GUINEA INSURANCE PLC MARCH 31, 2018 MANAGEMENT ACCOUNT

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1 MARCH 31, 2018 MANAGEMENT ACCOUNT

2 MANAGEMENT ACCOUNT FOR PERIOD ENDED MARCH 31, 2018 FINANCIAL HIGHLIGHTS 3/31/2018 3/31/2017 % Change N'000 N'000 Major Statement Of Financial Position Items As At 31 March 2018 Total Assets 4,320,423 3,922, Total liabilities 913,002 1,066, Insurance Contract liabilities 444, , Shareholder's Funds 3,407,421 2,855, Major Statement Of Profit Or Loss Items For The Period Ended 31 March 2018 Gross Premium Written 281, ,914 4 Gross Premuim Income 295, , Net Premuim Income 268, , Claims Expenses 9,694 (9,020) -207 Profit/ (Loss) Before Tax 1,891-31, Taxation (605) (14,450) 96 Profit/ (Loss) For The Year 1,286 (41,755)

3 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 March, /31/2018 3/31/2017 Notes % VARIANCE ACTUAL 2018 TO ACTUAL 2017 Gross premium written 1 281, ,914 4 Changes in unearned premuim 1 13,485 (64,043) (121) Gross premium income 1 295, , Reinsurance expenses 1.2 (26,933) (65,124) 59 Net premium income , , Fees and commission income 2 5,468 14,228 (62) Net underwriting Income 273, , Claims expenses 3 9,694 (9,020) 207 Underwriting expenses 4 (73,351) (48,472) (51) Underwriting result 209,952 98, Investment Income 5 31,243 23, Net realized gains and losses Net fair value gains 7 Other operating income Impairment reversal / charge 9.1 Finance cost - (737) (100) Management expenses 9 (239,759) (152,718) 57 Profit/(Loss) before taxation 1,891 (31,590) (106) Income tax expenses 10 (605) (14,450) (96) Profit/Loss after taxation 1,286 (46,040) (103) Other comprehensive income Net gain/(loss) on available-for-sale finan ,285 (100) Net (loss)/gains on ppe - land & building Remeasurement gains on defined benefit Income tax relating to OCI Total comprehensive( loss)/profit for the year, net of tax 1,286 (41,755) (103) Contigency Reserve 8,448 8,127 4 Earning/(Loss) per share Basic(kobo) (0.7) 2

4 STATEMENT OF FINANCIAL POSITION As At 31 March % Change 31/12/2017 Note % =N=000 Assets Cash and cash equivalents , , ,005 Financial assets: Available-for-sale financial assets , , ,196 Trade receivables , ,027 Reinsurance assets , , ,047 Deferred acquisition costs 18 32,874 55, ,241 Other receivables and prepayments 19 26, , ,914 Investment properties 20 1,770,000 1,572, ,770,000 Intangible Asset , Property, plant and equipment , , ,864 Statutory deposit , , ,654 Total assets 4,320,423 3,922, ,402,946 Liabilities and Equity Liabilities Insurance contract liabilities , , ,047 Trade payables 25 23,295 51, ,738 Other payables and accruals 26 90, , ,376 Employee benefit obligations 27 24,818 16, ,652 Current tax payable , , ,947 Deferred tax liabilities 21 75, , ,651 Financial liabilities - Deposit for shares 136,400-75,400 Total liabilities 913,002 1,066, ,811 Equity Issued share capital 29 3,070,000 3,070, ,070,000 Share premium , , ,545 Contingency reserve , , ,907 Retained losses (712,126) (975,687) -27 (704,964) Available-for-sale reserve and others 260,647 50, ,647 Total equity 3,407,421 2,855, ,406,135 Total liabilities and equity 4,320,423 3,922, ,402,946 MR. PIUS EDOBOR ED, FINANCE & ADMIN FRC/2013/ICAN/ MR. BABATUNDE OSHADIYA MANAGING DIRECTOR FRC/2013/CIIN/

