SUNTRUST SAVINGS & LOANS LIMITED

ANNUAL REPORT AND ACCOUNTS December 31 2012

Aminu Ibrahim & Co Chartered Accountants

SUNTRUST SAVINGS AND LOANS LIMITED REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012

CONTENTS

PAGE

Financial Highlights

1

Directors and Advisers

2

Report of the Directors

3

Audited Financial Statements: -Report of the Independent Auditors -Statement of Significant Accounting Policies

6 8

-Balance Sheet

12

-Profit and Loss Account

13

-Statement of Cash Flows

14

-Notes to the Financial Statements

15

-Statement of Value Added

26

-Financial Summary

27

SUNTRUST SAVINGS & LOANS LIMITED FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31 2012 DECEMBER 31, 2012 N'000

DECEMBER 31, 2011 N'000

INCREASE/ (DECREASE) %

Major balance sheet items:

Total assets Deposit and current accounts Share capital Share premium Loans and advances Long and short terms borrowings Shareholders' funds

10,156,714 1,452,644 2,475,000 475,000 5,293,273 5,440,751 2,505,827

7,374,908 4,002,316 2,000,000 3,466,174 1,627,627 1,667,003

37.7 (63.7) 23.8 100 52.7 234.3 50.3

Major profit and loss account items:

Gross earnings Provision for doubtful accounts Loss before taxation Taxation Loss after taxation

975,645 138,471 (108,553) (2,623) (111,176)

509,785 32,303 (103,920) (2,059) (105,979)

Information per 50k ordinary share: Earnings

:- Basic (kobo) Net assets (N) Total assets: - actual (N)

Ratios:

Cost to income Return on assets Return on shareholders' funds

Number of branches/agencies Number of staff Number of shares in issue (thousand)

(5) 1.0

(7) 0.8

4.1

3.7

% (28.5) (1.1) (4.3)

2 41 2,475,000

1

% (39.5) (1.4) (6.2)

2 43 2,000,000

91.4 328.7 4.5 27.4 4.9

SUNTRUST SAVINGS AND LOANS LIMITED

DIRECTORS AND ADVISERS FOR THE YEAR ENDED DECEMBER 31, 2012

DIRECTORS: Kenneth Ofili Muhammad Jibrin Yunusa Yakubu Abubakar Sadiq Mohammed Nasiru A. Dantata

- Chairman - Managing Director/CEO - Director - Director - Director

COMPANY SECRETARY Omega Reigns Chambers REGISTERED OFFICE:

AUDITORS:

6, Dar-Es-Salaam Street Off Aminu Kano Crescent Wuse II Abuja Aminu Ibrahim & Co. [Chartered Accountants] City Plaza, 3rd Floor Plot 596 Ahmadu Bello Way Garki II, Abuja

2

SUNTRUST SAVINGS AND LOANS LIMITED REPORT OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2012 The Directors have pleasure in presenting to the members of mortgage bank their report and the audited financial statements for the year ended December 31, 2012. CORPORATE STRUCTURE AND BUSINESS The Bank was incorporated on February 12, 2009 as a Private Limited Liability Company in accordance with the provisions of the Companies and Allied Matters Act. It was licensed to operate as a Mortgage Institution in March 2009 and commenced operations in January 2010. It is wholly owned by Nigerian corporate and individual citizens. RESULT The Bank’s results are shown as follows: 2012 N ’000 Loss after taxation

(111,176)

Less: Appropriations Transfer to statutory reserve Loss for the period transferred to general reserve

-----------(111,176) =======

PRINCIPAL ACTIVITIES The Bank engages in the business of mortgage banking. STATE OF AFFAIRS In the opinion of the Directors, the state of the mortgage bank's affairs is satisfactory and no event has occurred since the balance sheet date, which would affect the financial statements as presented. FIXED ASSETS Information relating to changes in fixed assets is given in Note 8 to the financial statements.

3

SUNTRUST SAVINGS AND LOANS LIMITED REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 DIRECTORS' INTERESTS The interest of the Directors in the issued share capital of the mortgage bank as recorded in the register of Director’s holding as at December 31, 2012 are as follows: Names

2012 (units)

2011 (units)

Abubakar Saddiq Mohammed

50,000,000

50,000,000

Kenneth Ofili

50,000,000

50,000,000

5,000,000

-

Muhammad Jibrin

SIGNIFICANT SHAREHOLDERS % holdings (2012)

% holdings (2011)

