FBN Holdings Plc. Consolidated Financial Statements for ... FBN Holdings Plc. DIRECTORS AND ADVISORS

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  • FBN Holdings Plc.

    Consolidated Financial Statements

    for the year ended 31 December 2019

  • FBN Holdings Plc.

    Index to the consolidated financial statements

    for the year ended 31 December 2019

    Note Page Note Page

    Directors and advisors 1 7 Interest income 116

    Corporate Governance Report 2 8 Interest expense 116

    Director's report 18 9 Impairment charge for credit losses 116

    Responsibility for annual financial statements 23 10 Insurance premium revenue 117

    Statement of compliance with NSE listing rule on

    Securities Trading Policy

    24

    11 Fee and commission 117

    Report of the Audit Committee 25 12 Net gains on foreign exchange 117

    Report of the Independent Auditors 26 13 Net gains/(losses) on investment securities 117

    Income statement 32

    14 Net (losses)/gains from financial instruments at fair

    value through profit or loss 118

    Statement of comprehensive income 33

    15 Dividend income 118

    Statement of financial position 34 16 Other operating income 118

    Consolidated statement of changes in equity 35 17 Personnel expenses 118

    Company statement of changes in equity 36 18 Other operating expenses 119

    Statement of cash flows 37 19 Taxation - income tax expense and liability 119

    Notes to the consolidated financial statements 20 Cash and balances with central banks 120

    1 General information 38 21 Cash and cash equivalents 121

    2 Summary of significant accounting policies 38 22 Loans and advances to banks 121

    2.1 Basis of preparation 38 23 Loans and advances to customers 121

    2.2 Changes in accounting policy and dislosures 38

    24 Financial assets and liabilities at fair value through

    profit or loss

    124

    2.3 Consolidation 39 25 Investment securities 126

    2.4 Segment reporting 40 26 Asset pledged as collateral 127

    2.5 Common control transactions 41 27 Other assets 128

    2.6 Foreign currency translation 41 28 Investment properties 129

    2.7 Income taxation 41 29 Investment in associates 129

    2.8 Inventories 42 30 Investment in subsidiaries 130

    2.9 Financial assets and liabilities 42 31 Asset Held for Sale: Discontinued operations 134

    2.10 Revenue recognition 47 32 Property and equipment 136

    2.11 Impairment of non-financial assets 49 33 Intangible assets 139

    2.12 Discontinued operations 49 34 Deferred tax assets and liabilities 141

    2.13 Collateral 49 35 Deposits from banks 142

    2.14 Leases 49 36 Deposits from customers 142

    2.15 Investment properties 52 37 Other liabilities 143

    2.16 Property and equipment 53 38 Liability on investment contracts 143

    2.17 Intangible assets 53 39 Liability on insurance contracts 144

    2.18 Investment contracts 54 40 Borrowings 144

    2.19 Cash and cash equivalents 54 41 Retirement benefit obligations 145

    2.20 Employee benefits 54 42 Share capital 149

    2.21 Provisions 55 43 Share premium and reserves 149

    2.22 Insurance contracts 55

    44 Reconcilliation of profit before tax to cash generated

    from operations

    150

    2.23 Fiduciary activities 57 45 Commitments and contingencies 150

    2.24 Issued debt and equity securities 57 46 Offsetting financial assets and financial liabilities 152

    2.25 Share capital 57 47 Related party transactions 153

    2.26 Financial guarantees 58 48 Directors' emoluments 153

    3 Financial risk management 59 49 Compliance with regulations 154

    3.1 Introduction and overview 59 50 Events after statement of financial position date 154

    3.2 Credit risk 61 51 Dividends per share 154

    3.3 Liquidity risk 85 52 Earnings per share 154

    3.4 Market risk 89 53 Restatement 155

    3.5 Management of insurance risk 96 Other National Disclosures

    3.6 Equity risk 103 Statement of value added 156

    3.7 Fair value of financial assets and liabilities 104 Five year financial summary 158

    4 Capital management 109

    5 Significant accounting judgements, estimates and

    assumptions

    112

    6 Segment information 114

  • FBN Holdings Plc.

