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UNION BANK OF NIGERIA PLC

2009 FINANCIAL STATEMENTS

CONTENTS PAGE

Directors, professional advisers, etc 2 Results at a glance 3 Report of the directors 4 Report of the independent joint auditors 18 Report of the Audit Committee 20

Statement of accounting policies 21 Group balance sheet 28 Group profit and loss account 29 Group statements cash flow 30 Notes to the financial statements 31 Group statement of value added 65 Bank statement of value added 66 Group five-year financial summary 67 Bank five-year financial summary 68

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COMPANY REGISTRATION NO.RC 6262

DIRECTORS, PROFESSIONAL ADVISERS, ETC DIRECTORS: Yakubu, Musa Gella - Chairman

Osibodu, Olufunke Iyabo (Mrs.) - Group Managing Director & Chief Executive Appointed w.e.f. 14 August, 2009 Ebong, Bartholomew Bassey - Ceased to be a Director w.e.f. 14 August, 2009 Abdullahi, Ado - Ceased to be a Director w.e.f. 14 August, 2009 Abubakar, Ahmadu Adeosun, Adekunle Mickey - Appointed w.e.f. 3 September, 2009 Adeyemi, Kenneth Sola - Retired w.e.f. 13 August, 2009 Ahmed, Mansur Akande, Onikepo Chief (Mrs) Ayininuola, Samuel Idowu - Ceased to be a Director w.e.f. 14 August, 2009 Emeruem, Ebenezer Uzoma - Ceased to be a Director w.e.f. 14 August, 2009 Esangbedo, Anthony Ebhodaghe - Ceased to be a Director w.e.f. 14 August, 2009 Gobir, Ibrahim Abdullahi Ikeazor, Philip - Appointed w.e.f .3 September, 2009 Kwargana, Ibrahim Abubakar - Appointed w.e.f. 3 September, 2009 Obigwe, Austen Iheanyi Njideofo - Ceased to be a Director w.e.f. 14August, 2009 Odimegwu, Festus Boniface Oha Okoloko, Onajite Olusanya, Olusegun Shonubi, Folashodun Adebisi - Appointed w.e.f. 3 September, 2009 Tadaferua, Augustine Oghenovo - Appointed w.e.f. 9 July, 2009 and Ceased to be a Director w.e.f. 14 August, 2009

Udofot, Cosmas Paul

COMPANY

SECRETARY: Odikanekwu, Emily Ifeyinwa (Mrs.) REGISTERED Stallion Plaza, OFFICE: 36, Marina, Lagos JOINT Akintola Williams Deloitte, AUDITORS: [Chartered Accountants], 235,Ikorodu Road, Ilupeju, Lagos. Baker Tilly Nigeria, [Chartered Accountants], 376,Ikorodu Road, Maryland, Lagos. REGISTRAR AND Union Registrars Limited, TRANSFER 2, Burma Road, OFFICE: Apapa.

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UNION BANK OF NIGERIA PLC RESULTS AT A GLANCE

AS AT 31 MARCH, 2009 The Group The Bank 2009 2008 2009 2008

Major profit and loss account items: Nm Nm Nm Nm Gross earnings 147,319 112,988 130,187 92,935 Interest paid 41,733 26,973 37,565 18,420

Net interest revenue 71,073 55,059 66,806 48,304 Provision for doubtful accounts 83,283 5,800 83,418 5,603 Overhead expenses including depreciation 65,842 47,203 57,697 39,166 (Loss)/profit before tax and exceptional item (43,539) 33,012 (48,493) 29,746 (Loss)/profit before tax (67,006) 33,012 (66,918) 29,746

(Loss)/profit after tax but before minority interest (72,854) 26,855 (71,052) 24,737 Minority Interest 333 1,116 - - (Loss)/profit after tax and minority interest (72,521) 25,739 (71,052) 24,737 Dividend declared during the year 11,580 9,652 11,580 9,652 ---------------------------------------------------------------------------------------------------------------------------------

Major balance sheet items:

Loans and advances 421,473 258,959 401,546 244,845 Deposits, current and other accounts 675,112 682,309 758,390 649,334 Called-up share capital 6,755 5,790 6,755 5,790 Shareholders fund 58,826 119,160 53,145 111,271 Total assets 1,238,797 1,128,890 1,106,779 907,074 Total assets and contingencies 1,329,920 1,215,745 1,197,902 993,929 ----------------------------------------------------------------------------------------------------------------------------------

Per 50 kobo share data (basic):

(Loss)/earnings (N5.37) N2.32 (N5.26) N2.14 Net assets N4.35 N10.29 N3.93 N9.61 Total assets N91.69 N97.49 N81.92 N78.33 Stock Exchange quotation as at 31 March - - N10.00 N43.50

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Number of employees 7,078 7,746 5,881 7,276 Number of branches 489 467 427 405 Number of shares in issue 13,510 11,580 13,510 11,580

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REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 MARCH, 2009

The Directors have pleasure in submitting their report together with the group financial statements for the year ended 31 March, 2009. 1. RESULT N'm The group loss for the year after providing for taxation was (72,854) Less: Minority interest 333 ---------- Loss after taxation and minority interest transferred to general reserve (72,521) ======= 2. LEGAL FORM The Bank commenced operations in Nigeria in 1917 as a branch of Barclays Bank Dominion

Colonial Overseas (DCO). It was incorporated as a private company limited by shares in Nigeria in 1969 and it became a public company limited by shares in 1970. The Bank's shares are quoted on the Nigerian Stock Exchange.

3. PRINCIPAL ACTIVITIES The company is engaged in the business of commercial banking.

4. DIRECTORS .1 The names of the present directors are stated on page 2. .2 The following directors ceased/retired as members of the Board on the dates indicated below: - Walter Chukwukaodinaka Orji Mbah Retired 16 March, 2009

Kenneth Sola Adeyemi Retired 13 August, 2009

Batholomew Bassey Ebong Ceased 14 August, 2009

Ado Abdullahi Ceased 14 August, 2009

Samuel Idowu Ayininuola Ceased 14 August, 2009

Ebenezer Uzoma Emeruem Ceased 14 August, 2009

Anthony Ebhodaghe Esangbedo Ceased 14 August, 2009

Austen Iheanyi Njideofo Obigwe Ceased 14 August, 2009

Augustine Oghenovo Tadaferua Ceased 14 August, 2009

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REPORT OF THE DIRECTORS (contd) .3 Since the last Annual General Meeting, the following Directors were appointed to the Board and being

eligible, offer themselves for election: - Olufunke Iyabo Osibodu (Mrs) 14 August, 2009 Adekunle Mickey Adeosun 3 September, 2009 Philip Ikeazor 3 September, 2009 Ibrahim Abubakar Kwargana 3 September, 2009 Folashodun Adebisi Shonubi 3 September, 2009 .4 In accordance with Section 90 of the Bank's Articles of Association, the underlisted Directors retire

by rotation and, being eligible, offer themselves for re-election: - Ahmed Abubakar Ibrahim Abdullahi Gobir Mansur Ahmed Olusegun Olusanya Cosmas Paul Udofot 5. DIRECTORS' INTERESTS .1 The direct interests of the Directors in the issued share capital of the Bank as recorded in the register of

directors' shareholdings are as follows: -----Ordinary shares of 50k each at-----

8 October, 31 March, 31 March,

2009 2009 2008

M. G. Yakubu 287,877 287,877 246,752 O. I. Osibodu (Mrs.) 201,841 N/A N/A B. B. Ebong N/A 12,822,042 10,990,322 Ado Abdullahi N/A 3,223,580 2,004,667 A. Abubakar - - - A. M. Adeosun - N/A N/A K. S. Adeyemi N/A 1,717,846 1,306,327 M. Ahmed 28,000 28,000 26,776 O. Akande Chief (Mrs.) 75,006 27,137 - S. I. Ayininuola N/A 14,331,026 12,283,737 E. U. Emeruem N/A 1,296,843 1,111,580 A. E. Esangbedo N/A 1,953,066 1,674,057 I. A. Gobir 372,991 372,991 725,054 P. Ikeazor - N/A N/A I. A Kwargana - N/A N/A A. I. N. Obigwe N/A 34,454,746 29,532,640 F. B. O. Odimegwu 4,632 1,404,237 1,203,632 O. Okoloko - - - O. Olusanya 26,486,833 26,486,833 22,703,000 F. A. Shonubi 14,686 N/A - A. O. Tadaferua N/A N/A N/A C. P. Udofot 181,918 181,918 155,930 W. C. O. Mbah N/A 3,090,705 2,649,176

======= ======= =======

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.2 The directors have not notified the Bank of any indirect interests they hold in the shares of the Bank.

.3 None of the directors has notified the Bank for the purpose of Section 277 of the Companies and

Allied Matters Act, Cap C20 LFN 2004 of any disclosable interest in contracts with which the Bank was involved during the year under review.

6. RECORD OF DIRECTORS ATTENDANCE

In accordance with Section 258 (2) of the Companies and Allied Matters Act Cap C20 LFN 2004, the Record of Directors attendance at Directors meetings during the financial year under review is available for inspection at the Annual General Meeting.

