Mar 28, 2018 - The principal activity of the Bank is the provision of banking and other ... Such services include retail
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NPF NPF MICROFINANCE BANK PLC ANNUAL REPORT 31 DECEMBER 2017
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NPF MicrofinanceBank PLC Annual Report - 31 DECEMBER2017
Contents
Page
Corporate Information
I _/
Directors' Report
2
Corporate Governance Report
7
Statement of Directors' Responsibilities
15
Report of the Audit Committee
16
Independent Auditor's Report
17
Statement of Financial Position
21
Statement of Profit or Loss and other Comprehensive Income
22
Statement of Changes in Equity
23
Statement of Cash Flows
24
Notes to the Financial Statements
25
Other National Disclosures: Value Added Statement Financial Summary
66 67
NPF Mlcrofinance Bank PLC Annual Report· 31 DECEMBER 2017
Corporate Information Directors:
Mr. Azubuko Joel Udah (Esq.) Mr. Akinwunmi M. Lawal Mr. Jude C. Ohanehi Mr. Francis C. Nelson Prince Jude Ifeanyi Eke Mr. Mohammed D. Saeed Mr. Olusholla B. David Mr. Jibril G. Gane
Company Secretary:
Mrs. Osaro J. Idemudia Aliyu Atta House I, Ikoyi Road, Obalende Lagos
Registered Office:
Aliyu Atta House I, Ikoyi Road, Obalende Lagos
Auditor:
KPMG Professional Services KPMGTower, Bishop Aboyade Cole Street, Victoria Island, Lagos
Bankers:
Sterling Bank Pie First Bank of Nigeria Pie United Bank for Africa Pie Zenith Bank Pie Access Bank Pie First City Monument Bank Pie
Registrars:
CardinalStone Registrars Limited 358, Herbert Macaulay Way Yaba, Lagos
Chairman Managing Director Executive Director Executive Director Non-Executive Director Non-Executive (Independent) Director Non-Executive Director Non-Executive Director
NPF Microfinance Bank PLC Annual Report· 31 DECEMBER2017
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GOVERNANCE DIRECTORS' REPORT The directors are pleased to submit their report on the affairs of the Bank together with the financial statements for the year ended 31 December 2017. I)
LEGAL FORM
The Bank was incorporated in Nigeria as a Private Limited Liability Company on 19 May 1993 under the provisions of the Companies and Allied Matters Act CAP C20 LFN 2004 with RC No. 220824. It obtained a provisional license as a Community Bank from the Central Bank of Nigeria on 12 July 1993 with License No. FC 00200 and commenced operations on 20 August 1993. It obtained a final license from the Central Bank ofNigeria on 24 January 2002. It was registered as a Public Limited Company on 13 July 2006. The Bank was given approval-in-principle to operate as a Microfinance Bank on 10 May 2007 and obtained the final license on 4 December 2007. The shares of the Bank were listed on the Nigerian Stock Exchange on I December 2010. 2)
PRINCIPAL ACTIVITIES
The principal activity of the Bank is the provision of banking and other permissible financial services to poor and low income households and micro enterprises with emphasis on members of the Nigerian Police Community. Such services include retail banking, loans and advances and other allied services. The Bank currently has 28 branches nationwide from which it operates. 3)
OPERA TING RESULTS
The profit before tax recorded by the Bank for the year ended 31 December 2017 was N820 million (31 December 2016: N803 million). Highlights of the Bank's operating results for the year ended 31 December 2017 are as follows:
In thousands ofnaira Profit before tax Tax charge for the year Profit after tax Total comprehensive income Basic and diluted earnings per share (kobo)
Dec-17
Dec-16
819,819 (187,929) 631,890
803,440 (248,537) 554,903
631,890
554,903
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4) DIVIDENDS The Board of Directors, subsequent to the reporting date, recommended the payment of a dividend of 17 kobo (2016: 15 kobo) per share on the issued share capital of 2,286,657,766 ordinary shares, amounting to N389 million (2016: N343 million). The dividend proposed is subject to the approval of shareholders at the next annual general meeting (AGM). Withholding tax will be deducted at the point of payment. 5)
DIRECTORS
The following Directors served during the year under review:-
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NAME Mr. Azubuko Joel Udah (Esq.) Mr. Emmanuel C. Wabali* Prince Jude Ifeanyi Eke Mr. Audu Abubakar** Mr. Mohammed D. Saeed Mrs. Adebola Abiodun lge*** Mr. Joseph Daramola**** Mr. Olusholla B.David***** Mr. Jibril G. Gane****** Mr. Akinwunmi M. Lawal Mr. Jude C. Ohanehi Mr. Francis C. Nelson*******
DESIGNATION Chairman Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive (Independent) Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Managing Director Executive Director, Operations Executive Director, Finance & Administration
DA TE OF APPOINTMENT 23 July 2015 2 January 2009 30 March 2010 10 March 2015 15 November 2012 26 September 2016 23 July 2015 26 October 2017 26 October 2017 26 June 2014 26 June 2014 I August 2017
• Resignedfrom the Board in January 2018 **Deceased(Died on 13 December 2017) ***Resignedfrom the Board on 7 August 2017 •••• Resignedfrom the Board on 25 October 2017 *****Appointedon 26 October 2017 to replace Mrs. Abiodun Ige and represent the interest of the Nigeria Police CooperativeSociety Limited. His appointmentwas approved by the CBN on 2 February 2018. ******Appointedon 26 October 2017 to replace Mr. Joseph Daramola and represent the interest of the Nigeria Police Cooperative Society Limited. His appointmentwas approved by the CBN on 2 February 2018. *******Appointedon l August 2017 to fill the position of Executive Director, Finance & Administration which had been vacant on the Bank's organogram. His appointment was approved by the CBN on 2 February 2018.
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NPF Microfinance Annual
6)
DIRECTORS' INTEREST IN SHARES
The interest of Directors in the issued share capital of the Bank as recorded in the Register of members as at 31 December 2017 were as follows: 2017
2016 INDIRECT
NAME OF DIRECTOR
DIRECT (units)
INDIRECT (units)
DIRECT (units)
Mr. Azubuko Joel Udah (Esq.)
