR EQUITY

The shares of Notore Chemical Industries Plc were admitted to trading on the Main Board of The Nigerian Exchange Limited on 2nd August, 2018. Given its market capitalization, Notore Chemical Industries Plc. currently ranks amongst the topmost companies on The Nigerian Exchange Limited with a share price of N62.50kobo per share. As at 31st December 2023, the Authorised Share Capital of the Company was N2,000,000,000, divided into four billion Ordinary Shares of 50kobo each with about 730 Shareholders.

The Issued Share Capital as at 31st December 2023, stood at N806,033,100 divided into 1,612,066,200 Ordinary Shares of 50kobo each. As at 31st December, 2023, Notore Chemical Industries (Mauritius) Limited had a majority shareholding of approximately 76.55% with about 23.45% being held by other Nigerians and Foreign Investors.

iii

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

SHAREHOLDING

According to the Register of Members, as at 31st December 2023, the spread of shareholding in the Company is as follows:

Number Of	% of	Number Of
Share Range	Shareholders	Shareholder	Holdings	% Shareholding
1	10,000	714	97.81	125,979	0.01
10,001	50,000	4	0.55	73,894	0.00
100,001	500,000	1	0.14	119,004	0.01
500,001	1,000,000	2	0.27	1,577,800	0.10
1,000,001	5,000,000	3	0.41	12,101,170	0.75
10,000,001	50,000,000	2	0.27	82,691,750	5.13
50,000,001	100,000,000	2	0.27	151,691,205	9.41
100,000,001	500,000,000	1	0.14	129,629,630	8.04
1,000,000,001	2,000,000,000	1	0.14	1,234,055,768	76.55
TOTAL :-	730	100.00	1,612,066,200	100.00

According to the Register of Members as at 31st December 2023, the following are the Shareholders of the Company holding one million shares and above:

Shareholder

Number of sharesPercentage holding (%)

Notore Chemical Industries [Mauritius] Limited TY Holdings Limited

Africa Finance Corporation FBN Capital Limited

Employee Stock Option [ESOP] Stanbic IBTC Engr. Mike Orugbo, JP

Al-Yuma Ventures & Investment Ltd Okmine Global Services Limited

R and Partners Ventures Nigeria Limited *Other corporate and individual investors

1,234,055,768	76.55
129,629,630	8.04
77,265,575	4.79
74,425,630	4.62
48,358,420	3.00
34,333,330	2.13
4,730,000	0.29
4,218,670	0.26
3,152,500	0.20
1,896,677	0.12

1,612,066,200

100.00

* Other corporate and individuals represents shareholders holding below one million shares

The Company's entire Issued Ordinary Shares are on the Main Board of the Nigerian Exchange Group to promote better liquidity of its Shares in the secondary market and have access to long term capital from a wide range of local and international investors when required.

DIRECTORS' INTERESTS IN CONTRACTS

Save for Mr. Onajite Okoloko who is also the Chairman of Eroton Exploration and Production Company Limited (''a Joint Venture Partner in the ownership of OML 18''), for the purpose of Section 303 of the Companies and Allied Matters Act, 2020 and Rule 20 of the Nigerian Stock Exchange RuleBook, none of the Directors notified the Company of any direct or indirect interest in Contracts or proposed Contracts with the Company during the year under review. In 2016, the Company entered into a 20 year contract with Eroton for the supply of Gas.

SUBSIDIARY COMPANIES

The Company currently has eight subsidiaries in line with its long term plans and strategic goals. As of 31st December 2023, only one of the subsidiaries (Notore Power & Infrastructure Limited) is active. The shareholding of Notore Chemical Industries Plc in these subsidiaries are as follows:

iv

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

SUBSIDIARY COMPANIES (cont'd)

Subsidiary Company

Notore Power & Infrastructure Limited (active)

Notore Seeds Limited (Inactive)

Notore Foods Limited (Inactive)

Notore Supply and Trading Limited BVI (Inactive)

Notore Supply and Trading Mauritius Limited (Inactive)

Notore Industrial City Limited (Inactive)

Notore Train II Limited (Inactive)

Notore NPK Fertiliser Limited (Inactive)