7. DIRECTORS' RESPONSIBILITIES The directors are responsible for the preparation of financial statements which give a true and fair

view of the state of affairs of the group at the end of each financial year, and of the profit or loss for that year and comply with the Banks and Other Financial Institutions Act, Cap B3 LFN 2004 and the Companies and Allied Matters Act Cap C20 LFN 2004. In doing so, they ensure that:

- internal control procedures are instituted which, as far as is reasonably possible,

safeguard the assets, prevent and detect fraud and other irregularities; - proper accounting records are maintained; - applicable accounting standards are followed; - suitable accounting policies are adopted and consistently applied; - judgements and estimates made are reasonable and prudent; and - the financial statements are prepared on the going concern basis, unless it is inappropriate to presume

that the Bank will continue in business. 8. SHAREHOLDING STRUCTURE

As shown in the analysis of shareholding on page 9 of the financial statements, the shares of the Bank are held by a diverse number of shareholders. The interests of shareholders are protected by giving the prescribed notices for statutory meetings, affording shareholders opportunity to provide guidance and criticisms at the various shareholders fora and general meetings. Furthermore, three representatives of shareholders are voted into the Banks Audit Committee (one of whom is the Committee chairman) and giving the internal and external auditors unfettered access to the committee.

9. CORPORATE GOVERNANCE

Following the Central Bank of Nigeria Order of 14 August 2009 the membership of the Board of the bank reduced from seventeen (17) Directors to fourteen (14) comprising five (5) Executive Directors (including the Group Managing Director/Chief Executive) and nine (9) Non-Executive Directors, including the Chairman of Board. It should be noted that five of the Board members are independent Directors.

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REPORT OF THE DIRECTORS (contd)

To qualify as a member of our Board, there are two critical qualities we look for, including competence, character/integrity. For the first parameter, a suitable Director should be well-qualified professionally, be of abundant skills and knowledge, and be very experienced. As for the second criterion, a Director must not be of doubtful character, should not have any physical or mental impairment and must have a high moral standard and sense of what is right and wrong.

FUNCTIONS OF THE BOARD OF DIRECTORS

- Setting the banks Vision, Mission, Objectives and Strategies and upholding and reinforcing its

core values - Ensuring that the environment is enabling to achieve the banks goals through appropriate

sourcing of materials/capital inputs as well as enhancing, building and appointing high-level Managers to manage the strategic desks in the bank.

- Considering and approving the banks annual budgets.

- Periodic review of the banks organogram whereby various Divisions and Departments and Units

are organized in a mutually collaborative and synergistic manner to ensure maximum efficiency and effectiveness.

- Delegating and delineating appropriate responsibilities and authorities to Executive Management

and GMD/CE and from them down the banks hierarchy.

- Formulating policies regarding external relations such as public image and social responsibility as well as policies relating to institutional capacities such as take-overs, mergers, acquisitions, floatation of stocks, et cetera.

- Monitoring and evaluation of banks performance

- Setting the general guidelines for personnel and employment policies to ensure that staff with requisite background are attracted and retained. Similarly policies regarding management development and employee rewards/sanctions are considered and instituted.

The Board of Directors meets, at least, six times in a year.

THE BOARD AND DECISION-MAKING

The responsibility of the Board is in three broad categories. The first is the appointment and supervision of the executive management team. It also spells out the policy framework that guides management in running the affairs of the company day-to-day and ensures that the company complies with policies, rules and regulations as well as reporting/accounting and ethical standards. Furthermore, the Board rewards management based on performance against set targets. The division of labour is, therefore, such that Executive Management is responsible for operational and tactical decisions.

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Both the Board and Management rely on the Committee structure for the effective discharge of their responsibilities. These committees are shown below:

Audit Committee

This is a Committee of the Annual General Meeting of the bank. It has a membership of six (6), three of which are elected on the floor of the Annual General Meeting every year. The election is always supervised by the Joint External Auditors of the bank. The membership comprises:-

The Chairman: A knowledgeable Shareholder

Members: Two (2) other Shareholders

Three Non-Executive Directors The functions of the Audit Committee include, inter alia, the following:

- Ascertain whether the accounting and financial reporting of the bank is in accordance with legal/statutory requirements and professional/ethical practices.

- Review the internal control structure and the effectiveness of the banks system of accounting.

- Make recommendations to the Board with respect to the appointment, removal and remuneration of the external auditors of the bank.

- Monitor compliance with the banks code of conduct.

- Authorise the Inspection Department to carry out investigations into any activities of the bank that are of interest to the Committee.

- Assess the quality of the financial statements issued by the bank, prior to their approval by the

Board and Annual General Meeting.

- Review external audit reports, management letters and debriefing memoranda to ensure prompt action by management.

- Review reports on major defalcations, frauds and thefts within the bank.

Board Establishment & Services Committee

This is a standing Committee and it is headed by a Non-Executive Director. The membership is as follows: -

i. Engr. Mansur, Ahmed - Chairman ii. Group Managing Director/Chief Executive iii. Executive Director (Commercial & Retail Banking (South) and Consumer Banking) iv. Executive Director (Commercial & Retail banking (North) and Public Sector) v. Executive Director (Operations, Technology & Services)

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vi. Executive Director (Corporate, International, Investment Banking & Treasury) vii. Mr. Olusegun, Olusanya viii. Dr. F B O Odimegwu ix. Mr. Onajite, Okoloko x. Mr. Cosmas Paul, Udofot

Functions

The functions of this committee include, amongst others, the following: -

- To consider and approve human resource strategic issues - To review and approve promotions to Senior and General Management positions. - To consider, review and approve salary and remuneration packages for the generality of staff.

- To consider, review and approve recommendations relating to safety at work and conduciveness

of the work environment.

- To approve and determine the quantity and quality of human resources consistent with our level of operations

The Committee holds a minimum of six meetings each year.

Board Finance & General Purposes Committee

This Committee consists of ten (10) members and is chaired by a Non-Execution Director. The membership is composed as follows: -

i. Alhaji (Dr) Ahmadu, Abubakar - Chairman ii. Group Managing Director/Chief Executive iii. Executive Director (Commercial & Retail Banking (South) & Consumer Banking) iv. Executive Director (Commercial & Retail Banking (North) & Public Sector) v. Executive Director (Operations, Technology & Services) vi. Executive Director (Corporate, International, Investment Banking & Treasury) vii. Dr. Festus Boniface Oha, Odimegwu viii. Mr. Onajite, Okoloko ix. Engr. Ibrahim Abdullahi, Gobir x. Chief (Dr.) Mrs. Onikepo, Akande

Functions

The Functions of the Board Finance and General Purposes Committee are as follows:-

- Appraising matters that impinge significantly (i.e. above EXCOs powers) on the banks financial resources.

- Considering and recommending the banks Capital and Annual Budget for Board approval. - Any other special functions as may be assigned from time to time by the Board.

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The Committee meets, at least, six times a year.

Board Credit Committee

This Board Credit Committee is chaired by a Non-Executive Director and consists of eleven (11) members. The membership of the Committee is as follows: -

i. Engr. Ibrahim Abdullahi, Gobir - Chairman ii. Group Managing Director/Chief Executive iii. Executive Director (Comercial & Retail Banking (South) & Consumer Banking) iv. Executive Director (Commercial & Retail Banking (North) & Consumer Banking) v. Executive Director (Operations, Technology & Services) vi. Executive Director (Corporate, International, Investment Banking & Treasury) vii. Dr. Cosmas Paul, Udofot viii. Dr. Festus Boniface Oha, Odimegwu ix. Chief (Dr.) Mrs Onikepo, Akande x. Dr. Mansur, Ahmed xi. Alhaji (Dr) Ahmadu Abubakar

Functions

The functions of this Committee include, inter alia, the following:

- To approve secured loans within its limit

- To present summary of approvals to the Board

- To consider and recommend to the Board any banking facilities above its discretion as well as those approved in anticipation of Board on account of exigency of operations.

Like the other Board Committees, this Committee meets, at least, six times each year.

Board Risk Management Committee

The Committee comprises ten (10) members with a Non-Executive Director as Chairman. The

membership is as follows: - i. Mr. Olusegun, Olusanya - Chairman

ii. Executive Director (Commercial & Retail Banking (South) & Consumer Banking) iii. Executive Director (Commercial & Retail Banking (North) & Public Sector iv. Executive Director (Operations, Technology & Services)

v. Executive Director (Corporate, International, Investment Banking & Treasury) vi. Dr. Festus Boniface Oha, Odimegwu vii. Mr. Onajite, Okoloko viii. Engr. Mansur, Ahmed ix. Alhaji (Dr) Ahmadu, Abubakar x. Engr. (Dr.) Ibrahim Abdullahi, Gobir

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Strategic Functions

- Oversight on banks Risk Management Framework - Oversight on Organisational and Reputational Risks - Oversight on Statutory/Regulatory Risks

Specific Functions

- Oversight on Credit Risks - Oversight on Operational Risks - Oversight on Market Risks - Oversight on Liquidity Risks

The Committee holds a minimum of six meetings a year.