Midland Corporate Investments Limited

54

67

Afric Capital Limited

13

-

Pinnacle Prime Concepts & Investments Limited

10

12

Suntrust Real Estate Investment Limited

6

-

Tijara Resources Limited

4

5

Various individuals having less than 4% each

13

16

Names

RESPONSIBILITIES OF DIRECTORS In accordance with the provisions of sections 334 and 335 of the Companies and Allied Matters Act and the requirements of Bank and Other Financial Institutions Act 2004. Directors are responsible for the preparation of financial statements which give a true and fair view of the state of affairs of the Bank as at the end of the financial year and of its financial performance for the year and comply with the provisions of the Act. These responsibilities include ensuring that: i) ii) iii) iv)

adequate internal control procedures are instituted to safeguard assets and prevent and detect fraud and other irregularities; proper accounting records are maintained and applicable accounting standards followed; suitable accounting policies are used and consistently applied; the financial statements are prepared on a going concern basis unless it is inappropriate to presume that the Company will continue in business. 4

SUNTRUST SAVINGS AND LOANS LIMITED REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2012 EMPLOYEES INVOLVEMENT The mortgage bank is committed to keeping employees fully informed as far as possible regarding the mortgage bank’s performance and progress and seeking their views wherever practicable on matters, which particularly affect them as employees. Management, professional and technical expertise are the mortgage bank’s major assets and investment in developing such skills continues. EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS No physically challenged person was employed by the mortgage bank during the year. It is however the mortgage bank's policy to consider such persons for employment if academically and medically qualified. HEALTH, SAFETY OF EMPLOYEES Health and safety regulations are enforced within the mortgage bank’s premises and employees are aware of the safety regulations. DONATION The mortgage bank did not make any donation during the year. AUDITORS Messrs Aminu Ibrahim & Co. have expressed their willingness to continue in office as auditors in accordance with Section 357(2) of the Companies and Allied Matters Act. BY ORDER OF THE BOARD

5

City Plaza, 3rd Floor Plot 596, Ahmadu Bello Way P.O. Box 971, Garki II, Abuja, Nigeria Tel: +234 9 8706058, 3145724 www.aminuibrahim.com

Aminu Ibrahim & Co Chartered Accountants

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF SUNTRUST SAVINGS & LOANS LIMITED Report on the Financial Statements We have audited the accompanying financial statements of Suntrust Savings & Loans Limited which comprise the balance sheets as at December 31, 2012 and the profit and loss accounts and cash flow statements for the year then ended and a summary of significant accounting policies and other explanatory notes. Directors' Responsibility for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free of 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 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 and Nigerian Standards on Auditing issued by the Institute of Chartered Accountants of Nigeria, which require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of 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’ judgment, 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 auditors consider internal control relevant to the entity's 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, 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 for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Suntrust Savings & Loans Limited as at 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with relevant accounting standards issued by the Financial Reporting Council of Nigeria, relevant circulars issued by the Central Bank of Nigeria, Companies and Allied Matters Act and the Banks and Other Financial Institutions Act.

6

Aminu Ibrahim & Co Chartered Accountants

Report on Other Legal and Regulatory Requirements Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act In our opinion, proper books of account have been kept by the Mortgage Bank, so far as appears from our examination of those books and the Mortgage Bank’s balance sheet and profit and loss account are in agreement with the books of account. Compliance with Section 27(2) of the Banks and Other Financial Institutions Act and Central Bank of Nigeria circular BSD/1/2004 i.

No contravention of the Banks and Other Financial Institutions Act was brought to our attention during the audit of the financial statements for the year ended December 31, 2012.

ii.

Related party transactions and balances are disclosed in note 6.5 to the financial statements in accordance with Central Bank of Nigeria Circular BSD/1/2004.

Compliance with Section 4.3 of the Revised Guidelines for Primary Mortgage Banks in Nigeria 2011 We report that nothing has come to our attention to indicate that the Mortgage Bank will not remain in business for at least twelve months from the date of this report.

7

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED DECEMBER 31, 2012 The accounting policies adopted in the preparation of these financial statements are set out below: a)

Basis of accounting The financial statements have been prepared under the historical cost convention and comply with the Statements of Accounting Standards issued by the Nigerian Accounting Standards Board (now Financial Reporting Council of Nigeria).

b)

Fixed Assets Fixed assets are stated at costs less accumulated depreciation. Depreciation is calculated on straight line basis to write-off the cost of assets over their estimated useful lives as following: % Office furniture, fitting and equipment Computer hardware Motor vehicles Plant and machinery

20 33.3 25 20

No depreciation is provided on assets under construction. Gain or loss arising from the disposal of fixed assets is included in the profit and loss account. c)