5 STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 March, /31/2018 3/31/2017 =N=000 =N=000 Operating activities: Premium received 304, ,113 Commission received 5,468 14,228 Commission paid (45,903) (48,382) Reinsurance premium paid (26,933) (65,124) Gross claim paid (30,534) (35,347) Recoveries 1,171 4,081 Payments to employees (81,202) (71,265) Other operating cash receipts/(payments) (133,395) (65,970) Other income received Tax paid - (10,949) Net cash flow from operating activities (5,909) (31,614) Investing activities: Investment income received 31,243 23,383 Purchase of property and equipment (4,110) (8,513) Proceed from sale of equipment Purchase of Intangible Assets Proceed from loans and recievables Addtions to investment properties Net cash flows from investing activities 27,510 14,870 Financing activities: Deposit for shares Interest repayment on finance lease - (737) principal repayment on finance lease - (797) Net cash flows from financing activities - (1,534) Net increase in cash and cash equivalents 21,601 (18,279) Effect of exchange rate changes on cash and cash equivalent Cash and cash equivalents at 1 January 889, ,559 Cash and cash equivalents at 31 March, , ,280 4

6 STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 March, 2018 For the period ended 31 December, 2017 Issued share capital Retained earnings Share premium Contingenc y reserve Availablefor-sale financial assets Asset revaluatio n Total equity =N=000 As at 1 January ,070,000 (704,964) 337, , ,693 10,000 3,389,181 Profit / Loss for the year - 1,286 1,286 Transfer to contingency reserve - (8,448) - 8,448 Other comprehensive income Issues/ reclassification As At 31 March ,070,000 (712,126) 337, , ,693 10,000 3,390,467 For the period ended 31 March 2017 =N=000 As at 1 January ,070,000 (921,520) 337, ,300 46,102-2,897,427 Profit for the year - (46,040) (46,040) Transfer to contingency reserve - (8,127) - 8,127 Other comprehensive income - 4,285-4,285 Issues - As at 31 March ,070,000 (975,687) 337, ,427 50,387-2,855,672 5

7 NOTES TO THE FINANCIAL STATEMENTS 1 Net insurance premium revenue 3/31/2018 3/31/2017 =N=000 =N=000 1 Gross premium income on insurance contracts Gross premium written in the year 281, ,914 Change in unearned premiums provision 13,485 (64,043) Total gross premium income 295, ,870 1 Gross Premium Income Gross premium written Increase/ (Decrease) in Unearned premium Gross premium Income 3/31/2018 3/31/2018 3/31/2018 N 000 N 000 N 000 Motor 78,322 (1,890) 80,212 Fire 30,631 (7,518) 38,149 Marine & Aviation 27,413 12,598 14,815 Miscellaneous General Accident 100,072 8,463 91,610 Oil and Gas 45,151 (25,137) 70, ,589-13, ,074 1 Changes In unearned Premium per class of insurance business Unearned Premium As At Increase/ (Decrease) in Unearned premium Unearned Premium As At 1/1/2017 3/31/2018 N 000 N 000 N 000 Motor 66,420 (1,890) 64,530 Fire 30,699 (7,518) 23,180 Marine & Aviation 8,713 12,598 21,311 Miscellaneous General Accident 56,306 8,463 64,769 Oil and Gas 56,279 (25,137) 31, ,416-13, ,931 Gross premium written Increase/ (Decrease) in Unearned premium Gross premium Income 3/31/2017 3/31/2017 3/31/2017 N 000 N 000 N 000 Motor 53,708 8,393 45,316 Fire 62,716 6,229 56,488 Marine & Aviation 5, ,658 Miscellaneous General Accident 130,678 78,572 52,107 17,851-29, ,914 64, ,870 7