MANAGEMENT COMMITTEES

Executive Committee - EXCO

This is a five-member Committee chaired by the Group Managing Director/Chief Executive. The structure of the Committee is as follows:

i. Group Managing Director/Chief Executive - Chairman ii. Executive Director (Commercial & Retail Banking (North) & Consumer Banking) iii. Executive Director (Commercial & Retail Banking (South) & Consumer Banking) iv. Executive Director (Operations, Technology & Services) v. Executive Director (Corporate, International, Investment Banking & Treasury)

Functions:

- Translating the Boards Vision, Mission, Objectives and Strategies into tactical and operational

plans and setting goals and targets of achievement - Monitoring performance via periodic appraisal of performance statements and taking prompt

remedial steps to check adverse variances.

- Upholding and reinforcing the banks core values through Executive action such that the Executives are the embodiments of such values

- Day-to-day administration of the bank

- Piloting and guiding the implementation of decisions

- Rewarding performance and sanctioning under-performance and/or staff misdemeanor.

- Ensuring an enabling environment by enforcing discipline and industrial harmony.

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- To handle all personnel matters falling within its discretion with recommendation to the Board for those falling outside it for such matters ranging from recruitment, training, deployments, promotions, emoluments, etc, to terminations/dismissals

- To ensure that the bank meets its social responsibilities and maintains a good image before its

various publics. The Committee meets once every week.

General Management Committee (GEMCO)

The Committee is composed of all staff in the General Management cadre. The actual composition is dynamic and depending on the operational structures and proposition of the bank at any given time. The membership is as follows: -

- Group Managing Director/Chief Executive - Chairman - All Executive Directors - All Deputy General Managers - All Assistant General Managers - Heads of Departments - Zonal Coordinators - Managers of Business Development Centres - Corporate Affairs Manager - Security Manager

Functions

- To review performance reports from Branch, Zonal Offices and Head Office Departments and

identify strategies for meeting agreed targets.

- To deliberate and resolve outstanding and/or peculiar problems of any Business Development Centres and Zone

- To update Managers and other Executives with latest developments in the banks operations

and/or new policy thrusts from the Central Bank of Nigeria. The Committee meetings are held quarterly or as may be directed.

Asset and Liability Committee

The Asset/Liability Committee is an eleven-member committee with the Group Managing Director/Chief Executive as the Chairman. The composition is as follows:

Group Managing Director/Chief Executive - Chairman

- All Executive Directors - Head, Treasury - Head, Finance & Planning - Head, Risk Management - Head, Marketing.

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Strategic Functions

- Management of Assets and Liabilities

Specific Functions:

- Balance Sheet Management - Spread Management - Interest Rate Management - Cash Flow Management

Credit Committee (CRECO)

This is a five-man Committee comprising the following: i. Group Managing Director/Chief Executive - Chairman ii. Executive Director (Commercial & Retail Banking (North) & Consumer Banking) iii. Executive Director (Commercial & Retail Banking (South) & Public Sector iv. Executive Director (Operations, Technology & Services) v. Executive Director (Corporate, International, Investment Banking & Treasury)

In attendance at CRECO meetings are the Deputy General Managers in charge of:

a. Inspection b. Legal Services c. Credit Policy and Control d. Special Asset e. Commercial Banking (South) f. Commercial Banking (North) g. Debt Recovery h. Treasury i. Corporate Banking (General) j. Corporate Banking (Energy) k. Foreign Operations l. Special Products

Functions

The specific functions of this Committee include, among others, the following:

- To formulate and review policies regarding loans and advances - To consider and recommend all credit matters above its limit to the Board Credit Committee or

the Board for approval - To review the quality and structure of Credit Portfolios

The Credit Committee meets weekly.

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Computer Policy Advisory Committee

This Committee deals with policy matters on IT-related issues. The composition comprises as follows: -

- Group Managing Director/Chief Executive - Chairman - Executive Director (Commercial & Retail Banking (South) & Consumer Banking) - Executive Director (Commercial & Retail Banking (North) & Public Sector) - Executive Director (Operations, Technology & Services) - Executive Director (Corporate, International, Investment Banking & Treasury) - Chief Inspector - Head, Information Technology Department - Head, Finance & Planning Department - Head, Internal Control Department - Assistant General Managing, Group Corporate Planning Department

Specific Functions

- To fashion out and review regularly, an appropriate IT Strategy for the bank

- To ensure that the bank is well positioned for the future information super highway

- To ensure high computer literacy among Union Bank Staff

- To play the role of policy advocacy in matters relating to computerization and information technology

- To advise the bank on IT trends and expenditure

10. SUBSTANTIAL INTEREST IN SHARES Nigerian citizens and associations held all the ordinary shares of the Bank as at 31 March, 2009. No individual shareholder held more than 10% of the called up share capital of the Bank as at 31

March, 2009 and 8 October, 2009.

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11. ANALYSIS OF SHAREHOLDINGS AS AT 31 March, 2009

Number of Percentage of

Range shareholders Shares held shareholding

%

1 - 1,000 75,443 34,109,884 0.25 1,001 - 5,000 244,631 556,014,310 4.12 5,001 - 10,000 65,485 468,252,842 3.46 10,001 - 50,000 86,437 1,818,130,057 13.46 50,001 - 100,000 11,793 821,023,608 6.08 100,001 - 500,000 8,737 1,657,744,206 12.27 500,001 - 1,000,000 849 592,006,372 4.38 1,000,001 - 5,000,000 634 1,254,781,017 9.29 5,000,001 - 10,000,000 69 487,623,940 3.61 10,000,001 and above 110 5,820,313,764 43.08 ---------- ----------------- ------- 494,188 13,510,000,000 100.00 ====== ========== ===== 12. ACQUISITION OF OWN SHARES The Bank did not purchase any of its own shares during the year. 13. FIXED ASSETS

Movements in fixed assets during the year are shown in Note 14 on pages 37 to 39. In the opinion of the directors, the market value of the Bank's properties is not less than the value shown in the financial statements.

14. DONATIONS

Donations made during the year amounted to N93,384,842(2008 N51,846,842) details of which are stated below. No donation was made to any political organisation.

N Donations to Universities, Polytechnics and Colleges of Education 16,530,500 Sponsorship of NUGA Games 40,000,000 Joint Admissions and Matriculation Board 2,000,000 Donation to Rivers State Summit on Revenue and Tax 10,000,000 Chartered Institute of Bankers of Nigeria (CIBN) 17,159,458 Nigerian Economic Society 1,000,000 Chartered Institute of Stockbrokers 1,000,000 Education Summit Senate Committee 5,694,884 --------------- 93,384,842 =========

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15 EMPLOYMENT AND EMPLOYEES

.1 Employment of disabled persons It is the policy of the Bank that there should be no discrimination in considering applications for

employment including those from disabled persons. All employees whether disabled or not are given equal opportunities to develop. As at 31 March, 2009 there were 6 (2008- 6) disabled

persons in the employment of the Bank. .2 Health, safety at work and welfare of employees

Health and safety regulations are in force within the Bank's premises and employees are aware of the existing regulations. The group provides subsidies to all levels of employees for medical, transportation, housing, etc.

.3 Employees' involvement and training

The Bank is committed to keeping employees fully informed as much as possible regarding their performance and progress and seeking their views wherever practicable on matters, which particularly affect them as employees.

Management, professional and technical expertise are the group's major assets and investment in

their further development continues. A range of training provided to its employees, whose opportunities for career development

within the Bank have thus been enhanced, has extended the groups expanding skills base. Training is carried out at various levels through in-house and external courses.

Incentive schemes designed to meet the circumstances of each individual are implemented

wherever appropriate and some of these schemes include bonuses, children education grants, scholarships, etc.

16. POST BALANCE SHEET EVENTS Subsequent to the financial year end, the Central Bank of Nigeria and the Nigerian Deposit

Insurance Corporation carried out joint a special examination of the Bank and its report identified the following deficiencies in the Banks operations: -

i) Capital adequacy ratio was negative; ii) Instances of poor corporate governance were identified; and iii) Liquidity challenges resulting to recourse to the Expanded Discount Window.

Consequently, on 14 August, 2009, the Central Bank of Nigeria intervened in the management of the Bank amongst others, by removing the executive management and appointing new

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persons to replace them. It also injected a sum of N120 billion into the Bank in the form of a 7 year 11% CBN Note to support its operations and improve the liquidity. Currently, the new management is putting in place a rigorous risk management system to address various aspects of risks identified. Debt recovery drive have also been stepped up and some recoveries made whilst negotiations are on to reach agreement on the recovery of others.

17. AUDIT COMMITTEE Pursuant to Section 359(3) of the Companies and Allied Matters Act CAP C20 LFN 2004, the

Bank has an Audit Committee comprising three shareholders and three directors as follows:

Chief I. P. Nwokocha;

Dr. Marcel Ojinka;

Alhaji Musa Baba Bichi;

Mr. O. Olusanya;

Dr. C. P. Udofot; and

Chief (Mrs.) Onikepo Akande The functions of the Audit Committee are as laid down in Section 357(6) of the Companies and Allied Matters Act Cap C20 LFN 2004.