Loans and advances Loans and advances are carried at cost less provision for impairment and are recognised when cash is advanced to borrowers. Loan impairment provision is made in accordance with the Revised Guidelines for Primary Mortgage Banks in Nigeria 2011 issued by the Central Bank of Nigeria for each account that is not performing in accordance with the terms of the related facility as follows: Mortgage loans: 3 months but less than 6 months 6 months but less than 1 year 1 year but less than 2 years

Provision Classification 1% Watchlist 10% Substandard Doubtful 100% less 50% of the estimated net realizable value of security

2 years and over

Lost

Interest and/or Principal outstanding for over

8

100%

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – Continued Commercial real estate financing: Classification Watchlist

Interest and/or Principal outstanding for over

6 months but less than 1 year and the past due is less than 40% of installment amount 6 months but less than 1 year and the past due is more than 40% of installment amount 1 year but less than 2 years 2 years but less than 3 years 3 years and over

Provision 1%

Substandard

25%

Doubtful Very doubtful Lost

50% 75% 100%

Other loans (neither mortgage nor real estate loans) Interest and/or Principal outstanding for over

3 months but less than 6 months 6 months but less than 1 year 1 years and over

Classification Substandard Doubtful

Lost

Provision 10% 50% 100%

Performing loans In addition to the specific allowance on non-performing loans, a minimum provision of 1% is made for all performing accounts to recognize losses in respect of risks inherent in the credit portfolio. Interest in Suspense Interest on non-performing loans is recognised to interest in suspense account. Interest suspended is recognised in profit and loss account on cash basis. d)

Income recognition Interest, commission and other income are recognized when due, and accounted for on accrual basis. Interest accruing on non-performing account is not earned but taken to interest in suspense until the debts are recovered.

e)

Investments Long-term investments are carried at cost. Where a permanent decline in value occurs, the carrying amount of the asset is reduced to recognise the loss. Short term investments are carried at the lower of cost and net realisable value.

9

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – Continued f)

Foreign Currency Transactions Transactions in foreign currencies are translated to the Naira at the rates of exchange ruling at the dates of the transactions. Foreign currency balances are converted to the Naira at the rate of exchange ruling at the balance sheet date and resultant profit and loss on exchange is taken to the profit and loss account.

g)

Taxation i.

Current income tax Income tax expenses/credits are recognized in the profit and loss account. Current income tax is the expected tax payable on the taxable income for the year, using statutory tax rates at the balance sheet date, and any adjustment to tax payable in respect of previous years.

ii.

Deferred taxation Deferred income tax is provided in full, using liability method, on all temporary timing differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using rates that are expected to apply when the related deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that is probable that future taxable profits will be available against which the temporary differences can be utilised

h)

Retirement benefits Arrangements for retirement benefits for members of staff are based on the provisions of the National Pension Reform Act. The matching contribution by the Company is based on current basic salaries and designated allowances and it is charged to profit and loss account.

i)

Investment properties Investment properties which are held for capital appreciation and subsequent disposal are measured initially at their cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at their valuation amount and revalued periodically on a systematic basis at least once in every three years. Investment properties are not subject to periodic charge for depreciation. An increase in the carrying amount arising from the revaluation of investment property is credited to the shareholders’ fund as revaluation surplus.

10

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – Continued A permanent decline in the value of the investment is charged to the income statement while a reduction in the carrying amount of the investment is reversed when there is an increase, other than temporary, in the value of the investment, or if the reasons for the reduction no longer exist. j)

Intangible assets Software acquired by the company is stated at cost less accumulated amortisation and accumulated impairment losses. Expenditure on internally developed software is recognised as an asset when the company is able to demonstrate its intention and ability to complete the development and the use the software in a manner that will generate future economic benefits, and can reliably measure the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable to developing the software, and are amortized over its useful life. Internally developed software is stated at capitalised cost less accumulated amortisation and impairment. Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. Amortisation is recognised in profit or loss on a straight line basis over the estimated useful life of the software, from the date that it is available for use since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life of software is 3 to 5 years. Amortisation method, useful lives, and residual values are reviewed at each financial yearend and adjusted if appropriate.

k)

Segmental reporting A segment is a distinguishable component of the company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Mortgage Bank’s activities are concentrated in one geographic region. The Mortgage Bank’s primary format for segment reporting is based on business segments. The business segments are determined by management based on the Mortgage Bank’s internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 11

SUNTRUST SAVINGS & LOANS LIMITED BALANCE SHEET AS AT DECEMBER 31 2012

Note

DECEMBER 31 2012 N'000

DECEMBER 31 2011 N'000

ASSETS

Cash in hand Due from banks and other financial institutions Placements Investment properties Loans and advances Other assets Property, plant and equipment Intangible assets

