NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of STACO INSURANCE PLC will thbe held at Federal Palace Hotel, 6- 8 Ahmadu Bello Way, Victoria Island, Lagos on Wednesday,10
November, 2010 at 11.00 a.m. to transact the following business:
st1. To receive the Audited Financial Statements for the year ended 31 December, 2009 together with the Directors' and Auditors' reports thereon.
2. To receive the Report of the Audit Committee.3. To re-elect Directors.4. To authorize the Directors to fix the remuneration of the Auditors.5. T o elect/re-elect members of the Audit Committee.
6. To approve the Directors' remuneration.7. To consider, and if thought fit, pass the following resolution, which would be proposed as Ordinary
Resolution:
a) Increase of Authorized Share Capital. “That the Authorized Share Capital of the Company be and is hereby increased from N3,500,000,000,00 to N4,500,000,000.00 by the creation of additional 2,000,000,000 Ordinary Shares of 50k each ranking parri passu in all respects with the existing Ordinary Shares in the Capital of the Company”
b) Amendment Of Memorandum Of Association “That the first sentence of the Share Capital Clause No 6 in the Memorandum Of Association of the Company, only to the extent of the value and number of shares stated therein, be and is hereby amended to read as follows:The Share Capital of the Company is N4,500,000,000.00 (Four Billion, Five Hundred Million Naira ) divided into 9,000,000,000 (Nine Billion) Ordinary Shares of 50k each”
BY ORDER OF THE BOARD
TAIWO OGUNBAJOAg. COMPANY SECRETARY
THDATED: 14 OCTOBER, 2010
NOTES:
A shareholder of the Company entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote on his/her behalf and such proxy need not be a member of the company. A proxy form for this purpose is contained in the Annual Reports and Accounts.
To be valid for the meeting, the proxy form must be completed, stamped by the Commissioner for Stamp Duties and thereafter deposited at the office of First Registrars Limited, Plot 2, Abebe Village Road, Iganmu, Lagos not later than 48 hours before the time fixed for the meeting.
A member entitled to attend and vote at the Annual General Meeting may nominate a shareholder for election to the Audit Committee of the Company. Such nomination should be in writing and forwarded to the Company Secretary at 209, Herbert Macaulay Street, Ebute-Metta, Lagos not later than 21 days before the date of the Annual General Meeting.
ST thThe Register of Members and Transfer Books of the Company will be closed from 1 November, 2010 to 5 November, 2010, both days inclusive for the purpose of updating the Shareholders Records.
A. ORDINARY BUSINESS
B. SPECIAL BUSINESS
1. PROXY
2. AUDIT COMMITTEE
3. CLOSURE OF REGISTER AND TRANSFER BOOKS
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NOTICE OF THE FIFTEENTH ANNUAL GENERAL MEETINGInsurance Plc
RC 167274
A passion for high standardsA passion for high standards
STACO Insurance Plc emerged in July 1994 as a result of discreet acquisition and restructuring thcarried out on Alpha Insurance Plc. It was incorporated in Nigeria with RC. No. 167274 on 10
October 1991 and subsequently licensed to transact all classes of Insurance business with stRegistration No. RI 135 and RI 135L on 1 October 1994. The company under the new name
commenced General Insurance Business and Special Risks with registration No. RIC-053.
Owned by Nigerians who have distinguished themselves in their various business endeavours and
manned by seasoned professionals who have proven integrity in the Nigerian Insurance Industry.
The company's asset base is in excess of Seven billion naira.
The company's strength lies in its passion for high standards and prompt claims settlement. This, and
the notable quality services delivery by the company every time has enabled it to win numerous
award out of which is the prestigious Insurance Company of the Year Award conferred on the
company in 2009 by Thisday Newspaper.
Our strength lies in our passion for high standards and prompt claims settlement.
We are poised to be a world class provider of insurance and other financial services
To be the first choice provider of superior financial services such that the delivery is of integral benefit to all our stakeholders
Professionalism
Team Work
Integrity
Empathy
Customer Satisfaction
Social Responsibility
Retain and enhance our client's base
Expand our ability to cross sell
Add real and genuine value to our customer's needs, particularly our claims settlement
Extend the penetration of our existing product and services
Develop at least one conspicuously different product each year
Flexibility
Excellent Services
Originality
Relationship Management
Good Leadership
Our Vision:
Our Mission:
Core Values:
Strategic Objectives:
Staco seeks to:
Differentiating Competences:
CORPORATE INFORMATION
About Us
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Insurance PlcRC 167274
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Board of Directors:
Mr. Oritsedere Otubu - Chairman
Mr. S. O. Oyefeso - Managing Director / CEO
Mr. Pius Olarewaju - Director
Mr. G. I. Ogan - Director
Mr. N. E. Chiejina - Director
Mr. L. O. Ojakovo - Director
Mr. G. B. Okoturo - Director
Mr. C. C. Chikeluba - Director
Corporate Secretaries: - Taiwo Ogunbajo
Company Secretary (Acting)
209, Herbert Macaulay Street
Ebute - Metta
Lagos
Registered Office: - 209, Herbert Macaulay Street
Ebute Metta
Lagos
Bankers: - First Bank of Nigeria Plc
- United Bank for Africa Plc
- Wema Bank Plc
- Oceanic Bank Plc
- Access Bank Plc
Auditors: - Abayomi - Dosunmu & Co.