KEY DISTRIBUTORS

Authorised Share Capital

Units

10,000,000

10,000,000

10,000,000

50,000 no par single class

Issued Share capital

Units 10,000,000 10,000,000 10,000,000

100 single

1

1

10,000,000

10,000,000

10,000,000

10,000,000

100,000,000

100,000,000

The Company transacted business with the following key distributors during the year:

A.A. Rano Nigeria Limited A.M. Fugu Nigeria Limited

A.S. Kumo Daneji Global Limited AIKAS Nigeria Limited

Alhaji Bashir Maccido

Alhaji Ibrahim Achida & Sons Alhaji Sadiku Shehu & Sons Ltd Ali Ali Kura

Al-Yuma Ventures & Investment Limited Anasiyya & Sons Nigeria Limited Austino Best Chemical Industries Limited Babban Gona Farmer Services Nig. Limted Baladini Global Resources Limited

Chiaha Bartholomew

Chris Uba Nigeria Limited Cornel Agro Ventures

Crop Technology & Commerce Limited Dan Maje Global Concept Limited Demmy Global Resources

Elisco Agro Nigeria Limited

Ellatami Integrated Service Nigeria Limited Ficus Investment Limited

Garu Multipurpose Services Limited Greengate Agro-Bar

Haskamu & Sons Nigeria Limited Henkoff Investment

Huetha Global Services Limited Hulhulde Nigeria Limited

IH Fako Nigeria Limited K2Y2 Farms Limited Kaak-Akk Llimited Kabsus Nigeria Limited

Kasaha Investment Nigeria Limited Kwani Global Concept LimitedMa'aji Empire Global Investment Limited MB Fertilizer and Chemicals

Number of shares allotted to holding companyValue of shares allotted to holding company

Units

Naira

9,999,999 9,999,999

9,999,999 9,999,999

9,999,999 9,999,999

100 single 1

- 255,000

9,999,999 9,999,999 9,999,999 9,999,999 99,999,999 99,999,999

Millenium Agro Allied Services Limited Musale Uwawu Limited

MZ & Sons Nigeria Limited Ndam Global Nigeria Limited Ogbalikpa & Sons Nigeria Limited Oko Global

R & Partners Ventures Limited Reliant Overseas Co. Limited

S.A. Golden Multi Services Limited Salisu and Sons Nigeria Limited Samason

Ogbalikpa & Sons Nigeria Limited Oko Global

Oma Nima Agro R & Partners

Rabami Global Concept Limited Reliant Overseas

S.A Golden

Salisu and Sons Nigeria Limited Samason Nigeria Limited Samethel Properties Limited Samseed

San-Afrah Nigeria Limited Sesantech Industries Nigeria Limited Sharubutu & Sons

Sholte Nigeria Limited SMDD

Sterling Alternative Finanace Tomram Nigeria Limited

Umar Maitaki Integreted Concept Usmaniya Nigeria Limited

VD & S Farm Center

v

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

ACHIEVEMENTS AT THE PLANT

The following were the major achievements recorded at the Plant during the year under review:

The Maintenance program that commenced on 19th November 2022, came to a successful completion on 9th January 2023 with the execution and completion of 43% of the first phase of the total Turn Around Maintenance job requirement.

The Ammonia Converter Catalyst changeout and the reduction process was completed on 24th February 2023 with improved performance observed in terms of Ammonia conversion per pass, upon Ammonia Plant restart. The time required for heating the Ammonia Converter Catalyst to reaction temperature has now reduced from 48hrs to less than 6hrs.

Achieved a significant improvement in the High-Pressure Steam Circuit of the Ammonia Plant as a result of the critical equipment replaced at the front and back ends of the Plant. Key contributors to the improvement include the Primary Waste Boilers (101-CA/CB), newly installed Steam Drum Relief valves as well as the Ammonia Converter Effluent-Boiler Feed Water Exchanger (123-C).

The Company achieved a new milestone in Loss Time Injury (LTI) free operation; crossing 19 million Manhours on 28th November, 2023. This is a manifestation of the commitment of the business to safety in its operations.

Notore retained the ISO-9001:2015 certification following the successful Quality Management System surveillance audit conducted by Bureau Veritas in June 2023.

Achieved 100% Compliance with all QHSE statutory regulations by the prompt renewal of licenses and permits.

