royal exchange group - nigeria's foremost financial ......6 royal exchange plc 2015 nnual reort...

3Royal Exchange Plc 2015 Annual Report & Financial Statements

table of ContEntS

Corporate Information 5Corporate Profile 6Results at a Glance 7-8the notice of Annual General Meeting 9-10Proxy/Authority to Admit Form 11-12Important notice 13-14Mandate for E-Dividend Payment 15-16Chairman’s Statement and Reports 18-21Group Managing Director’s Statement and Reports 22-25Report of Corporate Governance 26-29Risk Management Statement 30-33Board of Directors 35Brief Particulars of our Directors 38-39Executive Management team 40Executive Management team’s Profile 41-43Directors & Regional Directors 44Report of the Directors 45-50Statement of Directors’ responsibilities in relation to the financial statements 51Report of Audit Committee 52Independent Auditor’s Report 54-55Consolidated and Separate Statement of Financial Position 56Consolidated and Separate Statement of Profit or Loss and other Comprehensive Income 57Statement of Change in Equity - Group 58Statement of Change in Equity - Company 59Consolidated Statement of Cash Flows 60notes to the Consolidated Financial Statements 61-166Statement of Value Added 168Financial Summary - Group 169Financial Summary - Company 170Management (Group and Subsidiaries) 172-177Branch/office network cum Directory 178Friendship Centre network 179Corporate Events 180-181notes 182

Who We are

VISIon StAtEMEnt

MISSIon StAtEMEnt

ouR VALuES

C - Customer orientationC - CreativityI - IntegrityL - Learning organisationP - ProfessionalismT - teamwork

“to responsibily and efficiently mobilize and utilize human, financial and technological capital to exceeed stakeholders expections”.

“to attain leadership in the financial sector and provide the highest quality services in accordance with ethical practices and norms to our clients while ensuring adequate returns to our stakeholders”.

4 Royal Exchange Plc 2015 Annual Report & Financial Statements


DIreCTorsChairman - Mr. Kenneth Ezenwani odogwu

non-Executive Directors - Chief Anthony Ikemefuna Idigbe (SAn) Mr. Daniel Maegerle Chief uwadi okpa-obaji Alhaji Ahmed Rufa’i Mohammed Alhaji Rabiu Muhammad Gwarzo, oon Mr. Adeyinka ojora

Group Managing Director - Alhaji Auwalu Muktari

Group Company Secretary - Ms. Sheila Ezeuko

regIsTereD offICe - 31, Marina, Lagos

AuDITors - KPMG Professional Services

BAnkers - Access Bank Plc Diamond Bank Plc Ecobank Plc FCMB Plc First Bank of nigeria Plc Guaranty trust Bank Plc Heritage Bank Plc Stanbic IBtC Bank Keystone Bank Ltd Mainstreet Bank Ltd (now Skye Bank Plc) Sterling Bank Plc uBA Plc uBn Plc Wema Bank Plc Zenith Bank Plc

regIsTrArs - CardinalStone (Registrars) Limited, 358, Herbert Macauley Street, Yaba, Lagos.

rC no. - 6752

Corporate InFoRMAtIon


In 1918, our company started operations in nigeria represented by Barclays Bank DCo and on February 28, 1921 converted to a full branch of its then parent company, Royal Exchange Assurance, London.

Royal Exchange Assurance, London was originally founded in 1720 and was one of the first two insurance companies in Britain to receive legal status via Royal Charter. originally established for marine business, it expanded within a year to include fire and life insurance as well, thereby becoming Britain’s first composite insurer. the establishment of its branch in nigeria was the result of an overseas expansion drive in the early 20th century.

Some notable figures in the local insurance industry have headed our company, which was, for over twenty years, the only insurance company operating in nigeria. thus, our company can be said to be the beginning of insurance in nigeria and today, has one of the largest branch networks in its sector, with thirty-three branches, two friendship centers and ten sales outlets.

Pursuant to section 396(2) of then companies Act of 1968, our company was on December 29, 1969, reconstituted and incorporated as a private limited liability company, Royal Exchange Assurance (nigeria) Limited. the company went public July 18, 1989 and was duly listed on the nigerian Stock Exchange on December 3, 1990.

In June 2007, our company entered into a merger with African Prudential Insurance Company and Phoenix of nigeria Assurance Company Plc. the merger brought about a significant and stronger company, better positioned to serve the needs of its clientele in the financial services sector.

In June 2008, our company was re-organized into a Group Structure, whereby it assumed the role of a group holding and asset management company to execute its strategic vision for financial services, namely insurances, funds management, finance and banking, through its five wholly owned subsidiaries namely:• Royal Exchange Finance & Asset Management Ltd

(previouly called Royal Exchange Finance & Investment Ltd) was incorporated as a wholly-owned subsidiary of Royal Exchange Plc in october 2004 and licensed in April 2005 by Central Bank of nigeria to carry on the non-life insurance business of the group;

• Royal Exchange Prudential Life Plc, established in February 2007 to carry on life assurance business of the group;

• Royal Exchange Finance & Asset Management Ltd previously called Royal Exchange Finance & Investment Ltd established in December 4, 2013 to provide a wide range of services in Finance and Asset management;

• Royal Exchange Healthcare Limited, established in May 2006 to provide health management services and healthcare insurance;

• Royal Exchange Microfinance Bank Limited established in July 2009 and licensed to carry on the business of assisting all enterprises engaged in small scale industries, micro economic activities and co-operative related endeavors.

All subsidiaries are properly licensed by their respective regulators and are structured to fully exploit the significant opportunities available in the nigerian economy.

the Royal Exchange brand is a notable brand in nigeria especially in the field of insurance. the company will ensure its continued relevance in the environment in which it operates by continuously re-inventing its products and services.

oUr DIreCtorS:

roYal eXChaNGe plC 1. Mr. Kenneth Ezenwani odogwu - Chairman2. Chief Anthony Ikemefuna Idigbe (SAn) - Director 3. Mr. Daniel Maegerle (Swiss) - Director4. Chief uwadi okpa-obaji - Director5. Alhaji Ahmed Rufa’i Mohammed - Director6. Alhaji Rabiu Muhammad Gwarzo, oon - Director 7. Mr. Adeyinka ojora - Director 8. Mr. Chike Mokwunye - Group Managing Director *9. Alhaji Auwalu Muktari - Group Executive Director **

roYal eXChaNGe GeNeral INSUraNCe CoMpaNY lIMIteD1. Mr. Chike Mokwunye - Chairman *2. Alhaji Auwalu Muktari - Vice Chairman **3. Chief Gilbert Grant - Independent Director 4. Mr. Donald nosiri - Director5. Mr. Richard Borokini - Managing Director

roYal eXChaNGe prUDeNtIal lIfe plC1. Mr. Chike Mokwunye - Chairman *2. Alhaji Auwalu Muktari - Vice Chairman **3. Alhaji Sani Muhammad Hamid, fwc - Independent Director4. Mr. Donald nosiri - Director5. Mr. olawale Banmore - Managing Director

roYal eXChaNGe healthCare lIMIteD1. Mr. Chike Mokwunye - Chairman *2. Alhaji Auwalu Muktari - Vice Chairman **3. Dr. nicholas Azinge - Independent Director4. Mr. Donald nosiri - Director5. Dr. Pius ofulue - Managing Director

roYal eXChaNGe fINaNCe aND aSSet MaNaGeMeNt lIMIteD1. Mr. Chike Mokwunye - Chairman *2. Alhaji Auwalu Muktari - Vice Chairman **3. Mr. Abiola Sanni - Managing Director4. Mr. Hosea Boman - Director

roYal eXChaNGe MICrofINaNCe baNK lIMIteD1. Mr. Chike Mokwunye - Chairman *2. Alhaji Auwalu Muktari - Vice Chairman **3. Mr. Ben Azih - Independent Director4. Mr. Abiola Sanni - Director5. Mrs. Elizabeth Elghoche - Managing Director

* Resigned with effect from 31 December 2015** Appointed as Group Managing Director with effect from June 14, 2016

Corporate PRoFILE


(2,000,000)

-‐

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Gross Premium Wri6en

Gross Premium Earned

Net Premium Income Investment and Other income

Profit Before Tax Profit / Loss for the Period

Thou

sans

of N

aira

GROUP-‐Major Statement of Comprehensive Income Items

2015 N'000

2014 N'000

Group Parent 2015 2014 % 2015 2014 % N’000 N’000 Growth N’000 N’000 Growth

MAJOR STATEMENT OF COMPREHENSIVE INCOME ITEMS Gross Premium Written 10,790,628 9,425,451 14.48 - - -Gross Premium Earned 10,809,176 9,868,197 9.54 - - -Net Premium Income 8,084,851 7,366,626 9.75 - - -Investment and Other income 807,792 1,069,108 (24.44) 223,669 549,855 (59.32)Profit Before Tax (896,961) 304,730 (394.35) (116,707) 150,093 (177.76)

Profit / Loss for the Period (1,298,960) 139,540 (1,030.89) (129,807) 118,487 (209.55)

2015 2014 2015 2014 N’000 N’000 N’000 N’000

MAJOR STATEMENT OF FINANCIAL POSITION ITEMS Total Assets 26,525,242 26,028,973 1.91 8,889,570 8,809,478 0.91 Insurance Liabilities 8,263,204 7,094,226 16.48 - - -Investment Contract Liabilities 336,271 257,963 - - -

reSUltS At A GLAnCE


Results at a Glance cont’d

-‐

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Total Assets Insurance Liabili9es Investment Contract Liabili9es

Thousands o

f Naira

GROUP-‐ Major Statement of Financial Posi9on Items

2015 N'000

2014 N'000

(200,000)

(100,000)

-‐

100,000

200,000

300,000

400,000

500,000

600,000

Investment and Other income Profit Before Tax Profit / Loss for the Period

Axis Title

PARENT-‐Major Statement of Comprehensive Income Items

2015 N'000

2014 N'000

8,760,000

8,780,000

8,800,000

8,820,000

8,840,000

8,860,000

8,880,000

8,900,000

Total Assets

Thou

sand

s of N

aira

PARENT-‐ Major Statement of Financial PosiDon Items

2015 N'000

2014 N'000

9

NotICe of AnnuAL GEnERAL MEEtInG

orDInAry BusIness:

1. to lay before the meeting the Consolidated Financial Statements of the Company for the year ended December 31, 2015 together with the Reports of the Directors, the Audit Committee and the Report of the Auditors thereon.

2. to elect/re-elect directors.

3. to approve the remuneration of the directors.

4. to authorize the directors to fix the remuneration of the auditors.

5. to elect shareholders as members of the statutory Audit Committee.

By orDer of The BoArD

sheILA eZeuko CoMPAnY SECREtARY/GM (LEGAL SERVICES)FRC/2013/nBA/00000004059

new Africa House31, Marina, Lagos.

August 22, 2016

notICE is hereby given that the Forty-Seventh Annual General Meeting of Royal Exchange Plc will be held at the Panoramic View Hall, Civic Centre, ozumba Mbadiwe Avenue, Victoria Island, Lagos, Lagos State on thursday, 22nd September, 2016 at 11.00 o’clock in the forenoon to transact the following business:


noTes

• Proxy

A member of the company entitled to attend and vote is allowed to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the company. A proxy form is contained in the Annual Report and Accounts. If it is to be valid for the purpose of the meeting, it must be completed, detached, duly stamped at the office of the Commissioner for Stamp Duties and deposited at the office of the Registrars, CardinalStone (Registrars) Limited, 358 Herbert Macauley Street, Yaba, Lagos, not later than 48 hours before the time appointed for holding the meeting.

• DividendWarrants

the company will not recommend any dividend for the year ended December 31, 3015.

• ClosureofRegisterofMembersandTransferBooks

the Register of Members and the transfer Books will be closed from 12th September 2016 to 16th September 2016, both dates inclusive.

• AppointmentofMembersoftheAuditCommittee

Any member may nominate a shareholder as a member of the Audit Committee of the company, by giving notice in writing of such nomination to the Company Secretary, at least 21 (twenty- one) days before the Annual General Meeting.

• UnclaimedShareCertificatesandDividendWarrants

the company notes that some share certificates have been returned, marked “unclaimed”. the company notes further that some dividend warrants sent to shareholders are yet to be presented for payment.

therefore, all shareholders with unclaimed share certificates should write to the Registrars, CardinalStone (Registrars) Limited, the Company Secretary or call at the registered office of the company during normal working hours.

Furthermore, all shareholders with unclaimed dividend warrants nos. 1 – 11 should address their claims to the Company Secretary or call at the registered office of the company during normal working hours for processing of their claims or assistance. Shareholders, with unclaimed dividends nos. 12 – 17 should address their claims to the Registrars, CardinalStone (Registrars) Limited.

Members are urged to advise the Registrars or the Company Secretary of any change of address or situation particularly as it relates to share certificates and warrants.

• RightofSecurities’HolderstoaskQuestions Securities’ Holders have a right to ask questions not only at the Meeting, but also in writing prior

to the Meeting, and such questions must be submitted to the Company on or before 17th day of September, 2016.

notice of Annual General Meeting cont’d


PRoxY FoRM

Tear off from here

the Annual General Meeting of Royal Exchange Plc to be held at the Panoramic View Hall, Civic Center, ozumba Mbadiwe Avenue, Victoria Island, Lagos, Lagos State, on thursday, September 22, 2016 at 11.00 am in the forenoon.

I/We………………………………. being a member/members of Royal Exchange Plc hereby appoint …….…….………………………………………………or failing him the chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the 47th Annual General Meeting of the Company to be held on thursday, September 22, 2016 and at every adjournment thereof.

Dated this ………………… day of ……………………… 2016.

NoteS:

1. Please indicate with an ‘x’ in the appropriate squares how you wish your votes to be cast on the resolutions set out above.

2. A member (shareholder) who is unable to attend the Annual General Meeting is allowed to vote by proxy. the above proxy form has been prepared to enable you to exercise your right to vote in case you cannot personally attend the meeting. Members wishing to vote by proxy should please ensure that the appropriate stamp duties due on the proxy form are paid. the proxy must produce the “Authority to Admit”, attached to this form to obtain entrance to the Meeting.

3. Provision has been made on this form for the chairman of the meeting to act as your proxy. However, if you so wish, you may insert in the space provided on the form the name of any person whether a member of the company or not who will attend the Meeting and vote on your behalf.

4. Please sign the above proxy form and post it so as to reach the registrars, CardinalStone (Registrars) Limited, 358, Herbert Macauley Street, Yaba Lagos, not later than 48 hours before the appointed time for holding the meeting. If executed by a corporation, the proxy form must bear the common seal of such corporation.

FoR REGIStRAR/CoMPAnY uSE onLY

nAME oF SHAREHoLDER:

nuMBER oF SHARES:

nos. RESoLutIonS FoR AGAInSt 1. to elect Alhaji Auwalu Muktari as the Group Managing Director

2. to re-elect Mr. Kenneth odogwu

3. to re-elect Alhaji Rabiu Gwarzo oon

4. to fix the Remuneration of directors 5. to authorize the directors to fix the Remuneration of Auditors 6. to elect members of the Audit Committee

aUthorItY to aDMIt

Please admit …………………………………………………………. at the 47th Annual General Meeting of Royal Exchange Plc to be held at the Panoramic View Hall, Civic Center, ozumba Mbadiwe Avenue, Victoria Island, Lagos, Lagos State on thursday, September 22, 2016 11.00 am in the forenoon.

SheIla eZeUKoCoMPAnY SECREtARY/GM (LEGAL SERVICES)FRC/2013/nBA/00000004059

NoteS:

1. this authority to admit must be produced by the shareholder or his/her proxy in order to gain entry to the venue of the Annual General Meeting

2. Shareholders or their proxies must sign this authority for admission before attending the Meeting.

………………………………….............…Signature of person attending

CaUtIoN: to be ValID thIS forM MUSt be StaMpeD aCCorDINGlY

BEFoRE PoStInG tHE ABoVE CARD PLEASE tEAR oFF tHIS PARt AnD REtAIn It.


Tear off from here

Please AffixPostage Stamp

Here

the Registrar,CardinalStone (Registrars) Limited,358, Herbert Macauley Street, Yaba, Lagos.

PRoxY/AutHoRItY to ADMIt


IMPoRtAnt notICE

to:

the registrar, CardinalStone (registrars) limited, 358, herbert Macauley StreetYaba, lagos.

roYal eXChaNGe plCreQUeSt for e-boNUS

I/We hereby request that henceforth all bonuses due to me/us with respect to my/our shareholding in Royal Exchange Plc be paid directly to my CSCS/stock broker account stated below:

Account Details:

Shareholder Account no: (Please look on the left hand corner of our certificate for your shareholder account number)

name of Shareholder:

Address of Shareholder:

Investor’s Account no:

CSCS Account no. (CHn):

GSM no:

E-mail Address:

Yours faithfully,

Signature: ) Corporate shareholders ) should please affix sealname: ) here and state RC no. For Joint Shareholders

Signature: ) name: ) ) of Shareholder



official stamp and authorized signatures of stockbroker

1. Signatory: Seal of stockbroker

2. Signatory:



Here


IMPoRtAnt notICE


MAnDAtE FoR E-DIVIDEnD PAYMEnt

to:

the registrar, CardinalStone (registrars) limited, 358, herbert Macauley StreetYaba, lagos.

I/We hereby request that, all dividends to me/us from my/our holding in all the companies ticked at the right hand column be paid electronically my/our Bank Account named below:

SHAREHoLDERS FuLL nAMES:

ADDRESS:

GSM nuMBERS:

E-MAIL ADDRESS:

PLEASE AttACH YouR VALID MEAnS oF IDEntIFICAtIon

nAME oF BAnK

BRAnCH

BRAnCH ADDRESS

ACCount nuMBER

SoRt CoDE

BVn

Please tick as applicable

NAMEOFCOMPANY

ACoRn PEt. PLC

AFRIK PHARMACEutICALS PLC

AG HoMES SAVInGS & LoAnS

AG LEVEntIS

ARBICo PLC

ASHAKACEM PLC

BAnKERS WEREHouSE

BEtA GLASS

CAPItAL HotELS PLC

ELLAH LAKES

EVAnS MED PLC

FCMB BonD

FCMB GRouP PLC

G.CAPPA PLC

GuInEA PLC

IMB EnERGY MAStER FunD

JoS Int. BREWERIES PLC

KoGI SAVInGS & LoAn LtD.

LAFARGE AFRICA PLC

LAFARGE BonD

LAW unIon & RoCK PLC

LEGACY FunD

LIVEStoCK FEEDS PLC

MoRISon PLC

MRS oIL PLC

nAHCo BonD

nAHCo PLC

nEWPAK PLC

n.G.C. PLC

nGC StERILE

nPF MICRoFInAnCE BAnK

nuLEC InDuStRIES PLC

oKoMu oIL PALMS PLC

PREMIER PAIntS PLC

REAn PLC

SKYE BAnK PLC

totAL nIG. PLC

tRAnEx PLC

WoMEn InVEStMEnt FunD

(Surname First)

SIGnAtuRE JoInt/CoMPAnY’S SIGnAtoRIES

CoMPAnY SEAL

Authorised Signature and Stamp of Bank


MAnDAtE FoR E-DIVIDEnD PAYMEnt


Here


StateMeNtS & REPoRtS

Royal Exchange Plc 2015 Annual Report & Financial Statements18

Distinguished fellow shareholders, members of the board of directors, ladies and gentlemen.

I bid you a warm welcome to the 47th Annual General Meeting of our company, taking place this 22nd Day of September, 2016 here in Lagos. I am pleased to present an overview of the 2015 macroeconomic environment, a review of our operating results for the year and synopsis of our expectations for 2016, all for your consideration, and in accordance with the mandate of my office as Chairman.

MACROECONOMICREVIEWthe global economic growth weakened in 2015; decelerating to 2.4% from 2.6% in 2014. the unimpressive performance was reflective of a precipitous decline in emerging and developing economies amidst post-crisis lows in commodity prices, weaker capital flows and subdued global trade. Most significant were Brent crude prices, which started off the year at uS$58.38pb, but fell to uS$37.28pb in December 2015. no relief remains in sight as market sentiments reveal slowing growth will persist in the near to medium term.

In the developed economies, there were marked improvements as markets gained traction within the year, largely as a result of stronger domestic demands healing labor markets and improving credit conditions. In the united States (u.S), domestic demand was supported by robust consumption and dynamic investment outside the oil sector. In contrast, net exports dragged on growth while industrial activity stayed subdued. Despite the above-mentioned, u.S output grew at 2.5% for the year - her highest annual rate in the post-crisis period. However, in the united Kingdom, GDP growth rate fell to 2.2% from 2.9% in 2014; unveiling a production sector close to stagnation and a construction sector in recession.

Recovery was the theme song in the Euro zone. Domestic demand strengthened and exports accelerated as an aftermath to a lagged depreciation of the euro currency. overall, growth in the zone stood at 1.5% with low oil prices and favorable financing conditions supporting consumer spending and investments.

ChaIrMaN’S StAtEMEnt

MR. KEnnEtH EZEnWAnI oDoGWu - CHAIRMAn


Chairman’s Statement cont’d.

In Japan, output growth experienced a soft patch, irrespective of rising corporate profits and continued policy stimulus. Japan’s Gross Domestic Product (GDP) growth for the year was at 0.8%.

Growth stood at a post-crisis low of 4.3% in developing economies. Macro-economic indices in the BRIC countries (Brazil, Russia, India and China) exhibited asymmetrical weaknesses with the exception of India. Growth subsided in the Chinese economy as output cooled off to 6.9% from 7.3% recorded a year earlier. Brazil and the Russian Federation took a turn for the worse as a result of global and domestic headwinds, with both countries experiencing deepening contractions and deteriorating public finances. the Brazilian economy contracted at a 3.7% in 2015, whereas Russia’s output shrank by 3.8% in the same year. India’s output, on the other hand, rose above 7% thanks to progressive fiscal reforms engineered by her government.

Across the African continent, growth fell short of expectations in 2015, with the largest disappointments coming from energy exporters. Low commodity

official naira exchange rate was devalued from n168/uS$ to n199/uS$.

In the money market, open BuyBack (oBB) and overnight (on) rates fell to close at levels of 0.81% and 0.98% by December 2015 from opening levels of 11.17% and 11.58% respectively.

the nigerian capital market routed towards 2008 financial crisis level. Year-to-date value fell by approximately n1.64 trillion as market capitalization dropped from n11.49 trillion in 2014 to n9.85 trillion. the nigerian Stock Exchange (nSE) All Share-Index (ASI) equally fell from 34,657.15 points to 28,642.25 points.

Significant pressure persisted in the foreign exchange market. the official exchange rate opened at n164.08/uS$ (including 1% commission) and closed at n199.00/uS$, representing a depreciation of n34.92 or 21.28%. Inter-bank selling rate opened at n180.00/uS$ and closed at n198.59/uS$, representing a depreciation of n18.59 or 10.33% in the period, while at the BDC segment, the selling rate opened at n191.50/uS$ and closed at n248.00/uS$ representing a depreciation of n56.50k or 29.50%.

Gross official external reserves as at December 2015 stood at $29.07 billion compared with opening levels of $34.25 billion. the depletion was triggered by market interventions made by the CBn in a bid to stabilize the naira exchange rate. this left

Within the year, the apex regulator also pushed for a 10-year tenure limit regulation for chief executive officers (Ceos) in its drive to engender good corporate governance in the industry. policy guidelines barring insurance companies from investing in businesses abroad and in their parent’s companies were also introduced.

prices, heightened security concerns, occasioned by terrorist attacks impacted adversely on international trade, financial markets, government policies and security expenditure in nigeria. Furthermore, the presidential election played a pivotal role in the country with the election of President Muhammad Buhari ushering in a new ruling party – All Progress Congress (APC) – on the platform of change. this however coincided with the downturn in oil prices as a global oil supply glut ensued, leading to a slowdown in domestic growth in the second half of the year. In effect, nigeria’s GDP fell to 2.6% year-on-year (y-o-y) from 6.3% recorded in 2014.

to stem the tide, the Central Bank of nigeria (CBn) reverted to an expansionary monetary policy stance to stabilize the economy. Monetary Policy Rate (MPR) was dropped to 11% from 13% per annum during the year. Cash Reserve Requirement (CRR) on public deposits and private sector deposits which stood at 75% and 20% respectively, was aggregated to a mid-point level of 31% and later lowered to 20% in the second half of 2015 to improve systemic liquidity. Likewise, the



the country’s external reserves vulnerable to absorbing less than six months of imports.

In the Insurance sector, Alhaji Mohammed Kari was appointed the new Insurance Commissioner by the President; following the exit of Mr. Fola Daniel after an eight-year tenure in office. the new chief-in-charge revealed plans to focus on a number of reforms in the industry. these included amongst others; Risk-Based Solvency (RBS) supervision; Code of Corporate Governance enforcement, Market Conduct and Claims settlement reforms.

Within the year, the apex regulator also pushed for a 10-year tenure limit regulation for chief executive officers (CEos) in its drive to engender good corporate governance in the industry. Policy guidelines barring insurance companies from investing in businesses abroad and in their parent’s companies were also introduced. According to the policy, insurers are now excluded from investing in derivatives except in cases where approval is sought from the commission. In addition, 20% of total current account balances and bank placements now represents the maximum acceptable placement for operators with any particular bank. Likewise, insurers are restricted from investing in companies that have neither reported profits nor paid dividend in the last three years. nAICoM ordered operators not to outsource their investment functions without prior approval from the commission as well.

other policy guidelines enacted during the year included a September 30, 2015 deadline for payment of all outstanding claims and subsequent implementation of relevant provisions of the Insurance Act 2003 by october 1, 2015 by all operators. Consequently, a notice/circular

n2.38billion, declining by 30% when compared with 2014 value of n3.40billion.

Management expenses were n3.27billion in 2015 in comparison with n3.09billion in 2014 showing an increment of 6%.

the group experienced a Loss before taxation of n897 million largely due to insurance contract liabilities’ provisions made in accordance with the IFRS.

An increase in reserve to the tune of n1.2billion was made by the Group for the Insurance and Investment Liabilities of the life business during the year under review. IFRS requires that we value the liabilities at market interest rate. When the interest rates rise, the value of liabilities will fall, and when the rates fall, the value of our liabilities will rise. therefore, when the value of liabilities fall there is a release of profits and when the liabilities rise there is a transfer from the profits to the reserves.

Should there be a rally in real interest rates, including bond yields, these reserves would be released back to profits; so it should be noted that these transfers to reserves are not cash losses and therefore should not be construed as such.

eXPeCTATIons for 2016It is expected that the naira will continue to lose value against the dollar as current retreat in oil prices and the inability of the CBn to defend her currency would fuel sentiments for further devaluations.

Also the sliding oil prices is expected to persist with spillover impact on the insurance industry - which generates approximately 20% of its premium from this business segment. the Brent Crude prices is expected to slide further from the prevailing global supply glut, which is

was issued to the general public requesting the reporting of any insurance company that is non-compliant with these provisions.

Business wise, the retail insurance market demonstrated resilience in the course of the year as rising levels of products, innovations and channels partnership drove cross-selling of insurance products to the public. However, the reverse was the case in the corporate segment which arises from the slowing domestic economy alongside plummeting oil prices created pullbacks in major business lines, most evident was in the Public sector and oil & Gas insurance market segments where expenditure on insurance dwindled.

other key challenges encountered in the corporate market included rising competition, soft pricing conditions and tight profit margin.

notwithstanding the above, the insurance market still remains highly viable with attractive demographic statistics and a low insurance penetration thrust.

oPerATIng resuLTsIn spite of the hostile operating environment experienced by the insurance sub-sector and the financial-services industry in general, Royal Exchange Group kept a tight rein on her businesses in 2015.

During the period under review, your group generated a gross written premium of n10.79billion, while that of the preceding year was n9.43billion, an increase of 14%. the net claims expense for the year amounted to n3.04billion in comparison with n2.43billion reported in 2014; signaling an increase of 25%. underwriting expenses decreased by 4% from n2.74 billion in 2014 to n2.64 billion in 2015.

these translated to net income before overhead expenses of



adversely affecting the major oil companies investments in new projects locally. this would also pose fresh challenges on the new government’s fiscal policies.

the MPR rate is expected to rise in 2016 to counter reserves’ erosion, oil price slump and to realign with upward movement in inflation rate towards double-digit territory. there is a high probability that inflation would breach the 10% ceiling in the course of the year due to spiking food prices and yield demand pressures on government bonds and treasuries by investors.

It is anticipated that the Federal Government would become more rigorous in revenue diversification in a bid to deepen her tentacles in the manufacturing and agriculture sectors as new frontier markets. Also, a decisive stance would need to be taken in ending the scourge of terrorism in 2016 in order to provide a conducive investment environment and improve sentiments about doing business in nigeria.

In order to diversify the economy, infrastructural investment in power and transportation is expected to be top priorities for the new government. this would significantly improve output, employment, productivity and aid government to increase her revenue generation capacity.

We expect healthy growth in micro-insurance products and services thanks to emerging It technologies and a growing influence of digital aggregators coming into the ecosystem to drive penetration and financial inclusion amongst the lower income class.

the Health insurance sector would be of interest to us as the national Health Insurance Scheme (nHIS) relentlessly canvasses for a 30% universal healthcare adoption rate for the nigerian populace.

Alhaji Auwualu Muktari, who was appointed as Executive Director on the Board with effect from october 17, 2009 was appointed by the Board to the position of Group Managing Director following the departure of Mr. Chike Mokwunye. Alhaji Auwalu Muktari will be presented to members for election and approval.

ConCLusIonIn conclusion, I wish to express, on behalf of the Board our appreciation to our distinguished shareholders, clients, brokers, agents, advisors, and other stakeholders for your long-standing support.

We also extend our gratitude to the entire staff and management for demonstrating the true spirit of Royal Exchange as they continue to rededicate themselves towards building a seasoned brand and in their unflinching belief in our future and philosophy.

the future of our company and our plans for 2016 are well on course notwithstanding the current downturn in our domestic economy.

thank You.

KENNETHEzEANWANIODOgWUChairman

the clamour for greater government’s participation as well as the enforcement of compulsory insurance regulations as provided by the Market Development and Restructuring Initiative (MDRI) are expected to be a top priority of nAICoM in 2016.

As always, Royal Exchange stays abreast with many of the initiatives mentioned above in our quest to grow market share and attain market leadership position. the group is presently streamlining major components of her businesses, service delivery, processes and operations in order to deliver superior returns to our shareholders. this we believe will reposition our great company as not only a major industry player but as a potential game changer.

In summary, your board is confident about the future of our company.

DIVIDENDSthe Board of Directors do not recommend the payment of a dividend for the year ended December 31, 2015 due to the IFRS induced reserves we made from the profit or loss account as explained above in the operating results section.

BoArD ChAngesthere was some changes in your board since the last Annual General Meeting.

Mr. Chike ukwabuine Alex Mokwunye who was appointed as Executive Director on the Board in october 17, 2009 and subsequently elevated to the position of Group Managing Director in March 25, 2011, disengaged from the service of the company having successfully completed his five-year tenure at the helms of affairs. the Board of Directors appreciates his contributions in steering many of the Strategic Initiatives for the company and wishes him luck and success in future endeavours.


Distinguished Shareholders, members of the Board of Directors and Colleagues, it is my pleasure to present to you the report of our stewardship for the financial year ended 2015.

2015 was a challenging year for the economy as severe shocks from falling oil prices and liquidity volatility prevailed. the fall in oil price adversely affected revenue for government as well as oil Majors’ appetite to embark on new projects. Moreover, the instability in the capital market, a further naira devaluation and the continuing slowdown in economic activities further exacerbated the growth of the economy.

For the group, the board and management of Royal Exchange remained focused in accomplishing its long term strategic objectives. We achieved closure on many important components of our Strategic Plan aimed at steering the company towards market leadership. We invested in digital solutions that would improve front-end sales, distribution and customer services, as well as enhance back-end operating efficiency and expenses management.

the performance of Royal Exchange group in 2015 was a good show of spirit and tenacity. At group level, business retention levels were enhanced to enable us to focus on our new business areas. our revenue diversification drive away from traditional markets might still be at its preliminary stages but we are recording good progress in deepening our tentacles in some frontier markets; most especially retail and agribusinesses. Performance–wise, our top line rose by 10% year-on-year from n9.87 billion in 2014 to n10.81 billion. Results from core operating activities dipped with underwriting profit declining by 32% from n2.32 billion in the corresponding year to n1.57 billion in 2015 as a result of provisionings of n1.16 billion made in respect of our Life insurance contract liabilities. Furthermore, a spike in impairment charges doused the group’s profitability. However, management expenses was tamed, only

GMD’S StAtEMEnt

AuWALu MuKtARI- GRouP MAnAGInG DIRECtoR


GMD’s Statement cont’d.

able to rise by 6% year-on-year to n3.27 billion in 2015. Moving ahead, we reassure our shareholders of more stringent cost optimization measures in place in the forthcoming year to improve our efficiency levels. We also believe the current business strategy undertaken by management to diversify the revenue base of the Group shall translate to improved revenue growth over the medium term.

At the subsidiary level, our objectives were clear and precise; continue to expand the market share for our core insurance subsidiaries as well as ensure a sustained increase in the contributions of our non-core insurance businesses of asset management and microfinance banking divisions to the pool. on our insurance businesses, growth was achieved through our retail business with the help of new alliances and engagement in key strategic partnerships.

For our non-insurance subsidiaries, we have commenced opening of new markets for our banking subsidiary – Royal

(a) Royal Exchange General Insurance Company Ltd

(b) Royal Exchange Prudential Life Plc

(c) Royal Exchange Healthcare Ltd

(d) Royal Exchange Finance & Asset Management Ltd

(e) Royal Exchange Microfinance Bank Ltd

Your company achieved gross revenue of n10.79 billion in 2015, up from n9.43 billion recorded in 2014, with income before overhead expenses of n2.38 billion generated, as against n3.40 billion in 2014 which translated to 14% growth.

Management expenses, on the other hand, rose to n3.27 billion as against an expense of n3.09 billion in 2014, signifying an increase of 6%.

A Loss before tax of n896.96 was reported in 2015. the occurrence of this loss is traceable to a n1.16 billion provisions made to Insurance contract liabilities during the year as well as impairment charges recognized.

royAL eXChAnge generAL INSURANCECOMPANYLIMITEDRoyal Exchange General Insurance Company Limited (REGIC) remained the major income earner of the group contributing 64% of the gross earning of the group.

Exchange Microfinance Bank. We hope to open a minimum of three new branches by third quarter of 2016. We also launched the third-Party Fund Management Services of our Asset Management division and we look forward optimistically to building competencies and traction in this line of business to further strengthen our range of products and services for our various investment clients.

Generally, the bottom-line performances were down across the subsidiaries due to a very volatile business operating environment. notwithstanding, the board and management are determined to reverse this trend especially for our life business, Royal Exchange Prudential Life Plc, which was a major drag on our profitability for the year due to the huge reserves made for the Company’s Insurance and Investment Liabilities in line with IFRS. oPerATIng resuLTs:grouPthe company’s wholly owned subsidiaries at the end of 2015 were:

During the year, royal exchange kept to its promise of being a socially responsible corporate citizen by championing insurance education and advocacy. our initiatives included partnerships and sponsorships of programmes targeted at improving insurance literacy among secondary school students and deepening our foot-prints in the lower and informal segment of the insurance market.



Gross written premium (GWP) at n6.89 billion rose 2% above 2014 results of n6.72 billion, whilst Gross premium income of n6.97 billion was at same level with that of the corresponding year. Stagnation in growth of gross written premium was as a result of the economic downturn suffered – as plummeting oil prices led to contraction in associated oil insurance deals and low investments by oil majors in new oil and gas projects. Reinsurance cost year–on–year rose by 7% impacting negatively on net premium earned. net premium income of n4.66 billion was recorded in the year; 2% lower than that of 2014.

net Claims incurred was n1.48 billion as against n1.50 billion recorded in 2014 displaying a decline of 1%. the company’s claims ratio also dropped marginally from 22% in 2014 to 21% in 2015. underwriting expenses at n2.14 billion declined by 5% over 2014 levels. Hence, we recorded an underwriting profit of n1.32 billion in 2015, as against n1.38 billion in 2014.

Management expenses at n1.63 billion increased marginally by 4% against 2014 levels.

Consequently, a profit before tax of n140.80 million is reported for the company in 2015.

royAL eXChAnge PruDenTIAL LIfe PLCIn 2015, Royal Exchange Prudential Life continued to demonstrate strong premium growth potential within the group.

Gross written premium at n3.57 billion was approximately 51% higher than that of 2014, and

million in 2015. Royal Exchange Healthcare continues to show promise through aggressive marketing which has impacted positively on its top-line.

Gross underwriting expenses rose sharply by 97% to n329 million in 2015 as against n167 million in 2014 as a result of large medical claims incurred during the period. operating expenses declined by 32% from n141 million in 2015 to n206 million in 2014.

A profit before tax of n13.7 million is reported for 2015.

royAL eXChAnge MICROFINANCEBANKLTDthe audited account shows a gross interest income of n53 million in 2015, within close proximity of its 2014 levels. net interest income fell marginally to n50 million in 2015 from 2014 results of n52 million.

operating expense increased from n65 million in 2014 to n67 million in 2015. Profit before tax of n8million is reported for 2015 as against a profit of n13 million in 2014.

CorPorATe soCIAL resPonsIBILITyDuring the year, Royal Exchange kept to its promise of being a socially responsible corporate citizen by championing insurance education and advocacy. our initiatives included partnerships and sponsorships of programmes targeted at improving insurance literacy among secondary school students and deepening our foot-prints in the lower and informal segment of the insurance market. We have consistently sponsored a radio programme titled “Wetin Insurance dey do sef” on naija

Gross premium income at n3.50 billion was 32% above 2014 levels. However, underwriting profit dipped from n810 million in 2014 to n237 million as a result of large provisions of n1.16 billion made in respect of life insurance contract liabilities.

Management expenses at n1.05 billion was 47% higher than n717 million recorded in 2014. the increase in management expenses was attributed to increased cost of funding, an aggressive expansion drive encompassing extensive branch network development, deepening our retail business and e-platform enhancements that took place during the year. Consequently, the company realized a Loss before tax of n819 million in 2015.

royAL eXChAnge fInAnCe & ASSETMANAgEMENTLTDthe company achieved gross earnings of n363 million as against n303 million in 2014, an increase of 20%. net interest margin also appreciated by 25%, from n123 million in 2014 to n154 million in 2015.

During the year the company bolstered its credit generation drive via an aggressive liabilities mobilization strategy and this boosted its income earning capacity.

A profit before tax of n9.1 million is reported for 2015 as against n7.4 million in 2014.

royAL eXChAnge heALThCAre LTDGross written premium rose by 23% to n418 million in 2015 from n340 million in 2014. Likewise, earned premium increased from n307 million in 2014 to n420



102.7 FM. Running in its third year of production, this remains the first of its kind to promote insurance awareness in pidgin english to the public.

In future, we intend to be more active in promoting Microinsurance to bridge the insurance needs of the yearning public, including the upcoming millenials.

ConCLusIonLooking ahead, our goal is to continuously redefine, reinvent and differentiate ourselves in the marketplace. the focus would be on achieving long-term sustainable growth for our shareholders through the broadening of our revenue base, improving service delivery support systems and at same time keeping a lid on our group-wide costs.

I would like to conclude by appreciating the firm commitments and resilience of our management and staff members as well as the support of our Directors. I am indeed grateful for the trust, contributions and sacrifices made by all in the course of this journey.

thank you.

AUWALUMUKTARIGroup Managing Director


report of CoRPoRAtE GoVERnAnCE

Royal Exchange, understanding that good corporate governance is essential to earning and retaining the confidence and trust of its stakeholders as well as achieving its vision, provides structures upon which the objectives of the Group are set and the means of attaining those objectives. these structures define the powers and responsibilities of its corporate bodies and employees and are reviewed periodically to ensure that proper organization and conduct of the business remain consistent within the Royal Exchange Group.

there is an effective structure for cooperation amongst the Board of Directors, Management and Internal Control functions in Royal Exchange. the structure establishes checks and balances and ensures that appropriate controls are in place to provide institutional independence of Board of Directors from the Group Managing Director and the Executive Committee (ExCo), responsible for managing the Group on a day to day basis.

the Group operated within all regulatory guidelines by complying with all applicable laws and regulations such as the Securities and Exchange Commission (SEC) Code of Best Practices on Corporate Governance in nigeria (2003), the national Insurance Commission (nAICoM) Code of Corporate Governance (2009); the Central Bank of nigeria (CBn) Code of Corporate Governance (2003) as well as the Companies and Allied Matters Act in relation to its activities and all ethical boundaries by ensuring its business practices are done in line with all applicable governance standards and best business practices.

business judgment in the best interest of Royal Exchange’s shareholders. All the current non-Executive Directors served on the Board throughout 2015.

InTernAL orgAnIZATIonthe Board is chaired by the Chairman. Board members are also subject to standards of business conduct policies, rules and regulations to avoid conflict of interest and use of insider information. the Board appoints committees to help carry out its duties. Given the separation of roles of the chairman and the CEo, the Board appoints non-Executive Directors as chairmen of Board committees. Board committees work on key issues in greater details than would be possible at full Board meetings, which helps to ensure more effective full Board meetings. Each Board committee reviews the results of its meeting with the full Board.

the Board is required to meet at least four times each year. the Board met seven (7) times in 2015 and the average attendance was 90 percent.

BoArD CoDe of eThICsto avoid unethical and unwholesome practice and conflict of interest in any business relationship with the company, the Group board has put in place Code of Business Ethics to provide guidance for the board and staff to maintain strong ethical standards.

BOARDPERFORMANCEEVALUATIONIn compliance with the provisions of the SEC Code of Corporate Governance, the performance of the Board, its committees, the chairman and individual directors was appraised by an independent consultant.

Royal Exchange Plc Board composition is made up of non-Executive and Executive Directors in line with all relevant corporate governance codes. the role of the chairman of the Board and CEo are separated thus providing separation of powers between the two functions and ensuring autonomy of the Board. Additionally, in compliance with the provisions of the various corporate governance codes the Board had put in place various policies and codes as well as established different board committees one of which is the Establishment and Governance Committee (ECG) which oversees and regularly measures the governance structure of the group against best practices. the board similarly maintains oversight function on the company by receiving periodic management reports on corporate governance to ensure compliance with all corporate governance requirements

The BoArD the Board, consisting of Executive and non-Executive members through the Chairman directs the affairs of Royal Exchange. Its size provides for sufficient diversity among its members to exercise their business judgment in the best interest of Royal Exchange’s shareholders while facilitating substantial discussions in which each director can participate meaningfully. Members of the Board of Directors of the subsidiaries are appointed from the Group Executive Management as well as an independent director for each subsidiary.

The grouP BoArD of DIreCTorsthe Board through the Chairman directs the strategic affairs of Royal Exchange. the directors’ fiduciary duty is to exercise their


BOARDCOMMITTEESIn order to increase the efficiency of its work and enable a more detailed analysis of certain issues, the Board appointed committees for specific areas from among its members and established terms of reference and rules with respect to delegated authority and reporting to the Board. the primary objective of the Committees is to provide preparatory and administrative support to the Board. the issues considered at Committee meetings are recorded in minutes and reported at the subsequent Board meetings.

the Board has the following standing committees which regularly report to the Board as well as submit proposals for discussions and decision making.

ESTABLISHMENTANDgOVERNANCECOMMITTEEthe committee which is composed of six members oversees the Group’s governance and measures its governance program against best practice to ensure that the rights of the shareholders are fully protected. It is also responsible for determining the remuneration of the executive and non-executive members of the Board, nominations for approval of the Board candidates to fill Board vacancies, and for the continuous review of senior management succession plans. to assist in the review of the compensation structures and practices, the committee has retained its own independent advisor – Leading Edge Consultants.

During the 2015 financial year, the committee met four (4) times with average attendance of 92% with the following serving in the committee, Chief A. I. Idigbe (SAn) – Chairman; Alhaji R.M Gwarzo, oon; Mr. D. Magerle; Chief u. I.

fInAnCe AnD generAL PURPOSESCOMMITTEEthe committee assists the board in fulfilling its financial oversight responsibilities with specific reference to corporate finance, resources and assets utilization, capital structure, cash management, equity and debt financing, financial planning and reporting as well as the overall financial performance of the group.

the committee consists of seven members and met five times in 2015 with attendance of 100%.

INVESTMENTCOMMITTEEthe committee assists the board in its oversight functions with respect to investment strategies, investment portfolio performance, investment mix and the overall investment performance of the group. the committee consists of six (6) members and met four times in 2015 with attendance of 100%.

STRATEgYCOMMITTEEthe committee is comprised of six (6) members and met four times in 2015 with the average attendance of 79%. the Committee’s responsibility includes but not limited to advising and assisting the board in carrying out:i) the development, articulation

and execution of the Group’s long term strategic plan and

ii) it’s advisory oversight responsibilities relating to potential mergers, acquisitions and other key strategic transactions outside the ordinary course of the Group’s business.

GroUp StrUCtUre aND ShareholDerS

oPerATIonAL grouP sTruCTureto effectively manage the complexity associated with group structure both in operations and

Report of Corporate Governance cont’d.

okpa–obaji; Mr. Chike Mokwunye, Alhaji Auwalu Muktari. Each of these directors is considered by the Board to be independent in judgment and character.