8 1.2 Re-insurance expenses 31/3/ /3/2017 Total reinsurance expenses (26,933) (65,124) Total net insurance premium revenue 268, ,746 2 Fees and commission income Reinsurance commission income 5,468 14,228 Total fees and commission income 5,468 14,228 3 Claims expenses Gross claims paid 30,534 35,347 Claims ceded to reinsurers (1,171) (4,081) Gross change in outstanding claims (82,338) (58,353) Change in outstanding cliams ceded to reinsu 43,281 36,107 (9,694) 9,020 4 Underwriting expenses Note Fire Motor General accident Marine and aviation Total 2017 Amortised aquisition cost 7,918 9,781 24,670 2,882 45,251 32,391 (Note 18) Maintenace cost 7,389 6,377 13, ,100 16,081 15,307 16,158 38,389 3,497 73,351 48,472 5 Investment income Rental income from investment properties (0) (0) Rental income from land and building 245 1,425 Available-for-sale financial assets: Dividend income 1, Interest income on statutory deposit 9,128 Interest income on cash and cash equivalents 20,453 21,904 31,243 23,383 5 Interest income on cash and cash equivalents Due to Policy holders 9,978 15,540 Due to shareholders 10,475 6,364 20,453 21,904 7

9 NOTES TO THE FINANCIAL STATEMENTS - 6 Gain on sale of property, plant and equipme Property, plant and equipment: Realised gains on disposal Total net realised gains and losses Net fair value gains on investment properties Fair value gains on investment properties (Note 20) 8 Other operating income Recoveries from other receivables and 42 - sundry Income Provision no longer required Exchange gain 35 - Travel insurance/ Sundry Income Impairment charge/reversal Trade receivables Availaible for sale financial assets (Note 16b) Available for sale for sale financial asset Impairment - Impairment of other recievables 9 Management expenses Depreciation on property, plant and equipment 14,413 22,196 Armotisation of Software Auditors remuneration 2,250 2,750 Employee benefits expense (Note 9.2) 81,202 71,265 Exchange differentials - Legal and professional fees 74,573 6,449 Rent and Rates 2,631 3,131 Administrative 64,690 46,926 Total management expenses 239, , Employee benefits expense Wages and salaries 78,102 68,324 Defined benefit plan cost Pension costs 3,100 2,941 Total employee benefits expense 81,202 71, Finance cost

10 10 Income tax Notes The major components of income tax expense for the period are 10 Income tax expense Per profit or loss (605) Current income tax: Company income tax minimum - (14,450) Education tax Underprovision for tax in the prior years (605) (14,450) Deferred tax Fair value gains/losses on - investment properties Employee benefits - Property, plant and equipment - Revaluation loss on building Income tax expense reported in profit or loss (605) - Reported in other comprehensive income Deferred tax relating to items recorgnised in other comprehensive income (OCI) during the year: Re-measurement gains on defined benefit plans Income tax expense charged to OCI 10 Reconciliation of tax charge N'000 N'000 Profit/(Loss) before taxation 1,891 (31,590) Tax at Nigerian's statutory income tax rate of 30% - Income not subject to tax Non deductible expenses Minimum tax (14,450) Tax effect of capital allowance Education 2% of assessable profit Unused tax losses Tax rate differencial on fair value gains Total tax charge for the year 11 Dividends paid and proposed No dividend was proposed or paid by the Company for the period ended March 31,

11 12 (Loss)/earnings per share (LPS)/EPS Basic (LPS)/EPS amounts are calculated by dividing the (loss)/profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding at the reporting date. The following reflects the income and share data used in the basic and diluted (LPS)/EPS computations: (loss)/profit attributable to ordinary shareholders (N'000) 1,286 (46,040) Weighted average number of ordinary shares for basic EPS ('000) 6,140,000 6,140,000 Basic and diluted (loss)/earnings per ordina 0.0 (0.7) 13.1 Net unrealized (loss)/gains on available-for-sale finacial assets Unrealised (loss)/gains on available-forsale financial assets - 4,285 Reclasification adjustments to gains included in profit or loss - 4,285 Total net unrealised (loss)/gains on available-for-sale financial assets - 4, Net unrealized (loss)/gains on ppe - land & building Unrealised (loss)/gains on ppe - land & buil Reclasification adjustments to gains included in profit or loss Total net unrealised (loss)/gains on ppe - la 10