(Chartered Accountants)
3rd Floor, Alex Creppy House
30, King George V Road
Onikan, Lagos
Management Team:
Mr. S. O. Oyefeso - Managing Director / CEO
Mr. Bayo Fakorede - Associate Director (Brokers Group)
Mr. Tayo Ajibulu - Associate Director (Corporate Clients)
Mrs. Adaobi Nwaeme - Deputy Director (Lagos Control Office)
Mr. Goke Adeyemo - Deputy Director (Business Development)
Mr. Bola Ogundijo - Assistant Director (Brokers Unit)
Mrs. Tobore Ojumah - Assistant Director (HR/Admin)
Mr. Abiodun Ajayi - AGM (Finance)
Mr. Tunji Nosiru - AGM (Technical, LCO)
Mr. Olatunji Aminu - AGM (Transportation)
Mr. Hamza Razak - AGM (Claims)
Mr. Lanre Oyaleye - AGM (Fire, Engineering & Re-Insurance)
Mrs. Joyce Ojemudia - AGM (Ikeja Branch)
Mr. Sola Oyenuga - AGM (Management Accounts)
Mr. Mojeed Sogo - AGM (Abuja Branch)
Mr. Ade Adetayo - AGM (General Accident/Oil & Gas)
Mr. Sola Akinola - AGM (Marketing, LCO)
REINSURERS COMPANIES - Munich Reinsurance Co. Ltd
- African Reinsurance Corporation
Continental Reinsurance Plc
- Aveni Reinsurance Co. Limited
- Waica Reinsurance Pool
Nigeria Reinsurance Corporation
Corporate Information (cont ’d)
Directors, Offices & Management Team
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Insurance PlcRC 167274
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OUR RANGE OF PRODUCTS
Generic Products:
Customized Products:
Fire and Special Perils
Consequential Loss Insurance
Burglary and Theft Insurance
Motor Insurance
Marine Hull and Marine Cargo Insurance
Goods-In-Transit Insurance
Money Insurance
Group Personal Accident / Personal Accident
Workmen's Compensation Insurance
Public Liability, Professional liability
Fidelity Guarantee Insurance
Contractor's All Risks Insurance
Machinery Breakdown
Erection All Risk
Engineering Insurance
Bond (performance, advance payment, bid, tender and customs)
Aviation
Oil and Gas
Staco Home Owners Insurance
Staco 3 “R” Motor Insurance
Staco Travel Insurance
Staco Personal Protection Plan
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Insurance PlcRC 167274
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Head Office:209, Herbert Macaulay Street,
Ebute-Metta, P.M.B.1018, Sabo, Yaba, Lagos.
Tel.: 01 7741181, 7740571, 4758852-3Fax: 01 3425466
Website: E-mail:
Lagos Control Office:292F Ajose Adeogun Street
Victoria IslandLagos
Tel.: 01 7410184
Ikeja Office,Skymit compound,
32, Mobolaji Bank Anthony Way,Ikeja, Lagos.
Tel: 01-2806995Fax: 01-2806996
Apapa Office:1, Ibikunle Akintayo Street,
Off Randle Road,Apapa, Lagos.
Tel: 0802 884 9062
Northern Regional Office:118, Aminu Kano Crescent,
AbujaTel.: 07027857227
Kaduna Branch:4, Constitution Road,
Kaduna, Kaduna StateTel.: 07028026049
Kano Branch:
36, Ibrahim Taiwo Rd,Kano, Kano State
Tel.: 07028026055
Port - Harcourt Branch:31, King Perekule Street,
G.R.A Phase 11, Port HarcourtPort Harcourt, Rivers State
Tel.: 07028026051
Ibadan Branch:
49, Ring Rd, by Ajeigbe B/Stop
Ibadan, Oyo State
Tel.: 07028022223
Akure Branch:st1 floor, BOI House (left wing),
Opposite Olam Nig Limited,Ado/Owo Road,
Alagbaka, Akure, Ondo State.
Tel: 07041370145, 08034726260
Warri Branch:
255, Effurun/Sapele Road
Effurun, Delta State
Tel.: 07028026041, 08023044606
Yenogoa Branch:
193B, Mbiama Str., Yenogoa Road,
Yenogoa, Bayelsa State
Tel.: 08023064656, 07028026052
Awka Branch:
229, Zik Avenue,
Awka, Anambra State
Tel.: 07028211838
Asaba Branch:
28, Illah Road,
Opposite Nelrose Hotels,
Asaba, Delta State
Tel.: 08033247681, 07029954959
Jos Branch:
No. 4, Beach Road,
Ahmedu Bello way (Beach House),
Jos, Plateau State.
Tel.: 07028026057, 08023187896
Uyo Branch:
174, Ikot Ekpene Road,
Uyo, Akwa-Ibom State.
Tel.: 070 28026080
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Insurance PlcRC 167274
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Corporate Information (cont ’d)
2009 2008 Growth
N'000 N'000 %
MAJOR BALANCE SHEET ITEMS
Total assets 7,823,701 7,205,432 8.58
Shareholders' funds 4,673,478 4,336,904 7.76
Investments 3,522,023 3,947,460 (10.78)
MAJOR PROFIT AND LOSS ACCOUNT ITEMS
Gross premium 5,058,949 4,375,118 15.63
Premium earned 4,327,845 4,011,711 7.88
Investment and other income 397,439 699,519 (43.18)
Claims incurred 1,225,060 899,778 36.15
Profit before taxation 538,406 623,478 (13.64)
Profit after taxation 433,164 542,420 (20.14)
INFORMATION PER 50K ORDINARY SHARE
Earnings per share (kobo)(Basic) 8 11 (25.87)
Dividend per share (kobo) - 12 (100.00)
Assets ratio (kobo) 88 149 (40.94) Stock exchange quotation (kobo) at 31 December 125 670 (81.34)
Price earnings ratio 15 61 (75.41)
Number of 50k shares issued 5,312,425,762 4,829,477,966 -
Number of employees 306 306 -
Number of branches 16 15 -
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FINANCIAL HIGHLIGHTS Insurance PlcRC 167274
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Chairman’s statement
Mr. Or i t sedere Otubu
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Distinguished Shareholders, Ladies and
Gentlemen,
It is my pleasure to welcome you to the
Fifteenth Annual General Meeting of our
Company, Staco Insurance Plc., and to
present to you the Annual Report and stAccounts for the year ended 31 December,
2009.