AUDITCOMMITTEEthe Committee comprised of seven (7) members made up of three non-Executive, one Executive Director and three shareholder representatives. the committee serves as a focal point for the communication and oversight regarding Financial Accounting Reporting, Internal Control and Compliance among Management as stated in section 359 (6) of the Companies and Allied Matters Act. the Audit committee, at least annually reviews the standards of internal control, including the activities, Plans, organization and Quality of Internal Audit and Group Compliance.

the committee met five (5) times in 2015 with an average attendance of 100%.

RISKMANAgEMENTCOMMITTEEthe committee oversees the Group wide risk governance framework, including risk management and control, risk policies and their implementation as well as the risk strategy and monitoring of operational risks. It reviews the business management and Group risk management function, the Group general policies and procedures and satisfies itself that the effective systems of risk management are established and maintained. It oversees the Group risk appetite statements to ensure alignments with the group’s strategic objectives.

Comprised of six (6) members, the committee met four times in 2015 with average attendance of 92%.


governance, Royal Exchange Plc manages its exposure to group governance on a matrix depicting lines of business and functionalities which reflects in the areas of responsibility.

THEExECUTIVECOMMITTEE(eXCo)the Executive Committee (ExCo) is headed by the GMD and includes the Group Executive Director and the Group Heads of Finance & Accounts, Human Resources, Strategy & Business Improvement, Legal & Company Secretarial Services and the Managing Director of Royal Exchange Finance & Asset Management Ltd.

this management structure leads to the reporting of the Group based on the following primary business segments:• General insurance serves

the property and casualty insurance (inclusive oil and gas business) need of a wide range of customers, from individual to small and medium sized businesses, commercial enterprises and multinationals corporations.

• Prudential Life pursues astrategy with market–leading proposition in investment linked and protection products through global distribution and proposition pillars to develop leadership position in its chosen segment.

• Healthcare providesqualitative healthcare services to individuals and organizations. their major strategy is to pursue blue chip companies that have large number of staff. the main benefits of the service is that apart from the easy access to healthcare delivery system, the enormous cash outlay

are effective and regularly reviewed to deliver financial and operational accountability and success.

INforMatIoN to ShareholDerS Royal Exchange Plc is committed to continually disclose all material information in a timely and transparent manner to its shareholders. In the light of the above, the company posts all issues that might be of interest to shareholders in its web portal, including but not limited to its annual reports. there is also a blog where shareholders can post in their comments and communicate with other shareholders.

Cross shArehoLDIng the company has no interest in any other company exceeding 5% of the voting rights of that other company, where that other company has an interest in Royal Exchange Plc exceeding 5% of the voting rights in Royal Exchange Plc.

ANNUALgENERALMEETINgIn compliance with statutory and regulatory requirements the Annual General Meeting of the company was held in an open manner on July 30, 2015 and it gave the opportunity to the Four Hundred and Forty Six (446) shareholders of the company or their proxies to deliberate and take decisions on the issues affecting the company. the representatives of Corporate Affairs Commission (CAC), the nigerian Stock Exchange (nSE), Securities and Exchange Commission (SEC), and members of the press were in attendance to observe the proceedings at the meeting.


needed by the organizations to settle medical bills of staff is significantly reduced.

• Finance and AssetManagement provides financial services to the Group and the public. It pursues a strategy of generating income in the course of garnering borrowings from the public, disbursing credits to individuals and corporate entities as well as asset management for individuals and corporate entities.

• Microfinance Bank providesservices to the less privileged public having a total production assets of not exceeding n500,000.00 and monthly income not exceeding twice the monthly per capita income in nigeria or minimum wage.

THEgROUPMANAgEMENTExECUTIVECOMMITTEE(gMEC)the GMEC is headed by the Group Managing Director and includes the Group Executive Director, Managing Directors of the subsidiaries and Group Heads of Departments.the GMEC is responsible for:• Thedaytodayrunningofthe

Group on behalf of the Board• The development and

implementation of all Board - approved initiatives

• The achievement of allbusiness and operational plans, targets, strategies and objectives within the company’s risk management framework; and

• Thedevelopmentofadvancedreporting procedures to ensure the Board is fully informed at all times.

the GMEC also ensures that the processes, policies, procedures and controls within the Group


BOARDANDBOARDCOMMITTEEMEETINgATTENDANCE

DIRECtoRS BoARD BIC E&GC F&GP RMC AC BSC

Expected Meetings 4 4 4 4 4 4 4

Actual Meetings 7 4 4 5 4 5 4

MR. K.E. oDoGWu 7 n/A n/A n/A n/A n/A 1CHIEF .A.I. IDIGBE (SAn)* 7 4 4 5 n/A n/A 4MR. D. MAGERLE 2 n/A 2 n/A 2 n/A 2CHIEF .u. oKPA-oBAJI 6 4 4 5 4 5 n/AALHAJI .A.R. MoHAMMED 7 4 n/A 5 4 5 4ALHAJI .R.M. GWARZo, oon 7 n/A 4 5 4 n/A n/AMR. A. oJoRA 7 4 n/A 5 n/A 5 n/AMR. C. MoKWunYE 7 4 4 5 4 5 4ALHAJI .A. MuKtARI 7 4 4 5 4 n/A 4ALHAJA A.S. KuDAISI n/A n/A n/A n/A n/A 5 n/AMR. t. oLAWuYI n/A n/A n/A n/A n/A 5 n/AMR. A. BEnKunMI n/A n/A n/A n/A n/A 5 n/A

Average attendance 90% 100% 92% 100% 92% 100% 79%

noTes:

1. It is the policy of the Group that any director who will be absent from any meeting shall send his alternative to attend the meeting. In compliance with the above, every director ab-initio has named and presented his permanant alternative details with the board. the directors with astetixes were represented by their alternatives on the dates they were absent.

2. During the year, the Group contravened the provision of Appendix III Clause 14(c) of the nigeria Stock Exchange Commission (nSE) Post-Listing Requirements and consequently, a penality of two Million two Hundred thousand naira only (n2,200,000:00) was paid.

3. the Company has an approved share dealing policy and the Directors adhere to the policy in their dealings with the Company’s shares.

4. the Company has an approved Complaints Management Policy Framework in compliance with the rules and regulations of Securities & Exchange Commission.



In line with our Vision and Mission statements, the Group, understanding the turbulent and challenging business environment within which it operates has fully imbibed risk management as a key concept to the achievement of its objective.

the Group is thus committed to continually embrace the culture, processes and structures that are directed towards realizing potential business and growth opportunities, whilst managing the adverse effects of all the enterprise risk faced by the Group.

our key Enterprise Risk Management (ERM) objectives:• Aligning risk appetite and

corporate strategy• Protect the Group’s capital

base by monitoring and ensuring that risks are not taken beyond the Groups tolerance limit

• Enhance value creation andcontribute to an optimal risk return profile by providing the basis for efficient capital deployment

• Support the Group decisionmaking processes by providing consistent, reliable and timely risk information

• Protect our reputation andbrand by promoting a sound culture of risk awareness and disciplined and informed risk taking.

our key Enterprise Risk Management framework:Risk Management has been effectively embedded into the system through clearly articulated roles for the Board of Directors, Chief Executive

rIsk CuLTurethe Board and management sustained the promotion of risk awareness across the Group to manage products, market, portfolio, liquidity credit and interest rate risks where the associated risks are deemed unacceptable and higher than the residual risk target.

In addition, the Board of Directors and management ensured that the long term survival and reputation of the company are not at risk. the Group’s objective is to have ERM rooted in the Group’s individual culture, management processes and strategic vision, leading to enhanced risk-based decisions.

the company continually exposes the staff to training on principles and practice of ERM which has enhanced the skill level of the staff members.

rIsk APPeTITethe Board of Directors established the Group risk appetite statements to guide the Group to effectively discharge its functions. the management is thus guided to take decisions on managing different categories of risk within the purview of the risk appetite statements. Also, the risk appetite levels such as prudential limits were set by the Board of Directors to guide the management’s decision on the amount of risk they are prepared to accept, when decisions are taken to manage any mitigating measures. In line with the Group appetite statements, the subsidiaries’ risk appetites were scaled down from that of the Group to reflect the respective subsidiary’s need.

rISK MaNaGeMeNt REPoRt

officer, business and functional areas. our risk management framework is centered round a robust risk governance process with assigned responsibilities for identifying, managing, monitoring and reporting risk within the Group.

the Board risk management committee charter and the enterprise risk management policy are the Group’s main risk governance documents. they specify authorities, reporting requirements, procedure to approve any exceptions and methods of referring any risk issues to senior management and the Board of Directors.

to support the governance process, the Group relies on documented policies and guidelines, regular reporting of the Group risk profile, current risk issues and adherence to risk policies and improvement actions within subsidiaries and on a Group level.

Risk Management is not only embedded in our business but is also aligned within the Group strategic and operational planning process. Risks are assessed systematically from a strategic perspective through identification and evaluation of the probability of a risk scenario occurring and the severity of the consequences, should it occur. Similarly, the Group regularly measures and quantifies material risk to which it is exposed. these processes are performed annually, reviewed regularly and closely tied to the planning processes.


RISKgOVERNANCEthe primary objective of the Group’s risk and financial management framework is to protect the Group’s stakeholders from events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities.

the Group’s strategy for managing risk exposures is to establish and maintain a robust Enterprise Risk Management (ERM) programme that is embedded in all processes and driven by technology with emphasis on protection from unwanted risk while maintaining stakeholders’ value.

to this end, the Board established the Group’s corporate risk management framework. the ERM programme will help structure and coordinate all direct and indirect risk management activities within the Group, while eliminating redundancies and ensuring consistency in the risk management process.

the risk management committee of the Board serves as the focal point for oversight regarding risk management. It reviews the risk management methodologies, policies, models, and reporting and risk strategies.

CAPITALMANAgEMENTAPProAChthe Group’s operations are subject to regulatory requirements of the national Insurance Commission (nAICoM), Central Bank of nigeria (CBn), the nigerian Stock Exchange (nSE) and the Securities and Exchange Commission (SEC). Such regulations not only prescribe

are based upon required levels of solvency, capital and a series of prudent assumptions in respect of the type of assets held.

the capital management process is governed by the Board of directors who has the ultimate responsibility for the capital management process. the Board of directors is supported by the Board risk management committee and the Board credit committee all of whom have various inputs into the capital management process.

REgULATORYFRAMEWORKRegulators are primarily interested in protecting the rights of policyholders and depositors’ funds and monitoring them closely to ensure that the Group is satisfactorily managing affairs for their benefit. At the same time, regulators are also interested in ensuring that the Group maintains an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.

the operations of the Group are thus subject to regulatory requirements. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive reserves (e.g., contingency reserve, limits on recognition of revaluation reserves for solvency purposes, Limit of investment in fixed assets, Permissible level of portfolio at risk and distribution to shareholders of actuarial surpluses) to minimize the risk of default and insolvency on the part of the companies to meet unforeseen liabilities as these arise.

Risk Management Report cont’d

approval and monitoring of activities, but also impose certain restrictive provisions (e.g., capital adequacy) to minimize the risk of default and insolvency on the part of the financial service companies and to meet unforeseen liabilities as these arise.

the Group’s capital management policy is therefore to hold sufficient capital to cover the statutory requirements based on regulators’ directives, including any additional amounts required by the regulators.

the Group has established the following capital management objectives, policies and approach to managing the risks that affect its capital position:• Maintaintherequiredlevelof

stability of the Group thereby providing a degree of security to policyholders;

• allocate capital efficientlyand support the development of business by ensuring that returns on capital employed meet the requirements of its capital providers and of its shareholders;

• Retain financial flexibility bymaintaining strong liquidity and access to a range of capital markets;

• Aligntheprofileofassetsandliabilities, taking account of risks inherent in the business;

• Maintainfinancialstrengthtosupport new business growth and satisfy the requirements of the policyholders, regulators and other stakeholders;

In reporting financial strength, capital and solvency are measured using the rules prescribed by nAICoM. these regulatory tests


AsseT AnD LIABILITy MANAgEMENTFRAMEWORKthe Assets and Liability Management framework is integrated in the overall risk management policy of the company be it directly or indirectly associated with insurance and investment liabilities. our insurance risk management policy is to ensure, in each period, sufficient cash flow is available to meet liabilities arising from insurance and investment contracts.

RISKMANAgEMENTthe Group operations cut across the financial sector thus, the Group operations is exposed to varied forms of risk, such as, operational Risk, Insurance Risk, Credit Risk, Liquidity Risk, and Market Risk. to mitigate all of these risks, the company has put in place approved policies, procedures and guidelines to identifying, measuring and control of these risks.

oPerATIonAL rIskthe Group, recognizing it cannot completely eliminate the Group operational risk, such as human error, system failure fraud and external events, has put in place adequate controls to ensure that the impact does not lead to damage to the reputation of the company, financial loss or legal and regulatory implication.

Controls such as segregation of duties, access control, authorization and reconciliation procedures, staff education and assessment processes including the use of internal audit have been put in place. Business risks such as changes in environment, technology and industry are

the Group thus ensures the establishment of principles, policies and processes and structure for the management of risk exposure arising from direct default, counter party and concentration risks to ensure that these risks are properly managed within the Groups risk appetite.

In setting this appetite limits, the corporate solvency level, risk capital and liquidity level, level of investments, reinsurance and coinsurance arrangements, nature and categories of its clients, are taken into consideration.

the following risk mitigation and control activities are in place to effectively manage exposures to default risk: client evaluation, credit analysis, credit limit setting, credit approval, security management, and provision for impairments.

Similarly, the quality and performance of credit portfolios is monitored to identify early signs of decline in credit quality. Such activities include the review of ageing report, credit portfolio quality and delinquency management.

Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is avoided by following policy guidelines in respect of counterparties’ limits that are set each year by the Board of directors and are subject to regular reviews. At each reporting date, management performs an assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining suitable allowance for impairment.


monitored through the company strategic planning and budgeting process.

InsurAnCe rIsk Insurance business being the central part of the Group business exposes the company to the risk of timing and expectations of claims and benefit payments. this is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims.

the risk exposure is mitigated by diversification across a large portfolio of insurance contracts and ensuring that sufficient reserves are available to cover these liabilities. the variability of risks is also improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements.

underwriting risk appetite is defined based on underwriting objectives, business acceptance guidelines, retention guidelines, net retention capacity, annual treaty capacity, regulatory guidelines, other operational considerations and the judgment of the Board and senior management.

CreDIT rIsk the Group’s credit risk appetite is in line with the company’s strategic objectives, available resources and the provisions of the regulators’ operational guidelines. the Group credit risk policy is to ensure that an appropriate, adequate and effective system of risk management and internal control which addresses credit control is established and maintained.


LIQUIDITYRISKthe Group continues to be proactive in implementing adequate risk management measures to mitigate all liquidity risks. the liquidity risk management governance structure comprises the Board, Management and Internal audit department.

our strategy is to continually maintain a good optimum balance between having stock of liquid assets, profitability and investment needs. Additionally, credit control and approval limits, effective management of receivables and contingency account to meet all claims payment are put in place.

MARKETRISKAn unfavorable change in the market conditions exposes the Group to the possibility of loss of income or investment hence the Group has adopted a cautious and prudent approach to investment and trading activities.

the Group investment policy is that, except waived by the Board investment committee (BIC), investment / trading transactions that do not fall within the Group risk appetite , are not undertaken, no matter how profitable the transaction may seem.

Additionally, the Group does not enter into any transaction that is illegal, unethical or contravenes any applicable law, regulations, and professional code of conduct or is capable of damaging the company corporate image or key officer.


the company does not enter into any transaction with any organization with perceived likelihood of failure or showing signs of going concern challenges.

REgULATORY/COMPLIANCErIskCompliance risk is exposure to legal penalties, financial forfeiture and material loss an organization faces when it fails to act in accordance with industry laws and regulations, internal policies or prescribed best practices. this threat can lead to diminished reputation and limited business opportunities as the company finds its franchises reduced in value and its potential for expansion curtailed.

Whilst Governance refers to the responsibility of the company’s executives for maintaining organizational transparency and taking steps to reduce compliance risk by ensuring that established policies and procedures are followed, Risk management is the process by which a company sets its risk tolerance and, Compliance is the process that actually records and monitors the daily business activities to make sure that the company is complying with the law, industry mandates, and internal policies.

thus, the Group takes an integrated approach to compliance risk management because of these overlapping activities collectively referred to as Governance, Risk and Compliance (GRC).

35

boarD oF DIRECtoRS

7.Mr.AdeyinkaOjoraDirector

8.AlhajiAuwaluMuktariGroup Managing Director

9.Ms.SheilaI.EzeukoGroup General Manager

(Legal Secretariat & Compliance Services)

1.Mr.KennethEzenwaniOdogwu

Chairman

2.ChiefAnthonyIkemefunaIdigbe(SAN)

Director

3.Mr.DanielMaegerleDirector

4.ChiefUwadiOkpa-ObajiDirector

5.AlhajiAhmedRufa’iMohammed

Director

6.AlhajiRabiuMuhammadgwarzo,OON

Director

1

2

5

4 7

8

3 6 9

brIef partICUlarS oF ouR DIRECtoRS


brIef partICUlarS oF ouR DIRECtoRS

MR.KENNETHEzENWANIODOgWUHe is a Legal Practitioner. He was called to the nigerian Bar in 1990 and was engaged as a counsel in the firm of Sofunde, osakwe, ogundipe & Belgore. He worked as the Head (Legal Department) of Perfecta Investments Limited, a capital market operator and as Chief Executive officer of Siotel, an It company. He is currently on the Board of several publicly quoted and private companies and was the last Chairman of IMB Bank, before it merged into First Inland Bank (now FCMB). He is also the Chief Executive of odogwu Group of Companies. He was appointed to the Board of the company on September 1, 1997 and became Chairman on July 26, 2007.

CHIEFANTHONYIKEMEFUNAIDIgBe (sAn)A seasoned legal practitioner with over 30 years experience, Chief Anthony Idigbe is the Senior Partner in Punuka Attorneys. He was elevated to the rank of Senior Advocate of nigeria in 2000 and was recently admitted to practice law in ontario, Canada. He has advised clients on several complex transactions and has represented major companies and institutions in the highest courts of nigeria. He is a well-known capital markets legal adviser and has advised and acted as Counsel to the Securities & Exchange Commission. He has also been involved as lead counsel in many ‘big ticket’ litigation briefs such as the Kano trovan Clinical trial Cases. He also possesses wealth of knowledge and experience in telecommunications Law particularly the workings of the nigerian telecommunications Industry, having represented numerous clients in various telecommunications disputes.

MR.DANIELMAEgERLEHe is a Swiss national and holds a Degree in Law from the university of Zurich/Switzerland. He was called to the Zurich Bar in 2002 and qualified as a Certified Specialist of the Swiss Bar Association SBA in Employment Law in 2009. He was a Partner in the firm Streiff von Kaenel, a firm established in 1962 and engaged in a broad range of legal services both nationally and internationally, until 2015. Currently he is the Founding and Managing Partner of his own law chambers, Maegerle Attorneys at Law, founded in 2016. He was appointed to the Board of the company on november 24, 2004. He is currently the chairman of the Establishment and Corporate Governance Committee.

CHIEFUWADIOKPA-OBAJIHe holds a B.Sc (1980), an M.Sc (1982) both in Economics from the university of Lagos, Lagos State; an LL.B (2007) from the university of Abuja and was called to the nigerian Bar in 2008. He holds a Certificate in Macro-Economic Policy and Management from Harvard university Institute for International Development. He participated and completed the Chief Executive Programme 14 (CEP 14) of the Pan Atlantic university, Lagos. He also attended Harvard Business School for a programme on Compensation Committee titled “new Challenges, new Solutions”. He is a Fellow of the Chartered Institute of Management Accountants, uK, the Institute of Chartered Secretaries and Administrators uK and the Institute of Chartered Accountants of nigeria. He is also an Associate of the Association of national Accountants of nigeria and the Chartered Institute of taxation of nigeria. He is a

Chief Anthony Idigbe graduated from the university of Ife, (now obafemi Awolowo university), Ile- Ife in 1982 with a 2nd Class upper Degree (Hons). He also received the Hon. Justice orojo Prize for the Best Student in Company Law. He finished from the nigerian Law School, Lagos in 1983 also with a Second Class (upper Division). He has an LLM from the university of toronto, Canada (2015), the Robert Gordon university (RGu), Scotland, uK (2012) and the university of Lagos, Akoka (1988) respectively as well as MBA from the Enugu State university of Science and technology (ESut) Enugu (1997). He also had a Diploma in Advertising from Advertising Practitioners Council of nigeria (APCon), (1999). He was a Lecturer at ESut Business School, Enugu between 1999 and 2009 and APCon from 2000 – 2002.

He is a Fellow of the Chartered Institute of Arbitrators, uK, Insolvency International and the International Bar Association. He is also a member of the Institute of Directors and the International Insolvency Institute. He was the immediate past President of the Business Recovery and Insolvency Practitioners Association of nigeria (BRIPAn). He was the Founder and first Chairman, Capital Markets Solicitors Association (CMSA), and now functions as a trustee of the Association. He has also served on various arbitration panels and is presently a member of the International Criminal Court (ICC) Arbitral Panel. He is the author of many published books and articles. He is currently the chairman of the Strategy and nominations Committee. He is currently the chairman of the Strategy and nominations Committee.


Brief Particulars of our Directors cont’d

member of the Chartered Institute of Stockbrokers of nigeria and an Authorized Dealing Clerk of the nigerian Stock Exchange. Chief okpa-obaji was a founding staff and former Director of the national Council on Privatisation/Bureau of Public Enterprises and is currently an Executive Director of the odogwu Group of Companies. He was appointed to the Board of the company on March 15, 2007. He is currently the chairman of the Board Finance and General Purposes Committee of the company.

ALHAJIAHMEDRUFA’IMOHAMMEDHe is a graduate of the Ahmadu Bello university, Zaria, Kaduna State. He holds a Certificate in Banking and Development Finance from the Manchester Business School and is a Fellow of the Institute of Public Administration. He has undertaken several national assignments and is currently on the Board of several publicly quoted and private companies. He is currently the second vice-president and a fellow of the Institute of Directors. He is also the chairman of the IoD governing board, and the IoD centre for corporate governance. He is a recipient of various national, international awards and honours. He was appointed to the Board of the company on May 16, 2007. He is currently the chairman of the Board Investment Committee of the company.

ALHAJIRABIUMUHAMMADgWARzO,OONHe is an Associate of the British Society of Commerce. He holds a Certificate in Accounting and Finance for Developing countries from the university of

Exchange on June 6, 2011. He is currently the chairman of the Board Risk Committee.

ALHAJIAUWALUMUKTARIHe is a graduate of Ahmadu Bello university Zaria where he obtained a Diploma in Insurance at Credit Level in 1983. He completed his 1st degree in Business Administration and Masters degree in Banking and Finance at Bayero university Kano in 1993 and 1999 respectively.

He started his career with Kapital Insurance and rose to become Head of Re-insurance Department before joining Royal Exchange Assurance in 1995 as a branch manager in Kano, and overseeing the activities of Bauchi, Maiduguri and Yola office. In 2003, he became the Regional Director, Abuja. He resigned from Royal Exchange to become the Managing Director/Chief Executive officer of Yankari Insurance Co. Ltd in 2008, which later became Fin Insurance Co. Ltd. He returned to Royal Exchange as the Group Executive Director, (Marketing and Sales) in 2010.

Alhaji Muktari was elected in 2010 as an associate member of the Institute of Directors, nigeria; he is also a professional member of the following bodies:• Associate Member Institute

of Management Specialist, uK.

• Member Chartered Instituteof Insurance of nigeria.

• Associate Member, Instituteof Management.

He was appointed the Group Managing Director with effect from June 14, 2016.

Strathclyde, Glasgow, Scotland Business School and Certificate in Wheat Marketing & Processing from Kansas State university, uSA. He is also an Associate of the institute of Industrialists and Corporate Administrators (AIICA) and a Fellow of the Institute of Industrialists and Corporate Administrators (FIIC). He has undertaken several national assignments and is currently on the Board of several publicly quoted and private companies. He holds the national honour of the officer of the order of the niger (oon). He was appointed to the Board of the company on november 21, 2008. He is currently the chairman of the Finance and General Purposes Committee.

MR.ADEYINKAOJORAHe is a businessman. He started his business pursuits in 1992 when he joined nigerlink from At&t Global Information Services where he was a marketing support specialist for the MICR implementation for the Central Bank of nigeria. He worked with Eco Securities Limited as an assistant registrar and broker from 1996-1998 and was later appointed managing director with specific responsibility for power generation. He also heads the defence procurement division of nigerlink Industries Limited. He serves as a director on the boards of different companies as well as advisor to numerous companies seeking entry into the nigerian market place. As a philanthropist, he is a trustee of the Well Being foundation, whose goal is the reduction of maternal and infant mortality in nigeria. He is a director, ojora group and was appointed to the board of Royal


Mr.OkoliFrancisGroup Chief

Financial Officer

eXeCUtIVe MAnAGEMEnt tEAM

AlhajiAuwaluMukhtari

Group Managing Director

Dr.PiusOfulueManaging Director (Royal Exchange

Healthcare)

Mr.OlawaleBanmore

Managing Director (Royal Exchange Prudential Life)

Mr.HoseaBomanGroup Head

(Enterprise Risk Management)

Mrs.ElizabethElghoche

Managing Director (Royal Exchange

Microfinance Bank)

Mr.AbiolaSanniManaging Director (Royal Exchange Finance & Asset Management)

Ms.SheilaEzeukoGroup General Manager

(Legal, Secretariat & Compliance

Services)

Mr.DonaldNosiriGroup Head

(Human Resources)

Mr.EjikeOsisiomaGroup Head (Information Technology)

MallamBashirBabajo

Group Head (Facilities

Management)

Mr.WilsonOkoh-EseneGroup Head(Corporate

Communications)

Mr.BenAgiliManaging Director (Royal Exchange

General Insurance)

Mr.NnamdiMelieGroup Head

(Strategy & Business Planning)

Mr.NelsonAkereleGroup Head

(Retail)


eXeCUtIVe MAnAGEMEnt tEAM’S PRoFILE

ALHAJIAUWALUMUKTARIHe a graduate of Ahmadu Bello university Zaria where he obtained Diploma in Insurance at Credit Level in 1983. He completed his 1st degree in Business Administration and Masters degree in banking and Finance at Bayero university Kano in 1993 and 1999 respectively. He is an alumnus of the Harvard Business School.

He started his career with Kapital Insurance and rose to become Head of Re-insurance Department before joining Royal Exchange Assurance in 1995 as a branch manager in Kano, and overseeing the activities of Bauchi, Maiduguri and Yola office. In 2003, he became the Regional Director, Abuja. He resigned from Royal Exchange to become the Managing Director/Chief Executive officer of Yankari insurance Co. Ltd in 2008, now called Fin Insurance Co. Ltd. He returned to Royal Exchange as the Group Executive Director in 2010. He was appointed the Group Managing Director with effect from June 14, 2016.

MS.SHEILAEzEUKOShe is a graduate of the university of nigeria, nsukka, Enugu State. She holds a Bachelor of Arts in History, a Bachelor of Law from the same university,a Post Graduate Certificate (corporate & commercial law) from the university of London and was called to the nigerian Bar in 1999. She worked in the Chambers of G.E. Ezeuko (SAn) before going into corporate practice. She served as Company Secretary to General Cotton Mill Limited and also Sosoliso Airlines Limited. She has undergone various management and professional courses. She was appointed Company Secretary of Royal Exchange Plc in 2007 and

MR.BENAgILIMr. Agili is a graduate of Building technology of the Institute of Management and technology, Enugu and holds an MBA in Financial Management from the Lagos State university, ojo, Lagos State.

He started his insurance career with unIC Insurance Plc. He joined Royal Exchange Plc in 2003 as an AGM, Eastern operations and was later elevated to a Regional Director in 2007. He was appointed Managing Driector of Royal Exchange General Insurance Company Limited in november 2015.

Dr. PIus ofuLueHe is the Managing Director/Chief Executive officer of Royal Exchange Healthcare Limited, a wholly owned subsidiary of Royal Exchange Plc. He graduated from the university of Ibadan with MBSS in 1986 and holds an MBA in Insurance and Risk Management from Enugu State university. He is also an alumnus of the Lagos Business School. A medical practitioner of over twenty-five years and an active player in the Health Maintenance organization (HMo) industry with fifteen years cognate experience, he was the Chief Executive officer of Managed Healthcare Services Limited and the Group Practice Manager of Critical Rescue International (CRI). Dr. ofulue is the pioneer Managing Director/CEo of Royal Exchange Healthcare Limited, a position he assumed in 2006.

MR.ABIOLASANNIHe is a graduate of the obafemi Awolowo university, Ile-Ife and holds a Bachelor of Science degree in Accounting and a Masters degree in Finance (Economic Policy) from the university of London, uK. He started his

is currently the Group Head (Company Secretariat/Legal Services) with responsibility for the management and execution of Legal Services and Company Secretariat across the Group. She is also an alumna of the Lagos Business School having undergone the Advanced Management Programme (AMP 24). She is an associate member of the Institute of Chartered Arbitrators, nigeria and member of other professional bodies notably, the International Bar Association and the nigerian Bar Association. In addition to her existing roles, she was also appointed the Group Chief Compliance officer on november 1, 2013.

MR.OLAWALEBANMOREHe is a graduate of the university of Ibadan, oyo State. He holds a Bachelor of Science degree in Sociology and a Masters degree in Managerial Psychology from the same institution. He is an associate of the Chartered Insurance Institute of nigeria (ACIIn). He started his career in 1987 with odips Fishing Industries and later joined unIC insurance Plc in 1992 as a Management trainee where he rose to become the Group Head (operations). Prior to joining Royal Exchange in 2003, he was the Regional Director (West) of First Chartered Insurance Company Limited.

He was promoted Assistant General Manager in 2007 and was redeployed to the technical Services Division as Head (technical Services) in 2010. He has attended various courses both within and outside the country. He was appointed Managing Director of Royal Exchange Prudential Life Plc, a subsidiary of Royal Exchange Plc in 2011. He is also an alumnus of the Lagos Business School.


professional career in the Lagos office of Arthur Andersen now, (KPMG Professional Services). He acquired expertise in Investment Banking at IBtC Limited now Stanbic IBtC Bank, where he gained a wealth of experience across a broad spectrum of Investment Banking and Asset Management functions. He headed the asset management team responsible for structuring investment portfolios for HnIs and the biggest of nigeria’s corporate benefits and pension funds.

A nigerian Certified Public Accountant; he is an authorized dealing clerk of the nigerian Stock Exchange and a graduate member (2011) of the Chartered Institute of Stockbrokers. He is a Chartered Banker and Accountant (FCA). Biola is also an associate member of the national Institute of Marketing of nigeria (Chartered). He joined Royal Exchange in February, 2013 as the Group Head, Asset Management and was appointed the Managing Director Royal Exchange Finance & Asset Management Ltd. on July 1, 2013.

MRS.ELIzABETHELgOCHEShe is a graduate of the university of Lagos with a B.Sc in Education, a M.ED Educational Administration well as an MBA. She has over 20 years cognate experience spanning Banking & Finance, Manufacturing and Bureau de Change where she served as Chief operating officer before joining Royal Exchange Microfinance Bank (REMFB). She is a Fellow of the Chartered Institute of Bankers of nigeria (FCIB), and an Associate of the Chartered Institute of Marketing (ACIM). She was appointed Managing Director of Royal Exchange Microfinance Bank (REMFB) in 2010.

Direct Marketing nigeria (FDMn) and an Alumnus of IBM Marketing College Warbrook, London.

He is an astute insurance professional with in-depth knowledge of general insurance practice, life underwriting/marketing, engineering, special risk arrangement and bonds.

He joinded Royal Exchange Plc on october 9, 2006. He is currently the Group Head, Retail Business of Royal Exchange Plc.

MR.FRANCISOKOLIMr. okoli is a graduate of Accounting of the university of Port Harcourt and holds a Masters Degree in Finance at the university of Lagos. He is a fellow of the Institute of Chartered Accountants of nigeria (FCA), the Chartered Institute of taxation of nigeria (FCtI) and the Chartered Institute of Bankers of nigeria (FCIB) respectively. He is also a Certified Information Systems Auditors (CISA), uSA; a Certified Information Security Manager (CISM), uSA; a Certified Information Systems Security Professional (CISSP) and a Certified Internal Auditor (CIA), uSA as well as Member, nigerian Institute of Management (nIM).

He has over 26 years experience in financial control and strategic financial management having worked in various financial services sectors.

He joined Royal Exchange Plc on December 2, 2010 and was appointed the Group Chief Financial officer of the Company on november 9, 2015.

MR.EJIKEOSISIOMAHe is an It professional and is a Microsoft Certified Professional (MCP), Member, nigeria Computer Society (MnCS) and Computer

Executive Management team’s Profile contd.

MR.DONALDNOSIRIHe is a graduate of the university of nigeria, nsukka, Enugu State. He holds a Bachelor of Science and Masters degree in Mass Communication from the same institution and the university of Lagos respectively. He holds a Certificate in Personnel Practice from the Chartered Institute of Personnel and Development in London. He is an alumnus of the Lagos Business School (LBS) having undergone the Senior Management Programme (SMP24). He is also an Associate Member of the Chartered Institute of Personnel Management of nigeria (CIPM), Associate Member of the Chartered Institute of Personnel and Development (CIPD) London and Honorary Senior Member (HCIB) of the Chartered Institute of Bankers of nigeria. He joined Royal Exchange as a Group Head (Human Resources) in 2012. He also serves as a director on three subsidiary boards within the Group.

MR.NNAMDIMELIEMr. Melie is an Insurance graduate of the university of Lagos and has an MBA from IESE Business School, Barcelona, Spain. He is a fellow of the Chartered Institute of Insurance, London.

Mr. Melie has worked in various insurance broking and consulting firms with special emphasis on slaes, performance and strategy.

He joinded Royal Exchange Plc on July 4, 2005. He is currently the Group Head, Strategy & Business Planning.

MR.NELSONAKERELEMr. nelson is an insurance graduate of the Kano State Polytechnic, Kano. He is an Associate of the Chartered Insurance Institute of London (ACII), Fellow, Institute of


Executive Management team’s Profile contd.

Professionals Registration Council of nigeria (MCPn). He holds a first degree in computer science from the university of nigeria, nsukka (1995) and an MBA from the ESut Business School (2005).

Prior to joining Royal Exchange, he was managing an It organization and was a Consultant/Resource person on Basel II to banks and other financial institutions. He was at various times with Data Links nigeria Limited as Head, Software/It consulting and later AGM, technical Services where he was responsible for all technical matters, business generation, project management, software development and banking software implementation from start to finish. He is a highly skilled It professional with expertise in database design, implementation and management, software design and development, amongst others. He joined Royal Exchange Plc in 2011 as Group Head, Information technology.

MR.HOSEABOMANHe is a Chartered Accountant, a Chartered Stockbroker as well as a member of the Chartered Institute of taxation of nigeria with over 25 years experience spanning through publishing, banking, finance, stock broking and a brief stint in the media. He joined Royal Exchange Finance Ltd. in 2005 as the pioneer Head of Finance and Administration and was appointed Managing Director/CEo in 2009. He is also an alumnus of the Lagos Business School and IESE Business School, Barcelona, Spain. A fellow of the Institute of Chartered Accountants of nigeria (FCA), he is currently the Group Head (Enterprise Risk Management) since June 2013.

MALLAMBASHIRBABAJOHe is a graduate of the Ahmadu Bello university, Zaria. He holds a Bachelor of Science degree in Business Administration and an MBA from the same institution. He started his career in 1988 in the Public sector and has over the years served in various capacities before joining Royal Exchange in May 2008. He is currently the Group Head, Facilities Management. He is also an alumnus of the Lagos Business School.

MR.WILSONOKOH-ESENEHe is a graduate of the university of nigeria, nsukka (unn). He holds a Bachelor of Arts in Mass Communication and is an Associate of the nigerian Institute of Management (Chartered) and a member of the Chartered Institute of Public Relations MCIPR, uK.

A Corporate Communication professional with over 14 years experience in various capacities, Wilson joined Royal Exchange Plc as Deputy Manager, Corporate Affairs, from oando Plc, where he was in charge of communications activities for three (3) subsidiaries of the oil Company. Wilson started his professional career in 1998 after his youth service with united Bank for Africa Plc (uBA) as trainee officer, Corporate Affairs unit and later moved to Fidelity Bank Plc in 2001. He then joined Hallmark Bank Plc and moved to oando Plc in 2006 as Coordinator, Corporate Communications. He joined Royal Exchange Plc in 2010 and is currently the Group Head, Corporate Communications.


DIreCtorS & REGIonAL DIRECtoRS

Mr.AustinNwankwoDirector

(Lagos/West Directorate)

Mr.SteveOkohRegional Director

(Lagos-South)

Mrs.VivianEluemeRegional Director

(South-South)

Mrs.JaneEkonwererenRegional Director (Lagos-Central)

Mr.RotimiAjanaRegional Director

(West)

Mr.PatrickOjiRegional Director

(Lagos-West)


report oF tHE DIRECtoRS

the directors are pleased to submit to the members of the company, their forty-seventh annual report, together with the audited financial statements for the year ended December 31, 2015.

1. LEgALFORMANDPRINCIPALACTIVITIES: the Company was incorporated as a private limited liability company on December 29, 1969,

converted to a public limited liability company on July 15, 1989 and was listed on the nigerian Stock Exchange on December 3, 1990. the principal activities of the company include life, healthcare and general insurance, financing, asset management and micro–finance banking services.

2. resuLTs for The yeAr: the highlights of the company’s trading results for the year ended December 31, 2015.

Group Group Company Company 31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014

Profit/(loss) before taxation (896,961) 304,730 (116,707) 150,093 Minimum tax (63,532) (71,039) - - Income taxes (338,467) (94,151) (13,100) (31,606)

(Loss)/Profit after taxation (1,298,960) 139,540 (129,807) 118,487 other Comprehensive (Loss)/Income, net of tax (55,514) 23,392 (3) (138)

total comprehensive (loss)/income for the year (1,354,474) 162,932 (129,810) 118,349

total assets 26,525,242 26,028,973 8,889,570 8,809,478

Shareholders fund/total equity 7,426,236 8,883,617 6,518,890 6,751,607

3. REVIEWOFBUSINESSANDFUTUREPROSPECTS: the review of the company’s business and future prospects contained in the Group Managing

Director’s statement are an integral part of the Directors Report and should be read in conjunction with the Directors Report.

4. DIVIDEND:

4.1 the Directors will not be recommending to the members payment of dividend for the year ended December 31, 2015.

4.2 A list of shareholders who have either unclaimed dividends or share certificate have been compiled and are attached to this report. Shareholders who find their names on the lists and have claimed their dividend or share certificate since December 31, 2015 should kindly ignore the attached list. However, shareholders who are yet to claim their unclaimed dividend or share certificate should contact the Company Secretary or the Registrars, CardinalStone (Registrars) Limited.

5. DIRECTORS’INTERESTANDSHAREHOLDINg: A board of 10 (ten) directors determined the general strategy and policy of the company in the

year under review.

For the Year Ended 31 December 2015


5.1 the names of directors who served during the year were: Mr. K. E. odogwu - Group Chairman Chief A. I. Idigbe (SAn) - non-Executive Director Mr. D. Maegerle - non-Executive Director Chief u. okpa-obaji - non-Executive Director Mr. A. A. ojora - non-Executive Director Alhaji A. R. Mohammed - non-Executive Director Alhaji R. M. Gwarzo, oon - non-Executive Director Mr. C. Momoh - Indepedent Director (Resigned)* Mr. C. u. A. Mokwunye - Group Managing Director (Former)** Alhaji A. Muktari - Group Managing Director ***

* Resigned with effect from 7 October 2015 ** Resigned with effect from 31 December 2015*** Appointed as Group Managing Director with effect from June 14, 2016

5.2 the directors’ interests in the issued share capital of the Company as recorded in the Register of Members and in the Register of Directors’ Holdings and Contracts, as notified by them for the purposes of Section 276 and 277 of the Listing Requirements of the nigerian Stock Exchange, are as follows:

number number number of 50k of 50k of 50k ordinary ordinary ordinary Holdings Shares Holdings Shares Holdings Shares as at Held as at as at Held as at as at Held as at June 30, June 30, December 31, December 31, December 31, December 31, 2016 2016 2015 2015 2014 2014

number number number number number number Direct Indirect Direct Indirect Direct Indirect

* Mr. K. E. odogwu nil 2,013,119,834 nil 2,013,119,834 nil 2,013,119,834** Chief A. I. Idigbe (SAn) nil 1,350,276 nil 1,350,276 nil 1,350,276 Mr. D. Maegerle nil nil nil nil nil nil Chief u. okpa-obaji 645,468 nil 645,468 nil 645,468 nil Alhaji A. R. Mohammed nil nil nil nil nil nil**** Alhaji R. M. Gwarzo, oon 3,782,319 nil 3,782,319 nil 3,782,319 nil Mr. C.u.A Mokwunye 590,644 nil 590,644 nil 590,644 nil*** Mr. A. A. ojora 100,000 183,529,858 nil 183,529,858 nil 183,529,858 Alhaji A. Muktari 546,410 nil 546,410 nil 546,410 nil Mr. C. Momoh nil nil nil nil nil nil

Grand total 5,564,841 2,197,999,968 5,564,841 2,197,999,968 5,564,841 2,197,999,968

5.3 Board Changes Since the last annual general meeting:5.3.1 Mr. Charles Momoh resigned his appointment as Independent Director of the company with

effect from october 2015.

5.3.2 Mr. Chike Mokwunye proceeded on terminal leave from 31 December 2015 to disengage from the services of the company having completed his contract of employment as Group Managing Director.

5.3.3 Alhaji Auwalu Muktari was appointed Group Managing Director on June 14, 2016.

5.3.4 the Board of Directors further recommends to the members of the company that the appointment of Alhaji Auwalu Muktari as the Group Managing Director be approved.

5.3.5 In accordance with the Articles of Association, Mr. Kenneth odogwu and Alhaji Rabiu Muhamadu Gwarzo (oon) are the directors retiring by rotation. Mr. Kenneth odogwu and Alhaji Rabiu Muhamadu Gwarzo (oon) being eligible, offer themselves for re-election.

Report of the Directors contd.For the Year Ended 31 December 2015

* Mr. K. E. Odogwu represents the interest of Spennymoor Limited** Chief A. I. Idigbe (SAN) represents the interest of Punuka Investment Limited*** Mr. A. A. Ojora represents the interest of Phoenix Holdings Limited**** Alhaji R. M. Gwarzo, OON and Alhaji A. R. Mohammed represent the interest of Dantata Investments & Securities Company Limited



6. shAre CAPITAL AnD shArehoLDIng: the company did not purchase its own shares during the year.

6.1 Authorized Share Capital: the authorized share capital of the company is n5billion made up of 10,000,000,000 ordinary

shares of 50k each.

6.2 Called up, Issued and Fully Paid Share Capital:

6.2.1 the issued and paid-up share capital of the Company is currently n2,572,685,037 made up of 5,145,370,074 ordinary shares of 50k each.

no. of % no. of % no of % ordinary Holdings ordinary Holdings ordinary Holdings

Shares Held as at Shares Held as at Shares held as at as at June June as at December December as at December December 30, 2016 30, 2016 31, 2015 31, 2015 31, 2014 31, 2014

Spennymoor Limited, Jersey C.I: 2,013,119,834 39.12 2,013,119,834 39.12 2,013,119,834 39.12 Royal Exchange Assurance (u.K): 3,776 0.00 3,776 0.00 3,776 0.00 nigerian Government: 20,654,487 0.40 20,654,487 0.40 20,654,487 0.40 Dantata Investments & Securities Company Limited: 690,244,885 13.41 673,049,980 13.4 921,833,885 17.92 Chief (Dr.) S. I. odogwu, oFR 266,870,509 5.19 266,870,509 5.19 266,870,509 5.19 Helen and troy Holdings Limited/ Decanon Investment Limited (under Litigation - Suit no 261,058,784 5.07 261,058,784 5.07 261,058,784 5.07 FHCL/CS/547908) 159,388,632 3.10 159,388,632 3.10 159,388,632 3.10 Phoenix Holdings Limited: 183,529,858 3.57 183,529,858 3.57 183,529,858 3.57 other nigerian Citizens & Associations: 1,550,499,309 30.13 1,550,499,309 30.13 1,318,910,309 25.63

Grand total 5,145,370,074 100 5,145,370,074 100 5,145,370,074 100

the Company hereby declares that aside from the listed person(s) in the above schedule, no

other person(s) has 5% or more of the issued and fully paid share capital of the company.

6.3 Share Range Analysis as at December 31, 2015

Share Range Analysis no. of % of units % of as at December 31, 2015 Holders units Held Held units Held

1 - 500 964 6.318 230,548 0.0045 501 - 1,000 735 4.8171 556,777 0.0108 1,001 - 5,000 5118 33.5431 14,284,998 0.2776 5,001 - 10,000 2821 18.4887 19,677,469 0.3824 10,001 - 50,000 3707 24.2955 82,022,311 1.5941 50,001 - 100,000 791 5.1842 57,846,393 1.1242 100,001 - 500,000 810 5.3087 171,698,584 3.337 500,001 - 1,000,000 130 0.852 90,052,907 1.7502 1,000,001 - 5,000,000 133 0.8717 282,444,243 5.4893 5,000,001 - 10,000,000 27 0.177 181,487,034 3.5272 10,000,001 - 5,145,370,074 22 0.1442 4,245,068,810 82.5027

Grand total 15,258 100 5,145,370,074 100


7. reCorDs of DIreCTors ATTenDAnCe: Further to the provisions of Section 258 (2) of the Companies and Allied Matters Acts, Cap

C20Laws of the federation of nigeria 2004, the Record of Directors’ Attendance at the Board Meetings held in 2015 is available at the venue of annual general meeting and is contained in the Report on Corporate Governance.