1,000,000
-
1,000,000
-
Mr. Emmanuel C. Wabali Prince Jude Ifeanyi Eke
2,080,000
2,080,000
2,252,000
-
-
-
-
1,580,000
-
1,580,000
1,480,718,606
-
1,480,718,606
-
"
Mr. Audu Abubakar Mr. Mohammed D. Saeed
-
Mr. Olusholla B. David •
-
Mr. Jibril. G. Gane • Mr. Akinwunmi M. Lawal
5,025,861
Mr. Jude C. Ohanehi
3,870,456
Mr. Francis C. Nelson
-
"
-
160,796
(units)
2,252,000
-
-
5,025,861
-
3,870,456
-
-
•Mr. Olusholla B. David and Mr. Jibril G. Gane currently represent the interest of the Nigerian Police Cooperative Society Limited, which owns 1,480,718,606 (2016: 1,480,718,606) ordinary shares of50k each in the issued share capital of the Bank. Save as disclosed above, none of the directors has notified the Bank of any discloseable interest in the Bank's share capital as at 31 December 2017. 7)
DIRECTORS' INTEREST IN CONTRACTS
None of the directors notified the Bank for the purpose of Section 277 of the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004 of any interest in contracts deliberated upon during the year in review. 8)
RETIREMENT OF DIRECTORS
In accordance with Article 25(a) of the Articles of Association, Mr. Emmanuel C. Wabali retires from the Board in January 2018, having served the maximum period of nine (9) years. Also in accordance with S.259 (I) & (2) of the Companies and Allied Matters Act, Prince Ifeanyi Eke and Mr. Mohammed D. Saeed will retire by rotation and being eligible offer themselves for re-election. The profile of all Directors, including the Directors to be presented for election/re-election is contained in the Annual Report. 9)
CHANGES TO THE BOARD
In the year under review, Mr. Olusholla B. David and Mr. Jibril G. Gane were appointed as Non-Executive Directors of the Bank on 26 October 2017 to fill the vacancies created by the exit of Mrs. Abiodun lge and Mr. Jospeh Daramola. They represent the interest of the Nigerian Police Cooperative Society Ltd. Following the approval of members at the last Annual General Meeting and that of the Central Bank of Nigeria to increase the Board size, Mr. Francis C. Nelson was appointed on I August 2017 to the position of Executive Diretcor, Finance & Administration which had been vacant on the organogram of the Bank. All the above appointments were approved by the Central Bank of Nigeria on 2 February 2018. The Board on 13 December 2017 lost one of its Non-Executive Director (Mr. Audu Abubakar) after a brief illness. He has since been buried according to islamic traditions. 10)
SUBSTANTIAL INTEREST IN SHARES
According to the register of members as at 31 December 2017, no shareholder held more than 5% of the issued share capital of the Bank except the following: 31 December2017 No. of Shares
Shareholder
31 December 2016
Shareholding
No. of Shares
(%) Nigeria Limited
Police
Co-operative
NPF Welfare Insurance Scheme
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Society
Shareholding (%'
1,480,718,606
64.75
1,480,718,606
64.75
234,305,460
10.25
234,305,460
10.25
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Bank PLC
Report-31 DECEMBER2017
NPF Mlcrofinance Bank PLC Annual Report· 31 DECEMBER2017
11)
ANALYSIS OF SHAREHOLDING
The shareholding structure of the Bank is as stated below: As at 31 December 2017 Range From I 5001 10001 50001 100001 500001 1000001 50000001
Holders 3,913 998 1,264 254 455 73 90 3 7,050
5000 10000 50000 100000 500000 1000000 50000000 2286657766
As at 31 December 2016 Range From
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Units 55.50 14.16 17.93 3.60 6.45 1.04 1.28 0.04 100
2,2!!!!,6:i:Z,2!!6
%
Holders
Units
3,831 997 1,253 254 471 70 89 3
54.98 14.31 17.98 3.65 6.76 1.01 1.28 0.04
~ 12)
6,622,867 7,786,819 28,810,488 19,165,546 I05,295, 127 52,783,427 282,351,453 1,783,842,039
To 5000 10000 50000 100000 500000 1000000 50000000 2286657766
5001 10001 50001 100001 500001 1000001 50000001
%
To
6,536,669 7,781,323 28,534,606 19,433,107 108,096,402 50,955,893 281,477,727 1,783,842,039
2.1!!1?,!i:i:z.m
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SHARE CAPITAL HISTORY
The following changes have taken place in the Bank's authorised and issued capital since incorporation. AUTHORISED DATE ISSUED
ISSUED & FULLY PAID
FROM
TO
FROM
TO
N'OOO
N'OOO
N'OOO
N'OOO
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N'OOO
REMARKS
N'OOO
CASH& 1.00 KIND
.
.
-
-
17,976 21,571 40,186 58,624 58,624 58,624
1.00 1.00 1.00 1.00 1.00 1.00
CASH BONUS 1:4 CASH CASH CASH CASH
250,000
58,624
239,958
1.00
BONUS 1:10 &CASH
250,000
500,000
239,958
239,958
1.00
2006
500,000
1,000,000
239,958
259,955
1.00 BONUS 1:12
2007 2008 2009
1,000,000
259,955
-
2,000,000 2,000,000 2,000,000
417,192
417,192 417,192 1,143,328
2010
.
2,000,000
1,143,328
.
1.00 CASH . 1.00 1.00 CASH SHARESOK SPLIT 1:2
2011
-
2,000,000
1,143,328
-
SOK
-
2,000 000 2 000 000 3,000,000 3,000,000 3,000,000 3,000,000
I 143,328 1 143 328 1,143,328 1,143,328 1,143,328 1,143,328
-
SOK SOK SOK SOK 50k 50k
1993
500
500
1996 1999 2000 2001 2002 2003
500
-
30,000 30,000 80,000 80,000 250,000 250,000
2004
.
2005
2012 2013 2014 2015 2016 2017
30,000
80,000
.
2,000,000.00
-
-
17,996 21,571 40,186
-
-
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NOMINAL VALUE
-
.
SHARESPLIT 1:2
-
-
-
NPF Mlcronnance Bank PLC Annual Report· 31 DECEMBER 2017
13) PROPERTY AND EQUIPMENT Information relating to changes in property and equipment is given in Note 19 of the financial statements. 14)
DONATIONS
As part of our commitment to the development of our primary community and to identify with the aspirations of various sections of the society, the Bank made contributions to charitable and non-political organisations amounting to NS,805,000 (2016: N4,103,000) during the year. This comprises contributions to educational organisations amongst others as listed below:
N Police Hospital Falomo Police Officers' Wives' Association National Association ofMicrofinance Banks Pacelli School for the Blind Police Colleges (Ikeja, Orita Challenge, Idimu & Minna) POW A International School Police Barracks Obalende St. Monica Orphanage Force Education Secondary School Microfinance Development Leaming Centre The Nigeria Police Cooperative Society - Recreational facility Police Children Schools (Ikeja, Idimu, Okota, Eleweran & Ijebu-ode)
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500,000 500,000 50,000 25,000 655,000 30,000 600,000 100,000 25,000 2,000,000 1,000,000 320,000 5,805,000
EVENTS AFTER THE REPORTING PERIOD
There were no post balance sheet events which could have a material effect on the state of affairs of the Bank as at 31 December 2017 or the profit for the year ended on that date which have not been adequately provided for or disclosed. 16)
HUMAN RESOURCES
EMPLOYMENT OF DISABLED PERSONS The Bank operates a non-discriminatory policy on recruitment. Applications by physically challenged persons are always considered, bearing in mind the respective aptitudes and abilities of the applicants concerned. In the event of members of staff becoming physically challenged, every effort is made to ensure that their employment with the Bank continues and that appropriate training is arranged. It is the policy of the Bank that the training, career development and promotion of disabled persons should, as far as possible, be identical with those of other employees. Currently, the Bank has one physically challenged person in its employment. EMPLOYEE INVOLVEMENT AND TRAINING The Bank is committed to keeping employees fully informed as much as possible regarding the Bank's performance and progress and seeking their view wherever practicable on matters which particularly affect them as employees. As an institution committed to maintaining its competitve edge, NPF Microfinance Bank ensures that employees receive qualitative training through both in-house and external, local and international courses. Staff training plans are drawn up yearly and hinged on grade and job function specific programmes. These trainings are complemented by on-the-job training. HEALTH SAFETY AND WELFARE OF EMPLOYEES The Bank continues to priortise staff health and welfare. Fire prevention and fire fighting equipments are installed in strategic locations within the Bank's premises. Health and safety rules and practices are in force at the work environment. In addition, the Bank provides medical facilities to its employees and their immediate families at its expense. These health facilities are actively enhanced with annual heatih screening excercises that include eye screening, dental screening, cervical screening and Hepatatis B screening. The Bank operates a Group Life Assurance Scheme and a Contributory Pension Plan for the benefit of employees in line with the Pension Reform Act, 2014 (as amended) exists also for employees of the Bank .