Business Environment
As anticipated, the year 2009 was indeed a
challenging one as the global economy did
not fully recover from what most economic
analyst termed a depression. The Central
Bank of Nigeria (CBN) played its regulatory
role by introducing some reforms in the
banking industry with a view to reversing
the negative trend. The reforms, however,
almost brought the credit expansion to a
total freeze resulting to a major slowdown
in economic activity in the last quarter of
year 2009. This caused business closures
and massive job losses in many sectors of
the economy thereby raising the
unemployment levels with adverse effect
on government revenues forcing
government to resort to increased
borrowing and stricter enforcement of
taxation. Also, the government's failure to
deliver on the promised 6,000 mw of
electricity power generation by December
2009 worsened the country's economic
activity.
Macroeconomic Conditions
The lower oil production volumes
occasioned by the attacks on oil
installations caused a significant drop in
government revenues and government at
all levels had to resort to a combination of
increased borrowing, more aggressive tax
col lection measures and reduced
Insurance PlcRC 167274
A passion for high standardsA passion for high standards
expenditure to plug budget deficits.
Insurance Industry
In the light of the global economic meltdown, the
governments of both developed and developing
countries were working on strategies that would
turn their economies around. Consequently,
business regulators in Nigeria like other countries
introduced reforms that will ensure that business is
done in Nigeria in line with the world's accepted
best practices to attract foreign investors.
The National Insurance Commission (NAICOM)
has not been left out in the crusade for achieving
the best business practices as it has embarked on
strict enforcement of regulations and guidelines
more than ever before. It has similarly embarked
on public enlightenment on compulsory insurance
and the launching of new products nationwide. It
is also worthy of note that the passage of the Local
Content Act has helped to increase the retention
capacity of the local insurance companies on oil
and gas insurance businesses.
Financial Results
I am pleased to inform you that the Board and
Management worked relentlessly to keep your
company on the track of profitability in spite of the
operating environment. The Gross Premium
increased by 15.63% from N4.375 billion in 2008
to N5.058 billion in 2009. Our investment income
recorded a decline of 43.18% from N699.52
million in 2008 to N397.44 million in 2009 as a
result of the losses suffered in the capital market.
Despite the high rate of reduction in investment
income, your company strived to ameliorate the
effect on Profit before Tax (PBT) which declined
only marginally by 13.64% from N623.478 million
in 2008 to N538.406 million in 2009. We hope to
continue our effort and evolve strategies to ensure
that the trend is fully reversed in 2010.
Your company's shareholders fund increased
marginally from N4.336 billion in 2008 to N4.673
billion in 2009.( i.e. by N336.574 million or 7.76%)
Dividend
In view of the need for your company to improve
its financial performance your Directors are not
recommending payment of dividend.
Future Outlook
The insurance industry continues to face market
challenges as a fall out of the prevailing global
financial crisis. The various reforms aimed at
pulling the world economy out of recession have
also had their ripple effect on the income of the
insurance industry because of the reduced levels
of consumer credits, less disposable income for
consumers and weak capital market and exposure
to equities investments. Your Directors have
resolved to turn the challenges to opportunities,
strive to make your company a big player in the
underwriting of oil and energy business and give
necessary support to Management to improve the
company's performance for the benefit of all the
stakeholders. We are making frantic efforts at
repositioning your company for better strategic
presence in the market place.
Conclusion
I wish to express my appreciation to all our
customers and business partners for their loyal
patronage and support without which we would
not have attained our present position. I also wish
to express my gratitude to my colleagues on the
Board for their support and cooperation towards
making Staco Insurance Plc a household name
insurer in Nigeria.
Finally, I wish to thank our esteemed shareholders
for their interest, support and confidence in the
Board and to the Management and staff for their
dedication and commitment which has helped the
company to be counted among the best insurance
companies in Nigeria.
Thank you and God bless.
DERE OTUBU
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Chairman’s Statement (cont’d.)Insurance Plc
RC 167274
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BOARD OF DIRECTORS
Mr. Or i t sedere Otubu Cha i rman
Mr. S . O. Oye fesoManag ing D i rec to r / CEO
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Insurance PlcRC 167274
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Board Of Directors (cont ’d)
Mr. Pius Olarewaju-Director Mr. G. I. Ogan-Director
Mr. N. E. Chiejina-Director Mr. L. O. Ojakovo-Director
Mr. G. B. Okoturo-Director Mr. C. C. Chikeluba-Director
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Insurance PlcRC 167274
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Mr. S. O. Oyefeso-Managing Director / CEO
Insurance PlcRC 167274
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M A N A G E M E N T T E A M
Mr. Bayo FakoredeAssociate Director (Brokers Group)
Mr. Tayo AjibuluAssociate Director (Corporate Clients)
Mrs. Adaobi NwaemeDeputy Director
(Lagos Control Office)
Mr. Goke AdeyemoDeputy Director
(Business Development)
M a n a g e m e n t T e a m ( c o n t ’ d )
Mrs. Tobore OjumahAssistant Director (HR/Admin)
Mr. Bola OgundijoAssistant Director (Brokers Unit)
Mr. Abiodun AjayiAGM (Finance)
Mr. Tunji NosiruAGM (Technical, LCO)
Mr. Olatunji AminuAGM (Transportation)
Mr. Hamza RazakAGM (Claims)
Mr. Lanre OyaleyeAGM (Fire, Engineering & Re-Insurance)
Mrs. Joyce OjemudiaAGM (Ikeja Branch)
Mr. Sola OyenugaAGM (Management Accounts)
Mr. Mojeed SogoAGM (Abuja Branch)
Mr. Adegboye AdetayoAGM (General Accident/Oil & Gas)
Mr. Sola Akinola
AGM (Marketing, LCO)
Insurance PlcRC 167274
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REPORT OF THE DIRECTORS
Directors hereby submit their report to the members of STACO INSURANCE PLC with
Balance Sheet as at 31 December 2009 together with the Profit and Loss Account for the
year ended on that date.