18. AUDITORS

In accordance with Section 357(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004, the joint auditors Messrs. Akintola Williams Deloitte and Baker Tilly Nigeria (formerly Oyelami Soetan Adeleke) have indicated their willingness to continue in office. A resolution will be proposed authorizing the directors to determine their remuneration.

BY ORDER OF THE BOARD

Emily I. Odikanekwu (Mrs.) Company Secretary

LAGOS, NIGERIA 8 October, 2009

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REPORT OF THE INDEPENDENT JOINT AUDITORS TO THE MEMBERS OF


Report on the Financial Statements

We have audited the accompanying financial statements of Union Bank of Nigeria Plc, as at 31 March 2009, set out on pages 28 to 68 which have been prepared on the basis of the significant accounting policies on pages 21 to 27 and other explanatory notes on pages 31 to 64.

Directors Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act CAP B3 LFN 2004. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial 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.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the Group and the Bank have kept proper accounting records and the financial statements are in agreement with the records in all material respects and give in the prescribed manner, information required by the Companies and Allied Matters Act CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act CAP B3 LFN 2004. The financial statements give a true and fair view of the financial position of Union Bank of Nigeria Plc as at 31 March 2009, and of its financial performance and its cash flows for the year then ended in accordance with the Statements of Accounting Standards issued by the Nigerian Accounting Standards Board.

Emphasis of matter

Without qualifying our opinion, we draw attention to note 49 in the financial statements, where subsequent events after the Balance sheet date have resulted in the intervention of the Central Bank of Nigeria in the Management of the Bank to address reported capital inadequacy, liquidity problems and corporate governance issues; and efforts put in place by the newly appointed management of the Bank with the active support of the Central Bank of Nigeria, to redress the noted deficiencies and ensure that the Bank continues as a going concern.

Report on Compliance with Banking Regulations

We confirm that our examination of loans and advances was carried out in accordance with the prudential Guidelines for licensed banks issued by the Central Bank of Nigeria. Related party transactions and balances are disclosed in Notes 10.4 and 54 to the financial statements in accordance with Central Bank of Nigeria Circular BSD/1/2004

Contraventions

The Bank contravened certain provisions of the Banks and Other Financial Institutions Act, Cap B3 LFN 2004. The particulars thereof and the penalties paid thereon are set out in note 51.

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

LAGOS, NIGERIA

8 October, 2009

20


REPORT OF THE AUDIT COMMITTEE

TO THE MEMBERS OF UNION BANK OF NIGERIA PLC In accordance with the provisions of section 359 (2) of the Companies and Allied Matters Act, CAP C20 LFN 2004, we confirm that the accounting and the reporting policies of the company are in accordance with legal requirements and agreed ethical practice. In our opinion, the scope and planning of the audit for the twelve months ended 31 March, 2009 were adequate and we have received the auditors findings on Management matters and are satisfied with the departmental responses thereon. We also state that the internal control was being constantly and effectively monitored. As required by the Central Bank of Nigeria Circular BSD/1/2004, we reviewed the insider related credits of the Bank and found them to be as analyzed in the financial statements. Dated:

Chief I P Nwokocha

Chairman, Audit Committee

Other members of the Committee

Dr Marcel Ojinka Alhaji Musa Baba Bichi Olusegun Olusanya Dr C P Udofot Onikepo Akande Chief (Mrs)

21


STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

FOR THE YEAR ENDED 31 MARCH 2009

The significant accounting policies adopted by the Group in the previous and current year in the preparation of financial statements are as follows:-

1. Accounting convention

The financial statements are prepared under the historical cost convention modified to include

revaluation of certain real estate properties.

2. Basis of consolidation

The group financial statements include the financial statements of the Bank and its subsidiaries:

Union Bank UK Plc, Union Homes Savings and Loans Plc, Union Trustees Limited, UBN Property

Company Limited, Union Registrars Limited, Union Capital Market Limited and Union Assurance

Company Limited.

All intercompany transactions are eliminated on consolidation and all forms of combinations are

accounted for using the acquisition method of accounting. All the companies make-up their financial

statements to the year ended 31 March except Union Assurance Company Limited which makes up

its financial statements to 31 December. This is because of the regulation governing the Insurance

Industry, which requires that they make-up their financial statements up to 31 December.

There were no major transactions in the company between January and March, 2009 that had a

material effect on the Groups financial position as at 31 March, 2009.

3. Cash and short-term funds

Cash and short-term funds comprise cash balances on hand, balances with the Central Bank of

Nigeria and other banks and financial institutions (local and foreign). The balance is stated less

provision for doubtful balances.

4. Bills discounted

Holdings in bills discounted are stated at face value as it is the Banks policy to hold these to

maturity. Diminution in value of investments is stated as a note in the financial statements.

5. Trading securities

Trading securities comprise of government bonds and other securities.

i) Trading securities held for fixed redemption date are stated at cost.

ii) Dealing securities are stated at the lower of cost and market value.

22

iii) Premiums and discounts arising on purchase are amortized on the yield to redemption.

6. Investments

Investments are classified as short or long term.

i) Short term investments

Debt and equity securities held for a period not exceeding one year are classified as short term

investments.

ii) Long term investments

Investments intended to be held for over a period exceeding one year, which are either held to

maturity or available for sale in response to needs for liquidity or changes in interest rates,

exchange rates or equity prices are classified as long term investments.

iii) Valuation

a) Quoted investments other than dated securities are stated at the lower of cost and market value

except Union Assurance Company Limited, which was stated at market value in line with the

National Insurance Commission directive.

b) Unquoted investments are stated at cost less provision for doubtful investments.

c) Dated securities are stated at cost.

d) Investments in subsidiaries are stated at cost.

e) The Banks equity investment in Union Bank UK Plc is stated at cost.

7. Managed funds

Managed funds represent balance held under fund management arrangement with third parties.

8. Credit portfolio classification

.1 Credit facilities are classified as either performing or non-performing and are stated after

deduction of appropriate provision.

.2 Provision is made for each account that is not performing in accordance with the terms of the

related facility as follows:

Interest and/or principal outstanding for over: Classification Provision

90 days but less than 180 days Sub-standard 10%

180 days but less than 360 days Doubtful 50%

360 days and above Loss 100%

.3 In accordance with the provisions of the Central Bank of Nigerias Prudential Guidelines,

specific provisions are made on all non performing accounts and a general provision of at

least 1% is made on risk assets not specifically provided for.

23

9. Income Recognition

Interest income is recognized on an accrual basis. Interest accruing on non-performing accounts is

suspended and recognized on cash basis only.

Investment income is recognized on accrual basis and credited to the profit and loss account.

Dividend income is recognized when the right to receive income is established.

Net premium represents the total amount invoiced to policy holders less reinsurances and is recognized as income from the date of attachment of risks. Full credit is taken for premium receivable upon the issuance of the related policies.

10. Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the value of

the identifiable assets and liabilities of a combining entity at the date of acquisition.

Goodwill is retained in the books and tested for impairment in accordance with the Statement of

Accounting Standard (SAS) 26 on Business Combination.

11. Equipment on lease

Equipment on lease are accounted for as either Finance or Operating lease.

Operating leases are recognized as part of fixed assets and income arising therefrom is accrued

evenly to the profit and loss account over the period. Advances to customers under finance lease are

stated net of principal repayments and income is recognized in a manner which provides a constant

yield on the outstanding principal over the lease term.

In accordance with the provisions of the Prudential Guidelines on credit portfolio classification for

licensed banks, specific provision is made for advances on finance leases that are non-performing

while a general provision of at least 1% is made on performing finance lease.

12. Fixed assets

Fixed assets are stated at cost or valuation less accumulated depreciation. Gains or losses on disposal

of fixed assets are included in the profit and account.

24

13. Depreciation

Depreciation charged on fixed assets is calculated on the straight-line basis at the following annual

rates to write off the cost or valuation over their estimated useful lives:

Freehold buildings - 2%

Leasehold buildings:

50years and over - 2% Below 50 years - Over the term of the lease Motor vehicles - 25% Computer equipment - 25% Other fixed assets - 20% Operating lease - Over the life of the lease

14. Provisions

Provision is recognized when the company has a present obligation whether legal or constructive as

a result of a past event for which it is probable that an outflow of resources embodying economic

benefits will be required to settle the obligation in accordance with the Statement of Accounting

Standard (SAS) 23 on Provisions, Contingent Liabilities and Contingent Assets.

15. Dividend

Dividend distributions to shareholders are accounted for on the date of declaration, as they do not

meet the criteria of present obligation in accordance with Statement of Accounting Standard (SAS)

23. Any proposed dividend is subject to withholding tax at the appropriate tax rate.

16. Foreign currencies

.1 Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling at the

dates of the transactions.

.2 Foreign currency balances are converted to the Naira at the rates of exchange ruling at the balance sheet date, and the difference arising therefrom is dealt with in the profit and loss account.

.3 Overseas subsidiary/branches balances are translated to the Naira at the rates of exchange ruling

at the balance sheet date and any exchange difference arising on the head office investment in the overseas subsidiary/branches is dealt with in the exchange difference reserve account.

.4 Any gain on conversion of long-term foreign currency denominated monetary asset is taken to profit and loss on a systematic basis over the remaining life of the asset.