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NPF Microlinance Bank PLC Annual Repo,t - 31 DECEMBER 2017
17)
EMPLOYEE AND DIRECTOR INFORMATION
Tue number and percentage of men and women employed in the Bank during the year ended 31 December 2017 and the comparative year were as follows: Number Employees (2017) Employees (2016) Top Management (2017) Top Management (2016)
Percentage
Male 185 161
Female
14 13
129 123
Total 314 284
Male 59% 57%
Female 41% 43%
4 2
18 15
78% 87%
22% 13%
3 2
100% 100%
0% 0%
6 7
100% 86%
0% 14%
Board Executive Directors (2017) Executive Directors (2016)
3 2
-
Non -Executive Directors (2017)
6
-
Non -Executive Directors (2016)
6
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18) AUDITOR Messrs. KPMG Professional Services, having satisfied the relevant corporate governance rules on their tenure in office, have indicated their willingness to continue in office as auditor to the Bank. In accordance with Section 357 (2) of the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004 therefore, the auditor will be re-appointed at the next general meeting of the Bank after a resolution has been passed.
BY ORDER OF THE BOARD
c:k~~~~' Mrs. Osaro J. ldennttna
Company Secretary/Legal Adviser FRC/2013/NBA/00000002319 9March2018
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NPF Microllnance Bank PLC Annual Report - 31 DECEMBER
CORPORATE GOVERNANCE REPORT INTRODUCTION This report is designed to update stakeholders on how NPF Microfinance Bank Pie ("the Bank") discharged its fiduciary responsibilities in relation to governance as well as its level of compliance with relevant statutory and regulatory requirements during the year under review. The Bank remians committed to promoting good corporate governance and best practices. It is mindful that best practice in corporate governance is essential for ensuring accountability, fairness and transparency in the Bank's relationship with all its stakeholders. The Bank undertakes frequent internal assessment of its compliance with the Corporate Governance Codes/Rules and submits periodic returns to the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Nigeria Stock Exchange (NSE), and the Nigerian Deposit Insurance Corporation (NDIC). GOVERNANCE STRUCTURES THE BOARD The Board of Directors is responsible for the governance of the Bank and is accountable to shareholders. The Board consist of persons with mixed skills having the requisite integrity and experience to bring independentjudgement to bear on Board deliberations and discussions. The Board plays a central role in conjunction with Management in ensuring that the Bank is financially strong. This synergy between the Board and Management fosters interactive dialogue in setting broad policy guidelines in the running of the Bank to enhance optimal performance and ensure that associated risk are well managed. The Board of Directors currently consists of eight (8) members, five (5) non-executive directors and three (3) executive directors. One of the nonexecutive directors chairs the Board.
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RESPONSIBILITIES The Board is accountable to the Shareholders and continues to play a key role in governance. It is the responsibility of the Board of Directors to endorse the Bank's organisational strategy, develop directional policy, appoint, supervise and remunerate senior executives and ensure accountability of the Bank to its stakeholders and regulatory authorities. The Board is responsible for providing stable and effective leadership for the Bank, to facilitate achievement of its corporate operating objectives. The Board has delegated the day to day management of the Bank to the Managing Director/Chief Executive Officer who is assisted by the Management Team. In line with best practices and relevant regulations, the roles of the Chairman of the Bank and the Managing Director/Chief Executive Officer are assumed by different individuals to ensure that the right balance of power and authority is maintained. DIRECTORS' REMUNERATION The Bank's remuneration policy is structured taking into account the environment in which it operates and the results it achieves at the end of each financial year. It includes: Remuneration Basic Salary
class
Performance Incentive
Directors' s fees
Sitting allowances
Description
Entitled Directors
Timing
Reflects the industry competitive salary package and the extent to which the Bank's objectives have been met for the financial year.
Executive Directors only
Monthly
This is awarded based on the performance of the Bank and individual Executive Directors only Directors.
Annually
Annual Payments approved at the Annual General Meeting
Non-Executive Directors only
Allowances paid for attending board and Non-Executive Directors board committee meetings only
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Half yearly Paid at every sitting at board and board committee meetings
ROLE OF THE BOARD The traditional role of the Bank's Board is to provide the Bank with leadership within a framework of prudent and effective controls which enables risk to be assessed and managed while deploying the Bank's resources to profitable use. The Board outlines the Bank's strategic and corporate aims, ensures that the necessary financial and human resources are in place for the Bank to meet its objectives and reviews management performance on a continuous basis. The Board also sets the Bank's values and standards and ensures that its obligations to its shareholders and others are understood and met.
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NPF Microfinance Bank PLC Annual Report- 31 DECEMBER2017
BOARD MEETINGS To ensure the Board's effectiveness throughout the year, an annual meeting and task calendar is developed at the beginning of each year. These calendars do not only focus on the activities of the Board but also establish benchmarks against which its performance can be evaluated at the end of the year. The Board meets quarterly and additional meetings are convened as the need arises. In furtherance of its roles, the Board met six (6) times in the year under review on 6/3, 27/4, 5/7, 27/7, 26/10 and 7/12. Attendance at the Board meetings during the year were as follows:
No Members I Mr. Azubuko Joel Udah (Esq.)
