NEWLIFE MICROFINANCE BANK LIMITED

CONTENT Corporate Information Directors Report Report of the Auditors Significant Accounting Policies Balance Sheet Profit and Loss Account Cash Flow Statement Notes on the Accounts Value Added Statement Five -Years Financial Summary

PAGE (S) 2 3-4 5-6 7 -9 10 11 12 13-20 21 22

NEWLIFE MICROFINANCE BANK LIMITED CORPORATE INFORMATION

DIRECTORS Mr. B.B Yavala - Chairman MR. Samuel OLATUNJI Captain Austin OMAME MR. Dapo AKINOSUN Dr. Kunle ASHAYE MR. Tunde OBOKHAI . MANAGEMENT TEAM Depo ELUYERA CEO Laide ADEBAYO Corporate Planning & Product Dev. Iyabo BASHUA - GRP. HEAD, BUS DEV. UNIT John OKOYE - HEAD OF AUDIT Ladipo LAYODE - HEAD OF IT Temilola ALADESANMI HEAD, RCCG CAMP BR

REGISTERED OFFICE PLOT 372 LATEEF JAKANDE ROAD AGIDINGBI, IKEJA, LAGOS. BANKERS
INTERCONTINENTAL BANK PLC OBAFEMI AWOLOWO WAY, IKEJA. SPRING BANK (NIG.) PLC 82, ALLEN AVENUE, IKEJA INTERCONTINENTAL BANK PLC 13, ALLEN AVENUE, IKEJA FIRST BANK NIGERIA PLC ISHERI ROAD, OJODU, LAGOS. AUDITORS AWOYINFA OBAFUNSO & CO (CHARTERED ACCOUNTANTS) 1A, ARO OMOBA CRESCENT P. O. BOX 293 IKEJA, LAGOS.

RC: 334233

GTB PLC KUDIRAT ABIOLA ROAD OREGUN UBA PLC OBA AKRAN ROAD, IKEJA LAGOS FIDELITY BANK PLC 23, AWOLOWO ROAD, IKOYI, LAGOS. BANK PHB PLC IBARA ROAD, ABEOKUTA, OGUN.

UBA PLC AKIN ADESOLA STREET VICTORIA ISLAND HAGGAI SAVINGS & LOAN. 53, BODE THOMAS STREET SURULERE, LAGOS. FCMB PLC ALAGBOILE- AKUTE ROAD, AKUTE, OGUN.

INTERCONTINENTAL BANK PLC IJAIYE ROAD, OGBA. SECRETARY TOMI SANNI & CO 3, EMINA CRESCENT, OFF TOYIN STREET, IKEJA.

NEWLIFE MICROFINANCE BANK LIMITED REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 MARCH, 2011.

The Directors submit their report together with the audited financial statements for the year ended 31 MARCH, 2011. 1. Incorporation and Business NEWLIFE MICROFINANCE BANK LIMITED is a private limited liability company. It commenced business on 12th May 1997, initially as a Community Bank. The shares of the Micro Finance Bank are 100% owned by Nigerian citizens. The company is engaged in the business of micro finance banking and was finally licensed by the Central Bank of Nigeria on 24th January 2002. On 1st January 2008, the Bank merged with Vintage Community Bank Limited (a wholly owned Subsidiary) in pursuance of its activities as a MICROFINANCE Bank. 2. RESULTS FOR THE PERIOD MARCH 2011 N000 Profit/(loss) on ordinary activities before taxation Taxation (Loss) / Profit After Taxation Transfer to Statutory Reserve Unappropriated Profit B/F Unappropriated Profit C/F 51,895 (15,568) 36,326 (4,541) 652,269 MARCH 2010 N000 64,312 (19,294) 45,019 (5,627) (686,033)

(620483) (652,269) ===== =====

NEWLIFE MICROFINANCE BANK LIMITED REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 MARCH, 2011. (CONTD)
3. DIRECTORS SHAREHOLDINGS The interest of directors in the issued share capital of the Bank is as follows: DIRECTOR A. O. Osinubi Mr. S. O Olatunji Captain A. L. Omame Mrs. A. Akinosun Dr. A. O. Ashaye Mr. B. A. Obokhai SHAREHOLDING N 2,993,675 3,113,634 1,496,837 1,496,837 898,102 873,046 % 8.31 8.64 4.15 4.15 2.90 2.49

4. POST BALANCE SHEET EVENT There was no Post balance sheet event 5. EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS The Bank maintains a policy of non-discrimination in considering applications for employment made by physically challenged persons with due regard to their abilities and aptitudes. In the event of staff becoming physically challenged, efforts will be made to ensure that their employment with the Bank continues with appropriate training arrangement to fit them into Banks working environment. As at 31 MARCH 2011, the bank has one (1) physically challenged person in its employment. 5. AUDITORS Messrs AO PARTNERS have indicated their willingness to continue in office in accordance with Section 357(2) of the Companies and Allied Matters Act, 1990. A resolution will be proposed authorising the Directors to determine their remuneration.