8. PROPERTYANDEQUIPMENT: Information relating to property and equipment during the year is shown in note 18.

9. DonATIons: the Group made several donations in the sum of n4,290,000 (2014: n3,566,000) during the

year ended 31 December 2015 as analysed below.

Beneficiaries Amount

REPLC-HOLDINgCOMPANY Sponsorship of the leadership conference for Secondary School Prefects in Lagos State 2,210,000

regIC Donation towards World Sickle Cell Campaign 2,000,000 Donation for the 9th Speech and Prize Giving Day of Fountain Heights School 50,000 Donation to the nigerian Council of Registered Insurance Brokers 30,000

Total 4,290,000

10. EVENTSAFTERREPORTINgDATE: there were no significant events after reporting date, which could have had a material effect on

the financial statements for the year ended December 31, 2015 which have not been recognised and/or disclosed.

11. AgENTS,BROKERSANDINTERMEDIARIES: the group maintains a network of licensed agents, brokers as well as other intermediaries

throughout the country.

12. FIDUCIARYACTIVITIES the group acts as a custodian, trustee or in other fiduciary capacity, that results in its holding,

placing, or performing oversight functions over assets on behalf of its clients.

13. EMPLOYEES’DEVELOPMENT:

13.1 Employmentofphysicallychallengedpersons: It is the policy of the Group that there be no discrimination in the consideration of all applications

for employment, including physically challenged persons.

All employees whether physically challenged or not, are given equal opportunities to develop their expertise and knowledge and qualify for promotion in furtherance of their careers. In the event of members of staff becoming physically challenged, every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that training, career development and promotion of physically challenged persons should, as far as possible, be identical with that of other employees.

13.2 Healthandsafetyatworkandwelfareofemployees: the Group is concerned about the health, safety and welfare of its employees. therefore the

Group, through its subsidiary, Royal Exchange Healthcare Limited provides health insurance for all group staff.



13.3Employees’involvementandconsultation: the Group’s consultation machinery was fully utilized in the year to disseminate management

policies and encourage employee involvement in its affairs.

Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.

Circulars and newsletters on significant corporate issues are published. In order to facilitate the exchange of information, a house journal titled “Royal news” is published featuring contributions from and about employees of the Group.

13.4Training: the Group recognizes that the acquisition of knowledge is ongoing. the Group also recognizes

that to foster commitment, its employees need to hone their awareness of factors economic, financial or otherwise, that affect the Group. to this end, the Group, in the execution of its training programs, encourages and provides the opportunity for its staff to develop and enhance their skills awareness and horizons.

14. AUDITCOMMITTEE: the members of the statutory Audit Committee appointed at the annual general meeting held on

July 30, 2015, in accordance with S359 (3) of the Companies and Allied Matters Decree Cap C20, Laws of the Federation of nigeria 2004, were:

A. Alhaja A. S. Kudaisi B. Mr. t. olawuyi C. Mr. B. Akinsolu D. Chief u. okpa-obaji E. Alhaji A. R. Mohammed F. Mr. A. A. ojora

the committee met in accordance with the provisions of S 359 of the Companies and Allied Matters Act, Cap C20, Laws of Federation of nigeria 2004 and will present their report.

15. SHAREHOLDERSINFORMATION Build up of Share capital history

1. Share CapItal hIStorY

YEAR SHARE CAPItAL MoDE oF ACQuISItIon

1990 21,600,000 InItIAL SHARE CAPItAL 1991 27,000,000 BonuS 1991 5,400,000 SHARES 1992 33,750,000 BonuS 1992 6,750,000 SHARES 1995 50,625,000 BonuS 1995 16,875,000 SHARES 1996 75,937,500 BonuS 1996 25,312,500 SHARES 1997 227,812,500 RIGHt oFFER 151,875,000 SHARES 2000 341,718,750 BonuS 2000 113,906,250 SHARES 2001 512,578,125 BonuS 2001 170,859,375 SHARES 2003 683,437,500 RIGHtS oFFER 170,859,375 SHARES 2003 854,296,875 BonuS 2003 170,859,375 SHARES 2004 1,067,871,094 BonuS 2004 213,574,218 SHARES 2005 1,601,806,641 BonuS 2005 533,935,547 SHARES 2006 2,818,608,785 RIGHtS oFFER 1,216,802,144 SHARES 2007 3,359,898,835 SCHEME SHARES 541,290,050 SHARES 2008 3,695,888,719 BonuS 2008 335,989,884 SHARES 2009 4,065,477,591 BonuS 2009 369,588,872 SHARES 2010 4,573,662,289 BonuS 2010 508,184,698 SHARES 2011 5,145,370,074 BonuS 2011 571,707,786 SHARES



2. boNUS hIStorY

YEAR BonuS ISSuES

1991 5,400,000 1992 6,750,000 1995 16,875,000 1996 25,312,500 2000 113,906,250 2001 170,859,375 2003 170,859,375 2004 213,574,218 2005 533,935,547 2008 335,989,884 2009 369,588,872 2010 508,184,698 2011 571,707,786

totAL BonuS 3,042,943,505

5. StrateGIC ShareholDerS

unItS %unItS

SPEnnYMooR LtD 2,013,119,834 39.1249 RoYAL ExCHAnGE ASSuRAnCE (uK) 3,776 0.0001 nIGERIAn GoVERnMEnt 20,654,487 0.4014 DAntAtA InVEStMEnt & SECuRItIES Co. LtD 690,244,885 13.4149 CHIEF (DR) SunnY DIKE oDoGWu (oFR) 266,870,509 5.1866 HELEn AnD tRoY HoLDInGS LIMItED/ 261,058,784 5.0737 DE-CAnon InVEStMEnt LIMItED (unDER LItIGAtIon) 159,388,632 3.0977 PHoEnIx HoLDInGS LIMItED 183,529,858 3.5669 3,594,870,765 69.8661 FREE FLoAt 1,550,499,309 30.1339

PAID uP CAPItAL 5,145,370,074 100.0000

16. AuDITors: the External Auditors, Messers KPMG have indicated their willingness to continue in office in

accordance with section 357(2) of the Companies and Allied Matters Act 2004, Cap 20. A resolution will be proposed authorising the Directors to fix their remuneration.

17. COMPLIANCEWITHTHECODEOFBESTPRACTICESONCORPORATEgOVERNANCE the Directors confirm that they have reviewed the structure and activities of the Group in view of

the Code of Best Practices on Corporate Governance in nigeria published in February, 2009. the Directors confirm that the Group has substantially complied with the provisions of the Code of Best Practices on Corporate Governance with regards to matters stated therein concerning the Board of Directors, the Shareholders and the Audit Committee.

By orDer of The BoArD

SHEILAIFEYINWAEzEUKOCoMPAnY SECREtARY/GM (LEGAL SERVICES)FRC/2013/nBA/00000004059

LAGoS, nIGERIA15 June 2016

3. SUMMarY

InItIAL SHARE CAPItAL 21,600,000 BonuS ISSuES 3,042,943,505 RIGHtS ISSuES 1,539,536,519 SCHEME SHARES 541,290,050 PAID uP CAPItAL 5,145,370,074

4. rIGhtS ISSUeS

YEAR RIGHtS ISSuE

1997 151,875,000 2003 170,859,375 2006 1,216,802,144

totAL RIGHtS 1,539,536,519



the directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters Act of nigeria and the Financial Reporting Council of nigeria Act. the directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of nigeria and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. the directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead.

SIGnED on BEHALF oF tHE BoARD oF DIRECtoRS:

KEnnEtH oDoGWu ALH AuWALu MuKtARI (Chairman) (Group Managing Director)(FRC/2013/nBA/00000004195) (FRC/2013/IoDn/00000004058)15 June 2016 15 June 2016

StateMeNt of DIRECtoRS’ RESPonSIBILItIES In RELAtIon to tHE FInAnCIAL StAtEMEntS



In compliance with Section 359 (6) of the Companies and Allied Matters Act Cap C20 Laws of the Federation of nigeria 2004, (“the Act”) WE, the Members of the Audit Committee have reviewed and considered the financial statements of the Company for the year ended December 31, 2015 and the reports thereon and confirm as follows:

a) the accounting and reporting policies of the company are in accordance with legal requirements and agreed ethical practices.

b) the scope and planning of audit requirement were, in our opinion, adequate.

c) We have reviewed the findings on management matters, in conjunction with the external auditors and are satisfied with the response of management thereon.

d) the company’s systems of accounting and internal controls were adequate.

e) We have made the recommendation required to be made in respect of the auditors.

DAtED tHIS June 15, 2016

ALHAJAA.KUDAISIFRC/2013/IoDn00000004197CHAIRMAn oF tHE AuDIt CoMMIttEE

OTHERMEMBERSMR. t. oLAWuYIMR. A. BEKunMICHIEF u. oKPA-oBAJIALHAJI A. R. MoHAMMEDMR. A. A. oJoRA

report of tHE AuDIt CoMMIttEEFor the Year Ended 31 December 2015

fINaNCIal StAtEMEntS


INDepeNDeNt AuDItoR’S REPoRtto the Members of RoyalExchangePlc

report on the financial StatementsWe have audited the accompanying financial statements of RoyalExchangePlc (“the Company”) and its subsidiary companies (together “the Group”), which comprise the consolidated and separate statements of financial position as at 31 December 2015, and the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity, and the consolidated and separate statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 56 to 166.

Directors’ Responsibility for the Financial Statementsthe Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of nigeria and the Financial Reporting Council Act of nigeria, 2011, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s 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 auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view 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 the 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.

KpMG professional Services telephone 234 (1) 271 8955 KPMG tower 234 (1) 271 8599Bishop Aboyade Cole Street Internet www.kpmg.com/ngVictoria IslandPMB 40014, FalomoLagos

KPMG Professional Services, a Partnership established under Abayomi D. Sanni Adebisi o. Lamikanra Adekunle A. Elebute Adetola P. Adeyeminigeria law, is a member of KPMG International Cooperative Adewale K. Ajayi Ajibola o. olomola Ayodele A. Soyinka Ayodele H. othihiwa(“KPMG International”), a swiss entity. All rights reserved. Ayo I. Salami Chibuzor n. Anyanechi Goodluck C. obi Ibitomi M. Adepoju Joseph o. tegbe Kabir o. okunola Mohammed M. Adama oladapo R. okubadejoRegistered in nigeria no Bn 986925 oladimeji I. Salaudeen olanike I. James olumide o. olayinka olusegun A. Sowande oluseyi t. Bickersteth olufemi o. Awotoye oluwatoyin A. Gbagi tayo I. ogungbenro Victor u. onyenkpa


OpinionIn our opinion, these financial statements give a true and fair view of the financial position of RoyalExchangePlc (“the Company”) and its subsidiaries (together “the Group”) as at 31 December 2015, and of the Group and Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of nigeria and the Financial Reporting Council of nigeria Act, 2011.

report on other legal and regulatory requirements

Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of Nigeria

In our opinion, proper books of account have been kept by the Company, so far as appears from our examiniation of those books and the Company’s statement of financial position and the statement of profit or loss and other comprehensive income are in agreement with the books of account.

Signed:

AdetolaP.AdeyemiFRC/2012/ICAn/00000000620For: KPMG Professional Services Chartered Accountants27 June 2016Lagos, nigeria


CoNSolIDateD AnD SEPARAtE StAtEMEntS oF FInAnCIAL PoSItIonFor the Year Ended 31 December 2015

Restated* Restated* Restated* Restated* Group Group Group Company Company CompanyIn thousands of Naira Note 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

ASSETSCash and cash equivalents 6 7,035,842 6,635,540 1,810,882 105,452 49,606 35,595 Loans and advances to customers 7 1,278,434 1,083,876 812,571 - - - Advances under finance lease 8 123,269 102,980 218,585 - - - Investment securities 9 3,448,883 4,024,087 3,558,965 17,935 - - Investment in subsidiaries 10 - - - 8,660,464 8,660,464 7,620,464 Trade receivables 11 528,399 319,428 421,637 - - - Reinsurance assets 12 1,889,750 1,916,261 2,044,041 - - - Deferred acqusition cost 13 382,490 366,892 469,160 - - -Other receivables and prepayments 14 387,396 476,235 483,625 79,119 81,920 77,984 Investment in associates 15 274,088 295,250 213,694 - - - Investment properties 16 6,807,743 7,722,739 7,092,569 - - - Property and equipment 18 2,219,584 1,673,178 1,690,707 26,600 17,488 16,852 Intangible assets 19 39,088 46,863 37,418 - - - Employees retirement benefit asset (net) 20(a) 154,016 170,199 166,963 - - - Statutory deposits 21 555,000 555,00 555,000 - - - Deferred tax assets 22 427,621 640,445 699,334 - - - Assets classifed as held for sale 17 973,639 - - - - -

Total assets 26,525,242 26,028,973 20,275,151 8,889,570 8,809,478 7,750,895

LIABILITIESBorrowings 30 1,020,083 1,051,959 52,554 872,257 1,106,011 116,849 Deferred Income 23 122,169 102,234 84,797 - - - Trade payables 24 5,387,629 5,151,843 528,509 - - - Other liabilities 25 1,469,737 1,233,863 1,170,182 1,199,985 672,377 388,482 Depositors’ funds 26 1,196,324 1,032,616 595,449 - - - Insurance contract Liabilities 27 8,263,204 7,094,226 6,973,096 - - - Investment contract Liabilities 28 336,271 257,963 599,106 - - - Dividend payable - - 80,525 - - 80,525 Current income tax liabilities 29 488,713 502,951 494,388 255,109 255,109 254,373 Employees retirement benefit liability 20 570,008 545,206 550,660 43,329 24,374 20,139 Deferred tax liabilities 22 244,868 172,495 167,931 - - -

Total liabilities 19,099,006 17,145,356 11,297,197 2,370,680 2,057,871 860,368

EQUITYShare capital 31 2,572,685 2,572,685 2,572,685 2,572,685 2,572,685 2,572,685 Share premium 32 2,690,936 2,690,936 2,690,936 2,690,936 2,690,936 2,690,936 Contingency reserve 33 1,422,919 1,176,375 947,734 - - - Treasury shares 34 (500,000) (500,000) (500,000) - - - Retained earnings 35 834,374 2,657,434 3,045,281 1,254,849 1,487,563 1,626,345 Other component of equity 36 405,322 286,187 221,318 420 423 561

Total equity 7,426,236 8,883,617 8,977,954 6,518,890 6,751,607 6,890,527

Total equity & liabilities 26,525,242 26,028,973 20,275,151 8,889,570 8,809,478 7,750,895

*See note 4

The financial statements was approved by the board of directors on 15 June 2016 and signed on its behalf by:

Kenneth Odogwu Auwalu Muktari Francis OkoliChairman Group Managing Director Chief Financial Officer(FRC/2013/NBA/00000004195) (FRC/2013/IODN/00000004058) (FRCN/2013/ICAN/00000002399)

The statement of significant accounting policies and the accompanying notes form an integral part of these financial statements.


CoNSolIDateD AnD SEPARAtE StAtEMEnt oF PRoFIt oR LoSS AnD otHER CoMPREHEnSIVE InCoME


Restated* Restated* Group Group Company Company In thousands of Naira Note 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Gross premium written: 10,790,628 9,425,451 - -Unearned premium 18,548 442,746 - -

Gross premium income 10,809,176 9,868,197 - -

Reinsurance expenses 37 (2,724,325) (2,501,571) - -

Net premium income 8,084,851 7,366,626 - -

Fees and commission income 38 330,561 412,693 - -

Net underwriting income 8,415,412 7,779,319 - -

Insurance claims and benefits incurred 39 (4,040,292) (3,016,698) - -Insurance claims and benefits incurred - recoverable from reinsurers 40 1,000,936 589,203 - -

Net claims expenses (3,039,356) (2,427,495) - -Changes in insurance contract liabilities (1,162,291) (290,888)Underwriting expenses 41 (2,644,148) (2,738,239) - -

Total underwriting expenses (6,845,795) (5,456,622) - -

Underwriting profit 1,569,617 2,322,697 - -

Net Interest Income/(expense) 42 101,725 206,929 (142,087) (11,349)Investment and other income 43 399,596 535,948 131,000 299,960 Share of loss on investment in associate 15(a) (36,628) (17,031) - - Net fair value gain on financial assets 44 327,550 45,354 6,385 -Charge of impairment allowance 45 (357,535) (118,198) (2,289) -Other operating income 46 316,629 381,539 230,660 261,243Foreign exchange gains 47 56,455 34,567 - -

Net Income 2,377,409 3,391,805 223,669 549,855

Management expenses 48 (3,274,370) (3,087,075) (340,376) (399,761)

Total expenses (3,274,370) (3,087,075) (340,376) (399,761)

(Loss)/profit before tax (896,961) 304,730 (116,707) 150,093Minimum tax 29(a) (63,532) (71,039) - -Income tax expense 29(a) (338,467) (94,151) (13,100) (31,606)

(Loss)/profit after taxation (1,298,960) 139,540 (129,807) 118,487

Other comprehensive (loss)/income, net of taxItems that will never be reclassified subsequently to profit or loss: Net actuarial losses of defined benefit obligations 20.1( c) (75,145) (12,179) (3) (138)Tax effects on other comprehensive (loss)/income 20.1( c) 7,413 (21,761) - -Items that are or may be reclassified subsequently to profit or loss: Changes in fair value of AFS investments 12,218 57,332 - -

Total other comprehensive (loss)/income, net of tax (55,514) 23,392 (3) (138)

Total comprehensive (loss)/income for the period (1,354,474) 162,932 (129,810) 118,349

Total comprehensive income attributable to shareholders (1,354,474) 162,932 (129,810) 118,349

(Loss)/earnings per share - Basic and diluted (kobo) 49 (25) 3 (3) 2

*See note 4

The statement of significant accounting policies and the accompanying notes form an integral part of these financial statements.


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rosp

ect r

esta

tem

ent (

see

note

4)

(5

0,91

2)

(5

0,91

2)

As re

stat

ed

2,5

72,6

85

2,6

90,93

6

947

,734

3

,045

,281

(500

,000

) 8

2,103

14

3,425

(4

,210)

2

21,3

18

8,97

7,954

Profi

t for

the

year

-

-

-

13

9,540

-

-

-

-

-

13

9,540

Tr

ansf

er to

Con

tinge

ncy

rese

rve

-

-

228

,641

(2

28,6

41)

-

-

-

-

-

-

Tran

sfer

to re

gula

tory

rese

rve

-

-

-

(41,4

77)

-

41,4

77

-

-

41,4

77

-

Othe

r com

preh

ensiv

e in

com

e/(lo

ss):

Chan

ges i

n fa

ir va

lue

of A

FS in

vest

men

ts

-

-

-

-

-

-

-

57,3

32

57,3

32

57,3

32

Net a

ctua

rial l

osse

s -

-

-

-

-

-

(1

2,179

) -

(1

2,179

) (1

2,179

)Ta

x Ef

fect

s on

othe

r com

preh

ensiv

e in

com

e/(lo

ss)

-

-

-

-

-

-

(21,7

61)

-

(21,7

61)

(21,7

61)

Tota

l com

preh

ensiv

e in

com

e/(lo

ss)

-

-

228

,641

(1

30,5

78)

-

41,4

77

(33,9

40)

57,3

32

64,

869

16

2,932

Tran

sact

ions

with

in e

quity

:

Divi

dend

pai

d

-

-

-

(257

,269)

-

-

-

-

-

(2

57,26

9)

As a

t 31 D

ecem

ber 2

014

2,572

,685

2

,690

,936

1,

176,

375

2

,657

,434

(5

00,0

00)

123,5

80

109,4

85

53,1

22

286

,187

8

,883

,617


Sta

te

Me

Nt

of

CH

An

GES

In E

Qu

ItY

as a

t 31 D

ecem

ber 2

015

Com

pany

Othe

r Com

pone

nt o

f Equ

ity

Sh

are

Shar

e Re

tain

ed

Actu

aria

l Ot

her

Equi

ty

Non-

To

tal

In th

ousa

nds o

f Nai

ra

Capi

tal

Prem

ium

Ea

rnin

gs

Gain

/Los

s Co

mpo

nent

at

trib

utab

le

cont

rolli

ng

Equi

ty

Rese

rve

of E

quity

to

Par

ent’s

In

tere

sts

(Tot

al)

Shar

ehol

ders

As a

t 1 J

anua

ry 2

015

2,5

72,6

85

2,6

90,93

6

1,48

7,563

4

23

423

6

,751,6

07

-

6,75

1,607

Loss

for t

he y

ear

-

-

(129

,807

) -

-

(1

29,8

07)

-

(129

,807

)Ot

her c

ompr

ehen

sive

loss

Net a

ctua

rial l

osse

s -

-

-

(3

) (3

) (3

) -

(3

)

Tota

l com

preh

ensiv

e in

com

e -

-

(1

29,8

07)

(3)

(3)

(129

,810

) -

(1

29,8

10)

Tran

sact

ion

with

in e

quity

:

Divi

dend

pai

d

-

-

(102

,907)

-

-

(1

02,90

7)

-

(102

,907)

As a

t 31 D

ecem

ber 2

015

2,5

72,6

85

2,6

90,93

6

1,25

4,84

9

420

4

20

6,5

18,8

90

-

6,5

18,8

90

Com

pany

Oth

er C

ompo

nent

of E

quity

Shar

e Sh

are

Reta

ined

Ac

tuar

ial

Othe

r Eq

uity

No

n-

Tota

l

In th

ousa

nds o

f Nai

ra

Capi

tal

Prem

ium

Ea

rnin

gs

Gain

/Los

s Co

mpo

nent

at

trib

utab

le

cont

rolli

ng

Equi

ty

Rese

rve

of E

quity

to

Par

ent’s

In

tere

sts

(Tot

al)

Shar

ehol

ders

As a

t 1 J

anua

ry 2

014

2,5

72,6

85

2,6

90,93

6

1,67

7,257

5

61

561

6

,941,4

39

-

6,94

1,439

Im

pact

of r

etro

spec

t res

tate

men

t (se

e no

te 4

)

(5

0,91

2)

(50,

912)

(50,

912)

2,572

,685

2

,690

,936

1,

626,

345

5

61

561

6

,890

,527

-

6

,890

,527

Pr

ofit f

or th

e ye

ar

-

-

118,

487

-

-

11

8,48

7

-

118,

487

Othe

r com

preh

ensiv

e lo

ssNe

t act

uaria

l los

ses

-

-

-

(138

) (1

38)

(138

) -

(1

38)

Tota

l com

preh

ensiv

e in

com

e/(lo

ss)

-

-

118,

487

(1

38)

(138

) 11

8,34

9

-

118,

349

Tran

sact

ions

with

in e

quity

:

Divi

dend

pai

d

-

-

(257

,269)

-

-

(2

57,26

9)

-

(257

,269)

As a

t 31 D

ecem

ber 2

014

2,5

72,6

85

2,6

90,93

6

1,48

7,563

4

23

423

6

,751,6

07

-

6,75

1,607


CoNSolIDateD StAtEMEnt oF CASH FLoWSFor the Year Ended 31 December 2015

Restated* Restated* Group Group Company Company In thousands of Naira Notes 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Profit for the year (1,298,960) 139,540 (129,807) 118,487 Add: Minimum tax 29(a) 63,532 71,039 - - Add: Income taxes 29(a) 338,467 94,151 13,100 31,606

Profit before taxes (896,961) 304,730 (116,707) 150,093 Adjustments for:Impairment allowance on loans and advances to customers 45 48,516 6,561 - - Impairment allowance on advance under finance lease 45 1,936 1,200 Write back of impairment on advance under finance lease 45 (26,737) - - - Impairment allowance on investment securities 45 1,974 - - - Impairment allowance on premium receivables 45 302,079 90,928 - - Write back of impairment on premium receivables 45 (1,260) (8,837) - - Impairment allowance on reinsurance receivables 45 15,272 11,123 - - Impairment allowance on other receivables 45 24,610 34,461 2,289 - Write back of impairment on other receivables 45 (8,855) (17,238) - - Fair value gain on investment properties 44 (600,530) (584,315) - - Depreciation on property and equipment 18 255,789 262,358 9,760 8,883 Amortization of intangible assets 19 9,785 14,354 - - Loss/(Profit) on disposal of property and equipment 46 7,233 (7,201) - - Dividend from investment in subsidiaries 43 - - (131,000) (299,960)Dividend income on equity investments (AFS &FVTPL) 43 (105,252) (191,062) - - Rental income 46 (71,352) (104,618) - - Interest income 46 (391,830) (317,125) - - Interest expense on borrowings 42 148,112 - 145,787 - Interest expense on depositors funds 42 141,993 122,632 - - Foreign exchange (gains)/losses 47 (56,455) (34,567) - - Fair value (loss)/gain on FVTPL financial assets 44 272,980 538,961 (6,385) -

(928,953) 122,345 (96,256) (140,984)

Changes in working capital:Loans and advances to customers 51(viii) 32,532 (277,866) - - Advance under lease 51(ix) 7,565 114,405 - - Trade receivables 51(iii) (525,062) 20,118 - - Re-insurance asset 51(iv) 26,511 116,657 - - Deferred acquisition cost (15,598) 102,268 - - Other receivables and prepayment 51(ii) 40,410 (19,343) 512 (3,946)Deferred income 19,935 17,437 - - Trade and other payables 235,786 4,623,334 - - Other liabilities 195,178 3,276 475,362 258,722 Depositors’ funds 75,013 314,535 - - Investment contract liabilities 78,308 (341,143) - - Changes in unearned premium 51(vii) (7,282) (442,746) - - Changes in provision for outstanding claims 51(vi) 1,176,261 563,876 - - Changes in employee retirement benefits 51(i) 87,209 102,653 22,143 5,475

497,813 5,019,806 401,761 119,267

Income tax paid 28(b) (104,887) (84,939) - (874)Contribution to employees retirement benefits 18(d) (11,170) (26,722) - - Employee benefits paid 51(i) (110,199) (96,800) (3,191) (1,378)

Net cash provided by operating activities 271,557 4,811,345 398,570 117,015

Cash flows from investing activities: Purchases of property and equipment 18 (292,772) (237,204) (18,872) (9,520)Purchases of intangible assets 19 (2,010) (23,799) - - Purchase of investment properties 16 - (45,855) - - Proceed from disposal of property and equipment 25,230 9,087 - - Proceed from redemption/disposal of investment securities 51(v) 809,177 680,794 - - Additional investment in associates 15(a) (30,000) (96,908) - - Additional investment in subsidiary - - - (1,040,000)Net purchase of investment securities (496,709) (1,629,224) - - Dividend received 15(a) 136,262 191,062 117,900 269,964 Rent received 73,016 104,618 - - Interest received 46 113,171 317,125 - - Dividend received from associate 15(a) 14,534 - - - Share of loss/(profit) of associate 15(a) 36,628 17,031 - -

Net cash provided by investing activities 386,527 (713,273) 99,028 (779,556)

Cash flows from financing activities:Repayment of borrowings (364,237) 1,001,151 (379,541) 1,001,151 Proceeds from new borrowings 184,249 - - - Unclaimed dividend received 42,847 13,195 42,847 13,195 Unclaimed dividend paid (2,151) - (2,151) - Dividend paid (102,907) (337,794) (102,907) (337,794)

Net cash (used)/provided in financing activities (242,199) 676,552 (441,752) 676,552

Cash and cash equivalent at beginning of year 6,619,958 1,810,768 49,606 35,595 Effect of exchange rate fluctuatons on cash and cash equivalents - 34,566 - - Net increase in cash and cash equivalent 415,885 4,774,624 55,846 14,011

Cash and cash equivalent at end of year 50 7,035,843 6,619,958 105,452 49,606

*See note 4


1 Reporting Entity The Company was incorporated as Royal Exchange Assurance (Nigeria) Plc, a private limited liability Company on 29 December 1969. It

was converted to a public limited Company on 15 July 1989 and then listed on the Nigerian Stock Exchange on 3 December 1990. On 28 July 2008, the Company changed its name to Royal Exchange Plc and transferred its general and life insurance businesses to newly incorporated subsidiaries, Royal Exchange General Insurance Company Limited and Royal Exchange Prudential Life Plc respectively.

The Group currently comprises Royal Exchange Plc (Parent Entity), Royal Exchange General Insurance Company Limited, Royal Exchange Prudential Life Assurance Plc, Royal Exchange Finance and Asset Management Ltd, Royal Exchange Micro-Finance Bank Limited and Royal Exchange Healthcare Limited.

The principal activities of the Group are general and health insurance, life assurance, asset management, credit financing and microfinance banking.

The financial statements of the Group are as at and for the year ended 31 December 2015.

The registered office address of the Group is New Africa House, 31, Marina, Lagos, Nigeria.

2 Basis of preparation(a) Statement of compliance with International Financial Reporting Standards These financial statements are the Company’s separate and consolidated financial statements of the Company, and its subsidiaries

(together, “the Group”).The Group’s consolidated financial statements for the year ended 31 December 2015 have been prepared in accordance with, and comply with the, International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The financial statements comply with the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011, the Insurance Act of Nigeria 2003 and relevant National Insurance Commission of Nigeria ( “NAICOM”) circulars.

The financial statements include the statement of financial position, statement of profit or loss and other comprehensive income, the statement of cash flows, the statement of changes in equity and the notes to the account.

(b) Functional and presentation currency The financial statement is presented in Naira, which is the group’s functional currency. Financial information presented in Naira has

been rounded to the nearest thousands except where otherwise indicated.

(c) Basis of measurement These consolidated and seperate financial statements have been prepared on a historical cost basis except for the following items:

(i) Carried at fair value: •financialinstrumentsatfairvaluethroughprofitorloss; •available-for-saleinvestmentsecurities; •investmentproperties; •planassetsfordefinedbenefitsobligations

(ii) Carried at amortised cost: •loansandreceivables; •heldtomaturityfinancialinstruments; •financialliabilitiesatamortisedcost.

(ii) Carried at a different measurement basis •Retirementbenefitobligationsaremeasuredintermsoftheprojectedunitcreditmethod; •Insurancecontractliabilitiesaremeasuredusingagrosspremiumvaluationapproachforindivdualandgroupliferiskbusinesswhile

discounted cashflows approach are used for measuring annuity and the risk reserve for individual deposit based businesses.

(d) Reporting period These consolidated and seperate financial statements have been prepared for a 12 month period.

NoteS to the ConSoLIDAtED FInAnCIAL StAtEMEntFor the Year Ended 31 December 2015


(e) Use of estimates and judgment In preparing these financial statements in conformity with the International Financial Reporting Standards (IFRS) which requires

the use of certain critical accounting estimates,management hasmade judgements, estimates and assumptions that affect theapplication of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

Informationaboutsignificantareasofestimationuncertaintiesandcriticaljudgementsinapplyingaccountingpoliciesthathavethemost significant effect on the amounts recognised in the financial statements are disclosed in Note 5.

(f) Changes in accounting policies The accounting policies adopted in the preparation of the Company’s financial statements are consistent with those followed in the

preparation of the financial statements for the year ended 31 December 2015, except for changes/amendments highlighted below:

Standards, amendments and interpretations effective during the reporting period Amendments to IAS 19 and the improvement cycles 2010 - 2012 and 2011 - 2013 which became effective in the reporting period from 1st

January 2015 do not have any material impact on the accounting policies, financial position or performance of the Company.

(g) Standards, amendments and interpretations issued but not yet effective A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2016, and have

not been applied in preparing these financial statements. The Company does not plan to adopt these standards early.

(i) Effective for the financial year commencing 1 January 2016(a) Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) The amendments require business combination accounting to be applied to acquisitions of interests in a joint operation that

constitutes a business.

Businesscombinationaccountingalsoappliestotheacquisitionofadditionalinterestsinajointoperationwhilethejointoperatorretainsjointcontrol.Theadditionalinterestacquiredwillbemeasuredatfairvalue.Thepreviouslyheldinterestinthejointoperationwill not be remeasured. As a consequence of these amendments, the company will end its accounting policy with effect from 1 January 2016foracquisitionsofinterestsinajointoperation.

The amendments which will apply prospectively has no impact on the financial statements of statements of the Company.

(b) Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) The amendments to IAS 16 Property, Plant and Equipment explicitly state that revenue-based methods of depreciation cannot be used

for Property, Plant and equipment.

The amendments to IAS 38 Intangible Assets introduce a rebuttable presumption that the use of revenue-based amortisation methods for intangible assets is inappropriate.

The presumption can be overcome only when revenue and the consumption of the economic benefits of the intangible asset are ‘highlycorrelated;orwhentheintangibleassetisexpressedasameasureofrevenue.

The company does not apply the revenue based amortisation method for it’s intangible assets. Therefore, this amendment has no impact on the Company.

(c) Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) The amendments to IAS 16 and IAS 41 include bearer plants in the scope of IAS 16 Property, Plant and Equipment, because their

operation is similar to that of manufacturing. Agriculture requires all biological assets related to agricultural activity to be measured at fair value less costs to sell.

The amendments have no impact on the Company as there are no agriculture assets owned by the Company or plans to invest in agriculture.

notes to the Consolidated Financial Statement contd.For the Year Ended 31 December 2015


(d) Equity Method in Separate Financial Statements (Amendments to IAS 27) The amendments allow an entity to apply the equity method in its separate financial statements to account for its investments in

subsidiaries,associateandjointventures.

The ammendments apply retrospectively. The ammendment is not expected to have any significant impact on the Company.

(e) Sale or Contribution of Assets between an Investor and its associate or Joint Venture (Amendments to IFRS 10 and IAS 28) The amendments require the full gain to be recognised when assets transferred between an investor and its associate or Joint Venture

meet the definition of a ‘business’ under IFRS 3 Business Combinations. Where the assets transferred do not meet the definition of business,apartialgaintotheextentofunrelatedinvestors’interestsintheassociateorjointventureisrecognised.Thedefinitionofa business is key to determining the extent of the gain to be recognised.

The amendments apply prospectively. The ammendment is not expected to have any significant impact on the Company.

(f) Disclosure Initiative (Amendments to IAS 1) The amendments provide additional guidance on the application of materiality and aggregation when preparing financial statements.

The amendments also clarify presentation principles applicable to the order of notes, subtotals presented in the statement of finacial position, and the statement of profit or loss and other comprehensive income.

The Company will adopt amendments in the year ending 31 December 2016

(g) Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 12 and IAS 28) The amendment to IFRS 12 Disclosure of Interest in Other Entities requires an entity that prepares financial statements in which all

its subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 to make disclosures required by IFRS 12 relating to investment entities

The amendment to IAS 28 Investment in Associates and Joint Ventures modifies the conditions where an entity need not apply the equitymethodtoitsinvestmentsinassociatesorjointventurestoalignthesetotheamendedIFRS10conditionsfornotpresentingconsolidated financial statements.The amendments introduce relief when applying the equity method which permits a non-investor in anassociateorjointventurethatisaninvestmententitytoretainthefairvaluethroughprofitorlossmeasurementappliedbytheassociateorjointventuretoitssubsidiaries.

The amendments apply retrospectively. The ammendment is not expected to have any significant impact on the Company.

(ii) Effective for the financial year commencing 1 January 2018(a) IFRS 15 Revenue from contracts with customers This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements

for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue-Barter of Transactions involving Advertising Services.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.

This new standard will most likely have a significant impact on the Group, which will include a possible change in the timing of when revenue is recognised and the amount of revenue recognised. The group is currently in the process of performing more detailed assessment of the impact of this standard on the group.

The standard is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. The group will adopt the amendments for the year ending 31 December 2018.

(b) IFRS 9 Financial Instruments On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes

theIASB’sprojecttoreplaceIAS39FinancialInstruments:RecognitionandMeasurement.



This standard will have a significant impact on the company, which will include changes in the measurement bases of the Company’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expected credit loss” model which is expected to increase the provision of bad debts recognised in the Company. The Company is currently in the process of performing more detailed assessment of the impact of this standard on the Company.

The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective application, early adoption is permitted. The Company will adopt the amendments for the year ending 31 December 2018.

(iii) Effective for the financial year commencing 1 January 2019(a) IFRS 16 Leases This standard replaces IAS 17 Leases

The standard fundamentally changes the accounting treatment of leases by lessee. It eliminates the current dual accounting model for lesses, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on- balance sheet accounting model that is similar to current finance lease accounting under which the lessor recognizes all majorleasesonbalancesheet.Lessoraccountingremainssimilartocurrentpractice.

At commencement of lease period, the lessee will calculate the present value of the lease payments using the interest rate implicit in the lease. The lessee measures the right-of-use of the assets at cost less accumulated depreciation and accumulated impairment losses(ifany).Thelesseewillalsoadjusttheright-to-useassetforanyremeasurementdifferencesintheleaseliability.Thecostincludes the lease liability, initial direct costs, prepaid lease payments, estimated costs to dismantle, remove or restore the asset less any lease incentive received.

Ateachreportingdate,acompanyisexpectedtoreassessitskeyjudgementsregardingitsleaseagreements.

The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted for companies that also adopt IFRS 15. The Company will adopt the amendments for the year ending 31 December 2018.

Based on preliminary assessment of the Group or Company, the new accounting policies are not expected to have signifcant impact on the financial statements, except for possibly IFRS 9 and IFRS 15.

3 Summary of significant accounting policies Except for the changes explained in Note 2(f) above, the Group consistently applied the following accounting policies to the periods

presented in the financial statements.

(a) Basis of consolidation (i) Business combination The Group applies IFRS 3 Business Combinations in accounting for business combinations. Business combinations are accounted

for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on bargain purchase is recognised in profit or loss immediately.

The Group measures goodwill at the acquisition date as the total of: -thefairvalueoftheconsiderationtransferred,whichisgenerallymeasuredatfairvalue;plus -therecognizedamountofanynon-controllinginterestsintheacquiree;plusifthebusinesscombinationisachievedinstages,the

fairvalueoftheexistingequityinterestintheacquiree;less - the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses.The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.



Transactions costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees(acquiree’s awards) and relate to past services , then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.

(ii) Non-controllling interest Non controlling interest are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Changes in the Groups’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(iii) Subsidiaries Subsidiaries are investees controlled by the Group. The Group ‘ controls’ an investee if it is exposed to, or has rights to, variable returns

from its involvement with investee and has the ability to affect those returns through its power over the investee. The Group financial statementsincorporatestheassets, liabilitiesandresultsof;RoyalExchangeGeneralInsuranceCompanyLimited,RoyalExchangePrudential Life Plc, Royal Exchange Microfinance Bank, Royal Exchange Healthcare Limited and Royal Exchange Finance and Asset Management Limited. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

(iv) Associates Associatesarethoseentities inwhichtheGrouphassignificant influence,butnotcontrolor jointcontrol,overthefinancialand

operating policies.

Investments in associates are accounted for using the equity method of accounting. They are initially recognised at cost, which includes transaction costs. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

Subsequent to initial recognition, the Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated profitorloss;itsshareofpost-acquisitionmovementsisrecognisedinothercomprehensiveincome.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.WhentheGroup’sshareoflossesinanassociateequalsorexceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Intra-group gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Intra-group losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. For preparation of consolidated financial statements, equal accounting policies for similar transactions and other events in similar circumstances are used. Dilution gains and losses in associates are recognised in the consolidated profit or loss

(v) Loss of control When the Group loses control over a subsidiary, the Group derecognizes the assets and liabilities of the subsidiary, any non-controlling

interests and the other components of equity related to the subsidiary. Any interest retained in the former subsidiary is measured at fair value when control is lost.

(vi) Transaction eliminated on consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated

in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.



(b) Foreign currency transactions Transactions in foreign currencies are translated into the functional currency of the Group at the exchange rates an the dates of the

transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.

However, foreign currency differences arising from the translation of the following items are recognised in OCI:

•available-for-saleequityinvestments(exceptonimpairment,inwhichcaseforeigncurrencydifferencesthathavebeenrecognisedin OCI are reclassified to profit or loss).

(c) Cash and cash equivalents Cash comprises cash in hand, and demand deposits. Cash equivalents are short-term highly liquid investments that are readily

convertible to knownamounts of cash and that are subject to insignificant risk of changes in their fair value. Cash equivalentscomprise investments with original maturities of three months or less and used by the Group to manage its short - term commitments.

Subsequent to initial recognition, cash and cash equivalents are carried at amortised cost in the statement of financial position. For the purpose of the statement of cash flows, cash and cash equivalents are net of outstanding overdrafts.

(d) Financial instruments The classification of the Group’s financial instruments depends on the nature and purpose of the instruments and are determined at

the time of initial recognition.

(i) Classification of financial assets The financial assets have been recognised in the statement of financial position and measured in accordance with their assigned

classifications.

The Group classifies its financial assets into the following categories: •financialassetsatfairvaluethroughprofitorloss(FVTPL), •Available-for-sale’(AFS)financialassets, •Heldtomaturityand •Loansandreceivables

Financial assets at fair value through profit or loss (FVTPL) Financial instruments are classified at FVTPL when the financial instrument is either held for trading or it is designated as at FVTPL.

Financial instruments at FVTPL are stated at fair value.

Available-for-sale finanacial assets (AFS) Available-for-sale financial instruments are non-derivatives that are either designated as AFS or are not classified as:

(a) loansandreceivables; (b) held-to-maturityinvestments;or (c) financial assets at fair value through profit or loss.

Listed redeemable notes held by the Company that are traded in an active market are classified as AFS and are stated at fair value at the end of each reporting period. The Company also has investments in unlisted shares that are not traded in an active market but that are also classified as AFS financial assets.

Held to maturity Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that

the Company has the positive intent and ability to hold to maturity, and which are not designated as at fair value through profit or loss or as available-for-sale.



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 are measured at amortized cost using the effective interest method, less any impairment.

(ii) Classification of financial liabilities A financial liability is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on

initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred.

Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, including any interest expense, are recognised in profit or loss.

Other financial liabilities are initially measured at fair value less any directly attributable transaction costs.

Financial liabilities have been recognised in the statement of financial position and measured in accordance with their assigned classifications.

(ii) Initial recognition and measurement All financial instruments are initially recognized at fair value, which includes directly attributable transaction costs for financial

instruments not classified as at fair value through profit and loss. For financial instruments held at fair value through profit and loss (FVTPL), the transaction costs are immediately expensed in the profit and loss.

(iii) Subsequent measurement Subsequent to intial recognition, financial assets are measured either at fair value or amortised cost, depending on their categorization:

Financial Assets at fair value through profit or loss (FVTPL) Financial assets at FVTPL are stated at fair value. Any gains or losses arising on re-measurement are recognized in the statement of

profit or loss in the period in which they arise. The net gain or loss recognized in the statement of profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘investment income’ line item in the Group’s profit or loss statement.

Available-for-sale financial assets (AFS) Available-for-sale financial assets are carried at fair value, with the exception of investments in equity instruments where fair value

cannot be reliably determined, which are carried at cost. The fair values for quoted instruments are determined by reference to regulated exchange quoted ruling prices. If quoted market prices are not available, reference is also made to readily and regularly available broker or dealer price quotations.

The fair values of unquoted equities and other instruments for which there is no active market, are established using valuation techniques. These include the use of recent arm’s length transactions, reference to the current market value of other instruments that are substantially the same and discounted cash flow analysis. Where the fair value of financial assets is determined using discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar instrument.

Available for sale equity instruments for which fair value cannot be reliably determined are carried at cost less impairment allowance, if any. Impairment losses are recognised in profit or loss and reflected in an allowance account in the statement of financial position.

Changes in the fair value of available-for-sale financial assets are recognized in the statement of other comprehensive income as a separate component of equity under the heading of Fair value reserves.

When an available for sale instrument carried at fair value is disposed of, the cumulative gain or loss previously accumulated in the Fair value reserve is reclassified to profit or loss and gains or losses on disposal recognised.

Dividends on available for sale equity instruments are recognized in profit or loss as Investment and Other Income when the Group’s right to receive the dividends is established.

Interest income recognized on available for sale instruments are recognized in profit or loss as net interest income as it accrues and is calculated by using the effective interest rate method.



Loans and receivables Loans and receivables on the statement of financial position comprise cash and cash equivalent, loans and advances to customers,

advances under finance lease, trade receivables, other receivables and statutory deposits.

Loans and receivables, after initial measurement, are measured at amortized cost, using the effective interest rate method less any impairment (if any). Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the effective interest rate.

Loans granted at below market rates are fair valued by reference to expected future cash flows and current market interest rates for instruments in a comparable or similar risk class and the difference between the historical cost and fair value is accounted for as employee benefits under staff costs.

Interest on loans and receivables are included in profit or loss

When the asset is impaired, impairment losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired assets continues to be recognised through the unwinding of the discount. If an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, then the decrease in impairment loss is reversed through profit or loss.