Designation
No. of Meetings
Attendance
Director
6 6
Director Director (Indep) Director Director
6 6 6 3 4 3 4 2
2
Mr. Emmanuel C. Wabali
Chairman Non-Executive
3 4
Prince Jude Ifeanyi Eke Mr. Mohammed D. Saeed Mr. Audu Abubakar Mrs. Adebola A. Ige
Non-Executive Non-Executive Non-Executive Non-Executive
Mr. Joseph Daramola Mr. Olusholla B. David*
Non-Executive Director Non-Executive Director
6 6
11
Mr. Jibril G. Gane** Mr. Akinwunmi M. Lawal Mr. Jude C. Ohanehi
Non-Executive Director Managing Director Executive Director
12
Mr. Francis C. Nelson ***
Executive Director
6 6 6 6
5 6 7 8 9
10
6 6 6 6
2 6 6 2
* Appointed on 26 October 2017 to replace Mrs. Adebola A. Jge. **Appointed on 26 October 2017 to replace Mr. Joseph Daramola. ***Appointed on I August 2017 to the position of Executive Director, Finance & Administration.
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BOARD APPRAISAL An effective Board is a critical factor in ensuring a well governed, well directed and successful Bank. A periodic evaluation of the effectiveness and performance of the Board of Directors and its committees, is consistent with good corporate governance.
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In compliance with the requirement of the Central Bank of Nigeria (CBN) Code of Corporate Governance, the Board commissioned the Society for Corporate Governance to carry out Board evaluation for the financial year ended 31 December 2017.
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Their report will be communicated to the shareholders at the Annual General Meeting. TENURE OF DIRECTORS In pursuance of the Bank's drive to continually imbibe best Corporate Governance practices, the tenure of the Non-Executive Directors is limited to a maximum of three (3) terms of three (3) years each. This allows for the injection of fresh perspectives to the business of the Board.
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INDUCTION AND CONTINOUS TRAINING On appointment to the Board, all Directors receive an induction tailored to meet the requirement of their position as Directors. This induction which is arranged by the Company Secretary includes presentation by Senior Management staff to assist Directors in building a detailed understanding of the Bank's operations, its strategic plan, Business environment and key issues faced by the Bank and to introduce directors to their fiduciary duties and responsibilities. Training and Education of Directors on issues pertaining to their oversight function is a continuous process in order to update their knowledge and skills and keep them informed of new developments in the Bank's business and operating environment. These trainings are carried out through external, local and international courses.
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NPF Microfinance Bank PLC Annual Report - 31 DECEMBER
All Directors attended at least one training course in the year under review. The training courses attended are indicated hereunder:
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Facilitator
Training
Date
Participants
Society for Corporate Governance
Risk Management and Board Effectiveness in a Challenging Nigerian Business Environment
22 February 2017
Prince Jude Ifeanyi Eke
Society for Corporate Governance
Corporate Governance Programme on Finance for Non-Finance Directors22 March 2017 Understanding and Interpreting Financial Statements in accordance to IFRS
Mr. Azubuko J. Udah, Mr. Emmanuel C. Wabali, Mr. Audu Abubakar, Mr. Mohammed D. Saeed, Mr. Joseph Daramola, Mrs. Abiodun Ige
FITC
International Programme for Directors of 8- 12 May 2017 Banks & Other Financial Institutions
Prince Jude Ifeanyi Eke and Mr. Audu Abubakar
DCSL Corporate Services Ltd
Improving the Performance of Audit Committee
14- 15 June 2017
Mr. Lazarus Onwuka, Mr. Abdulquadri Sanni, Mr. Emmanuel C. Wabali, Mr. Audu Abubakar
FITC
CBN-FITC Continuous Education Programme for Directors of Banks
19 - 20 September 2017
Mr. Azubuko J. Udah and Mr. Mohammed D. Saeed
9 December 2017
Mr. Azubuko J. Udah, Mr. E.C. Wabali, Prince Jude Ifeanyi Eke, Mr. Audu Abubakar, Mr. Mohammed Saeed, Mr. Olusholla B. David, Mr. Jibril G. Gane, Mr. Akinwunmi Lawal, Jude Ohanehi, Mr. Francis C. Nelson
8 December 2017
Mr. Azubuko J. Udah, Mr. Emmanuel C. Wabali, Prince Ifeanyi Jude Eke, Mr. Audu Abubakar, Mr. Mohammed D. Saeed, Mr. Olusholla B. David, Mr. Jibril G. Gane, Mr. Akinwunmi Lawal, Jude Ohanehi, Mr. Francis C. Nelson
Lagos Business School
Sustainability & Social Impact Assessment Training
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ADRAC Professional Services Consulting
IFRS technical update training
BOARD COMMITTEES The responsibilities of the Board are further accomplished through four ( 4) standing Committees in addition to the Statutory Audit Committee. Through these commmittees, the Board is able to effectively deal with complex and specialised issues and fully utilise its expertise to formulate strategies for the Bank. These committees have clearly defined terms of reference setting out their roles, responsibilities, functions and reporting procedures to the Board.
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The Board committees in operation during the period under review were: Board Board Board Board
Finance and General Purpose Committee Risk Management Committee Audit Committee Governance and Remuneration Committee
The roles and responsibilities of these committees are discussed below: Finance and General Pumose Committee This Committee has the responsibility for monitoring all financial aspects of the Bank. Its responsibilities also include:I '-./
To formulate and shape the strategy of the Bank and make recommendations to the Board Review the budget of the Bank and make recommendations to the Board for approval
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NPF Microfinance
Bank PLC
Annual Report-31 DECEMBER2017
Monitor performance of the Bank against the budget Consider and approve expenses above the limits of Management and make recommendations to the Board for approvals above its limits Consider and approve significance IT investment and expenditure to be made by the Bank Review the Assets and Liability Committee report Review the Bank's investment portfolio annually Approve all policies relating to finance for the Bank Oversee the development and maintenance of IT Strategic Plan Review and approve within its approved limits the annual manpower plan for the Bank Approve compensation policy and review compensation for all officers of the Bank (excluding Executive and Non - Executive Directors). The Committee meets at least once in each quarter. However, additional meetings are convened as required. The Committee met four (4) times in the 2017 financial year on 23/2, 25/4, 18/7 and 17/10. Membership of the Committee and attendance at its meetings during the year were as follows: No. I 2 3 4 5 6
Members Mr. Emmanuel C. Wabali Prince Jude Ifeanyi Eke Mr. Audu Abubakar Mrs Adebola Abiodun Ige Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi
Designation Chairman Member Member Member Member Member
No. of Meetings 4 4 4 4 4 4
Attendance 4 3 3 2 4 4
Board Risk Management Committee The responsibilities of this Committee are:Review and recommend risk management policies including risk strategy to the full Board for approval Review the adequacy and effectiveness of risk management and controls Monitor the Bank's compliance level with applicable laws and regulatory requirements Periodic review of changes in the economic and business environment, including trends and other factors relevant for the Bank's risk profile Review and recommend for approval of the Board risk management procedures and controls for new products and services Approve lending, investment decisions, credit products and new processes Oversight of management's process for the identification of significant risks across the Bank and the adequate prevention, detection and reporting mechanism Review and approve the framework for the management of credit risk, market risk, liquidity risk, operational risk, reputation risk and other risk types as appropriate Review and oversee the development of loan loss provision policy and annually assess the appropriateness and application of such policy in the light of the credit risk imbedded in the overall loan portfolio Review and monitor the effectiveness and application of credit risk management policies, related standards and procedures, and control environment with respect to credit decisions and review internal audit reports with respect thereto; and Review and approve or decline credit applications submitted by the Management's Credit Committee for loans to new individual borrowers or additional requests for existing borrowers. The Board Risk Management Committee meets quarterly, and additional meetings are convened as required. The Committee met four (4) times during the 2017 financial year on 19/1, 26/4, 19/7 and 18/10. Membership of the Committee and attendance at its meetings during the year were as follows:No. I 2 3 4 5 6 7