    DIRECTORS AND ADVISORS

    DIRECTORS

    Dr. Oba A. Otudeko, CFR Non-Executive Director (Group Chairman)

    U. K. Eke, MFR Group Managing Director

    Oye Hassan-Odukale, MFR Non-Executive Director

    Chidi Anya Non-Executive Director

    Dr. Sule Hamza Wuro Bokki Non-Executive Director

    Debola Osibogun Non-Executive Director

    Omatseyin Ayida Non-Executive Director

    Dr. Adesola Adeduntan Non-Executive Director

    Oluwande Muoyo Non-Executive Director

    Cecilia Akintomide, OON Non-Executive Director

    COMPANY SECRETARY:

    REGISTERED OFFICE: Samuel Asabia House

    35 Marina

    Lagos

    AUDITOR:

    REGISTRAR:

    Lagos

    BANKERS: First Bank of Nigeria Limited

    35 Marina

    Lagos

    FBNQuest Merchant Bank Limited

    10 Keffi Street, Ikoyi

    Lagos

    Iganmu

    First Registrars & Investor Services Limited

    Plot 2 Abebe Village Road

    Victoria Island, Lagos

    Oluseye Kosoko

    PricewaterhouseCoopers

    (Chartered Accountants)

    Landmark Towers, Plot 5B, Water Corporation Road

    1

  • FBN Holdings Plc.

    2

    CORPORATE GOVERNANCE REPORT Introduction A robust corporate governance structure remains a critical enabler of our ability as an institution to enhance the interests of our stakeholders – shareholders, customers, staff, regulators and the community. Over the years, FBN Holdings Plc (“FBNHoldings” or “FBNH”) has maintained an effective governance structure built on accountability, integrity and transparency. In 2019, the Group remained resolute on the path of good governance, aligning our long-term strategy with our governance framework and complying with the highest international standards to promote sound and efficient financial services and build market confidence. At FBNHoldings, we recognize that a fully engaged, committed and highly effective Board of Directors is vital to the success of the Group. Consequently, we continue to invest in the knowledge of our directors through bespoke training and other opportunities to deepen their expertise, experience and ability to effectively carry out their role. The Group’s oversight functions are discharged through the respective Boards of each operating entity, which also ensures compliance with industry-specific statutory and regulatory requirements. At the Holding Company and in all operating entities, the Boards operate through various Committees, and FBNHoldings’ governance framework ensures that there is a fine blend of Board autonomy and Group coordination at the operating company level. The governance framework is in alignment with global best practices and in compliance with the requirements of the Central Bank of Nigeria (CBN), National Insurance Commission, Securities and Exchange Commission, Nigerian Stock Exchange, the Financial Reporting Council and the Nigerian Code of Corporate Governance. Diversity We are aligned with the broad consensus that diversity leads to the best outcomes and enhances the ability to create superior value. Today, diversity within FBNHoldings is reflected not only in our gender mix, which complies with CBN requirements, but also through the diversity of thoughts, experience and academic background throughout the Group, and through our inclusive policies that tackle all forms of discrimination. Currently, there are three women on the board, representing 30% of the total membership, which is in line with the CBN recommendation. Shareholder/Regulatory Engagement The Board and Management maintain stakeholder focus through continuous engagement with shareholders and shareholder groups. Engagement sessions continue to provide valuable opportunities for Board and Management to listen to external perspectives, as well as gain insights into shareholders’ concerns. Similarly, recognizing the importance of regulatory bodies to the different businesses within the Group, the regulators are constantly engaged in fostering an atmosphere of cordiality and ensuring compliance with extant regulations.

  • FBN Holdings Plc.

    3

    Appointment Philosophy Relevant regulatory guidelines and laws guide FBNHoldings’ appointment philosophy, including a transparent Board appointment process. Our Directors are selected based on their skills, competencies and experience. The Board Governance and Nomination Committee identifies and considers a pool of candidates for appointment. Thereafter, recommendations on candidates’ suitability are made to the full Board, which then decides on the appointment of the candidate subject to the approval of the relevant regulatory authorities and ratification of the shareholders at the general meeting. Changes to Board Composition The FBNHoldings Board is a considered blend of diversity, experience and knowledge. The Board continuously seeks to review and refresh its composition to ensure that new ideas and experience are added to its decision-making processes. However, in 2019 there were no changes to the Board’s composition Board Composition The Board has 10 Directors, comprising seven Non-Executive Directors, two Independent Non-Executive Directors and one Executive Director, who is also the Group Managing Director. This is in alignment with global best practices, which encourage a higher percentage of Non-Executive Dir