THE INFRASTRUCTURE BANK PLC AND …The Infrastructure Bank Plc and Subsidiary Companies Annual Report 31 December 2015 Chief Executive Officer's statement Financial performance Business

THE INFRASTRUCTURE BANK PLC AND SUBSIDIARY COMPANIES

Annual Report31 December 2015

CONTENTSReportsCorporate information……………………………………………………………………………………Chairman's statement………………………………………………………………………………………Chief executive officer's statement………………………………………………………………………Directors' report……………………………………………………………………………………………Corporate governance report………………………………………………………………………………Statement of directors' responsibilities……………………………………………………………………Report of the audit committee……………………………………………………………………………Independent auditor's report………………………………………………………………………………Consolidated and separate financial statementsConsolidated and separate statement of financial position………………………………………………Consolidated and separate statement of profit or loss and comprehensive income………………………Consolidated and separate statement of changes in equity………………………………………………Consolidated and separate statement of cash flows………………………………………………………Notes to the consolidated and separate financial statements

1 Reporting entity……………………………………………………………………………………2 Basis of preparation………………………………………………………………………………3 Changes in accounting policies……………………………………………………………………4 Significant accounting policies……………………………………………………………………5 Use of judgments and estimates……………………………………………………………………6 Financial risk management…………………………………………………………………………7 Capital management………………………………………………………………………………8 Operating segment…………………………………………………………………………………9 Classification of financial assets and liabilities……………………………………………………

10 Net interest income/(expense)……………………………………………………………………11 Net fees and commission income…………………………………………………………………12 Other income………………………………………………………………………………………13 Expenses……………………………………………………………………………………………14 Impairment on financial assets……………………………………………………………………15 Taxation……………………………………………………………………………………………16 Basic and diluted earnings per share………………………………………………………………17 Cash and cash equivalents…………………………………………………………………………18 Loans and advances to customers…………………………………………………………………19 Fee income receivables……………………………………………………………………………20 Other assets…………………………………………………………………………………………21 Pledged assets………………………………………………………………………………………22 Investment in subsidiaries…………………………………………………………………………23 Equity-accounted investee…………………………………………………………………………24 Property and equipment……………………………………………………………………………25 Intangible assets……………………………………………………………………………………26 Borrowings…………………………………………………………………………………………27 Accruals……………………………………………………………………………………………28 Employee benefits…………………………………………………………………………………29 Other liabilities……………………………………………………………………………………30 Reconciliation notes to consolidated and separate statement of cash flows………………………31 Fiduciary activities…………………………………………………………………………………32 Group subsidiaries…………………………………………………………………………………33 Related parties………………………………………………………………………………………34 Capital and reserves………………………………………………………………………………

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35 Contravention of laws and regulations……………………………………………………………36 Contingent liabilities and commitment……………………………………………………………37 Events after the reporting date……………………………………………………………………

Other national disclosuresValue added statement……………………………………………………………………………………Financial summary……………………………………………………………………………………… 69

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The Infrastructure Bank Plc and Subsidiary CompaniesAnnual Report

31 December 2015

1

Corporate information

Board of directors: Lamis Dikko - ChairmanJohan Kruger (South African) - Vice ChairmanAdekunle AbdulRazaq Oyinloye - Managing DirectorHakeem Olopade - Executive DirectorTaiwo Dauda - Executive DirectorOye Hassan-Odukale - Non-executive DirectorAkinade Akanmu Ogunbiyi - Non-executive DirectorAbdullahi Musa Bello - Non-executive DirectorTanimu Yakubu Muhammad-Ja - Non-executive DirectorUmar Saleh - Non-executive DirectorL. O. T. Shittu - Non-executive DirectorNwabueze Okafor - Non-executive DirectorPromise Adewusi - Non-executive DirectorAnne Sanusi - Non-executive DirectorMicah Jiba - Non-executive DirectorAbdulrasheed Giwa - Non-executive DirectorMfon Ekong Usoro - Independent Non-executive Director