25

17. Taxation

i) Income tax

Income tax is the expected tax payable on the taxable profit for the year. Income tax is provided

on taxable profit at the current statutory tax rate.

ii) Deferred taxation

Deferred taxation, which arises from timing differences in the recognition of items for

accounting and tax purposes, is calculated using the liability method. Deferred income tax assets

and liabilities are measured at the tax rates that are expected to apply to the year when the asset

is realized or the liability settled, based on the tax rates and tax laws that have been enacted at the

balance sheet date.

18. Retirement benefits

Arrangements for retirement benefits for members of staff are based on the provisions of the Pension

Reforms Act 2004 which is contributory. The matching contributions of 7.5% each from both

employees and the Bank are based on basic salaries, lunch subsidy, housing and transport

allowances. The banks contributions are charged to the profit and loss account.

19. Off balance sheet commitments

Transactions that are not currently recognized as assets or liabilities in the balance sheet but which

nonetheless give rise to credit risks, contingencies and commitments are reported off balance sheet.

Such transactions include letters of credit, bonds, guarantees, indemnities, acceptances, trade related

contingencies such as documentary credits, etc.

Outstanding and unexpired commitments at year end in respect of these transactions are shown by

way of note to the financial statements. The Banks recourse against the customer in the event of a

call on any of these commitments is recorded as an offsetting asset of the same amount. Full

provision is made for any loss that may arise from off balance sheet transactions in accordance with

the Prudential Guidelines for licensed banks.

Fees and commissions earned on such off Balance Sheet transactions are accrued for and included in

other income in the profit and loss account.

Insiders related off balance sheet engagements are disclosed in line with Central Bank of Nigeria

guidelines.

20. Earnings per share

The Group presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated

by dividing the profit and loss attributable to ordinary shareholders of the Bank by the weighted

average number of shares outstanding during the year.

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21. Investment properties

Investment properties (including associated borrowing costs) are treated as long-term investments.

They are carried at market values which are determined every five years by external independent

valuers. Increases in their carrying amount are credited to revaluation reserve in shareholders

equity. Decreases that offset previous increases of the assets are charged against revaluation reserve

while, all other decreases are charged to the income statement. Revaluation surplus on disposed

assets are written back to income in line with the provision of SAS13.

22. Borrowing Costs

Borrowing costs associated with loans utilized on construction and/or acquisitions of properties for

re-sale are capitalized. They include interest charges, establishment fees and other incidental fees

directly related to the creation and arrangement of the facilities.

23. Technical reserve

These are computed in accordance with the provisions of sections 20, 21 and 22 of the Insurance Act

2003 as follows:

a) General insurance business

i. Reserves for unexpired risks

Reserve for unexpired risks are those proportions of the premium written in a year, less reinsurance, that relate to the period of risks from period of cover to the subsequent date of expiry of the policies and have been computed in accordance with Section 20(1) of the Insurance Act Cap 117 LFN 2004 which stipulates that the provision for unexpired risks shall be calculated on a time apportionment basis of the risks accepted in the year.

ii. Reserves for outstanding claims

This is maintained at the total amount of outstanding claims and 10% of claims deemed to have been incurred but not reported (IBNR) at the balance sheet date, except for oil and gas where the reserves is based on loss data of claims.

iii. Contingency reserve

This represent the higher of 3% of total premium and 20% of the net profit after taxation until the reserve reaches the greater of minimum paid up capital or 50% of net premium.

b) Life business

i. Life Insurance fund

27

This is made up of net liabilities on policies in force as computed by the actuaries at the time

of the actuaries valuation and an additional 25% of net premium for every year between

valuation dates.

ii. Contingency reserves

This is credited with the higher of 1% of gross premium and 10% of the net profit after

taxation.

24. Segment reporting

Segment information is presented in respect of the Groups business and geographical segments. The

business segments are determined by management based on the Companys internal reporting

structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those

that can be allocated on a reasonable basis.

A segment is distinguishable component of the Group that is engaged in providing related products

or services (business segment), or in providing products or services within a particular economic

environment (geographical segment), which is subject to risk and rewards that are different from

those of other segments.

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GROUP BALANCE SHEET AS AT 31 MARCH, 2009

The Group The Bank 2009 2008 2009 2008

ASSETS Notes Nm Nm Nm Nm Cash and short term funds 2 71,865 46,956 70,185 42,868 Due from other banks 3 218,826 437,273 163,542 266,379 Bills discounted 4 59,278 94,495 42,982 94,495 Trading securities 6 100,898 82,165 94,931 77,335 Managed funds 7 9,339 4,000 - Long term investments 8 32,687 28,623 19,797 16,291 Investment properties 14,014 12,958 - - Investments in subsidiaries and associated companies 9 84 84 14,297 9,607 Loans and advances 10 421,473 258,959 401,546 244,845 Advances under finance lease 11 5,465 4,143 5,465 3,852 Other assets 12 247,580 129,766 240,766 125,282 Equipment on lease 13 161 - - - Fixed assets 14 57,127 29,468 53,268 26,120 ------------- ----------- ---------- ----------- TOTAL ASSETS 1,238,797 1,128,890 1,106,779 907,074

Financed by: ======== ======= ======= ======

LIABILITIES Deposits, current and other accounts 15 675,112 682,309 758,390 649,334 Due to other banks 16 245,847 196,928 93,213 62,740 Managed funds 7 9,339 4,000 - - Taxation 17 6,527 5,707 4,633 4,372 Deferred tax 18 5,399 4,721 5,005 4,355 Dividend 19 309 309 309 309 Other liabilities 20 228,088 108,567 192,084 74,693 Liabilities for administered funds 21 9 20 - - Insurance funds 22 659 507 - - Life insurance fund 23 738 559 - - ------------ ------------ ------------ ---------- 1,172,027 1,003,627 1,053,634 795,803

CAPITAL AND RESERVES ======= ======= ======= ====== Share capital 24 6,755 5,790 6,755 5,790 Share premium 25 53,023 53,023 53,023 53,023 Bonus issue reserve 26 - 965 - 965 Statutory reserve 27 16,282 16,282 14,385 14,385 Small scale industries reserve 28 6,774 6,774 6,774 6,774 General reserve 29 (52,267) 31,834 (55,686) 26,946 Contingency reserve 30 365 242 - - Exchange difference reserve 31 1,895 1,895 1,895 1,895 ---------- ---------- ---------- - ------------- Core capital 32,827 116,805 27,146 109,778 Fixed assets revaluation surplus 25,999 1,493 25,999 1,493 Equities revaluation reserve 32 - 862 - - ---------- --------- ---------- - ------------ SHAREHOLDERS FUNDS 58,826 119,160 53,145 111,271 Minority interest 33 7,944 6,103 - - ---------- ----------- ------------- ------------ 66,770 125,263 53,145 111,271 ----------- ------------ ------------ ----------- TOTAL LIABILITIES 1,238,797 1,128,890 1,106,779 907,074 ======= ======= ======= ====== CONTINGENT LIABILITIES 34 91,123 86,855 91,123 86,855 ====== ======= ======= ====== Total assets and contingencies 1,329,920 1,215,745 1,197,902 993,929 ======= ======= ======= ====== The financial statements on pages 21 to 68 were approved on 8 October, 2009 by the Board of Directors and signed on its behalf by: --------------------------------------------------) CHAIRMAN ) --------------------------------------------------) GROUP MANAGING DIRECTOR & CHIEF EXECUTIVE ) --------------------------------------------------) EXECUTIVE DIRECTOR

29


GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2009

-----The Group----- ----The Bank---- 2009 2008 2009 2008

Notes Nm Nm Nm Nm Gross earnings 147,319 112,988 130,187 92,935 ====== ======= ====== ====== Interest income 35 115,806 82,032 104,371 66,724 Interest expense 36 (41,733) (26,973) (37,565) (18,420) Net interest income 74,073 55,059 66,806 48,304 Commissions and other income 37 31,513 30,956 25,816 26,211 105,586 86,015 92,622 74,515 Overheads 38 (61,698) (43,011) (54,184) (35,548) Depreciation 39 (4,144) (4,192) (3,513) (3,618) ---------- ---------- ---------- --------- Profit before provision for risk assets 39,744 38,812 34,925 35,349 Provision for doubtful accounts 40 (83,283) (5,800) (83,418) (5,603) ---------- --------- --------- --------- (Loss)/profit before taxation and exceptional item 41 (43,539) 33,012 (48,493) 29,746

Exceptional item

Provision for investment losses through a subsidiary 42 (23,798) - (18,425) - ---------- ---------- ----------- -------- (Loss)/profit before taxation (67,337) 33,012 (66,918) 29,746 Information Technology Development Levy 20.2 - (307) - (297) Current taxation 17 (4,839) (5,109) (3,484) (3,983) Deferred taxation 18 (678) (741) (650) (729) -------- -------- -------- --------- (Loss)/profit after tax (72,854) 26,855 (71,052) 24,737 Minority interest 33 333 (1,116) - - --------- -------- --------- -------- (Loss)profit after tax and minority interest (72,521) 25,739 (71,052) 24,737 ===== ===== ===== =====

APPROPRIATIONS:

Transfer to statutory reserve 27 - 4,109 - 3,710 Transfer to small scale industries reserve 28 - 1,237 - 1,237 Retained (loss)/profit for the year transferred to general reserve 29 (72,521) 20,393 (71,052) 19,790 --------- -------- --------- --------- (72,521) 25,739 (71,052) 24,737 ===== ===== ===== ===== (Loss)/earnings per 50k share - basic 43 (N5.37) N2.22 (N5.26) N2.14 ===== ===== ===== ===== The accounting policies on pages 21 to 27 and notes on pages 31 to 63 form part of these financial statements.