The ingenuity of the workforce to sustain Plant production at a daily average of 568MT and 778MT of Ammonia and Urea respectively, during the frequently reoccurring low gas supply/fluctuating supply conditions far below the minimum design requirement to support Plant production.

NATURAL GAS SUPPLY

An internal issue with the Joint Venture ("JV") Partners of OML-18 led to the cessation of the Natural Gas Supply to the Plant on 24th February 2023, which resulted in the abrupt shutdown of the Plant. With the outage of gas from OML-18, Accugas was approached to ramp up supply from the 10MMSCF/day limit specified in the Interruptible Supply Agreement to the minimum of 45mmsfc/day required to operate the Plant. The interruptible nature of the agreement coupled with the complexity of managing the pipeline network with multiple users constituted significant limitations to continuous plant operation.

The negotiation of a new Gas Supply Agreement ("GSA") with the OML-18 JV has been concluded and the GSA is currently undergoing the final page-turn towards its execution. In the meanwhile, clearance was granted for Notore to resume offtake on 9th August 2023 on the back of upfront payment for volumes of gas nominated. However, the OML-18 JV gas was not adequate in terms of volume and pressure hence could only be used to power the utilities within the year. The OML-18 team has been requested to improve the availability and pressure to meet our process requirements.

The Interruptible Gas Supply Agreement with Accugas was renewed for another year, ending 17th August 2024 with the contractual volume reviewed to 20mmscf/day to supplement the contracted volume from OML-18.

Management is engaging the OML-18 JV Partners for them to make the necessary investment in the Wells and boost the supply to meet the required process conditions of the Notore Plant. This will be supplemented with the supply from Accugas.

vi

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

ISO 9001: 2015 (QUALITY MANAGEMENT SYSTEM) CERTIFICATION

Notore remained committed to continually improving product/service quality delivery, processes, and customer satisfaction. This year the Company underwent the recertification Audit for to retain its ISO 9001:2015 (Quality Management System) Certificate. The recertification Audit was conducted successfully by Bureau Veritas and the United Kingdom Accreditation Service (UKAS) (ISO External Certification body) from 8th - 9th June 2023. A total of three (3) non-conformities were recorded, which were successfully closed out. The ISO External Auditors from Bureau Veritas commended the maturity of Notore's Management System, noting a high conformity performance in its processes companywide. This was a demonstration of the Company's commitment to quality products and services delivery, total customer satisfaction and continuous performance improvement in its business operations. The ISO External Auditors have since reviewed our response to the identified Non-Conformities and found them sufficient, adequate, and compliant with current QMS requirements and recommended that the Company be recertified.

ISO 14001:2015 & 45001:2018 (ENVIRONMENTAL AND OCCUPATIONAL HEALTH & SAFETY MANAGEMENT SYSTEM) CERTIFICATION PROJECT

Notore in its commitment to continuous improvement commenced the process of certification to Occupational Health Safety management system ISO 45001:2018 and Environmental Management System 14001:2015, these two management systems integrated as Health Safety and Environmental (HSE) management system, shall further improve Health Safety and

Environmental Management in Notore's operations. So far Notore has concluded the gap analysis, training of Internal

Auditors, and documentation required by the management systems. In Addition, Notore has completed the first Internal Audit of the Health Safety and Environmental management system conducted by its trained Internal Auditors. All Audit findings are presently being addressed after which the management review and certification audit will take place.

GRANT OF LICENSE AS OIL AND GAS FREE ZONE DEVELOPER

The Company's Oil and Gas Free Zone Developer License and Enterprise License granted in December 2017 were further renewed in the course of the year. By virture of this License, the Company's entire land area (558.623 Hectares) remains designated as an Oil and Gas Free Zone area in Onne, Rivers State, Nigeria.

REPORT ON THE ELECTRICITY EMBEDDED AND DISTRIBUTION LICENSES

Following the acquisition from the Nigerian Electricity Regulatory Commission (NERC) of the Embedded Power Generation and Independent Electricity Distribution Network Licenses by Notore Power and Infrastructure ("NPI") and Notore Industrial

City ("NIC") respectively in March 2022 to generate and distribute 2x25 Megawatts of power, NPI has since purchased another 2x17Megawatts GE LM2500 Gas Turbines.