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Members Prince Jude Ifeanyi Eke Mr. Emmanuel C. Wabali Mr. Joseph Daramola Mr. Mohammed D. Saeed Mrs Adebola Abiodun Ige Mr. Akinwunmi Lawal Mr. Jude C. Ohanehi
Designation Chairman Member Member Member Member Member Member
No. of Meetings 4 4 4 4 4 4 4
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Attendance 4 4 3 2 2 3 4
NPF Microfinance Bank PLC Annual Report - 31 DECEMBE~ 2017
Board Audit Committee The Audit Committee is responsible for maintaining oversight regarding the integrity of the Bank's financial statements, ensuring compliance with legal and other regulatory requirements, assessment of qualification and independence of the external auditor, and assessment of performance of the Bank's internal audit function as well as that of the external auditors. Its responsibilities also includes: Ensure the development of a comprehensive internal control framework for the Bank, obtain assurance and report the operating of the Bank's internal control framework to the Board Review and ensure that adequate whistle-blowing
effectiveness
procedures are in place and that a summary of issues reported are highlighted to the Board
Preserve auditor independence, and set clear hiring policies for employees and /or former employees of independent auditors Consider any related-party transactions that may arise within the Bank or any of its related companies Invoke its authority to investigate any matter within its terms of reference for which purpose the Bank must make available the resources to the internal auditors with which to carry out this functions including access to external advice when necessary This Committee consist of only Non-Executive Directors and is required to meet quarterly in a year. The Committee met three (3) times during the 2017 financial year on 24/2, 28/4 and 25/7. Members of the Committee and attendance at its meetings during the year were as follows:-
No.
Members
Designation
1
Mr. Mohammed D. Saeed
Chairman
3
Attendance 2
2
Prince Jude Ifeanyi Eke Mr. Joseph Daramola Mr. Audu Abubakar Mrs Adebola Abiodun Ige
Member Member Member Member
3 3
3 3
3 3
3 3
3 4
5
No. of Meetings
Board Governance and Remuneration Committee J
The responsibilities of the Committeee are; Make recommendations
on the appropriate compensation structure for the Managing Director and other senior Executives
Make recommendations
to the Board on the Bank's policy framework of Executive remuneration and its cost
Review and report to the Board on the succession planning process for the positions of chairman, Chief Executive Officer/Managing Executive Directors and any other key managerial position . Periodically evaluate the skills, knowledge and experience required on the Board
Director,
Establish the criteria for Board and Board committee membership, review candidates qualifications and any potential conflict of interest, assess the contributions of current Directors in connection with their re-connection and make recommendation to the Board Monitor the development, alignment, satisfaction and productivity of the Bank's employees with a view to competitive excellence
J
Develop and constantly review and make recommendation the Bank
to the Board on policies and procedures to maintain high standard of management by
Monitor on a continuous basis and make recommendations
to the Board concerning the corporate governance of the Bank
Perform other oversight functions as may from time to time be expressly requested by the Board The Board Governance and Remuneration Committee is required to meet as often as it deems necessary but not less than 3 times a year. The Committee met four (4) times in the 2017 financial year on 20/1, 4/5, 26/7 and 19/10. Membership of the Committee and attendance at its meetings during the year were as follows:
J
No. Members I Mr. Mohammed D. Saeed
4
Prince Jude Ifeanyi Eke Mr. Joseph Daramola Mr. Emmanuel C Wabali
5
Mr. Audu Abubakar
Member
2
3
)
Designation Chairman Member Member Member
No. of Meetings 4 4 4 4 4
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11
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Attendance 3 4
3 4
3
I
NPF MicrofinanceBan~ PLC
rnua/ Report- 31 DECEMBE~ 2017 I
II Statutory Audit Committee In compliance with section 359(6) of the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004, lln audit committee comprising two (2) representatives of shareholders elected annually at the Annual General Meeting (AGM) and two (2) Non-Executive Directors is in place. I The responsibilities of the Committee are as contained in the Companies and Allied Matters Act, Cap C.20, Laws of the Federatio~ of Nigeria, 2004. The Statutory Audit Committee meets at least once in each quarter. However, additional meetings are conveyed as required. The Committee met five (5) times in 2017 financial year on 28/2, 7/3, 24/4, 2/8 and 16/10. Membership of the Committee and attendance at its meetings during the year were as
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No. 1 2 3 4
I Designation
Members Mr. Waheed A. Adegbite * Mr. Lazarus Nnadozie Onwuka Alhaji Abdulquadri Sanni
5
Mr. Emmanuel C.Wabali Prince Jude Ifeanyi Eke
6
Mr. Audu Abubakar
No. of Meeting 5 5
Chairman Chairman Member · Member
**
Member Member
Attendance I 2
I
3
I
5
5
I
5 5 5
3 2
I
3
* Mr. Waheed A. Adegbite was elected by members at the Annual General Meeting on 6 July 2017 to replace Mr. L.N. Onwuka. ** Prince Jude Ifeanyi Eke was appointed to represent the Board at the AGM held on 6 July 2017 and replaced Mr. Emmanuel C. Wabali I
on the
Committee MANAGEMENT
COMMITTEES
The committees comprise senior management staff of the Bank. These committees provide inputs for the respective Board committees of the Bank and ensure that recommendations of the Board committees are effectively and efficiently implemented. They meet as frequently as necessary to take action and decisions within the confines of their powers. The standing management com~ittees
are:-
1
- Assets and Liabilities Committee - Enterprise Risk Management Committee - Finance and Expenditure Committee IT Steering and Business Development Committee Staff Committee - Management Credit Committee )
Assets and Liabilities Committee The Asset and Liability Committee meets weekly or as required to analyse and make recommendations on risks arising from day to day activities of the Bank. The Committee also establishes standards and policies covering the various components of market risk. It also ensures that the authority delegated by the Board and Management Risk Committees with regard to market risk is exercised effectively, and that market risk exposures are efficiently monitored and managed. The Committee is composed of all senior management staff. Enterprise Risk Management Committee The Committee is comprised of all senior management staff of the Bank. The Committee is responsible for the implementation
of the Bank's risk
management strategy. The Committee also monitors overall regulatory and economic capital adequacy. It recommends to the Board for its approval, clear policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks. The Commit!~
is also saddled
with the responsibility of reviewing asset quality results versus plan, portfolio management and the adequacy of the allowance for credit losses. Finance and Expenditure Committee J
_)
The Finance and Expenditure Committee is responsible for recommending for approval to management the purchase of assets for new and existing branches. It also reviews the budget expenditure performance during the financial year. The Committee is comprised of the Company Secretary/Legal Adviser, Head Finance & Administration, Head Credit, Head Information Technology and Head Administration. · Staff Committee
'j
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The Committee considers all staff disciplinary issues for recommendation/ implementation to the management team. It also considers .issues pertaining to staff welfare and performance appraisal. ! The members of the Committee include the Company Secretary/Legal Adviser, Head Finance & Administration, Head Internal Audit, Head Credit, Head Administration and Head Information Technology. \
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NPF
Microfinance Bank
Annual Report - 31 DECEMBER
IT Steering and Business Development Committee This Committee is responsible for amongst others, development of corporate information technology (IT) strategies and projects that ensure cost effective application and management of resources throughout the organisation. The Committee also reviews for management's recommendation to the Board Risk Management committee, new and existing bank products and its features. The members of the Committee includes the Executive Director Operations, Head Information Technology, Head Credit, Head Administration, Head Internal Audit, Head Marketing and Head Finance & Administration.