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GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH, 2009

The Group The Bank

Note 2009 2008 2009 2008

CASH FLOWS FROM OPERATING

ACTIVITIES Nm Nm Nm Nm Interests earnings 35 115,806 82,032 104,371 66,724 Commission and other incomes 29,415 30,476 24,141 24,920 Lease income 524 301 494 290 Recoveries on loans previously written off 1,018 179 1,005 179 Interest paid 36 (41,733) (26,973) (37,565) (18,420) Payments to employees and suppliers (61,698) (43,011) (54,184) (35,548) Income tax paid (4,019) (3,378) (3,223) (2,953) --------- ---------- ---------- ------------

Operating profit before changes

in assets/liabilities 39,313 39,626 35,039 35,192

Changes in operating assets/liabilities Loans and advances (213,433) (109,453) (207,239) (105,148) Advances under finance lease (1,531) (3,625) (1,825) (3,331) Other assets (140,957) (105,805) (138,593) (102,311) Trading securities (42,200) (29,985) (36,021) (6,204) Managed funds (5,339) Investment properties (1,056) (12,958) - - Deposits, current and other accounts (7,197) 250,225 109,056 231,928 Other liabilities 123,172 6,780 113,488 (10,004) Insurance funds 152 349 - - Liability for administered funds (11) (10) - - ------------ ---------- ---------- ---------- Net cash (used in)/from operating activities 44 (249,087) 35,144 (126,095) 40,122 ------------ ---------- ---------- ----------

CASH FLOWS FROM

INVESTING ACTIVITIES:

Proceeds from sale of investments - 2,443 - 2,443 Purchase of Investments (4,149) (1,843) (3,565) (841) (Acquisition)/Redemption of dated securities 85 789 59 789 Purchase of fixed/leased assets 14 (7,473) (5,674) (6,155) (4,622) Proceeds from sale of fixed assets 32 224 15 205 Dividend received from subsidiaries - - 164 822 Acquisition of subsidiaries and associated companies - - (4,690) - ---------- ---------- ---------- --------- Net cash used in investing activities (11,505) (4,061) (14,172) (1,204) ---------- ---------- ---------- ---------

CASH FLOWS FROM

FINANCING ACTIVITIES Dividend paid 29 (11,580) (9,652) (11,580) (9,652) New issue - - - - Consolidation expenses - (394) - (394) ---------- ---------- ---------- ---------- Net cash used in financing activities (11,580) (10,046) (11,580) (10,046) ---------- ---------- ---------- ----------

Net (decrease)/increase in cash

and cash equivalents (272,172) 21,037 (151,847) (1,759) Cash and cash equivalents at 1 April 386,938 365,901 345,676 347,435 ---------- - ---------- ----------- ----------- Cash and cash equivalents at 31 March, 5 114,766 386,938 193,829 345,676 ====== ====== ====== ======

31

UNION BANK OF NIGERIA PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 2009 1. THE BANK

The bank commenced operations in Nigeria in 1917 as a branch of Barclays Bank Dominion Colonial Overseas (DCO). It was incorporated as a private company limited by shares in Nigeria in 1969. It became a public limited company in 1970. The banks shares are quoted on the Nigerian Stock Exchange.

2. CASH AND SHORT-TERM FUNDS The Group The Bank

2009 2008 2009 2008

Nm Nm Nm Nm .1 Cash 8,296 7,638 6,632 4,699 --------- ---------- ---------- -------- .2 Balances held with the

Central Bank of Nigeria:

Cash reserve requirement 11,595 11,931 11,579 11,916 Current account 51,974 27,387 51,974 26,253 ---------- ---------- --------- --------- 63,569 39,318 63,553 38,169 --------- --------- --------- --------- 71,865 46,956 70,185 42,868 ====== ====== ====== ====== 3. DUE FROM OTHER BANKS

In Nigeria 7,367 108,298 7,575 80,458 Outside Nigeria (Note 3.1) 208,673 253,682 156,462 175,651 ---------- ---------- ---------- ---------- 216,040 361,980 164,037 256,109 With other financial institutions 12,824 79,829 9,232 14,338 ---------- ---------- ---------- ---------- 228,864 441,809 173,269 270,447 Provision for non-performing interbank placements in Nigeria (Note 3.2) (10,038) (4,536) (9,727) (4,068) ---------- ---------- ---------- ---------- 218,826 437,273 163,542 266,379 ======= ====== ====== ====== .1 Included in balances held outside Nigeria is N59,863,682,041, (2008 - N5,142,446,809) held on behalf of

customers to cover letters of credit transactions.

32

NOTES TO THE FINANCIAL STATEMENTS (contd)

The Group The Bank .2 Provision for non-performing Nm Nm Nm Nm

inter-bank placements in Nigeria

At 1 April 4,536 5,393 4,068 3,699 Per profit and loss account (Note 40) 5,502 (857) 5,659 369 --------- --------- ---------- ------- At 31 March (Note 3) 10,038 4,536 9,727 4,068 ===== ===== ===== ===== 4. BILLS DISCOUNTED Nm Nm Nm Nm

Maturing within 90 days of the date of acquisition: Federal Government of Nigeria Treasury bills - 67,282 - 67,282 Trade bills 12 - 12 - Maturing after 90days of the date of acquisition: Federal Government of Nigeria Treasury bills 59,872 27,819 43,576 27,819 --------- -------- ---------- -------- Market value N59.884 billion (2008- N 95.101bn 59,884 95,101 43,588 95,101 Provision (606) (606) (606) (606) --------- --------- ---------- -------- 59,278 94,495 42,982 94,495 ====== ===== ===== ====== 5. CASH AND CASH EQUIVALENTS

Cash (Note 2.1) 8,296 7,638 6,632 4,699 Balance with Central Bank of Nigeria (Note 2.2) 63,569 39,318 63,553 38,169 Due from other banks (Note 3) 228,864 441,809 173,269 270,447 Bills discounted (Note 4) 59,884 95,101 43,588 95,101 Due to other Banks (Note 16) (245,847) (196,928) (93,213) (62,740) ---------- ---------- ---------- ---------- Per cash flow statement 114,766 386,938 193,829 345,676

Provisions: Interbank placements (Note 3.2) (10,038) (4,536) (9,727) (4,068) Bills discounted (Note 4) (606) (606) (606) (606) 104,122 381,796 183,496 341,002 ====== ====== ====== ====== 6. Trading securities Maturing within 1 year Federal Government Bond 20,000 4,600 20,000 4,600 Maturing between 1 and 5 years Federal Government Bond 29,259 27,679 29,259 27,679 Maturing after 5 years Federal Government Bond 31,700 14,425 31,700 14,425 ---------- --------- --------- - --------- Market value (2009 N80.959billion 80,959 46,704 80,959 46,704 Investment in quoted securities Market value N19.939 billion (2008-N35.461 billion) 43,406 35,461 32,397 30,631 ---------- ---------- ------------ ---------- 124,365 82,165 113,356 77,335 Less provision for diminution (Note 42) (23,467) - (18,425) - ---------- -------- ---------- -------- 100,898 82,165 94,931 77,335 ====== ====== ======= ======

33


The Group The Bank 7. Managed funds 2009 2008 2009 2008

Nm Nm Nm Nm Quoted investments - 141 - - Staff pension funds 74 135 - - Deposit on mixed funds 541 540 - - Bankers acceptance and commercial papers 8,724 3,184 - - --------- -------- -------- ---------- 9,339 4,000 - - ===== ===== ===== ====== 8. LONG TERM INVESTMENTS .1 Quoted debentures, at cost Maturing within 1 year 1st Edo State Govt. Floating rate Redeemable Revenue Bond 2002/2009 (Market value N19,000,000 2008 N19, 000,000) 19 19 19 19

Federal Government Bond 5,274 8,579 - - (Market value 2008 N5,274,000,000 N8, 579,000,000) Lagos State Govt. Floating Rate Debenture

(Market value N4,687,000,000 2008

N1, 440,000,000) 4,687 1,440 4,668 1,440

Cross River State Tourism Development Bond 2004/2009 (Market value N 2008 N59million) - 59 - 59 Maturing after 1 year Neimeth Intl Pharmaceutical Plc 20.5 Convertible stock 11 11 11 11 -------- -------- ------- ------ 9,991 10,108 4,698 1,529 -------- --------- -------- ------- .2 Quoted investments

HFC Bank (Ghana) Limited 402 343 286 286

Oando Petroleum Plc - 26 - - Afprint Nigeria Plc 3 3 3 3 Investment of subsidiaries 1,435 3,528 - - ------- ------- ------- ------- (Market value 2008 N6.863billion) 1,840 3,900 289 289 ------- ------- ------- ------