2009 2008
N'000 N'000
Profit Before Taxation 538,406 623,478
Less: Taxation Provision (105,242) (81,058)
Profit After Taxation 433,164 542,420
======= ======
Appropriation
Transfer to contingency reserve 151,768 131,254
Transfer to general reserve 281,396 411,166
433,164 542,420
======= =======
The company was incorporated in Nigeria as a public limited liability company in 1994
under the name of Standard Trust Assurance Plc. The Company's name was changed to
STACO Insurance Plc in 2007 following the merger of Standard Trust Assurance Plc with
Summit Insurance Company Limited as a result of directive from National Insurance
Commission (NAICOM) on the increase of share capital of Insurance Companies in
Nigeria.
The Company is principally engaged in General Insurance Business.
Mr. O.S Otubu Chairman
Mr. S.O. Oyefeso Managing Director/CEO
Mr. P. Olarewaju Director
Mr. G. I. Ogan Director
Mr. E. Chiejina Director
Mr. L.O. Ojakovo Director
Mr. G.B. Okoturo Director
Mr. C.C. Chikeluba Director
1. ACCOUNTS
2. LEGAL FORM
3. PRINCIPAL ACTIVITIES
4. DIRECTORS
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Insurance PlcRC 167274
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5. RESPONSIBILITIES OF DIRECTORS
6. RE-ELECTION OF DIRECTORS
7. INTEREST OF DIRECTORS
8. SHARE CAPITAL
The Directors are responsible for preparation of the financial statements which give a true and fair
view of the state of affairs of the company as at the end of the financial year and of its profit and
cash flows for the year and comply with the provisions of the Companies and Allied Matters Act,
CAP C20, LFN 2004. These responsibilities include ensuring that:
. adequate internal control procedures are instituted to safeguard assets, prevent and detect fraud
and other irregularities;
. proper accounting records are maintained;
. applicable accounting standards are adhered to;
. suitable accounting policies are used and consistently applied; and
. the financial statements are prepared on the going concern basis unless it is inappropriate to
presume that the company will continue in business.
Messrs G. I. Ogan, C. C. Chikeluba and Pius Olarewaju, Directors will retire by rotation from the
board of directors at this annual general meeting and being eligible, offer themselves for re-
election.
Pursuant to Section 275 and 276 of the Companies and Allied Matters Act, CAP C20, LFN 2004, the
directors' direct interest in the Issued capital of the company as at 31 December 2009 is as
follows:
The Nominal Value of the Share is 50k each.
31/12/2009 31/12/2008
No. of Nominal No. of Nominal
Shares Value Shares Value
Names N N
Mr. O.S Otubu 307,348,043 153,674,021.50 279,407,312 139,703,656.00
Mr. S.O. Oyefeso 401,208,625 200,604,312.50 364,735,114 182,367,557.00
Mr. P. Olarewaju (Indirect) 221,100,001 110,550,000.50 201,000,001 100,500,000.50
Mr. I. G. Ogan 11,000,000 5,500,000.00 10,000,000 5,000,000.00
Mr E. Chiejina 14,758,333 7,379,166.50 13,416,666 6,708,333.00
Mr C.C Chikeluba 29,406,667 14,703,333.50 26,733,334 13,366,667.00
Mr L.O Ojakovo 44,000,000 22,000,000.00 40,000,000 20,000,000.00
Mr G.B Okoturo 12,397,647 6,198,823.50 11,270,588 5,635,294.00
As required by Section 277 of the Companies and Allied Matters Act 1990, none of the directors
has notified the company of any declarable Interest in contracts, which the company is involved as
at 31 December 2009.
The issued and fully paid up Share Capital was N2,656,212,881 divided into 5,312,425,762
ordinary shares of 50 kobo each as at 31 December 2009.
Report Of The Directors (cont'd)
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Insurance PlcRC 167274
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Report Of The Directors (cont'd)
No shareholder except as disclosed below held more than 5% of the issued share capital of the
company as at 31 December 2009.
2009 % 2008 %
No of shares No of shares
Seaforce Investment Ltd 586,666,674 11.04 533,333,334 11.04
Mr. S. O. Oyefeso 401,208,625 7.56 364,735,114 7.56
Mr. O. O. S. Otubu 307,348,043 5.79 279,407,312 5.79
Nigerian Citizens and Associates 4,017,202,420 75.61 3,652,002,206 75.61
5,312,425,762 100 4,829,477,966 100
=========== === ========= ===
Movement in Fixed Assets during the period is shown in the Notes on the Financial Statements.
The company identifies with the aspirations of the community as well as the environment within
which it operates and made charitable donations to the under-listed organizations amounting to
N8,247,320 (2008- N2,300,000) during the year as follows:
Organisations: N
Gateway Polytechnic 2,500,000
Chartered Insurance Institute of Nigeria 1,500,000
Ansar-ud-deen Society of Nigeria 500,000
Nigerian Council of Registered Ins. Brokers 500,000
Annual Brokers Day Ibadan 100,000
Lasumba Heritage 150,000
Primetouch College 100,000
Institute of Chartered Accountants of Nigeria 100,000
Crowns Mouth Resort 100,000
Association of Registered Agents of Nigeria 50,000
Eagle Tower School 50,000
Others 2,697,320
8,247,320
========
(a) Employment of Disabled Persons
The Company does not discriminate in its employment policy as it relates to disabled persons.
(b) Health, Safety and Welfare
The Company complies with all Safety and Welfare regulations and maintains retainership
agreement with accredited Medical Clinics for the benefit of its Staff.
(c) Training and Development
The Company has a policy of ensuring “on the job” training and development of its staff.
9. SIGNIFICANT CHANGES IN FIXED ASSETS
10. DONATIONS AND CHARITABLE GIFTS
11. PERSONNEL
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12. AUDITORSPursuant to Section 357(2) of the Companies and Allied Matters Act 1990, the Auditors, Messrs Abayomi Dosunmu & Co, (Chartered Accountants) have expressed their willingness to continue in office and a resolution will be proposed at the annual general meeting to authorize the Directors to fix their remuneration.
BY ORDER OF THE BOARD
Dated: …………………….. 2010
Report Of The Directors (cont'd)Insurance Plc
RC 167274
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18 1 5 T H A N N U A L R E P O R T & A C C O U N T S ‘ 0 9
CORPORATE GOVERNANCE
1. INTRODUCTION
Corporate governance is the process and structure by which the business affairs of an institution
is directed and managed in order to improve long term shareholder value by enhancing corporate
performance and accountability, while taking into account the interests of other stakeholders.