2 3 4 5 6 7 9 8

820 647,611 803,754 2,272,673 5,293,273 1,047,581 69,697 21,305

9,023 117,022 1,790,193 1,540,526 3,466,174 228,409 103,037 120,524

10,156,714

7,374,908

10 11 12 13 18

1,452,644 500,000 2,623 754,869 4,940,751 7,650,887

4,002,316 2,059 75,903 1,627,627 5,707,905

14 15 17

2,475,000 475,000 (444,173) 2,505,827

2,000,000 (332,997) 1,667,003

10,156,714

7,374,908

TOTAL ASSETS LIABILITIES Deposit and current accounts Short-term borrowings Taxation Other liabilities Long term borrowings

CAPITAL AND RESERVES Share capital Share premium General reserve SHAREHOLDER'S FUNDS TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS

The Accounting Policies and Notes to the financial statements form integral part of these financial statements

12

SUNTRUST SAVINGS & LOANS LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31 2012

Note

Gross earnings

DECEMBER 31, 2012 N'000

DECEMBER 31, 2011 N'000

975,645

509,785

Interest income

19

694,344

374,816

Interest expense

20

(506,996)

(233,188)

187,349

141,628

281,301

134,969

468,649

276,597

(278,152) (55,985) (104,594) (138,471)

(201,493) (47,457) (99,264) (32,303)

(108,553)

(103,920)

(2,623)

(2,059)

(111,176)

(105,979)

(111,176)

(105,979)

(111,176)

(105,979)

(5)

(7)

Interest margin Commissions and other income

21

Operating income Operating expenses Depreciation Amortisation of intangible assets Provision for doubtful accounts

22 9 8 23

Loss before taxation Taxation

12

Loss after taxation Appropriations:

Transfer to statutory reserve Transfer to general reserve

16 17

Earning per share (kobo)

-Basic

25

The Accounting Policies and Notes to the financial statements form integral part of these financial statements

13

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31 2012 DECEMBER 31, 2012 N'000

DECEMBER 31, 2011 N'000

694,344 281,301 (506,996) (278,152) (2,059)

374,816 134,969 (233,188) (201,493) -

188,438

42,801

(1,965,570) (819,172) (2,549,671) 678,966

(2,456,640) 31,549 797,283 (84,366)

(4,467,009)

(1,669,373)

(732,147) (5,375) (22,645)

(387,189) (17,480) (44,975)

(760,167)

(449,645)

Proceeds from issue of shares Short-term borrowings Long term borrowings Repayment of long term loans

950,000 500,000 3,376,992 (63,869)

1,000,000 1,637,323 (9,693)

Net cashflow from financing activities

4,763,123

2,627,630

Net increase in cash and cash equivalents Cash and cash equivalents at 1 January

(464,053) 1,916,239

508,612 1,407,627

1,452,186

1,916,239

Note Cash flows from operating activities

Interest received Commission and other income received Interest expenses paid Cash payment to employees and suppliers Tax paid Operating profit before changes in operating assets and liabilities Changes in operating assets/liabilities

Loans and advances Other assets Deposit and current accounts Other liabilities Net cashflow from operating activities

26

Cash flows from investing activities

Change in investments properties Acquistion of intangible assets Purchase of fixed assets

8 9

Net cash used in investing activities Cash flows from financing activities

Cash and cash equivalents at year end

4.1

The Accounting Policies and Notes to the financial statements form integral part of these financial statements

14

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS

1.

The mortgage bank

Sun Trust Savings & Loans Plc was incorporated on 12 February 2009 as a Private Limited Liability Company in accordance with the provisions of the Companies and Allied Matters Act, 1990. It was licensed to operate as a Mortgage Institution in March 2009 and commenced operations in January 2011.

2.

December 31, 2012 N'000

December 31, 2011 N'000

820

9,023

Cash and short term funds

Cash

3.

Due from banks and other financial institutions

Local banks

4.

647,611

117,022

803,754

1,790,193

820 647,611 803,754

9,023 117,022 1,790,193

1,452,186

1,916,239

1,540,526 3,984,169 (321,090)

1,153,337 387,189 -

(2,930,932) 2,272,673

1,540,526

Placements

Placements with banks in Nigeria

4.1 Cash and cash equivalents

Cash and short-term funds (note 2) Balances with banks and other financial institutions (note 3) Placements (note 4)

5

Investment Properties

Cost at 1 January Additions during the year Reclassification to other assets Disposal during the year Balance at year end

These are real estates acquired for resale at a later date and are stated at cost

15

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS December 31, 2012 N'000 6.