34


The Group The Bank 2009 2008 2009 2008 Nm Nm Nm Nm

.3 Other investments

Unquoted equities, at cost Banque International Du Benin Cotonou 1,152 1,146 1,152 1,146 African Export -Import Bank 21 21 21 21 Investments of subsidiaries 6,178 274 - - Central Securities Clearing Systems Limited 19 19 19 19 ValuCard Nigeria Plc 126 110 126 110 Nigeria Automated Clearing Systems Limited 42 42 42 42 Inters Switch Nigeria Limited 42 42 42 42 Nigeria Superswitch Corporation 10 10 10 10 African Finance Corporation (Note 8.6) 5,890 5,890 5,890 5,890 Abuja Investment Property Company 2,481 2,481 2,481 2,481 Unique Venture Capital Nigeria Limited 1,805 1,789 1,805 1,789 Tinapa Business Resort Limited 500 500 500 500 Investment in Small and Medium Scale Industries (Note 8.4) 2,753 2,454 2,753 2,454 --------- -------- -------- ------- 21,019 14,778 14,841 14,504 ===== ===== ====== ===== Total 32,850 28,786 19,828 16,322 Provision for non- performing investments (163) ( 163) (31) ( 31) -------- -------- ------ ------- 32,687 28,623 19,797 16,291 ===== ===== ===== =====

.4 Equity participation in Small and Medium Scale Industries (SMIEIS)

NAME OF COMPANY % No. of 2009 2008 2009 2008 shares

Nm Nm Nm Nm

Mitchelson Nigeria Ltd 40.00 36,000,000 90 90 90 90 Gambou Paper Mills Ltd 40.00 40,000,000 100 100 100 100 Zanders Nigeria Ltd 40.00 60,000,000 60 60 60 60 Double Diamonds Plastics Ltd 40.00 90,000,000 213 90 213 90 Nokosing Paper Mills Ltd 38.50 100,100,000 100 100 100 100 Johnsons Products Nig. Ltd 40.00 44,000,000 44 44 44 44 Beauty Base Limited 35.00 100,000,000 100 100 100 100 Kitchen Vegetable Oils Ltd 28.75 100,625,000 100 100 100 100 Rokana Industries Ltd 40.00 93,333,333 93 93 93 93 Saadatu Plastics Mfg. Co. Ltd 40.00 76,000,000 76 76 76 76 Nakudu Tannery Limited 36.00 100,000,000 100 100 100 100 Delma Pharmaceutical Nig. Ltd. 40.00 23,000,000 23 23 23 23 Livestock Products & Inv. Co. 40.00 30,000,000 30 30 30 30 Alba Soap Industries Limited 40.00 33,333,333 70 70 70 70 Newland Foods Limited 40.00 2,000,000 50 50 50 50 Partnership SME Investment - - 593 566 593 566 Standard Brothers Enterprises - 7 - 7 - Maxwell Industries Limited - 12 - 12 - Cibi Kaduna Granite(9% cum. pref. shares) - 126 50 126 50 EMMUM Investment Company Limited - 194 140 194 140 Balance held by CBN - - 572 572 572 572

2,753 2,454 2,753 2,454 ===== ==== ===== =====

35


.5 In the opinion of the directors, the market value of the unquoted investments is not lower than their cost. .6 This represents the banks 5% holding in African Finance Corporation. The company was incorporated in 2007 to carry on the business of private sector led investment banking and development finance as stated in the Memorandum of Association

9. INVESTMENT IN SUBSIDIARIES AND

ASSOCIATED COMPANIES .1 The Group The Bank

2009 2008 2009 2008 Nm Nm Nm Nm Summary Holding Principal % activity

Union Homes Savings and Loans Plc 60.1 Mortgage financing - - 1,834 1,834 (Note 9.2) Union Trustees Limited (Note 9.2) 100.00 Trusteeship - - 5 5 Consolidated Discounts Limited 37.50 Financial services 75 75 75 75 (Note 9.2) Union Assurance Company Limited 70.00 Insurance - - 1,448 1,448 (Note 9.2) UBN Property Company Limited 58.65 Real estates - - 1,815 55 (Note (9.2) Union Bank UK Plc (Note 9.2) 100.00 Banking - - 6,011 6,011 Union Registrars Limited (Note 9.2) 80.00 Secretarial services - - 480 50 Union Capital Markets Limited 100.00 Financial Services - - 2,620 120 (Note 9.2) Unique Venture Capital Mgt Ltd 48.00 Assets Management 9 9 9 9 (Note 9.2) --------- ------ -------- --------- 84 84 14,297 9,607 ====== ==== ===== ======

.2 Shares held in subsidiaries and associated companies by Union Bank of Nigeria Plc:

Union Homes Savings and Loans Plc (Registered office at 153, Ikorodu Road, Lagos)

60.1% (2008 61.2%) holding of the ordinary shares of the company, of which (2008-30.6%) is held directly by the Bank and (2008-15.3%) by Union Trustees Limited. William Street Trustees Limited which is the nominee company for Union Bank of Nigeria Plc Staff Pension Fund held (2008-15.3%).

Union Trustees Limited (Registered office at 131, Broad Street, Lagos)

40% direct equity holding of the ordinary shares of the company, while six directors of Union Trustees Limited

each holds 10% ordinary shares of the company as nominees of the Bank.

Consolidated Discounts Limited (Registered Office at 38/39, Marina, Lagos)

37.5% interest in the ordinary shares of the company.

36


Union Assurance Company Limited (Registered office at 131, Broad Street, Lagos)

30% direct equity holding in 7,515,098,000 ordinary shares of 50k each and 20% indirect holding through Union Homes Savings and Loans plc. Williams Street Trustees Limited, the nominee company for Union Bank of Nigeria Plc Staff Pension Fund held 20%.

UBN Property Company Limited (Registered office at 38/39, Marina, Lagos)

The company has 5,626,416,051 ordinary shares of N1.00 each, of which 32.25% is held directly by the Bank and 8.80% each by Union Trustees Limited, Union Assurance Company Limited and Williams Street Trustees Limited; the nominee company for Union Bank of Nigeria Plc Staff Pension Fund.

Union Bank UK Plc (Registered office at 14-18 Copthal Avenue, London EC2R 7BN)

100% holding of the 45,000,000 ordinary shares of $1 each and 99% direct holding in 50,000 deferred shares of 1 each and 1% indirect holding through Williams Street Trustees Limited, the nominee company for Union Bank of Nigeria Plc Staff Pension Fund. Union Bank UK Plc was incorporated in October, 2004 as an authorized United Kingdom subsidiary to carry out the business formerly conducted by London branch of Union Bank of Nigeria Plc.

Unique Venture Capital Management Company Limited (Registered office at 40, Marina Lagos)

48% holding of 40,000,000 ordinary shares of N1 each. The company commenced operations in 2004 for the purpose of equity participation in unquoted companies under Small and Medium Enterprises Equity Investment Scheme (SMIEIS)

Union Registrars Limited (Registered office at 2, Burma Road, Apapa Lagos)

The company has 1,200,000,000 ordinary shares of N1 each which is 80% held by the bank.

Union Capital Market Limited (Registered office at 4, Davies Street, Marina Lagos)

100% holding of 800,000,000 ordinary shares of N1 each. The company was formerly Union Stockbrokers registered to deal in shares and stocks on all the trading floors of the Nigerian stock exchange.

10. LOANS AND ADVANCES The Group The Bank

2009 2008 2009 2008

.1 Analyses of loans and advances by security: Nm Nm Nm Nm

Secured against real estate 190,005 95,454 170,914 79,983

Otherwise secured 205,259 116,565 200,234 113,655

Unsecured 110,078 79,890 109,058 79,329

---------- ---------- --------- ----------

Gross loans 505,342 291,909 480,206 272,967

------------ ----------- ----------- -----------

Provision for doubtful accounts

General - (3,917) (2,204) (3,725) (2,079)

Specific - (71,700) (19,083) (68,009) (15,247)

Interest in suspense (8,252) (11,663) (6,926) (10,796) ---------- --------- --------- --------

Total provisions (83,869) (32,950) (78,660) (28,122)

