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ROYAL EXCHANGE tr'INANCI C0MPANY LIMITE,} T..

RC:608898 ,''i'

FINANCIAL STATEMtrNTS31 DECEMBER,2OIS

Sterling Partners & CoChartered Accountants

ROYAL EXCHANGE FINANCE COMPANY LIMITED

Contents

(Crponent

f,.r-mrare Information

Cm_rorate Profile

kagufu at a Glance

Tm Board of Directors

Tbe \tanagement Team

*,aron of the Directors

Stsement of Directors Responsibitity

"d:ditors Report

Srrrement of Comprehensive Income

S;sement of Financial position

S;sement of Changes in Equity

S:mement of Cash flows

S;aement of Accounting policies

Emerprise Risk Management Analysis

\ores to the Financial Statements

Statement of Value Added

lDEtailed Income Statements

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n(T'-{,L EXCHANGE FINANCE COMPAI\TY LIMITED

COR.PORATE INFORMATIONAS -tT 31 December, 20lg

- : ill TORS: Alhaji Auwalu Muktari

Mr Olawale O. Banmore

Mrs Irene Nkechi Opara

Mr Ben C. Agili

Alhaji Turaki Ibrahim

Chairman (up till 30/9/tg)

, Ag. Chairman (wef lll)lls)Managing

Director

Independent Director

COUPAT{Y SECRETARY:

RIGISTERED OFFICE:

,. ER{TIONAL OFFICE:

I L DITORS:

ts r\KERS:

RC \umber:

Mrs. Ngozi Onyeme

New Africa House31, MarinaLagos.

26E, Abdulraman Okene Close, ,

Off Ligali Ayorinde StreetVictoria Island, Lagos, Nigeria i .

Sterling Parhrers & Co. i

(Chartered Accountants)100, Obafemi Awolowo Way,IkejaLagos Nigeria

Access Bank PlcFirst Bank LimitedRoyal Exchange Microfinance Bank Limited.

608898rIIII

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ROYAL EXCHANGE FINANCE COMPANY LIMITED.;, l].,.

Royal Exchange Finance Company Limited (REFCO), a member of the Royal ExchangeGroup, was incorporated as Royal Exchange Finance (REAN) and awholly owned subsidiaryof Royal Exchange Plc on 11ft October 2004. REFCO was licensed in April 2005 by CentralBank of Nigeria to provide a wide range of professional services in the areas of finance andfinancial advisory.

In order to deepen its wide range of services to include investment and asset management,and in line with its strategic objectives, the name was changed to Royal Exchange Finance &lnvestment Limited on 13 July, 2009 and again re-registered as Royal Exchange Finance &Asset Management (REFAM) on l't January,2or4. However, on 12ft June, 201g thecompany's name was changed to, and re-registered with the Corporate Affairs Commission asRoyal Exchange Finance Company Limited.

These changes in the corporate name were registered with the Corporate Affairs Commissionand approved by the Central Bank of Nigeria.

REFCO was established to fill the service delivery gup, eyidsrt in the Nigerian financialservice industry and adopt a customer-centric approach to financing businesses especiallysmall and medium scale enterprises.

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Though wholly owned by Royal Exchange Plc (formally Royal Exchange Assurance ofNigeria (REAN), the company operates independently and therefore can respond quickly toits clients' needs. , ,..REFCO's approach is hinged on relationship building and partnership. Current and pastfinancing engagements that incorporate broad-based knowledge and creativity testify to thisCompany:s technical expertise. l,

THE PARENT COMPANY: ROYAL EXCHANGE PLC. II

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Royal Exchange Plc started operations in Nigeria in 1918 as a'representative office of RoyalExchange Assurance, London (REA). It was then represen(,ed by Barclays Bank DCO. OnFebruary 28,1921, it was upgraded to a branch office. Pursui4i.to section 396(2) of the thenCompanies Act of 1968, the company was on December 29; 1969, reconstituted andincorporated as a Private Limited Liability Company, thp "Royal Exchange Assurance(Nigeria) Plc (REAN). The company went public on July 18,,1909 and was duly listed on theNigerian Stock Exchange on December 3, 1990. r' ., ,',' ,

SHARED VALUES:' ' ,,l.lr

Our shared values provide the focus for our dealings with our clignts and these are:

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' To value commitment to contractual obligations r'i ,.

' To value openness and integrity - we therefore spring no surprises' To value innovation and effectiveness - seeking the mbst,efficient solutions to our

clients' financial challenges. ,,:,:'

To value respect and teamwork - we work togethefil with our clients to achievemaximum results, and respecting everyone we deal wifi.

:- IDL.CTS&SERVICES

- =rchange Finance Company Ltd,s products and- - .:res. efficiently and effectively delivered to enable-

- - - es. These products and services are as follows:

, ,_ R.EDIT PRODUCTS

Business FinanceThis comes in form of loans and advancesmanagement. Some of the products under theseothers are tied to transactions.

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seryices.- are designed with in-builtour customers' meet their set financial

for asset u"drirition or working capitalcategories are tied to the assets acquired,

Equipment Leasing 'I ,.'. "

We offer flexible equipment leasing and financing packages th|t serve the needs of businessesin various industries. Our leasing packages can be tailored to'niebt the specific needs, as wellas address the peculiar cash flow situations of our clients. Available options are:. Sale and Leaseback i :,: ' -

' Defened and Seasonal Payment lease. Step-up/step-down Payments lease

We offer soft loans to employees of blue-chip companies. The benefit of the loan is to easeany identified financial gap in the cash flow of the

"*ptoy..ri .,;,i

. Vehicle/Flousehold equipment loan

. Personal loan

. Eduqational loan ,. Rent Payment loan

rnsurance Premium Finance ,';i,. ,-,,

This product is one of REFCo's responses to emergi.rg t "ii4Stin

the Nigerian Insurancelndustry. In the light of the recently introduced "ne-premium'ncj-cover', poli-cy of NAICOM,companies can fall back on this product to ensure Year-long cover while tire aciual outlays arespread across the Year.

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Receivable/Invoice D isco unting FinanceThis is designed to avail customers intermediate liquidity-prior to the expiration of the

credit period implied in the filled invoices. The focus here is often in the authenticity ofthe instrument, and reliability and capacity of the issuer(s). :t

Praject/Contract Finance ' t*

This is structured for medium-to-long term projects. It also involves providing financing

for projects/contracts viajoint ventures. ; .

Bonds and GuaranteesOur services do not stop at financing. We are also able to, through our sister companies

within the Royal Exchange Plc, provide services such as bo5r,$s and guarantees along with

FI\ANCE ADVISORY SERVICES

Our financial advisory services are geared at the small and niedt[m scale companies. We are

able to provide and assist entrepreneurs in the informal sector (SME and Start-Ups) to access

equity and other forms of funding for their businesses. Royal Exchange Finance Company Ltd

undertakes and provides advisory services in the following areaSl'

oFinancial Advisory '):1r) ;

o Private Equity Fundingu Loan Syndication.

, FUNDS/PORFOLIO MANAGEMENT SERVICES ,

In investment decision-making process, we use the principle of research fundamentals to

identify the investment objectives of our clients in order to make sound short & long-term

investment decisions. We manage their funds and portfolio of..securities to achieve above-

market return with a minimal risk level by using a three-dimerisional perspective involving:qualitative, financial and valuation analysis. " j"11

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Our professional team diversifies and strategically allocatesl,bifi investors' funds in order to

take advantage of opportunities in both money and capital market in a way to continually

improve the quality of their portfolio.

D. INVESTMENT PRODUCTS AND SERVICES ,

We offer, as well as facilitate investments in financial inStiiilments that are designed to

provide superior value to investors. Our portfolio of financial instruments so designed

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High Yield Investment Paper ('HYIP') r"r';/

HYIP is an investment instrument with a yield that is guaranteed to constantly lead the

average yield on deposit placements in money market with selected financial

institutions. , .

Royal Investment Note ('RIN') ri 't ir:

;,This is a flexible and secured money market investment option that guarantees

payment of upfront interest and tenor is usually between 3Odays to 18Odays.

I-Plan

Life is filled with uncertainties. Everyone at one time "or the other have their own

share of life's temporary inconveniences such as perrnanent disability, job loss and

death. There is therefore the need for planning, and I-Plan helps you with the

planning. This is a reserye investment account designed to cushion the impact ofeventualities.

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- \ TL EXCHANGE FINANCE COMPANY LIMITED

: .' I\CIAL RESULTS AT A GLANCE

: - \T 31 DECEMBER,2018

2018

N'000

}[{-IOR ITEMS ON THE STATEMENT OF

COIIPREHENSIVE INCOME:

G:oss lncome

gerest lncome

r*as and Other Income

fl :te back (Impairment) for credit losses

Frr,frt before Tax

Acnlarial (loss)/gain on Staff Retirement benefits

T;x E-xpense

Profit for the period after tax

391,658

360,922

30,736

7,288

19,871

(362)

(3.653)

15.856

FOSTTION AS AT 31 DECEMBER:

Total Assets

tsorror*'ings

Sbareholders' Funds

2017

N',000 Change

401,097

355,904

39,948

(36,981)

9,818

657

(4.831)

5.644

2%-

lYo +

23% -

120% +

102% +

24% -

. I I, IOR ITEMS ON THE STATEMENT OF FINANCIAL

2,056,550

1,497,047

482,075

2,21t,879

1,341,392

777,441

7%-

l2%o +

38% -

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Signifies Positive growth

- Signifies Negative growth

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\ I E ET OUR DIRECTORS

lit: boorcl is made up of Jive members wltose main duty is to formulate strategic focus and,:,tcrion for the company. The Board meets quarterly to discuss issues bordering on the continued-r,,lt€SS of the company.

lttt profile of these men of integrity is asfollows:

\LH.\JI AUWALU MUKTARI- CHAIRMAN (up to 30th September,2018)

; : -'mpleted his 1't degree in Business Administration and later his Masters Degree in Banking and-*:-.ce at Bayero University Kano in i993 and 1995 respectively.He also attended Ahmadu Bello" ;rsitv Zariawhere he obtained a Diploma in Insurance at Credit Level in 1983. Having attended

--'-:arva Primary School Bichi. Auwalu completed his secondary education at Kano Community- :-.::ercial College in 1981.

- ..lrt€d his working career with the Kano based insurance company, Kapital Insurance Limited.- r,-rse through the ranks to become Head of Re-insurance Departmentr

',]-.,': \luktari joined Royal Exchange Assurance Nigeria (as it was then known) in 1995 as Branch:r'.-:Jer in Kano, with direct oversight and responsibility over the activities of Bauchi, Maiduguri'- ':-.r1a offices of the company. In 2003, he became the Regional Director, Abuja.

- :-i Royal Exchange Plc to become the Managing Director/Chief Executive Officer of Yankari-: --:rnce Co. Ltd in 2008, (later called Fin Insurance to Co. Ltd) and returned to Royal Exchange as

, *-:".,r-rp Executive Director, Marketing and Sales in 2010.

.. r \luktari was elected in 2010 as an associate member of the Institute of Directors, Nigeria; and: :,-.-- o professional member of the following bodies: Associate Member, Institute of Management''--,,,ist. UK; Member, Chartered Insurance Institute of Nigeria; Associate Member, Institute of

*:,::ement and is currently the President of the Institute of Sales and Marketing Management of--:.1.

.:' ..:s attended various Executive Management & Development programmes around the world and

: *:- rlumnus of Harvard Business School, USA. i

r: :--ub1ed as the Group Managing Director, Royal Exchange Plc and chairman of REFCO from.,.:'.:

-+. 2016 till30tr'September,2018 when he resigned his appointment of the two positions..;

\ 1R, OLAWALE BANMORE - DIRECTOR/ACTING CHAIRMAN (wef October 1", 2018)

,: -s a graduate of the University of Ibadan, Oyo State. He holds a Eachelor of Science degree inS ;.-'logv and a Master degree in Managerial Psychology from the same institution. He is an'-...,:ciate of the Chartered Insurance Institute of Nigeria(ACIIN). He startedhis career in 1987 with:,:'s Fishing Industries and later joined UNIC insurance Plc in 1992 as a Management Trainee

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-": :e rose to become the Group Head (Operations). Prior to joining Royal Exchange in 2003, he

.- -, -,-= R.egional Director (West) of First Chartered Insurance Company Limited.

, ' :: promoted Assistant General Manager in 2007 and was redeptoyed to the Tec,hnic,at Sewices

'-l:l as Head (Technical Services) in 2010. He had attended various courses both within and-- : r-- the country. He was appointed Managing Director of Royal Eibhange Prudential Life Plc, a

: *ritil'of Royal Exchange Plc in 2011. I,:1

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..'rne the exit of Alhaii Auwalu Muktari from the Board, in September 2018, Mr Olawale-'.'-r:e vn'as appointed as the acting chairman of REFCO with effect from I October, 2018.