Loans and advances

6.1

Analysis of loans and advances by quality Performing Watchlist Sub-standard Doubtful Lost

5,122,727 180,722 19,144 51,310 100,846 5,474,749

3,475,350 21,658 12,172 3,509,180

(51,224) (1,807) (1,944) (25,655) (100,846) (181,476)

(34,753) (2,166) (6,086) (43,005)

5,293,273

3,466,174

Real estate Otherwise secured

4,778,933 695,816

2,182,856 1,326,324

Gross loans

5,474,749

3,509,180

1,002,569 248,171 4,224,010 5,474,749

1,002,569 248,171 2,258,440 3,509,180

83,356 551,135 4,840,259

323,755 1,002,416 2,183,009

5,474,749

3,509,180

Less Provision - General - Watchlist - Sub-standard - Doubtful - Lost

6.2

6.3

Analysis of loans and advances by security

Maturity profile of loans and advances Under 1 month 1 - 3 months Over 12 months

6.4

Analysis of loans and advances by nature Term loans Overdrafts Mortgage

6.5

December 31, 2011 N'000

Insider-related credits Aggregate amount of insider related credits outstanding at year-end

55,000

There were no non-performing insider-related credits as at December 31, 2012.

16

-

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued) 2012 N'000

7.

Other assets Interest receivable Deposit for property Prepayments Receivable from sales of investment properties Stationery stock Accounts receivable & clearing house Sundry debtors

8.

2011 N'000

28,257 321,090 131,952 553,966 11,323 994 -

10,850 173,873 5,590 15,202 22,894

1,047,581

228,409

Intangible assets The company adopted Statement of Accounting Standards 31: On Intangible Assets, which became operative for financial statements covering years beginning on or after 1 January 2011. As a result, the carrying amount of the cost of its acquired software, which does not form part of a related hardware and previously classified as Computer Equipment and software, was reclassified to intangible assets. The movement on intangible asset account during the year was as follows:

Computer Software Cost: At 1 January 2012 (Note 35) Additions during the year At 31 December 2012

2012 N'000

310,421 5,375 315,796

Accumulated Amortisation: At 1 January 2012 (Note 35) Additions during the year At 31 December 2012

9.

(189,896) (104,594) (294,491)

Net book Value: At 31 December 2012

21,305

At 31 December 2011

120,524

Property, plant and equipment Plants & Machinery N'000 Cost: At January 01, 2012

Furniture & Fittings N'000

Computer equipment N'000

Motor vehicles N'000

Office Equipment N'000

Total N'000

20,933

39,302

97,673

27,605

4,775

-

3,715

9,419

8,300

1,211

190,288 22,645

20,933

43,017

107,092

35,905

5,986

212,933

Depreciation: At January 01, 2012

6,126

12,055

59,998

8,228

843

Charge during the year

4,169

8,507

35,280

6,901

1,128

87,251 55,985

At December 31, 2012

10,295

20,562

95,279

15,130

1,972

143,236

10,638

22,455

11,813

Acquired during the year At December 31, 2012

Net Book Value At December 31, 2012 At December 31, 2011

14,807

27,247

37,675

17

20,776 19,376

4,014

69,697

3,932

103,037

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued) December 31, 2012 N'000

10.

December 31, 2011 N'000

Deposit, current and other accounts .1

Summary In Nigeria: Term Demand Savings

.2

2,626,253 1,364,406 11,657

1,452,644

4,002,316

1,262,163 97,223 93,259

1,364,406 1,324,783 1,313,126

1,452,644

4,002,316

The maturity profile of deposit liabilities is as follows: Under 1 month 6 - 12 months Over 12 months

11.

186,516 1,262,163 3,965

Short-term borrowings The mortgage bank secured a loan of N500 million from Skye Bank Plc with a tenor of 4 years at variable annual interest rate of 16% for onward lending to its customers to part-finance the acquisition of an housing estate in Abuja. The loan is secured by a legal mortgage over the estate being acquired. The mortgage bank has primary responsibility to service the loan but will recover from the customers.

12.

Taxation Company income tax Education tax Information technology development levy

2,218 405 -

Per Profit and loss account Balance brought forward Payment during the year Per Balance sheet

2,623 2,059 (2,059) 2,623

1,716 343 2,059 2,059

The charge for taxation in these financial statements is based on the provisions of the Companies Income Tax Act. The charge for education tax is based on the provisions of the Education Tax Act. Section 12(2a) of the Nigerian Information Technology Development Agency (NITDA) Act 2007 stipulates that, specified companies contribute 1% of their profit before tax to the Nigerian Information Technology Development Agency.