----------- ----------- ------------ ----------

Net loans 421,473 258,959 401,546 244,845

====== ===== ===== ======

37

10. Loans and advances (Contd) 10.2 Analysis of loans and advances by quality

10.2.1. The Group

2009 2008

Net Interest Gross Net Interest in Gross

Loans suspense loans Provision loans suspense loans Provision

Nm Nm Nm Nm Nm Nm Nm Nm

Non-performing: Substandard 22,656 - 22,656 2,266 42,800 - 42,800 4,280 Doubtful 26,442 - 26,442 13,221 4,423 - 4,423 2,212 Lost 56,213 8,252 64,465 64,465 12,591 11,663 24,254 24,254 ---------- --------- ---------- ---------- ---------- ----------- ----------- ------------ 105,311 8,252 113,563 79,952 59,814 11,663 71,477 30,746 Performing 391,778 - 391,778 3,917 220,432 - 220,432 2,204 ----------- ---------- ----------- ---------- ------------ ------------ ------------ ----------- 497,089 8,252 505,341 83,869 280,246 11,663 291,909 32,950 ====== ====== ====== ======= ======= ======= ======= ======== 10.2.2 The Bank Non-performing: Substandard 22,075 - 22,075 2,208 41,042 - 41,042 4,104 Doubtful 25,851 - 25,851 12,925 4,208 - 4,208 2,104 Lost 52,876 6,926 59,802 59,802 9,039 10,796 19,835 19,835 ---------- ------- ---------- --------- ---------- ----------- --------- ----------- 100,802 6,926 107,728 74,935 54,289 10,796 65,085 26,043 Performing 372,478 - 372,478 3,725 207,882 - 207,882 2,079 ----------- ---------- ------------ ----------- ----------- ------------ ------------ ------------- 473,280 6,926 480,206 78,660 262,171 10,796 272,967 28,122 ======= ====== ======= ====== ======= ======= ======= ========

38

NOTES TO THE FINANCIAL STATEMENTS (contd) 10. Loans and advances (Contd) 10.3 Maturity profile of loans and advances The Group The Bank

2009 2008 2009 2008 Nm Nm Nm Nm

Under 1 month 254,157 230,493 250,897 230,800

1 - 3 months 131,357 10,266 130,214 9,611

3 - 6 months 34,236 12,306 30,198 9,165

6 - 12 months 23,457 11,549 20,329 9,465

1 - 5 years 43,866 17,516 30,299 4,147

Over 5 years 18,269 9,779 18,269 9,779

--------- --------- -------- -------- 505,342 291,909 480,206 272,967 ====== ====== ===== ===== 10.4 Analysis of insider related credits by performance

Aggregate amount of insider related Credits outstanding at year-end classified Performing 1,709 2,211 1,708 2,211

Non-performing 499 125 499 125

-------- ------- -------- -------- 2,207 2,336 2,207 2,336 ===== ==== ===== ====

The details of the non-performing accounts as shown above are analysed in note 54 to the financial statements in line with the Central Bank of Nigeria Circular BSD/1/2004.

10.5 Analysis of loans and advances by nature Overdrafts 223,520 151,243 225,905 149,937 Term loans 134,870 123,606 130,358 114,661 Commercial papers 120,779 5,218 120,779 5,184 Others 26,173 11,842 3,164 3,185 ---------- --------- --------- --------- 505,342 291,909 480,206 272,967 ====== ===== ===== ======

39


The Group The Bank

Non- Non-

Performing performing Performing Performing

accounts accounts 2009 2008 accounts accounts 2009 2008

Nm Nm Nm Nm Nm Nm Nm Nm

10. Loans and advances (Contd) 10.6 Provisions for loans: At beginning of year 2,204 19,083 21,287 16,636 2,079 15,247 17,326 14,074 --------- ----------- --------- ---------- ---------- ---------- ---------- --------- Additional provision for the year 1,713 52,617 54,330 5,583 1,646 52,762 54,408 3,252

Provision no longer required - - - (932) - - - - ---------- ----------- ---------- ---------- --------- --------- --------- ---------- Per profit and loss account (Note 40) 1,713 52,617 54,330 4,651 1,646 52,762 54,408 3,252 ---------- ---------- ---------- --------- --------- --------- --------- ---------- At 31 March, 2009 3,917 71,700 75,617 21,287 3,725 68,009 71,734 17,326 Interest in suspense (Note 10.7) - 8,252 8,252 11,663 - 6,926 6,926 10,796 ---------- ---------- ---------- ---------- --------- ---------- --------- ---------- 3,917 79,952 83,869 32,950 3,725 74,935 78,660 28,122 ====== ====== ====== ====== ====== ====== ====== =======

40



10 . Loans and advances Nm Nm Nm Nm

10.7 Interest in suspense

At beginning of year 11,663 5,489 10,796 4,369 Arising during the year 2,768 6,174 2,309 6,427 -------- ------- -------- ------- 14,431 11,663 13,105 10,796 Amount written off (6,179) - (6,179) - ---------- -------- ---------- --------- At 31 March 8,252 11,663 6,926 10,796 ===== ===== ===== ===== 11. ADVANCES UNDER

FINANCE LEASES .1 Gross investments 6,407 4,795 6,407 4,501 Unearned income (109) (28) (109) (28) -------- -------- -------- -------- Net investment 6,298 4,767 6,298 4,473 Provision for non-performing accounts: General - (61) (42) (61) (39) Specific - (772) (582) (772) (582) -------- -------- -------- --------- At 31 March 5,465 4,143 5,465 3,852 ===== ===== ===== ===== .2 Movement in provision for doubtful accounts

The movement on the general provision for Advances under finance lease during the year Was as follows: - General: At beginning of year 39 11 39 11 Charge for the year (note 40) 22 31 22 28 -------- -------- ------- ------ At 31 March 61 42 61 39 -------- -------- ------- ------- Specific: At beginning 582 - 582 39 Charge for the year (note 40) 190 582 190 582 --------- -------- -------- ------- 772 582 772 621 ===== ===== ===== ===== 3 Analysis by performance Performing 6,108 4,185 6,108 3,891 Non-performing 190 582 190 582 6,298 4,767 6,298 4,473 ===== ===== ===== ===== 4 The advance under lease by maturity is: Within one month 3 to 6 months 2,720 2,826 2,720 2,532 6 to 12 months 1,748 1,373 1,748 1,373 over 12 months 1,830 568 1,830 568 ------- ------ ------ -------- 6,298 4,767 6,298 4,473 ===== ==== ===== =====

41



Nm Nm Nm Nm 5. This is analyzed into current and long term portion as follows: - Current 4,468 4,199 4,468 3,905 Long term 1,830 568 1,830 568 -------- -------- --------- ------- 6,298 4,767 6,298 4,473 ===== ===== ===== ======

12. OTHER ASSETS

Clearing (Note 12.2) 213,714 85,243 213,734 85,096 Prepaid staff allowance 1,640 2,038 1,508 2,038 Prepayment - Rent 1,822 2,057 1,780 1,936 Prepayment - Others 5,094 12,297 3,906 11,169 Trade debtors 1,016 1,631 - - Investment suspense 4,422 245 4,422 2,745 Bulk stationery 379 353 378 335 Accrued income 28,004 16,818 23,283 16,521 Prepaid interest 924 3,194 513 445 Frauds and losses 1,210 1,174 1,210 1,174 Deposit for shares and investments 1,643 39 - - Statutory deposits (Note 12.3) 12 500 - - Claims controls 500 22 - - Due from Wharf Street Limited 42 1,517 - - Other debit balances 8,139 6,828 8,568 6,098 Due from related company - - 1,942 1,942 Inter-branch 9,233 2,881 9,638 2,790 --------- --------- ---------- ---------- 277,794 136,837 270,882 132,289 Provision for non- performing accounts including fraud and losses (Note 12.1) (30,214) (7,071) (30,116) (7,007) --------- ---------- ---------- ---------- 247,580 129,766 240,766 125,282 ====== ====== ===== ======= .1 Summaries of provisions on other assets

At beginning of year 7,071 6,078 7,007 6,025 Provision no longer required - (10) - -

7,071 6,068 7,007 6,025

Additional provision (Note 40) 23,143 1,003 23,109 982 -------- -------- -------- -------- At 31 March (Note 12) 30,214 7,071 30,116 7,007 ===== ===== ===== ===== .2 This represents receivables from local Banks on clearing instruments. .3 Statutory deposits represent the amount deposited by Union Assurance Company Limited with the Central Bank of Nigeria in accordance with Section 10(3) of the Insurance Act, 2003.

42



Nm Nm Nm Nm 13. EQUIPMENT ON LEASE

Cost: At 1 April 2,049 2,049 1,991 1,991

Additions 181 - - -

Disposals - - - - ------- ------- ------- ------- At 31 March 2,230 2,049 1,991 1,991 ------- ------- ------- -------

Depreciation:

At 1 April 2,049 1912 1,991 1,878

Additions - - - -

Charge for the year 20 137 - 113

On disposals - - - - ------- ------- -------- -------- At 31 March 2,069 2,049 1,991 1,991 ------- ------- -------- --------

Net book value:

At 31 March, 2009 161 - - - ==== ==== ===== ==== At 31 March, 2008 - - - - ===== ===== ===== =====

43

NOTES TO THE FINANCIAL STATEMENTS (contd) 14. FIXED ASSETS .1 The Group Plant,

machinery,

Land and computer & Motor Furniture

buildings equipment vehicles and fittings Total

Summary: N'm N'm N'm N'm N'm

Cost/valuation:

At 1 April 2008 24,793 16,403 4,442 4,252 49,890

Additions 3,289 2,392 1,049 562 7,292

Revaluation surplus 24,506 - - - 24,506

Disposals - (28) (220) (4) (252)

-------- --------- -------- --------- --------- At 31 March 2009 52,588 18,767 5,271 4,810 81,436 -------- --------- --------- --------- ---------

Depreciation: At 1 April 2008 4,894 8,901 3,533 3,094 20,422

C

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