""I R:. IRENE NKECHI OPARA _ MANAGING DIRECTOR

---...rte Diploma (PGD) in Banking and Finance from Enugu State University of Technology,- - * A business development professional and seasoned banker with 24 years of uniformly

- - :3J high quality work experience spanning across business development and revenue generation,- -::al management, wealth management, risk asset administration,:'operations management and- ::-nation, internal control, strategy development, client servicing, team lead, people management

- 3;.rject management with over 13 years of successful history'of achievements in senior"--:Jement roles in the banking, finance and manufacturing sectors .

' ' - .'r' 0S once an Executive Director/Chief Operating Officer at R. Johnny-Fort International Ltd,- --: Head, Private Banking & Business Manager, First Bank of Nileria, AGM/Head of Banking-.::rons at Flallmark Bank Plc among several positions held prior to joining Royal Exchange'':-'ce Company Ltd in 2015. She is an Associate Member, Certified Pension Institute of Nigeria

- -\ r. Member of the Nigerian Institute of Management (lrtrIM), Member, Chartered Institute of-.:. & Risk Management of Nigeria and member, Institute of Directors (IOD) Nigeria.

' - -. :iiended several courses within and outside the country. ..:ei University, USA.

\IR. BEN C. AGILI..DIRECTOR

including a Leadership Programme at

: \gili holds a Higher National Diploma GIND) in Building Technology from Institute of':r--lSelrleflt and Technology, Enugu and a Masters in Business Administration (MBA, Financial

' .'::,qement) from Lagos State University, Ojo, Lagos State.'

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' . - -'[ ing his completion of the mandatory Youth Service programme,,he worked briefly as a project' 1.:--:cer with Savannah Enterprises Limited before he joined the insurance industry as a-- -::rintendent with LrNIC Insurance Plc, rising through the ranks, culminating in his appointment as.. -' . \:ea Manager, Eastern Operations of the company in 2000.

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. lgili joined Royal Exchange Assurance Nigeria Plc, (as it was then known) in 2003 as an AGM

-:.3:r Operations and later elevated to Regional Director, East in 2007. He then left Royal....:rnse to join Insurance PHB as General Manager, Branch Marketing in 2008 and rejoined the

- r.:anv in 2010, following a stint as the Managing Director of a Brokerage firm.

'i;l.. 1,.r al Exchange General Insurance Company (REGIC), Mr. Agili'r11as appointed Deputy General

.:.:ser/Head, Business Development with direct responsibility for generating new business for the

- r-.:an\'. nationwide, before he was appointed the Director, Southern Directorate and later, Director,

.,. '. & Western Directorate in January, 20ll .

. ,t:s garnered over twenty years of cognate Insurance experience cutting across vital areas of-, -.::nce practice such as underwriting, claims, risk management, marketing and branch operations.

- .. is well exposed and trained, having attended several courses: seminars and workshops within

- - -,'.rtside Nigeria. He is an alumnus of the famous Swiss - Re Insurance Training Centre, Zurrch,

' ,zerland. He is a Fellow of both the Chartered Insurance Institute of London (FCII), and the' , -.::nce Institute of Nigeria (FIIN).

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r L H \JI TURAKI II}RAHIM - INDEPENDENT DIRECTOR . ]

: ..-. ds a B.Sc (lg7g) in Business Administration and Banking and Finance from the Ahmadu Bello...::sity, Zaria. He is an Executive Council Member of the American Institute of Management and

, l:nber of the Chartered Institute of Bankers of Nigeria. He is also an Associate of the Nigerian- : . . ite of Management and the Chartered Institute of Taxation of Nigeria.

- .::s gained over 40 years experience in the public and private sectors in Nigeria and rose to the- , ..,-.:-r of a Deputy General Manager with the Union Bank of Nigeria Plc. He is currently the

- .':rng Director/CEO of Antis Investment and Develbpment Limited. He serves as a director on

J r,-ards of different companies in Nigeria and was appointed to the Board of the company on. .. *,-st 07 ,2017 as an independent director.

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THE \TANAGEMENT TEAMt ri.

,'ictively implement the strategic plans set by the Board, the company has a management team

- : ::ising of seven members who take charge of the SBUs of the company. They are as follows:

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1. \[rs. Irene Nkechi Opara - Managing Director

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' l:-. Opara holds a Masters Degree in Business Administration,-'::rr3te Diploma (PGD) in Banking and Finance from Enugu

lMea; in Finance and a Post

State University of Technology,

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-:---=r. A business development professional and seasoned banker with 24 years of uniformly- :: j:d high quality work experience spanning across business development and revenue generation,

---.:cial management, wealth management, risk asset administration, operations management and' -::ination, internal control, strategy development, client servicing, team lead, people management.-.: nroject management with over 13 years of successful history of achievements in senior

::-;rer1€r1t roles in the banking finance and manufacturing sectors .

' - -- \\.as once an Executive DirectorlChief Operating Officer at R. Johnny-Fort International Ltd,- -'-.' Head, Private Banking & Business Manager, First Bank of Nigeria, AGM/Head of Banking

::'::Iions at Hallmark Bank Plc among several positions held prior to joining Royal Exchanger'-::ice Company Ltd in 2015. She is an Associate Member, Certified Pension Institute of Nigeria

--?\i. Member of the Nigerian Institute of Management (NIM), Member, Chartered Institute of.: & Risk Management of Nigeria and member, Institute of Directors (IOD) Nigeria.

' ': :tended several courses within and outside the country including a Leadership Programme at- :--.:1 University, USA. , ,

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:. Mrs. Olufunke Folake Oluyemi: Head, Treasury & Investment

. uluyemi is an Economics graduate of University of Ibadan. She also holds a Masters Degree in-'--' ::ess Administration (MBA) with specialty in marketing management from Ladoke Akintola

- '':rsity, Ogbomosho, Oyo State. She has over 17 years of proftissional services experience, -::::ing auditing, branch banking operations, domestic operations, cash management, customer:-r- -CeS and relationship management , product marketing , money m[rket operations, treasury and- :slment management .

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:;--re coming on board Royal Exchange Finance Company Limited, Mrs. Oluyemi had worked in-- -- 'is organizations including Bola Shadipe & Co (Chartered Accountants), and Access Bank plc

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t ': :l3S attended various courses and seminars both locally and internationally. She is an Associate;::rber of Certified Pension Institute of Nigeria. She loves challenges and enjoys travelling.

3. Mr. Ndubuisi Umunna : Head, Finance, Accounts & Admin

': I--muru1. is a Finance & Insurance professional. He holds a Masters (M.Sc) in Accounting from.,.:isi Onabanjo University

- '::ined with Grant Thornton Nigeria as a professional Accountant and has worked in various-*::;rties and roles within the Royal Exchange Group which include investment and assetl-.'::39err€flt, business development, special risk claims administration, special risk reinsurance,.I-' sUrv management, investment accounting and financial reporting amongst others. He is an-,-.sociate Member, Institute of Chartered Accountant of Nigeria and Association of Accountingl:;irnicians. He also holds a diploma from the Institute of Chartered"insurance Institute of Nigeria.

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.,; :r:s attended several trainings in the course of his carrier. He is currently the Head Finance,-. - - .r ::nts. & Admin the position he assumed in May 20 1 8.

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1. \{rs. Ngozi Sylvia Onyeme : Company Secretary & Legal Adviser

>-,' .s a Legal Practitioner. She is a graduate of the University of nenin, Edo State. She was called to'll

,. \iserian Bar in 1999. She is the Manager (Legal Services) of Royal,.Exchange Plc and in addition

:- Company Secretary of Royal Exchange Healthcare Limited , Ond Royal Exchange Finance

- r::Dany Ltd (Members of Royal Exchange Group)

5. Mr. Emmanuel Lucky Osibuamhe- Head,Risk Management & Internal Control

. .,-:soned administrator and risk management professional with over 20 years of proven experience- .ire manufacturing, food &. beverages, information & communication technology, digital

,- -' :rtisement & printing, oil & gas servicing, insurance and finance sectors

::3nt1). the Enterprise Risk Management & Control Officer of Royal Exchange Finance Company

-. : subsidiary of Royal Exchange PLC. Also, he was once Group Manager (Finance & Admin.) at'..::'.:ric Nigeria Ltd, Accountant at Kikas Digital Graphics Ltd, Manager (Finance & Admin.) at

.::,-Tech Limited, Accountant at KPS Technologies Ltd, Reconciliation & Control Assistant at

.-:rian Breweries PLC and Audit Trainee at Uloko Thomas & Co. Ctiartered Accountants., rlil

-:ranuel Lucky Osibuamhe holds a Master of Science Degree in Risk Management with Excellent

- . - t. a Master of Business Administration in Cost Management (2008), a Post Graduate Diploma3:nhing and Finance (2001), a Bachelor of Science Degree in Banking & Insurance with First

- ,,-<s Flonors (2014), a Higher National Diploma in Accountancy (1999) and a Diploma in Service

, ,::llence with Distinction (2015) from Reputable Institutions of higher learning within and outside

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. -' ,,r as awarded the Overall Best Graduating Student Academics ESM University (2014), the Best

--:.:uating Student in the Department of Banking & Insurance ESM University (2014), Dr. D. K.

, ,.io)'a Campus Academic Award of Excellence (2015), the Overlit g.rt Postgraduate Degree

>.,.:ent Academics E,SM University (2017), the Best Postgraduate Degi-ee Student in the Department

. 1.sk Management ESM University (2017) and he was as well givqn'the Status of an Ambassador

, :S\,f University rn2077.He is a member of relevant professional bodies and he has attended

6. Mr. Sunday Olugbenga Owolabi: Team Lead, Credit ' , ,

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i -.::iav holds a Bachelor of Science degree in Accounting from Ahmadu Bello University, Zaria'q8r and an MBA in Financial Management from Ladoke Akintola University of Technology,

,,,::..mosho (2016).

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i1.- has worked for over six years as an Accountant in the Small and Medium Scale Equityirvestment Scheme (SMEIS) under the defunct Intercontinental Capital Market Ltd (ICML) before'-'ining Royal Exchange Finance Company Limited in the year 2007 where he has worked in the

l.nance department, Business Development unit before subsequently moving to Credit and

\ larketing Department as the team lead.

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ROYAL EXCHANGE FINANCE COMPAI\IY LIMITED

REPORT OF THE DIRECTORS

Report of the Directors for the Year Ended 31 December, 2018

The Directors are pleased to submit to the Members of the Company their annual report together

with the audited financial statements for the year ended 31 Decembgr, 2018.

LEGAL FORM AND PRINCIPAL ACTIWTIES:

The Company was incorporated as a Private Limited Liability Company on October 11,2004.

The principal activities of the Company are lending, leasing, financial advisory and asset

management services

The highlights of the Company's trading results for the year ended 31 December, 2018 and the

corresponding year to 31 Dece mber 2017 were:

1.

Gross Income

Total Expenses

Profit before Tax

Other Comprehensive Income/(loss)

fax Expense

Profit after Tax

Earnings per Nl share

3. REVIEW OF BUSINESS DEVELOPMENT:

--3]obo

satisfactorily during the year under

'1, , ',

2018 ,,i

N,000

391,658

(.37 r.787).

19,871'

(362)

(3,653)

, r -'[il15,856

--f-kobo

2017

N,000

401,097

(.39r.279\

9,818

657

(4,831)

5,644

In the opinion of the Directors, the company performed

review.

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RBPORT OF THE DIRECTORS CONTD

4. DIVIDEND & SCRIP ISSUE 'ri .. : i..

The Directors did not recommend a dividend or scrip issue. :

5. DIRECTORS AND DIRECTORS'INTEREST AND SHAREHOLDING:

s.l A Board of 5 (Five) Directors determined the general policy of the Company in theYear under review;

1. Alhaji Auwalu Muktari - Chairman up to 30 September, 2018

2. Mr. Banmore Olawale Omotunde - Chairman from 1 October, 2018

3. Mrs. Irene Nkechi Opara (Managing)

4. Mr. Ben C. Agili5. Alhaji Turaki Ibrahim

5.2 DirectorsRemuneration:

Other than the Managing Director/CEO who earns monthly salary, other Non-Executive Directors earn sitting allowances ranging from N100,000 to Nl50,000 per

meeting. Such fees, allowances and other Board medting expenses amounted toN7,708,000 QA17 - ++4,078,000) during the year.

6. SHARE CAPITAL AND SHAREHOLDING:' i i rr

6.1 Authorized Share eapitalThe Authorized Share Capital of the Company is N300,000,000 million made upof 300,000,000 Ordinary Shares of Nl.00 each.

6.2 Issued and Fully Paid Share Capital :.r: i,

The Issued and Paid-Up Share Capital of the Company as at 3lst December, 2018was N217,888,000 made up of 217,888,000 Ordinary,'shares ofNl"00 each.

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REPORT OF THE DIRECTORS CONTD

No. of

0rdinary

Shares Held

as at 31

December,2018,

o//o

Holdings

As at

Dec.31,

2018

217,881,999 99.9%

1 0.t%

217,887,999 100

These percentage shares holding structure has remained unchanged since inception of the company

7, DONATIONS:

The company did not make donation to any party during the year under review.