18

18

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued)

13.

14.

22,605 18,164 5,463 238,596 26,913 443,129

10,764 6,269 2,500 6,101 440 49,829

754,869

75,903

2,500,000

2,000,000

2,000,000 475,000 2,475,000

1,000,000 1,000,000 2,000,000

Share capital .1

Authorised:

2,500,000,000 ordinary shares of N1 each .2

Issued, called up and fully paid: At 1 January

Issued during the year At year end

Share premium

Arising during the year

475,000 475,000

At year end

16.

December 31, 2011 N'000

Other liabilities

Account payable Interest payable Accruals Managers' cheques Sundry creditors Subcribers deposits for purchase of houses

15.

December 31, 2012 N'000

-

Statutory reserve -

At year end

-

The statutory reserve is computed at 20% of profit after tax in accordance with the Guidelines for Primary Mortgage Institutions issued by Other Financial Institutions Department of Central Bank of Nigeria.

17.

General reserve

At 1 January Appropriation from the profit and loss account

(332,997)

(227,018)

(111,176)

(105,979)

At year end

(444,173)

(332,997)

19

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued)

18

December 31, 2012 N'000

December 31, 2011 N'000

1,627,627 3,376,992 (63,869)

1,637,323 (9,695)

4,940,751

1,627,627

Long Term Borrowings At January 1 Borrowings during the year Repayments during the year At year end

18.1

This represents funds obtained from Federal Mortgage Bank at interest rate of 4% and disbursed to beneficiaries of National Housing Fund. Interest and principal are payable monthly.

19.

Interest earnings a.

This is analysed by source and income type as follows: Bank sources: - Interest on placements

154,267

66,686

540,077

308,130

694,344

374,816

Non-Bank sources: - Interest on loans and advances

b.

Geographical location: 694,344

Earned in Nigeria 20.

Interest expense .a

Interest expense comprises:

- Demand - Time deposits - Savings - NHF

.b

81,129 291,344 158

7,605 189,287 151

134,364 506,996

36,145 233,188

506,996

233,188

Commission on turnover Loans management fees Gain from sale of investment properties

31,210 20,946 229,045

39,384 92,679 -

Administrative and processing charges

101 281,301

2,907 134,969

Geographical location:

Paid in Nigeria

21.

374,816

Commissions and other income

20

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued)

22.

December 31, 2011 N'000

49,310 3,500 10,941

52,521 2,500 -

214,401 278,152

146,473 201,493

16,471 1,807

24,051 2,166 6,086

Operating expenses

1. Summary: Staff and other related costs Auditors remuneration Share capital increase cost Other operating expenses

23.

December 31, 2012 N'000

Provision for doubtful accounts Loans and advances - General (note 6.1 ) - Watchlist - Sub-standard (note 6.1) - Doubtful (note 6.1)

(222) 19,569 100,846

- Lost (note 6.1)

138,471 Other assets

24.

0

32,303 -

138,471

32,303

850 3,500

2,500

Loss for the year attributable to shareholders (N'000)

(111,176)

(105,979)

Weighted average number of ordinary shares in issue ('000 units) Adjusted weighted average number of ordinary shares ('000 units)

2,118,750 2,118,750 (5.25) (5.25)

1,583,333 1,583,333 (6.69) (6.69)

Loss before tax This is stated after charging:

Directors' fees Auditors remuneration

25.

Earnings per share

Earnings per share (Kobo) - basic Earnings per share (Kobo) - adjusted

The weighted average number of ordinary shares in issue as stated above is less than the actual number of ordinary shares in issue at the year end because the shares issued during the year included in the weighted average number of shares reflect the date the consideration was received.

21

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued)

26.

December 31, 2012 N'000

December 31, 2011 N'000

(111,176)

(105,979)

Reconciliation of profit/(loss) after tax to net cash provided by operating activities Loss after taxation Adjustments to reconcile profit after tax to net cash (utilised)/provided by operating activities:

27.