'J
Management Credit Committee The Committee is responsible for ensuring that the Bank complies fully with the Credit Policy guidelines as laid down by the Board of Directors. The Committee also reviews and approves credit facilities not exceeding an aggregate sum to be determined by the Board from time to time. The Committee is saddled with the responsibility of ensuring that adequate monitoring and recovery of credit is carried out. WHISTLE-BLOWINGPROCESS The Bank is committed to the highest standards of openness, probity and accountability hence the need for an effective and efficient whistle blowing process as a key element of good corporate governance and risk management. Whistle blowing process is a mechanism by which suspected breaches of the Bank's internal policies, processes, procedure and unethical activities by any stakeholder (staff, customers, suppliers and applicants) are reported for necessary actions. It ensures a sound, clean and high degree of integrity and transparency in order to achieve efficiency and effectiveness in our operations.
The reputation of the Bank is of utmost importance and every staff of the Bank has a responsibility to protect the Bank from any person or act that might jeopardize its reputation. Staff are encouraged to speak up when faced with information that would help protect the Bank's reputation. An essential attribute of the process is the guarantee of confidentiality and protection of the whistle blower's identity and rights. It should be noted that the ultimate aim of this policy is to ensure efficient service to the customer, good corporate image and business continuity in an atmosphere compliant to best industry practice. The Bank has a Whistle Blowing channel via its website, dedicated telephone hotlines and e-mail address in compliance with Section 6.1.12 of the Central Bank of Nigeria (CBN) post-consolidation Code of Corporate Governance for Banks in Nigeria. The Bank's Head of Internal Audit is responsible for monitoring and reporting on whistle blowing.
__) \ _ ___)
SECURITIES TRADING BY INTERESTED PARTIES The Bank has in place a policy on trading in the Bank's Securities on terms no less exciting than the required standard set out in the Nigeria Stock Exchange Listing Rules. The policy prevents employees, Directors and related individuals/Companies from insider dealings on the shares of NPF Microfinance Bank Pie and related parties. The essence of the policy is to prevent the abuse of confidential non-public information that may be gained during the execution of NPF Microfinance Bank's Business. All Directors of the Bank have complied with the listing rules of the Nigeria Stock Exchange regarding securities transactions by Directors. SHAREHOLDERS' PARTICIPATION The Annual General Meeting of the Bank is the highest decision-making forum. Shareholders are opportuned to express their opinions on the Bank's financials and other issues affecting the Bank at such forum. The Bank encourages shareholders to partcipate in the affairs of the Bank. PROTECTION OF SHAREHOLDERS' RIGHTS The Board ensures the protection of the statutory and general rights of shareholders at all times, particularly voting rights at General Meetings of the Bank. All are treated equally, regardless of volume of shareholding or social status. SHAREHOLDERS' MEETING Shareholders' meetings are duly convened and held in line with existing statutory and regulatory regime. The Bank's General Meetings are conducted in a transparent and fair manner. Shareholders have the opportunity to express their opinions on the Bank's financial results and other issues affecting the Bank. The Annual General Meetings are attended by representatives of regulators such as the Nigerian Stock Exchange as well as representativesof Shareholders' Associations.
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PLC 2017
NPF Mlcroffnance Annual Report-
COMPLAJNTMANAGEMENT In compliance with the Securities and Exchange Commission (SEC) rules of 2015, the Bank has in place a complaint management policy. The policy sets out the manner in which shareholders make enquiries or register their complaints and how the Bank responds/address shareholder's complaints, issues and other matters that affects their shareholding. COMPLAJNTCHANNELS To ensure an effective feedback process, the following channels have been provided for customers to enable them contact the Bank: Emails
[email protected] Toll Free Li11e: 08008008008
BY ORDER OF THE BOARD
-= Aa~ . . ~ Mrs. Osaro J. Idem
ia
Company Secretary/Legal Ad,•iser
FR.C/2013/t-lB.A/00000002319 9 March2018
14
Bank PLC
31 DECEMBER
2017
NPF Microfinance Bank PLC Annual Report-31 DECEMBER 2017
Statement of Directors' responsibilities in relation to the financial statements for the year ended 31 December 2017
The directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance wiih International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004, the Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act, Cap B.3, Laws of the Federation of Nigeria, 2004 and relevant Central Bank of Nigeria (CBN) guidelines and circulars. The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act, Cap C.20, Laws of the Federation ofNigeria, 2004 and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. The directors have made assessment of the Bank's ability to continue as a going concern and have no reason to believe that the Bank will not remain a going concern in the year ahead SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
Managing Director/Chief Executive Officer FRC/20 l 4/CIBN/00000006345 9 March2018
NPF Microtinance Bank PLC Annual Report- 31 DECEMBER 2017
REPORT OF THE AUDIT COMMITTEE TO THE MEMBERS OF NPF MICRO FINANCE BANK PLC In compliance with section 359(6) of the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004, we the members of the Audit Committee of NPF Microfinance Bank Pie report as follows: We have reviewed the scope and planning of the audit requirements and we found them adequate. We have reviewed the financial statements for the year ended 31 December 2017 and are satisfied with the explanations obtained. We reviewed the external auditor's Management Letter for the year ended 31 December 2017 and management responses thereto and are satisfied that management is taking appropriate steps to address the issues raised. We have reviewed all insider related credits as defined by Section 20(2) of the Banks and Other Financial Institutions Act, Cap B.3, Laws of the Federation of Nigeria, 2004 and confirm that the Bank disclosed all such credits and that they were reported in line with the Central Bank of Nigeria (CBN)'s guidelines. Specifically, we are satisfied that the Bank has complied with the provisions of the Central Bank of Nigeria circular BSD/1/2004 dated 18 February 2004 on "Disclosure of insider related credits in the financial statements of banks". We hereby confirm that an aggregate amount ofN32,086,000 was outstanding as at 31 December 2017 (31 December 2016: N24,236,000) of which none was non-performing (31 December 2016: Nil) (see note 26 to the financial statements).