8. POST BALANCE SHEET EVENTS: :

Save as disclosed, there were no significant post balance sheet events, which could have had a

material effect on the accounts for the Year ended 31 December,2018 and which has not

been adequately provided for in this annual report and accounts. -

9. EMPLOYERS'INVOLVEMENT,TRAININGANDWELFARE:

Employment of Physicatly Challenged PersonsIt is the policy of the Company that there willrrhe no discrimination in the

consideration of all applications for employment. As at 31 Deeember,2018, there

was no disabled person employed by the Company;

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REPORT OF THE DIRECTORS CONT'D

Health and Safety at Work and Welfare of Empleiyeest

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The Company is ooncemed about the health, safety and welfure of its employees

as well as safety of all visitors. The Company.'lperiodically review health and

safety plans and retains reputable private hospitals fur the provision of medical

services for her staff.

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The Company's consultation machinery was firlly used in the Year to disseminate

management policies and encourage the employees' ilvolvement in its affairs.

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TrainingThe Company recognizes that the acquisition of knowledge is constant. The

Company recogRizes also that to fosler commitniEiit' t "r

employees need to hone

their awareness of factors; economic, financial'o5 otherwise, that affects its

growth. To this end, the Company, in the "xeqution

of its training programs

encourages and provides the opportunity for its staff to develop and enhance their

skills, awareness and horizon.

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10. AUDIT COMMITTEEI

The Finance and Audit Committee oversees the audit

Year, members of this committee were as follows:

r Mr Olawale Banmore - Chairman

affairs of the Company. During the

i :'

o Mr Ben C. Agili

o Mrs. Irene N. Opara

- Member

- Member

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FIIIrIII

t2.

REPORT OF THE DIRECTORS CONTD

11. AUDITORST

The Auditors, Messrs Sterling Partners & Co served as the Statutory Auditors during the year

and having indicated their willingness to continue in office, shall so continue as Auditors to

the company. A resolution will be proposed authorizing the Directors to determine their

remuneration at the Annual General Meeting.

COMPLIAI\ICE WITTI ?}IE CQDM O[' BEST PR.A,CTICES ON CCRPERATNGOVERNANCE:

The Directors confirm that they have reviewed the structure and activities of the Company inview of the Code of Best Practices on Corporate Governance in Nigeria published in October

2018. The Directors confirm that the Company 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.

COMPLIANCE WITH LAW

To the best of our knowledge, the Directors affirm that the company complied with all lawsgoverning its operations as well as environmental and other laws applicable to companies inNigeria during the year under review.

14 COMPLIANCE WITH IFRS 9

In line with the guidelines released by the Central Bank of Nigeria on the adoption of IFRS 9,

the company engaged the services of Price Waterhouse Coopers &, Co (Chartered

Accountants) during the year. The full impact of this IFRS 9 on the financial position of the

company for year 2018 is reported in Note 32 onPage 52.

13

BY ORDER OF THE BOARD

COMPANY SECRETARYLAGOS, NIGERIA28th March,2019

NGOZI ONYEME

18

ROYAL EXCHANGE FINANCE COMPA*' ''*,i,O

STATEMENT OF DIRECTORS, RESPONSIBILITY ;.;'

FOR THE YEAR ENDED 31 DECEMBER, 2018 '

The Companies and Allied Matters Act and the Banks and other Financial Institutions Act, require

the directors to prepare financial statements for each financial Year that gives a true and fair view of

the state of financial affairs of the company at the end of the Year and of its profit or loss' The

responsibilities include ensuring that the company:

t''i. Keeps proper accounting records that disclose, with reasonable."qgl"i.{1,the financial position of

the company and "o-pt-y

with the requiremenis of the Companies anO eUiea Matters Act and the

Banks and Other Financial lnstitutions Act' :

ii. Establishes adequate internal controls to safeguard its assets andilo prevent and detect fraud and

other irregularities; and

iii. prepares its financial statements using suitable accounting policies supported by reasonable and

pruient Judgments and estimates that are consistently applied.

The directors accept responsibility for the annual financial statements, which have been prepared

using appropriate *"o,r.ttirg policies supported by reasonable and pru$ent judgments and estimates

in conformity with, 1. .i:

- International Financial Reporting Standards;

- Prudential Guidelines for Licensed Banks & Finance Houses;: ,:'

- Relevant Circulars issued by the Central Bank of Nigeria; ." .

- The requirements of the Banks and Other Financial lnstitution's Act; and

- The requirements of the Securities and Exchange Commission.

- The requirements of the companies and Allied Matters Act. ,

The Directors are'of the opinion that the financial statements give a true 1d_fair view of the state of

the financial affairs of the company and of the profit for the Year. The Directors further accept

responsibility for the mainterr*"" of accounting records that ma1'be'relied upon in the preparation of

the financial statements, as well as adequate systems of internal financial control'

te that the company will not remain a- ',li.i-,,

---{

7az'{Mr. Benjamin AgiliDirectorFRC/20 1 3/CIIN/0000000099428th March,2}lg

Mt.'Olawale Banmore(Ag. Chairman)FRC/20 1 3/CIIN/Oo0000 03 07 5

: i'"

Agili

19

Wffi

FT!IIIIIIIIIIIIIIIII

41

(Cha rtered Accou ntaits)

IIrIIIIIIItt

100 Obafemi Awolowo Way,Beside Fan Milk, lkeja,Opposite MAN House,

' P.'0. Box 55221,Falomo lkoyi, Lagos,Teti 01 -8750532, 08033008965, 08-021 0031 24.Email:sterlingpartners@yahoo.comweb:sterlingpartnersnigeria.com. ,.4.

: ' :i."

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Oninion:

We have audited the financial statements of Royat Exchange Finance Cornpuiiy:iimited as at 31 December,20l8on pages 7 to 54 which have been prepared on the basis ofthe accounting policies on pages 26 to 41.

In our opinion, Royal Exchange Finance Company Limited has kept proper bboks of account and the financialstatements are in agreement therewith in all respects.

The financial statements drawn up in conformity with the Intemational Financial Reporting Standards, Provisions ofthe Companies and Allied Matters Act, CAP C20 LFN 2004, Provisions of the Banks and Other FinancialInstitutions Act,2004, The CBN Guidelines for Finance Companies in Nigeria and the Financial Reporting Councilof Nigeria Act No 6,2011, give a true and fair view of the State of Affairs of the Cgmpany as at 31't December 2018and ofthe profit and cash flows for the year ended on that date.

Basis of opinion: ir:

We conducted our audit in accordance with the intemational standards on"hurliting issued by the IntemationalFederation of Accountants. An audit includes examination, on a test basis of dvidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of the sigq'ifiiant estimates and judgments madeby the Directors in the preparation of the financial statements, and of whether thp accounting policies are appropriateto the company's circumstances, consistently applied and adequately disclosed.. ;,t ,,

We planned and performed our audit so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement.

. ,ilIn forming our opinion, we also evaluated the overall adequacy of the presentatlp.n of information in the financialstatements. The financial statements are in agreement with the books of account, which have been properly kept,andweobtainedtheinformationandexplanationswerequired.

REPORT OF THE AUDITORS TO THE MEMBERS OF

ROYAL EXCHANGE FINANCE COMPANY LIMITED

We believe that the audit evidence we have obtainedopinion.

Responsibilities of Directors :

is sufficient and appropriate to provide a basis for our audit

In accordance with the Intemational Financial Reporting Standards, ProviSionS of the Companies and AlliedMatters Act, CAP C20 LFN 2004, Provisions of the Banks and Other Financial Institutions Act, 2004, The CBNGuidelines for Finance Companies in Nigeria and Provisions of the Financial ieporting Council of Nigeria Act No6,2011, the Company's Directors are responsible for the preparation of the financial statements. This responsibilityincludes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation

20

of f,rnancial statements that are free from material misstatement, whether due to fraud or error; selecting and

applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances'

Responsibilities of Auditors:

The Objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are

f.rce from material misstatements, whether due to fraud or error, and to issue an auditor's report that includes.our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with Intemational Standards on Auditing (lSAs) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material il individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

our responsibility as Auditors is to fonn an independent opinion, based on our audit, on those statements and to report

our opiuiort to you.

Going Concern

The Co,rpany's financial statemenrs have been prepared using the going basis of accounting. The use of this basis of

accounting is appropriate unless management either intends to liquidate the Company or to cease operations, or has no

realistic altemative but to do so. As pan of our audit of the financial statements, we have concluded that management's

use of the going concem basis of aciounting in the preparation of the Company's financial statements is appropriate.

Management has not identified a material uncenainq that may cast significant doubt on the entity's ability to continue

u, u going concem, and accordingll,'none is disclosid in the financial statements. Based on our audit of the financial

statementi, we also have not ideniifiea such a rnaterial uncertainty. However, neither management nor the auditor can

glrarantee the Company's ability to continue a: a goir-rg concem.

Matters of Emphasis

Nothing of such has come to our knori.ledge during the audit, hence there are no issues to report to you.

Other rcnortins rcsponsibilities

Itoyal Exchange Finance Companr- Limited has complied with the requirements of the relevant circulars issued by

tl-re Celtral Bank of Nigeria. In accordance s ith circular BSD/1/2004 issued by the''Central Bank of Nigeria' details of

irrsider-related credits are as disclosed in note l9

We were neither informed nor a\\'are of an1 incidence in which the company contravened any law during the year'

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Akinnuwesi O. Israel, FCAFRC/20 l 4/ICAN/00000007060For: Sterling Partners & CoChartered AccountantsLagos, Nigeria.

28th March,2019

-.i .. -r

tTT:ITTITTITIIIIIIIII

- *-

IdOYAL IXCHANCE FINANCE C]OMPANY LIMITEI)

STATEMENT OT COMPREHENSIVI INCOMEFOR THE YEAR INDED 3I DI]CENTBER,2OIfI

Notc

Cross earnings

Iuterest ancl sirlilar incotne

lntcrest & similal e\pense

Net interest incotre

lrnpairenrent Revelsal t.charge ) tbr creclit losses

___3ere!_ _401,09736A,922 355,904

(2t 1,913) (168,195)

149,009 187,749

7 ,288 (36,98 1)

2018

N'0002017

N,000

t56.291

I i,862

(5, r 8e)

r6.874

(i6h;e73) (186,103)

19,87I 9,818

(3,653) (4,831)

2

3

q

Fees & Commission income

Changes in fair value of fina*cial assets

Other income

Other operating expenses

Profit before taiation

lncome tax expense

Profit after Toiation

Other Comprehensive income:

Actuarial (Loss)lGain on Staff Benefit Obligations

Other Comprehensive income

Total Comprehensive income for the year,

attributable to the Equicy share holders

Earnings per share (kobo)

The accounting polices on pages 26 to 53 and the

part of these f'inancial statements.

15,856 5,644

5

t3

6

7

8

()

16,218

::23 (362)

t50.128

2.1,264

( I1(

r 8.684

1,987

t\57

29

l0

notcs on pages 42 to 54 fornr

22

ROYAI. EXCHANGE FINANCE CO}IPA\\' LI}IITED!;'r t't'F. l\'t [\'r () F I,'IN AN (] I A r. POS I T I O \AS A'I' 3I I}ECH]ITBER. 2OI8

ASS[-I'S

Cash & C'ash equivalents

Due firrir other Financial lnstitLrtions(iovelnrnent Bond held

Finiincial A sset-FVTPl.

Inveslnrent in Sister Conrpany

l.,oans ancl aclvitnces to custonrers

Advances under Finance Lea,se

Other assets

\t,n - irrlrcnl lsiut hal(i ti'r -.,:r

l)u< fr trrn (ilouf cornf .rlie-

intangible assets

Propeltl,, Plant & Equipnreni

I,IABTI,ITIIiS[]orrorvings 1-ronr customels

[)ue lo group cornpanies

Other liabilities

thployee Beneflts

('urrerrl inconre tax liabilitr

I)eterred tax I iabi I it1'

{]APITAI, AND RESER\ ES

Share capital

Shirre premiunr

Risk Asscts Regulatory Rcs;;i;i\ctuarial Valuation Reserr e

Cerreral lleserve

Si!;\ldlillOl,D[.lLS' Ft \ D:

'I'hese flnancial statements B,ere approled b).

l)irectors on 28th March, 2019 and si_sred on

Note

l112,; ^I :.:

13

14

I5

l617

17.2

i8a

19

20

l1

18b

22

_-)

I21

201 8

N'000

r I,548

540, I 38

84.040

10,7 r 8

t{ 171

930,946

360,2 r8

2l " 155

42.430

19,768

t2,453

7,863

2Al7N'000

r rJ,471

495,l 47

lsooT

1s )71

1,121,330

420,283

31,939

J? )i{)

17,t87

r 8,679

9,4t3

1,497.047

.t r.854

35,360

2,741

7,473

_2Ar!,879 .

