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DRIVING EFFICIENCY THROUGH DIGITAL TRANSFORMATION Annual Reports & Accounts 2018 4 Who We Are STATEMENTS & REPORTS BOARD OF DIRECTORS 5 Corporate Information 18-21 Chairman’s Statement and Reports 36-40 Board of Directors and their Profile 6 Corporate Profile 22-28 Report of Corporate Governance 41 Executive Management Team 7-8 Results at a Glance 29-33 Risk Management Statement 42-45 Executive Management Team’s Profile 9-10 The Notice of Annual General Meeting 46 Business Directors 11-12 Proxy/Authority to Admit Form 47-52 Report of the Directors 13-14 Important Notice 53 Statement of Directors’ Responsibilities in 15-16 Mandate for E-Dividend Payment relation to the Financial Statements 54 Report of Audit Committee TABLE OF CONTENT FINANCIAL STATEMENT OTHER NATIONAL DISCLOSURES MANAGEMENT GROUP AND SUBSIDIARIES 56 - 60 Independent Auditor’s Report 186 Statement of Value Added 190-195 Management (Group and Subsidiaries) 61 Consolidated and Separate Statement of Financial Position 187 Financial Summary - Group 196 Branch/Office Network cum Directory 62 Consolidated and Separate Statement of Profit or 188 Financial Summary - Company Loss and Other Comprehensive Income 197 Friendship Centre Network 63 Statement of Change in Equity - Group 198-199 Corporate Events 64 Statement of Change in Equity - Company 200-202 Notes 65-66 Consolidated Statement of Cash Flows 67-184 Notes to the Consolidated Financial Statements 4 ROYAL EXCHANGE PLC Annual Report & Accounts 2018 WHO WE ARE Vision Statement Mission “To responsibly and efficiently Statement mobilize and utilize human, financial and technological capital to exceed stakeholders expectations”. “To attain leadership in the financial sector and provide the highest quality services in accordance with ethical practices and norms to our clients, while ensuring adequate returns to our stakeholders”. Customer Orientation Creativity Teamwork Integrity Our Values Professionalism Learning Organization ROYAL EXCHANGE PLC Annual Report & Accounts 2018 5 CORPORATE INFORMATION Directors Chairman Mr. Kenny Ezenwani Odogwu Independent Director Non-Executive Directors Mr. Hewett Benson Chief Anthony Ikemefuna Idigbe (SAN) Group Company Secretary Mr. Daniel Maegerle (Swiss) Ms. Sheila Ezeuko Chief Uwadi Okpa-Obaji Alhaji Ahmed Rufa’i Mohammed Alhaji Rabiu Muhammad Gwarzo (OON) Mr. Adeyinka Ojora Registered Office Auditors 31, Marina, Lagos. Deloitte & Touche RC No. 6752 Registrars Bankers CardinalStone (Registrars) Limited, Access Bank Plc 358, Herbert Macauley Street, Yaba, Lagos. Diamond Bank Plc Ecobank Plc FCMB Plc First Bank of Nigeria Ltd Guaranty Trust Bank Plc Actuary Heritage Bank Plc Stanbic IBTC Bank Plc Ernst & Young Keystone Bank Ltd FRC/NAS/00000000738 Polaris Bank Plc Sterling Bank Plc UBA Plc UBN Plc Wema Bank Plc Zenith Bank Plc 6 ROYAL EXCHANGE PLC Annual Report & Accounts 2018 CORPORATE PROFILE In 1918, our Company started operations in Nigeria represented by Barclays Bank DCO and on February 28, 1921 converted to a full branch of its then parent Company, Royal Exchange Assurance, London. Royal Exchange Assurance, London was originally founded in 1720 and was one of the first two insurance companies in Britain to receive legal status via Royal Charter. Originally established for marine business, it expanded within a year to include fire and life insurance as well, thereby becoming Britain’s first composite insurer. The establishment of its branch in Nigeria was the result of an overseas expansion drive in the early 20th century. Some notable figures in the local insurance industry have headed our Company, which was, for over 20 years, the only insurance company operating in Nigeria. Thus, our Company can be said to be the beginning of insurance in Nigeria and today, has one of the largest branch networks in its sector, with fifteen (15) branches, two (2) friendship centers and thirteen (13) sales outlets. Pursuant to Section 396(2) of then companies Act of 1968, our Company was on December 29, 1969, reconstituted and incorporated as a private limited liability company, Royal Exchange Assurance (Nigeria) Limited. The Company went public July 18, 1989 and was duly listed on the Nigerian Stock Exchange on December 3, 1990. In June 2007, our Company entered into a merger with African Prudential Insurance Company and Phoenix of Nigeria Assurance Company Plc. The merger brought about a significantly stronger Company, better positioned to serve the needs of its clientele in the financial services sector. In June 2008, our Company was re-organized into a Group Structure, whereby it assumed the role of a group holding and asset management company to execute its strategic vision for financial services, namely insurances, funds management, finance