We ascertained that the accounting and reporting policies of the Bank for the year ended 31 December 2017 are in accordance with legal requirements and agreed ethical practices. The external auditors confirmed having received full cooperation from management in the course of their statutory audit.
8 March 2018
Other members of the Audit Committee: Alhaji Abdulquadri Sanni Prince Ifeanyi Jude Eke
Mrs. O.J. Idemudia (Company Secretary) acted as Secretary to the Committee
I
16
KPMG Professional Services KPMGTower Bishop Aboyade Cole Street Victoria Island PMB 40014, Falomo Lagos
Telephone
234 (1) 271 8955
Internet
234 (1) 271 8599 www.kpmg.com/ng
INDEPENDENT AUDITOR'S REPORT To the Shareholders of NPF Microfinance Bank Pie Report on the Audit of the Financial Statements Opinion We have audited the financial statements of NPF Microfinance Bank Pie ("the Bank"), which comprise the statement of financial position as at 31 December 2017, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 21 to 64.
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In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Bank as at 31 December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004, the Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act, Cap B.3, Laws of the Federation of Nigeria, 2004 and relevant Central Bank of Nigeria (CBN) Guidelines and Circulars. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial · statements in Nigeria and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and. appropriate to provide a basis for our opinion.
J
Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment of loans and advances to customers The impairment of loans and advances to customers is an area of significance in our audit due to the significant judgment involved in estimating the recoverability of loan balances. The Bank identifies loans and advances for specific impairment assessment mainly based on past due status of the loans; and thereafter, determines its best estimate of the present value of the cash flows that are expected to be received on the loans. An impairment assessment is performed collectively on all other loans, with the key assumptions being the possibility of a loan becoming past due and subsequently defaulting, the rate of recovery on loans that are past due and in default and the estimated time between when the loss event occurred and when
KPMG Professional Services, a Partnership established under Nigeria law, is a member of KPMG International Cooperative ("KPMG International"), a swiss entity. All rights reserved. Registered in Nigeria No BN 986926
Partners: F. Bada Adewale K. Ajayi Abiola
Ayodele A. Soyinka lbitomi M. Adepoju Lawrence C. Amadi
Oladapo A. Okubadejo Olusegun A. Sowande TolulopeA. Oduka1e
Adebisi O. Lamikanra Ajibola 0. Olomola Chibuzor N. Anyanechi ljeoma T. Emezie-Ezigbo Mohammed M. Adama Oladimeji I. Salaudeen Oluwafemi 0. Awotaye Victor U. Onyenk.pa
Adek.unle A. E!ebute Ayobami L. Salami Ehile A. Aibangbee
Joseph 0. Tegbe Nneka C. Eluma Olanike I. James Oluwatoyin A. Gbagi
Adeto1a P. Adeyemi Ayodele H. Othihiwa Goodluck C. Obi Kabir 0. Okunlola Oguntayo I. Ogungbenro Olumide 0. Olayinka Temitope A. Onitiri
it was identified. For the purposes of a collective evaluation of impairment, loans are grouped on the basis of similar credit risk characteristics which considers the past due status of the loans. Collective impairment allowance is then established using statistical methods which considers historical loss rate experience. ,____,,,
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Procedures Our audit procedures, amongst others, were as follows: •
We evaluated the key controls over the impairment determination process which are the credit committee review of loan facilities and system configuration. The key controls tested covered processes such as monitoring the performance of loans and advances including timely identification of impairment triggers.
•
Regarding loans and advances specifically impaired by the Bank, we identified the loans with risk factors such as the current level of past due obligations and performed a recalculation of the specific impairment. We compared the outcome with the specific impairment recorded by the Bank.
•
For collective impairment, we challenged the Bank's model by evaluating the assumptions inherent in the Bank's model against our understanding of the Bank and knowledge of the microfinance sector. We evaluated the methodology used by the Bank to calculate the likelihood of loans and advances moving into default by recalculating these default rates using our cumulative knowledge of the Bank's actual historical experience. We recalculated the recovery rates used in the collective impairment assessment and compared the outcome to the Bank's history of actual recoveries on loans in default. We then applied these statistical rates to the outstanding balance on the loans in order to check the accuracy of the collective impairment recorded by the Bank.
The Bank's accounting policy on impairment and related disclosures on credit risk are shown in note 3(f) (vii) and 4(b) respectively. ~)
Information Other than the Financial Statements and Audit Report thereon The Directors are responsible for the other information. The other information comprises the Directors' Report; Corporate Governance Report; Statement of Directors' Responsibilities; Report of the Audit Committee; and Other National Disclosures (but does not include the financial statements and our auditor's report thereon) which we obtained prior to the date of this auditor's report; and the Vision & Mission Statements; Financial Highlights; Directors, Officers & Professional Advisers; Notice of Annual General Meeting; Chairman's Statement; Managing Director's Report; Board of Directors' Profiles; Report on the Appraisal of the Board; Profiles of the Management Team; Branches and their Addresses; Proxy Form; Mandate for e-Dividend Payment; Mandate for eBonus; and Personal Data Form (together "the outstanding reports"), which are expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the outstanding reports, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
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Responsibilities of the Directors for the Financial Statements The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs and in the manner required by the Companies and Allied Matters Act, Cap C.20, Laws of the Federation of Nigeria, 2004, the Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act, Cap B.3, Laws of the Federation of Nigeria, 2004 and relevant Central Bank of Nigeria (CBN) Guidelines and Circulars and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Bank or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, 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 ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, 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.
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Analysis of directors by gender:
-, -,
December 2017 Male Female
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Managing Director Executive Director Non - Executive Directors TOTAL
December 2017 Male Female I 2 6 -
Total I 2 6
-
9
9
December 2016 Male Female I 1 6 I 1 8
Total 1 1 7
2017
2016
46,658 69,905 116,563 71,001 187,564
28,860 82,474 111,334 45,767 157,101
9
The remuneration paid to the directors of the Bank (excluding pension and certain allowances) was: In thousands ofnaira Fees and sitting allowances Other directors' expenses Executive compensation (see note 26(a)(i)) j
62 J
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NPF Microfinance Bank PLC
Annual Report - 31 DECEMBER 2017
The directors' remuneration shown above includes: The Chairman
12,510
6,200
Highest paid director
26,977
18,906
J
The number of directors who received fees and other emoluments (excluding pension contributions and reimbursable expenses) in the following ranges were: 6
Below Nl,000,000 Nl,000,001 - N5,000,000 N5,000,001 - NI0,000,000 NI0,000,001
I
and above
6
2
3 10
9
28 Compliance with banking and other regulations During the year, the Bank did not pay any penalties. In 2016, the following penalties were paid: Nl.35million to the Securities and Exchange Commission in respect of delay in submission of the 2015 audited financial statements and Nl.095 million to the Federal Inland Revenue for non-rendition of VAT returns. 29 Events after the reporting period There were no events which could have a material effect on the financial position of the Bank as at 31 December 2017 or the profit for the year then ended on that date, that have not been adequately provided for or disclosed in the financial statements. 30 Litigations and claims The Bank in its ordinary course of business was involved in 12 cases as at 31 December 2017 (31 December 2016: 12) as a co-defendant. The directors of the Bank are of the opinion that none of the aforementioned cases is likely to have material adverse effect on the Bank and are not aware of any other pending and/or threatened claims or litigations which may be material to the financial statements. However, the total amount that may be claimed against the Bank is estimated at N636 million (2016: N552.4 million). 31 Operating segments Segment information is provided on the basis of operating and reportable segments in the manner the Bank manages its business. The financial statements of the Bank as presented reflects the management structure of the Bank and the way in which the Bank's management reviews business performance. Invariably, management considers its retail banking operations, whose results are shown in the statement of financial position and statement of comprehensive income, as its only operating segment. '-'")