At Staco Insurance Plc, we are dedicated to the protection and promotion of shareholders'
interest. The company recognizes the importance of the adoption of superior management
principles, its valuable contribution to long term business prosperity and accountability to its
shareholders.
The Company also complies with the code of corporate governance in the composition of the
Board of Directors by ensuring a diversity of experience without compromising integrity,
availability and independence.
2. Responsibilities of the Board;
The Board reviews corporate performance, authorizes and monitors strategic decisions whilst
ensuring regulatory compliance and safeguarding the interest of shareholders. It is committed to
ensuring that the company is managed in a manner that will fulfill stakeholder's aspirations and
societal expectations.
During the year, the Board actively performed the following roles;
. Ensuring the integrity of the company's accounting, financing and reporting system.
. Supervising and monitoring the execution of policies and providing direction for the
management.
. Review of corporate strategy, major plans of action, risk policy, business plans, setting
performance objectives, monitoring implementation and corporate performance.
3. Board Composition:The Board is composed of 8 members including the Chairman, who is a
Non Executive Director, the Managing Director and 6 Non Executive Directors. The Board of
Directors has a broad range of expertise that covers the oil sector, the company's main
business, the legal sector and finance. Each individual director has experience,
knowledge, qualifications, expertise and integrity necessary to effectively discharge the duties of
the board of directors.
4. Board Structure:
The Board has three Committees. The Committees are saddled with the following responsibilities;
Finance & Investment:
- Considering Quarterly And Annual Accounts
- Considering Annual Budgets
- Considering Investment Quarterly Report.
- Considering Capital Raising Exercise.
Human Resources:
- Formulating recruitment policy for the company
- Review of remuneration from time to time
- Recruitment of top management staff
- Review of organogram of the organization for time to time.
Audit:
- Review of accuracy of data and information in audited financial report.
- Reviewing of quarterly internal audit report.
- Considering and reviewing major changes in accounting policies.
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Directors who were unable to attend any of the meetings sent apologies for absence
prior to the meeting.
6. Internal Audit:
The internal audit reports to the Board through the Managing Director and ensures
that all controls including financial, operational and compliance control and risk
management are functioning effectively.
7. Shareholder's Participation:
In line with the Code of Corporate Governance, the Company gives equal opportunity
to all shareholders. They are encouraged to participate in Annual General Meetings and
they receive notices of meeting and other relevant information/ documents at least 21
days before the meetings except in cases of EGM's and other exceptions under CAMA.
The Company also maintains a website at to promote effective
dissemination of information to shareholders.
OGUNBAJO TAIWO
AG. COMPANY SECRETARY
www.stacoplc.com
Corporate Governance (cont’d)
4.1 Board Members and their Committees:
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Abayomi Dosunmu & Co.Chartered Accountants
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF STACO INSURANCE PLC
To the members of STACO Insurance Plc
Report on the Financial StatementsWe have audited the accompanying financial statements of STACO Insurance Plc which comprise the balance sheets as at 31 December 2009, the profit and loss account, statements of cash flows, value added statements for the year then ended, the statement of accounting policies, notes to the financial statements and the five year financial summary, as set out on page 41.
Directors' Responsibility for the Financial StatementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria, and relevant National Insurance Commission (NAICOM) guidelines and circulars. This responsibility includes: designing, implementing and maintaining internal control 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.
Auditor's ResponsibilityOur 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 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 auditor's 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 auditor considers 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 the 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.
OpinionIn our opinion, these financial statements give a true and fair view of the financial position of STACO Insurance Plc as at 31 December 2009, Company's financial performance and cash flows for the year then ended in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria, Insurance Act of Nigeria and relevant NAICOM guidelines and circulars.
Report on Other Legal and Regulatory RequirementsCompliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of Nigeria.In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us. Additionally, the Company's balance sheet and profit and loss account are in agreement with the books of accounts.
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REPORT OF THE AUDIT COMMITTEE
We have examined the Auditor’s Report for the year ended 31st December, 2009 in accordance
with provision of section 352 of the Companies and Allied Matters Act, 1990.
We have obtained all the information and explanations we required for our work.
In our opinion, the A uditor’s Report is consistent with our review of the scope and planning of the
Audit and the Management letter and replies thereon, and the Company’s Accounting and
Financial Reporting policies are in accordance with the provision of Section 359(6)(a) of the
Companies and Allied Matters Act, 1990.
Lagos, Nigeria.
MEMBERS OF THE AUDIT COMMITTEE
1. Mr. I. G. Ogan
2. Mr. L. O. Ojakovo
3. Mr. Ebisa Rewane
4. Mr. M. O. Kassim
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The following are the significant accounting policies which have been adopted by the company;
The financial statements have been prepared under the historical cost convention adopting the annual accounting basis. No provision has been made to reflect the effect of inflation or specific increase in prices.
Cash and bank balances represent the Company's balances held with banks in Nigeria and cash in hand.
Fixed asset are stated at cost less accumulated depreciation. Depreciation is provided to write off the cost of fixed assets over their expected useful lives at the following annual rates:
Leasehold property (Amortized over unexpired lease period 34 years)
Plant and Machinery 10%Motor vehicle 20%Office Equipment 10%Furniture and Fittings 10%Land and Buildings 2%Work-in-progress -
The capital element under finance lease is capitalized along with the company's fixed assets and depreciated at the same rates for assets in that category. The obligation to lessor is shown as part of borrowings, appropriately classified as to maturity.
Gross premium is recognized at the point of attachment of risk to a policy before deducting cost of reinsurance cover. All written premium relating to risk for period not falling within the accounting period is carried forward as unearned premium.
Net premium represents the total amount invoiced to policy holders less reinsurance. It is recognized as income from the date of attachment of risks.