12 14 Cash and cash equivalents Cash at banks and on hand 49,961 (53,580) Short-term deposits (including demand 907,860 and time deposits) 860,645 Total cash and cash equivalents 910, ,280 Representing: Policyholder's fund 444, ,069 Shareholder's fund 466, , , ,280 Short term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company. All placements are subject to an average variable interest rate obtainable in the market. The carrying amounts disclosed above reasonably approximate fair value at the reporting date. 15 Financial assets Available-for-sale financial assets 394, ,059 Total financial instruments 394, , Available-for-sale financial assets comprises: Listed equity securities at fair value 99, ,256 Unlisted equity securities at cost 294,428 37,803 Total available-for-sale financial assets 394, ,059 11

13 15 Financial assets - continued Carrying values of financial instruments Available-forsale Total At 1 January , ,775 Fair value loss recorded in OCI 4,285 4,285 At 1 January , ,196 Impairment reversal - Fair value gain /(loss) recorded in OCI Addition As At March 31, , ,196 Fair value of financial assets and financial liabilities not carried at fair values The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not already recorded at fair value in the financial statements. Assets for which fair value approximates carrying value For financial assets and financial liabilities that have less than three month s maturity such as demand deposits and those without specified maturity such as statutory deposit, other receivables and other payables, the carrying amounts approximate to their fair value. Unquoted investments carried at cost Certain unquoted investments for which fair values could not be reliably estimated have been carried at cost less impairment. There are no active markets for these financial instruments, fair value information are therefore not available, this makes it impracticable for the Company to fair value these investments. They have therefore been disclosed at cost less impairment. The carrying amount is the expected recoverable amount on these investments.the Company does not intend to dispose of these investments Determination of fair value and fair values hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Quoted (unadjusted) prices in active markets for identical assets Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly, and Level 3: Techniques which use inputs which have a signifcant effect on the recorded fair value that are not based on observable market data. 12

14 15 Financial assets - continued As At 31 March 31, 2018 Level 1 Level 2 Level 3 Total Available-for-sale financial assets: Equity securities 99, , ,196 Total financial assets 99, , , Trade receivables Gross insurance receivables 10,549 33,699 Impairment allowance (9,898) (9,898) Total trade receivables ,801 The carrying amounts disclosed above approximate fair value at the reporting date and are net of impairment charges. 16 Movement in impairment At begining of the year 9,898 9,898 Additions Impairment Reversal At end of the year 9,898 9, Reinsurance asset Reinsurers's share of reserve for outstanding claims 71,045 45,990 Prepaid reinsurance 74,224 88,444 Total reinsurance asset 145, ,434 Reinsurance assets are not impaired as balances are set-off against payables from retrocession at the end of every quarter. 13

15 18 Deferred acquisition cost These represents commission paid to brokers on unearned premium relating to the unexpired tenure of risks. Fire Motor General accident Marine and aviation Total At 1 January ,257 7,998 16,308 1,660 32,222 Commission incured during 6,301 9,915 24,161 5,525 45,903 the year Amortisation (Note 4) (7,918) (9,781) (24,670) (2,882) (45,251) As At March 31, ,641 8,131 15,799 4,303 32,874 At 1 January ,634 10,602 13,819 1,040 39,095 Commission incured during 12,690 6,149 28,523 1,019 48,382 the year Amortisation (Note 4) (11,540) (5,277) (14,123) (1,451) (32,391) As At March 31, ,784 11,475 28, ,086 14