I ,34 r .392

?) 111

57 .67 6

1 -t7Q

10,868

25

26

2"7

28

29

217,888

559,9 i 4

444,990

l4't191

(7ss.2 r r)

482,075'

1,434,438

217,888

559,9i 4

615,661

14,494

(630,5 16)

777,441

the Board ofits behalf by:

_____2,05{,s$_ ______2e}J-,87e

Umunna (Chief Finance Officer)

Thc accountinu policies on

d2 to 54 firrrn part olthese

FRC/2019/ICA

pages 26 and 54 and the notes on pages

financial statements.

i

F RC/20 1 3/CIIN/00000003 075III 23

IIIIITITIrIrrrIrrrII

I{0\.AI- IIXCI.IANGE ITINAN(]E CO}IPA,\\ LI\IITED

STATEMENT OF CHANGES IN EQUITY{T 31 DECEMBER,2Ol8

Share

Capital

N'000

208.445

SharePremiumReserve

N'000

540,230

Risk AssetRegulatory

Reserve ')

N'000 ',

77,454

-i

54,651

ActuarialRevaluation

Reserve

N'000

9,195

4,974

GeneralReserve

N'000

(136,755)

683

(54,651)

Total

N'000

698,170

5,657

Salance at December 3l ,2013

Total Comprehensive income for 2a14

1'ranfer to Risk Asset Regulaton Reser e

Balance at December 3l,20lJ

Total Comprehensive income for 2a15

1-ranfer to Risk Asset Regulaton Re sen:

Balance at December 3l . 2015

\c-r,i lssue made

Total Comprehensive income for 2C'te

l-ranfer to Risk Asset Regulaton Res:r e

Balance at December 31,2016

l'otal Comprehensive income for ltr I -'l-ransf'er

to Risk Asset Regularorr Reser,:

Balance at December 31,2017

\\irite back of Provision

I.oarrs written ofl

IFRS 9 Model adjustments (Note 3i r

I)rior year additional tax paid in l0 i 8

Total Comprehensive income for l01S-fransfer

to Risk Asset Regr,rlaton Reser e

lJalance at Deccmber 31, 2018

:ru88 ss%fl4

248,046

9.842

540,230

19,694

360,670

-i

.!

273,516

13,837

2 08.0-16 540,230 132,105

228,565

14,169

(332)

(190,723)

391

(228,565)

(41SSr?)

38,385

(273,516)

(654,028)

4,997

18,525

703,827

40

703,886

29,526

38,395

634,186

-l(l 8,525)

13,837

657

771,797

5,644

:17.888 559,914 615,661 14,494 (630,516)

451

3,415

(12,164)

15,856

(132,253)

777,441

45r

(205,132)

(94,377)

(12,t64)

15,856

(205,132)

(97,792\

132,253

217.888 559,914 444,990 14,494 (755,211) 482,075

24I

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.1

i{1.

ROYAL EXCHAI{(}E FT.\A\CE CO}IPANY LIMITEDS1'AT[IVIENl'OF CASH FLO\\ S

FOR THE YEAR IINDED 31 D[CE}TBER,20I8

Profit before Taxation

Actuarial (Loss) / Gain on StaffBenefit

Adjustments for Non - cash items:

Loss on Fixed Assets Sold

(Gain)1loss on Investment sold

Retirement obiigation charges for the vear

Dividend Income

lmpairement (rvrite - back) 'Loss on financial assets

Changes in fair value of financial asses

Depreciation of fixed assets

Amortization of intangible assets

Operating profit before rvorliing capital changes

Changes in operating assets/liabilities

Due from group companies

[,oans, l,eases and other advances

Other assets

Borrorvings from Customers

Due to group companies

Other liabilities

Tax paid

Net cash flows fr.om operating activities

Cash flows from investing acth'ities

Placernents rvith banks

Purchase of fixed assets

Proceeds of investment sold

Dividend lncome

Net cash flows fiom investing activities

Cash flows from Financing activifies

Il.etirement benefi ts paid

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning

Cash and cash equivalenfs at -l'ear end ll t;LifA

-$,411

Note

2017

N'000

s.818

657

5"40',7

( r0.3e2)

563

( r.607)

36.981

(s.24s)

8,1 82

6 ))-7

l3

20

l9

31

201 8

N'000

t 9"871

(362)

( 1 1"83 5)

(7.288)

5.1 89

4.829

6^22.6

15,630

(2,581)

(.53,2e8)

l6^7',79

t.s.5.655

9.73t

t22,316)(7.048)

50,591

( l l,887)

( r.56,1 55)

( I 0.663)

197.069

9.8 l5

32.098

(7,567)

t 03,301I I2,552

( t2c).03 t)/1

'7c)\\r--t 'l

12.815

(1 19"t75)

( I 87.2s8)

45,4-59

1,607

(140,192)

23

(6,s23)

r8.471

(i6.8e t)

55.362

25

IIIIIIIIIIIIIIIIIIII

ROYAL EXCHANGE FINANCE COMPANY LIMITED

FOR THE YEAR ENDED 31 DECE}IBER,2018

,'

1 Basis of preparation

(a) Statement of compliance * ith International Financial Reporting Standards

The financial statentenrs oirne Company as at and forthe Year ended 31 December,2018 have

been prepared in accordance ,,ri:ir the International Financial Reporting Standards (IFRSs).

The financial statentents \\.ere authorized fbr issue by the Board of Directors of the Company on

28th March, 2018.

(b) Basis of measurement

The financial statemenrs har.e been prepared on the historical cost basis except for financial

assets held for tradins n hich are measured at fair value in the statement of financial position.

(c) Functional and presentation currencyi". I

These financial statemenls are presented in naira, which is the Company's functional curency.

All financial information presented in naira has been rounded to the nearest thousand naira.

(d) Use of estimates and judgments

The preparation of rhe tlnanciaL statements in conformity with IFRS requires management to

make judgments. esrimates and assumptions that affect the application of accounting policies

and the reported amounrs .-,i assets. liabilities, income and expenses. These estimates and

judgments are conrinualh er aluated and based on historical experience and other factors,

including expectations oi tuture er,ents that are believed to be reasonable under the

circumstances. Actual result n-Lar dit-fer from these estimates und urru*ptions.

The effect of a change in an accounting estimate is recognrzed retrospectively by including it in

comprehensive income in tl.re period of the change, if the change affects both.

Information about signiticant areas ol estimation uncertainty and critical Judgments in applying

accounting policies that har e the most significant effect on the amounts recognized in the

financial statements are described in the notes to the accounts.

26

1., ' l,". i:i

IIIIrIIIIrIIIItIIttI

2.1

2.2

Z.J

2 Summary of standards and interpretations effective during the Year.

IAS I Presentation of financial statements

This clarifies that entities ma)' present the analysis of each components of other

comprehensive income either in the statement of changes in equity or in the notes to the,]

financial statements.

IAS 24 Related parties 'r I

The revised standard provides some exemptions for certain go*vemment related entities and

clarifies the definition of a related party and include an explicit requirement to disclose

commitments to related partles. The revised standard specially defines associates of the

ultimate parent compan\. as related parties of the entity and they have been treated as such in

these Financial Statements.

.'

II'.R,S 9 Financiol instrumertts (\'evt stanclard with Junuary 1, 2018 as effective date)

IF'RS 9 introduces neu re.luirements for the classification and measurement of financial

assets. IFRS 9 (l01Crr rntroduces addition relating to financial liabilities. IFRS9 requirements

represent a signiticant change tiom the existing requirements in IAS 39 in respect of financial

assets. The standard contains t\\'o primary measurement categories for financial assets:

amortized cost and tarr r alue. A financial asset would be measured at amortized cost if it isheld within a business rr:olel u'hose objective is to hold assets in order to collect contractual

cash flows and the esser s contractual terms give rise on specified dates to cash flows that are

solely payments oi prilcipal and interest on the principal outstanding. All other financial

assets would be me:.s,lred at tarr value. The standard eliminates the existing IAS 39 categories

of held to maturitr. a'':l.ab,1e-tbr-sale and loans and receivables. For an investment in an

equity instrument uh-ch is r.ot held for trading, the standard permits an irrevocable election,

on initial recognitio:t. on an indii'idual share-by-share basis, to present all fair value changes

from the investmenr in orher comprehensive income unless,thqy clearly represent a partial

recovery of the cost of inr e s,:rnent i ,,

Investment in equrrl instrl:rents. in respect of which an entity does not elect to present fair

value changes in other con:prehensive income, would be mea'sured at fair value with changes

IFRS 9 (2014) intro.Juces ngu. requirements for hedge accounting that align hedge accounting

more closely u'ith risk r.rar.agement. The requirement also establishes a more principle based

approach to hedge accountins and addresses inconsistencies and weaknesses in the hedge

accounting model of IFR.S 9.

The effective date of IFRS 9 uhich uas hithert o 2014 has beeripostponed to 1 January 2018.

The company ri ill adopt the standard in the first annual per]od beginning on or after the

27 ! ,r. i'

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mandatory effective date (once specified). The impact of the adoption of IFRS t has not yet

been estimated as the standard is stili being revised'

t.'

,

New standards, amendments and interpretations issued but not effective and not early

adopted.

A number of new standards. amendments to standards and interpietations became effective on

01 January, 2018. Those $hrch 63r' be relevant to the company''hre set out below'

The company does not plan to adopt these standards early' However, the company is still

evaluating the potential efiect of these standards, amendments and interpretations'

i. offsetting firtoncial ossets ntttl Jirtartciot liubilities (Amendment to IAS 32)

The amendmenr ro I-\S jl clarit-res the offsetting criteria in IAS 32by explaining when an

entity currentl)' has a legailr entbrceable right to set off and when gross settlement is

equivalent to net sefilemei:.:. The amendments are effective for annual periods beginning on or

after 1 Januarl-2018 an3 interim periods within those annual periods. Early application is

T

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IIIIIIIIIII

permitted.

The amendment is not

statements.

' lo., the ComPanY's financialerpecteJ to have any materlal tmpact

ii. IFRIC 2l Leties

IFRIC 21 defines a lerr as an outflow from an entity imposed by government in accordance

with legislations. It conr-rrms that an entity recognizes a liability for a levy when and only

when the triggering er ents specified in the legislation occurs. IFRIC 2l is not expected to

have a material eftect on the company's financial statement.i..,1,:

iii, Recoverable ontotutt tlisclosttre for non-Jinancial assets (amendment to IAS 36)

IFRS 15 specifres hou and s'hen an IFRS reporter will recognize revenue as well as requiring

such entities to proride users of financial statements withrmore informative, relevant

disclosures. The standard pror ides a single, principles based fiye-step model to be applied to

all contracts u'ith customers,

IFRS 15 was issued rn \lar'1018 and applies to an annual reporting period beginning on or

after 1 Januar.v 2019.

28

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rITrTTTrIIIIIIIIIII

The accounting policies adopted are consistent with those of the previous financial Year.

There are no IFRS or IFRIC interpretations that are effective for the first time for the financial

Year beginning on or after 1 Januarl'2019 that would be exp,qclgd to have a material impact

on the Company.

iv. IFRS 13, 'Fair value measurement' ;.

IFRS 13 aims to improve consisiencv and reduce complexity by providing a precise definition

of fair value and a sinsle source of tair r,alue measurement and disclosure requirement for use

across IFRS.

3. Significant accounting policies

The significant accountine p.',hcies set out below have been applied consistently to all periods

presented in these t-rnancial statements. unless otherwise indicated.

rl

Properfy, plant and equipment ,i,:.,. i.

Property, plant and ec -l-:::renr rs stated at cost, net of accumulated depreciation and /or

accumulated impairmerll lJSSes. if an."-. Such cost includes the cost of replacing component

parts of the propen). rlant and equipment.

Subsequent costs ,, , ,

This is the cost ans:ne su'rsequent to the acquisition of the asset is included in the asset's

carrying amount or recoSnized as a separate asset, as appropriate. Only when it is probable

that future econontic 'renel-rrs associated with an item will flow to the Company and the cost

of the item can be nreasurei re1iab11'. A11 other repairs and maintenance costs are charged to

the income statement dunns the financial Year in which they are incurred.

De-recognition '

An item of propertl. rlart and equipment is derecognized on disposal or when no future

economic benet-rt is expecred tiom its use. Any gain or loss arising on de-recognition of the

asset (calculated as rhe dltlerence between the net disposal proceeds and the carrying amount

of the asset) is incluie.l in income statement in the Year the aSset is derecognized.

Depreciation of propert\. plant and equipmentDepreciation is calculated on a straight-line basis to write-off assets over their estimated

useful lives. Land and assets under construction (work in progress) when applicable are not

depreciated.

Depreciation starts uhen an asset is ready for use and ends when derecognized or classified as

held for sale. Depreciation does not cease when the asset becomes idle or retired from use,

unless the asset is fulh ,lepreciated

t.2

1.3

1, "4

29til I 1r

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i.5

The annual rates used are as follorvs:

Furniture & Fittings

Plant & Equipment

I.T. Equipment

Motor Vehicles

AmortizationAmortization is calculated on

its residual va1ue.