Held to maturity Held-to-maturity investments are carried at amortised cost using the effective interest method, less any impairment losses. A sale or

reclassification of a more than insignificant amount of held-to-maturity investments would result in the reclassification of all held-to- maturity investments as available-for-sale, and would prevent the Group from classifying investment securities as held-to-maturity for the current and the following two financial years. However, sales and reclassification in any of the following circumstances would not trigger a reclassification:

•salesorreclassificationsthataresoclosetomaturitythatchangesinthemarketrateofinterestwouldnothaveasignificanteffectonthefinancialasset’sfairvalue;

•salesorreclassificationsaftertheCompanyhascollectedsubstantiallyalloftheasset’soriginalprincipal;and •salesorreclassificationsthatareattributabletonon-recurringisolatedeventsbeyondtheCompany’scontrolthatcouldnothave

been reasonably anticipated.

Trade receivables Trade receivables arising under insurance contracts are recognized when due. These include premium due from agents, brokers,

co- insurers and insurance contract holders for which credit notes issued are within 31days, in conformity with the “NO PREMIUM NO COVER” policy. Trade receivables are stated at cost less impairment.

Financial liabilities Subsequent to initial recognition, other financial liabilities are measured at amortised cost.

Trade payables are recognized when due. These include amounts due to agents, reinsurers, co-assurers and insurance contract holders. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

(iv) Fair value measurement Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of an asset or liability reflects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction



The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation techniquethatusesonlydatafromobservablemarkets,thenthefinancialinstrumentisinitiallymeasuredatfairvalue,adjustedtodefer the difference between the fair value at initial recognition and the transaction price.

Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

If an asset or liability measured at fair value has a bid price and an ask price, then the Company measures the assets and long positions at a bid price and liabilities and short positions at an ask price.

The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date is less than one year, discounting is omitted.

Portfolios of financial assets and financial liabilities that are exposed to market risk and credit risk that are managed by the Group on the basis of a price that would be received to sell a net long position (or paid to transfer a net short position) for a particular riskexposure.Thoseportfolio-leveladjustmentsareallocatedtotheindividualassetsandliabilitiesonthebasisoftherelativeriskadjustmentofeachoftheindividualinstrumentsintheportfolio.

The Group recognises transfers between levels of the fair value heirachy as of the end of the reporting period during which the change has occurred.

(v) Impairment of financial assets The Group assesses its financial assets, other than those at fair value through profit or loss, for indicators of impairment at the end

ofeachreportingperiod.Financialassetsareconsideredtobeimpairedwhenthereisobjectiveevidencethat,asaresultofoneormore events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For Available-for-sale (AFS) equity investments, a significant or prolonged decline in the fair value of the security below its cost is consideredtobeobjectiveevidenceofimpairment.

ObjectiveevidencethatafinancialassetorGroupoffinancialassetsisimpairmentcouldinclude: •Significantfinancialdifficultyoftheissuerorcounterparty; •Breachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments; •Itbecomingprobablethattheborrowerwillenterbankruptcyorotherfinancialre-organization; •Thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties.

Loans and receivables and held to maturity For loans and receivables and held to maturity instruments, the amount of the impairment loss recognized 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 interestrate.Ifinasubsequentperiodtheamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoan event occurring after the impairment was recognized, the previously recognized 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 amortized cost would have been had the impairment not been recognized.

When the asset is impaired, impairment losses are recognised in profit or loss and reflected in an allowance account against loans and receivables and held to maturity instruments. Interest on the impaired assets continues to be recognised through the unwinding of the discount.Iftheamountofimpairmentlosssubsequentlydecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringafter the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

Available-for-sale financial assets (AFS) Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value

reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit or loss.



Ifthefairvalueofanimpairedavailable-for-saledebtsecuritysubsequentlyincreasesandtheincreasecanberelatedobjectivelytoan event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss

Trade receivables An impairment is establishedwhen there is objective evidence that, as a result of oneormore events that occurred after the

initial recognition, the estimated future cash flows have been impaired. The carrying amount of the financial asset is reduced by the impairment loss through the use of an allowance account and recognized as impairment loss in income statement.

The Company’s allowance for impairment is based on incurred loss model for each customer. The probability of default and the age of the debts are also taken into account in arriving at the impairment amount.

When a trade receivable is considered uncollectible, it is written off against the impairment allowance account.

(vi) De-recognition of financial assets The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires, or when it

transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, The Group continues to recognize the financial asset and financial liability separately.

On de-recognition 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 recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

On de-recognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a

transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes 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 recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

(e) Impairment of other non-financial assets At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets ( other than deferred tax assets

and investment property) to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash- generating units, or otherwise they are allocated to the smallest Group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.



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 ofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.

If the recoverable amount of an asset (or cash-generating unit) 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 recognized 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.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) 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 recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized 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.

(f) Reinsurance assets The Group cedes reinsurance in the normal course of business in order to limit its net loss potential for losses arising from certain

exposures. The cost of reinsurance related to long-term contracts is accounted for over the life of the underlying reinsured policies, using assumptions consistent with those used to account for these policies. However, reinsurance arrangements do not relieve the Group from its direct obligations to its policyholders.

Reinsurance assets include balances due from various reinsurance companies for ceded insurance contracts. Amounts recoverable from reinsurers are estimated in a manner consistent with the underlying reinsurance contract.

Reinsuranceassetsareassessedforimpairmentateachreportingdate.Ifthereisreliableobjectiveevidencethatareinsuranceassetis impaired as a result of an event that occurred after initial recognition of the reinsurance asset, that the Group may not receive all amounts due to it under the terms of the contract and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer.

TheGroupgatherstheobjectiveevidencethatareinsuranceassetisimpairedusingthesameprocessadoptedforfinancialassetsheld at amortised cost. The impairement loss is calculated following the same method used for financial assets.

(g) Deferred acquisition costs The incremental costs directly attributable to the acquisition of new business which had not expired at the reporting date, are

deferred by recognizing an asset. For non-life insurance contracts, acquisition costs include both incremental acquisition costs and other indirect costs of acquiring and processing new businesses.

Deferred acquisition costs are amortised in the income statement systematically over the life of the contracts at each reporting date.

(h) Other receivables and prepayments Other receivables balances include dividend receiveable, inter-group balances, accrued rental income and security holding trust

account. The Group has an internal system of assessing the credit quality of other receivables through establised policies and approval systems. The Group constantly monitors its exposure to there receivables via periodic review.

Prepayment are essentially prepaid rents and staff upfront payments. Other receivables and prepayments are carried at ammortised cost less accumulated impairment losses.

(i) Investment properties Investment properties are properties held for long-term rental yields or for capital appreciation (including property under construction

for such purposes) or for both purposes, but not for sale in the ordinary course of business.

Recognition and measurement Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated with

the investment property will flow to the entity and the cost can be measured reliably.

Investment properties are measured initially at cost, including all transaction costs.



Subsequent to initial recognition, investment properties are measured at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair value of investment properties are included in the statement of profit or loss in the period in which they arise. Fair values are evaluated and assessed annually by a Financial Reporting Council’s accredited external valuer.

De-recognition An investment property is derecognized 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 de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in the income statement in the period of de-recognition.

Transfers Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to

owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property and equipment up to the date of change. Subsequently, the property is re-measured to fair value and reclassified as investment property.

(j) Property and equipment Recognition and measurement All property and equipment used by the Group is stated at historical cost less accumulated depreciation and any accumulated

impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. If significant partsofapropertyandequipmenthavedifferentusefullives,thentheyareaccountedforasseperateitems(majorcomponents)ofproperty and equipment.

Subsequent costs Subsequent expenditures are recognized in the carrying amount of the asset or as a seperate asset as appropriate if it is probable

that the future economic benefits embodied within the part will flow to the Group and its cost can be reliably measured. The costs of the day- today servicing of property and equipment are recognized in the statement of profit or loss as incurred.

Depreciation Depreciation is recognized so as to allocate the cost of assets (other than freehold land) less their residual values over their useful

lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

Freehold land is not depreciated The estimated useful lives of property and equipment are as follows: Leasehold land Over the lease period Buildings 50 years Furniture and office equipment 5 years Motor vehicles - New 4 years - Salvage 3 years Computer hardware 4 years

De-recognition An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise

from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the statement of profit or loss of the year that the asset is de-recognized.



(k) Intangible assets

Software expenditure An internally-generated intangible asset arising from the Group’s software development is recognized if and only if all of the following

conditions are met: •Thetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale; •Theintentiontocompletetheintangibleassetanduseorsellit; •Theabilitytouseorselltheintangibleasset; •Howtheintangibleassetwillgenerateprobablefutureeconomicbenefits; •Theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorselltheintangible

asset;and •Theabilitytomeasurereliablytheexpenditureattributabletotheintangibleassetduringitsdevelopment.

The amount initially recognized 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 recognized, development expenditure is recognized 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 amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Acquired computer software Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific

software. Computer software is stated at cost less amortization and impairment losses. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. Costs associated with maintaining computer software programmes are recognized as an expense as incurred.

Amortization Computer software costs, whether developed or acquired, are amortized for a period of five years using the straight line method.

Intangible assets which are not available for use are tested for impairment annually. Amortisation methods, useful lives and residual valuesarereviewedateachreportingdateandadjustedifappropriate

AnintangibleassetshallbederecognizedbytheCompanyondisposal;orwhennofutureeconomicbenefitareexpectedfromitsuseor disposal. Any gain or loss arising on de-recognition of the assets (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 the asset is recognised.

(l) Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of profit or loss except

to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Current income taxes TheCompanyissubjecttotheCompaniesIncomeTaxAct(CITA).TotalamountoftaxpayableunderCITAisdeterminedbasedonthe

higheroftwocomponentsnamelyincometax(basedontaxableincome(orloss)fortheyear;andMinimumtax(determinedbasedonthe sum of the highest of 0.25% of revenue of N500,000, 0.5% of gross profit, 0.25% of paid up share capital and 0.5% of net assets and 0.125% of revenue in excess of N500,000). Taxes based on taxable profit for the period are treated as current income tax in line withIAS12;whereastaxeswhichisbasedongrossamountsisoutsidethescopeofIAS12andthereforearenottreatedascurrentincome tax.

Where the minimum tax is higher than the Company Income Tax (CIT), a hybrid tax situation exits. In this situation, the CIT is recognized in the income tax expense line in the profit or loss and the excess amount is presented above income tax line as minimum tax.

The Group Income tax expense and payable is the sum of the individual tax expense and payable under the various tax laws governing each of the subsidiaries of the Group and the Company.



The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Group’s 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 Group’s liability for current tax is calculated using tax rates that have been enacted by the end of the reporting period.

Thecurrenttaxesinclude:CompanyIncometax@30%oftaxableprofit;Educationtax@2%ofassessableprofit;CapitalGainTax@10%ofchargeablegains;andInformationtechnologydevelopmentlevy@1%ofaccountingprofit.

Deferred tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Group’s financial

statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill (arising in a business combination) 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 the end of each reporting period 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 liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax liabilities and deferred tax assets for properties held for sale that are measured using the fair value model, the carrying amount of such properties are presumed to be recovered entirely through the sale unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business modelwhoseobjectiveistoconsumesubstantiallyalltheeconomicbenefitsembodiedintheinvestmentpropertyovertime,ratherthan through sale.

(m) Statutory deposits Statutory deposits are cash balances held with the Central Bank of Nigeria (CBN) in compliance with the Insurance Act, CAP 117, LNF

2004 for the general insurance companies.

The deposits are only available as a last resort to the Company if it goes into liquidation. Statutory deposits are measured at cost.

(n) Borrowings Borrowings by way of bank overdrafts that are repayable on demand and form an integral part of the Group’s cash

management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Borrowings have been measured in line with the Group’s accounting policy for financial instruments (see note 2(d))

Borrowing costs comprise interest payable on loans and bank overdrafts. They are charged to profit or loss as incurred, except those that relate to qualifying assets. Arrangement fees in respect of financing arrangements are charged to borrowing costs over the life of the related facility.

(o) Deferred income Deferred income comprises deferred rental income and deferred commission.

Deferred rental income relates to rents received in advance. These are amortized and transferred to the statement of profit or loss over the periods that they relate.

Deferred commission income relates to commissions received on ceded reinsurance businesses but not yet earned as at reporting date. Deferred commission incomes are amortized systematically over the life of the contracts at each reporting date.



(p) Provisions and other liabilities Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable

that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Other liabilities Other liabilities are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate

method. The fair value of a non-interest bearing liability is its discounted repayment amount. if the due date is less than one year, discounting is omitted.

(q) Finance and operating lease obligations These are the corresponding liabilities on assets acquired under finance lease. Lease payments are apportioned between finance

expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs.

Lease assets - lessee Assets held by the Group under leases that transfer to the Group substantially all of the risks and rewards of ownership are classified

as finance leases. The leased asset is initially measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases.

Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease

incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Lease assets - lessor If the Group is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental to ownership of the

asset to the lessee, then the arrangement is classified as a finance lease and a receivable equal to the net investment in the lease is recognised and presented within loans and advances

(r) Insurance contract liabilities(i) Classification IFRS 4 requires contracts written by insurers to be classified as either ‘insurance contracts’ or ‘investment contracts’ depending

on the level of insurance risk transferred.

Insurance contracts are those contracts when the insurer has accepted significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders.

The Group only enters into insurance contracts. Therefore, its insurance contract liabilities represent the Group’s liability to the policy holders. It comprises the unearned premium, unexpired risk, outstanding claims and the incurred but not reported claims. At the end of each accounting period, this liability is reflected as determined by the actuarial valuation report.

Unearned premium provision The provision for unearned premiums represents the proportion of premiums written in the periods up to the accounting date that

relate to the unexpired terms of policies in force at the end of the reporting date. This is estimated to be earned in subsequent financial periods, computed separately for each insurance contract using a time apportionment basis.



Reserve for unexpired risk A provision for additional unexpired risk reserve is recognised for an underwriting year where it is envisaged that the estimated cost

of claims and expenses exceed the unearned premium provision.

Reserve for outstanding claims Outstanding claims represent the estimated ultimate cost of settling all claims arising from incidents occurring prior to the end of

reporting date, but not settled at that date.

Reserve for incurred but not reported claims (IBNR) A provision is made for claims incurred but not yet reported as at the end of the financial year. This provision is based on the liability

adequacy test report.

Liability Adequacy Test At the end of each reporting period, liability adequacy tests are performed to ensure that material and reasonably foreseeable losses

arising from existing contractual obligations are recognised. In performing these tests, current best estimates of future contractual cash flows, claims handling and administration expenses, investment income backing such liabilities are considered. Long-term insurance contracts are measured based on assumptions set out at the inception of the contract. Any deficiency is charged to the statement of profit or loss by increasing the carrying amount of the related insurance liabilities.

The Liability Adequacy Test (LAT) was carried out by HR Nigeria Limited (Consultant Actuaries).

Insurance contract with discretionary participating features (DPF) Some insurance contracts and investment contracts contain a discretionary participating feature (DPF), which is a contractual right

to receive as, a supplement to guaranteed benefits, additional benefits that are: •Likelytobeasignificantportionofthetotalcontractualbenefits; •Theamountortimingiscontractuallyatthediscretionoftheinsurer;and •Thatarecontractuallybasedon: i.theperformanceofaspecifiedpoolofcontractsoraspecifiedtypeofcontract; ii. realizedandorunrealized investment returnsona specifiedpoolof assetsheldby the issuer; or iii. theprofitor lossof the

Company.

Recognition and measurement Insurance contracts with DPF are classified into two main categories, depending on the duration of risk and whether or not the terms

and conditions are fixed.

(i) Short-term insurance contracts Short-duration life insurance contracts (Group Life) protect the Group’s clients from the consequences of events (such as death or

disability) that would affect the ability of the client or his/her dependants to maintain their current level of income. These contracts have no maturity or surrender value and the premiums are recognized as earned premiums proportionally over the period of coverage.

The proportion of premium received on in-force contracts that relates to unexpired risks at the reporting date is reported as unearned premium liability. Premiums are shown before deductions of commissions and are gross of any taxes or duties levied on premiums.

Claims expenses are recognized in the statement of profit or loss as incurred based on the estimated liability for compensation owed to contract holders. They include direct and indirect claims settlement costs that arise from events that have occurred up to the end of the reporting period even if they have not been reported to the Group. The Group does not discount it liabilities for unpaid claims. Liabilities for unpaid/outstanding claims are estimated using the input of assessments for individual cases reported to the Group and statistical analyses for the claims incurred but not reported.

(ii) Long-term insurance contracts with fixed and guranteed terms These contracts insure events associated with human life (for example, death or survival) over a long duration. Premiums are

recognized as revenue when they become payable by the contract holder. Premiums are shown before deduction of commission. Benefits are recognized as an expense when they are incurred. A liability for contractual benefits that are expected to be incurred in the future is recorded when the premiums are recognized. The liability is actuarially determined based on assumptions such as mortality, persistency, maintenance expenses and investment income that are estabilished at the time the contract is issued.



(iii) Annuity Annuity premium are recognised as income when received from policy holders, and payments to policy holders are recognised as

an expense when due. Annuities are valued by using a discounted cash flow approach. The reserves are set equal to the present value of future annuity payments plus expenses, with allowance being made for any guaranteed periods as required by the terms of the contract. Annuities collected in a year are credited to the Gross Premium written and the portion that extends beyond one year is taken out via the unearned premium. The assets representing the annuities are invested in near-cash money market financial instruments with a tenor of 30 days on rolling basis.

The annuity is valued at year end by a professional consultant actuary registered with the Financial Reporting Council (“FRC”). Also a liability adequacy test is required by law to be performed on annuity fund to determine its sufficieny in meeting the contractual liabilities. Some of the assumptions being considered in valuing the annuity fund at the year end are:

(a) a 10 year guaranteed minimum annuity payment (b) a valuation interest determined by a long term FGN bond yield (c) a maintenance expenses and the mortality rates.

Recognition and measurement of insurance contract Premium Gross written premiums for general insurance contracts comprise premiums received in cash as well as premiums that have been

received and confirmed as being held on behalf of the Group by insurance brokers and duly certified thereto. Gross premiums are stated gross of commissions and taxes payable and stamp duties that are payable to intermediaries and relevant regulatory bodies respectively.

Unearned premiums represent the proportions of premiums written in the year that relate to the unexpired risk of policies in force at the reporting date.

Reinsurance Premiums, losses and other amounts relating to reinsurance treaties are measured over the period from inception of a treaty to

expiration of the related business. The actual profit or loss on reinsurance business is therefore not recognized at the inception but as such profit or loss emerges. In particular, any initial reinsurance commissions are recognized on the same basis as the acquisition costs incurred.

Premiums ceded, claims recovered and commission received are presented in the statement of profit or loss and statement of financial position separately from the gross amounts.

Amounts recoverable under reinsurance contracts are assessed for impairment at each reporting date. Such assets are deemed impaired if there isobjectiveevidence,asaresultofanevent thatoccurredafter its initial recognition, that theGroupmaynotrecover all amounts due under the contract terms and that the event has a reliably measurable impact on the amounts the Group will receive from the reinsurer.

Claims and policy holders benefit payable Claims incurred comprise claims and claims handling expenses paid during the financial year and changes in the provision for

outstanding claims. Claims and claims handling expenses are charged to profit or loss as incurred.

For long term insurance business, benefits are recorded as an expense when they are incurred. Claims arising on maturing policies are recognized when the claims become duefor payment. Death claims are accounted for on notification. Surrenders are accounted for on payment.

(t) Investment contract liabilities Investment contracts are those contracts that transfer significant financial risk. Financial risk is the risk of a possible future change

in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of price or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. The investment contract comprises of the Royal Policy Product, (RPP), the Royal Insurance Savings Account (ISA) and the Deposit Administration (DA).



Amounts collected from investment linked contracts with no discretionary participating features are reported as deposits (i.e. as investment contract lialibilities) in the statement of financial position. Interest, usually agreed with clients, is credited per annum to each account holder and the amount expensed to statement of profit or loss. Payment of benefits are treated as withdrawal (reduction) from the balance standing in the credit account of the client.

(u) Employee benefits liabilities(i) Short-term benefits Staff benefits such as wages, salaries, paid annual leave allowance, and non-monetary benefits are recognized as employee benefit

expenses. The expenses are accrued when the associated services are rendered by the employees of the Group.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

(ii) Defined contribution plans The Group operates a defined contribution plan in accordance with the provisions of the Pension Reform Act 2014. The Group

contributes 10% and employees contribute 8% each of the qualifying monthly emoluments in line with the Pension Reform Act.

The Group’s monthly contribution to the plan is recognized as an expense in profit or loss.

The Group pays contributions to privately administered pension fund administration on a monthly basis. The Group has no further payment obligation once the contributions have been paid. Prepaid contributions are recognized as an asset to the extent that a cash refund or reduction in the future payments is available. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

(iii) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee

accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal;orprovidingterminationbenefitsasaresultofanoffermadetoencouragevoluntaryredundancy.

(iv) Defined benefit plan TheGroupoperatesastaffgratuityschemeforsomeofitsemployees.Thegratuityliabilityisvaluedbyanactuaryusingtheprojected

unit credit method with discount rate used being the market yield on government bonds. The plan is unfunded and payments are made on a pay-as-you-go basis. Only staff of the Group as at 1 June 2008 are eligible for the staff gratuity scheme. Benefits accrue after a minimum of five years of service.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised immediately in OCI. The Group determines the net interest expense (income) on the defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking into account any changes in the net defined benefit liability during the period as a result of benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

(v) Pension The Group operated a funded pension scheme for its employees prior to the Pension Reform Act 2004. It therefore has continuing

pension obligation to its staff who retired prior to the commencement of the contributory pension scheme.

Pensioners are entitled to 3% annual increment. Over 90% of the pension assets are being managed by a pension fund administrator while the balance is invested in marketable securities and bank placement.

Thecalculationofdefinedbenefitobligationsisperformedannuallybyaqualifiedactuaryusingtheprojectedunitcreditmethod.When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.



Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(vi) Other long term benefits The Group operates a long service award plan for eligible staff who have rendered continued service to the organization.

Benefits accrue after a minimum of 10 years and a maximum of 35 years. The main benefits payable on the scheme are both cash and gift items which vary according to the number of years of service.

Theliabilityisvaluedannuallybyaqualifiedactuaryusingtheprojectedunitcreditmethod.

Remeasurements of the obligation, which comprise actuarial gains and losses, are recognised immediately in OCI. The Group determines the net interest expense (income) on the obligation for the period by applying the discount rate used to measure the obligation at the beginning of the annual period to the liability, taking into account any changes in the liability during the period as a result of benefit payments. Net interest expense and other expenses related to obligation are recognised in profit or loss.

(v) Capital and reserves

(i) Share capital The equity instruments issued by the Group are classified as equity in accordance with the substance of the contractual arrangements

and the definitions of an equity instrument.

Equity instruments issued by the Group are recognized as the proceeds are received, net of direct issue costs. Repurchase of the Group’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

(ii) Share premium This represents the excess amount paid by shareholders on the nominal value of the shares. This amount can be utilized as provided

in Section 120(3) of Companies and Allied Matters Act. The share premium is classified as an equity instrument in the statement of financial position.

(iii) Contingency reserve The Group maintains Contingency reserves for the general and life business in accordance with the provisions of S.21 of the Insurance

Act 2003.

In compliance with the regulatory requirements in respect of Contingency Reserve for the general business, which includes the health insurance business, the Group maintains contingency reserve at the rate equal to the higher of 3% of gross premium or 20% of the total profit after taxation until the reserve reaches the greater of minimum paid up capital or 50% of net premium.

In compliance with the regulatory requirements in respect of Contingency Reserve for Life business, the Company maintains contingency reserve at the rate equal to the higher of 1% of gross premium or 10% of the net profit accumulated until it reaches the amount of the minimum paid up capital.

(iv) Retained earnings The reserve comprises undistributed profit/ (loss) from previous years and the current year. Retained earnings is classified as part of

equity in the statement of financial position.



(v) Fair value reserves Fair value reserves represent the cummulative net change in the fair value of available-for-sale financial assets at the reporting date.

(vi) Other reserves - employee benefit actuarial surplus Actuarial (surplus)/deficit on employee benefits represent changes in benefit obligation due to changes in actuarial valuation

assumptions or actual experience differing from experience. The gains/losses for the year, net of applicable deferred tax asset/liability on employee benefit obligation, are recognized in other comprehensive income.

(vii) Treasury shares Where the Company or any member of the Group purchases the Company’s share capital, the consideration paid is deducted from

the shareholders’ equity as treasury shares until they are cancelled.Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

(viii) Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Group’s shareholders. Dividends

for the year that are declared after the end of the reporting period are dealt with in the subsequent period.

Dividends proposed by the Directors but not yet approved by shareholders are disclosed in the financial statements in accordance with the requirements of the Company and Allied Matters Act of Nigeria.

(w) Revenue recognition

(i) Gross Written Premium Gross written premiums for non-life (general), life, health insurance and investment contracts with discretionary participating features

comprise premiums received in cash as well as premiums that have been received and confirmed as being held on behalf of the Group by insurance brokers and duly certified thereto. Gross written premiums are stated gross of commissions, net of taxes and stamp duties that are payable to intermediaries and relevant regulatory bodies respectively.

Unearned premiums represent the proportions of premiums written in the year that relate to the unexpired risk of policies in force at the reporting date.

Deposits collected from investment-linked contracts with non-discretionary participating features are reported as investment contract liabilities in the statement of financial position.

Outward facultative premiums and reinsurance premiums ceded are accounted for in the same accounting period as the premiums for the related direct insurance or facultative business assumed.

The earned portion of premiums received is recognized as revenue. Premiums are earned from the date of attachment of risk, over the indenmity period, based on the patern of risks underwritten. Outward reinsurance premiums are recognized as an expense in accordance with the pattern of indenmity received.

(ii) Reinsurance expenses Reinsurance cost represents outward premium paid/payable to reinsurance companies less the unexpired portion as at the end of the

financial year.

(iii) Fees and commission income Fees and commission income consists primarily of insurance agency and brokerage commission, reinsurance and profit

commissions, policyholder administration fees and other contract fees. Reinsurance commissions receivable are deferred in the same way as acquisition costs. All other fee and commission income is recognized as the services are provided.

(iv) Interest income Interest income is recognized in the income statement as it accrues and is calculated by using the effective interest rate method. Fees

andcommissionsthatareanintegralpartoftheeffectiveyieldofthefinancialassetorliabilityarerecognizedasanadjustmenttothe effective interest rate of the instrument.




The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Where the estimated cash flows on financial assets aresubsequentlyrevised,otherthanimpairmentlosses,thecarryingamountofthefinancialassetsisadjustedtoreflectactualandrevised estimated cash flows.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

(v) Investment Income Investment income consists of dividends, realized gains and losses as well as unrealized gains and losses on financial instruments.

Dividend income Dividend income from investments is recognized when the shareholders’ rights to receive payment have been established.

Realized gains and losses and unrealized gains and losses Realized gains and losses on investments include gains and losses on financial assets and investment properties. Gains and losses

on the sale of investments are calculated as the difference between net sales proceeds and the original or amortized cost and are recorded on occurrence of the sale transaction.

Unrealized gains or losses represent the difference between the carrying value at the year end and the carrying value at the previous year end or purchase value during the year, less the reversal of previously recognized unrealized gains and losses in respect of disposals during the year.

(viii) Other operating income Other operating income represents income generated from sources other than premium revenue and investment income. It includes

rental income, profit on disposal of fixed assets. Rental income is recognized on an accrual basis.

(x) Expense recognition

(i) Insurance claims and benefits incurred Gross benefits and claims consist of benefits and claims paid / payable to policyholders, which include changes in the gross valuation

of insurance contract liabilities, except for gross change in the unearned premium provision which are recorded in premium income. It further includes internal and external claims handling costs that are directly related to the processing and settlement of claims. Amounts receivable in respect of salvage and subrogation are also considered.

Salvage Some non-life insurance contracts permit the Group to sell (usually damaged) property acquired in the process of settling a claim.

Subrogation Subrogation is the right of an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of

receiving the amount of the claim paid to the insured for the loss.

(ii) Underwriting expenses Underwriting expense include acquisition costs and maintenance expense. Acquisition costs comprise direct and indirect costs

associated with the writing of insurance contracts. These include commission expenses and other technical expenses. Maintenance expenses are expenses incurred in servicing existing policies and clients. All underwriting expenses are charged to income statement as they accrue or become payable.


(iii) Management expenses Management expenses are charged to profit or loss when goods are received or services rendered. They are expenses other than

claims, maintenance and underwriting expenses and include employee benefits, depreciation charges and other operating expenses.

(y) Segment reporting Operating segments are identified and reported in consonance with the internal reporting policy of the Group that are regularly

reviewed by the Chief Executive (being the chief operating decision maker) who allocates resources to the segment and assesses their performance thereof.

The Group’s reportable segments, for management purpose, are organized into business units based on the products and services offered as follows:

•Nonlifeinsurance-(RoyalExchangeGeneralInsuranceCompanyLimited); •Lifeinsurance-(RoyalExchangePrudentialLifeAssurancePlc); •Financialservices-(RoyalExchangeMicro-FinanceBankLimited); •Healthcare-(RoyalExchangeHealthcareLimited);and •AssetManagement(RoyalExchangeFinanceandAssetManagementLtd).

The other segments include corporate shared services and other activities not related to the core business segment and which are not reportable segments due to their immateriality. Certain expenses such as finance costs and taxes are also not allocated to particular segments.

The segment reporting is the measure used by the Group’s Chief Executive for the purposes of resource allocation and assessment of segment performance.

(z) Earnings per share The Group presents basic and diluted EPS data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss that is

attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period.

DilutedEPS isdeterminedbyadjusting theprofitor loss that is attributable toordinary shareholdersand theweighted-averagenumber of ordinary shares outstanding for the effects of all dilutive potential ordinary shares

(aa) Fiduciary activities The Group acts as trustees and in other fiduciary capacities that results in the holding and placing of assets on behalf of clients and

oversight functions over certain funds. The value of the assets held on behalf of clients as at reporting date are excluded from the statement of financial position of the Group as they are not assets of the Group, but are disclosed in the financial statements (see Note 61). The carrying value of the assets under custody were determined as follows:

- Cash and cash equivalents are carried at amortised cost. - Loans and receivables and Held-to maturity investments are carried at amortised cost. - Other Liabilities are measured at amortized cost using the effective interest rate method.

Fees and commissions earned from providing such services are generally recognised on an accrual basis in the statement of profit and loss in line with the agreement between the Group and the party for which the Group holds its assets.




4 Changes in presentation/retrospective restatement of financial statements Certain adjustmentswhich impacted prior periodfinancial statements have necessitated a restatement of financial information.

Theseadjustmentswhichrelatetoareclassificationofitemsinpriorperiodstatementoffinancialpositionandadjustmentswithanet impact on the profit and loss account and equity have been disclosed in note 4(a) and note 4(b) respectively.

(a) Changes in presentation

During the year, certain comparative balances were reclassified in order to enhance inter-period comparability of financial information. The following summarize the impact on the Company and Group’s financial statements:

(i) Other liabilities

Group Company 31-Dec-14 1-Jan-14 31-Dec-14 1-Jan-14

Other liabilities (as previously stated) 1,207,351 1,170,224 699,917 452,819 Reclassified to borrowings (see note 4(a)(ii)) (50,808) (52,554) (104,860) (116,849)

Other liabilities (as re-presented)* (see note 4(b)) 1,156,543 1,117,670 595,057 335,970

*Furtheradjustmentshaveimpactedthisbalance.Qualitativeandquantitativedetailsontheseadjustmentsaredisclosedinnote4(b).

(ii) Borrowings

Group Company 31-Dec-14 1-Jan-14 31-Dec-14 1-Jan-14

Borrowings (as previously stated) 1,001,151 - 1,001,151 - Reclassified from other liabilities (see note 4(a)(i)) 50,808 52,554 104,860 116,849

Borrowings (as re-presented) (see note 4(b)) 1,051,959 52,554 1,106,011 116,849

(iii) Net interest income

Group Company 31-Dec-14 31-Dec-14

Net interest income (as previously stated) 194,493 - Reclassified from Management expenses: - Interest expense on borrowings (see note 4(a)(vi)) (14,875) (12,992) Reclassified from Other operating income: - Interest income on staff loans (see note 4(a)(v)) 25,668 -

Net interest income (as re-presented)* (see note 4(b)) 205,286 (12,992)

*Furtheradjustmentshaveimpactedthisbalance.Qualitativeandquantitativedetailsontheseadjustmentsaredisclosedinnote4(b).

(iv) Investment and other income


Investment and other income (as previously stated) 576,972 299,960 Reclassified to Other operating income - Investment management income (see note 4(a)(v)) (41,024) -

Investment and other income (as re-presented) (see note 4(b)) 535,948 299,960


(v) Other operating income


Other operating income (as previously stated) 365,673 260,733 Reclassified from Investment and other income - Investment management income (see note 4(a)(iv)) 41,024 - Reclassified to Net interest income - Interest income on staff loans (see note 4(a)(iii)) (25,668) -

Other operating income (as re-presented)* (see note 4(b)) 381,029 260,733

*Furtheradjustmentshaveimpactedthisbalance.Qualitativeandquantitativedetailsontheseadjustmentsaredisclosedinnote4(b)

(vi) Management expenses


Management expenses (as previously stated) (3,088,900) (399,703) Reclassified to Net interest income - Interest expense on borrowings (see note 4(a)(iii)) 14,875 12,992

Management expenses (as re-presented)* (see note 4(b)) (3,074,025) (386,711)

*Furtheradjustmentshaveimpactedthisbalance.Qualitativeandquantitativedetailsontheseadjustmentsaredisclosedinnote4(b)



(b) Retrospective restatement of financial statements During the year, it was discovered that the following transactions relating to prior period were erronously omitted. (i) Fees earned from the provision of trusteeship services (ii) Receipt of unclaimed dividends from Company’s registrars (iii) Interest income earned from the investment of unclaimed dividends (iv) Statute-based liabilities on management fees earned from entities within the Group

These omissions have been corrected by restating each of the affected financial statement line items for prior periods. The following tables summarize the impacts on the Company and Group’s financial statements:

Statement of financial position as at 31 Dec 2014

Group Company

As re-presented Retrospective Restated As re-presented Retrospective RestatedIn thousands of Naira 31-Dec-14 Restatement 31-Dec-14 31-Dec-14 Restatement 31-Dec-14

ASSETSCash and cash equivalents 6,622,345 13,195 6,635,540 36,411 13,195 49,606Loans and advances to customers 1,083,876 - 1,083,876 - - -Advances under finance lease 102,980 - 102,980 - - -Investment securities 4,024,087 - 4,024,087 - - -Investment in subsidiaries - - - 8,660,464 - 8,660,464Trade receivables 319,428 - 319,428 - - -Reinsurance assets 1,916,261 - 1,916,261 - - -Deferred acquisition cost 366,892 - 366,892 - - -Other receivables and prepayments 473,919 2,316 476,235 79,604 2,316 81,920Investment in associates 295,250 - 295,250 - - -Investment properties 7,722,739 - 7,722,739 - - -Property and equipment 1,673,178 - 1,673,178 17,488 - 17,488Intangible assets 46,863 - 46,863 - - -Employees retirement benefit asset (net) 170,199 - 170,199 - - -Statutory deposits 555,000 - 555,000 - - -Deferred tax assets 640,445 - 640,445 - - - Total Assets 26,013,462 15,511 26,028,973 8,793,967 15,511 8,809,478

LIABILITIESBorrowings (see note 4(a)(ii)) 1,051,959 - 1,051,959 1,106,011 - 1,106,011Deferred Income 102,234 - 102,234 - - -Trade payables 5,151,843 - 5,151,843 - - -Other liabilities (see note 4(a)(i)) 1,156,543 77,320 1,233,863 595,057 77,320 672,377Depositors’ funds 1,032,616 - 1,032,616 - - -Insurance contract Liabilities 7,094,226 - 7,094,226 - - -Investment contract Liabilities 257,963 - 257,963 - - -Current income tax liabilities 502,951 - 502,951 255,109 - 255,109Employees benefit liability 545,206 - 545,206 24,374 - 24,374Deferred tax liabilities 172,495 - 172,495 - - -

Total Liabilities 17,068,036 77,320 17,145,356 1,980,551 77,320 2,057,871

EQUITYShare capital 2,572,685 - 2,572,685 2,572,685 - 2,572,685Share premium 2,690,936 - 2,690,936 2,690,936 - 2,690,936Contingency reserve 1,176,375 - 1,176,375 - - -Treasury shares (500,000) - (500,000) - - -Retained earnings 2,719,243 (61,809) 2,657,434 1,549,372 (61,809) 1,487,563Other component of equity 286,187 - 286,187 423 - 423

Total equity 8,945,426 (61,809) 8,883,617 6,813,416 (61,809) 6,751,607

Total equity & liabilities 26,013,462 15,511 26,028,973 8,793,967 15,511 8,809,478




Statement of financial position as at 01 Jan 2014

Group Company

As re-presented Retrospective Restated As re-presented Retrospective RestatedIn thousands of Naira 1-Jan-14 Restatement 1-Jan-14 1-Jan-14 Restatement 1-Jan-14

ASSETSCash and cash equivalents 1,810,882 - 1,810,882 35,595 - 35,595Loans and advances to customers 812,571 - 812,571 - - -Advances under finance lease 218,585 - 218,585 - - -Investment securities 3,558,965 - 3,558,965 - - -Investment in subsidiaries - - - 7,620,464 - 7,620,464Trade receivables 421,637 - 421,637 - - -Reinsurance assets 2,044,041 - 2,044,041 - - -Deferred acquisition cost 469,160 - 469,160 - - -Other receivables and prepayments 482,025 1,600 483,625 76,384 1,600 77,984Investment in associates 213,694 - 213,694 - - -Investment properties 7,092,569 - 7,092,569 - - -Property and equipment 1,690,707 - 1,690,707 16,852 - 16,852Intangible assets 37,418 - 37,418 - - -Employees retirement benefit asset (Net) 166,963 - 166,963 - - -Statutory deposits 555,000 - 555,000 - - -Deferred tax assets 699,334 - 699,334 - - -

Total Assets 20,273,551 1,600 20,275,151 7,749,295 1,600 7,750,895

LIABILITIESBorrowings (see note 4(a)(ii)) 52,554 - 52,554 116,849 - 116,849Deferred Income 84,797 - 84,797 - - -Trade payables 528,509 - 528,509 - - -Other liabilities (see note 4(a)(i)) 1,117,670 52,512 1,170,182 335,970 52,512 388,482Depositors’ funds 595,449 - 595,449 - - -Insurance contract Liabilities 6,973,096 - 6,973,096 - - -Investment contract Liabilities 599,106 - 599,106 - - -Dividend payable 80,525 - 80,525 80,525 - 80,525Current income tax liabilities 494,388 - 494,388 254,373 - 254,373Employees benefit liability 550,660 - 550,660 20,139 - 20,139Deferred tax liabilities 167,931 - 167,931 - - -

Total Liabilities 11,244,685 52,512 11,297,197 807,856 52,512 860,368

EQUITYShare capital 2,572,685 - 2,572,685 2,572,685 - 2,572,685Share premium 2,690,936 - 2,690,936 2,690,936 - 2,690,936Contingency reserve 947,734 - 947,734 - - -Treasury shares (500,000) - (500,000) - - -Retained earnings 3,096,193 (50,912) 3,045,281 1,677,257 (50,912) 1,626,345Other component of equity 221,318 - 221,318 561 - 561

Total Equity 9,028,866 (50,912) 8,977,954 6,941,439 (50,912) 6,890,527

Total equity & liabilities 20,273,551 1,600 20,275,151 7,749,295 1,600 7,750,895



Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December 2014

Group Company As re-presented Retrospective Restated As re-presented Retrospective RestatedIn thousands of Naira 31-Dec-14 Restatement 31-Dec-14 31-Dec-14 Restatement 31-Dec-14

Net Interest Income (see note 4(a)(iii)) 205,286 1,643 206,929 (12,992) 1,643 (11,349) Investment and other income (see note4(a)(iv)) 535,948 - 535,948 299,960 - 299,960

Other Operating Income (see note 4(a)(v)) 381,029 510 381,539 260,733 510 261,243Management expenses (see note 4(a)(vi) (3,074,025) (13,050) (3,087,075) (386,711) (13,050) (399,761)

Profit after taxation 150,437 (10,897) 139,540 129,384 (10,897) 118,487

Total comprehensive income 173,829 (10,897) 162,932 129,246 (10,897) 118,349

There is no material impact on the Group’s basic and diluted earnings per share however, the Company’s basic and diluted earnings per share for the year ended 31 December 2014 has reduced from 3 kobo per share to 2 kobo per share.

Statement of Cash FlowsFor the year ended 31 December 2014

Group Company

As re-presented Retrospective Restated As re-presented Retrospective RestatedIn thousands of Naira 31-Dec-14 Restatement 31-Dec-14 31-Dec-14 Restatement 31-Dec-14

Net cash provided by operating activities 4,811,345 - 4,811,345 386,979 (269,964) 117,015Net cash used by investing activities (713,273) - (713,273) (1,049,520) 269,964 (779,556)Net cash provided by financing activities 663,357 13,195 676,552 663,357 13,195 676,552

Cash and cash equivalent at end of year 6,606,763 13,195 6,619,958 36,411 13,195 49,606

There is no impact on the total operating, investing or financing cash flows for the years ended 31 December 2013.



5 Critical accounting estimates and judgments Inpreparingtheseconsolidatedfinancialstatements,managementhasmadejudgements,estimatesandassumptionsthataffect

the reported amounts of assets and liabilities within the financial year.

Estimates and underlying assumptions are reviewed on an ongoing basis and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are recognised prospectively.

A Judgements ManagementappliesitsjudgementtodeterminewhethertheindicatorssetoutinNote3(a)(iii)indicatethattheGrouphassignificant

influence over it’s investment in associates.

According to IAS 28, a 20% or more interest in an investee leads to a rebuttable presumption that the investor has significant influence over the investee.

The Group holds a direct interest of 26% in CBC EMEA. Management has considered the fact and circumstances, including the representation of the Company on the board of CBC EMEA and has concluded that the Group has significant influence over CBC EMEA and the entity is an associate of the Group.

B Assumptions and estimation uncertainties Informationaboutassumptionsandestimationuncertaintiesthathaveasignificantriskofresultinginamaterialadjustmentinthe

year ending 31 December 2015 is set out below in relation to the impairment of financial instruments and in the following notes in relation to other areas:

(i) Deferred tax assets Recognised deferred tax assets (see note 22) are measured at the tax rates enacted or substantively enacted at the end of the

reporting period and represents those amounts that are probable of realisation taking into account management’s estimates of future taxable profits. In determining estmates of future taxable profit against which deductible amount can be utilised, management has considered the existence of taxable temporary differences that will reverse in the same year that deductible amounts will reverse. Management’s estimate of future taxable profits has been determined on the basis of a five year profit forecast. Management affirms thatassumptionsunderlyingthefiveyearforecastisreasonablegiventheGroup’srestructuredoperationsandtherearenoobjectiveindicatorstosuggestthattheprojectedearningslevelwillnotbeachieved.

(ii) Liabilities arising from insurance contracts Claims arising from non-life insurance contracts Liabilities for unpaid claims are estimated on case by case basis. The liabilities recognised for claims fluctuate based on the nature

and severity of the claim reported. Claims incurred but not reported are determined using statistical analyses and the Company deems liabilities reported as adequate. Assumptions used in determining the liabilities are disclosed in Note 55.

(iii) Impairment of available-for-sale equity investment securities Investment in equity securities are evaluated for impairment on the basis described in accounting policies note 3(d)(v). The Group

determines that available-for-sale equity investments are impaired when there has been a significant or prolonged decline in the fair valuebelowitscost.Thisdeterminationofwhatissignificantorprolongedrequiresjudgmentrelatingtotheperiodoverwhichthelossesoccur.Inmakingthisjudgment,theGroupevaluatesamongotherfactors,thevolatilityinshareprice.Inaddition,objectiveevidence of impairment may be deterioration in the financial health of the investee, decline in quoted market price that has lasted for 9 months, industry and sector performance, changes in technology, and operational and financing cash flows etc.

(iv) Impairment of other financial assets measured at amortised cost Thedirectorsusetheirjudgmentinselectinganappropriatevaluationtechniqueforsomefinancialassets.Impairmentforfinancial

assets carried at amortized cost as well as the amount of impairment for trade receivables.The impairment for financial assets carried at amortized cost and trade receivables are evaluated on the basis described in accounting policies note 3(d)(v)

The Group reviews its loans and other receivables portfolios to assess impairment at least on a quarterly basis. In determining whether aspecificimpairmentlossshouldberecordedinprofitorloss,theGroupmakesjudgementsastowhetherthereisanyobservabledata indicating an impairment trigger. The trigger may include observable data indicating that the borrower is unable to fulfil the repayment obligations as per contractual terms e.g significant financial difficulty being experienced by the borrower, occurrence of default/delays in interest or principal repayments, restructuring of the credit facilities by giving extraordinary concessions to borrower or national or local economic conditions that correlate with defaults on assets in the Group. The Group uses estimates basedonhistoricallossexperienceforassetswithsimilarcreditriskcharacteristicsandobjectiveevidenceofimpairmentsimilartothoseintheportfoliowhenschedulingfuturecashflows.Inestimatingthesefuturecashflows,managementmakesjudgementsabout a debtor’s financial situation and the net realisable value of any underlying collateral. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss



estimates and actual loss experience. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the management.