16 19 Other receivables and prepayment Due from starcrest 0 0 Loan to Guinea coop Staff upfront and advances 2,312 1,808 Accrued interest 12,099 7,004 Due from Global Scansystems 217, ,444 Deposit for computerization and others 96,367 93,609 Others 6,355 3,785 Prepayments 6,028 8, , ,047 Impairment charged on other receivables Impairment on staff salary advances (314,198) (205,476) 26, ,572 The carrying amounts disclosed above reasonable approximate the fair value at the reporting date. All other receivable amounts are collectible within one year and the prepayment utilisable within one year. 20 Investment properties At the beginning of the year 1,770,000 1,572,500 Disposal - Fair value adjustments At the end of the year 1,770,000 1,572,500 Investment properties are stated at fair value, which has been determined based on valuations performed by Ubosi Eleh & Co.(FRCN/2014/NIESV/ ), accredited independent valuers,the valuer is a specialist in valuing these types of investment properties. The determination of fair value ofthe investment property was supported by market evidence. The modalities and process of valuationutilized extensive analysis of market data and other sectors specific peculiarities corroborated withavailable data derived from previous experiences. Valuations are performed on an annual basis and the fair value gains and losses were recorded within the profit or loss. 16

17 Representing: N 000 N 000 Policyholders funds 0 Shareholders funds 1,770,000 1,572,500 1,770,000 1,572,500 N 000 N 000 Opening balance at 1 January 1,770,000 1,572,500 Fair value adjustments Closing balance as at March 31, ,770,000 1,572,500 Description of valuation techniques used and key inputs to valuation on investment properties The valuation of the properties is based on the price for which comparable land and properties are being exchanged hands on or are being marketed for sale. (investment method ) By nature, detailed information on concluded transactions is difficult to come by. We have thereforerelied on past transactions and recent adverts in deriving the value of the subject properties. At least,eight properties were analysed and There are no restrictions on the reliability of investment property or the remittance of income and proceeds of disposal. The Company has no contractual obligations to purchase, construct or develop investment property or for repairs or enhancement. Rental income derived from investment properties Direct operating expenses (including repairs & maintenance) Profit arising from investment properties carried at fair value N'000 N'000 16

18 21 Taxation 21.1 Current tax payable At the beginning of the year 117, ,588 Amounts recorded in the income statements ,450 Tax on extra-ordinary item Payments made on-account during the year - (10,949) Deferred Tax Asset Write back of over provision - At the end of the year 118, ,089 Income Statement Deferred tax expense/(credit) Accelerated depreciation for tax purposes Revaluation loss on building Fair value gains/(losses) on investment propert Employee benefit obiligation Total deferred tax expense/(credit) 21.2 Deferred tax liabilities/(assets) Statement of financial position Fair value gains/(losses) on investment propert 75, ,463 Tax assets Tax expense during the period through OCI Deferred tax liabilities 75, ,463 Reconciliation of deferred tax liabilities is as shown below: At the beginning of the year 75, ,463 Amounts recorded in the income statement Reclassified to/from deferred tax asset At the end of the period 75, ,463 Reconciliation of deferred tax asset is as shown below: At the beginning of the year Amounts recorded in the income statement - Reclassified from/to deferred tax asset - At the end of the period 21.3 Intangible Asset Opening Additions Amounts recorded in the income statement (199) 1,607 As at 31 December, ,607 17

19 22 Property, Plant and equnote Motor Vehicles Building Land ELEVAT OR Computer Equipment Office Furniture and Fittings Work in progress Total Cost At 1st January , , , ,907 95,441 13,950 1,111,785 Additions ,578 1, ,060 Impairment Disposals (13,950) (13,783) As At 31 March , , ,000 15, ,827 95,861-1,116,062 Accumulated depreciation At 1st January , ,483 81, ,921 Depreciation for the period 8 1,633 8, ,599-14,214 As At 31 March ,671 8, ,922 84, ,135 Disposals (39) - (39) As At 31 March ,671 8, ,883 84, ,096 Carrying amount As At 31 March , , ,000 15,578 3,944 10, ,967 As at 31 March , , ,000 1,745 25, ,930 18