20%

15%

20%25%

,'lil

. rtl

the cost of the asset, or other amount substituted for cost, less, i'r

Asset useful lives and residual values

Property, plant and equipment is depreciated over its useful life taking into account residual

values where appropriate. The actual useful lives of the assets and residual values are assessed

annually. In re-assessing assets usetul lives, factors such as technological innovation, product

life cycles and maintenance programmes are taken into account. Residual value assessments

consider such issues as Iuture market conditions, the remaining life of the asset and projected

disposal values,

Intangible assets

Intangible assets acqurred separatell. in the form of IT Software are shown at historical cost

less accumulated amofiization and impairment losses

Subsequent expenditure 'Subsequent expenditure Lrn computer software and development cost are capitalized only

when the future economic benetlts embodied in the specific asset to which it relates. All other

expenditure is expensed as incurred.

2.0

2.1

2.2

Amortization is recognized in the income statement on a straight line basis over the estimated

useful lives of the intangible assets from the date they are avaifable for use, since this must

closely reflect the ernected pattern of consumption of the future economic benefits embodied

in the asset. The estimated usetul life for the current and comparative Year for IT software is

4 Years.

The amortrzatton methods. useful lives and residual values are reviewed at each hnancial

Year end and adjusted rf appropriate.

3.0 Loans, Advances & Receir ables ,l

Loans & Advances to customers are carried at the original amount due from customers, which

is considered to be tair value. less allowances for doubtful accounts. Allowance for doubtful

account is based on a periodic revieu' of all outstanding amounts. The process includes an

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assessment whether significant doubt about collectability exists, including an analysis ofhistorical bad debt, customer concentrations, customer creditworthiness, current economic

trends and changes in our customer pa1'ment terms. Significant debt balances are provided forbased on the criteria mentioned above and non- significant debts are tested collectively forimpairment.

Financial assets

The Company classifies its l-rnanciaL assets into following categories: At "fair value through

profit or loss", and "loans and receivables", "held to maturityl' and "Available For Sale""The classification is determined br management at initial recognition, and depends on the

purpose for which the inves:ments are acquired. Financial instruments carried at state offinancial position date lnclude loans and receivables, accounts receivable, cash and cash

equivalents, borrou'ings anj :cct-runts pavables. Financial instruments are recognized initiallyat fatr value plus. tor :ns::.rnents not at fair value through profit or loss, any directlyattributable transaction ccsi-i Subsequent to initial recognition, financial instruments are

measured as described te.;,",, . .:

RecognitionAll financial assets an; .r:::lities (including assets and liabilities designated at fair value

through profit or loss ::e :n:tiallr recognized on the trade date at which the Company

becomes a part)'to th: ;.-::::;iual provisions of the instrument. A11 financial instruments are

measured initiallr at :ie:: -:-r r alue plus transaction costs, except in the case of financialassets and financial li::i.r:.es recorded at fair value through cost or fair value.

.., i

ClassificationThe classification o: :--l::clrl instruments depends on the purpose, and management'sintension, for uhich ri:e r:-s:r*ments \\-ere acquired and their characteristics.

De-recognitionThe Companv derecoi:rze. a t-rnancial asset when the contractual rights to the cash flowsfrom the financral a,sset erp:re. or s-hen it transfer's the right to receive the contractual cash

flows on the financial asse:s i: a transaction in which substantially all of the risks and rewards

of ownership of the t-rn::;:a^ asset are transferred.Any interdst in transferred financial assets

that is created or retai:e; rr the Company is recognized as a separate asset or liability. The

Company derecognizes ,-r:;ncia1 liabilities when its contractual obligations are discharged orcancelled or expired.

OffsettingFinancial assets and 1ia:rirles are set off and the net amount presented in the statement offinancial position n'hen. and onlr *'hen. the Company has a leg-al right to set off the amount

4.2

4.3

4.4

31 ' 'l

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4.5

and intends either to settle on a net basis or to reahze the asset and settle the liabilitysimultaneously.

Income and expenses are presented on a net basis only whelr permitted under IFRSs, or forgains and losses arisin-e from a Fund of similar transactions such as in the Company's trading

activity.

Financial assets at fair value through profit or loss ,

A financial asset is classitled as f'air value through profit or loss if it is classified as held for

trading or is designated as such upon initial recognition. Financial assets are designated at fair

value through profit or loss ii the Company manages such investments and makes purchase

and sale decisions baseC on their fair value in accordance with the Company's documented

risk management or ir.r'esrnrent strategy. Upon initial recognition, attribute-able transaction

costs are recognized in p:.r1-n Lrr loss as incurred. Financial appets at fair value through profit

or loss are measurei ar t'air r alue, and changes therein hre recognized in the Income

statement.

Held- to- maturitr financial assets

If the Companl' has the :ositive intent and ability to hold debt securities to maturity, then

such f-rnancial assets are cir-.sified as held- to- maturity. Held- to- maturity financial assets are

recognized initiallr a: ia:r ,'.alue plus any directly,attributable transaction costs. Subsequent to

initial recognition. he1;-to-maturitl' financial assets are measured at amortized cost using the

effective interest rnethois. less anv impairment losses. Any salii or reclassification of a more

than insignificant amcu:1: oi held-to- maturity investment not close to their maturity would

result in the reclassiil.-ation oi all held- to- maturity investments as available -for-sale, and

prevent the Compar) Iiori ciassifying investment securities" as held-to-maturity for the

4.1

4.8

current and the tbllourns :.,r'o tlnancial Years.

Available -for- sale financial assets

.,], ,1., i

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Available -for- sale tlnanciai assets are non-derivative financial assets that are designated as

available -for-sale and that are not classified in any of the previous categories. The

Company's investmenrs in equitv securities and certain debt securities are classified as

available-for-sale t-rnar:.cra, assets. Subsequent to initial recognition, they are measured at fairvalue and changes therern. other than impairment losses and foreign currency differences on

available for sale tlnancial assets are recognized in other comprehensive income and

presented within equitr rn the t'air value reserve; When an investment is derecognized, the

cumulative gain or loss in other comprehensive income is transftrred to profit or loss.

32

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4.9 Amortized cost measurement

The amortized cost of a financial asset or liability is the amount at which the financial asset or

liability is measured at initial recognition. minus principal repayments, plus or minus the

cumulative amortization usins the ettective interest method of.any difference between the

initial amount recognized and the maturitl' amount, minus any reduction for impairment.

4.10 Fair value measurement

Fair value is the arnount lor r', hich an asset could be exchanged, or a liability settled, between

knowledge. u11line panies in an arm's length transaction on the measurements date. When

availabie, the Contpan\ nieasries the tair values of an instrument using quoted prices in an

active market tbr that lnstr:merl. A market is regarded as active if quoted prices are readily

and reguiarll, ar ailable ani represenr actual and regularly occurring market transactions on an

arm's length basis. Ii a i::iiet ior a financial instrument is not active, the Company

establishes fair r alue usirq a r ;luation technique most approprial? to its circumstance.

4.11 Identification and measurement of impairmen t "''j

At each reportins dale l:e Companl' assesses whether there is objective evidence that

financial assets measu:eJ li amofiized cost are impaired. A financial asset or a group offlnancial asset is in:paire; uhen objective evidence demonstrates that a loss event has

occurred after the iniria- re;osnition of the asset(s), and that the loss event has an impact on

the future cash flou's oi lhe asselr s) that can be estimated reliably.

An impairment loss rn respecr of a financial asset measured lt amortized cost is calculated as

the difference beru'een its carrf ing amount and the present value of the estimated future cash

flows discounted at the asser's original effective interest rate. Losses are recognized in profit

or loss and reilecte.l in an allon'ance account against receivables. Interest on the impaired

asset continues to Lre recognized through the unwinding of the discount. When a subsequent

event causes the antount oi impairment loss to decrease, the decrease in impairment loss is

reversed through prolit or loss.

I

fhe Companr u.rites off tlnancial assets carried at a\]ortized cost when they are

uncollectible. r :'.r

4.12 Cash and cash equivalents " ;

il

Cash and cash equir alents rnclude cash in hand, deposit held .at call with banks and other

short term inr estments in an active market with original maturities of three months or less.

I

33

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IIII

5.1

Revenue

This relates to fees and other income receivable on services to customers, exclusive of valueadded tax. Revenue is recognized u-hen the related services have been concluded and invoicedand the amount of revenue can be measured reliably.

Income recognitionIncome is recognised to the e\ter.t that it is probable that the economic benefits will flow to thecompany and the revenue can be reliabl1' measured, regardless of when the payment is beingmade. Income is measured at 'ihe Iair value of the consideration received, taking into accountcontractually defined terms o: parment and excluding taxes or duty.

5.2 Interest incomeFor all financial inslrun-ienl :neasured at amortized cost and interest bearing financial assetsclassified as at'ailab1e Io: s:le. interest income or expenses is recorded using the effectiveinterest rate (EIR). uhich is the rate that exactly discounts the estimated future cash paymentsor receipts through the erpec:ed life of the financial instrument or a shorter period, whereappropriate, to the net c:.r" -ng amount of the financial asset or liability. Interest income isseparately disclosed in the income sratement.

5.3 Interest expense

Interest expense on bani .",r erirafts. related party loans, borrowings and impairment lossesrecognised on financial 1r:.:,lities. s'here appreciable, are included under finance costs of thecompany in the income s:a:enent

Employee benefits

The compan\ operares a ce:lned contribution scheme for her employees.A defined contributron plan rs a post-employment benefit plan under which the Company paysfixed contributions tnto a separate entity and will have no legai'or constructive obligation topay further amounts. O:ligations lor contributions to defined, contribution pension plans arerecognised as an emplor ee benet-rt expense in the income statement in the period during whichservices are rendered br emplol ees. Contributions to this defined contribution plan are 7.5ohof staff salaries i.e. basrc. housing & transport allowances. Effective January l, 2A18,contribution rates br the emplor er and employee changed to 10%o and 8oZ respectively.

TaxationIncome tax for the \-ear is based on the taxable income for the Year. Taxable income differsliom profit as reponed in the statement of comprehensive income for the period as there areitems which mav never be tarable or deductible for tax and other items which may bedeductible or tarable in other periods,

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Current income taxCurrent income tax assets and liabilities for the current period are measured at the amount

expected to be recovered tiom or paid to the taxation authorities. The tax rates and the tax laws

used to compute the amount are those that are enacted or substantively enacted, at the

reporting date in Nigeria.

Current income tax relatins to iiems recognised directly in equity is recognised in equity and

not in the income statement.

.ir.

Deferred tar is pror rde; us:ng i:e liabilitl' method on temporary differences at the reporting

date between the tax ba,ses or a-ssets and liabilities and their carrying amounts for financialreporting purposes. Dele:re: ilctme tax is determined using tax rates (and laws) that have

been enacted or substanri','e1-, enacted b1' the end of the reporting period and are expected to

apply when the related ieie-e i i:.icome tax asset is realized or the differed income tax liabilityis settled.

Deferred tax assets Bre r3Cs.r::sed tbr all deductive temporary differences, calry forward ofunused tax credits and u::s:: ::r losses. to the extent that it is probable that taxable profit willbe available against rihrc:::e deductive temporary differences, and the carry forward ofunused tax credits anJ ;:*s:; :;\ losses can be utilized, except. l

The carrying amouni o: ie=::eJ tax assets is reviewed at each reporting date and reduced to

the extent that is no lLrir:ei ::obable that sufficient taxable profit will be available to allow allor part of the det'enel :r], 3sset to be utilized. Unrecognised driferred tax assets are reassessed

at each reporting dale alt ::e recognised to the extent that it his become probable that future

taxable profits u'ill a11o.,,, tne ielerred tax assets to be recovered.

7.3 Information Technologl Tar,.,.i

Provision is made at lYo of the accounting Profit before tax. ti \),

Provisions

Provisions are recosris:i then the Company has a present obligation (legal or constructive)

as a result of a past e\ en:. it is probable that an outflow of resources embodying economic

benefits will be requireJ to settle the obligation and a reliable ,estimate can be made of the

amount of the obligati.rn. \\ here the Company expects some or all of a provision to be

reimbursed. for eramp.e unoer an insurance contract, the reimbursement is recognised as a

separate asset but onlr u hen the reimbursement is virtually dertain. The expense relating to

any provision is presented rn the income statement net of any reimbursement

Deferred tax

IIItItItII

35

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If the effect of the time value of money is material, provisions are discounted using a current

pre-tax rate that reflects, where appropriate, the risks spedilfic to the liability. Where

discounting is used, the increase in the provision due to the passdge of time is recognised as a

10

finance cost.

Foreign currencyTransactions in fbreign currencies are

currency rates prevailing at the date

denominated in foreign currencies are

exchange ruling at the reportine date.