(v) Fair value of financial instruments Thedirectorsusetheirjudgmentinselectinganappropriatevaluationtechniqueforsomefinancialassets.Impairmentforfinancial

assetscarriedatamortizedcostsaswellastheamountofimpairmentfortradereceivables.Thesignificantestimatesandjudgmentsapplied in determination of fair value of financial assets are as shown in the statement of accounting policies note 3 (d)(iv).

(vi) Determination of fair value of investment property Management employed the services of estate surveyors and valuers to value its investment properties. The estimated open market

value is deemed to be the fair value based on the assumptions that there will be willing buyers and sellers. Recent market prices of neighborhood properties were also considered in deriving the open market values. Other key assumptions are as disclosed in Note 16 to the financial statements.

(vii) Defined benefit plan The present value of the employee benefit obligations depends on a number of factors that are determined in an actuarial basis using

a number of assumptions. Any changes in these assumptions will impact the carrying amount of obligations. The assumptions used in determining the net cost (income) for pensions include the discount rate.

The Group determines the appropriate discount rate at the end of the reporting period. In determining the appropriate discount rate, reference is made to the yield on Nigerian Government Bonds that have maturity dates approximating the terms of the related pension liability. Other key assumptions for pension obligations are based in part on current market conditions as disclosed in Note 20.

(viii) Current income tax The current income tax charge is calculated on taxable income on the basis of the tax laws enacted or substantively enacted at

the reporting date. The Company applies general tax rules and the Directors have adopted current tax practices in computing the tax liabilities. Actual results may differ from these estimates based on the interpretation by the tax authorities. The Directors acknowledge that changes in the application of the current tax practices can have a significant impact on the tax expense and tax liabilities recorded in the financial statements.

(ix) Determination of impairment of property and equipment, and intangible assets excluding goodwill Management is required to make judgements concerning the cause, timing and amount of impairment. In the identification of

impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate that impairment exists. The Group applies the impairment assessment to its separate cash generating units. This requires management to make significant judgementsandestimatesconcerningtheexistenceofimpairmentindicators,separatecashgeneratingunits,remainingusefullivesofassets,projectedcashflowsandnetrealisablevalues.Management’sjudgementisalsorequiredwhenassessingwhetherapreviously recognised impairment loss should be reversed.

(x) Depreciation, amortisation and the carrying value of property and equipment and intangible assets Theestimationoftheusefullivesofassetsisbasedonmanagement’sjudgement.Anymaterialadjustmenttotheestimateduseful

lives of items of property and equipment will have an impact on the carrying value of these items. Depreciation and amortisation is recognisedonthebasisdescribedinaccountingpoliciesnote3(j)and3(k).


6 Cash and cash equivalents

In thousands of Naira Restated* Restated* Restated* Restated* Group Group Group Company Company Company 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Cash 7,222 3,140 4,973 7 50 33 Bank balances 5,661,565 5,518,234 1,170,100 45,375 36,363 35,562 Short-term deposits (including demand and time deposits) 1,367,055 1,114,166 635,809 60,070 13,193 -

Cash and cash equivalents (as per statement of financial position) 7,035,842 6,635,540 1,810,882 105,452 49,606 35,595

* See note 4

(i) Short–term deposits are made for varying periods of between one day and three months depending on the immediate cash requirementsoftheGroup.Alldepositsaresubjecttoanaveragevariableinterestrateof12%(2014:12%).

The carrying amounts disclosed above reasonably approximate fair value at the reporting date.

(ii) The balance represents amounts used as an integral part of the Group’s cash management.

7 Loans and advances to customers

Group Group Company Company In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Term loan 1,386,913 1,143,839 - - Specific impairment (106,990) (52,709) - - Collective impairmen (1,489) (7,254) - - Total impairment (see note 7(a) below) (108,479) (59,963) - -

Carrying amount 1,278,434 1,083,876 - -

(a) The movements in impairment allowance on loans and advances to customers is analyzed below;


Balance, beginning of year 59,963 53,402 - - Impairment allowance recognised during the year (see note 45) 48,516 6,561 - -

Balance, end of year 108,479 59,963 - -

Within one year 261,539 122,111 - -

More than one year 1,016,895 961,765 - -

1,278,434 1,083,876 - -




8 Advances under finance lease


Gross investment in finance lease 136,269 140,781 - - Impairment allowance (see note 8(a) below) (13,000) (37,801) - -

123,269 102,980 - -

(a) Themovementsinimpairmentallowanceonadvanceunderleaseisanalyzedbelow;


Balance, beginning of year 37,801 36,601 - - Write back of impairment allowance (26,737) - - - Impairment allowance recognised during the year (see note 44) 1,936 1,200 - -


Within one year 57,781 32,671 - -

More than one year 65,488 70,309 - -

123,269 102,980 - -

9 Investment securities


Available for sale investment securities (see note 9(a) below) 415,263 393,862 - - Fair value through profit or loss (FVTPL) (see note 9(b) below) 1,936,874 2,126,224 17,935 - Loans and receivables at amortised cost (see note 9(c) below) 1,096,746 1,227,144 - - Held to maturity investment securities (see note 9(d) below) - 276,857 - -

Total financial assets 3,448,883 4,024,087 17,935 -

Within one year 1,255,548 1,216,189 - - More than one year 2,193,335 2,807,898 17,935 -

3,448,883 4,024,087 17,935 -

(a) Available for sale investment securities: Listed equities 90,012 77,810 - - Unlisted equities at cost 496,636 485,463 - - Specific impairment allowance (see note 9(a)(iii) below) (171,385) (169,411) - -

415,263 393,862 - -

(i) An analysis of equities in available for sale financial assets as at 31 December 2015 is as shown below

31-Dec-15 31-Dec-14 Carrying Percentage Carrying Percentage value holding value holding Name of entity N’000 % N’000 %

Sterling Assurance 235,797 7% 235,797 7% Capital Bancorp 1,716 1% 1,716 1% R.E.A Real property investment 1,449 5% 1,449 5% DPMS 1,261 2% 1,261 2% African Reinsurance Corporation 82,766 3% 70,551 3% Nigeria Liability Pool 21,160 11% 10,000 11% Nigeria Energy Liability Pool 67,000 4 Lines 67,000 12% Others 4,114 6,088

415,263 393,862



(ii) The Group’s available for sale financial assets includes investment in listed and unlisted equities. Unlisted equities are carried at cost less impairment allowance as the fair value could not be determined reliably. Listed available for sale equities are measured at fair value using the quoted prices in active markets and fair value changes recognised in other comprehensive income. The investments were assessed for impairment as at year end.

(iii) The movements in specific impairment allowance on listed and unlisted equities classified as available for sale is analyzed below:


Balance, beginning of year 169,411 169,411 - - Impairment allowance recognised during the year 1,974 - - -


(b) Fair value through profit or loss (FVTPL)


Federal government bonds 298,531 160,686 - - Treasury bills 79,611 35,161 - - Listed equities 1,558,732 1,930,377 17,935 -

1,936,874 2,126,224 17,935 -

(c) Loans and receivables at amortised cost


Unlisted debenture - 328 - - Staff personal loans 4,755 - - - Staff mortgage loans 214,631 149,162 - - Policy holders loan 23,045 10,898 - - Placement with financial institutions 854,315 1,066,756 - -

1,096,746 1,227,144 - -

(d) Held to maturity investment securities


State government bonds - 128,379 - - Corporate bonds - 148,478 - -

- 276,857 - -

10 Investment in subisidiaries


Royal Exchange General Insurance Company Limited - - 5,169,404 5,169,404 Royal Exchange Prudential Life Assurance Plc. - - 2,565,833 2,565,833 Royal Exchange Finance and Asset Management Limited - - 748,276 748,276 Royal Exchange Healthcare Company Limited - - 151,669 151,669 Royal Exchange Microfinance Bank Limited - - 106,205 106,205

- - 8,741,387 8,741,387 Allowance for impairment - - (80,923) (80,923)

- - 8,660,464 8,660,464



(a) The subsidiary companies comprise of the following:

Ownership interest (%) Name of Entity Nature of Business Year End 31-Dec-15 31-Dec-14

Royal Exchange General Insurance Company Limited Non-Life Insurance 31 Dec 100.00 100.00 Royal Exchange Prudential Life Assurance Plc. Life Insurance 31 Dec 100.00 100.00 Royal Exchange Finance And Asset Management Limited Credit Financing and Asset Management 31 Dec 100.00 100.00 Royal Exchange Healthcare Company Limited (see note (i) below) Health insurance 31 Dec 29.84 29.84 Royal Exchange Microfinance Bank Limited (see note (ii) below) Microfinance Bank 31 Dec 53.00 53.00

All subsidiaries are incorporated in Nigeria.

Indirect holdings The Company indirectly owns shares in Royal Exchange Healthcare Company Limited and Royal Exchange Microfinance Bank through

some of its wholly owned subsidiaries as listed below:

Royal Exchange Healthcare Royal Exchange Microfinance Holdings Company Limited Bank

Indirect holdings Royal Exchange General Insurance Company Limited 33.00 14.60 Royal Exchange Prudential Life Assurance Plc. 37.16 21.60 Royal Exchange Finance And Asset Management Limited - 10.80

70.16 47.00 Direct holdings by the Company 29.84 53.00

100.00 100.00

There are no non-controlling interests in any of the subsidiaries



(a) The condensed financial data of the consolidated entities as at 31 December 2015, are as follows

(ii) Condensed statement of profit or loss for the year ended 31 December 2015

Royal Royal Royal Exchange Royal Exchange Exchange Finance Exchange Royal Group Elimination Royal General Prudential and Asset Microfinance Exchange In thousands of Naira balances entries Total Exchange Plc Insurance Life Management Bank Healthcare

Gross premium income 10,809,176 (75,277) 10,884,453 - 6,968,693 3,495,959 - - 419,801 Reinsurance expenses (2,724,325) - (2,724,325) - (2,311,560) (412,765) - - -

Net premium income 8,084,851 (75,277) 8,160,128 - 4,657,133 3,083,194 - - 419,801 Fee and commission income 330,561 - 330,561 - 279,985 50,576 - - -

Net underwriting Income 8,415,412 (75,277) 8,490,689 - 4,937,118 3,133,770 - - 419,801

Total underwriting expenses (6,845,795) - (6,845,795) - (3,618,196) (2,909,037) - - (318,562)

Underwriting profit 1,569,617 (75,277) 1,644,894 - 1,318,922 224,733 - - 101,239

Share of (loss) on investment in associate (36,628) (836) (35,792) - (35,792) - - - - Write-back/(charge) of impairment allowance (357,535) - (357,535) (2,289) (284,935) (19,884) (20,168) (3,547) (26,712) Investment and other income 1,201,955 (363,184) 1,565,139 225,958 769,412 218,400 182,185 80,067 89,117

Net income 2,377,409 (439,297) 2,816,706 223,669 1,767,607 423,249 162,017 76,520 163,644

Total expenses (3,274,370) 304,799 (3,579,169) (340,376) (1,626,811) (1,241,776) (152,876) (67,376) (149,954)

(Loss)/Profit before tax (896,961) (134,498) (762,463) (116,707) 140,796 (818,527) 9,141 9,144 13,690

Minimum tax (63,532) - (63,532) - (43,736) (15,112) - (748) (3,936) Income tax expense (338,467) - (338,467) (13,100) (300,722) (13,692) (8,750) (233) (1,970)

(Loss)/Profit after taxation (1,298,960) (134,498) (1,164,462) (129,807) (203,662) (847,331) 391 8,163 7,784



Condensed Statement of financial position as at 31 December 2015

Royal Royal Royal Exchange Royal Exchange Exchange Finance Exchange Royal Group Consolidation Royal General Prudential and Asset Microfinance Exchange In thousands of Naira balances entries Total Exchange Plc Insurance Life Management Bank Healthcare

ASSETS Cash and cash equivalents 7,035,842 (55,276) 7,091,118 105,452 5,534,750 406,915 894,058 96,214 53,729 Loans and advances to customers 1,278,434 (113,812) 1,392,246 - - - 1,255,637 136,609 - Advances under finance lease 123,269 (13,995) 137,264 - - - 137,264 - - Financial assets 3,448,883 (82,606) 3,531,489 17,935 2,676,939 690,775 52,006 13,000 80,834 Investment in subsidiaries - (8,660,464) 8,660,464 8,660,464 - - - - - Trade receivables 528,399 (27,407) 555,806 - 170,137 16,778 - - 368,891 Reinsurance assets 1,889,750 - 1,889,750 - 1,582,128 307,622 - - - Deferred acqusition cost 382,490 - 382,490 - 301,965 64,547 - - 15,978 Other receivables and prepayments 387,396 (2,193,944) 2,581,340 79,119 1,530,052 847,021 14,527 53,094 57,527 Investment in associates 274,088 (525,071) 799,159 - 500,669 283,217 15,273 - - Investment properties 6,807,743 - 6,807,743 - 3,265,716 3,037,927 - - 504,100 Property and equipment 2,219,584 - 2,219,584 26,600 1,912,242 233,592 15,960 10,270 20,920 Intangible assets 39,088 - 39,088 - 12,597 2,502 22,999 990 - Employees retirement benefits 154,016 - 154,016 - 154,016 - - - - Statutory deposits 555,000 - 555,000 - 340,000 215,000 - - - Deferred tax assets 427,621 (5,712) 433,333 - 401,915 - - - 31,418 Assets classified as held for sale 973,639 - 973,639 - - 973,639 - - -

Total assets 26,525,242 (11,678,287) 38,203,529 8,889,570 18,383,126 7,079,535 2,407,724 310,177 1,133,397

LIABILITIES Borrowings 1,020,083 91,725 928,358 872,257 5,001 - - 51,100 - Deferred income 122,169 - 122,169 - 122,169 - - - - Trade payables 5,387,629 (27,407) 5,415,036 - 5,376,586 38,450 - - - Other liabilities 1,469,737 (1,976,477) 3,446,214 1,199,985 760,545 696,603 548,910 7,762 232,409 Depositors’ funds 1,196,324 (55,276) 1,251,600 - - - 1,130,517 121,083 - Insurance contract liabilities 8,263,204 - 8,263,204 - 4,434,285 3,656,421 - - 172,498 Investment contract liabilities 336,271 - 336,271 - - 336,271 - - - Current income tax liabilities 488,713 - 488,713 255,109 217,737 1,789 8,750 1,132 4,196 Employees benefit liability 570,008 3,787 566,221 43,329 493,530 1,046 15,661 1,113 11,542 Deferred tax liabilities 244,868 - 244,868 - 186,916 31,809 - - 26,143

Total liabilities 19,099,006 (1,963,648) 21,062,654 2,370,680 11,596,769 4,762,389 1,703,838 182,190 446,788

EQUITY Share capital 2,572,685 (7,206,845) 9,779,530 2,572,685 4,366,667 2,161,339 208,046 70,793 400,000 Share premium 2,690,936 (2,076,946) 4,767,882 2,690,936 802,737 404,494 540,230 101,817 227,668 Contingency reserve 1,422,919 - 1,422,919 - 1,288,611 122,557 - - 11,751 Treasury shares (500,000) (500,000) - - - - - - - Retained earnings 834,374 77,074 757,300 1,254,849 255,887 (381,872) (352,785) (48,441) 29,662 Other component of equity 405,322 (7,922) 413,244 420 72,455 10,628 308,395 3,818 17,528

Total equity 7,426,236 (9,714,639) 17,140,875 6,518,890 6,786,357 2,317,146 703,886 127,987 686,609

Total equity & liabilities 26,525,242 (11,678,287) 38,203,529 8,889,570 18,383,126 7,079,535 2,407,724 310,177 1,133,397



(ii) The condensed financial data of the continuing operations as at 31 December 2014, are as follows

Condensed statement of profit or loss for the year ended 31 December 2014 (Restated)


Gross premium income 9,868,197 - 9,868,197 - 6,922,060 2,639,442 - - 306,695 Reinsurance expenses (2,501,571) - (2,501,571) - (2,165,027) (336,544) - - -

Net premium income 7,366,626 - 7,366,626 - 4,757,033 2,302,898 - - 306,695 Fee and commission income 412,693 - 412,693 - 376,915 35,778 - - -

Net underwriting Income 7,779,319 - 7,779,319 - 5,133,948 2,338,676 - - 306,695

Total underwriting expenses (5,456,622) - (5,456,622) - (3,749,811) (1,540,113) - - (166,698)

Underwriting profit 2,322,697 - 2,322,697 - 1,384,137 798,563 - - 139,997

Share of profit/loss on investment in associate (17,031) - (17,031) - (17,031) - - - - Write-back/(charge) of impairment allowance (118,198) - (118,198) - (88,698) (824) (20,133) (2,306) (6,237) Investment and other income 1,204,337 (577,933) 1,782,270 562,846 451,674 341,510 162,885 81,493 181,862

Net income 3,391,805 (577,933) 3,969,738 562,846 1,730,082 1,139,249 142,752 79,187 315,622

Total expenses (3,087,075) 277,973 (3,365,048) (412,753) (1,570,669) (976,338) (135,353) (65,125) (204,810)

Profit before tax 304,730 (299,960) 604,690 150,093 159,413 162,911 7,399 14,062 110,812

Minimum tax (71,039) - (71,039) - (45,188) (22,042) - - (3,809) Income tax expense (94,151) - (94,151) (31,606) (57,116) (437) (6,716) (1,041) 2,765

Profit after taxation 139,540 (299,960) 439,500 118,487 57,109 140,432 683 13,021 109,768



Condensed Statement of financial position as at 31 December 2014 (Restated)


ASSETS Cash and cash equivalents 6,635,540 (54,217) 6,689,757 49,606 5,617,944 391,988 328,594 162,626 138,999 Loans and advances to customers 1,083,876 (71,256) 1,155,132 - - - 1,082,406 72,726 - Advances under finance lease 102,980 (25,845) 128,825 - - - 128,825 - - Financial assets 4,024,087 (20,586) 4,044,673 - 3,193,407 691,355 75,312 10,772 73,827 Investment in subsidiaries - (8,660,464) 8,660,464 8,660,464 - - - - - Trade receivables 319,428 - 319,428 - 32,832 78,633 - - 207,963 Reinsurance assets 1,916,261 - 1,916,261 - 1,745,574 170,687 - - - Deferred acqusition cost 366,892 - 366,892 - 327,004 34,606 - - 5,282 Other receivables and prepayments 476,235 (974,074) 1,450,309 81,920 1,133,203 162,650 17,585 40,393 14,558 Investment in associates 295,250 (521,820) 817,070 - 518,580 283,217 15,273 - - Investment properties 7,722,739 - 7,722,739 - 3,341,639 3,874,650 - - 506,450 Property and equipment 1,673,178 - 1,673,178 17,488 1,435,076 172,826 17,029 1,488 29,271 Intangible assets 46,863 - 46,863 - 21,078 2,748 22,999 38 - Employees retirement benefits 170,199 (11,350) 181,549 - 170,199 11,350 - - - Deferred tax assets 640,445 (57,576) 698,021 - 671,643 - - - 26,378 Statutory deposits 555,000 - 555,000 - 340,000 215,000 - - -

Total assets 26,028,973 (10,397,188) 36,426,161 8,809,478 18,548,179 6,089,710 1,688,023 288,043 1,002,728

LIABILITIES Deferred income 102,234 - 102,234 - 102,234 - - - - Trade payables 5,151,843 - 5,151,843 - 5,121,897 29,946 - - - Other liabilities 1,252,453 (498,534) 1,750,987 672,377 492,065 381,374 46,779 2,767 155,625 Finance lease obligations - - - - - - - - - Depositors’ funds 1,032,616 (54,218) 1,086,834 - - - 923,215 163,619 - Insurance contract liabilities 7,094,226 - 7,094,226 - 4,733,745 2,222,552 - - 137,929 Investment contract liabilities 257,963 - 257,963 - - 257,963 - - - Dividend payable - - - - - - - - - Current income tax liabilities 502,951 - 502,951 255,109 222,666 11,108 6,963 1,194 5,911 Employees benefit liability 545,206 (11,350) 556,556 24,374 515,093 2,935 7,240 639 6,275 Borrowings 1,033,369 (72,642) 1,106,011 1,106,011 - - - - - Deferred tax liabilities 172,495 (51,865) 224,360 - 180,756 18,117 - - 25,487

Total liabilities 17,145,356 (688,609) 17,833,965 2,057,871 11,368,456 2,923,995 984,197 168,219 331,227

EQUITY Share capital 2,572,685 (7,206,845) 9,779,530 2,572,685 4,366,667 2,161,339 208,046 70,793 400,000 Share premium 2,690,936 (2,076,946) 4,767,882 2,690,936 802,737 404,494 540,230 101,817 227,668 Contingency reserve 1,176,375 - 1,176,375 - 1,081,952 86,848 - - 7,575 Treasury shares (500,000) (500,000) - - - - - - - Retained earnings 2,657,434 80,923 2,576,511 1,487,563 797,205 500,816 (181,633) (53,498) 26,058 Other component of equity 286,187 (5,711) 291,898 423 131,162 12,218 137,183 712 10,200

Total equity 8,883,617 (9,708,579) 18,592,196 6,751,607 7,179,723 3,165,715 703,826 119,824 671,501

Total equity & liabilities 26,028,973 (10,397,188) 36,426,161 8,809,478 18,548,179 6,089,710 1,688,023 288,043 1,002,728



11 Trade receivables Group Group Company Company In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Due from agents (see note 11(a) below) 380,535 254,141 - - Due from co-insurers (see note 11(b) below) 147,864 65,287 - -

528,399 319,428 - -

Within one year 528,399 319,428 - - More than one year - - - -

528,399 319,428 - -

The carrying amount is a reasonable approximation of fair value

(a) The analysis of due from agents is as follows:

Gross receivable from agents 808,264 381,376 - - Less: Impairment allowance (see note 11a(i) below) (427,729) (127,235) - -

380,535 254,141 - -

(i) The movements in impairment allowance on amount duefromagentsisanalysedbelow;

Balance, beginning of year 127,235 45,144 - - Allowance made during the year (see note 45) 302,079 90,928 - - Write off (325) - - - Write back (see note 45) (1,260) (8,837) - -

Balance, end of the year 427,729 127,235 - -

(b) The analysis of due from co-insurers is as follows:

Reinsurance receivables 300,646 202,797 - - Less: Impairment allowance (see note 11(b)(i) below) (152,782) (137,510) - -

147,864 65,287 - -

(i) The movements in impairment allowance on reinsurancereceivablesisanalysedbelow;

Balance, beginning of year 137,510 126,387 - - Allowance made during the year (see note 45) 15,272 11,123 - -

Balance, end of the year 152,782 137,510 - -

12 Reinsurance assets Group Group Company Company In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Non-life business reinsurance share of insurance liabilities (see 12(a) below) 1,582,128 1,745,574 - -

Life business reinsurance share of insurance liabilities (see 12(b) below) 307,622 170,687 - -

1,889,750 1,916,261 - -

Within one year 1,760,238 1,863,015 - - More than one year 129,512 53,246 - -

1,889,750 1,916,261



(a) Non-life business reinsurance share of insurance liabilities


Prepaid reinsurance premium (see note (a)(i)) 858,696 912,846 - - Reinsurer’s share of claims expenses outstanding (see note (a)(ii)) 437,798 436,158 Reinsurer’s share of incurreed but not reported claims (see note (a)(iii)) 285,634 396,570 - -

1,582,128 1,745,574 - -

(i) The movement in prepaid reinsurance premium is shown below: Group Group Company Company In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Balance, beginnning of year 912,846 1,030,254 - - Movement during the year (see note 37) (54,150) (117,408)


(ii) The movement in reinsurer’s share of claims expenses outstanding is shown below:


Balance, beginnning of year 436,158 608,602 - - Movement during the year 1,640 (172,444)


(iii) The movement in reinsurer’s share of incurred but not reported claim is shown below:


Balance, beginnning of year 396,570 257,325 - - Movement during the year (110,936) 139,245


(iv) Analysis of non-life business reinsurance share of insurance liabilities by business classes are as follows:


Fire 491,262 505,106 - - General accident 93,060 95,063 - - Motor 126,505 118,315 - - Marine 73,491 93,714 - - Oil & gas 697,414 849,763 - - Engineering 89,924 59,857 - - Bonds 10,472 23,756 - -

1,582,128 1,745,574 - -



(b) Life business reinsurance share of insurance liabilities


Reinsurance asset (actuarial valuation) (see note 12(b)(i)) 204,068 129,512 - - Reinsurer and facultative asset (see note 12(b)(ii)) 103,554 41,175 - -

307,622 170,687 - -

(i) Reinsurance assets (actuarial valuation)

In thousands of Naira Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Short-term insurance contract 195,232 128,193 - - Long-term insurance contract 8,836 1,319 - -

204,068 129,512 - -

(ii) The movement in life business reinsurance assets is as shown below:


At 1 January 170,687 147,856 - - Additions in the year 374,779 192,347 Receipts during the year (237,844) (169,516) - -

Balance as at year end 307,622 170,687 - -

Reinsurance assets are valued after an allowance for their recoverability and the carrying amount is a reasonable approximation of fair value

13 Deferred acquisition costs This represents the unexpired portion of the commission paid to brokres and agents as at reporting date.


Balance at start of the year 366,892 469,160 - - Additions in the year 853,049 820,404 - - Amortization in the year (837,451) (922,672) - -

Balance as at year end 382,490 366,892 - -

Within one year 382,490 366,892 - - More than one year - - - -

382,490 366,892 - -



14 Other receivables and prepayment

Restated* Restated* Restated* Restated* Group Group Group Company Company Company In thousands of Naira 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Intercompany receivables (see note 14(a) below) - - - 47,280 40,338 35,286 Accrued investment income (see note 14(b) below) 172,819 222,569 57,562 - - - Other receivables (see note 14(c) below) 818,170 873,474 942,866 23,537 24,249 26,279 Prepayments 274,786 250,081 278,036 10,591 17,333 16,409

1,265,775 1,346,124 1,278,464 81,408 81,920 77,974

Impairment allowance on other receivables (see note 14(d) below) (878,379) (869,889) (869,889) (2,289) - -

387,396 476,235 408,575 79,119 81,920 77,974

Within one year 387,396 476,235 408,575 79,119 54,617 50,671 More than one year - - - - 27,303 27,303

387,396 476,235 408,575 79,119 81,920 77,974

* See note 4

(a) Due from related parties

Restated Restated Restated Restated Group Group Group Company Company Company In thousands of Naira 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Royal Exchange Microfinance Bank Limited - - - 1,397 257 2,849 Royal Exchange Finance and Asset Management Limited - - - 1,897 - - Royal Exchange Healthcare Limited - - - 43,986 40,081 32,437

- - - 47,280 40,338 35,286

(b) Accrued investment income


Dividend receivables 172,819 222,569 57,562 - - -

172,819 222,569 57,562 - - -

(c) Other receivables Restated Restated Restated Restated Group Group Group Company Company Company In thousands of Naira 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Inventory 8,692 7,693 8,555 - - - Accrued rental income 20,279 21,943 18,630 - - - Staff advance and other debtors 115,701 168,595 162,941 - - - Management fees receivable - - - 20,558 21,811 24,689 Trustee fees receivable 2,635 2,316 1,590 2,635 2,316 1,590 Sundry debtors 624,028 624,028 624,028 - - - Annuity certain - 1,110 - - - - Receivable from Funds under management 2,167 2,167 2,167 - - - Sundry receivables 44,668 45,622 124,955 344 122 -

818,170 873,474 942,866 23,537 24,249 26,279



(d) Impairment allowance on other receivables The movements in impairment allowance on other receivables is analysed below:


Balance, beginning of year 869,889 794,849 1,025,703 - - - Allowance made during the year (see note 45) 24,610 34,461 22,673 2,289 - - Write off (7,265) - (248,507) - - - Reclassifications - 57,817 - - - - Write back (see note 45) (8,855) (17,238) (5,020) - - -

Balance, end of year 878,379 869,889 794,849 2,289 - -

Included in other assets are financial assets as follows:

In thousands of Naira Restated Restated Restated Restated Group Group Group Company Company Company 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Financial assets 112,610 226,154 130,539 68,528 64,587 61,565

15 Investment in associates(a The movement in balances of investment in associates are as shown below:


Balance, beginning of the year 295,250 213,694 - - Additional investment during the year 30,000 96,908 - - Dividend income (14,534) - - - Share of current year result recognised in OCI - 1,679 - -

310,716 312,281 - -

Share of current year result recognised in profit or loss (48,799) (17,031) - - Share of cumulative unrecognised results 12,171 - - -

Recognised in profit or loss (36,628) (17,031) - -

Balance, end of the year (see note 15(b) below) 274,088 295,250 - -

(b) This represents the Group’s investment in the ordinary shares of City Business Computers EMEA Limited (CBC EMEA) incorporated in Nigeria, representing 26.10% (December 2014: 24.9%) equity interest in the company. The investee company has 31 December as its year end.

The summarised financial information of CBCEMEA Limited are as set out below:

In thousands of Naira 31-Dec-15 31-Dec-14

Percentage ownership interest 26.10% 24.90%

Non-Current Asset 1,767,001 2,119,641 Current Asset 3,369,394 2,116,344

Total Assets 5,136,395 4,235,985 Non-Current Liabilities (820,867) - Current Liabilities (3,265,328) (3,511,503)

Total Liabilities (4,086,195) (3,511,503)

Net assets 1,050,200 724,482

Company’s share of net assets 274,088 180,396

Carrying amount of associate 274,088 295,250

Revenue 3,078,818 1,832,003 (Loss)/profit after tax from continuing operations (186,978) (107,676) Other comprehensive income - 7,325 Total comprehensive income (186,978) (100,351)

Company’s share of total comprehensive income (48,799) (4,370) Company’s share of other comprehensive income - 1,679

Company’s share of loss (48,799) (17,031)



16 Investment properties


At 1 January 7,722,739 7,092,569 - - Additions during the year - 45,855 - - Fair value gains (see note 44) 600,530 584,315 - - Transfer to property and equipment (see note 18) (541,887) - - - Transfer to non current assets held for sale (see note 17) (973,639) - - -

At 31 December 6,807,743 7,722,739 - -

(a) The items of investment properties are valued as shown below:

Investment properties Location Name of valuer Address of Valuer FRC NOS. NIESVA Reg. no 31-Dec-15 31-Dec-14

In thousands of Naira

No. 2, Bank road, off Ibrahim Yayok Associates Suite B7, Halima Plaza, FRC/2013/NIESV/00000 Taiwo way, Kano Estate Surveyor & Valuer behind Sahad Stores, 000834 A-1277 320,700 302,450 Balanga,Abuja No.5, NBC road, off Ahmadu Yayok Associates Suite B7, Halima Plaza, FRC/2013/NIESV/00000 Bello way, Kaduna Estate Surveyor & Valuer behind Sahad Stores, 000834 A-1277 220,800 214,700 Balanga,Abuja No.7,UsumaCresentMaitama EmekaOrji Suite9G,9thfloor, FRC/2013/NIESV/00000 Abuja

Partnership Ahmed Talib House 000976 (NNDC) 18/19 Ahmadu Bello Way, Kaduna A-1672 545,824 513,502

No6a/6bUsumaCresent, EmekaOrji Suite9G,9thfloor, FRC/2013/NIESV/00000 Maitama,Abuja. Partnership AhmedTalibHouse 000976 A-1672 - 541,886 (NNDC) 18/19 Ahmadu Bello Way, Kaduna No 1, Eleko close, Ikoyi, Saibu Makinde & NIPOST Building, 5th floor FRC/2013/NIESV/00000

Lagos Associates (rightwing),Lafiaji,Lagos 000730 A-1878 700,000 608,970

No. 2,Eleko close Ikoyi Saibu Makinde & NIPOST Building, 5th floor FRC/2013/NIESV/00000 Lagos Associates (rightwing),Lafiaji,Lagos 000730 A-1878 850,000 570,000

No. 26, Abduraman Okene cresent, Saibu Makinde & NIPOST Building, 5th floor FRC/2013/NIESV/00000 VictoriaIsland,Lagos Associates (rightwing),Lafiaji,Lagos 000730 A-1878 628,391 590,132

29,OroagocrescentGarki11,Abuja EmekaOrji Suite9G,9thFloor,Ahmed FRC/2013/NIESV/00000 Partnership Talib House. (NNDC), 18/19 000976 A-1672 356,196 326,037 Ahmodu Bello Way, Kaduna

776CadastralZoneA00, EmekaOrji Suite9G,9thFloor,Ahmed FRC/2013/NIESV/00000 Centralbusinessarea,Abuja Partnership TalibHouse.(NNDC),18/19 000976 A-1672 - 973,639 Ahmodu Bello Way, Kaduna

15a Asa road, Aba Uma Uma & Compa Saibu 46 St. Michael’s Road, Aba, FRC/2013/NIESV/00000 36/38, Apapa Oshodi expressway, Makinde & Associates Abia State 004050 A-421 69,000 70,000 Oshodi, Lagos NIPOST Building, 5th floor FRC/2013/NIESV/00000 (rightwing),Lafiaji,Lagos 000730 A-1878 755,026 704,973

10, Bayo Kuku street, Ikoyi, Lagos Saibu Makinde & NIPOST Building, 5th floor FRC/2013/NIESV/00000 Associates (rightwing),Lafiaji 000730 A-1878 1,857,706 1,800,000 Valuer Lagos

12, Post Office road, Kano Yayok Associates Suite B7, Halima Plaza, FRC/2013/NIESV/00000 Estate Surveyor & behind Sahad Stores, 000834 A-1277 362,500 355,850

Valuer Balanga,Abuja

8, Bank street, Jos. Yayok Associates Suite B7, Halima Plaza, FRC/2013/NIESV/00000 Estate Surveyor & behind Sahad Stores, 000834 A-1277 141,600 150,600 Valuer Balanga,Abuja

6,807,743 7,722,739



(a) Movement in investment properties are as shown below:

For the year ended 31 December 2015

Balance as at 1 January Fair value Balance as at 31 Property Details 2015 Additions Transfer Gain/(Loss) December 2015

In thousands of Naira No.2, bank road, off Ibrahim Taiwo way, Kano 302,450 - - 18,250 320,700 No.5, NBC road, off Ahmadu Bello way, Kaduna 214,700 - - 6,100 220,800 No.7,UsumaCresentMaitamaAbuja 513,502 - - 32,322 545,824 No6a/6bUsumaCresent,Maitama,Abuja. (see note (a)(i) below) 541,886 - (541,886) - - No 1, Eleko close, Ikoyi, Lagos 608,970 - - 91,030 700,000 No. 2,Eleko close Ikoyi Lagos 570,000 - - 280,000 850,000 No. 26, Abduraman Okene Cresent,Victoria Island, Lagos 590,132 - - 38,259 628,391 29,OroagoCrescentGarki11,Abuja 326,037 - - 30,159 356,196 776CadastralZoneA00,Centralbusinessarea,Abuja (see note (a)(ii) below) 973,639 - (973,639) - - 15a Asa road, Aba 70,000 - - (1,000) 69,000 36/38, Apapa Oshodi Expressway Oshodi, Lagos 704,973 - - 50,053 755,026 10, Bayo Kuku Street, Ikoyi, Lagos 1,800,000 - - 57,706 1,857,706 12, Post office road, Kano 355,850 - - 6,650 362,500 8, Bank Street, Jos. 150,600 - - (9,000) 141,600

7,722,739 - (1,515,525) 600,529 6,807,743


Balance as at 1 January Fair value Balance as at 31 Property Details 2014 Additions Transfer Gain/(Loss) December 2014

No.2, bank road, off Ibrahim Taiwo way, Kano 289,400 - - 13,050 302,450 No.5, NBC road, off Ahmadu Bello way, Kaduna 202,500 - - 12,200 214,700 No.7,UsumaCresentMaitamaAbuja 430,000 - - 83,502 513,502 No6a/6bUsumaCresent,Maitama,Abuja. 442,862 - - 99,024 541,886 No 1, Eleko close, Ikoyi, Lagos 520,000 - - 88,970 608,970 No. 2,Eleko close Ikoyi Lagos 580,000 - - (10,000) 570,000 No. 26, Abduraman Okene Cresent,Victoria Island, Lagos 550,000 - - 40,132 590,132 29,OroagoCrescentGarki11,Abuja 324,441 - - 1,596 326,037 776CadastralZoneA00,Centralbusinessarea,Abuja 939,182 - - 34,457 973,639 15a Asa road, Aba 74,000 - - (4,000) 70,000 36/38, Apapa Oshodi Expressway Oshodi, Lagos 690,000 - - 14,973 704,973 10, Bayo Kuku Street, Ikoyi, Lagos 1,620,000 45,855 - 134,145 1,800,000 12, Post office road, Kano 290,600 - - 65,250 355,850 8, Bank Street, Jos. 139,584 - - 11,016 150,600

7,092,569 45,855 - 584,315 7,722,739

(i) TheinvestmentpropertylocatedatNo6a/6bUsumaCresent,Maitama,Abujahasbeentransferredtoproperty,plantandequipmentduring the year because it is being occupied by the Group (see note18).

(ii) Theinvestmentpropertylocatedat776CadastralZoneA00,Centralbusinessarea,Abujahasbeentransferredtononcurrentassetsheld for sale (see note 17) as management has committed to sell the investment property.

(b) Valuation techniques used for fair valuation of investment properties

Investment properties are stated at fair value, which has been determined based on valuations performed by Messrs Yayok Associates, EmekaOrji,UmaUma&Company&SaibuMakindeAssociatesasat31December2015.Theyareindustryspecialistsinvaluingthesetypes of investment properties. The fair value is supported by market evidence and represents the amount at which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction at the date of valuation, in accordance with standards issued by the International Valuation Standards Committee. Valuations are performed on an annual basis and the fair value gains and losses are reported in profit or loss. The profits or losses on disposal are also reported in profit or loss as they occurred.

The fair value measurement for the investment properties has been categorised as a Level 3 fair value based on the use of significant unobservable inputs in the valuation technique used.



The details of valuation techniques and significant observable inputs used in determining the fair value of investment properties are presented below:

Property description Valuation Location of Valuation Significant Estimate Sensitivity on (N’000) investment technique unobservable management’s properties inputs Impact Impact Lower Upper (N’000) (N’000)

The property is a fully completed 320,700 2 Storey Sales Price per Sales 32,070 (32,070) building with 3 floors located in the building Comparison square meter price central business district of Kano located at per which is a commercial Kano square neighbourhood. +/- 10%

Site: The site, which is slightly irregular in shape, appears level and well drained and is relatively flat. It has a total area of approximately 1,685 square metres.

Situation: Primary access to the property is vide the Ibrahim Taiwo road Kano State.

The property is a 2 storey office 220,800 No.5, NBC road, Sales Price per Sales 22,080 (22,080) block and a commercial bungalow off Ahmadu Comparison square meter price located in the central business Bello way, per district of Kaduna State. Kaduna square +/- 10% Site: The site, which is rectangular in shape, appears level and relatively flat. It covers a total land area of approximately 5,184 square metres.

Situation: Primary access to the property is vide the Ahmadu Bello way while a secondary access is the Broadcasting road Kaduna State.

The property is a 5 bedroom 545,824 No. 7, Usuma Sales Price per Sales 54,582 (54,582) detached duplex located in a Cresent, Comparison square meter price high brow low density Maitama, per residentialneighbourhood Abuja square inAbuja. +/-10%

Site: The site is rectangular in shape, appears firm and is sloped gently towards the back. It has a total land area of approximately 2,133.60 square metres.

Situation: Primary access to the property is vide the Usman Crescent which takes its root from Gana street which itself takes root from the popular ShehuShagariwayinMaitamaAbuja.




The property is a 4 bedroom detached house. It is located in the Old Ikoyi fully developed neighbourhoud of Lagos.

Site: The site, which is rectangular in

shape, and covers a total land area of approximately 1,041.76 square metres.

Situation: Primary access to the property is vide the Macpherson Street which carries traffic to Bourdillon road Ikoyi.

The property is a 4 bedroom detached house. It is located in the Old Ikoyi fully developed neighbourhoud of Lagos.

Site: The site, which is rectangular in shape, and covers a total land area of approximately 1,837.85 square metres.

The property is a block of open plain office space on two floors. It is located in the commercial area of Lagos State.

Site: The site, which is rectangular in shape, appears level and relatively flat. It covers a total land area of approximately 1,260 square metres.

Situation: Primary access to the property is vide the Ligali Ayorinde Street.

The property is a fully completed building with 3 floors located in the central business district of Garki II,Abujawhichisacommercialneighbourhood.

Site: The site, which is slightly irregular in shape, appears level and well drained and is relatively flat. It has a total area of approximately 2,017 square metres.

Situation: Primary access to the property is vide the Muhammud Buhari Way,Abuja.

The property is a fully completed building with 2 floors located in the central business district of Aba, Abia State which is a commercial neighbourhood.

Site: The site, which is rectangular in shape, appears level and well drained and is relatively flat. It has a total area of approximately 2,017 square metres.

Situation: Primary access to the property is vide the

MuhammudBuhariWay,Abuja.

700,000

850,000

628,391

356,196

69,000

No 1, ElekoClose,Ikoyi, Lagos

No. 2, Eleko CloseIkoyi Lagos

No. 26, Abduraman Okene Cresent,Victoria Island, Lagos

29 Oroago Crescent, Garki 11,Abuja

15a, Asa Road, Aba

Sales Comparison

Sales Comparison

Sales Comparison

Sales Comparison

Sales Comparison

Price persquare meter





Sales price per square +/- 10%





70,000 (70,000)

85,000 (85,000)

62,839 (62,839)

35,620 (35,620)

6,900 (6,900)




The property is a fully completed building with 3 floors located in Oshodi, Lagos which is a commercial neighbourhood.

Site: The site, which is rectangular in shape, appears level and relatively flat. It covers a total land area of approximately 5,275 square metres.

Situation: Primary access to the property is vide the Oshodi Apapa Express way and Akin Lawanson street, Lagos State.

The property is a detached house of 4 bedrooms, 4 Nos room servant quarters/boys quarters, car park, gate house, swimming pool, generatorhouse;allenclosedinadwarf concrete slab wall fence with metal grills and a secured gate. It is located within Ikoyi’s commercial zone.

Site: The site, which is rectangular in shape and appears level. It covers a total land area of approximately 5,040 square metres.

Situation: Primary access to the property is vide the Alfred Rewane Road, Ikoyi side, Lagos State.

The property is a fully completed building with 2 floors located in the Central Business District Kano Municipality, which is a commercial neighbourhood.

Site: The site, which is triangular in shape, appears level and relatively flat. It covers a total land area of approximately 2,618 square metres.

Situation: Primary access to the property is vide Post Office Road and Bank Road, Kano.

The property is a fully completed building with 3 floors located in Oshodi, Lagos which is a commercial neighbourhood.

Site: The site, which is triangular in shape, appears level and relatively flat. It covers a total land area of approximately 2,618 square metres.

Situation: Primary access to the property is vide the Oshodi Apapa Express way and Akin Lawanson street, Lagos State.

755,026

1,857,706

362,500

141,600

36/38, Apapa Oshodi Expressway Oshodi, Lagos and 10, Bayo Kuku Street, Ikoyi, Lagos

10, Bayo Kuku Street, Ikoyi, Lagos

12, Post Office Road, Kano

8, Bank Street, Jos.

Sales Comparison

Sales Comparison

Sales Comparison

Sales Comparison









75,503 (75,503)

185,771 (185,771)

36,250 (36,250)

14,160 (14,160)



17 Assets classified as held for sale


Balance, beginning of year - - - - Transfer from investment properties (see note 16) 973,639 - - -

Balance, end of year 973,639 - - -

In December 2015, management committed to a plan to sell one of its investment property located at 776 Cadastral Zone A00, Central businessarea,Abuja.Accordingly,thispropertyispresentedasanoncurrentassetsheldforsale.

At31December2015,thenoncurrentassetsheldforsalewasstatedatitscarryingamount;asinvestmentpropertiesaremeasuredat the lower of its carrying amount and fair value less cost to sell.

The company conducted an impairment test on the non current asset held for sale in the period under review and there was no indication of impairment on the assets. The fair value of the non current asset held for sale as at 31 December 2015 stood at N990 million, higher than the carrying amount of N974 million, hence there were no changes to its carrying amount. There are no gains or losses recognised in relation to its classification as a non-current asset held for sale.

ThedeterminationofthefairvaluewasconductedbyaprofessionalEstateSurveyorandValuer;EmekaOrjiPartnership,withFRCnumber FRC/2013/NIESV/00000000976 and NIESV number A-1672.