The engineering, procurement, construction and installation of the first unit of the Gas Turbine Generator (GTG) has been completed and the commissioning phase is in progress. The shipment of the second unit is at the final stage. Plans for the installation, pre-commissioning and commissioning of the second unit are being finalized. Plans have also been put in place for the synchronization of the three generating units bringing the Company's total generation capacity to about 60 Megawatts.

Given that only 9 Megawatts is being consumed presently in the Industrial Complex, NIC has developed a power commercialization plan and commenced engagement with potential off-takers and stakeholders in readiness for commencement of full operations. This will generate more cashflow for the business and reduce carbon emissions from customers' use of fossil fuel generators, contributing to sustainability goals and the drive towards net-zero.

NIC is also making plans to supply power to the host community as part of our corporate social responsibility. This will assist the SMEs in reducing cost of business amidst the current economic inflation.

vii

NOTORE CHEMICAL INDUSTRIES PLC

Annual report, consolidated and separate financial statements

For the year ended 31 December 2023

EMPLOYMENT AND EMPLOYEES

EMPLOYEE HEALTH, SAFETY AND WELFARE

Notore has demonstrated commitment to the Health, Safety, Environment and well-being of its employees, contractors, visitors, and host communities at all its business locations in the 2023 financial year. This was attributed to the stringent health, safety, environmental rules and standard practices within the work environment and enforcement of compliance for continual improvement actions. The National Environmental Standards and Regulations Enforcement Agency (NESREA)

Officials visited the Plant complex for her annual Environmental Compliance Monitoring Inspection. They commended the

Organization for its Environmental Management Systems aimed at ensuring environmental sustainability and their "Cradle to cradle" philosophy /approach in pollution control and waste management.

The Company achieved a remarkable milestone of 19 million LTI-free manhours through the implementation of strict and robust HSE processes and practices across the Company and all its subsidiaries, leading to an improved safety culture. This feat was achieved by enhancing sustainable, eco-friendly, and safe work environment, through effective identification of all hazards and environmental aspects, effective HSE supervision, work flexibilities, training and awareness sessions including provision of required PPEs, while ensuring compliance with all relevant Health, Safety and Environmental regulations, standards, and other requirements.

During the year under review, HSE statistics results were: Zero Fatality; Zero LTI (>19million LTI-free Manhours and still counting); Insignificant Total Recordable Incident Frequency Rate (TRIFR=0.53) and zero regulatory sanctions. Due to the effective monitoring and control of all associated environmental aspects, zero reportable Environmental pollution was recorded in the financial year. During the year under review, average free ammonia concentration (a major environmental aspect) in the discharged effluent was 1.91ppm as against IFC guideline of 5ppm of free ammonia. Scheduled air quality monitoring was carried out at various parts of the Plant and in the Communities with recorded values being within the exposure limits when benchmarked with the Occupational Safety and Health Administration (OSHA) standards. Noise levels within the Plant area and outside were monitored during the year and recorded values showed compliance with regulatory guidelines. Also, remarkable cost savings due to proactive management of process effluent treatment which resulted in the Company achieving zero regulatory sanction, litigation or payment of compensation.

EMPLOYMENT OF DISABLED PERSONS AND GENDER DIVERSITY

The Group has a policy of fair consideration of job applications by disabled persons having regard to their abilities and aptitude. The Group's policy prohibits discrimination of disabled persons in the recruitment, training and career development of its employees. Although there are no specific legal requirements for gender diversity in Nigeria, the Financial Reporting Council's Nigerian Code of Corporate Governance recommends that quoted companies should consider gender inclusivity in employment processes. Notore progressively aims at being a gender-balanced Company. This is achieved by creating enabling working conditions to attain annual increases in the percentage of women managers and senior leaders.

Operationally, our 24-hour production cycle and policy limits the involvement of women on night shifts, thus a challenge with reaching desirable gender balance. To enhance inclusion, we have a deliberate practice of placing female operatives on 12 hour dayshifts, so they are not excluded in the championing of the African Green Revolution.

EMPLOYEE TRAINING AND INVOLVEMENT

The Company operates a robust training and developmental strategy with the overall objective of equipping employees with the right competencies to participate directly as the organization strives to fulfill its mission and meet its objectives by applying their ideas, expertise, and efforts towards problem solving and decision making. Principles of equality of opportunity and treatment, and non-discrimination in employment are integrated in the management of our human resources.

viii