Acting secretary and Ezinwanyi Ken-Ahia registered office:

P.M.B 272, Garki Abuja F.C.TNigeria

Lagos office: 52 Ahmadu Bello WayVictoria Island, LagosNigeria

Independent auditor: KPMG Professional ServicesKPMG TowerBishop Aboyade Cole StreetVictoria IslandLagos

Bankers: Access Bank PlcCitibank Nigeria LimitedGuaranty Trust Bank PlcStandard Chartered Bank LimitedUnited Bank for Africa PlcUnity Bank PlcEcobank Nigeria LimitedDiamond Bank Plc

RC No.: 196688

Plot 977 Central Business District (Adjacent National Mosque)

The Infrastructure Bank Plc and Subsidiary Companies

Annual Report

31 December 2015

Chairman's statement

Market environment

Financial performance

Board of directors

Outlook

Conclusion

LAMIS DIKKO

FRC/2013/IODN/00000004932

Chairman, Board of Directors

The performance this year was praiseworthy and I would like to thank The Infrastructure Bank staff for their hard work and commitment to the Bank’s

Vision to be the premier focal point for infrastructure development in Nigeria.

I am pleased to report that The Infrastructure Bank Plc has delivered another robust result for the financial year ended 31 December 2015. In the face of

an increasingly challenging operating environment, Adekunle Oyinloye and his team continue to execute the Bank’s well-defined strategy, and make

progress.

2015 was marred by considerable challenges globally: slow economic growth, turbulence in global markets, a crash in commodity prices, and increased

geopolitical tensions and insecurity threats. On the local front, the economic effects of anticipated policy adjustments following the general elections have

been mixed. However, the almost inevitable outcome of the external and internal pressures has come to pass: Nigeria has fallen into a recession. Whilst

the Bank is not immune to the effects of the economic slowdown, the 2015 return has added more credence to our adopted blended-income business

model.

Profit before tax of N1.055 billion (2014: N669 million) for the Group and N1.182 billion (2014: N973 million) for the Bank contributed to earnings per

share of 33 kobo (2014: 11 kobo) and earnings per share of 37 kobo (2014: 21 kobo) for the Group and Bank respectively. Total comprehensive income

of N1.074 billion (2014: N611 million) at Group level and N1.201 billion (2014: N916 million) at the Bank level contributed to shareholders’ funds of

N3.829 billion (2014: N2.754 billion) for the Group and shareholders’ funds of N4.538 billion (2014: N3.338 billion) for the Bank as at 31 December

2015.

In the course of the year, Umar Saleh and Nwabueze Okafor both resigned from the Board. Mr. Saleh and Mr. Okafor both served the Bank with

distinction and I would like to take this opportunity to thank them both for their unstinting support and dedication throughout their respective tenures.

AbdulRasheed Giwa and Micah Jiba replaced Mr. Saleh and Mr. Okafor respectively.

The economic indicators at national and global levels are negatively affecting general investment decisions. That said, it is apparent that infrastructure

development remains a major pillar of the Nigerian government’s economic diversification and growth agenda; whilst there remains significant liquidity

amongst select International Financial Institutions, Development Finance Institutions, bilateral and multilateral sovereign funds, and Nigeria’s contractual

savings sector. I believe that The Infrastructure Bank Plc’s services and products offering, strategic local and international alliances and partnerships, and

unparalleled access to attractive investment opportunities positions the Bank well to thrive in spite of this challenging operating environment.

2


Annual Report

31 December 2015

Chief Executive Officer's statement

Financial performance

Business model

Looking forward

ADEKUNLE A. OYINLOYE

FRC/2013/CIBN/00000002382

Managing Director / Chief Executive Officer

The challenges facing the business remain unchanged in the current financial year. However, we are buoyed by the resilience of the business and

remain confident in our ability to deliver good returns to our shareholders through the cycle. We will maintain our strategic and operational discipline

in the belief that we are well positioned to seize the opportunities that lie ahead.