18 Property and equipment(a) Group

Freehold Computer Furniture Motor In thousands of Naira Land buildings Equipment and Fittings Vehicles Total

Cost Balance at 1 January 2015 137,649 1,161,958 280,857 558,544 789,841 2,928,849 Transfer from investment properties (see note 16) - 541,886 - - - 541,886 Reclassification (2,624) 2,624 1,747 (1,747) - - Additions 62,500 73,576 17,451 22,233 117,012 292,772 Disposals - - - (3,412) (80,800) (84,212)

Balance at 31 December 2015 197,525 1,780,044 300,055 575,618 826,053 3,679,295

Balance at 1 January 2014 - 1,291,540 267,655 531,499 708,834 2,799,528 Transfer from prepaid expenses - - - 10,288 - 10,288 Reclassification 135,026 (135,026) (9,000) - 9,000 - Additions 2,623 5,444 25,071 37,739 166,327 237,204 Disposals - - (2,869) (20,982) (94,320) (118,171)


Accumulated Depreciation Balance at 1 January 2015 16 121,064 236,307 425,291 472,993 1,255,671 Charge for the year 2,440 40,180 20,850 50,830 141,489 255,789 Reclassification - - 603 (603) - - Disposals - - - (2,763) (48,986) (51,749)

Balance at 31 December 2015 2,456 161,244 257,760 472,755 565,496 1,459,711

Balance at 1 January 2014 - 73,881 217,886 388,778 428,275 1,108,820 Charge for the year 16 47,183 21,797 56,708 136,654 262,358 Reclassification - - (750) 750 - Transfer - - - 778 - 778 Disposals - - (2,626) (20,973) (92,686) (116,285)

Balance at 31 December 2014 16 121,064 236,307 425,291 472,993 1,255,671

Carrying amounts: Balance at 31 December 2015 195,069 1,618,800 42,295 102,863 260,557 2,219,584




(i) There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2014: nil).(iii) The Group had no capital commitments as at the balance sheet date (2014: nil) see note 59(a)

(b) Company

Freehold Computer Furniture Motor In thousands of Naira buildings Equipment and Fittings Vehicles Total

Cost Balance at 1 January 2015 - 14,252 27,479 30,650 72,381 Additions - 372 - 18,500 18,872 Reclassifications - 1,747 (1,747) - -

Balance at 31 December 2015 - 16,371 25,732 49,150 91,253

Balance at 1 January 2014 - 14,149 26,212 22,500 62,861 Additions - 103 1,267 8,150 9,520


Accumulated Depreciation Balance at 1 January 2015 - 13,176 21,314 20,403 54,893 Charge - 952 1,906 6,902 9,760 Transfer - 603 (603) - -


Balance at 1 January 2014 - 12,374 18,386 15,250 46,010 Charge - 802 2,928 5,153 8,883


Carrying amounts: Balance at 31 December 2015 - 1,640 3,115 21,845 26,600


(i) There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2014: nil). (ii) The Company had no capital commitments as at the balance sheet date (2014: nil) see note 59(a)(iii) There was no property and equipment that has been pledged as security for borrowing as at year end. (2014: Nil)

19 Intangible assets


Cost: At 1 January 229,445 205,646 9,375 9,375 Additions 2,010 23,799 - -

At 31 December 231,455 229,445 9,375 9,375

Accumulated amortisation: At 1 January 182,582 168,228 9,375 9,375 Charge for the year 9,785 14,354 - -

At 31 December 192,367 182,582 9,375 9,375

Carrying Amount as at 31 December 39,088 46,863 - -

The Intangible assets of the Group comprised computer software.The computer software is accounted for using the cost model less accumulated amortization and accumulated impairment. The amortization is charged to the income statements in accordance with the Group’s policy. As at 31 December 2015, these assets were tested for impairment, and Management has determined that no impairment is required of these intangibles.



20 Employee benefit obligations The Group operates defined contribution pension plan based on the New Pension Act 2014, and a defined benefit gratuity plan based

on employee’s pensionable and other post-employment remuneration and length of service.

The details of the Group’s assets from Employee benefits are as below:

Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Defined benefit obligations (see Note 20.1 below) 154,016 170,199 - -

Employee benefit asset in statement of financial position 154,016 170,199 - -

The details of the Group’s liabilities from Employee benefit obligations are as below:


Defined contribution obligations 3,787 - - - Defined benefit obligations (see Note 20.1 below) 566,221 545,206 43,329 24,374

Employee benefit liability in statement of financial position 570,008 545,206 43,329 24,374

20.1 Defined benefit plan: The Group offers its employees defined benefit plans in the form of gratuity scheme and long service awards. The Gratuity Scheme

covers all employees and it is payable to an employee on resignation only if the employee has served the entity for more than five years. The gratuity benefit is based on a percentage of an employee’s annual emolument.

TheGroupoperatesaLongServiceAwardschemeforitsemployees.Qualificationforlongserviceawardsare10years,15years,20years, 25 years, 30 years and 35 years.

The defined benefit obligations are actuarially determined at the year end by HR Nigeria Limited with FRC number FRC/2012/NAS/00000000738.Theactuarialvaluationisdonebasedonthe“ProjectedUnitCredit”method.Gainsandlossesofchangedactuarialassumptions are charged to other comprehensive income.

(a) The details of the defined benefit plans are as below:


Pension (net asset) (see note 20.1 (d) below) 154,016 170,199 - -

Defined benefit asset in statement of financial position 154,016 170,199 - -

Gratuity (outstanding liability) (see note 20.1(e) below) (514,004) (504,219) (41,467) (22,843) Long service award (outstanding liability) (see note 20.1(f) below) (52,217) (40,987) (1,862) (1,531)

Defined benefit liability in statement of financial position (566,221) (545,206) (43,329) (24,374)

(b) Company’s obligations for:-


– Pension benefits (see note 20.1(d) below) (242,792) (193,545) - - – Gratuity (see note 20.1(e) below) (551,896) (530,941) (41,467) (22,843) – Long service award (see note 20.1(f) below) (52,217) (40,987) (1,862) (1,531)

Total Company’s obligation (846,905) (765,473) (43,329) (24,374)

(c) Fair value of Company’s plan assets


– Pension (see note 20.1(d) below) 396,808 363,744 - - – Gratuity (see note 20.1(e) below) 37,892 26,722 - -

434,700 390,466 - -



i Income statement charge for:-


– Pension benefits (see note 20.1(d)(iii) below) (27,837) (23,835) - - – Gratuity (see note 20.1(e)(iii) below) 98,981 114,629 21,700 5,068 – Long service award (see note 20.1(f)(ii) below) 12,278 11,860 443 407

Total (See note 48) 83,422 102,654 22,143 5,475


ii. Gain/ (loss) on other comprehensive income -Adjustmentsfornetpensionassets(seenote20.1(d)(iv)) (74,236) (84,717) - - -Adjustmentsforgratuityobligations((seenote20.1(e)(iv)) - 63,425 - (321) -Adjustmentsforlong-serviceawardsobligations(seenote20.1(f)(iii)) (909) 9,113 3 183

Total (75,145) (12,179) 3 (138)

Tax effect of remeasurement 7,413 (21,761) - -

Total in other comprehensive income (67,732) (33,940) 3 (138)

(d) Pension benefits The amounts recognised in the statement of financial position are determined as follows:


Present value of funded obligations (see note 20.1(d)(i) below) (242,792) (193,545) - - Fair value of plan assets (see note 20.1(d)(ii) below) 396,808 363,744 - -

Net asset in the statement of financial position 154,016 170,199 - -

Current - - - - Non-current 154,016 170,199 - -

154,016 170,199 - -

i The movement in the present value of the funded pension benefits obligation over the year is as follows:


At 1 January 193,545 251,768 - - Interest cost 26,724 30,600 - - Actuarial (gains)/ losses-assumption 37,436 (12,241) - - Actuarial (gains)/losses-experience 15,303 38,949 - - Benefits paid by employer (30,216) (64,117) - - Benefits paid by the fund - (51,414) - -

At 31 December 242,792 193,545 - -

ii The movement in the fair value of plan assets of the year is as follows:


At 1 January 363,744 418,731 - - Expected return on plan assets 54,561 54,435 - - Benefits paid - (51,413) - - Actuarial (loss)/gains (21,497) (58,009) - -

At 31 December 396,808 363,744 - -



iii The amounts recognised in the profit or loss are as follows:


Current service costs - - - - Net interest costs/income: - Interest costs (see note 20.1(d)(i)) 26,724 30,600 - - - Expected return on plan asset (see note 20.1(d)(i)) (54,561) (54,435) - -

At 31 December (27,837) (23,835) - -

iv The amounts recognised in other comprehensive income are as follows:


Actuarial (gains)/ losses-assumption for obligation (see note 20.1(d)(i)) (37,436) 12,241 - - Actuarial (losses)-experience for obligation (see note 20.1(d)(i)) (15,303) (38,949) - -

Actuarial (losses) on plan asset (see note 20.1(d)(i)) (21,497) (58,009) - -

At 31 December (74,236) (84,717) - -

The periodic pension costs are included in the staff costs for the reporting period and treated as a single line item. The principal actuarial assumptions used were as follows:


Discount rate 12% 15% N/A N/A Rate of pension increase 3% 3% N/A N/A Inflation rate 9% 10% N/A N/A

ThemortalityratesassumedfortheemployeesaretheratespublishedintheA67/70UltimateTablespublishedjointlybytheInstitute and Faculty of Actuaries in the United Kingdom.

The average life expectancy in years of a pensioner retiring at age 65, at the end of the reporting period is as follows:

Group Group Company Company In years 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Male 80 80 N/A N/A Female 84 84 N/A N/A

The average life expectancy in years of a pensioner retiring at age 65, 20 years after the end of the reporting period, is as follows:

Group Group Company Company In years 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Male 80 80 N/A N/A Female 84 84 N/A N/A

The sensitivity of overall pension liability to changes in the weighted principal assumptions is:

31-Dec-15

Change in assumption Impact on overall liability (N’000)

Discount rate -0.50% 0.50% 250,351 235,659

31-Dec-14


Discount rate -0.50% 0.50% 5,061 (4,810)



(e) Gratuity benefits The amounts recognised in the statement of financial position are determined as follows:


Present value of obligations (see note 20.1(e)(i) below) 551,896 530,941 41,467 22,843 Fair value of plan assets (see note 20.1(e)(ii) below) (37,892) (26,722) - -

Net obligation in the statement of financial position 514,004 504,219 41,467 22,843

Current - - - - Non-current 514,004 504,219 41,467 22,843

514,004 504,219 41,467 22,843

(i) The movement in the present value of the gratuity obligation over the year is as follows:


At 1 January 530,941 509,895 22,843 18,741 Current service cost 50,949 46,226 2,863 2,555 Interest cost 33,821 68,403 1,389 2,513 Past service cost (including curtailments) 14,211 - 17,448 - Benefits paid (78,026) (30,158) (3,076) (1,287) Actuarial (gains)/losses - (63,425) - 321

At 31 December 551,896 530,941 41,467 22,843

The gratuity plan has been terminated effective 31 December 2015. The Group plans to settle employees from it’s placements in 2016.

(ii) The movement in fair value of plan assets over the year is as follows:


At 1 January 26,722 - - - Employer contributions 11,170 26,722 - -

At 31 December 37,892 26,722 - -

(iii) The amounts recognised in the profit or loss are as follows:


Current service costs 50,949 46,226 2,863 2,555 Net interest costs/income: - Interest costs (see note 20.1(e)(i)) 33,821 68,403 1,389 2,513 Past service costs (including curtailment) (see note 20.1(e)(i)) 14,211 - 17,448 -

At 31 December 98,981 114,629 21,700 5,068

(iv) The amounts recognised in other comprehensive income are as follows:


Actuarial (gains)/losses on obligations (see note 20.1(e)(i)) - (63,425) - 321

At 31 December - (63,425) - 321

The periodic pension and gratuity costs are included in the staff costs for the reporting period and treated as a single line item.



The principal actuarial assumptions used were as follows:


Discount rate N/A 15% N/A 13.5% Future salary increases N/A 12% N/A 12% Inflation rate N/A 9% N/A 9%

This is not applicable since the scheme was discontinued as at the review date. The year-end liability was valued on a discontinuance basis and does not include any demographic or financial assumptions.

ThemortalityratesassumedfortheemployeesaretheratespublishedintheA67/70UltimateTablespublishedjointlybytheInstituteand Faculty of Actuaries in the United Kingdom.

The sensitivity of overall gratuity liability to changes in the weighted principal assumptions is:

31-Dec-15


Discount rate -0.50% 0.50% N/A N/A

Future salary increases -0.50% 0.50% N/A N/A

31-Dec-14


Discount rate -0.50% 0.50% 1,053 (1,045)

Future salary increases -0.50% 0.50% (2,154) 2,155

(f) Long Service Awards


Present value of unfunded obligations (see note 20.1(f)(i) below) 52,217 40,987 1,862 1,531

52,217 40,987 1,862 1,531

Current - - - - Non-current 52,217 40,987 1,862 1,531

52,217 40,987 1,862 1,531

(i) The movement in the defined benefit obligation over the year is as follows:


At 1 January 40,987 40,765 1,531 1,398 Current service cost 6,130 6,512 213 227 Interest cost 6,148 5,348 230 180 Benefits paid (1,957) (2,525) (115) (91) Actuarial (gains)/losses 909 (9,113) 3 (183)

At 31 December 52,217 40,987 1,862 1,531



(ii) The amounts recognised in the profit or loss are as follows:


Current service costs (see note 20.1(f)(i)) 6,130 6,512 213 227

Net interest costs/income: - Interest costs (see note 20.1(f)(i)) 6,148 5,348 230 180

At 31 December 12,278 11,860 443 407

(iii) The amounts recognised in other comprehensive income are as follows:


Actuarial losses/(gains) on obligations (see note 20.1(f)(i)) 909 (9,113) 3 (183)

The principal actuarial assumptions used were as follows:


Discount rate 12% 15% 12% 13.5% Future salary increases 11% 12% 11% 12% Inflation rate 9% 9% 9% 9%

ThemortalityratesassumedfortheemployeesaretheratespublishedintheA67/70UltimateTablespublishedjointlybytheInstituteand Faculty of Actuaries in the United Kingdom.

The sensitivity of overall pension liability to changes in the weighted principal assumptions is:

31-Dec-15


Discount rate -0.50% 0.50% 40,255 37,676

Future salary increases -0.50% 0.50% 38,155 39,737

Inflation rate -0.50% 0.50% 38,337 39,554

31-Dec-14


Discount rate -0.50% 0.50% 966 (923)

Future salary increases -0.50% 0.50% (631) 651

Inflation rate -0.50% 0.50% (405) 420



21 Statutory deposits

In line with Section 10 (3) of the Insurance Act of Nigeria, a deposit of 10% of the regulatory share capital is kept with the Central Bank of Nigeria (CBN). The cash amount held is considered to be a restricted cash balance.


Deposits with CBN 555,000 555,000 - -

The analysis of the statutory deposit is as follows: Deposit with CBN for non-life business 340,000 340,000 - - Deposit with CBN for life business 215,000 215,000 - -

555,000 555,000 - -

22 Deferred taxation

Group The movement in the net deferred tax assets/(liabilities) during the year are shown below:


Net balance Recognised Recognised in Net balance as at 1 in profit OCI as at 31 January or loss December 2015


Deferred tax assets Property and equipment, and software (11,235) 50,636 - 39,401 Allowances for loans and receivables - - - - Unrelieved loss 507,197 (264,534) - 242,663 Employee benefits 144,857 (6,713) 7,413 145,557 Foreign exchange (374) 374 - -

Deferred tax assets 640,445 (220,237) 7,413 427,621

Deferred tax liabilities Investment properties (172,495) (72,373) - (244,868)

Net deferred tax assets/(liabilities) 467,950 (292,610) 7,413 182,753

For the year ended 31 December 2014 Net balance Recognised Recognised in Net balance as at 1 in profit OCI as at 31 January or loss December 2014


Deferred tax assets Property and equipment, and software (99,795) 88,560 - (11,235) Allowances for loans and receivables 37,916 (37,916) - - Unrelieved loss 617,442 (110,245) - 507,197 Employee benefits 143,771 22,847 (21,761) 144,857 Foreign exchange - (374) - (374)

Deferred tax assets 699,234 (37,128) (21,761) 640,445

Deferred tax liabilities Investment properties (167,931) (4,564) - (172,495)

Deferred tax assets/(liabilities) 531,403 (41,692) (21,761) 467,950



Deferred tax assets have been recognised in the account because it is probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.

Deferred tax assets have not been recognised in the Company because it is not probable that future taxable profit will be available against which the Company can utilise the benefits therefrom as detailed in Note 22(a) below.

(a) Unrecognized deferred tax assets Significantmanagementjudgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognized,baseduponthe

likely timing and the level of future taxable profits together with future tax planning strategies.

The deferred tax assets of Royal Exchange Prudential Life Assurance Plc and Royal Exchange Plc, components of the group, which relates primarily to timing difference in the recognition of depreciation and capital allowances on property and equipment, impairment on premium receivables, employee benefit liabilities and unrelieved tax losses were not recognized in these financial statements.

This is due to the uncertainty about the availability of future taxable profits against which deferred tax assets can be utilized.

The unrecognized deferred tax asset during the year is attributable to the following:


Property and equipment 95,314 73,287 30,436 27,497 Employee benefit liabilities 24,680 8,193 12,999 7,312 Unrelieved tax losses 672,020 456,135 129,107 62,722

792,014 537,615 172,542 97,531

The movement in the unrecognized deferred tax asset during the year was as follows:


Balance, beginning of year 537,615 840,534 97,531 62,076 Increase/(decrease) during the year 254,399 (302,919) 75,011 35,455

792,014 537,615 172,542 97,531

23 Deferred income


Deferred rental income (see 23(a) below) 23,392 28,716 - - Deferred commission income (see 23(b) below) 98,777 73,518 - -

At 31 December 122,169 102,234 - -

Within one year 95,885 80,239 - - More than one year 26,284 21,995 - -

122,169 102,234 - -

(a) Deferred rental income


At 1 January 28,716 17,350 - - Additions during the year 34,060 28,716 - - Amortised for the year (39,384) (17,350) - -

At 31 December 23,392 28,716 - -



(b) Deferred commission income This represents the unexpired portion of commission received from businesses ceded to reinsurers as at the reporting date.


Balance at start of the year 73,518 67,447 - - Additions in the year 305,245 382,986 - - Amortization in the year (279,986) (376,915) - -

At 31 December 98,777 73,518 - -

Analysis of deferred acquisition income by class of insurance are as follow:


Fire 23,504 22,081 - - Accident 9,825 9,718 - - Motor 10,326 14,719 - - Marine and aviation 9,802 7,154 - - Oil & gas 37,480 10,320 - - Engineering 7,291 6,062 - - Bond 549 3,464 - -

98,777 73,518 - -

24 Trade payables


Reinsurance payables 358,483 190,172 - - Deposit for premium (see note (a) below) 5,018,782 4,957,183 - - Premium payables to co-insurers 10,364 4,488 - -

5,387,629 5,151,843 - -

Within one year 5,387,629 5,151,843 - - More than one year - - - -

5,387,629 5,151,843 - -

The carrying amount disclosed above approximate fair value at the reporting date. All amounts are payable within one year

(a) Deposit for premium represents premium collected in advance at the reporting date that are yet to be recognised as at year end.



25 Other liabilities


Due to related parties (see 25(a) below) - - - 738,352 278,549 64,461 Other liabilities (see 25(b) below) 1,469,737 1,233,863 1,170,182 461,633 393,828 324,021

1,469,737 1,233,863 1,170,182 1,199,985 672,377 388,482

Within one year 1,382,788 971,947 685,552 171,996 215,287 150,950 More than one year 86,949 261,916 484,630 1,027,989 457,090 237,532

1,469,737 1,233,863 1,170,182 1,199,985 672,377 388,482

* See note 4

(a) Due to related parties


Royal Exchange General Insurance Company - - - 466,294 206,584 40,245 Royal Exchange Prudential Life Plc - - - 272,058 68,958 20,089 Royal Exchange Finance and Asset Management - - - - 3,007 4,127

- - - 738,352 278,549 64,461

(b) Analysis of other liabilities is as follows:


Deferred income 9,447 5,895 4,265 - - - Accruals 248,033 124,714 147,430 35,297 29,276 8,533 WHT and PAYE payables 105,699 104,527 108,355 46,182 41,282 20,771 VAT payable 101,326 90,373 73,025 76,920 65,572 52,511 NAICOM levy 34,491 36,017 39,117 - - - Other statutory payables 4,423 3,029 5,931 Deposit for shares 29,526 21,851 16,836 - - - Staff payables 108 108 4,664 - - - Bank overdrafts (see note 6 above) - 15,582 114 - - - Dividend payable held as collateral (see note (i) below) 237,193 237,193 237,193 237,193 237,193 237,193 Unclaimed dividends (see note (ii) below) 52,444 11,748 - 52,444 11,748 - Other payables (see note (iii) below) 647,047 582,826 533,252 13,597 8,757 5,013

1,469,737 1,233,863 1,170,182 461,633 393,828 324,021

(i) Dividend payable held as collateral represents dividend belonging to Spennymoor Limited, Dantata Investments & Securities Company Limited and Phenonix Holdings Limited which was withheld by the Group in respect to 250 million units of the Group’s shares held by Decanon Investment Limited in relation to an ongoing litigation case involving the Group and the aforementioned counterparties.

(ii) Unclaimed dividend represents all dividends belonging to shareholders of the Group outstanding for more than 15 months, which have been returned to the Group by the Registrar in compliance with the Securities Exchange Commission (SEC)’s directive.



(iii) The analysis of other payables is as follows:


Sundry creditors 233,774 271,479 256,062 13,597 8,757 5,013 Provision for litigations and claims 78,954 47,740 95,820 - - - Sales deposit and other creditors 250,821 193,898 165,299 - - - Accrued commissions payable 76,067 69,645 16,069 - - - Co-operative/thrift savings 10 61 - - - - National Housing Fund payable 7,418 - - - - Union dues 3 3 2 - - -

647,047 582,826 533,252 13,597 8,757 5,013

(iv) Included in other liabilities are financial liabilities as follows: Restated* Restated* Restated* Restated* Group Group Group Company Company Company In thousands of Naira 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Financial liabilities 1,182,731 1,081,403 426,336 1,102,904 278,549 64,461

26 Depositors’ funds


Royal Exchange investment notes (see note (a) below) 31,482 39,467 - - High yield investment papers (see note (b) below) 1,040,041 820,012 - - Savings 29,686 81,525 - - Demand deposit 19,593 60,256 - - Term deposit and call deposits 75,522 31,356 - -

1,196,324 1,032,616 - -

(a) Royal Exchange Investment Notes represents customers’ deposits into the Group’s term deposit options. It is a flexible money market investment option that has an upfront interest payment and accepts a minimum of N2million as deposit payable over 90 days. It is carried at amortised cost.

(b) High Yield Investment Papers represent customers’ deposits into the Group’s term deposit options. It is a product that offers a certain interest, promising to be higher than the average money market rate. Interests are paid back end and minimum deposits of N1million are accepted, payable over 90 days. It is carried at amortised cost.

(c) Analysis of depositor’s funds by maturity


Up to 1 month 128,306 232,165 - - 3 - 6 months 488,11 708,016 - - 6 - 12 months 71,564 45,885 - - Above 12 months 508,340 46,550 - -

1,196,324 1,032,616 - -



27 Insurance contract liabilities


Non-life insurance (see note 27(a) below) 4,434,285 4,733,745 - - Healthcare insurance (see note 27(b) below) 172,498 137,929 - - Life insurance (see note 27(c) below) 3,656,421 2,222,552 - -

8,263,204 7,094,226 - -

(a) Non-life general Insurance


Unexpired risk (See note 27(a)(ii) below) 2,223,284 2,303,340 - - Outstanding claims (See note 27(a)(iii) below): - - - Claims outstanding 1,432,816 1,495,477 - - - Incurred but not reported 778,185 934,928 -

4,434,285 4,733,745 - -

(i) The concentration of non-life insurance by type of contract is summarised below by reference to liabilities.


Fire 1,021,552 1,006,495 - - Accident 556,796 552,361 - - Motor 1,016,989 936,492 - - Marine 198,273 248,166 - - Oil and gas 1,460,760 1,809,183 - - Engineering 163,055 141,158 - - Bond 16,859 39,889 - -

4,434,285 4,733,745 - -

(ii) Unexpired risk is summarised by type below


Fire 364,277 339,394 - - Accident 165,988 161,786 - - Motor 544,972 601,759 - - Marine 59,587 66,740 - - Oil and gas 1,026,922 1,044,108 - - Engineering 60,928 83,744 - - Bond 612 5,810 - -

2,223,284 2,303,340 - -



(iii) The movement in unexpired risk reserve is shown below:


Balance, beginning of the year 2,303,340 2,506,089 - - Movement during the year (80,056) (202,749) - -

Balance, end of the year 2,223,284 2,303,340 - -

(iv) Outstanding claims represent the estimated ultimate cost of settling all claims arising from incidents occurring prior to the end of reporting date, but not settled at that date and provision made for claims incurred but not yet reported as at the end of the financial year. This provision is based on the liability adequacy test report.

Analysis of outstanding claims per class of non-life insurance business is shown below:


Fire 657,276 667,100 - Accident 390,808 390,575 - - Motor 472,017 334,733 - - Marine 138,687 181,427 - - Oil and gas 433,838 765,075 - - Engineering 102,128 57,415 - - Bond 16,247 34,080 - -

2,211,001 2,430,405 - -

(v) An ageing analysis of the time between when the outstanding claims were reported and the date of the financial statements is presented below:

Group Company In thousands of Naira 31-Dec-15 31-Dec-14

0 - 90 days 354,595 - 91 - 180 days 167,658 - 181 - 270 days 131,392 - 271 - 360 days 108,967 - Above 360 days 670,204 -

1,432,816 -

(vi) The movement in outstanding claims is shown below:


Balance, beginning of the year 2,430,405 2,296,484 - - Movement during the year (219,404) 133,921 - -

Balance, end of the year 2,211,001 2,430,405 - -



(b) Healthcare insurance


Claimsandlossadjustmentexpenses(seenote27(b)(i)) 65,980 29,228 - - Provisions for unearned premiums and unexpired short term insurance risks (see note 27(b)(ii)) 106,518 108,701 - -

172,498 137,929 - -

(i) Analysisofclaimsandlossadjustmentexpensesareasfollows:


Claims outstanding as at 1 January 29,228 38,831 - - Cash paid for claims settled in the year 455,851 127,383 - - – Arising from current-year claims (389,871) (98,155) - - – Arising from prior year claims (29,228) (38,831) - -

Balance, as at 31 December 65,980 29,228 - -

(ii) Provisions for unearned premiums and unexpired short term insurance risks The movements for the year are summarised below:


Balance at 1 January 108,701 75,824 - - Increase in period 88,284 130,354 - - Release in the period (90,467) (97,477) - -

Balance, as at 31 December 106,518 108,701 - -

These provisions represent the liability for short-term insurance contracts for which the Group’s obligations are not expired at the end of the reporting period. The unexpired risk provision relates to the casualty insurance contracts for which the Group expects to pay claims in excess of the related unearned premium provision. This assessment is performed using geographical aggregation of portfolios of liability insurance contracts within the casualty segment.

(c) Life insurance


Outstanding claims - Group life (see note 27(c)(i) below) 618,617 421,149 - - Outstanding claims - Individual life (see note 27(c)(ii) below) 17,686 18,532 - -

636,303 439,681 - - Life insurance contract liabilities (see note 27(c)(iii) below) 3,020,118 1,782,871 - -

3,656,421 2,222,552 - -

(i) Outstanding claims - group life The movement in the provision for outstanding claims during the year was as follows:


Beginning of the year 421,150 363,613 - - Increase during the year (see note 39(ii)) 197,467 57,537 - -

As at year end 618,617 421,150 - -



(ii) Outstanding claims - individual life The movement in the provision for outstanding claims during the year was as follows:


Beginning of the year 18,531 3,665 - - Decrease/(increase) during the year (see note 39(ii)) (845) 14,866 - -

As at year end 17,686 18,531 - -

Outstanding claims represent the estimated ultimate cost of settling all claims arising from incidents occurring as at the reporting date.Theageinganalysisforclaimsreportedandlossadjustedforlifeinsurancecontractsisasstatedbelow:-


Days 0- 90 107,730 52,889 - - 91- 180 118,225 50,594 - - 181-270 102,031 65,223 - - 271-360 122,844 99,162 - - Above 360 185,474 171,813 - -

636,303 439,681 - -

(iii) Life insurance contract liability The movement on the Life funds account during the year was as follows:


Beginning of the year 1,782,870 1,688,590 - - Increase/(decrease) during the year 1,162,291 367,154 - - Unearned premium (see note 27(c)(v) below) 74,957 (272,874) - -

As at year end 3,020,118 1,782,870 - -

The life insurance contract liability is analyzed as follows:

Risk-based deposit policies 24,808 19,706 - - Individual life policies 1,321,904 929,574 - - Group life policies 940,198 774,466 Additional reserve by Actuary 57,900 26,391 Annuity valuation by Actuary (see 27(c)(iv) below) 675,308 32,733

As at year end 3,020,118 1,782,870 - -

(iv) Annuity The annuities were reserved for by using a discounted cash flow approach by the Actuary. Here, reserves are set equal to the present

value of future annuity payments plus expenses, with allowance being made for any guaranteed periods as required by the terms of the contract. The assets representing the annuities are invested in near-cash money market financial instruments with a tenor of 30 days on rolling basis.

The annuities fund has supporting assets and liabilities as follows:


Assets 493,008 45,559 - - Liabilites 675,308 32,733 - -

The deficit in the annuity fund forms part of the deficit in the solvency level (Note 52). The Directors have commenced a process to realize some of the Group’s investment properties and are therefore confident that the deficiency in the annuity business will be rectified without any adverse impact on the operations of the Company.



(v) The movement in the unearned premium during the year was as follows:


Beginning of the year 513,046 785,920 - - Decrease/(increase) during the year 74,957 (272,874) - -

As at year end 588,003 513,046 - -

28 Investment contract liabilities


Deposit administered funds (see note 28(a)) 113,911 95,386 - - Investment managed funds (see note 28(b)) 222,360 162,577 - -

336,271 257,963 - -

(a) Deposit administered funds


At 1 January 95,386 433,701 - - Deposits received in the year 32,446 20,490 - - Interest paid 2,152 5,839 - - Withdrawals (16,073) (364,644) - -

Balance at 31 December 113,911 95,386 - -

Current 32,442 21,004 - - Non Current 81,469 74,382 - -

113,911 95,386 - -

The Group has a total sum of N113.91 million (2014:N95.38 million) in deposit administered funds with guaranteed interest which has been in existence since 2010. The outstanding balance in the account is attributable to clients who are yet to reclaim their investment.

(b) Investment managed funds


At 1 January 162,577 165,405 - - Deposits 210,614 172,347 - - Interest accrued thereon 10,248 5,855 - - Withdrawals (161,079) (181,030) - -

Balance at 31 December 222,360 162,577 - -

Current 165,985 156,577 - - Non Current 56,375 6,000 - -

222,360 162,577 - -



29 Taxation(a) Income tax expense

Recognised in profit or loss

Group Group Company Company In thousands of Naira Notes 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Current Income tax 7,971 6,538 - - Under/(over) provision in prior years 14,267 (227) - - Tertiary Education Tax 3,354 9,905 - - NITDA Levy 1,525 6,247 - 1,610

27,117 22,463 - 1,610 Withholding tax on dividends 18,740 29,996 13,100 29,996

45,857 52,459 13,100 31,606 Deferred tax charge 22 292,610 41,692 - -

338,467 94,151 13,100 31,606

Minimum tax 63,532 71,039 - -

Recognised in other comprehensive income Deferred tax on remeasurement of defined benefit scheme - 21,761 - -

The Company has not considered the minimum tax rule based on section 33 of CITA which exempts companies from minimum tax as long as they have up to 25% imported equity capital in their capital structure.

Group Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 Tax Amount Tax Amount Tax Amount Tax Amount rate % N’000 rate % N’000 rate % N’000 rate % N’000

Profit/(loss) before tax (896,961) 304,730 (116,707) 150,093

Income tax using the domestic corporation tax rate 30% (269,088) 30% 94,689 30% (35,012) 30% 48,297 Non-deductible expenses -35% 311,242 133% 420,476 -16% 18,473 6% 9,690 Tax exempt income 9% (79,677) -99% (311,265) 37% (43,257) -56% (89,988) Derecognition of unutilized tax losses -36% 321,589 -27% (84,878) -51% 59,797 20% 32,001 Under/(over) provision in prior years -2% 14,267 0% 20 0% - 0% - Change in recognised deductible temporary differences -2% 16,515 0% - 0% - 0% - Minimum tax -7% 63,532 0% - 0% - 0% - NITDA Levy 0% 1,525 2% 6 ,247 0% - 1% 1,610 Tertiary Education Tax 0% 3,354 3% 9,905 0% - 0% - Withholding tax on dividends -2% 18,740 10% 29,996 -11% 13,100 19% 29,996

-45% 401,999 54% 165,190 -11% 13,100 21% 31,606

(b) Current income tax liabilities


At 1 January 502,951 494,388 255,109 254,373 Charge for the year 90,649 93,502 - 1,610 Payment during the year (104,887) (84,939) - (874)

At 31 December 488,713 502,951 255,109 255,109



30 Borrowings


WEMA Bank (see note 30(i) below) 793,226 1,001,151 - 793,226 1,001,151 - Central Bank of Nigeria (see note 30(ii) below) 51,100 - - - - - Borrowings from Funds under management (see note 30(iii) below) 175,757 50,808 52,554 23,218 32,218 33,964 Royal Exchange Finance and Asset Management Limited (see note 30(iv) below) - - - 55,813 72,642 82,885

1,020,083 1,051,959 52,554 872,257 1,106,011 116,849

* See note 4

Current 793,226 1,001,151 - 793,226 1,001,151 - Non Current 226,857 50,808 52,554 79,031 104,860 116,849

1,020,083 1,051,959 52,554 872,257 1,106,011 116,849

(i) The amount of N793,226,000 represents the carrying amount of a N800,000,000 term loan obtained from WEMA Bank Plc as at 31 December 2015 to finance the Company’s investment in Royal Exchange General Insurance Company Limited. The facility’s effective date is 29th December 2015 with a tenor of six months (180 days) at seventeen point five (17.5) percent interest rate to the Company. The accrued interest and the principal amount are payable by bullet payment on or before maturity.

(ii) The amount of N51,100,000 represents the carrying amount of a N50,300,000 term loan obtained from the Central Bank of Nigeria as at 31 December 2015 under the Micro, Small & Enterprises Development Fund. The facility’s effective date is 09 April 2015

(iii) The amount represent the carrying amount of term loans obtained by the Group from the unclaimed debentures under the management of Royal Exchange Plc as at the 31 December 2015.

(iv) Borrowings from Royal Exchange Finance and Asset Management Limited


Term Loan - - - 46,477 59,128 66,840 Finance Lease Obligations - - - 9,336 13,514 16,045

- - - 55,813 72,642 82,885



31 Share capital


Share capital comprises Authorized share capital 10,000,000,000 ordinary share of 50k each 5,000,000 5,000,000 5,000,000 5,000,000

Issued share capital 5,145,370,074 ordinary share of 50k each 2,572,685 2,572,685 2,572,685 2,572,685

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company

Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Company’s shareholders.

Dividends for the year that are declared after the end of the reporting period are dealt with in the subsequent period.

Dividends proposed by the Directors but not yet approved by members are disclosed in the financial statements in accordance with the requirements of the Company and Allied Matters Act of Nigeria.

32 Share premium


As at year end 2,690,936 2,690,936 2,690,936 2,690,936

33 Contingency reserve In compliance with Section 21(1) of Insurance Act 2003, the contingency reserve for general business is credited with the greater of

3% of gross premium or 20% of net profit and accumulated until it reaches the amount of greater of minimum paid up capital or 50 percent of net premium, where as, the contingency reserve for life business is credited with the greater of 1% of gross premium or 10% of net profit and accumulated until it reaches the amount of greater of minimum paid up capital or 50 percent of net premium.

34 Treasury shares Treasury shares represent the cost of the 250,000,000 ordinary shares of the Group which is held in respect to Security Holding

TrustLimitedinrespecttoaproposedshareownershipschemeforstaffofasubsidiarywhichissubjecttoalitigationinsuitFHC/L/CS/5479/09. The ordinary shares are being held as guarantee that value will not be lost as well as N237million cash dividend. The ordinary shares have a market value of N462 million as at 31 December 2015 .

35 Retained earnings The amount represents the retained earnings available for dividend distribution to the equity shareholders of the company (if

approved at the Annual General Meeting). For the analysis of movement in Retained Earnings, see the ‘Statement of Changes in Equity’

36 Other Component of Equity Other component of equity comprises of actuarial gains or losses on employee benefit obligation, cumulative net change in the fair

value of available- for-sale financial assets until assets are derecognized and transfers to regulatory risk reserve.

(a) Actuarial gains/losses on employee benefit obligation Actuarial gains/losses on employee benefits represent changes in benefit obligation due to changes in actuarial valuation assumptions

or actual experience differing from expectation The gains/losses for the year, net of applicable deferred tax asset/liability on employee benefit obligation, are recognized in other comprehensive income.

(b) Fair value reserves Fair value reserves represent the cummulative net change in the fair value of available-for-sale financial assets at the reporting date.

(c) Regulatory risk reserve Regulatory risk reserves represents the difference between the allowance for impairment losses on loans and advances to customers

based on Central Bank of Nigeria (CBN) prudential guidelines, compared with the loss incurred model used in calculating the impairment under IFRSs.



37 Reinsurance expenses


Non-life reinsurance premiums: Gross written reinsurance premiums 2,257,410 2,047,619 - - Change in reinsurance unearned premiums (see note 12(a)(i)) 54,150 117,408 - -

2,311,560 2,165,027 - -

Life reinsurance premiums: Insurance premium ceded to reinsurers 412,765 336,544 - -

2,724,325 2,501,571 - -

38 Fee and commission income


Reinsurance commissions on non-life business 279,985 376,915 - - Reinsurance commissions on life business 50,576 35,778 - -

330,561 412,693 - -

39 Insurance claims and benefits incurred


Insurance claims and benefits incurred on non-life busines (see note 39(i) below) 2,101,914 1,976,074 - - Insurance claims and benefits incurred on life busines (see note 39(ii) below) 1,706,448 906,028 - - Insurance claims and benefits incurred on healthcare business (see note 39(iii) below) 231,930 134,596 - -

4,040,292 3,016,698 - -

(i) Analysis of insurance claims and benefits incurred on Non-life business:


Motor and accident 834,795 639,615 - - Fire and IAR 844,977 522,275 - - Marine 438,174 212,212 - - Engineering 141,495 67,837 - - Bond 7,255 21,532 - - Special risk (164,782) 512,603 - -

2,101,914 1,976,074 - -



(ii) Analysis of insurance claims and benefits incurred on life business:


Short term insurance contract 1,249,683 747,318 - - Long term insurance contract 260,143 86,307 - - Increase/decrease in outstanding claims short term insurance contract (see note 27(c)(i)) 197,467 57,537 - - Increase/decrease in outstanding claims long term insurance contract (see note 27(c)(ii)) (845) 14,866 - -

1,706,448 906,028 - -

(iii) Analysis of insurance claims and benefits incurred on healthcare business:


Short term insurance contract 222,997 127,383 - - Increase/decrease in outstanding claims short term insurance contract 8,933 7,213 - -

231,930 134,596 - -

40 Insurance claims and benefits incurred - recoverable from reinsurers


Insurance claims and benefits incurred- recoverable on non-life busines(see note 40(i) below) 626,157 473,122 - - Insurance claims and benefits incurred-recoverable on life business(see note 40(ii) below) 374,779 116,081 - -

1,000,936 589,203 - -

(i) Insurance claims and benefits incurred- recoverable on non-life busines:


Motor and accident 231,808 214,211 - - Fire and IAR 281,298 242,850 - - Marine 114,549 49,449 - - Engineering 63,747 107,710 - - Bond (1,072) 15,818 - - Special risk (64,173) (156,916) - -

626,157 473,122 - -

(ii) Insurance claims and benefits incurred- recoverable on life busines:


Short term insurance contract 374,779 116,081 - -

374,779 116,081 - -



41 Underwriting expenses


Acquisition costs: Non-life business 768,631 1,379,115 - - Acquisition costs: Life 241,688 189,723 - - Acquisition costs: Healthcare 5,602 8,643 - - Salaries & Allowances - underwriting employees 789,396 846,123 - - Guaranteed interest on life products 12,399 11,693 - - Other commissions 826,432 302,942 - -

2,644,148 2,738,239 - -

42 Net interest income/(expense)

Gross Interest Income: Interest income on placement with local banks 109,506 53,235 3,700 1,643 Interest income on treasury bills 2,832 1,565 - Interest income on loans and receivables 275,606 240,619 - - Interest income on advances under finance lease 3,053 23,349 - - Interest on staff loan & advances 833 25,668 - -

391,830 344,436 3,700 1,643

Interest expense: Interest expense on depositors funds (141,993) (122,632) - - Interest expense on borrowings (148,112) (14,875) (145,787) (12,992)

Net interest income 101,725 206,929 (142,087) (11,349)

* See note 4

43 Investment and other income

Restated* Restated* Group Group Company Company In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Debt securities: *At fair value through profit/loss 22,994 39,394 - - *Loans & receivables (amortised cost) 118,566 26,671 - -

Equity securties: Dividend from investment in subsidiaries - - 131,000 299,960

Dividend Income: *Available-for-sale 19,245 117,443 - - *At fair value through profit/loss 86,007 73,619 - - Income on disposal of equities 38,158 98,316 - - Cash and cash equivalents 72,974 159,680 - - Deposits with credit institutions 41,652 20,825 - -

399,596 535,948 131,000 299,960

* See note 4



44 Net fair value gain or (loss) on financial assets


Debt securities: *At fair value through profit/loss - (610) - - Equity securties: - - - - *At fair value through profit/loss (272,980) (538,351) 6,385 - Derivative financial instruments: - - - - Investment properties 600,530 584,315 - - Cash and cash equivalents - - - -

327,550 45,354 6,385 -

45 Charge/(write-back) of impairment allowance


Impairment allowance on premium receivables(see note 11(a)(i)) 302,079 90,928 - - Write back of impairment on premium receivables(see note 11(a)(i) (1,260) (8,837) - - Impairment allowance on reinsurance receivables (see note 11(b)(i)) 15,272 11,123 - - Impairment allowance on financial assets (see note 9(a)(ii)) 1,974 - - - Impairment allowance on loans and advances (see note 7(a)) 48,516 6,561 - - Impairment allowance on advance under lease (see note 8(a)) 1,936 1,200 - - Write back of impairment on advance under lease (see note 8(a)) (26,737) - - - Impairment allowance on other receivables (see note 14(d)) 24,610 34,461 2,289 - Write back of impairment on other receivables (see note 14(d)) (8,855) (17,238) - -

357,535 118,198 2,289 -



46 Other operating income

Restated* Restated* In thousands of Naira Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Rental income 71,352 104,618 - - (Loss)/profit on disposal of property & equipment (7,233) 7,201 - - Management fee income from subsidiaries - - 226,485 260,725 Investment management income 66,172 41,024 - - Trustee Fee income 446 510 446 510 Other income 26,711 51,028 3,729 8 Insurance brokerage commission 1,012 - - - Income from lead-underwriting business 11,622 - - - Derecognized items 16,404 11,209 - - Bonus payments by brokers (ceding commission profit) 38,859 58,577 - - Third party administration and other related income 52,828 64,736 - - Fees and commission on loans and advances 38,456 42,636 - -

316,629 381,539 230,660 261,243

* See note 4

47 Foreign exchange gains


Gains on translation of foreign currency transactions 56,455 34,567 - -



48 Management expenses

Restated* Restated* In thousands of Naira Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Salaries and allowances of other employees 899,086 911,974 102,073 95,401 Post employment defined benefit expenses (see note 20.1(c)(i)) 83,420 102,654 22,143 5,475 Audit fees 29,920 23,820 6,000 4,000 Amortization and impairment charges (see note 19) 9,785 14,354 - - Depreciation on property and equipment (see note 18) 255,789 262,358 9,760 8,883 Promotional and advert expenes 26,502 23,912 14,529 5,589 Rent and rates 4,947 16,546 1,555 5,111 Directors’ fees 1,420 998 1,420 998 Directors’ sitting allowances 67,791 59,730 48,480 40,153 Directors’ other allowances 23,481 17,088 23,481 17,088 Donations 4,290 3,566 2,210 2,126 Bank charges 35,719 43,893 1,223 1,551 Legal fee 22,618 68,757 246 23,750 Insurance premium 37,439 211,335 5,485 3,119 Accounting consultancy fee 71,068 64,478 6,643 13,635 Investment expenses 36,536 49,214 - - Power charges 4,487 133,503 4,487 5,792 Government charges 53,593 65,253 - 117 Stationeries 1,397 1,775 - 66 Printing external 63,525 32,731 2,790 2,541 Repairs and maintenance 261,756 259,384 1,820 1,068 Transport expenses 209,337 217,660 40,132 45,905 Transport fare expenses 3,718 140,423 - 21,555 Software expenses 40,481 18,444 - - Subscriptionandjournals 25,482 28,954 687 3,277 Fine paid (contravention) 5,097 23,343 4,925 18,723 Electricity and diesel expenses 116,867 122,153 - - Telephone expenses 27,008 21,126 - - Other administrative expenses 851,811 147,649 40,287 73,839

3,274,370 3,087,075 340,376 399,761

* See note 4



49 Earnings per share


Basic and diluted earnings per share(kobo) (25) 3 (3) 2

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:


Loss/(profit) for the year attributable to owners of the company (1,298,960) 139,540 (129,807) 118,487

Unit in thousands Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Number of ordinary shares for the purpose of basic and diluted earnings per share 5,145,370 5,145,370 5,145,370 5,145,370

50 Cash and cash equivalents for Cash Flow Purposes

For the purposes of the statement of cash flow, cash and cash equivalents include cash, bank balances, investment in short term deposits (demand and time deposits) with a maturity date of 3 months or less upon acquisition and bank overdrafts.