20 23 Statutory deposit This represents the amount deposited with the Central Bank of Nigeria as at March 31, 2018 ( March 31, 2017 N315,000,000) in accordance with Section 10 (3) of Insurance Act Interest income was earned at an average rate of 11% per annum (2017: 12.39%) and this has been included within investment income. Statutory deposit 333, , Insurance contract liabilities Insurance contract liabilities consist of the following: Provision for reported claims by policyholders 239, ,311 Provisions for claims incurred but not reported (IBNR) Outstanding claims provisions 239, ,311 (Note 24.1) Provision for unearned premiums (Note 24.2) 204, ,758 Total insurance contract liabilities 444, ,069 20

21 The cash and cash equivalents as described in Note 14 serves as a cash cover for the insurance contract liabilities Outstanding claims provision At 1 January 321, ,664 Claims incurred in the current accident period year (51,807) (23,006) Claims paid during the year (30,534) (35,347) At the end of the period 239, , Provision for unearned premiums At 1 January 218, ,565 Premiums written in the year (Note 1) 281, ,914 Premums earned during the period (Note 1) (295,074) (206,870) At the end of the period 204, , Trade payables Due to reinsurance and insurance compan 23,295 51,508 23,295 51,508 This represents the amount payable to insurance and reinsurance companies 26 Other payables and accruals Accrued expenses 36,724 50,290 Deferred revenue (Note 26.1) 6,120 2,867 Unearned Commission 13,675 19,689 Other payables (Note 26.2) 33,548 57,919 90, , Other payables represent outstanding NAICOM charges, PAYE, NSITF, ITF, NHF, union dues, witholding tax, VAT, travel insurance, stale cheque, unclaimed dividend and other creditors. The carrying amounts disclosed above reasonably approximate fair value at the reporting date. All amounts are payable within one year (with the exception of deferred revenue). 20

22 26.1 Deferred Revenue Rental Income At the beginning 664 4,292 Amount deferred 5,700 - Amount released to the income statement (245) (1,425) Total deferred revenue 6,120 2,867 Rental income arising from operating lease on investment properties is accounted for on a straight line basis over the lease terms and is included in investment income. 27 Employee benefit obligations The amounts recognised in the statement of financial position at the reporting date are, as follows: Defined Contribution payable 21,020 8,947 Defined benefit grautity payable 3,798 7,167 24,818 16,114 GUINEA INSURANCE PLC 28 Deposit for shares As at 31 March , , Issued share capital Authorised and issued share capital Authorised share capital 3,200,000 3,200, billion Ordinary shares of N0.50k each Ordinary shares issued and fully paid At 1 January 3,070,000 3,070,000 Issued during the period As at 31 March ,070,000 3,070, Share premium At 1 January 337, ,545 As at 31 March , ,545 21

23 NOTES TO THE FINANCIAL 31 Contingency reserve Contingency reserve in respect of non-life business is the higher of 20% of net profit and 3% of premium as specified in Section 21(2) of the Insurance Act At the beginig of the period 442, ,300 For the period 8,448 8,127 As at 31 March , ,427 Retained Earnings At the beginig of the period (704,964) (921,520) For the period 1,286 (46,040) Contigency reserve (8,448) (8,127) As at 31 March 2018 (712,126) (975,687) 32 Available-for-sale Financial Assets Reserve At the begining of the period 243,693 46,101 For the period Reclassification from quoted to - unquoted - As at 31 March ,693 46, Employment benefit reserve. At the begining of the period 6,954 - For the period - As at 31 March , Asset revaluation At the begining of the period 10,000 - For the period - Reclassification from quoted to un 10,000-22

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