Work-in-progress represents land and building under construction. The attributable cost of each asset will be transferred to the relevant asset category upon completion.
1. Basis of accounting
2. Cash and bank balances
3. Fixed assets
4. Finance lease
5. Gross premium
6 Net premium
7. Work-in-progress
ACCOUNTING POLICIESFOR THE YEAR ENDED 31 DECEMBER 2009
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8. Claims expenses
9. Underwriting expenses
10. Deferred acquisition costs
11. Acquisition cost
12. Management expenses
13a. Trade debtors
13b. Other debtors and prepayments
All claims paid and incurred are charged against revenue as expense when incurred. Reinsurance
recoveries are recognized when the re-insurer accepts liability for the claims.
Underwriting expenses for insurance contracts are recognized as expenses when incurred, with
the exception of acquisition costs, which are recognized on a time apportionment basis in respect
of risks.
Acquisition costs comprise all direct and indirect costs arising from the writing of insurance
contracts. Deferred acquisition costs represent a proportion of commission and other acquisition
costs, which are incurred during a financial period and are deferred to the extent that they are
recoverable out of future revenue margins.
Acquisition costs comprise all direct and indirect costs arising from the writing of insurance
contracts.
Management expenses are expenses other than claims, investment and underwriting expenses.
They include salaries and wages, depreciation expenses and other expenses. They are accounted
for on an accrual basis.
Debtors are stated after deducting allowance made for specific debts considered doubtful of
recovery. In accordance with the National Insurance Commission (NAICOM) guidelines,
allowance is made for bad debts as follows:
Period outstanding % Allowance required
Up to 3 months Nil
3 - 6 months 25%
6 - 9 months 50%
9 - 12 months 75%
Above one (1) year 100%
Other debtors are stated after deduction of amounts considered bad or doubtful of recovery.
Subsequent recoveries are credited to the profit and loss account.
Prepayments are carried at cost less amortised amounts.
Accounting Policies (cont'd)
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14. Foreign currency transactions
15. Technical reserves
16. Long-term investments
17. Short-term investments
Transactions in foreign currencies are recorded in Naira at the rate ruling on the date of
the transaction. Assets and liabilities in foreign currencies are translated to Naira at the
rate ruling at the balance sheet date. All differences arising from the conversion of
balances in foreign currencies to the Naira are taken to profit and loss account.
These are computed in accordance with the provisions of Section 20 and 21 of the
Insurance Act 2003 as follows:
a. Reserve for unexpired risks
In accordance with Section 20(1) (a) of Insurance Act 2003, the reserve for unexpired
risks is calculated on a time apportionment basis in respect of the risks accepted during
the year.
b. Reserves for outstanding claims
In accordance with Section 20(1) (b) of Insurance Act 2003, the reserve for outstanding
claims is maintained at the total amount of outstanding claims plus 10% thereof to cover
claims incurred but not reported at the balance sheet date.
c. Contingency reserves
In accordance with Section 21(1) of Insurance Act 2003, the contingency reserve is
credited with the greater of 3% of total premiums, or 20% of the profits. This shall
accumulate until it reaches the amount of greater of minimum paid-up capital or 50
percent of net premiums.
Quoted investments are stated at the lower of cost or market value. The diminution in
value of investments is charged against profit and loss account.
These are stated at cost. Where in the opinion of the Directors the value of any unquoted
investment falls below its cost, an appropriate allowance for diminution in value thereof is
charged against the profit and loss account.
Short-term investments are stated at the lower of cost or market value. The carrying cost
is determined on an item by item basis. The amount by which cost exceeds market value
(unrealized loss) is charged to the profit and loss account. Realised gains or losses on
disposal of short-term investments are taken to the profit and loss account. Interest
receivable on investments is accrued and credited to the profit and loss account.
a. Quoted investments
b. Unquoted investments
Accounting Policies (cont’d.)
FOR THE YEAR ENDED 31 DECEMBER 2009Insurance Plc
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18. Investment income
19. Taxation
20. Deferred taxation
21. Dividend
22. Pension
Investment income comprises income earned on short term deposits and dividends on port folio.
Income tax expenses/credits are recognized in the profit and loss account. Current income tax is the expected tax payable on the tax income for the year using the statutory tax rate at the balance sheet date.
Deferred taxation, which arises from timing differences in the recognition of items for accounting and tax purpose, is calculated using the liability method. Deferred taxation is provided fully on timing differences, which are expected to reverse at the rate of tax likely to be in force at the time of reversal.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
In accordance with SAS 23, dividend distribution to the company's shareholders is recognized as a liability in the Financial Statements in the period in which the dividend is approved by the shareholders.
The Company operates a contributory pension scheme for eligible employees. Employees and the Company contribute 7.5% each of the qualifying staff salary in line with the provisions of the Pension Reform Act 2004.
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Accounting Policies (cont’d.)
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26
Approved by the Board of Director on 17th September, 2010
The accounting policies on pages 22 to 25 and accompanying notes on pages 30 to 39 form part of these financial statements.
BALANCE SHEET AS AT 31 DECEMBER 2009
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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2009
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REVENUE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2009
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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009
2009 2008
N'000 N'000
Cash flow from operating activities
Profit for the period before taxation 538,406 623,478
Accretion to Insurance funds 390,957 410,988
Depreciation on fixed assets 112,442 129,599
Depreciation on leased assets 100,643 81,755
Operating profit before working capital changes 1,142,448 1,245,820
Working capital changes
Debtors and prepayments (1,136,638) (167,511)
Creditors and accruals 87,254 261,921
Cash generated from operations 93,064 1,340,230
Tax paid (26,992) (44,946) Dividend paid (96,590) (581,419)
Net Cash from operating activities (30,518) 713,865
Cash flow from investing activities
Bank loan 156,012 78,723
Convertible bond (182,356) -
Purchase of fixed assets (32,263) (53,779)
Leased assets (61,560) ( 222,790)
Investment portfolio 425,437 (472,524)
Library books (481) (933)
Net Cash from operating and investing activities 274,271 42,562
Cash flows from financing activities
Lease repayment (248,422) (179,585)
Net cash from financing activities (248,422) (179,585)
Net changes in cash and cash equivalents 25,849 (137,023)
Cash and cash equivalents at start of year 175,833 312,856
Cash and cash equivalents at end of the year 201,682 175,833
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1 The Company
The company was incorporated as a public company in 1994. It markets General insurance
business and the shares became listed on the Nigerian Stock Exchange on June 18 2007.
