Chairman Board of Directors,
Jafuwara PLC,
Lagos, Nigeria.

Dear Sir,

Report on Operating Segments in Accordance with IFRS 8

Introduction

IFRS 8 – Operating Segments defines criteria for identifying reportable operating segments. An operating segment is separately reportable if it satisfies the following quantitative thresholds:

1. Revenue Test:
   • Its reported revenue (external and internal) is 10% or more of the combined revenue of all operating segments.
2. Profit or Loss Test:
   • The absolute amount of its reported profit or loss is 10% or more of the greater of:
     • The combined profit of all operating segments that did not report a loss, or
     • The combined loss of all operating segments that reported a loss.
3. Asset Test:
   • Its assets are 10% or more of the combined assets of all operating segments.

Evaluation of Segments

Based on the above criteria, the evaluation of Jafuwara PLC’s operating segments is as follows:

1. Chemicals
   • Africa: Does not meet any criteria and will not be separately reportable.
   • Rest of the World: Meets all criteria and is reportable.
2. Pharmaceuticals
   • Wholesale: Meets all criteria and is reportable.
   • Retail: Does not meet the quantitative thresholds.
     • Management may choose to report it separately if the information is deemed useful to users or amalgamate it with Pharmaceutical Wholesale, provided they share similar economic characteristics.
3. Cosmetics
   • Does not meet the quantitative thresholds and is not reportable.
   • It may be grouped with Body Care if they share similar characteristics or disclosed in an “All Other Segments” column.
4. Hair Care
   • Meets the Profit or Loss Test and is reportable.
5. Body Care
   • Meets all criteria and is reportable.

Reportable Segments

Based on the analysis, the following are reportable segments:

1. Rest of the World (Chemicals)
2. Pharmaceutical Wholesale
3. Body Care
4. Hair Care

The remaining segments—Chemical Africa, Pharmaceutical Retail, and Cosmetics—will be grouped and disclosed in the “All Other Segments” column.

Compliance with the 75% Revenue Test

IFRS 8 requires that at least 75% of external revenue is reported by operating segments.

• Total external revenue: ₦384M
• Revenue from reportable segments: ₦316M
• Percentage reported: 316/384×100=82.29%

This satisfies the requirement, as the reportable segments account for over 75% of total external revenue.

Conclusion

The reportable operating segments for Jafuwara PLC under IFRS 8 are:

1. Rest of the World
2. Pharmaceutical Wholesale
3. Body Care
4. Hair Care

These segments fully meet the criteria of IFRS 8, while the remaining segments should be grouped as “All Other Segments.”

Thank you.

Yours faithfully,
XYZ LTD.

Workings