32 Earnings per share Basic earnings per share (EPS) is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.
_
_) Net profit attributable to shareholders ( in thousands ofnaira) Number of shares in issue (in thousands) Weighted average number of shares in issue (in thousands) Basic earnings per share (kobo)
2017
2016
631,890 2,286,656 2,286,656 28
554,903 2,286,656 2,286,656 24
The Bank did not have potential dilutive shares as at 31 December 2017 (31 December 2016: Nil). 33 Statement of cash flows notes (a) Change in borrowings (see note 23(b))
Additions during the year Interest accrued during the year Interest payable on borrowings
63
2017
2016
1,600,000 55,816 (25,786) 1,630,030
15,658 (10,492) 5,166
NPF Microfinance Bank PLC Annual Report - 31 DECEMBER 2017
(b) Proceeds from disposal of property and equipment Cost of property and equipment disposed during the year Accumulated deperciation on disposals of property and equipment
275,709 (223,276) 52,433 1,228
Profit on sales of property and equipment Proceeds from disposal of property and equipment
53,661
18,413 (I 8,197) 216 2,285 2,501
(c) Change in other liabilities
'
Balance in other liabilities at 3 I December 20 I 7 Balance in other liabilities at 3 I December 20 I 6
315,251 (537,353) (222,102) 102,432 (I 19,670)
Retirement benefit obligations paid
537,353 (652,637) (115,284) 172,130 56,846
(d) Proceeds from disposal of investments Balance on investment securities at 3 I December 20 I 7 Balance on investment securities at 31 December 2016
16,681 37,574 20,893 15,274 157 36,324
Profit on disposal of available-for-sale financial assets (see note 10) Impairment (write-back)/loss on investments (see note 11)
(e) Interest received Interest Interest Interest Interest
income (see note 7) receivable on pledged assets receivable on loans received
2,605,413 (5,053) (16,003) 2,584,357
1,997,486 (49,673) (15,571) 1,932,242
(318,898) 25,786 20,037 (273,075)
(223,480) 10,492 15,269 (197,719)
(t) Interest paid Interest Interest Interest Interest
expenses (see note 8) payable on borrowings payable on deposits paid
34 Unclaimed dividends Unclaimed dividends summed up to N63,896,IOl.91 as at 31 December 2017 (2016: N44,537,224.57). This amount is made up of N59,079,612.93 (2016: N35,769,790.30) invested with Stanbic IBTC Asset Management Limited in fixed income mutual funds and N4,816,488.98 (2016: N8,767,434.27) in the custody ofCardinalStone Registrars Limited. The investment balance ofN59,079,612.93
is analysed below:
Net investible balance I October - 31 December 2017 Net income earned
N'OOO 57,646 1,433 59,079
N'OOO 34,573 1,196 35,769
Fee amount N'OOO
Fee amount N'OOO
1,210 1,210
1,100 1,100
35 Fees for non-audit services KPMG Professional services rendered the following non-audit services to the Bank: \/
Service description Tax compliance services
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OTHER NATIONAL DISCLOSURES
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NPF Microfinance Bank PLC Annual Report- 31 DECEMBER 2017
OTHER NATIONAL DISCLOSURES: VALUE ADDED STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2017 N'OOO 3,654,875 (1,086,597)
Gross earnings Bought-in-materials and services - local
%
2016 N'OOO 2,925,229 (794,240)
%
Value added
2,568,278
100
2,130,989
100
Distribution of value added: To employees - As salaries and other benefits
1,306,773
51
1,008,055
47
To providers of finance - As interests
318,898
12
223,480
10
To the Government -As taxes
187,929
7
248,537
12
Retained in the business - Asset replacement (depreciation) - Profit to augment reserves
122,788 631,890
5 25
96,014 554,903
5 26
2,568,278
100
2,130,989
100
Value added
This statement represents the distribution of the wealth created with the Bank's assets through its own and its employees' efforts.
)
66
NPF Microfinance Bank PLC
Annual Report- 31 DECEMBER2017
OTHER NATIONAL DISCLOSURES: FINANCIAL SUMMARY AS AT 31 DECEMBER
2017
2016
2015
5,752,469 409,674 9,008,675 16,681 172,878 591,964
1,889,881 581,425 9,095,801 37,574 257,545 499,646
3,054,860 583,038 7,881,519 38,154 346,969 394,070 35,411
3,054,787 635,090 6,527,210 47,265 194,773 371,331 34,733
2,477,012 20,000 5,559,453 61,268 207,530 355,375
15,952,341
12,361,872
12,334,021
10,865,189
8,680,638
9,126,494 146,270
6,792,391 199,571
6,610,113 630,795 188,983
4,803,374 213,434 282,010
61,569 315,251 1,550,468
19,910 537,353 349,249
652,637
813,502 672,976
3,858,052 135,024 106,449 62,196 602,023
11,200,052
7,898,474
8,082,528
6,785,296
4,763,744
CAPITAL AND RESERVES Share capital Share premium Retained earnings Other reserves
1,143,328 1,517,485 728,276 1,363,200
1,143,328 1,517,485 506,963 1,295,622
1,143,328 1,517,485 476,216 1,114,464
1,143,328 1,517,485 407,801 1,011,279
1,143,328 1,517,485 301,138 954,943
TOTAL EQUITY
4,752,289
4,463,398
4,251,493
4,079,893
3,916,894
15,952,341
12,361,872
12,334,021
10,865,189
8,680,638
2014
2013
In thousands of naira STATEMENT OF FINANCIAL POSITION
,-
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ASSETS Cash and cash equivalents Pledged assets Loans and advances to customers Investment securities Trade and other receivables Property and equipment Deferred tax assets TOTAL ASSETS
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I ..__)
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LIABILITIES Deposits from customers Current tax liabilities Retirement benefit obligations Deferred tax liabilities Other liabilities Borrowings TOTAL LIABILITIES
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