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initially recorded uv tttie company at the functional

of the transaction. Monetary assets and liabilities

retranslated at the functional currency spot rate of

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All diff'erences are taken ro rhe income statement with the exception of all monetary items that

forms part oi a ner investment in a foreign operation. These are recognised in other

comprehensive inc.-,me unrii the disposal of the net investment, at which time they are

reclassifled to protit or [-,ss. Tax charges and credit attributable to exchange differences on

those monetarf items a:e also recorded in other comprehensive inbome.

Non-monetarf itents ll'Lat are measured in terms of historical cost in a foreign currency are

translated using rhe eschanse rates as at the dates of the initial transactions. Non -monetary

items measured at fa:: r:1ue in a foreign currency are translated using the exchange rates at the

date when the thir r al:e :s determined. The gain or loss arising on translation on non-monetary

items is recognised r:: line riith the gain or loss of the item jhat gave rise to the translation

differences (transla:ion diilerences on items whose gain or loss is recognised in other

comprehensive income :r protit or loss is also recognised in other comprehensive income or

profit or loss respective.r ,,

Dividend distributionsDividend distlbutrr-,ns ro the company's shareholders, when applicable, are recognized as a

liability in the compan\ 's r-rnancial statements in the period in which the dividend are declared.

Unclaimed dividencs ;.re amounts payable to shareholders in respect of dividend previously

declared by the Comparr. uhich have remained unclaimed by the shareholders. In compliance

with Section 385 oirhe Ct',mpanies and Allied matters Act, CAP C20 Laws of the Federation

of Nigeria, unclainted dir idends after twelve Years are transferred to general reserves.,. 1.]

Earnings per share I i'; i

The Company presents basic earnings per share for its ordinary shares. Basic earnings per

share are calculated t,r' dir iding the profit attributable to ordinaiy shareholders of the Company

by the number of shares outstanding during the Year.

Ad.iusted earnings per share is determined by dividing the profit or loss attributable to ordinary

shareholders b,v the ri eiehted a\rerage number of ordinary shares adjusted for the bonus shares

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issued.

36

II

12

13

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

ordinary shares and share options are recognised as a deduction from equity, net of any tax

effects and costs directll' attributable to the issue of the instruments'

Impairment of non- financial assets

Goodwill and indefrnite 1it-e intangible assets are considered for impairment at least annually"

property plant and ecuipmenr. other intangible assets, available -for-sale investments and non

current assets held tor saie are considered for impairment if there is a reason to believe that

impairment ma). be necessarr. Factors taken into consideration in reaching such a decision

include the economic r raL,rlitr of the asset itself and when it is a component of a larger

economic entit)'. the r iabrlin of the unit itself.

Assets that har.e an :n;et-rnrte useful life are not subject to amortization and are tested annually

for impairment. Asser:s rhar are subject to amortization are reviewed for impairment whenever

events or changes Ln ci:;:msrances indicate that the carrying amount may not be recoverable'

An impairmenr loss rs :ecosnised for the amount by which ihe asset's carrying amount its

recoverable amounr. The :ecoverable amount is the higher of an asset's fair value less costs to

Sell and yalue il us.. F,--: i:e pllpose of assessing impairment, assets are grouped atthe lowest

levels for which the:e :re separatelf identifiable cash flows (cash generating units)'

An impairment loss i: respect of goodwill is not reserved. In respect of other assets,

impairment iosses ;3;..g:ized in prior periods are assessed at'each reporting date for any

indications that the .oss has decreases or no longer exists. An impairment loss is reversed ifthere has been a c]-.:nre in the estimate used to determine'the recoverable amount. An

impairment loss is reversec onlr' to the extent that the asset's carrying amount does not exceed

the carrying amour.r tha-, s ould have been determined, net of depreciation or amorlization, ifno impairment loss hac.'reen recognized

1.:tIIIIIt

37

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ROYAL EXCHANGE FINANCE COMPANY LIMITED

ENTERPRISE RISK MANAGEMENT FRAMEWORK

Risk management framework

The Company's risk management policies are established to identify and. analyze the risksfaced by the Compan\'. to set appropriate risk limits and'controlr, to monitor risks andadherence to limits' This policy is subject to review periodically. More frequent reviews maybe conducted in the opinion of the company Directors when

"hu.rg", in laws, marketconditions or the Company's activities are material enough to impact on the continued

adoption of existins policies. The company, through its training and management standardsand procedures' ainls to develop a disciplined and constructive control erviron.rent, in whichall emplor ees understand their roles and obligations.The Board of Directors of the company has overall responsibility for the establishment andoversight of The companr''s risk management framework via its committees.

The Board is assisted b1 the various Management committees in identifring and assessingrisks arising lrom dar 1c, da1. activities of the Company.These commirtees meet on a regular basis while others are set up on an ad-hoc basis asdictated b1 the circumsrances.

.

Financial risks', :i

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The companr has e\posure to the following risks from its use'of'financial instruments:. Credit risk

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Liquidin'riskMarket risk-s

Operational risks

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This note presents lntbrmation aboutthe company's exposureto each of the above risks, Thecompany's objectire. policies and processes for measuring and managing risks, and TheCompany's manasement of asset and liability"

Credit RiskThe companf is at the risk of an economic loss arising from failure of counter party to fulfillits contractual obligations. Its effect is measured by the cost and replacing cash flows if theother party defaults' The tough operating economic environment has continued to poseseveral challen_ses in the management of credit risk.

38

e t

Credit Risk Philosophy t,i,

The Company credit risk philosophy is guided by fwin responsibilities of protecting earnings

and preventing erosion of capital. The Credit Risk Managepept is guided by the followingprinciple. .;'l"rs q

a. Clear articulation of policy guidelines

b. Irrespective of rervards, the Company will always put Credit Risk before pecuniary

considerations.

c. The Companl, shall adopt a strategic rather than a purely opportunistic approach in the

creation of the portfolio.

Liquidin RiskLiquiditl, risk is the risk that the Company does have sufficient resources to meet itsobligations uten they fail due or will have to meet its obligations at an excessive cost. This

may be as a result of cash requirement from contractual commitments and investments.

Management of liquidity riskri ,,'rl'

A brief oven'ierr'of the Company's liquidity management processes included the following:

Nlaintenance of minimum levels of liquid and marketable assets above the regulatory

requirement limit. The Company has set for itself more stringent in-house limit tor,rhich it adheres.

Monitoring of its cash flow and hnancial position trends

Regular measurement and monitoring of its liquidity positiorl rations in line withregulatorl requirements and in-house limits

Regular monitoring of non- eaming assets , i

Monitoring of deposit placement concentration .

Ensure dir ersification of funding sources r .

Maintaining a contingency funding plan.

Exposure to liquiditl' riskThe key measure used by the Company for managing

assets to total net assets of the Company.

ratio of net liquid

Market RiskMarket risk is the risk that the Company income or fair value or future cash flows of a

flnancial instrument riill fluctuate due to changes in market prices in particular, changes ininterest rates, foreign rates and equity prices.

The objective of market risk management is to manage and control market risk exposures

within acceptable parameters, while optimizing the return on risk.

a

a

a

a

a

a

liquidity risk is the

39

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Management of market riskOverall authority for market risk is vested in the managerneoJ committee. However, the

Market Risk Management group within is responsible for the development of detailed risk

management policies (subject to review and approval by the Committee) and for the day-to-

day review of their implementation. ,.i,

Exposure to market risks- trading portfolios ', '

The principal tool used to measure and control market risk exposure within The Company's

trading portfolio is the open position limits using the earninglat Risk approach. Specified

limits have been set for open position limits, which are the expected maximum exposure The

Company is to be exposed.

Exposure to interest rate risk -trading and non trading portfoliosThe principal risk to rvhich non- trading portfolios are exposed is the risk of loss from

fluctuation in the future cash flows or fair values of financial i,nsfruments because of a change

in market interest rates.

Interest rate risk is managed principally through monitoring interest rate gaps and by having

pre-appro\.ed limits for re-pricing bands

Operational Risk :

Operational risk is the risk of loss arising through fraud, unauthorized activities, errors,

omission. inefficiencl'. s),stem failure or from external events. The definition includes losses

arising from legal and regulatory risk but excludes strategic and i'eputational risk.

An operational risk arises from all of The Company's operations and is faced by all business

entities. The obiectives of the Company operational risk management is to manage and

control operational risk in a cost effective manner, avoiding financial losses and reputational

damage rvithout instituting control procedures that will strife initiative and creativity.

The Companl' locus is to manage operational risk based on a consistent framework that

enables us to determine not only operational risk profile in comparison to our risk appetite,

but also define risk mitigating measures and priorities.

Future operational risks identified through forward looking analysis are managed via

mitigation strategies such as the development of backup systems and emergency plans.

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ROYAL EXCHANGE TINANCE COMPANY LIMITED'NOTES TO TIIE F'INANCIAL STATEMENTSFOR THf, YEAR ENDE} 3I DECEMBIR,2OI8

l. 'l'he Conrpany

l. Legal forrn

llol'al Exchanre Finance Contpany l.td rvas

October 200.1 as RE.\\ l]inarrce (--onrparryincorporated as a private lirnited liability company orr I I

Lirnited, uncler lhe Conrpanies and Alliecl Matters Act.CAP c20. t,F\ 100-i.

In line lvith the strategic ob.f ective of tlre Royal Exchango group. the name was changed to Rol.itl

Fl.rchanse Finance and Irrvestrnenl l,ld and approved by tlre Corporate Alfairs Clomnrission on l3th

J u 11' 2009 an d late r ch irnged to Royal Exchange Finance & Assets Vlanagenrent Ltcl on January I st.

?0 l.l.OnJuire ll.l0lShorvevet'.tltenamei.vaschangedtoRoyal lJxchangel;inanceConrpanyLtd.

I'his chanqe has since heen approved by the Central Ilank of Nigeria and registered with the

( (\r|.r:lti \:'1.|t. ( ,.rrrrrri'.iOrt.

[i. Principal actir ities

The C,lrnp:1r\'s principal activities are the business of linance. equity/debt arranged,

llrraric jal ird', isorr -sen'ices. portfbliolfiurds rnanagement and the nanagemeltt ofinr e.rtntents.

Interest & Sirnilar income

lnterest on FGN Bonds

Interest on Finance Leases

Interest on other Loans

Interest on FGN Treasury Bills

Interest on Bank Placements

Interest & Similar Expense

Interest expense on borrowings

Impairement charge for credit loses

Arising during the year on loans (note I 5.a)

Other assets {note I 7.1 )

Fees & Commission IneomeI;ees & Commission Income

Other [ncome

Dividend lncome

Gain from sale of financial assets

liinancial Gain on T/Bitl

Sundry Income

2017

N'000

90.480

209,208

i0, r 0-5

26,1 I I

360,922 355,904

211,9t3 168,195

20t8x'oott

1.397

68,24L

1.s2,802

94,379

42,763

1,607

10,392

6,685

18,684

i.

(10,258) 25,455

4- 11,s26

_@88)_ ___36,981

21,264

12.835

>l3,987

16,874

41

ROYAL EXCHANGE FINANCE COMPA*' ""OJ'N'

NOTES TO THE tr'INANCIAL STATEMENTSYEAR EIYI)ED 31 DECEMBER, 2018

Other 0perating expenses

Staff cost

Tenninal payment to exit staffProfessional fees

General Office Expenses

Corporate gifts

Penalties & Fines

Directors fees & expenses

Depreciation & Amortization expense

Repairs & Maintenance

Legal expenses

Postages & Telegraph

Offi ce E lectricitl',Gnergy costs

Annual General Meeting expenses

Contributions to NSITF & StafTpension costs

Vehicle maintenance

lnc ease in Staff Retirement Obligation

Loss on Fixed asset soid

Insurance premium paid

Trade & Professional fees

Others

Profit before taxationThis is arrived at after charging

Directors' emoluments

Depreciation & AmortizationAr"rdit fees

9 Taxaton

Current year ebarge:

Income tax

Education tax

Infbrmation Technology tax

At I January

Payment made in the year

Balance unpaid at period eld

82,e50

t7 "5.18

6,t2.4

9"0331 111

7,70;I r,056

4,081

398

999

I.998

1 q){

,,:

l.lJt

650

r 1.459

?tl17

N'000

| 17,622

4.3 86

:.s ra1.502

1 1,067

4,078

14,408

4.084

412

2.204

1,615

t21

465

661

563

5.407) ))(\

552

I 2,1 50

-19!,]!r161,973

10,247

I 1,0-55

1.90i)

i

3,?ti2

228r_t1t+J

--.-.--._3,653

10,868

(7,04[i)

7,473

4,831

13,604

(7,567)

_10,869_

9,942

14,4081,750

4,3 85

348

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ROYAL EXCI{AN(;B FINANCE COMPANY LIMITED

NOTES TO THE FINANCIAL STATE\IE\TSYEAR ENDED 3I DECEMBER.2018

l0 Earnings per share

Basic Eamings (kobo)

I I Cash & Cash equivalentsCash in Vault

Bank Balanees:- First Bank Plc

- Royal Exchange Microfinance Bank Ltd

- UBA Plc

- Access Bank Nigeria Plc

l2 Due from other Financial Institutioas(a) Bank Placements:

ARM Fixed Deposit

Sterling Bank Plc

Royal Exchange Microfinance Bank LtdHeritage Bank LirnitedKeystone Bank Limited

(b) FGN Treasury Bills:UBA Plc

First Bank Plc

Coronation Merchant Bank Limited

Grand Total (a-b)

datc.

