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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% -
\ (-)TE
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
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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:[email protected]:sterlingpartnersnigeria.com. ,.4.
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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
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- *-
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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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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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
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1, "4
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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
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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
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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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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
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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
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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