and banking, through its five wholly-owned subsidiaries namely: • Royal Exchange General Insurance Company Limited established in January 2008, to carry on the non-life insurance business of the Group; • Royal Exchange Prudential Life Plc, established in February 2007 to carry on life assurance business of the Group; • Royal Exchange Finance Company Limited (previously called Royal Exchange Finance & Investment Ltd) was incorporated as a wholly-owned subsidiary of Royal Exchange Plc in October 2004 and licensed in April 2005 by Central Bank of Nigeria, to carry on the finance functions of the Group; • Royal Exchange Healthcare Limited, established in May 2006 to provide health management services and healthcare insurance; • Royal Exchange Microfinance Bank Limited, established in July 2009 and licensed to carry on the business of assisting all enterprises engaged in small scale industries, micro economic activities and co-operative related endeavors; All subsidiaries are properly licensed by their respective regulators and are structured to fully exploit the significant opportunities available in the Nigerian economy. The Royal Exchange brand is a notable brand in Nigeria especially in the field of insurance. The Company will ensure its continued relevance in the environment in which it operates by continuously re-inventing its products and services. OUR DIRECTORS: ROYAL EXCHANGE PLC 1. Mr. Kenny Ezenwani Odogwu - Chairman ROYAL EXCHANGE HEALTHCARE LIMITED (REHL) 2. Chief Anthony Ikemefuna Idigbe (SAN) - Director 1. Alhaji M. S. Hammid (fwc) - Chairman 3. Mr. Daniel Maegerle (Swiss) - Director 2. Dr. Emenike Onwutalu - Managing Director 4. Alhaji Rabi’u Muhammad Gwarzo, OON - Director 3. Mr. Olawale Banmore - Director 5. Chief Uwadi Okpa-Obaji - Director 4. Mr. Ben Azi - Independent Director 6. Alhaji Ahmed Rufa’i Mohammed - Director 5. Mrs. Jane Ekomwereren - Director 7. Mr. Adeyinka Ojora - Director 8. Mr. Hewett Benson - Independent Director ROYAL EXCHANGE FINANCE COMPANY LIMITED (REFCL) 1. Alh. Ibrahim Turaki - Chairman ROYAL EXCHANGE GENERAL INSURANCE COMPANY LIMITED 2. Mrs. Irene Opara - Managing Director (REGIC) 3. Mr. Benjamin Agili - Director 1. Alhaji Rabi’u Muhammad Gwarzo, OON - Chairman 4. Mr. Olawale Banmore – Director (Awaiting NAICOM approval) 2. Mr. Benjamin Agili - Managing Director 3. Mr. Nnamdi Oragwu - Director ROYAL EXCHANGE MICROFINANCE BANK LIMITED (REMFB) 1. Mr. Sunday Adunola - Ag. Managing Director 4. Mr. Olawale Banmore - Director 2. Mr. Ben Azi - Independent Director 5. Mr. Donald Nosiri - Director 3. Mr. Nelson Akerele - Director 6. Mr. Nelson Akerele - Director 4. Mrs. Irene Opara - Director 7. Mrs. Jane Ekomwereren – Director ROYAL EXCHANGE PRUDENTIAL LIFE PLC (REPRU) 1. Mr. Hewett Benson - Chairman (Awaiting NAICOM approval) 2. Mr. Olawale Banmore - Managing Director 3. Mr. Benjamin Agili - Director 4. Mr. Matthew Adefila - Director 5. Mr. Ben Azi - Independent Director 6. Mr. Donald Nosiri - Director ROYAL EXCHANGE PLC Annual Report & Accounts 2018 7 RESULTS AT A GLANCE 31-Dec-18 31-Dec-17 % Earned income 15,859,871 14,757,388 8 Profit/(loss) before tax 326,871 (682,127) 148 Loss/profit after tax (156,176) (969,643) 84 Share capital 2,572,685 2,572,685 - Shareholders' fund 5,099,339 5,578,400 (9) Earnings per share (naira) - basic (3) (19) Stock exchange quotation (naira) 0.22 0.50 Earned Income 8% Profit/(Loss) before tax 148% Loss/profit after tax 84% Shareholders’ fund (9)% 8 ROYAL EXCHANGE PLC Annual Report & Accounts 2018 RESULTS AT A GLANCE (CONTINUED) Group Parent 2018 2017 % 2018 2017 % =N=’000 =N=’000 Growth =N=’000 =N=’000 Growth MAJOR STATEMENT OF COMPREHENSIVE INCOME ITEMS Gross Premium Written 14,712,798 12,822,219 14.74 - - - Gross Premium Income 15,178,132 13,396,839 13.30 - - - Net Premium Income 9,185,274 7,078,057 29.77 - - - Investment and Other Income 681,739 1,360,549 (49.89) (271,341) 57,237 (574.07) Profit/(Loss) Before Tax 326,871 (682,127) 147.92 (838,798) (351,118) (138.89) Loss for the period (156,176) (969,643) 83.89 (845,484) (399,669) (111.55) MAJOR STATEMENT OF FINANCIAL POSITION ITEMS Total Assets 35,516,592 33,272,846 6.74 14,847,224 11,454,447 29.62 Insurance Contract Liabilities 11,018,012 11,337,881 (2.82) - - - Investment Contract Liabilities 302,424 293,555 3.02 - - - Group- Major statement of Comprehensive Income Items Company- Major statement of Comprehensive Income Items 200,000 16,000,000 100,000 14,000,000 - 12,000,000 (100,000) 10,000,000 (200,000) 8,000,000 (300,000) 6,000,000 (400,000) 4,000,000 (500,000) 2,000,000 (600,000) Thousands of Naira - (700,000) Thousands of Naira (800,000) -2,000,000 Gross Premium Written Gross Premium Income Investment and Other Profit/(Loss) Before Tax Loss for the period (900,000) Income Investment and Other Income Profit/(Loss)