In line with the NAICOM Directive to Insurance Companies to recapitalise, the company
increased its issued share capital through public offer and so increasing the networth to
N3 billion.
2009 2008
N'000 N'000
2 Cash and bank balances
Cash at bank 201,384 175,379
Cash in hand 298 454
201,682 175,833
3 Short term investments 2,285,104 2,252,241
Short term investments include fixed deposit with banks and other financial institutions
4 Debtors and Prepayments
Agency debtors (Note 4.1) 1,734,572 1,124,704
Interest receivable 208,082 -
Due from Reinsurance Companies 242,499 17,675
Prepayments 39,624 58,352
Staff loan 25,365 28,344
Deferred acquisition cost 225,876 62,458
Sundry debtors (Note 4.2) 127,200 175,047
2,603,218 1,466,580
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
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2009 2008
N'000 N'000
4.1 Agency debtors
Debtors for premium (Note 4.1.1) 1,892,349 1,983,181
Provision for doubtful debts (Note 4.1.1) (157,777) (858,477)
1,734,572 1,124,704
4.1.1 Age analysis of agency debtors
Gross % Provisions
Premium
0 to 90 days 1,403,150 -
91 to 180days 400,874 25 100,219
181 to 270 days 35,442 50 17,721
271 to 365 days 52,883 75 39,837
Over 360 days - 100 -
1,892,349 157,777
4.1.2 The movement in doubtful debt
provision during the year was as follows:
Balance brought forward 858,477 248,522
Addition (Note 4.1.1) 157,777 609,955
Written off during the year (858,477) -
Balance carried forward 157,777 858,477
4.2 Sundry debtors
Debtors 190,133 176,480
Provision for doubtful debts (Note 4.2.1) (62,933) (1,433)
127,200 175,047
4.2.1 Balance brought forward 1,433 -
Addition 61,500 1,433
Balance carried forward 62,933 1,433
4.3 Summary of charge to profit and
loss account
Agency Debtors (Note 4.1.2) 157,777 609,955
Other Debtors ( Note 4.2.1) 61,500 1,433
219,277 611,388
Notes To The Financial Statements (cont’d.)
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2009 2008
N'000 N'000
5 Quoted Investments
First Bank of Nigeria Plc 6,733 6,733
Guaranty Trust Bank Plc 6,433 6,246
Nigerian Breweries Plc 466 466
Cadbury Nigeria Plc 641 641
Nolchem Plc 323 323
Mobil Nigeria Plc 323 323
Nestle Nigeria Plc 326 326
Nigeria Bottling Company Plc 383 383
Flour Mills of Nigeria Plc 290 290
Guinness Nigeria Plc 710 710
Zenith Bank Plc 1,912 253,912
Ashakacem Plc 342 342
United Bank for Africa Plc 78 78
PZ Cussons Nigeria Plc 410 410
Unilever Plc 450 450
Oceanic Bank Plc 530 530
OANDO Nigeria Plc 1,074 1,074
Diamond Bank Plc 200,504 200,504
Access Bank Plc 126,753 76,752
Intercontinental Bank Plc 4,807 4,807
Wema Bank Plc 1,500 1,501
Skye Bank Plc 1,270 1,270
Sterling Bank Plc 1,749 1,749
Spring Bank Plc 2,600 2,600
First City Monument Bank Plc 800 150,800
Berger Paint Plc 83 83
Access Bank bond 12,500 100,000
Union Bank of Nigeria Plc 158 158
Bank PHB Plc - 170,000
Afribank of Nigeria Plc 50,000 50,000
Fidelity Bank Plc - 80,000
424,148 1,113,461
Provision for diminution In value (Note 5.1) (190,461) (347,742)
233,687 765,719
Aggregate market value 233,687 765,719
5.1 Diminution in value
At 1 January (347,742) -
Addition during the year - (347,742)
Diminution on investment sold 66,909 -
Appreciation in value 90,372 -
At 31 December (Note 5) (190,461) (347,742)
Notes To The Financial Statements (cont’d.)
FOR THE YEAR ENDED 31 DECEMBER 2009
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2009 2008 N'000 N'000
6 Unquoted Equities at cost 703,232 629,500
In the opinion of the Directors the value of unquoted investments is not lower than cost.
7 Statutory depositThis represents amount deposited with Central Bank of Nigeria (CBN) in accordance with section 10(3) of the Insurance Act, 2003. 300,000 300,000
Notes To The Financial Statements (cont’d.) FOR THE YEAR ENDED 31 DECEMBER 2009
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Notes To The Financial Statements (cont’d.)
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Notes To The Financial Statements ( Cont’d.)
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Notes To The Financial Statements (cont’d.)
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 0 9
2009 2008
12.2 Staff pension N'000 N'000
At 1 January 2009 - -
Provision in the year 35,321 23,197
35,321 23,197
Release to pension fund administrators (35,321) (23,197)
At 31 December 2009 - -
13 Taxation
Per profit and loss account
Income tax 86,944 60,737
Education tax 10,663 8,098
97,607 68,835
Deferred taxation (Note 15) 7,635 12,223
105,242 81,058
Per balance sheet
At 1 January 2009 179,030 155,141
Provision for the year 97,607 68,835
276,637 223,976
Payment during the year (26,992) (44,946)
At 31 December 2009 249,645 179,030
14 Insurance funds
Provision for unearned premium
Fire and Engineering 167,601 138,508
Motor 539,173 492,295
General Accident 153,966 114,749
Marine 123,030 95,298
Bonds 2 4
Oil and Energy 28,018 2,840
1,011,790 843,694
Provision for outstanding claims
This balance is inclusive of the 10% incurred but not reported(IBNR) provision as required under
section 20 (1)(b) of the Insurance Act 2003.