In thousands of Naira Restated* Restated* Restated* Restated* Group Group Group Company Company Company 31-Dec-15 31-Dec-14 1-Jan-14 31-Dec-15 31-Dec-14 1-Jan-14

Cash (see note 6) 7,222 3,140 4,973 7 50 33 Bank balances (see note 6) 5,661,565 5,518,234 1,170,100 45,375 36,363 35,562 Short-term deposits (see note 6) 1,367,055 1,114,166 635,809 60,070 13,193 - Bank overdrafts (see note 25(b)) - (15,582) (114) - - -

7,035,842 6,619,958 1,810,768 105,452 49,606 35,595

* See note 4

51 Reconciliation notes to consolidated and separate statement of cashflows

(i) Net Increase/(decrease) in employee retirement benefit:


Changes in employee retirement benefit asset 16,183 (3,236) - - Changes in employee retirement benefit liability 24,802 (5,454) 18,955 4,235 Net changes 40,985 (8,690) 18,955 4,235 Contibutions to plan asset 11,170 26,722 - - Cash payment to employees 110,199 96,800 3,191 1,378 Net actuarial gains recognised in OCI (75,145) (12,179) (3) (138)

Total changes recognised in statement of cashflows 87,209 102,653 22,143 5,475



(ii) Net Increase/(decrease) in other receivable and prepayments:


Net changes in other receivable and prepayments (88,839) (7,390) (2,801) 3,946 Dividend received 136,262 191,062 - - Dividend income (105,252) (191,062) - - Rent received 73,016 104,618 - - Rental income (71,352) (104,618) - - Writebacks recognised in profit or loss (8,855) (17,238) - - Impairments recognised in profit or loss 24,610 34,461 2,289 - Reclassifications from prepayments to PPE - 9,510 - -

Total changes recognised in statement of cashflows (40,410) 19,343 (512) 3,946

(iii) Net Increase/(decrease) in trade receivable:


Net changes in trade receivable 208,971 (102,209) - - Impairment allowance on reinsurance receivables (see note 11(b)(i)) 15,272 - - - Write back of impairment on premium receivables(see note 11(a)(i) (1,260) (8,837) - - Impairment allowance on premium receivables(see note 11(a)(i)) 302,079 90,928 - -

Total changes recognised in statement of cashflows 525,062 (20,118) - -

(iv) Net Increase/(decrease) in reinsurance asset: In thousands of Naira Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Net changes in reinsurance asset 26,511 127,780 - - Writebacks recognised in profit or loss - (11,123) - -

Total changes recognised in statement of cashflows 26,511 116,657 - -

(v) Changes in financial assets


Net changes in financial assets 575,204 (465,122) (17,935) - Impairment recognised in profit or loss 1,974 - - - Fair value changes recognised in OCI (12,218) (55,653) - - Fair value changes on equity securities recognised in profit or loss 272,980 538,351 (6,385) - Fair value changes on debt securities recognised in profit or loss - 610 - - Redemptions/disposals 809,177 680,794 - - Purchases by related companies - - (11,550) Purchases (496,709) (1,629,224) - -

Total changes 575,204 (465,122) (17,935) -



(vi) Changes in provision for outstanding claims


Changes in outstanding claims on group-life insurance 197,467 57,537 - - Changes in outstanding claims on individual-life insurance (845) 14,866 - - Changes in outstanding claims on non-life general insurance (219,404) 133,922 - - Changesinclaimsandunadjustedexpenseonhealthinsurance Cash paid for claims settled in the year 455,851 127,383 - - – Arising from current-year claims (389,871) (98,155) - - – Arising from prior year claims (29,228) (38,831) - - Increase/(decrease) in insurance contract liabilities on life insurance 1,162,291 367,154 - -

Total changes statement of cashflows 1,176,261 563,876 - -

vii) Changes in unearned premium


Changes in unexpired risk on non-life general insurance (80,056) (202,749) - - Changes in provisions for unearned premiums and unexpired short term insurance risks – Increase in period 88,284 130,354 – Release in the period (90,467) (97,477) Changes in unearned premium on life insurance contract liability 74,957 (272,874) - -

Total changes in statement of cashflows (7,282) (442,746) - -

(viii) Changes in loans and advances to customers


Net changes in loans and advances to customers (194,558) (271,305) - - Interest income 275,606 - Impairment allowance recognised in profit or loss (48,516) (6,561) - -

Total changes in statement of cashflows 32,532 (277,866) - -

(ix) Changes in advances under finance lease


Net changes in advances under finance lease (20,289) 115,605 - - Interest income 3,053 - - - Write back of impairment allowance 26,737 - - - Impairment allowance recognised in profit or loss (1,936) (1,200) - -

Total changes in statement of cashflows 7,565 114,405 - -



52 Capital management

The group manages its capital to ensure that it will be able to continue as a going concern and comply with the regulators’ capital and solvency requirements for every of its subsidiaries whose capital is regulated, while maximizing return to stakeholders through the optimisation of the equity balance.

The capital structure of the group consist of only equity attributable to equity holders of the company, comprising issued capital, reserves and retained earnings.

The regulatory capitals of the subsidiaries in insurance and banking and asset management have been maintained and preserved over the reporting periods.TheregulatorycapitalwithintheinsuranceindustryinNigeria, inwhichtheentityhasitsmajoroperations, isN3billionandN2billionforNon-life and Life businesses respectively. Also, the regulatory capital for unit microfinance bank is N20million, same as for the group’s finance house business.

The insurance industry regulator, NAICOM, measures the financial strength of Non-life underwriters through a solvency margin model. The Insurance Act, under section 24, defines solvency margin of a Non-life underwriter as the difference between the admissible assets and liabilities which shall not be less than 15% of Net premium income or the minimum capital base of N3billion, whichever is higher. The regulation requires non- life underwriters to maintain a minimum of 100% solvency margin. The Group’s Solvency requirement was revalidated by HR Nigeria Ltd, the Company’s Consultant Actuaries.

The table below sets out the capital that is managed by the Company on an IFRS and regulatory basis:

The solvency position of the Non-life insurance business

The Insurance Act 2003 (Section 24) prescribed that an insurer shall in respect of its business other than life insurance business, maintain a margin of solvency being the excess of the value of its admissible assets in Nigeria over its liabilities in Nigeria.

The solvency margin, which is determined as the excess of admissible assets over total liabilities shall not be less than 15% of the gross premium income less reinsurance premiums paid out during the year under review or the minimum paid up capital, whichever is greater.

Group Group In thousands of Naira 31-Dec-15 31-Dec-14

Admissible Assets Cash and cash equivalents 5,500,258 5,617,944 Financial assets: - Available for sale 346,211 322,836 - At fair value through profit or loss 1,234,425 1,518,872 - Loans and receivables 1,096,303 1,194,487 - Held to maturity - 157,212 Investment in associates 500,669 518,580 Trade receivables 170,138 27,698 Other receivables and prepayment 500,000 609,093 Deferred acquisition cost 301,965 327,004 Reinsurance assets 1,582,128 1,745,574 Investment properties 2,724,214 2,824,488 Statutory deposit 340,000 340,000 Property and equipment 801,268 401,181 Intangible assets 12,597 - Employees benefits assets 154,016 170,198

A 15,264,191 15,775,167

Less: Admissible liabilities Bank overdrafts 56,149 15,552 Trade and other payables 5,376,586 5,121,896 Provision and other payables 704,396 464,182 Deferred income 122,169 102,234 Insurance liabilities 4,434,285 4,733,746 Finance lease obligations 5,001 12,331 Employees benefits obligations 493,530 515,093 Current income tax liabilities 217,737 222,666

B 11,409,853 11,187,700

Solvency margin (A-B) 3,854,338 4,587,467

Minimum paid up capital 3,000,000 3,000,000

Net premium from Non-Life Insurance Business 4,657,133 4,757,033

15% of Net premium 698,570 713,555



The Group’s non-life solvency margin of N3,854,338,000 (2014: N4,587,467,000) is more than the minimum paid up capital of N3,000,000,000 (2014: N3,000,000,000). Therefore, the Group’s non-life business subsidiary is solvent since the solvency margin is higher than the minimum paid up capital & 15% of net premium.

The solvency position of the Life insurance business However, the solvency level of the Group’s life business on the valuation date of 31 December, 2015 was 88.02%. That is, the admissible

assets representing the Life Fund (including outstanding claims) and deposit administration funds, amounting to N3.551 billion were 88.02% of the actuarial determined gross liabilities, including outstanding claims, of N3.993billion.

The Insurance Act 2003 requires that the deficit of N441 million be made good by way of cash payment and that satisfactory evidence of such payment be provided to the National Insurance Commission (“the Commission” or “NAICOM”) within a time-frame to be directed by NAICOM. The Directors have commenced a process to realize some of the Group’s investment properties and are therefore confident that the deficit will be rectified without any adverse impact on the operations of the Group. The Group has submitted an undertaken to the National Insurance Commission that in the event of the subsidiary involved in the Life business’ inability to meet policy holders’ liabilities, it shall assume and discharge these liabilities.

The actuarial deficiency notwithstanding, the Group’s life business maintained more than the NAICOM required statutory minimum capital of N2 billion (see table below).

The table below sets out the capital that is managed by the Company on an IFRS and regulatory basis:

In thousands of Naira Group Group 31-Dec-15 31-Dec-14

Shareholders’ fund as per financial position 2,317,147 3,165,713 Less: Intangible assets (2,502) (2,748)

Capital resources on a regulatory basis 2,314,645 3,162,966

The details of the Company’s capital structure are shown in the statement of financial position section of the financial statements.

53 Financial risk management

Factors relating to general economic conditions, such as consumer spending, business investment, government spending, the volatility and strength of both debt and equity markets, and inflation, all affect the profitability of businesses in Nigeria.

In a sustained economic phase of low growth, characterized by higher unemployment, lower household income, lower corporate earnings, lower business investment and lower consumer spending, the demand for financial and insurance products could be adversely affected.

The Group’s risk management process includes the identification and measurement of various forms of risk, the establishment of risk thresholds and the creation of processes intended to maintain risks within these thresholds while optimizing returns on the underlying assets and minimizing costs associated with liabilities. Risk range limits are established for each type of risk, and are approvedbytheBoard’sInvestmentCommitteeandsubjecttoongoingreview.

The Group’s risk management strategy is an integral part of managing the Group’s core businesses, and utilizes a variety of risk management tools and techniques such as:

-Measuresofpricesensitivitytomarketchanges(e.g.,interestrateandforeignexchangerate); -Asset/Liabilitymanagement; -PeriodicInternalAuditandControl,and; - Risk management governance, including risk oversight committee, policies and guidelines, and approval limits.

In addition, the Group monitors and manages the financial risks relating to the operations of the organization through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (currency risk, interest rate risk and price risk), credit risk and liquidity risk.



54 Fair value of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at

the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. Fair values are determined at prices quoted in active markets. In our environment, such price information is typically not available for all instruments and the Group applies valuation techniques to measure such instruments. These valuation techniques make maximum use of market observable data but in some cases management estimate other than observable market inputs within the valuation model. There is no standard model and different assumptions could generate different results.

Fairvaluesaresubjecttoacontrolframeworkdesignedtoensurethatinputvariablesandoutputareassessedindependentoftherisktaker.TheGrouphas minimal exposure to financial assets which are valued at other than quoted prices in an active market.

a Fair value hierarchy IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

Observableinputreflectmarketdataobtainedfromindependentsources;unobservableinputsreflecttheGroup’smarketassumptions.Thesetwotypes of inputs have created the following fair value hierarchy:

Level1-Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.Thislevelincludeslistedequitysecuritiesanddebtinstrumentson exchanges.

Level 2 - Valuation techniques based on observable inputs. This category includes instruments valued using: quoted market prices in active markets forsimilarinstruments;quotedpricesforsimilarinstrumentsinmarketsthatareconsideredlessthanactive;orothervaluationtechniqueswhereallsignificant inputs are directly or indirectly observable from market data.

Level 3 - This includes financial instruments, the valuation of which incorporate significant inputs for the asset or liability that is not based on observable market data (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. These inputs are generally determined based on inputs of a similar nature, historic observations on the level of the input or analytical techniques.

This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, analyzed into Levels 1 to 3 based on the degree to which the fair value is observable.

Group 31 December 2015 In thousands of Naira Level 1 Level 2 Level 3 Total

Financial Assets: Fair value through profit or loss:- Quotedequityshares 9(b) 1,558,732 - - 1,558,732 Treasury bills 9(b) 79,611 - - 79,611 Federal government bonds 9(b) 298,531 - - 298,531

1,936,874 - - 1,936,874 Available for sale financial assets:- Quotedequityshares 9(a) 90,012 - - 90,012

90,012 - - 90,012

Total financial assets measured at fair value 2,026,886 - - 2,026,886

31 December 2014

Financial Assets: Fair value through profit or loss:- Quotedequityshares 9(b) 1,930,377 - - 1,930,377 Treasury bills 9(b) 35,161 - - 35,161 Federal government bonds 9(b) 160,686 - - 160,686

2,126,224 - - 2,126,224

Available for sale financial assets:- Quotedequityshares 9(a) 82,020 - - 82,020

82,020 - - 82,020

Total financial assets measured at fair value 2,208,244 - - 2,208,244

Company 31 December 2015

Financial Assets: Fair value through profit or loss:- Quotedequityshares 9(b) 17,935 - - 17,935

Total financial assets measured at fair value 17,935 - - 17,935



b Financial instruments not measured at fair value The fair value information for financial assets and financial liabilities not measured at fair value has not been disclosed because the

carrying amount is a reasonable approximation of its fair value. These financial instruments include:

Cash and cash equivalents Cash and cash equivalents consists of cash on hand and current balances with banks.

The carrying amounts of current balances with banks is a reasonable approximation of fair value which is the amount receivable on demand.

Loans and receivables Loans and receivables consists of placements with financial institutions and staff mortgage loans.

The estimated fair value of fixed interest earning placements is based on discounted cash flows using prevailing money-market interest rates for the debts. The carrying amount represents the fair value which is receivable on maturity. The estimated fair value of staff mortgage loans represents the market values of the loans, arrived at by recalculating the carrying amount of the loans using the estimated market rate.

Financial assets held to maturity Held to maturity consists of state government and corporate bonds.

The carrying amount of financial assets held to maturity are a reasonable approximation of their fair values which are receivable on demand.

Trade receivables and other receivables The carrying amounts of trade receivables and other receivables are reasonable approximation of their fair values which are receivable

on demand.

Bank overdrafts, trade payables, provision and other payables and finance lease obligations The carrying amounts of bank borrowings, trade payables, provision and other payables and finance lease obligations are reasonable

approximation of their fair values which are repayable on demand.

(d) Financial risks The Group is exposed to the following categories of risk as a consequence of offering different financial products and services by the

Group:-

(i) Market risk This reflects the possibility that the value of the Group’s investments will fall as a result of changes in market conditions, whether

those changes are caused by factors specific to the individual investment or factors affecting all investments traded in the market. The Group is exposed to this risk through its financial assets and comprises of currency risk, interest rate risk and price risk.

Currency risk This is the risk of the fair value of financial instruments being affected by changes in foreign exchange rates.

The Group seeks to manage its exposures to risk through control techniques which ensure that the residual risk exposures are within acceptable tolerances agreed by the Board. A description of the risks associated with the Group’s principal products and the associated control techniques is detailed below.

Foreign Currency risk TheGroupacceptsreceiptofpremiumsinforeigncurrency,inadditiontoNaira,fromitsclients;hence,exposurestoexchangerate

fluctuations arise. The Group is exposed to foreign currency denominated in dollars through a domiciliary bank balance.

The Group has minimal exposure to currency risk as the Group’s financial assets are primarily matched to the same currencies as its insurance and investment contract liabilities. As a result, foreign exchange risk arises from other recognized assets and liabilities denominated in other currencies.



The carrying amounts of the Group’s foreign currency denominated assets and liabilities are as follows:

Group

31 December 2015 In thousands of Naira Pounds sterling Euro US Dollars Total

Assets (cash & cash equivalent) 2,615 15,689 5,042,278 5,060,582 Quotedequities - - 116,832 116,832 Loans and receivables - - 63,453 63,453 Liabilities - - (5,018,782) (5,018,782)

2,615 15,689 203,781 222,085


Assets (Cash & Cash Equivalent) 11,906 11,594 5,034,266 5,057,766 QuotedEquities - - 108,104 108,104 Loans and receivables - - 1,062,048 1,062,048 Liabilities - - (4,957,183) (4,957,183)

11,906 11,594 1,247,235 1,270,735

Foreign currency sensitivity analysis The following table details the Group’s sensitivity to a 10% increase and decrease in foreign currency rates against the Naira. A 10%

sensitivity rate is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. For each sensitivity scenario, the impact of change in a single factor is shown, with other assumptions or variables held constant.

The following tables show the effect on the Group’s profit as at 31st December 2015 from N196.5/$ closing rate and as at 31st December 2014 from N167.5/$ closing rate respectively.


10% increase 262 1,569 20,378 22,209 10% decrease (262) (1,569) (20,378) (22,209)

Impact of increase on: Pre-tax profit - - - (874,752) Shareholders’ equity - - - 7,448,445

Impact of decrease on: Pre-tax profit - - - (919,170) Shareholders’ equity - - - 7,404,027

The tax impact of foreign exchange results is generally 30% of the result. This is not included in the impact on shareholders equity as the final impact will depend on the tax status of the Company when it realises the impact of the foreign exchange results for tax.


10% increase 1,191 1,159 124,724 127,074 10% decrease (1,191) (1,159) (124,724) (127,074)

Impact of increase on: Pre-tax profit - - - 326,938 Shareholders’ equity - - - 9,010,690

Impact of decrease on: Pre-tax profit - - - 177,656 Shareholders’ equity - - - 8,756,543



Interest rates risk The Group’s exposure to interest rate risk relates primarily to the market price and cash flow variability of assets and liabilities

associated with changes in interest rates.

Insuranceliabilitiesandemployeebenefitsdonotformpartofthisprofile.Althoughtheyaresignificantliabilitiessubjecttointerestrate risk, they are not financial insturments within the scope of IFRS 7.

Changes in interest rates result to reduction in income ‘spread’ or the difference between the amounts that the Group is required to pay under the contracts and the rate of return the Group is able to earn on investments intended to support obligations under the contracts. Investment spread is, arguably, one of the key components of the net income of insurers.

The Group’s mitigation efforts with respect to interest rate risk are primarily focused on maintaining an investment portfolio with diversified maturities that has a weighted average duration or tenor approximately equal to the duration of its liability cash flow profile.

Also, the Group manages this risk by adopting close asset/liability matching criteria, to minimize the impact of mismatches between asset and liability values arising from interest rate movements.

Furthermore, the Group uses sensitivity analytics to measure the impact of interest rate changes and movements on the value of our financial assets scenarios.

The Group is very moderately exposed to interest rate risk as it invests in fixed income and money market instruments.

Interest rate profile At the end of the reporting period the interest rate profile of the Group’s interest bearing financial instruments as reported to the

Management of the Group are as stated below:

Group

Financial instruments In thousands of Naira Notes 31-Dec-15 31-Dec-14

Fixed Interest rate instructions Cash and cash equivalents 6 1,367,055 1,114,166 Federal government bonds 9(b) 298,531 160,686 Treasury bills 9(b) 79,611 35,161 State government bonds 9(c) - 128,379 Corporate bonds 9(c) - 148,478 Unlisted debenture 9(c) - 328 Staff personal loans 9(c) 4,755 - Staff mortgage loans 9(c) 214,631 149,162 Policy holders Loan 9(c) 23,045 10,898 Other loans and advances 9(c) 854,315 1,066,756 Loans and advances 7 1,278,434 1,083,876 Advances under finance lease 8 123,269 102,980

4,243,646 4,000,870 Bank overdrafts 6 - (15,582)

4,243,646 3,985,288

In addition to the financial instruments listed above, the Group has borrowings amounting to N1.02billion (2014: N1.05billion). The impact on interest sensitivity information below is 0.5% of N1.02billion, which is N5.1million (2014: N5.26million).

Company

Financial instruments In thousands of Naira Notes 31-Dec-15 31-Dec-14

Fixed Interest rate instructions Cash and cash equivalents 6 60,070 13,193

60,070 13,193

In addition to the financial instruments listed above, the Company has borrowings amounting to N872.26million (2014: N116.8million). The impact on interest sensitivity information below is 0.5% of N872.26million, which is N4.36million (2014: N584,000).



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

instruments at the balance sheet date. A 0.5% 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.


Increase in interest rate by 50 basis points (+0.5%) 21,218 19,860 300 66 Decrease in interest rate by 50 basis point (-0.5%) (21,218) (19,860) (300) (66)

Impact of increase on: Pre-tax profit (875,743) 335,489 (116,407) 150,159 Shareholders’ equity 7,447,454 8,965,286 6,519,190 6,751,673

Impact of decrease on: Pre-tax profit (918,179) 295,768 (117,007) 150,027 Shareholders’ equity 7,405,018 8,925,566 6,518,590 6,751,541

The tax impact of interest rate movement is generally 30% of the result. This is not included in the impact on shareholders equity as the final impact will depend on the tax status of the Company when it realises the impact of the interest rate results for tax purposes.

Equity price risk management The Group is exposed to equity price risks arising from equity investments primarily from investments not held for unit-linked

business. The shares included in financial assets represent investments in listed securities that present the Group with opportunity for return through dividend income and capital appreciation.

Equity investments designated as available-for-sale are held for strategic rather than trading purposes. The Group has no significant concentration of price risk.

The carrying amounts of the Group’s equity investments are as follows:

Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 N’000 N’000 N’000 N’000

EquitySecurities;-quoted(availableforsale) 9(a) 90,012 82,020 - - EquitySecurities;-quoted(fairvaluethroughprofitorloss) 9(b) 1,558,732 1,930,377 17,935 - EquitySecurities;-unquoted(availableforsale) 9(a) 325,251 485,463 - -

1,973,995 2,497,860 17,935 -

Equity price sensitivity analysis The sensitivity analyses set out below show the impact of a 10% increase and decrease in the value of equities on profit before tax

and shareholders’ equity based on the exposure to equity price risk at the reporting date.

Group Group Company Company 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 N’000 N’000 N’000 N’000

10% increase 197,400 232,424 1,794 - 10% decrease (197,400) (232,424) (1,794) -

Impact of increase on: Pre-tax profit (699,562) 537,153 (114,914) 150,093 Shareholders’ equity 7,623,636 9,116,041 6,520,683 6,751,607

Impact of decrease on: Pre-tax profit (1,094,361) 83,204 381,151 150,093 Shareholders’ equity 7,228,837 8,713,002 6,517,096 6,751,607



(ii) Credit risk Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Group.

The key areas of exposure to credit risk for the Group are in relation to its investment portfolio, reinsurance program and receivables from reinsurers and other intermediaries.

The Group has adopted a policy of dealing with only creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group transacts with only entities that have an investment grade rating and above.

This information is supplied by independent rating agencies, where available, and if not available, the Group uses other publicly availablefinancialinformationanditsowntradingrecordstorateitsmajorpolicyholdersandreinsurers

The Group’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 periodically.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties. Concentration of credit, otherwise known as single obligor credit, did not exceed 5% of gross monetary assets at any time during the year. The credit risk on liquid funds and other near cash financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The Group is exposed to credit risk via •Debtsecurities •Reinsuranceassets •Loansandreceivablestopolicyholders,agentsandintermediaries •Cashandcashequivalents •Trade/insurancereceivables

The Group’s maximum exposure to credit risk at 31 December 2015 and 31 December 2014 respectively, is represented by the net carrying amounts of the financial assets set out below:

Loans and advances Advances under to customers finance lease 2015 2014 2015 2014

Neither past due nor impaired (see note (a) below) 1,254,605 1,128,042 128,527 70,437 Individually impaired (see note (b) below) 132,308 64,313 7,742 45,543

Gross 1,386,913 1,192,355 136,269 115,980 Allowance for specific impairment (106,990) (106,990) (13,000) (13,000) Allowance for collective impairment (1,489) (1,489) - -

Net 1,278,434 1,083,876 123,269 102,980

Loans and advances Advances under to customers finance lease 2015 2014 2015 2014

Neither past due nor impaired 1,254,605 1,128,042 128,527 70,437 Individually impaired 132,308 64,313 7,742 45,543

Gross 1,386,913 1,192,355 136,269 115,980 Allowance for specific impairment (106,990) (106,990) (13,000) (13,000) Allowance for collective impairment (1,489) (1,489) - -

Net 1,278,434 1,083,876 123,269 102,980



(a) Risk assets: neither past due nor impaired The credit quality of the portfolio of loans and advances to customers that were neither past due nor impaired can be assessed by

reference to the internal rating system adopted by the Group.

Gross amount of loans and advances to customers that are as disclosed below:

Group

In thousands of Naira Loans and advances Advances under to customers finance lease 2015 2014 2015 2014

Non-performing loans by classification Overdraft 47,924 43,090 - - Term Loans 1,206,681 1,084,952 - - Advance under finance lease - - 128,527 70,437

Total 1,254,605 1,128,042 128,527 70,437

(b) Risk assets: individually impaired Loans and advances to customers is considered individually impaired based on the Group’s accounting policy as documented in Note

2.10.

Gross amount of loans and advances to customers that are as disclosed below:

Group

In thousands of Naira Loans and advances Advances under to customers finance lease 2015 2014 2015 2014

Non-performing loans by classification Overdraft - - - - Term Loans 132,308 64,313 - - Advance under finance lease - - 7,742 45,543

Total 132,308 64,313 7,742 45,543

All individually impaired loans and advances and advance under finance lease are located in the south western region of Nigeria



Analysis of financial assets based on credit risk grades ThemajorityofdebtsecuritiesareinvestmentgradeandtheGrouphasverylimitedexposuretosub-standardcredits.

Reinsurance assets are reinsurers’ share of outstanding claims and reinsurance receivables. They are allocated below on the basis of ratings for claims paying ability.

Loans and receivables from policyholders, agents and intermediaries generally do not have a credit rating.

The following table shows aggregated credit risk exposure for assets with external credit ratings:-

Group

31 December 2015 Notes AAA AA A+ A BBB Not rated Carrying In thousands of Naira Amount

Fair value through profit or loss carried at fair value (FVTPL) - FGN bonds 9(b) - 298,531 - - - - 298,531 - Treasury bills (> 90 days) 9(b) 79,611 - - - - - 79,611

378,142

Loans and receivables: - Staff personal loans 9(c) - - - - - 4,755 4,755 - Staff mortgage loans 9(c) - - - - - 214,631 214,631 - Policy holders loan 9(c) - - - - - 23,045 23,045 - Placement 9(c) - - - - - 854,315 854,315 - Loans and advances to customers 7 - - - - - 1,278,434 1,278,434 - Advances under finance lease 8 - - - - - 123,269 123,269

2,498,449

Cash and cash equivalents: Bank balances 6 - - - 5,661,565 - 1,367,055 7,028,620

7,028,620

Reinsurance claims recoverable 12(a) - - - - - - 285,634 285,634 Short-term insurance contract 12(b) - - - - - 204,068 - 204,068 Long-term insurance contract 12(b) - - - - - 103,554 - 103,554

593,256

Trade/insurance receivables 11 - - - - 528,399 - 528,399

11,026,866

31 December 2014 Notes AAA AA A+ A BBB Not rated Carrying In thousands of Naira Amount

Fair value through profit or loss carried at fair value (FVTPL) - FGN bonds 9(b) - 160,686 - - - - 160,686 - Treasury bills (> 90 days) 9(b) 35,161 - - - - - 35,161

195,847

Loans and receivables: - Kaduna state government bond 9(c) - - 128,379 - - - 128,379 - Corporate bonds 9(c) - - 148,478 - - - 148,478 - Unlisted debentures 9(c) - - - - - 328 328 - Staff mortgage loans 9(c) - - - - - 149,162 149,162 - Policy holders loan 9(c) - - - - - 10,898 10,898 - Placement 9(c) - - - - - 1,066,756 1,066,756 - Loans and advances to customers 7 - - - - - 1,083,876 1,083,876 - Advances under finance lease 8 - - - - - 102,980 102,980

12,759,397

Cash and cash equivalents: Bank balances 6 - - - 5,518,232 - 1,100,973 6,619,205

6,619,205

Reinsurance claims recoverable 12(a) - - - - - 832,728 832,728 Short-term insurance contract 12(b) - - - - 129,512 - 129,512 Long-term insurance contract 12(b) - - - - 41,175 - 41,175

1,003,415

Trade/insurance receivables 11 - - - - 319,428 - 319,428

20,897,292



Analysis of financial assets based on past due status

Group

31 December 2015

Fair value Available Recoverable Insurance/ Past due status through for sale Loans and from trade In thousands of Naira profit financial receivables reinsurers receivables or loss assets

Past due and impaired - - - - 70,248 Past due more than 90 days - - - - 91,647 Past due 31 to 90 days - - - - 147,874 Past due less than 30 days - - - - 179,579 Neither past due nor impaired 1,936,874 415,263 1,096,746 1,889,751 39,051

Total carrying amount 1,936,874 415,263 1,096,746 1,889,751 528,399

31 December 2014

Past due status through for sale Loans and from trade In thousands of Naira profit financial receivables reinsurers receivables or loss assets

Past due and impaired - - - 137,510 48,510 Past due more than 90 days - - 5,665 - 2,806 Past due 31 to 90 days - - - 65,287 142,644 Past due less than 30 days - - 160,059 - 35,190 Neither past due nor impaired 2,126,224 393,862 1,338,277 832,728 90,278

Total carrying amount 2,126,224 393,862 1,504,001 1,035,525 319,428



Credit concentrations

Geographical Location

Group

In thousands of naira Loans and Advances Trade/ Other loans Cash and cash advances to under finance Financial insurance Reinsurance and equivalents customers lease assets receivables assets receivables Total

31 December 2015

In Nigeria:

North Central - 195,481.32 18,190 - - - - 213,672South East - - 11,667 - - - - 11,667South South - 5,186.64 - - - - - 5,187South West 7,028,620 1,077,766 93,412 378,142 528,399 593,256 1,096,746 10,796,341

Total 7,028,620 1,278,434 123,269 378,142 528,399 593,256 1,096,746 11,026,867


31 December 2014

In Nigeria:

North Central - 165,732.07 15,196.44 - - - - 180,929South East - - 9,746.34 - - - - 9,746South South - 4,397.32 - - - - - 4,397South West 6,619,205 913,747 78,037 195,847 319,428 1,003,415 11,572,541 20,702,220

Total 6,619,205 1,083,876 102,980 195,847 319,428 1,003,415 11,572,541 20,897,292



Sectorial analysis

Group


31 December 2015

Agriculture - 16,236 1,566 - - - - 17,802Manufacturing - 39,383 3,797 - - - - 43,181Trade and commerce - 94,807 9,141 - - - - 103,949Finance and insurance 7,028,620 - - 378,142 528,399 593,256 1,096,746 9,625,163Real estate and construction - 180,352 17,390 - - - - 197,741Education - 248,568 23,967 - - - - 272,536Others - 699,087 67,407 - - - - 766,495

Total 7,028,620 1,278,434 123,269 378,142 528,399 593,256 1,096,746 11,026,867


31 December 2014

Agriculture - 6,990 664 - - - - 7,654Manufacturing - 40,747 3,871 - - - - 44,618Trade and commerce - 86,153 8,185 - - - - 94,338Finance and insurance 6,619,205 - - 195,847 319,428 1,003,415 11,572,541 19,710,436Real estate and construction - 122,810 11,668 - - - - 134,478Education - 200,637 19,063 - - - - 219,700Others - 626,539 59,528 - - - - 686,067

Total 6,619,205 1,083,876 102,980 195,847 319,428 1,003,415 11,572,541 20,897,292



(iii) Liquidity risk TheGroup’sprincipalobjectiveinmanagingitsliquidityandcapitalresourcesistomaximizethereturnsoncapitaltoshareholders,

while enabling it to pay claims, pay dividends, pay staff and fulfill statutory obligations to regulators and the different tiers of government in the environment in which it operates. Effective and prudent liquidity is a priority across the Group.

Managementmonitorsthe liquidityoftheGrouponadailybasisandprojectsherfinancialneedsoveramulti-yeartimehorizonthrough its quarterly budget and review process. Management believes that the cash flows from the sources of fund available to the Group are sufficient to satisfy the current liquidity requirements of the Group, including under reasonably foreseeable stress scenarios.

In managing liquidity (and of course, capital), the Group seeks to: -Matchtheprofileofassetsandliabilities,takingintoaccounttherisksinherentineachlineofproduct; -Maintainfinancialstrengthtosupportnewbusinessgrowthwhilststillsatisfyingtherequirementsofpolicyholdersandregulators; -Retainfinancialflexibilitybymaintainingstrongliquidity,and; - Allocate liquid resources efficiently to support growth while paying claims and other commitments promptly.

Sources of Liquidity In managing cash flow position, the Group has a number of sources of liquidity, including the following principal sources: -PremiumIncome; - Investment income - Investment maturities

Application of funds The principal uses of our liquidity include: - Payment of Claims -Staffbenefits; -Purchaseofinvestments’and; - Payment in connection with financing activities. In practice, most of the Group’s assets are marketable securities which could be converted into cash when required.

Maturity Profile The following table shows the Group’s expected maturity for its non-derivative assets. The table has been drawn up based on the

undiscounted contractual maturities of the assets including interest that will be earned on those assets except where the Group anticipates that the cash flow will occur in a different period.Reinsurers’ share of unearned premiums are excluded from this analysis.

It also shows details of the expected maturity profile of the Group’s undiscounted obligations with respect to its financial liabilities and estimated cash flows of recognized insurance contract liabilities. It includes both interest and principal cash flows.

It should be noted that Unit-linked assets and liabilities and reinsurers’ share of unearned premiums are excluded from this analysis.

Group

31 December 2015

In thousands of Naira Notes Carrying Contractual < 1 1 - 3 3 - 12 1 - 5 > 5 years amount cashflow month months months years

Non-derivative financial assets/ insurance assets

Cash and cash equivalents 6 7,035,842 7,239,479 5,831,412 1,408,067 - - - Fair value through profit or loss carried at fair value (FVTPL) 9(b) 298,531 188,589 14,300 71,842 49,767 273,640 - Loans and receivables 9(c) 1,096,746 1,129,648 - - 1,243,254 294,678 - Loans and advances to customers 7 1,278,434 1,560,311 46,170 48,284 326,935 1,138,922 - Advances under finance lease 8 123,269 152,238 843 2,670 61,201 87,524 -

9,832,822 10,270,265 5,892,725 1,530,863 1,681,157 1,794,764 -

Non-derivative financial liabilities/ insurance liability

Borrowings 30 1,020,083 1,120,806 175,757 - 945,049 - - Trade payables 24 5,387,629 5,387,629 5,001,739 385,890 - - - Other liabilities 25 1,182,731 1,182,731 1,182,731 - - - - Depositors’ funds 26 1,196,324 1,196,324 128,306 - 559,678 508,340 - Investment contract liabilities 28 336,271 1,569,062 87,421 - 961,189 520,452 -

9,123,038 10,456,552 6,575,954 385,890 2,465,916 1,028,792 -

Gap (asset - liabilities) 709,784 (186,287) (683,229) 1,144,973 (784,759) 765,972 -

Cumulative liquidity gap 1,144,973 360,214 1,126,186 1,126,186



31 December 2014


Non-derivative financial assets/insurance assets

Cash and cash equivalents 6 6,622,345 6,644,063 5,521,372 1,122,691 - - -Fair value through profit or loss carried at fair value (FVTPL) 9(b) 195,847 188,589 - 37,022 - 151,567 -Loans and receivables 9(c) 1,504,001 1,537,932 - - 1,243,254 294,678 -Loans and advances to customers 7 1,083,876 1,213,941 97,178 52,946 53,799 1,010,018 -Advances under finance lease 8 102,980 102,980 7,346 12,820 12,505 70,309 -

9,509,049 9,687,505 5,625,896 1,225,479 1,309,558 1,526,572 -

Non-derivative financial liabilities/insurance liability

Borrowings 30 1,001,151 1,085,008 15,583 - 1,069,425 - -Trade payables 24 5,151,843 5,151,843 4,720,480 172,545 258,818 - -Liabilities 25 1,102,904 1,102,904 1,102,904 - - - -Depositors’ funds 26 1,032,616 1,032,616 232,165 - 753,901 46,550 -Investment contract liabilities 28 257,963 257,963 26,797 26,400 64,380 45,000 95,386

8,546,477 8,630,334 6,097,929 198,945 2,146,524 91,550 95,386

Gap (asset - liabilities) 962,572 1,057,171 (472,033) 1,026,534 (836,966) 1,435,022 (95,386)

Cumulative liquidity gap 1,026,534 189,568 1,624,590 1,529,204

Company

31 December 2015


Non-derivative financial assets/insurance assets

Cash and cash equivalentsFair value through profit or loss carried at 6 105,452 106,115 45,575 60,540 - - -fair value (FVTPL) 9(b) 17,935 - - - - - -

123,387 106,115 45,575 60,540 - - -

Non-derivative financial liabilities/insurance liability

Borrowings 30 872,257 958,947 25,997 5,557 894,049 33,344 -Other liabilities 25 1,102,904 1,102,904 1,102,904 - - - -

1,975,161 2,061,851 1,128,901 5,557 894,049 33,344 -

Gap (asset - liabilities) (1,851,774) (1,955,736) (1,083,326) 54,983 (894,049) (33,344) -

Cumulative liquidity gap 54,983 (839,066) (872,410) (872,410)

31 December 2014


Non-derivative financial assets/insurance assetsCash and cash equivalents 6 49,606 6,644,063 5,521,372 1,122,691 - - -

49,606 6,644,063 5,521,372 1,122,691 - - -

Non-derivative financial liabilitie/insurance liabilityBorrowings 30 1,106,011 1,199,037 32,218 - 1,094,607 72,212 -Other liabilities 25 278,549 278,549 278,549 - - - -

1,384,560 1,477,586 310,767 - 1 ,094,607 72,212 -

Gap (asset - liabilities) (1,334,954) 5,166,477 5,210,605 1 ,122,691 (1,094,607) (72,212) -

Cumulative liquidity gap 1 ,122,691 28,084 (44,128) (44,128)



(b) Financial assets and liabilities

Accounting classification, measurement basis and fair values

The table below sets out the Group’s classification of each class of financial assets and liabilities, and their fair values.

Group

31 December 2015

In thousands of Naira Loans and Designated Available- Other Total receivables at fair value for-sale financial carrying Fair liabilities amount value

Cash and cash equivalents 7,035,842 - - - 7,035,842 7,035,842 Financial assets 1,096,746 1,936,874 415,263 - 3,448,883 3,448,883 Loans and advances to customers 1,278,434 - - - 1,278,434 1,546,905 Advances under finance lease 123,269 - - - 123,269 149,155 Trade receivables 528,399 - - - 528,399 528,399 Other receivables less prepayments 112,610 - - - 112,610 112,610 Statutory deposits 555,000 - - - 555,000 555,000

10,730,300 1,936,874 415,263 - 13,082,437 13,376,795

Borrowings - - - 1,020,083 1,020,083 1,183,296 Trade payables - - - 5,387,629 5,387,629 5,387,629 Depositors’ fund - - - 1,196,324 1,196,324 1,196,324 Other liabilities - - - 1,182,731 1,182,731 1,182,731

- - - 8,786,767 8,786,767 8,949,980

31 December 2014

In thousands of Naira Loans and Designated Available- Other Total receivables at fair value for-sale financial carrying Fair liabilities amount value

Cash and cash equivalents 6,622,345 - - - 6,622,345 6,622,345 Financial assets 1,504,001 2,126,224 393,862 - 4,024,087 3,949,748 Loans and advances to customers 1,083,876 - - - 1,083,876 1,255,996 Advances under finance lease 102,980 - - - 102,980 119,333 Trade receivables 319,428 - - - 319,428 319,428 Other receivables less prepayments 223,838 - - - 223,838 223,838 Statutory deposits 555,000 - - - 555,000 555,000

10,411,468 2,126,224 393,862 - 12,931,554 13,045,688

Borrowings - - - 1,001,151 1,001,151 1,160,134 Trade payables - - - 5,151,843 5,151,843 5,151,843 Depositors’ funds - - - 1,032,616 1,032,616 1,032,616 Other liabilities - - - 1,102,904 1,207,351 1,207,351

- - - 8,288,514 8,392,961 8,551,944



Company

31 December 2015 Other Total In thousands of Naira Loans and Designated Available- financial carrying receivables at fair value for-sale liabilities amount Fair value

Cash and cash equivalents 105,452 - - - 105,452 105,452Financial assets - 17,935 - - 17,935 17,935Other receivables less prepayments 68,528 - - - 68,528 68,528

173,980 17,935 - - 191,915 191,915

Borrowings - - - 872,257 872,257 872,257Other liabilities - - - 1,102,904 1,102,904 1,102,904

- - - 1,975,161 1,975,161 1,975,161

31 December 2014

Other TotalIn thousands of Naira Loans and Designated Available- financial carrying receivables at fair value for-sale liabilities amount Fair value

Cash and cash equivalents 49,606 - - - 49,606 49,606Other receivables less prepayments 64,587 - - - 64,587 64,587

114,193 - - - 114,193 114,193

Borrowings - - - 1,106,011 1,106,011 1,106,011Other liabilities - - - 278,549 278,549 278,549

- - - 1,384,560 1,384,560 1,384,560

Management has assessed that the fair value of financial assets, loans and advancees and borrowings approximates the carrying value of these instruments following the relatively short tenor of the instruments and that interest approximates market interest rate as at year end.

For other receivables and payables, management has assessed that given the nature of the instruments, carrying value approximates fair value.



55 Insurance risk management The Group accepts insurance risk through its insurance contracts and certain investment contracts where it assumes the risk of loss

frompersonsororganisationsthataredirectlysubjecttotheunderlyingloss.TheGroupisexposedtotheuncertaintysurroundingthe timing, frequency and severity of claims under these contracts.

The Group manages its risk via its underwriting and reinsurance strategy within an overall risk management framework. Pricing is based on assumptions which have regard to trends and past experience. Exposures are managed by having documented underwriting limits and criteria. Reinsurance is purchased to mitigate the effect of potential loss to the Group from individual large or catastrophic events and also to provide access to specialist risks and to assist in managing capital. Reinsurance policies are written with approved reinsurers on either a proportional or excess of loss treaty basis.

Regulatory capital is also managed (though not exclusively) by reference to the insurance risk to which the Group is exposed.

(a) Non-life insurance The Group writes fire, general accident, oil & gas, engineering, bond, marine and motor risks primarily over a twelve month duration

(usually longer for engineering policies). The most significant risks arise from natural disasters, climate change and other catastrophes (i.e. high severity, low frequency events). A concentration of risk may also arise from a single insurance contract issued to a particular demographic type of policyholder, within a geographical location or to types of commercial business. The relative variability of the outcome is mitigated if there is a large portfolio of similar risks.

The concentration of non-life insurance by the location of the underlying risk is summarised below by reference to liabilities.

In thousands of Naira Gross Reinsurance Net 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

- Within Nigeria 4,434,285 4,733,745 1,582,128 1,745,574 2,852,157 2,988,171 - Outside Nigeria - - - - - -

4,434,285 4,733,745 1,582,128 1,745,574 2,852,157 2,988,171

The concentration of non-life insurance by type of contract is summarised below by reference to liabilities.


Fire 1,021,552 820,105 491,262 499,088 530,290 321,017 Accident 556,796 590,676 93,060 97,355 463,737 493,320 Motor 1,016,989 926,625 126,504 118,315 890,484 808,310 Marine 198,273 225,627 73,492 91,766 124,781 133,861 Oil and gas 1,460,760 1,989,664 697,414 855,436 763,346 1,134,228 Engineering 163,055 141,159 89,924 59,857 73,131 81,302 Bond 16,859 39,889 10,472 23,756 6,387 16,133

4,434,285 4,733,745 1,582,128 1,745,574 2,852,157 2,988,171


Outstanding claims: Fire 657,276 643,856 403,777 421,642 253,499 222,214 Accident 390,808 428,890 64,399 65,093 326,409 363,797 Motor 472,017 324,866 86,204 67,714 385,813 257,152 Marine 138,687 158,887 40,479 57,371 98,208 101,516 Oil and Gas 433,838 765,075 57,701 162,759 376,137 602,316 Engineering 102,128 74,751 62,229 36,723 39,899 38,027 Bond 16,247 34,080 8,644 21,425 7,604 12,655

Total 2,211,000 2,430,405 723,433 832,728 1,487,568 1,597,677


Unexpired risk: Fire 364,277 339,394 87,485 83,463 276,792 255,931 Accident 165,988 161,786 28,660 29,970 137,328 131,816 Motor 544,972 601,759 40,301 50,601 504,671 551,158 Marine 59,587 66,740 33,013 36,343 26,573 30,397 Oil and gas 1,026,922 1,044,108 639,713 687,003 387,209 357,105 Engineering 60,928 83,744 27,695 23,134 33,233 60,610 Bond 612 5,810 1,829 2,331 (1,217) 3,478

Total 2,223,284 2,303,340 858,696 912,846 1,364,589 1,390,494


Assumptions and sensitivities

Therisksassociatedwiththenon-lifeinsurancecontractsarecomplexandsubjecttoanumberofvariableswhichcomplicatequantitativesensitivity analysis. The Group uses several statistical and actuarial techniques based on past claims development experience. This includes indications such as average claims cost and expected loss ratio. The key method used by the Group for estimating liabilities is upward or downwardadjustmentbasedondocumentationandprofessionaljudgement.