]r2.2 Governrnent Bond held

l"ederal Covcmmcn t B t-ri'. i

' , ,, 2018

N'000

7

2A17

N'000

3

The Harnings per shale is cllc:rl::;ri :" c:r i.iing the profit attertax

by the number of ordinary shares of N I each issued at each year end date:

58

5,-548

5,894o

39

16,286

104

291

66

|.724, 'l lr5d8 18,47I

102,416

' 80,63 8

106,938

I15,099

10,000

289,992 L25,099

250,146 _

46,090

295,439

28,519

250,146 370,048

5.10,138 495,147

(i) Shorl-tenn dep.rsit: irre i-:ii icI r;.r1 ing periods of betrveen rvre rnontlrs to three treinths

depending on the irr;-.:eir::: c:sh reqLiirements clf'the Conrpan,v. All deposits are subject

to an average af 12o/o Q.A17: 16.4%) rate per annum. i:-

(ii) l'he carrying anrorilrls .i;.c ..sc.l above reasonably approxirnate fair valuc at the reporling

l'8i,o+o

The carrying anlounts di:cltrseci above reasonably approxir-nate t'air lrslus,:il1 the reporting

tlate.

43

';. ii;

.: .t,:il.:.ili:-l.Y

ROl'Al. EXCII;\NGE ITINANCE CO\lP,\\\ LllllTEI)N0 TI,S TO 1'IIIi] FINANCI,.\I, ST,{TE}IE\TSYt.\R E\DED 31 DECEN||IER. 2018

l.l Financial .'\sset- FVTPL

[air Va]Lte irt bcginnirrg

Irail valuc ol'slocks sold

Cirangcs in ltrir lalLre

fair value ai peliorl enJ

I lrL rnilrkct \.rlr.!,'t .' .-.:

20 18

, N'000

15,907

(5, l 89)

---..,,1llllt_:i.'.:.: r, ..-

",, .- i 3.1 r(]il (1017 - N I 5.907.000) as at 3 I Decentber.

2017

N'000

45,729

(35,067)

5,24515,907

2018.

l4 Investment in Sister Companl'(REIIFB Ltd.)

Ordinary Shares at cost

l5 Loans & Advances to customcrc

Anal-vsis try secu ritl'

____ lzl ______t!lll

2018

N'000

2017

N'000

This represents cost of 7.6-i6"-<7? unis of Ro1.'al fuIicrofinance Bank (ii) NGN2 per uuitRo1'aI Exchalge Finanoe and Companl' LtrJ rvith the approval of its Boarcl dated I i th Febnrary, 2014

took up 7 -67 6,572 shares of Ro1.al Exchange Microfinance Bnnk Ltd alloted to her on the 28th ol'

Januar1", 2014. Ro,val Erchange \Iicro Finance Baak Limited is a nrembm ollthe Royal Exchange group.

-l'e rnr

Loans\'0{)0

i. I 78.-105

Finance

[,cascs

N'00{)

l8-1"218

Total, 2018

N'000

I .5(r I .52-1

Trital2nt7li'000

I,73_r.853Secured against real estat*

Otherwise secured

Gross loans

- Specific impairement

- Collective impairment

Carrying amount

15(a) illovement in Impairement

Balance at Beginning

IIiRS 9 IVIodel adjustmenl

Write-hack

Arising in the year (Note -12)

Charge ibr tl.re year

Ilalance at Period end

r.l 78,305

( r"17.359)

383,218

(23.000)

1,561,523 1,7J3,953

'Q7o,3se) (186,240)

930,9.t6

163"2.10

91.377

257.6t7

(.15 r )

(9,807)

(10"258)

247,35{)

360,2r8

23.000

_]eJls3_ lf4?4r.'.,1

23,000

160,785

(451 ) (2.435)

(9.807) 27,890

( I 0.258)

270.J59

23.000

r86.240

q43'77

280-617

I 60.785

25.,155

186,240

l.

l!'

44

ROYAL EXCHAI\GE FINANCE CON{PANY LIMITED

SO1'I1S TO THI FINANCIAL STATE}IENTSYtrAR ENDED 3l DECINIBER.20l8

l5(li) Statement of Prudential adjustments

In accordance with the Regulatory suidelines released by both the CBN/\IDIC, provisions for loanlosses recognised in the income statemenl shall be determined based on the requirements of IFRS.The IFRS provisions should be compared u ith provisions determined under the CBN Prudentialguidelines and the expected impact changes in seneral reserve should be treated as follows:

(a) If prudential provision is higher than IFRS provision; Transfer the difference from general

reserve to a non - distributable reguLaton reserve.

(b) Ifprudential provision is less thar IFRS provision; Transfer the excess from the non -

distributable regulatorl resene :o the general reserve to the extent of the non - distributablereserve previousll. recogniseJ.

201 8

N'000

801,90 I

(198.11s)

112,223

71-s,349

(270,:is9)

444,990

(.i

2l)r7N'000

80 t,901

80 r ,901

( 1 86,240)

Prudential provision B/f

Less Reversal on Recoveries

Arising during the year

Prudential provision required at year end (Note 15(g))

Less IFRS Provision as at )€ar end ( Note 15(a ) )

Balance on Risk Assets Regulatory Reserve (Note 27)

l5(c ) Aualysis by type

Finance Leases

Short term loans

LPO Finance

Staffloans

l5{d) Scctorial Analrsis tif loanr rnd adr ances to customcrsAgriculture1\,lanultrcrLrring

Tracle and Corrnrerce

I{eal Estate and Constr.riir:i,::

I'.ducation

Others

Balance, beginning of period

IFRS 9 model adjustments

Write back during the periodImpairment allowance recognised during the period (Note 4)

Balance, end ofperiod45

383,2 r 8

1,473,104

52,1)30

52,211

18.734

r8,i25612,fiA163,3581r.a i ir)

598,716

___l,sg1,s2l_ _____1,733,8s3_

l5(e) The movements in impairment allortance on loans and advances is analyzed below;

163,240

94,377

(451)(9,807)

137,785

(2,435)27,890

615,661

443"28i

t,164.429

i 3.3 t2

52,829

_]-n,s21_

8_s.236

l,6l I

-129.00-5

197,908

326,594621,169

____247_3se_ _163240_

-El

e

ITOYAL EXCI{ANGE FINANCE COMPANY LIMITED

NOTES TO THM FINANCIAL STATBMENTS

YEAII. ENDtrD 31 DECEMBER, 2018

l5(0 Anal.vsis of Loans and Advances bv maturity :

1-30 days

3 1-60 clai s

6 l-90 dal's

9l-180days

IBl-360dals

Over 360 day s

15(g) Analysis of Loans br CB\ PI'udentinl Classification

', 964,936 187,528

1,561,523 1,ry,570

2018

N'000

194,738

38,480

107,744

146,906

108,719

2017

N'000

715,912

13,254

37,690

201,113

135,077

Provision

N'000

7,550

11,041

85,245

698,065

Performing

Sub standard

Doubtful

Lost

2018

N'000

I52,283

43,020

125392

640,828

Provision

N'000

7,523

4,302

62,696

640,828

2017

.,r N'000

754,910

110,406' 170,472

698,065

Rate%

1

10

50

100

l6

lf61,s2l_

Advance under finance lease

Finance lease

lmpairment

16(a) Analysis of advances under finance lease by maturity

1-30 days

3 1-90 days

91-180 days

181-360 days

Over 360 days

360"318 420,283

11

i:;

715.349 1.733.853 801,901

2018

N'000

383,318

, (23,000)

t,302

58,612

47,524

275,88A

--tPr,Ig-

2g17

N'000

443,283

(23,000)

129,679

2,092

22,012

10,769

278,731

_!!l&-

46

i

I{OYAL SXCHANGE FINAI\CE CO}IPA\Y LIN{ITEI)

NOTES TO THE FINANCIAL STATEMENTSYEAR ENDrD 3l DECEMBER, 2018

l6(h) Movements in impairment allo*ance on advance under lease

Balance, beginning of period

Impairment allorvance recognised during the period

Balance, end of period

17 Othcr assets

Inlcresl lieceir ahle

Ittterest Receir able rr .\nh,:i:rPl'epavrllcnis

lncome Receir ahle

Diviclenci Recei r itl. i c

Srrndrv clebtols

Impairment for doubrlul accounrs (notes 17. 1)

17.1 Impairment for other assets

Balance, beginning of period

Charge to income statement (note 4)

Balance, end of period

17.2 Non - Current Asset held for resaleAhuia land snap

l8 Group companiesa l)ue from Group Comp*n1-:

Royal Exchange Prudential Life Pic

Ro.val Exchange Plc (parent compan.r.,)

Royal Exchange Health Care

Royal Exchange Microfinance

tr)ue to Group Conrltanies:I{o.val Exchange Plc

Ro1,al Exchange Generai Ii'rsiri-ance Companv I-imited

2018

N'000

23,000

23,000

73,1501 8,713

14,014

, uu:

2,924

109,390

(88,23s)

It5,2651 q70

88,235

42,430

9.298

10,453

-t: 17

19"768

_1i.854

2011N'000

23,000

23,000

73,150

I 8,7 l311,846

407

4,299

8,799

117,204

(85,265)

_t!,939_

73^73q

I 1.526

85,265

42,250

9.464

{l,l 15

4

4

11"181

22,123

3I,854

These balances arose as the net effect of various transactions between th:6:,companyand each of the respective companies within the Royal Exchange group .i:

,i

.f.t

::i.:

47

22,123

ROYAL EXCHANGE TINANCE COMPANY LIMITED

NOTIIS TO THI TINANCIAI, STATEi}IENTSYXAR ENDED 3I DECE1!rBER,2018

l9 lntrngible assets (IT Software)

\et lloul, \'rlrr. lt tltc l.ei rtnii:-

.\tjJiti,'rr,rl I:rpurr.litirle- ir'. .:: -'.:

Arlortisation during thr rcrr

\tt Il,rnL \'.,ltr,' ,rr \ . :i - . :

(lost

At I January

Additions

Disposal

,A1 3l December

Depreciation

At I January

lll irninated on disposal

Charge for the ,\,ear period

At 3l December

Net book value

At 3 I December 201 8

At 3 l December 20l T

Furniture,Fittings &Equipment

N'000

24,536

45

24,581 11,337 11,306 ,. 21,645

6.627 15.6 17

'['he companv acquired nen'soft*are (Slmbols soft*'are package) supplied by Neuiogic Solutions Ltd early in

I'ebruary'2014. The implemenarion has fully commenced. It is expected that the Softwarerand the

related hardware till run fbr 5 1.'ears from the date of full implemcntation. :

2{} Propertl plants & EqLripment

ComputerEquipment

N'000

12.307_

30

Plantand

N{achineryN'000

8.1 02

3,20;

2018

N'000

I tt,679

. - (6,226)

t2.451

MotorVehicles

N'000

21,64s

?01'7

N'000

24,905

{6"226)

18.679

TotalN'000

66.590

3,279

69,869

57 -17'/

.1,829

I 3,204

28.241

1,064.3()9

220.81t.5------:--;:;--;-

l--)i().O+l

1,1.750

___lt1E22_

24,272

140

24,412

,69

264

10.66 t

'164

11,425 7,078

3.47,4

15,945

8,211

1,352,1',/0

106,50t)

I.482.826

. 14,221

*l_,497,$47_

I9,09t 62,006

912 4,?e8 2,554 7,863

1,646 1,4:15 6,029 9,413

2018 20t7N'000 N,000

2l Borrolr ings

{r) l}}'Product:

lp)rn

C'al1

I ligh ""-ield

plan

IloYal I nvcslnrcnt \(rtc

Add: lntelest l)ilablc thclcon

48

2lb

ROYAt, nXC[:IANG Ii FIN:{NClt CONIPA NY LIMITED

N* O"I'ES'I'(}'rl m F-INANCLA.L STATI&IENTS

YIIAR END[,I} 3I. DS]CEN{BER,2018

Analysis by maturity Prolile:lIp to I month

Ilelrveen3-6monthsBctlleen6-l2monthsAbove 1 year

Other Liatrilities

Sundrl'. creditors

Statutory Remittances due

Accrued expenses

Deposit for Shares

Uneamed credit lees & uther incomc

Other pa1.'able

23 Staff retirement obligation (Long Service Award)

A: i"e begtnning

20:3 serv ce cost

Payn enr to leavers

A l: I i et tl

Company's obligation for:- Graiuity- Long Service Award- Other Pension Liability

At period end

20r8N't)00

561.808

506"792

"1q1"i.t6

---1,:'-$,qJ]-

1) 11)

r,323

3,607

85

5.46.)