This was a commendable year for TIB in the circumstances and I would like to thank the entire TIB team for their good work and resolve. I would

also like to express my gratitude to the Board and our shareholders for their support and encouragement.

Whilst 2015 was a difficult year, it gave further credence to the resilience and strength of the TIB business model, strong networks, and excellent

people. My focus is to ensure that the Bank performs to its undoubted potential through the current recession and is well placed to use its strong

market position to take advantage of opportunities when the economic recovery comes.

The recorded profit before tax of N1.055 billion (2014: N669 million) for the Group and N1.182 billion (2014: N973 million) for the Bank

contributed to earnings per share of 33 kobo (2014: 11 kobo) and 37 kobo (2014: 21 kobo) for the Group and Bank respectively. The year-on-year

improvement in performance in the face of a challenging operating environment is testament to the resilient TIB model and a disciplined control over

operating expenses.

In 2015, we announced the planned raise of a US$500 million Nigeria-focused TIB Infrastructure Fund in collaboration with local and international

partners. To that end, the Bank established a subsidiary, TIB Asset Management Limited (TIB AML), which has succeeded in obtaining Securities

and Exchange Commission approval to perform the function of Fund / Portfolio Manager in the Capital Market. Additionally, the Bank was granted

approval to perform the function of Issuing House in the Capital Market in early 2016.

The addition of Asset Management and Issuing House services capability represent important progress made in diversifying the business. These

operating licences are stepping stones to our objective to become the dominant provider and manager of funds for infrastructure development

nationwide, which will contribute to meeting the Bank’s aim of generating competitive returns for shareholders through the economic and business

cycles.

Against a backdrop of macro-economic uncertainty, low investor confidence and subdued market sentiment, we have remained steadfast in delivering

on our clear and consistent strategic objectives, centring on provision of expert-led, innovative and practical technical and financial solutions to

address the yawning infrastructure gaps nationwide.

3


31 December 2015

4

Directors' reportfor the year ended 31 December 2015

Legal form

Principal activity and business review

Operating results

Group Group Bank BankIn thousands of Naira 31 Dec 15 31 Dec 14 31 Dec 15 31 Dec 14

Gross earnings 3,266,042 2,164,490 3,546,637 2,467,571

Profit before minimum tax and income tax 1,055,470 668,739 1,182,078 973,246 Minimum tax (27,113) (19,776) (27,113) (19,776) Income tax (19,305) (339,618) (19,305) (339,618)

Profit for the year 1,009,052 309,345 1,135,660 613,852

Basic and diluted earnings per share (kobo) 33k 11k 37k 21k

Ownership structure

Shareholders Number of Shares Shareholding Percentage

Number of Shares

Shareholding Percentage

2,063,000,000 66.5% 2,063,000,000 66.5%320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%

320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%80,000,000 2.5% 80,000,000 2.5%

Total 3,103,000,000 100% 3,103,000,000 100%

The directors present their report on the affairs of The Infrastructure Bank Plc (“the Bank”) and its subsidiaries ("the Group"), together with the financialstatements and auditor’s report for the year ended 31 December 2015.

The Infrastructure Bank Plc is a public limited company incorporated in Nigeria. It was established by Act No. 51 of 1992. The Bank's name was changedfrom Urban Development Bank of Nigeria Plc to The Infrastructure Bank Plc by a special resolution effective 27 June 2011.

The Bank was established to foster the rapid development of infrastructure across the Federation through the provision of finance and banking services.