Amortisation of intangible assets Provision on doubtful balances Depreciation of property, plant and equipment

104,594 138,471 55,985

47,457 32,303 99,264

Changes in assets and liabilities Increase in loans and advances Increase in other assets Increase in deposit and other current accounts Increase in tax payable (Decrease)/increase in other liabilities

(1,965,570) (819,172) (2,549,671) 564 678,966

(2,456,640) 31,549 797,283 2,059 (84,366)

Net cash flow from operating activities

(4,467,009)

(1,669,373)

Emolument of Directors .1

Emoluments: Fees Allowances Aggregate emoluments

The Chairman's fees amounted to Highest paid Director (Executive)

22

850 450

450

1,300

450

250 3,000

3,000

SUNTRUST SAVINGS & LOANS LTD NOTES TO THE FINANCIAL STATEMENTS (Continued) December 31, 2012 N'000

December 31 2011 N'000

Emolument of Directors (Cont'd) .2The table below shows the number of Directors of the Bank (excluding the chairman) whose remuneration (excluding pension contributions) in respect of services to the Bank fell within the ranges shown below. Number

below N1,000,000 N1,000,001 - N3,000,000 Above N 3,000,001

4 1 0

Number of directors who had no emoluments.

28.

0

Number 0 1 0

5

Employees .1 The average number of persons employed (excluding

Directors) in the Bank during the year as follows: - Senior staff - Junior staff

.2 The related staff costs were: Staff costs

6 35 41

5 38 43

N'000

N'000

49,310

23

52,521

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued) December 31, 2012

29.

Post balance sheet events There are no significant post balance sheet events which could have had a material effect on the state of affairs of the Bank as at 31 December, 2012 and on the loss for the year ended on that date which have not been adequately provided for or disclosed.

30.

Claims and litigations The Directors are of the opinion that no contingent liability will arise in respect of claims and litigation against the Bank as at 31 December 2012.

31.

Guarantees and other financial commitments The Directors are of the opinion that all known liabilities and commitments which are relevant in the assessment of the state of financial affairs of the mortgage bank have been taken into consideration in the preparation of these financial statements.

32.

Comparative figures Certain changes have been made to comparative figures to reflect current year presentations.

33.

Contraventions The Bank was not penalised for contravention of any section of the Banks and Other Financial Institutions Act during the year.

34.

Sections 355 (8) and (9) of the Companies and Allied Matters Act In accordance with banking traditions, the assets and liabilities have been shown in decreasing order of liquidity and without sub-classifications as between fixed and current assets unlike the formats applied by the Act. Subject to the foregoing, the format used gives the information required by the Act substantially in accordance therewith.

24

SUNTRUST SAVINGS & LOANS LIMITED NOTES TO THE FINANCIAL STATEMENTS (Continued) December 31,

2012

35.

Restatement of Property, Plant and Equipment prior year comparative

This is the first set of financial statements after the implementation of the Statement of Accounting Standards number 31: On Intangible Assets, which became effective for annual years beginning on or after 1 January 2011. The implementation of the accounting policy resulted to a reclassification of computer software from Property, Plant & Equipment (Note 9). The impact of this is shown below:

2011 N'000 Cost: Opening balance as previously stated Reclassification to intangible assets Opening balance as re-stated

500,709 (310,421) 190,288

Accumulated Depreciation: 277,148 (189,896)

Opening balance as previously stated Reclassification to intangible assets Opening balance as re-stated

87,251

Net Book Value: Opening balance as previously stated

223,561

Opening balance as re-stated

103,037

25

SUNTRUST SAVINGS & LOANS LIMITED STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 DECEMBER 2012 December 31, 2012 N'000

- Gross earnings - Interest expense Administrative and other expenses - Local Provision for doubtful debts VALUE ADDED

975,645 (506,996) 468,649 (228,842) (138,471)

December 31, 2011 N'000

509,785 (233,188) 276,597 (148,973) (32,303)

101,337

100

95,322

100

49,310

49

52,521

55

2,623

3

2,059

2

146,721 (105,979)

154 (111)

95,322

100

DISTRIBUTED AS FOLLOWS: In payment to employees:

- Salaries, wages and other allowances In payment to government:

-Taxation Retained for future replacement of assets and expansion of business:

- Depreciation and amortisation - Loss carried forward

160,580 (111,176)

158

101,337

100

(110)

Value added represents the additional wealth which the Bank has been able to create by its own and its employees' efforts. This statement shows the allocation of that wealth among employees, shareholders, government and that retained for future creation of more wealth.