AWOYINFA OBAFUNSO & CO

(CHARTERED ACCOUNTANTS) HEAD OFFICE 1A, Aro-Omoba Crescent Off Simbiat Abiola Road P. O. Box 293, Ikeja. Tel./Fax: 234-1-8759385 234-80-33065173 www.aopartnersng.com BRANCH 6th Floor, Orosi House, Maritime Concepts Limited, 28, Forces Avenue, Old G.R.A. Port Harcourt. E-mail: awoyinfa_obafunso@yahoo.com mail@aopartnersng.com

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF NEWLIFE MICRO FINANCE BANK LIMITED Report on the Financial Statements 1. We have audited the accompanying financial statements of Newlife Micro Finance Bank Limited for the year ended 31 March 2011, set out on pages 10 to 20 which have been prepared on the basis of the significant accounting policies on pages 7 to 9 and explanatory notes on pages 12 to 20. Directors Responsibility for the Financial Statements 2. The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, Banks and Other Financial Institutions Act CAP B3 LFN 2004. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgments, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our audit opinion. 2

OPINION In our opinion, the Bank has kept proper accounting records and the financial statements are in agreement with the records in all material respects and give in the prescribed manner, information required by the Companies and Allied Matters Act CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act CAP B3 LFN 2004. The financial statements give a true and fair view of the financial position of Newlife Micro Finance Bank Limited as at 31 MARCH 2011, and of its financial performance and cash flows thereof in accordance with the Statement of Accounting Standards issued by the Nigerian Accounting Standards Board and relevant International Financial Reporting Standards. REPORT ON COMPLIANCE WITH BANKING & FINANCIAL REGULATIONS We confirm that our examination of advances was carried out in accordance with the Prudential Guidelines for licensed banks & finance houses issued by the Central Bank of Nigeria. CONTRAVENTIONS The Bank contravened certain guidelines relating to timely submission of reports.

Lagos, Nigeria September, 2011.

(Chartered Accountants)

NEWLIFE MICROFINANCE BANK LIMITED SIGNIFICANT ACCOUNTING POLICIES

1. 2. Basis of accounting The financial statements are prepared under the historical cost convention. Income recognition i. Interest income Interest is accrued on daily balances on all assets to which interest is applicable. ii. Fees, commissions and other income Fees and commissions where material, are amortized over the life of the related service. Otherwise fees, commissions and other income are recognized as earned upon completion of the related service. iii. Investment income Dividend from quoted investments is accounted for on actual receipts and credited to the profit and loss account. 3. Loans and Advances Loans and advances are stated net of provision for bad and doubtful debts. Provision is determined in accordance with the Central Bank of Nigerias Guidelines for Microfinance Banks from a specific assessment of each customers account. Loans are classified as to performing and non-performing and are considered non-performing when principal and or interest repayment obligations are in arrears for over 30 days. Specific provisions are made on non-performing accounts as follows: Interest and or principal Classification: Provision: outstanding for: 1-30 days Pass and watch 5% 31-60 days Sub standard 20% 61-90 days Doubtful 50% 91 days and above Lost 100% A general provision of 1% is made on all performing balances in line with the Prudential Guidelines for Microfinance banks, issued by the Central Bank of Nigeria.

NEWLIFE MICROFINANCE BANK LIMITED SIGNIFICANT ACCOUNTING POLICIES (Contd)

4. Interest Interest on advances is accrued to profit until such a time as reasonable doubt exists about its collectability. Interest accruing on non-performing accounts is not taken to the credit of profit and loss account until the debt is recovered. 5. Investments Quoted investments are stated at lower of cost and market value. Unquoted investments are stated at cost less provision for diminution in value. 6. Fixed assets Fixed assets are stated at cost less accumulated depreciation. 7. Depreciation Depreciation is provided on a straight line basis to write off the cost of fixed assets over their estimated useful lives at the following annual rates: Free-hold land and building Furniture and fittings Office equipment Motor vehicles Computers % 2 20 20 25 33

8. Taxation Income tax is provided on taxable profit at the current statutory rate. Provision for deferred tax is made by the liability method and calculated at the current rate of taxation on the differences between the net book value of qualifying fixed assets and their corresponding tax written down value. 9. Pension costs The Bank operates a defined benefit pension scheme in accordance with the Pension Reform Act 2004, where staffs are required to select a pension fund administrator of their choice. Employees are entitled to join the scheme on confirmation of their employment. Employee and Bank contributions are 7.5% each of total employees annual basic salary, transport allowance and housing allowance. The scheme is managed by various Pension Fund Administrators (PFAs) chosen by the employees. 10. Interest expense Interest is accrued on daily balances on all liabilities to which interest is applicable.

NEWLIFE MICROFINANCE BANK LIMITED SIGNIFICANT ACCOUNTING POLICIES (Contd)

11. Provisions Provision is recognized when the Bank has a present obligation whether legal or constructive as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations in accordance with the Statements of Accounting Standard 23. 12. Contingent liabilities Transactions that are not currently recognized as assets or liabilities in the balance sheet but which nonetheless give rise to credit risks, contingencies and commitments are reported off balance sheet. Such transactions include letters of credit, bonds, guarantees, indemnities, acceptances and trade related contingencies such as documentary credit, etc. Outstanding and unexpired commitments at year end in respect of these transactions are shown by way of note to the financial statements. Income on off balance sheet engagements is in form of commission which is recognized as and when transactions are executed. Such commission is included in commission income in the profit and loss account.