The outstanding claims are analysed below:
Gross claims Provision Outstanding Outstanding
outstanding for IBNR Claim Claim
2009 2009 2009 2008
N'000 N'000 N'000 N'000
Fire and Engineering 105,220 10,522 115,742 80,000
Motor 109,433 10,944 120,377 40,000
General Accident 132,220 13,222 145,442 41,000
Marine 34,755 3,475 38,230 25,000
Bonds 12,791 1,279 14,070 25,000
394,419 39,442 433,861 211,000
Insurance funds 1,445,651 1,054,694
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2009 2008
N'000 N'000
15 Deferred taxation
Excess of tax allowances on eligible fixed
assets over the depreciation provided in
respect thereof;
At January 1 2009 36,444 24,221
Charge for the year (Note 13) 7,635 12,223
44,079 36,444
16 Share Capital
(a) Authorised
7,000,000,000 ordinary shares of 50k each
At 1st January 2009 3,500,000 2,500,000
Addition during the year - 1,000,000
At 31 December 2009 3,500,000 3,500,000
(b) Called up and Fully Paid
5,312,425,762 ordinary shares of 50k each
(2008: 4,829,477,966 ordinary share of 50k each)
At 1st January 2009 2,414,739 2,414,739
Bonus issue (Note 17) 241,474 -
At 31 December 2009 2,656,213 2,414,739
17 Share premium account
Balance at the beginning of the year 693,455 693,455
Bonus issue (Note 16b) (241,474) -
At 31 December 2009 451,981 693,455
18 General reserve
At January 2009 683,514 853,767
Profit for the year 281,396 411,166
Dividends paid (96,590) (581,419)
At 31 December 2009 868,320 683,514
19 Contingency reserve
At 1st January 2009 545,196 413,942
Transfer from profit and loss account 151,768 131,254
At 31 December 2009 696,964 545,196
Notes To The Financial Statements (cont ’d).
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 0 9
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Notes To The Financial Statements (cont’d.)
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2009 2008
25 Employees Number Number Average number of persons employed during the year 306 306
N'000 N'000 Aggregate Payroll Cost:Wages, salaries and other benefits 651,335 468,332
Chairman and other Directors emolumentsEmolumentChairman 170 170 Other Directors 1,050 1,050
1,220 1,220 FeesChairman 200 200 Other Directors 1,400 1,400
1,600 1,600
The number of Directors whose emoluments were within the following ranges :
Number Number
Above - 150,000 8 8
Employees remuneration at higher ratesThe number of employees in receipt of emoluments,including
Allowances within the following ranges were:20,001 - 30,000 - 1030,001 - 40,000 8 640,001 - 50,000 39 4150,001 - 60,000 14 1460,001 - 70,000 23 1570,001 - 80,000 - - 80,001 - 90,000 41 3990,001 - 100,000 - - 100,001 - 120,000 15 19Above - 120,000 166 162
26 PenaltyPenalty amounting to N365,000 was paid for late filing of returns to the regulatory authorities during the year.
27 Comparative figuresCertain comparative figures have been reclassified to conform with presentation in the current year.
Notes To The Financial Statements (contd.)
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2009 2008
N'000 % N'000 %
Net earned premium and commission 4,444,829 4,064,430
Investment and other income 397,439 699,519
4,842,268 4,763,949
Claims, Commission and other services (3,203,048) (2,802,761)
Value added 1,639,220 100 1,961,188 100
Applied as follows:
To Employees:
Employee costs 651,335 41 468,332 24
To Government :
Government Taxes 105,242 6 81,058 4
To providers of finance :
Interest on finance lease 139,804 9 76,606 4
Dividend paid 96,590 6 581,419 30
Retained in business :
Depreciation on fixed assets 112,442 7 129,599 7
Depreciation on leased assets 100,643 5 81,754 4
Contingency reserve 151,768 9 131,254 7
Retained in the business 281,396 17 411,166 20
Value added 1,639,220 100 1,961,188 100
“Value added" represents the additional wealth, which the company was able to create through its own efforts and those of its
employees. This statement shows the allocation of that wealth between employees, government and the proportion retained for
the future creation of more wealth.
STATEMENT OF VALUE ADDED F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 0 9
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FIVE - YEAR FINANCIAL SUMMARYInsurance Plc
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P E R F O R M A N C E C H A R T S
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S H A R E C A P I T A L H I S T O R Y
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EVENTS
L-R, Justus Eziri, Endorser of Staco Insurance Plc,MD/CEO and Dr. Teslim Sanusi, President of NCRIB at the
Staco Sponsored NCRIB Monthly Meeting.
Sakiru Oyefeso (MD/CEO) and Mr. Adegboyega Adepegba, DG of CIIN during CIIN courtesy visit to
Staco Insurance Plc.
The President of ICAN, Mrs. Elizabeth Adegbite and MD/CEO, Staco Insurance Plc., during ICAN
courtesy visit to Staco.
Staff at the Staco sponsored Walk for Education by Catholic Church of Assumption, Falomo, Ikoyi.
Participants at the quality service train the trainer Seminar
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Staco Management making a presentation of KIA Rioto ICAN for the winner of the Raffle Draw at
Accountant Conference.
Goke Adeyemo (DD, Business Development) with the Female Winner of the Staco Sponsored Governor’s Cup
Tournament held in Uyo.
Mr. Tunde Odeyemi (Head, Corporate Affairs), and Mr. Ade Adetayo (AGM, GA/Oil & Gas) with representatives of ASISAN during a trade visit
to Staco.
Staff with Ben Oke (The Technical Consultant) during his send-forth after completing his contract
with Staco
Staco Staff at the CIIN Annual Fitness Walk.
Sakiru Oyefeso (MD/CEO) and Mr. Ray Atelly (Council member of NBCC) during NBCC
courtesy visit to Staco Insurance Plc.
EVENTS
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Insurance PlcRC 167274
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N O T E S
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