26

SUNTRUST SAVINGS & LOANS LIMITED FINANCIAL SUMMARY DECEMBER 31

2012 N'000

2011 N'000

2010 N'000

ASSETS

Cash in hand Due from banks and other financial institutions Placements Investment properties Loans and advances Other assets Property, plant and equipment Intangible assets TOTAL ASSETS

820 647,611 803,754 2,272,673 5,293,273 1,047,581 69,697 21,305

9,023 117,022 1,790,193 1,540,526 3,466,174 228,409 103,037 120,524

12,059 580,092 815,476 1,153,337 1,009,534 259,958 307,827 -

10,156,714

7,374,908

4,138,283

1,452,644 500,000 2,623 754,869 4,940,751 7,650,887 2,505,827

4,002,316 2,059 75,903 1,627,627 5,707,905 1,667,003

3,205,032 160,269 3,365,301 772,982

10,156,714

7,374,908

4,138,283

975,645

509,785

250,061

(108,553) (111,176)

(103,920) (105,979)

(227,018) (227,018)

(5)

(7)

(23)

1.0

0.8

0.8

LIABILITIES

Deposit and current accounts Short-term borrowings Taxation Other liabilities Long term borrowings Shareholders' funds TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS

Gross Earnings Loss before taxation Loss after taxation Earnings/(loss) per share - Basic (Kobo) Net assets per share - Actual (kobo) Note:

Earnings / (loss) per share (basic) are based on profit after taxation and the number of issued ordinary shares at the end of each year. Net assets per share are based on the number of issued share capital at the end of each year.

27

SUNTRUST SAVINGS AND LOANS LIMITED RC 800311

SUMMARISED FINANCIAL STATEMENTS BALANCE SHEET AS AT DECEMBER 31, 2012

2012 ’000

N

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2012 2012 N’000

N ’000

975,645

509,785

Interest and similar income Interest and similar expenses Net Interest income Commissions & other income Operating income Operating expenses

694,344 (506,996) 187,349 281,301 468,649 (278,152)

374,816 (233,188) 141,628 134,969 276,597 (201,493)

Depreciation of fixed assets Provision for risk assets Amortisation of intangible assets

(55,985) (138,471) (104,594)

(146,721) (32,303) -

Loss before taxation Taxation

(108,553) (2,623)

(103,920) (2,059)

Loss after taxation

(111,176)

(105,979)

APPROPRIATIONS Transferred to statutory reserve Transferred to general reserve

(111,176)

(105,979)

(111,176)

(105,979)

2011 N ’000

2011

USE OF FUNDS

Cash and short-terms funds 820 Due from banks and other financial Institutions 647,611 Placements 803,754 Investment properties 2,272,673 Loans and advances 5,293,273 Other assets 1,047,581 Fixed and intagible assets 91,002 TOTAL ASSETS 10,156,714

9,023 117,022 1,790,193 1,540,526 3,466,174 228,409 223,561 7,374,908

LIABILITIES Deposit and current accounts Taxation Other liabilities & short-term borrowing Long term borrowings TOTAL LIABILITIES

1,452,644 2,623 1,254,869 4,940,751 7,650,887

4,002,316 2,059 75,903 1,627,627 5,707,905

CAPITAL AND RESERVES Paid-up share capital Share premium and reserves SHAREHOLDERS’ FUNDS

2,475,000 30,827 2,505,827

2,000,000 (332,997) 1,667,003

TOTAL LIABILITIES & SHAREHOLDERS’ FUNDS 10,156,714

7,374,908

Gross earnings

The full financial statements were approved by the Board of Directors on March 20, 2013 and signed on its behalf by:

Kenneth Ofili

Muhammad Jibrin

(Chairman)

(Managing Director/CEO)

INDEPENDENT AUDITORS’ REPORT ON THE SUMMARISED FINANCIAL STATEMENTS We have audited the full financial statements of Suntrust Savings and Loans Limited for the year ended December 31, 2012 in accordance with International Standards on Auditing. In our report dated March 20, 2013, we expressed an unqualified opinion on the full financial statements from which these summarised financial statements were derived.

In our opinion, the summarised financial statements are consistent, in material respects, with the full financial statements from which they were derived. For a better understanding of the company’s financial position and the results of the operations for the year ended December 31, 2012 and the scope of our audit, the summarised financial statements should be read in conjunction with the full financial statements. Report on other legal and regulatory requirements The related party transactions and balances as defined in Central Bank of Nigeria Circular BSD/1/2004 during the year are reported in the Notes to financial statements. No contravention of the Banks and Other Financial Institutions Act, CAP B3 Laws of the Federation of Nigeria 2004 was brought to our attention during the audit of the full financial statements for the year ended December 31, 2012.

Abuja, Nigeria. March 20, 2013

Chartered Accountants

DIRECTORS: Kenneth Ofili (Chairman), Muhammad Jibrin (Managing Director/ Chief Executive Officer), Yunusa Yakubu, Abubakar Sadiq Mohammed, Nasiru A. Dantata