12,164 .

_____lil!!_

Total

201 IN

l

2017

N',000

289,499

472,961

70,592

s08,340

10,14 r

4,473

5,1 06

26,889

I 1,067

___91_fr.9_

Total

20'17

N

1,815

563

))

2,379

_____2,373_

657 (628)

2,084 3 007

_____JJ41_ ___?373_

The ccr.?r,v under the group arrangement operates defined contributory Pens;on plan based on the New

Pei.ls cr Act 23)4 with both of the company and employees contributing 10% and 8% respectively

of lhe emo .!'ees' en''loluments respectively.and also has an obligation for a non-contributory definedbeneii g'at.:i,c an based on employees'pensionable and other poslemployment'en'--a':: l- a-c elgth of servrce

The most receni aciLrala valuations of staff gratuity benefit obligations were carried out at 31st December

2018 by Log;c Prc'ess'caal Services, a reputable firm of Actuaries, with FRC number

FRC/20171NASr0C03300C17548 The actuarial valuation is done based on the "pibjected Unit Credit"

method. Gains and csses oi changed actuarial assumptions are charged to other comprehensive income.

49

ROYAL EXCHANGE TINANCE COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 3I DECEMBER,2OIS

24 Deferred taxationAt year end

There is a delerred tax asset ol'Ntinring ditierences. For prudence

-- ( 20ll - N 2,407, 176 ) which arose lron sonre irreversible

sake. the defl'ered tax assets ltave not been recorgnised.

2 r 7.1t88

2 I 7"888

559"914

2Al7N'000

NIL

300,000

2 r 7.888

25 Sharc capital

,rlulltot'ised:

Ordinarr shares of NI each

lssuel and Jitll.v paid:

At thc br'ginning

Trarrslir liom Dr-posit lor Shares (note 2-5)

At the period end

26 Share Premium

,,\t the beginning'I ranslcr liorn Dcposit lbr Shares (note 24)

.,\t t1r.- ptriod cnd

L1 Risk .-\ssets Reserve

r\t LIanult)

IIRS 9 \ltrdcl d.ius1n1c1)t (No1e 32)

Loan: rr t ite-tiil''l'ransfer. ltor linm (ir-nerill Reserve

;\t thc pr'roil .'nd

Actuarial Valuation Reserve

At Ist January

I ransler fiom profit & loss

A1 3l st December

General Reserve

At 1 Januar-r,

'l'otal Comprehensive income for the year

Provision ntitten back

IFRS 9 tuIodel Adjustment (Note 32)

Prior year additional tai paid

l'r'ansl'er to Risk Assets Resen'e

At 3l December

559.9 r4

559.914 559"91.1

6 r5,66 t

(97.192)

(205, r .r2 )

I 32.253

634. I 86

( r 8,525)

28

29

615,661

t4.49.1 r3.li37

657

____J!'{el_

(630.516)

t5.856

151

3.115

( r 2. r6-l)

( L12,253)

14,494

(654,028)

4"987

r 8.525

50

__=__(?ss2!1l _-(6,3g,st6)_

4

ROYAL EXCHANGE FINANCE COMI'ANY LIMITtrD

NOTES TO THE T'INANCIAL STATEMENTSYEAR ENDED 31 DECEMBER, 2018

30 Information regarding Directors and Omployees

a) Chairman and Directors emoluments

i) The aggregate emoluments of the Directors r.vere:

Fees to Non-Executives

Emoluments of the Executive (Included in Staff Salaries)

ii) -l he aggregate payroll costs of these persons were as follor.vs:

\\'aees and salaries. including allorvances

Pension cost

'2018

N','000

2017

N'000

10,247 9,942

b)

i)

N'000

98,663

2,546

--1!f-'169-iii) Thc table h.-lori sho',r's the trr,rntbc-r of entployees of tlie

Corrpaur {othel thau ti'ie Directors) "vho

eartred over

nrUg.lLl0 JLrring the lear tirat lell u,ithin the ftillou,ing bauds:

Less tlian

600.001

901 .001

1.000,001

1.100.00 r

i,.101 .001

1 .501 .00 I

2.00 t.001

2,_501 ,001

600.000

900.000

1.000,000

1. 100.000

r.-100.000

I.-i00.000

1.000.000

2.500.01i0

and above

Number

I

0

J

-l

4

-)

7

_117,622_

Number

6

-)

-)

I

I

-)

9

10,247 9,942#-

Stalf numbers and costs

The average number olpersons employed (excluding f)irectors)

in the Conrpany during the period were as fbllorvs: --*-21 -

N'000

l1 1,469

6,1 53

51

2l 26

I{0\ AI, ["XCIIANG[, FIN/INCIi COITPANY I,Ii\IITIII)

\OTES [O THT], PINANCIAL S ATEITENTS\ EAR ENDID 31 DECE]IIBEII.2OI8

20t8N'000

31 Fraud & Forgcn,l'hcre u orc no cAscs ol liaucl and lircclics durins thc r,car under rc'u icrv.

32 ll'lls 9 \pplicatiorrlFRS9hccalncoporatiooal otti.lanLtiry"20lB Inlincrvilhthcretluircnrcntsofthcstirnclardandinorrlorto tullv ottntpl.v'' r.vith the suiclelines issued b-v C'entral llank of Nigeria on the atkptron ol IlrllS 9 provisions,Lhc Uank cngauccl Pricg \.!alcr housc c{)opors & ('o, Chartcrcd Aec{)untanls, to reviorv lhs risk assetspor1li)lio ol'the bank as a1 3 I Decembcr, 20llJ.IJascd ort tltoir rcport datcd ......l\,{arch. 2(i19. rhc r-vct intpact ol lFRS 9 on thc risk asscts lvas acLlitional

1;rovision ol-N84,571.000 u'hrch has besll tullv aLljustcd l'or in Nt)te l5 o1'Lhese AccoLrnis

'l lte dctails is as lbllou,s:

\l ri1t back of provision to Incotrc Statcmont ( Nitte l5a )

Wrilc o1'1'ol'prior vear provision to Risk Assel Rcservc ( Notc f 7 IWriLc oll'ol prirlr vear provisron kr (lcncral Rcscrve ( Notc 29 )

r"-et irlpact on lolin Ioss provision ( Note l5a )

Rcconcililtion ofnct prolit bclore tax tocash operrrting proiit(itoss Incornc

'k lntcresl Paicl

* ,\drnin Flxpcnscs Paid

' 1)rol'iL l i I-oss1 ol Inveslmclt sokl

'' I)ir'icicntl {ncolle+ Chanses in l.air Value of f inanciirl Asset

( rsh operatiug Prnlit

fr,rlhrving their aLrr"lit o1'1hc

I)ecernber. l0 I {r.

l'inal reconcili:rtion

(i)( ii)

{ iit)

(9.807 )

97,792(-1.,114)

8d,57 I

js 1.658

(21 l"e l3)(156"4(19)

( 12,ri35)

', 5,t8q

15.630

2017

N'000

:1() I ,097

( 168"lei)

( i 6s"067)

( 10,-192)

( I 't'}07 )

( 5,145)

_____i11.se1_

J3

J"l Ohli[atinc Lrgal \ctiorrrI 1rr'conrpanr, in tlre coursc ofits bLrsincss has tnstitutcd lcgal actions againsl somc dclaLrlturg credit custontcrs.

1'he company's lawyers have advised that these cases will not result into any loss to the comprmy now or in the near future.

(,oittg ( orrrrrrr (,rrrridcrrrlion

cnsLtre lilal lhc eLrnlpanr's linanctal corldition colltilluos on thc path 0f'profitabilitv. \Vi1h rhis antl etrntinuctl suppo|tol thc Parent c()mpan\. llrc cortrpanr,"s qoing eonccrn is not in doubl.

Post Ballnrr Strctt Er ents

l'herc arc rr,' :ilrtrilicant ticrclopnrcuLs sincc 1he cnd of'thc accoLrnting vcur rvhish cou[j havca nlatcrial ct lccl thiit have nrrt irccn discloscd in thc financial stiitcmouts.

(.iontigent I ia bilities

'l hc Lagos Starc lnrcmal lie'enLrc Scrr,ice has raised sonrc addrtional assessments

b.oks and rec\rr rl-\ !,1 tlte .()nlpan) up io nnd including the financial vear entled 3 I

rhc conrpanr': T3\ .,rnsrl1lrLs. has ohjcctcd 1o this additional asscssment but the

nieeliilll li r et tLr lt,tlJ rr irh tlic I ar Authoritles.

In l'ic* o1'thcsc unrc.!{)l\iri rssLtcs. the llnat liabilitv can not trc clelcrnrined as at 31 Dcccnrhcr,20ltl. hcnce provision hasnol been made il the ale\rlults ils presenled.

38 ConrparatircIiqures

(icrtain cLrtryaratir c ficures halc beeu rcclassillcd in line r.lith the prcseulation in lhe currcnt l,ear 1or

,t nlrrrL' l]leilr)incftrl c,,rrrprr'.,,rt

36

37

52

bD 50 co cI)

a--r-

CJ3UU:,c-c-a-3-

tnfio.o\

(,)hLC-

LLLECYYqV-u=LL;Egg39O-o'.-c:L-Ub')

) ;ttJlOc5aJ€ZJJJJ

!?aoo (}rr-+!_fV,@tr\= .i .a .r v, \a:--r:--a F: C F- -t -?s-

:l(\I

o ^l9 ^ 9 I UtC,, = O C) O OI.9 .: o : c. c> o C)lt=5 R i i r-" 'l; I - ^l -l

= AZ Iil

v !J o .o .a ,o oqrl-=o\o\occ

= ?+ -t F

(trO

NN

a-Oe

c.)

L

()()L

o0

o0

a

O.O.OcoN.,..OOOO.= : C.r r-\ N ar

'c?9

tf, tr) .ac?i (\ a{

@&t--g: x x x ;-i:-9O.1coO::S+

./) al

6.,,c .= e 76?^:LVAE-'t!-r-u==:Y6<a'JU -VU=x= :J :r y :)icZ, ^F 'i ': X

L(Jqr;.-

l'L;xui=bi=-:r'.

.ylai'.E,522-i(J-652--2<

=^'aiF=2&.ooi5

F al a'l f.l .t

RoyAL B*.HANGE FTNANCE coMpANr r]r*rr*VALUE ADDED STATtrMtrNTS

YEAR XNDtrD 31 DECEMBER,2OIS

2018

N'000

391,658

(2s92924)

_ljtJu

24fiN'000

441,097

(258,592)

,/,

tiross earnings

lnterest and cost of other inputs

Value added

Applied as fbllox,s:

To pav employees

Salaries and rvages

To pa,v Gor.ernmentlncorne tax

To provide for ehnanc

assests, expansion and payment of

dividend to shareholclers

l)epreciation

Amortisalion o1' Intangible assets

Profit for the vear

Value Added

100 142,505 100

101,169

3.653

4.830

6,226

15,856

17

'.

117,622 83

4,831

4

5

11

6

4

4

8,182

6,226

5,644

_r31J34_ ___-tq!_ _]42,505_ _$q_

Value added represents the u'ealth created by the ellbrts o{'tl e Cornpany and its

employees. The statenients shorvs the allocation of that u,ealth betrveen employees.

shareholclcrs. governrnent and that retained fbr the future creation of tufiher rvealth.

54

ROYAL EXCHANGE FINANCtr COMPANY b{MITf,}

DITAILID INCOME STATIMINTFOR THE YEAR ENDED 31 DECEMBER, 2018

Gross lncome

Irtterest lixpense

Operating Costs:

Salaries ancl rvages

Stal'f lvelfure

Rent & service charges

Audit f'ces

Depreciation

Arnortisation of lntangible assets

lnsrrrance

Repairs and maintenance

Training cost

l)ri rrt ing rud stal itrrrcries

Directors emclluments

l)irectors other erpenses

Soliu are expenses

Bank charges

Office expenses

Legal serv'ices

Promolior-r and \'larketing Costs

I rlr cl rrrd ae e orrrodation

Irines & Penalties

Other operati ng expenses

(211,913) (168,195)

179,745 232,902

20r 8

391 ,658

20t1

401,097

101,169

3.284

2.000

4.830

6,226

2,t77

4.081

2,506

,,:

7,708

1.005

534

9,033

3e8

1,728

858

13,485

1t"7,622

3.601

171

1,750

8.1 82

6.226

2,226

,1.084

3.987

446

256

4,078

2,il 1

535

2,5l4All

2,540

804

11.067

13,43l

Loss in Fair Value of Firrancial Assets

Provision fbr Risk assets Impairment

Profit before Taxation

161,973

5,1 89

(7.288)

159,874+

186,103

36.981

223,084

55

9,818