The Group has minimal exposure to these risks, the exposure of which is determined by the number of claims filed and the Court process.The Group considers that the liability for non-life insurance claims recognised in the balance sheet is adequate. However, actual experience will differ from the expected outcome.

Some results of sensitivity testing are set out below, showing the impact on profit before tax and shareholders’ equity gross and net of reinsurance. For each sensitivity the impact of a unchanged.change in a single factor is shown, with other assumptions.

In thousands of Naira Pre-tax profit Shareholders’ equity 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Non-Life Insurance:5% increase in loss ratios- Gross (1,231,553) 216,825 7,166,700 8,846,622- Net (1,504,874) 240,481 7,282,278 8,870,2785% decrease in loss ratios- Gross (534,683) 414,432 7,863,570 9,044,230- Net (1,039,160) (75,148) 7,747,992 9,020,574

Claims development table for Royal Exchange Insurance

The following tables show the development of claims over a period of time on both a gross and net of reinsurance basis. In 2012, in the year of adoption of IFRS, only 5 years were required to be disclosed. This will be increased in each succeeding year, until 8 - 10 years of information is presented. The top half of the table shows how the estimates of total claims for each accident year develop over time. The lower half of the table reconciles the cumulative claims to the amount appearing in the Statement of Financial Position.

The cumulative claims estimates and payments for each accident year are translated into Nigerian Naira at the year rates that applied at the end of each accident year.

Claims development pattern: Non- Life insurance

31 December 2015 Incremental Chain ladder-Yearly Projections (N)

Accident year 1 2 3 4 5 6 7 8 9

2007 90,369 130,760 40,801 16,493 20,453 4,601 2,386 1,605 5,9522008 224,573 320,685 10,146 8,950 29,856 2,088 564 8732009 267,763 144,617 172,929 35,249 23,592 16,790 1,2402010 423,867 348,593 151,026 19,854 21,506 5,2502011 690,737 1,100,807 274,558 104,755 12,0442012 484,693 976,236 349,847 58,7222013 703,893 571,066 181,0762014 740,384 1,018,5482015 1,037,614

31 December 2014 Incremental Chain ladder-Yearly Projections (N)

Accident year 1 2 3 4 5 6 7 8

2007 90,369 130,760 40,801 16,493 20,453 4,601 2,386 1,6052008 224,573 320,685 10,146 8,950 29,856 2,088 5642009 267,763 144,617 172,929 35,249 23,592 16,7902010 423,867 348,593 151,026 19,854 21,5062011 690,737 1,100,807 274,558 104,7552012 484,693 976,236 349,8472013 703,893 571,0662014 740,384




(b) Life insurance and investment contracts with discretionary participating features (DPF) The Group writes life, annuities, and investment-linked contracts with or without discretionary participating features (DPF). The most

significant risks arise from mortality, persistency, longevity, morbidity, expense variations and investment returns.

Concentration of insurance risk Concentration of risk may arise from geographic regions, epidemics, accumulation of risks and market risk. The concentration of life

insurance and investment contracts with DPF by location of the underlying risk is summarized below by reference to liabilities.


Life insurance: - Within Nigeria 3,648,840 2,222,552 204,068 129,512 3,444,772 2,093,040 - Outside Nigeria - - - - - -

3,648,840 2,222,552 204,068 129,512 3,444,772 2,093,040

Investment contracts with DPF: - Within Nigeria 336,271 257,963 - - 336,271 57,963 - Outside Nigeria - - - - - -

336,271 257,963 - - 336,271 257,963

The concentration of life insurance and investment contracts with DPF by type of contract is summarized below by reference to liabilities.


Life insurance: Protection 2,973,532 2,189,819 129,512 129,512 2,844,020 2,060,307 Pensions - - - - - - Annuities 675,308 32,733 - - 675,308 32,733 Others - - - - - -

Total Life insurance 3,648,840 2,222,552 129,512 129,512 3,519,328 2,093,040

Investment contracts with DPF 336,271 257,963 - - 336,271 257,963

Assumptions and sensitivities Therisksassociatedwiththelife insuranceandinvestmentcontractswithDPFarecomplexandsubjecttoanumberofvariables

which complicate quantitative sensitivity analysis. The key assumptions in quantifying these liabilities include mortality, persistency, longevity, morbidity, expense variations, investment return and discount rates.

Some results of sensitivity testing are set out below showing the impact on profit before tax and shareholders’ equity before and after reinsurance. For each sensitivity scenario, the impact of a change in a single factor is shown, with other assumptions or variables unchanged.

Pre-tax profit Shareholders’ equity In thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Life insurance: 5% increase in mortality/morbidity Gross(2015:Nil;2014:Nil) - - - - Net (2015:N2,474 2014:N1,912) (899,435) 313,716 7,423,762 9,026,631 5% increase in longevity - Gross - - - - - Net - - - - 10% increase in expenses Gross(2015:Nil;2014:Nil) - - - - Net(2015:N2,499;2014:N1,927) (899,460) 313,701 7,423,737 9,026,622 1% increase in interest rates Gross(2015:Nil;2014:Nil) - - - - Net(2015:N2,533;2014:N1,939) (899,494) 313,689 7,423,703 9,026,658



Claims development table for group life scheme

Claims on life insurance contracts are payable on a claims-occurrence basis and the Group is liable for all insured events that occurred during the term of the contract. There is however, uncertainty in the estimation of future benefits payments arising from the unpredictability of long term changes in overall levels of mortality and the variability in policy holder behavior.

Changes may occur in the amount of the Group’s obligations at the end of a contract period. In setting claims provisions, the Group gives consideration to the probability and magnitude of future claims experience being more adverse than assumed and exercises a degree of caution in setting reserves where there is considerable uncertainty.

The Group has taken advantage of the transitional rules of IFRS 4 that permit only five years of information to be disclosed upon adoption of IFRS.

The following table shows the estimates of cumulative incurred claims, including both claims notified and IBNR for each successive year at each reporting date, together with cumulative payments to date with respect to short-term insurance contract.

Claims development pattern: group life

Incremental Chain ladder-Yearly Projections (N)

Accident year 0 1 2 3 4 2007 122,700 34,905 577 3,634 1,262 2008 45,486 45,342 29,838 1,256 2,379 2009 25,378 54,498 31,968 18,099 2,697 2010 51,891 93,022 27,854 11,738 15,333 2011 76,113 70,612 52,699 43,993 10,754 2012 84,733 171,188 47,664 46,107 2013 228,475 243,203 52,792 2014 313,679 431,806 2015 625,063

The company is not exposed to any insurance risk.

56 Segment reporting

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and rewards approach. The Group has adopted IFRS 8 Operating Segments reporting.

Following adoption of IFRS 8, the Group’s reportable segments have not changed as the business segments reported to the monthly executive committee follow clear business lines with distinct risk and rewards which formed the basis under IAS 14.

The Group’s reportable segments under IFRS 8 are therefore identified as follows:

-Non-lifeinsurance; -Lifeinsurance; - Financial services -Healthcare;and -Assetmanagement;

The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment profit represents the profit earned by each segment without allocation of central corporate expenses, certain finance costs and tax expense. This is the measure reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of segment performance.



(a) Operating segment The following is an analysis of the Group’s revenue and result by reportable segment in 2015

In thousands of Naira Non-life Life Financial Asset insurance insurance services Healthcare management Elimination Group

Gross premium written: 6,888,637 3,570,916 - 417,618 - (86,543) 10,790,628 Unearned premium 80,056 (74,957) - 2,183 - 11,266 18,548

Gross premium income 6,968,693 3,495,959 - 419,801 - (75,277) 10,809,176 Reinsurance expenses (2,311,560) (412,765) - - - - (2,724,325)

Net premium income 4,657,133 3,083,194 - 419,801 - (75,277) 8,084,851 Fee and commission income 279,985 50,576 - - - - 330,561

Net underwriting income 4,937,118 3,133,770 - 419,801 - (75,277) 8,415,412

Insurance claims and benefits incurred (2,101,914) (1,706,448) - (231,930) - - (4,040,292) Insurance claims and benefits incurred - recoverable from reinsurers 626,157 374,779 - - - - 1,000,936

Net claims expenses (1,475,757) (1,331,669) - (231,930) - - (3,039,356) Increase in insurance contract liabilities - (1,162,291) - - - - (1,162,291) Underwriting expenses (2,142,439) (415,077) - (86,632) - - (2,644,148)

Total underwriting expenses (3,618,196) (2,909,037) - (318,562) - - (6,845,795)

Underwriting profit 1,318,922 224,733 - 101,239 - (75,277) 1,569,617

Net interest income/(loss) 4,563 25,658 224,482 (656) (142,087) (10,235) 101,725 Investment and other income 269,998 94,732 - 26,923 131,000 (123,057) 399,596 Share of loss on investment in associate (35,792) - - - - (836) (36,628) Net fair value gain/(loss) on financial assets 285,525 56,223 (23,306) 2,723 6,385 - 327,550 Charge of impairment allowance (284,936) (19,884) (23,714) (26,712) (2,289) - (357,535) Other operating income 160,451 34,353 61,076 59,981 230,660 (229,892) 316,629 Foreign exchange gains 48,875 7,434 - 146 - - 56,455

Net income 1,767,606 423,249 238,538 163,644 223,669 (439,297) 2,377,409

Management expenses (1,626,810) (1,241,776) (220,253) (149,954) (340,376) 304,799 (3,274,370)

Total expenses (1,626,810) (1,241,776) (220,253) (149,954) (340,376) 304,799 (3,274,370)

Segment profit before tax 140,796 (818,527) 18,285 13,690 (116,707) (134,498) (896,961)

Tax attributable: Minimum tax (43,736) (15,112) 748 (3,936) - (1,496) (63,532) Income taxes (300,722) (13,692) (8,983) (1,970) (13,100) - (338,467)

Profit after taxation (203,662) (847,331) 10,050 7,784 (129,807) (135,994) (1,298,960)



The following is an analysis of the Group’s revenue and result by reportable segment in 2014


Gross premium written: 6,719,311 2,366,568 - 339,572 - - 9,425,451Unearned premium 202,749 272,874 - (32,877) - - 442,746

Gross premium income 6,922,060 2,639,442 - 306,695 - - 9,868,197Reinsurance expenses (2,165,027) (336,544) - - - - (2,501,571)

Net premium income 4,757,033 2,302,898 - 306,695 - - 7,366,626Fee and commission income 376,915 35,778 - - - - 412,693

Net underwriting income 5,133,948 2,338,676 - 306,695 - - 7,779,319

Insurance claims and benefits incurred (1,976,074) (906,028) - (134,596) - - (3,016,698)Insurance claims and benefits incurred - recoverable from reinsurers 473,122 116,081 - - - - 589,203

Net claims expenses (1,502,952) (789,947) - (134,596) - - (2,427,495)Decrease in insurance contract liabilities - (290,888) - - - - (290,888)Underwriting expenses (2,246,859) (459,277) - (32,103) - - (2,738,239)

Total underwriting expenses (3,749,811) (1,540,112) - (166,699) - - (5,456,622)

Underwriting profit 1,384,137 798,564 - 139,996 - - 2,322,697

Net interest income/(loss) - - 218,278 - (11,349) - 206,929Investment and other income 330,165 225,982 - 20,825 299,960 (340,984) 535,948Share of loss on investment in associate (17,031) - - - - - (17,031)Net fair value (loss) or gain onfinancial assets (68,130) 57,850 (20,024) 75,658 - - 45,354Charge of impairment allowance (88,698) (824) (22,440) (6,236) - - (118,198)Other operating income 156,199 52,932 69,910 86,625 261,243 (245,370) 381,539Foreign exchange gains 33,440 2,373 - (1,246) - - 34,567

Net income 1,730,082 1,136,877 245,724 315,622 549,854 (586,354) 3,391,805

Management expenses (1,570,669) (973,967) (200,478) (204,809) (399,761) 262,609 (3,087,075)

Total expenses (1,570,669) (973,967) (200,478) (204,809) (399,761) 262,609 (3,087,075)

Segment profit before tax 159,413 162,910 45,246 110,813 150,093 (323,745) 304,730

Unallocated finance costs: Tax attributable:Minimum tax (45,188) (22,042) - (3,809) - - (71,039)Income taxes (57,116) (437) (7,757) 2,765 (31,606) - (94,151)

Profit after taxation 57,109 140,431 37,489 109,769 118,487 (323,745) 139,540



Segment assets, liabilites and other information

The following is an analysis of the Group’s net assets by reportable segment in 2015

31 December 2015


Segment assets 18,383,125 7,079,534 2,717,901 1,133,397 8,889,570 (11,667,963) 26,535,564Segment liabilities (11,596,769) (4,762,389) (1,886,028) (446,788) (2,370,680) 1,953,183 (19,109,471)

Segment net assets 6,786,356 2,317,145 831,873 686,609 6,518,890 (9,714,780) 7,426,094

Unallocated assets - - - - - - -

Total net assets 6,786,356 2,317,145 831,873 686,609 6,518,890 (9,714,780) 7,426,094

The following is an analysis of the Group’s net assets by reportable segment in 2014

31 December 2014


Segment assets 18,548,178 6,089,709 1,976,066 1,002,728 8,793,967 (10,333,972) 26,076,676Segment liabilities (11,368,456) (2,923,994) (1,152,416) (331,225) (979,400) 625,392 (16,130,099)

Segment net assets 7,179,723 3,165,715 823,650 671,503 7,814,567 (9,708,580) 9,946,578

Unallocated assets - - - - - - -

Total net assets 7,179,723 3,165,715 823,650 671,503 7,814,567 (9,708,580) 9,946,578

For the purposes of monitoring segment performance and allocating resources between segments, the Group’s Chief Executive monitors the tangible, intangible and financial assets and liabilities attributable to each segment. All assets and liabilities are allocated to reportable segments with the exception of tax assets.

(b) Geographical information The Group’s revenue and information about its segment net assets by geographical location are as follows:

In thousands of Naira Revenue Net assets 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Within Nigeria 2,377,409 3,369,961 7,426,094 9,946,578 Outside Nigeria - - - -

2,377,409 3,369,961 7,426,094 9,946,578



57 Related Parties The Group’s related parties have been considered to be entities that the Group has control or influence over, key management

personnel and persons connected with them. The key management personnel have been identified as the executive and non-executive directors of the Group. Close members of family are those family members who may be expected to influence or be influenced by that individual in their dealings with the Group. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below:

(a) Transactions with related parties TheGroupentersintotransactionswithitssubsidiaries,associates,jointventuresanditskeymanagementpersonnelinthenormal

course of business. The transactions and balances below concern mainly banking, insurance and administrative transactions. The banking and insurance transactions are done in the ordinary course of business against a pricing that considers related party relationship. For the related party transactions with key management personnel, see note 62.

In thousands of Naira Relationship 2015 2014

Royal Exchange PLC Bank balances Royal Exchange Microfinance Bank Ltd Subsidiary 146 17,646

Payables Royal Exchange General Insurance Company Limited Subsidiary 466,294 206,584 Royal Exchange Prudential Plc Subsidiary 272,058 68,958 Royal Exchange Finance and Asset Management Subsidiary -

3,007

Receivables Royal Exchange Healthcare Ltd Subsidiary 43,986 40,081 Royal Exchange Microfinance Bank Ltd Subsidiary 1,397 257 Royal Exchange Finance and Asset Management Subsidiary 1,897 -

Premium paid Royal Exchange General Insurance Company Limited Subsidiary 5,020 2,098 Royal Exchange Prudential Plc Subsidiary 1,150 -

Loans Royal Exchange Finance and Asset Management Subsidiary 46,477 59,128

Finance Lease Royal Exchange Finance and Asset Management Subsidiary 9,336 13,514

Management fees received Royal Exchange General Insurance Company Limited Subsidiary 140,932 163,574 Royal Exchange Prudential Plc Subsidiary 85,553 97,151

Dividend received Royal Exchange General Insurance Company Limited Subsidiary 131,000 148,667 Royal Exchange Prudential Plc Subsidiary - 151,294

Solicitor’s fee paid Punuka Attorneys and solicitors Director 5,000 10,000

Royal Exchange General Insurance Company Limited Bank Balance with Royal Exchange Microfinance Bank - 34,406 Deposit fund with Royal Exchange Prudential Plc 273,404 52,643 Deposit fund with Royal Exchange Finance and Asset Management Ltd 60,505 - Deposit fund with Royal Exchange Microfinance Bank Ltd - 12,331 Finance lease obligation to Royal Exchange Finance and Asset Management Ltd 5,001 - Overdraft facility with Royal Exchange Microfinance Bank Ltd

55,968

Royal Exchange Prudential Life Plc Bank/(Bank Overdraft) Balance with Royal Exchange Microfinance Bank 32,487 (2,918) Deposit fund with Royal Exchange Finance and Asset Management Ltd 2,337 52,001 Finance lease obligation to Royal Exchange Finance and Asset Management Ltd 5 -

Royal Exchange Finance and Asset Management Bank Balance with Royal Exchange Microfinance Bank 1,973 2,166 Deposit fund with Royal Exchange Microfinance Bank Ltd - 4,407 REPRU Annuity Fund 495,002 -

Royal Exchange Healthcare Limited Bank overdraft balance with Royal Exchange Microfinance Bank 5,140 9,210 Deposit fund with Royal Exchange Finance and Asset Management Ltd 40,845 114,909

The Group considered the outstanding balances at the reporting date are unsecured and non-interest bearing. The settlements will involve physical delivery of cash.



58 Statement of Prudential Adjustments In accordance with the Regulatory guidelines released by both CBN/NDIC, provisions for loan losses recognized in the income statement

shall be determined based on the requirements of IFRS. The IFRS impairment should be compared with provisions determined under the CBN Prudential guidelines and the expected impact/changes in general reserves should be treated as follows:

(a) IfprudentialprovisionishigherthanIFRSimpairment;Transferthedifferencefromgeneralreservetoanon-distributableregulatoryreserve.

(b) IfprudentialprovisionislessthanIFRSimpairment;Transfertheexcessfromthenon-distributableregulatoryreservetothegeneralreserve to the extent of the non-distributable reserve previously recognized.

Group Group In thousands of Naira 31-Dec-15 31-Dec-14

Loans and advances to customers Specific impairment (see note 7) 106,990 52,709 Collective impairment (see note 7) 1,489 7,254

Advances under finance lease Impairment allowance (see note 8) 13,000 37,801

Total impairment allowance (a) 121,479 97,764

Total impairment based on prudential guidelines (b) 419,708 221,344

Regulatory risk reserve (c = b - a) 298,229 123,580

59 Contingencies and Commitments(a) Commitments for expenditure The Group has no commitment for capital expenditure at the reporting date.

However, the Group entered into a contract for the management and maintenance of some of its investment properties on annual basis, which will give rise to an annual expense of N1.275 million.

(b) Contingencies and commitments

Litigation and claims There are certain pending litigations in some courts of law in Nigeria involving the Group and the Company either as plaintiff or

defendant amounting to N2.2 billion (2014: N2.2billion). However, three cases have been decided against the Group and necessary accruals have been made in the financial statements. The actions are being vigorously contested and the Directors are of the opinion that no significant liability will arise therefrom in excess of the provision made in the financial statements.

Contingent assets The Group has no contingent assets as at the reporting date.

60 Events after the reporting period There were no events subsequent to the financial position date which require adjustment to, or disclosure in, these financial

statements.

61 Fiduciary Activities The Company acts as a custodian, trustee or in other fiduciary capacity, that results in its holding, placing or performing oversight

functions over assets on behalf of its clients.

The Company performs oversight and monitoring functions over two mutual funds. Its responsibilities have been defined in Item 12 of the Directors’ report.

Other assets held on behalf of clients represents unclaimed debentures which have matured and are yet to be claimed by the debenture holders as at reporting date. These assets are excluded from these financial statements, as they are not assets of the Company. The analysis of these assets are as shown below:

Company Company In thousands of Naira 31-Dec-15 31-Dec-14

Funds Under Management Clients’ Federal Government Bonds 33,217 55,874 Clients’ Commercial Papers 175,728 32,218 Clients’ Treasury Bills 2,842 - Clients’ Fixed Deposits 41,399 137,289 Clients’ Bank balances 2,529 18,790

255,715 244,171 Clients’ Payables (2,971) (2,971) Management Fees Payable (1,553) (1,332)

251,191 239,868



62 Compensation of key management personnel Key management personnel of the Company includes all directors, executive and non-executive, and senior mangement. The summary of compensation

of key manangement personnel for the year is as follows:

(a) Chairman and directors’ emoluments:

(i) Emoluments


Non-executive directors Directors’ fees 1,420 998 1,420 998 Sitting allowance 67,791 59,730 48,480 40,153 Other allowances 23,481 17,088 23,481 17,088

92,692 77,816 73,381 58,239

Executive Directors Executive Compensation 69,455 64,868 69,455 64,868 Post employment benefits 6,054 5,039 6,054 5,039

75,509 69,907 75,509 69,907

Chairman 3,611 3,889 3,611 3,889 Other directors 164,590 143,834 145,279 124,257

168,201 147,723 148,890 128,146

The highest paid director 52,174 33,797 52,174 33,797

(ii) Number of directors (excluding the chairman) within the following emolument range

Group Group Company Company N 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

400,000 - 500,000 11 11 - - 500,000 - 600,000 4 1 - - 2,000,001 - 5,000,000 2 11 - 5 Above 5,000,000 7 6 7 2

(b) Staff Average number of persons employed in the financial year and the related staff cost were as follows:


Managerial 29 41 1 1 Senior staff 332 327 6 8 Junior staff 41 37 1 1

402 405 8 10

(i) Staff costs


Salaries , wages and allowances 1,708,568 1,743,697 99,948 95,401 Pension cost 92,763 112,534 - 4,188

1,801,331 1,856,231 99,948 99,589


(ii) Pension scheme

At January 1 569 3,360 - - Provision in the year 92,763 63,431 - - Remittance to pension fund administrators (93,332) (66,222) - -

At December 31 - 569 - -



(iii) Employees remunerated at higher rates The number of employees in receipt of emoluments including allowances within the following ranges were:

Group Group Company Company N 31-Dec-15 31-Dec-14 31-Dec-15 31-Dec-14

Below 400,000 3 1 - - 400,001 - 500,000 3 3 - - 500,001 - 600,000 - 6 - - 600,001 - 700,000 2 2 - - 700,001 - 800,000 6 9 - - 800,001 - 900,000 - 6 - - 900,001 - 1,000,000 24 8 1 1 1,000,001 - 2,000,000 135 86 1 3 2,000,001 - 3,000,000 85 155 2 1 3,000,001 - 4,000,000 61 26 1 - 4,000,001 - 5,000,000 28 42 - 2 5,000,001 - 6,000,000 16 17 1 1 6,000,001 - 7,000,000 12 14 1 1 7,000,001 - 8,000,000 8 9 - - 8,000,001 - 9,000,000 5 6 - - 9,000,001 - 10,000,000 1 2 - - 10,000,001 - 12,000,000 9 7 - - 12,000,001 - 20,000,000 3 4 - - 20,000,001 - 30,000,000 1 2 1 1

402 405 8 10



63 Contraventions During the year, the Group contravened certain sections of Insurance Act Cap 117 LFN 2004, NAICOM Guideline 2010 and the CBN

Guideline for Microfinance banks in Nigeria as detailed below:


Company Regulatory Authority Description Penalt paid

31-Dec-15 31-Dec-14

Royal Exchange Plc SEC Penalty for late filing of audited accounts as at 30th April, 2015 1,175 -

SEC Penalty for late filing of 4th quarter returns as at 31st January, 2016 2,300 -

SEC Penalty for late filing of 1st quarter returns as at 30th April, 2015 1,450

SEC Penalty for late filing of returns as at 31st December, 2013 17,323

NSE Penalty for late filing of audited accounts as at 31st December, 2013 1,400

OtheComponent of Group

Royal Exchange General Insurance Company Limited NAICOM NAICOM Guideline Re-statement of 2013 financial statements - 100

NAICOM Penalty for contravention on 2014 reinsurance treaty arrangement late rendition of returns for third quarter 2011 - 500

NAICOM Penalty for non submission of 2013 quarter returns - 2,000

FIRS Penalty for 2013 year of assessment late returns submissions - 30

Royal Exchange Finance and Asset Management Limited SEC Penalty for non disclosure of exited staff in 2015 172 -

SEC Penalties for non submission of returns as required pre-2014 - 1,990

Total 5,097 23,343

other nAtIonAL DISCLoSuRES


StateMeNt of VALuE ADDEDFor the Year Ended 31 December 2015

In thousands of Naira Restated Restated Group Group Company Company 2015 2014 2015 2014 N’000 % N’000 % N’000 % N’000 %

Net premium income 8,084,851 7,366,626 - - Investment and other income 399,596 535,948 131,000 299,960 Interest income 101,725 206,929 (142,087) (11,349) Net fair value gain or loss on financial assets 327,550 45,354 6,385 - Other operating income 316,629 381,539 230,660 261,243 Bought in goods and services (8,632,688) (6,711,685) (208,689) (290,003)

Value added 597,663 100 1,824,711 100 17,269 100 259,852 100

Applied as follows: In payment of employees:- Salaries, wages and other benefits 982,506 164 1,014,628 56 124,216 719 100,876 39In payment to government:- Taxation 401,999 67 165,190 9 13,100 76 31,606 12For future replacement of assets and expansion of business:- Depreciation 265,574 44 276,712 15 9,760 57 8,883 3- Contingency reserve 246,544 41 228,641 13 - - - -- General reserve (1,298,960) (216) 139,540 7 (129,807) (752) 118,487 46

597,663 100 1,824,711 100 17,269 100 259,852 100


fINaNCIal SuMMARY For the Year Ended 31 December 2015

GROUP

Restated Restated Restated RestatedIn thousands of Naira 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

AssetsCash and cash equivalents 7,035,842 6,635,540 1,810,882 1,338,057 1,266,680Loans and advances to customers 1,278,434 1,083,876 812,571 435,830 285,401Advances under finance lease 123,269 102,980 218,585 412,961 240,639Financial assets 3,448,883 4,024,087 3,558,965 2,908,585 2,760,023Trade receivables 528,399 319,428 421,637 418,381 327,406Reinsurance assets 1,889,750 1,916,261 2,044,041 1,584,733 1,590,172Deferred acqusition cost 382,490 366,892 469,160 216,448 182,453Other receivables and prepayments 387,396 476,235 483,625 188,533 363,918Investment in associates 274,088 295,250 213,694 220,734 188,002Investment properties 6,807,743 7,722,739 7,092,569 6,356,474 6,169,307Property and equipment 2,219,584 1,673,178 1,690,707 1,379,719 1,438,620Intangible assets 39,088 46,863 37,418 38,035 41,210Employees retirement benefit asset (Net) 154,016 170,199 166,963 49,370 26,839Statutory deposits 555,000 555,000 555,000 555,000 555,000Deferred tax assets 427,621 640,445 699,334 523,150 378,652Assets classified as held for sale 973,639 - - - -

Total assets 26,525,242 26,028,973 20,275,151 16,626,010 15,814,322

LiabilitiesBank borrowing 1,020,083 1,051,959 52,554 - -Deferred income 122,169 102,234 84,797 92,675 139,491Trade payables 5,387,629 5,151,843 528,509 369,863 641,530Other liabilities 1,469,737 1,233,863 1,170,182 635,069 754,108Depositors’ funds 1,196,324 1,032,616 595,449 593,225 403,231Insurance contract liabilities 8,263,204 7,094,226 6,973,096 4,878,504 4,387,131Investment contract liabilities 336,271 257,963 599,106 573,494 530,960Dividend payable - - 80,525 80,525 -Current income tax liabilities 488,713 502,951 494,388 519,109 501,333Employees retirement benefit liability 570,008 545,206 550,660 475,150 369,732Deferred tax liabilities 244,868 172,495 167,931 88,378 77,332

Total liabilities 19,099,006 17,145,356 11,297,197 8,305,992 7,804,848

EquityShare capital 2,572,685 2,572,685 2,572,685 2,572,685 2,572,685Share premium 2,690,936 2,690,936 2,690,936 2,690,936 2,690,936Contingency reserve 1,422,919 1,176,375 947,734 722,231 525,193Treasury shares (500,000) (500,000) (500,000) (500,000) (500,000) Retained earnings 834,374 2,657,434 3,045,281 2,803,330 2,632,890Other component of equity 405,322 286,187 221,318 30,836 87,770

Total equity 7,426,236 8,883,617 8,977,954 8,320,018 8,009,474

Total equity and liabilities 26,525,242 26,028,973 20,275,151 16,626,010 15,814,322

Statement of Profit or Loss and Other Comprehensive Income


Gross premium 10,790,628 9,425,451 9,083,092 7,614,209 6,822,383

Net income 2,377,409 3,391,805 3,403,995 2,665,834 3,217,542

Profit/ (loss) before taxation (896,961) 304,730 828,213 703,094 261,210Income tax expense (401,999) (13,100) (21,929) (129,801) (259,895)

Profit/(loss) after taxation (1,298,960) 291,630 806,284 573,293 1,315

Earnings per share (kobo) (25) 3 31 22 1


fINaNCIal SuMMARYFor the Year Ended 31 December 2015

COMPANY


AssetsCash and cash equivalent 105,452 49,606 35,595 579 2,669Financial assets 17,935 - - - -Investment in subsidiaries 8,660,464 8,660,464 7,620,464 7,620,464 7,620,464Other Receivables and prepayments 79,119 81,920 77,984 46,135 47,128Property and Equipment 26,600 17,488 16,852 20,641 16,193Intangible Assets - - - 1,875 3,750

Total assets 8,889,570 8,809,478 7,750,895 7,689,694 7,690,204

LiabilitiesBank borrowing 872,257 1,106,011 - 1,688 -Other liabilities 1,199,985 672,377 388,482 436,014 463,003Dividend payable - - 80,525 80,525 -Current income tax liabilities 255,109 255,109 254,373 289,039 300,603Employees retirement benefit liability 43,329 24,374 20,139 14,845 11,468

Total Liabilities 2,370,680 2,057,871 743,519 822,111 775,074

EquityShare capital 2,572,685 2,572,685 2,572,685 2,572,685 2,572,685Share premium account 2,690,936 2,690,936 2,690,936 2,690,936 2,690,936Retained earnings 1,254,849 1,487,563 1,626,345 1,601,795 1,647,142Other component of equity 420 423 561 2,167 4,367

Shareholders’ funds 6,518,890 6,751,607 6,890,527 6,867,583 6,915,130

Total Equities and Liabilities 8,889,570 8,809,478 7,634,046 7,689,694 7,690,204

Statement of Profit or Loss and Other Comprehensive Income


Net income 223,669 549,855 559,721 362,348 1,085,575

Profit/ (loss) before taxation (116,707) 150,093 311,803 205,608 625,207Income tax expense (13,100) (31,606) (30,526) (45,140) (90,321)

Profit/(loss) after taxation (129,807) 118,487 281,277 160,468 534,886

Earnings per share (kobo) (3) 2 11 6 10

MaNaGeMeNt GroUp & SuBSIDIARIES


reGIoNal DIreCtorS

lagos-CentralMrs. J. EkomwererenB.A., ACII

lagos-SouthMr. S. t. okohACII, MBA

South-eastG. n. ChukwumaHnD, BSc., MBA

WestMr. R. A. AjanaBSc., MMP

South-SouthMrs. V. o. EluemeHnD, MBA

eXeCUtIVe GroUp

roYal eXChaNGe plC

Group Managing DirectorAlhaji A. MuktariBSc., MSc., AIoD, AMIn

Group General ManagerMs. S. I. EzeukoB.Ed., LLB, BL, ACIARB, PGD InSuRAnCE LAW, PGCL CoRPoRAtE & CoMMERCIAL

LAW

Deputy General Managers

human resourcesMr. D. nosiriBA, MSc, CIPD

Strategic & business planningMr. n. A. MelieBSc, ACIIn, MBA

finance and accountsMr. F. C. okoliBSc., M.Sc, FCA, FCtI, FCIB, CISA, CISSP,

CIA, CISM, MnIM

Information technologyMr. E. J. osisiomaBSc., MBA

assitant General Managers

enterprise risk ManagementMr. H. Y. BomanBSc., FCA, ACtI, ACS, ACPIn, MIoD

facilities ManagementMr. B. t. BabajoBSc., MBA

Senior Manager

legal and CompanySecretariat ServicesMrs. n. S. onyemeLLB, BL, ACIARB

eXeCUtIVe (SUbSIDIarIeS)

royal exchange GeneralInsurance Company limited

Managing DirectorMr. B. C. AgiliHnD, MBA, FCII, FIIM

Director (business Development)Mr. A. A. nwankwoHnD, ACII, MBA

Senior ManagersMr. Ayo KamoruBSc, LLB, BL, MBA, ACIIn, LLM

Mrs. D. A. L. AkintayoHnD, ACIIn, MBA

Mr. A. o. AjalanD, ACIIn, MMP

royal exchange prudential life plc

Managing DirectorMr. B. o. BanmoreBSc, MMP, ACII

assistant General ManagerMarketingMr. A. A. KasimBSc, MBA, ACIIn, ACEn, ACIP

royal exchange finance & asset Management limited

Managing DirectorMr. Abiola SanniBSc, nIMn, ACIB, FCA

assistant General ManagerMrs. Irene okparaMBA, HnD, CPIn

Senior ManagerMrs. Funke oluyemiBSc, MBA

royal exchange healthcare limited

Managing DirectorDr. C. P. ofulueMBBS, MBA

Senior ManagersDr. E. onwutaluMBBS, MBA, PGD (HSE)

Mr. o. o. SobuloHnD, BSc, ACA

royal exchange Microfinance bank limited

Managing DirectorMrs. E. o. ElgbocheBSc., (Ed.), MBA, FCB, ACIM

Senior ManagerMr. K. HassanBSc, MBA, MSC

MaNaGeMeNt GroUp & SuBSIDIARIES


royal exchange General Insurance Company limited is a wholly owned subsidiary of royal exchange plc, licensed by the National Insurance Commission to offer the full range of general and special risks insurance products. With over 90 years in the Nigerian market, royal exchange General Insurance has an enviable reputation for reliability, integrity, professionalism, technical competence and financial strength.

the company operates from thirty three (33) branches country wide to ensure maximum outreach and complete accessibility to its customer base. the recent implementation of a web-enabled backbone It system will further enhance its ability to provide incomparable service. the company’s capacity to underwrite oil and gas risks is widely acknowledged throughout the industry and its oil and gas treaty is widely recognized to be one of the best in the market.

With its unwavering dedication to its core values, the company continues to maintain its lead on many of the major corporate risks in nigeria.

roYal eXChaNGe GEnERAL

Mr. ben agiliManaging Director

(Royal Exchange General)


royal exchange prudential life plc is a wholly owned subsidiary of royal exchange plc and is licensed to underwrite life insurance and related risks. following the re-organization of the erstwhile royal exchange assurance (Nigeria) plc into a group holding company in april 2007, royal exchange prudential life plc emerged as the subsidiary providing a variety of life and investment linked savings products to cater for individual and corporate needs.

Royal Exchange Prudential Life has pioneered the use of a GSM based electronic platform which enables some of our products to be purchased and activated via scratch cards. this platform, which is user friendly, has also aided the accessibility of our products to all branches, friendship centers and other outlets nationwide.

As part of our efforts aimed at adding value to the growing needs of our customers, we have also introduced a number of new products namely:• Annuity Policies (with four different

variants)• FuneralPolicies(BasicandCommonwealth)

In the coming months, our clients will also be able to enjoy new additions to our product bouquet covering medical health annuity schemes, disability benefit cover and dreaded illness cover.

At the corporate level, we are also at the forefront of providing cover under Compulsory Group Life Schemes for employees of both private and public sectors of the economy as required by the Pension Reform Act, 2004. We presently enjoy the partnership and collaboration of brokers and related organizations in providing quality services to the insuring public, in line with professional best practices.

Mr. olawale banmoreManaging Director

(Royal Exchange Prudential Life)

roYal eXChaNGe PRuDEntIAL LIFE


royal exchange healthcare limited is a nationwide accredited NhIS health maintenance organization, providing financial intermediation within the health industry. We therefore act as a fulcrum between the enrollees and the healthcare providers selected purely on the quality of their services.

Royal Exchange Healthcare Limited’s primary function is the design of medical health plans that are both flexible and accommodating. our provider network is spread across the country and through rigorous continuous quality auditing, we strive to ensure the highest possible standards in medical services to our clients.

We utilize the principle of risk pooling and managed care in controlling and hedging risks associated with our business.

In performing these functions, the risk bearing responsibility and its innovative management have been the distinguishing factor of the Royal Exchange Healthcare brand in the health insurance industry.

Royal Exchange Healthcare Limited will, in the long term, create a one-stop health solution for its customers.

roYal eXChaNGe HEALtHCARE

Dr. pius ofulueManaging Director

(Royal Exchange Healthcare)


royal exchange finance & asset Management ltd (previouly called royal exchange finance & Investment ltd) was incorporated as a wholly-owned subsidiary of royal exchange plc in october 2004 and licensed in april 2005 by Central bank of Nigeria to provide a wide range of professional services in the areas of credit-finance, funds mobilization and financial advisory services. the company is also licensed by Security and exchange Commission to provide portfolio and fund management services.

We adopt a customer-centric approach to fill the service delivery gaps evident in nigerian financial sector in the area of financing businesses, especially small and medium scale enterprises. We are also excellent team players.

Royal Exchange Finance & Asset Management Ltd recognizes the indispensability of technology to straight-through processing and rapid turnaround times. We are at the verge of upgrading our system to a more advanced multi-functional financial software package to execute large-scale business transactions without hitches.

the technical expertise of Royal Exchange Finance & Asset Management Ltd is reflected in our creative approach to financing engagements. our in-depth transaction knowledge and customer-centric approach allow us develop mutually beneficial long-term relationship with our clients. our variety of personalized products meets specific needs. these products include:

• HighYieldInvestmentPaper(HYIP)• RoyalInvestmentNote(RIN)• InvestmentPlan(I-Plan)• Leasing• Loans• MortgageFinancing• ProjectandL.P.OFinancing• FinancialAdvisoryServices

roYal eXChaNGe FInAnCE & ASSEt MAnAGEMEnt

Mr. abiola SanniManaging Director

(Royal Exchange Finance)


royal exchange Microfinance bank limited is a wholly owned subsidiary of royal exchange plc, licensed by the Central bank of Nigeria on october 15, 2009 to provide comprehensive micro financial services to the unbanked and under banked in urban, semi-urban and rural areas of Nigeria. We commenced business on october 19, 2009.

In line with the vision of Royal Exchange Plc to be a one-stop financial service shop and with its passion to alleviate poverty, Royal Exchange Microfinance Bank was set up to provide micro finance services to improve the lives of the common people, alleviating poverty and building a better society. our focus is on micro, small, medium and retail markets, leveraging on state of the art technology to deliver superior and quality services.

the bank is in the process of converting to a State Microfinance Bank. Royal Exchange Microfinance Bank offers a broad range of products and services, most of which are unique and tailored to meet the needs of our diverse clientele.

the bank offers the following products:

Savings Products:• Royal Target Micro Savings (ROTMIS)

Account• Royal Ordinary Micro Savings (ROMIS)

Account• RoyalMandatorySavings(REMAS)Account• CurrentAccount(ROCA)• FixedDeposit(ROFID)Account

Loan Products:• Trade Group Loan (Royal Ordinary

Microcredit - RoMIC)• WorkingCapitalLoan(RoyalFlexibleCredit-

ReFlex)• Personalloanforsalaryearners(RoyalBail

Me Microcredit)• Assetacquisitionfinance• LPO financing (Royal Real Microcredit -

REMIC)

the corporate head office of Royal Exchange Microfinance Bank is located at 34/36 Apapa-oshodi Expressway, oshodi.

Mrs. e. o. elghocheManaging Director

(Royal Exchange Microfinance Bank)

roYal eXChaNGe MICRoFInAnCE BAnK


head officenew Africa House, 31, Marina, P.o. Box 112, Lagos, nigeria.Email: [email protected]: www.royalexchangeplc.comtel: 01-4606690 to 01-4606699

Control officePlot 34/36, Apapa/oshodi Expressway, Charity Bus-stop, oshodi, P.M.B. 1804, Ikeja, Lagos.tel: 01-4606690 to 01-4606699

Group retail officeMosesola House, 4th Floor,103/7, Allen Avenue,opposite Alade Market, Ikeja,tel: 01-2955662, 08023254096

aba1, Asa Road, Aba, P. o. Box 604, Abia Statetel: 08037763428

abeokutaModupeola House,onikolobo Road, Abeokuta, ogun Statetel: 08052210312 abuja26, Mahatman Ghandi Crescent, Area 11, Garki, Abuja.tel: 08035900354 akureold national Bank Building 34, oyemekun Road, P.M.B. 771, Akure.tel: 08033887730

alaba123, olojo Drive, ojo Alaba Int’l Market Road, Lagos.tel: 08029314777

apapatop Floor, Front Building1A, Plateau Road, Apapa, LagosP.o.Box 636 Apapa. tel: 08055266886 asaba14, Dennis osadebey Way,Asaba, Delta State. tel: 08130922757 awkanifson Millennium Plaza, opposite Federal Prison, Along Ziks Avenue, Amawbia, Anambra Statetel: 08036774177

benin113, new Lagos Road, Benin City, Benin.tel: 08068044177

berger 1Agha Park Apapa/oshodi Expressway, Berger, Lagos. tel: 01-2912135, 08101971401 berger 2Plot 34/36 Apapa/oshodi Expressway,Charity Bus-Stop, oshodi, Lagos.tel: 01-2912135, 08101971401

Calabar103, ndidem usang Iso Road,Effio-ete Junction, Calabar tel: 08037248052 enuguCanute House, 19/25 ogui Road, Enugu State.tel: 04-229108, 08023133497 Ibadanold Sketch Building, First Floor,Cocoa House Complex,Dugbe, Ibadan, tel: 08094686750

IkejaMosesola House, 3rd Floor,103/7 Allen Avenue,opposite Alade Market, Ikeja, P.o.Box 1803, Ikeja.tel: 01-8973858, 08037221503

IsoloPlot 34/36 Apapa/oshodi Expressway,Charity Bus-Stop, oshodi, Lagos.tel: 01-4540443, 08023207102

Jos1B, Richard Road, Muritala Mohammed Way, Jos.tel: 08023634873

Kaduna2, Muritala Mohammed Square/Independence Way, P.o. Box 261, Kaduna.tel: 08025842947

Kano 2B, Post office Road, Kano.P.o.Box 301, Kanotel: 08036613580

lagos Main branch (Marina)new African House,31, Marina, Lagos. P.o.Box 112, Lagostel:01-4181750, 08033327946Fax: 01-2713248

Makurdi19, Railway Bye-Pass,High Level, Makurdi.tel:08060009305

lekkiRoyal Exchange (Phoenix House) 26E Abdul-Rahman okene Close,off Ligali Ayorinde Street,Victoria Island, Lagos.tel: 01-8428234, 08023405365

owerri21 Wetheral Road, owerri, Imo State.tel: 08034481679

port harcourt42, Evo Road, GRA Phase II, Port Harcourt tel: 08033373133

Sokoto3, Abdullahi Fodio Road,opp. Zenith Bank, Sokoto.tel: 07039836650

Uyo130, Atiku-Abubakar Avenue,uyo, Akwa-Ibom State.tel: 08056049482

Victoria IslandRoyal Exchange (Phoenix House)26E Abdul-Rahman okene Close,off Ligali Ayorinde Street,Victoria Island, Lagostel: 01-7418620, 08033160496

Warriogun House, 107, Effurun/Sapele Road,opp. Stanbic IBtC Bank,Effurun, Delta State.tel:08033516212

YabaAlhaja Falilat Abegbe Ipaye Villa2nd Floor, 371, Borno Way,off Spencer Street, Yaba, Lagos.P.o.Box 1804, Ikeja.tel: 01-2956805, 08055517419

YolaModibbo Raji House,2, Lamido Aliu Way, Jimeta, Yola, Adamawa State.tel: 08037468679

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royal exchange Group retail friendship Centres

Alaba Int’l Market, Ibadan 123, olojo Drive, old Sketch Building, First Floor,ojo, Alaba. Cocoa House Complex,08029314777 Dugbe, Ibadan. 08155538272

royal prudential Sales outlets

S/N Name of Unit Manager location telephone No.

1 Micah Ikegbu Aba 08097902604 2 umeadi Gloria Awka 08032910128 3 Victor omoniyi Ibadan 08066617706 4 omolade Agbelusi Akure 08064945360 5 ogbuchukwu Genevive Asaba 08065368210 6 Vincent ojeagbase Port Harcourt 08036642606 7 nwobodo obinna Abuja 08037836308 8 Akachukwu okey Enugu 08063497754 9 David Solomon Jos 08069694488 10 Jonathan Inyang Calabar 08060792116 11 Gabriel Kolawole Adedeji uyo 08053942500 12 okhihie Bosede Warri 08036268899 13 Sesan Adesida Abeokuta 08026128239

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royal exchange group - nigeria's foremost financial ......6 royal exchange plc 2015 nnual reort...

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