The highlights of the Group's and the Bank’s operating results for the year are as follows:

The issued and fully paid-up share capital of the Bank was 3,103,000,000 (2014: 3,103,000,000) ordinary shares of N1 each as at 31 December 2015. Theshareholding structure as at the balance sheet date were as shown below:

31 December 2014

Estate of Hakeem Olamide Sanusi

ICHL Nigeria Limited

During the year, the Bank's interest in Motorways Asset Limited (formerly a wholly owned SPV of the Bank) decreased from 100% to 21.06% when newshares were issued to investors by Motorways Asset Limited. Motorways Asset Limited was incorporated by the Bank on 10 September 2013 to carry on theRehabilitation, Reconstruction and Expansion of the Lagos-Ibadan Dual Carriageway ("the Project"). The authorised share capital of the Company as at 31December 2014 was 1,000,000 ordinary shares of N1 each of which 510,000 shares were fully allotted to the Bank. On 2 March 2015, Motorways AssetLimited increased its authorised share capital from 1,000,000 ordinary shares of N1 each to 1,000,000,000 ordinary shares of N1 each and new shares wereissued to the Bank and new investors who were desirous to participate in the successful implementation of the Project. The shares issued were executed viashare subscription agreements between the new investors, Motorways Asset Limited and The Infrastructure Bank Plc. The participating investors also paidadditional consideration (i.e. 20% of the total consideration paid to Motorways Asset Limited) amounting to N260 million to Motorways Asset Limited for thepurchase of 100,000,000 ordinary shares of N1 each to the Bank. As at the reporting date, the Bank held 21.06% of the issued share capital of MotorwaysAsset Limited.

The Bank's consolidated financial statements include the results of Marina Express Train Services Limited ("METSL"), Infrastructure Heights Limited and TIBAsset Management ("TIB AML"). METSL and Infrastructure Heights Limited are Special Purpose Vehicles (SPV) incorporated by the Bank to executeinfrastructure projects while TIB AML was incorporated to act as a Fund/Portfolio Manager in the Bank's third party funds. TIB AML was granted approval forregistration as fund/portfolio manager by the Securities and Exchange Commission to function in the capital market with effect from 27 July 2015. The Banktypically incorporates and holds SPV shares in trust pending the admittance of subtantive investors which will result in reducing the Bank's interest to aminority position.

31 December 2015

Federal Government of Nigeria (represented by Ministry of Finance Incorporated)State Governments and Federal Capital Territory of Nigeria (represented by the Nigeria Governors' Forum)Local Governments of Nigeria (represented by the Association of Local Governments of Nigeria)Nigeria Labour Congress


31 December 2015

5


Directors and their interests

Director Direct Indirect Direct Indirect

Lamis Dikko - 58,848,763 - 58,848,763 Johan Kruger (South African) - 29,218,320 - 29,218,320 Adekunle AbdulRazaq Oyinloye - 58,848,763 - 58,848,763 Hakeem Olopade - 25,734,912 - 25,734,912 Taiwo Dauda - 25,734,912 - 25,734,912 Oye Hassan-Odukale - 310,919,301 - 310,919,301 Akinade Akanmu Ogunbiyi - - - - Abdullahi Musa Bello - 243,648,744 - 243,648,744 Taminu Yakubu Muhammad-Ja - 174,623,951 - 174,623,951 Umar Saleh* - - - - Abdulrasheed Giwa* - - - - L.O.T. Shittu - - - - Nwabueze Okafor ** - - - - Micah Jiba** - - - - Promise Adewusi - - - - Anne Sanusi 80,000,000 63,306,360 80,000,000 63,306,360 Mfon Ekong Usoro*** - - - -

Directors’ interests in contracts

Related Director Interest in entity Services to the BankOye Hassan-Odukale Director InsuranceAkinade Akanmu Ogunbiyi Director Insurance

Property and equipment

Analysis of shareholding

Share rangeNo of shareholders

Percentage of shareholders

No of holdingsPercentage holdings

50,000,001 – 100,000,000 1 16.7% 80,000,000 2.6%100,000,001 – 500,000,000 4 66.6% 960,000,000 30.9%500,000,001– 3,000,000,000 1 16.7% 2,063,000,000 66.5%

6 100% 3,103,000,000 100%

Share rangeNo of shareholders

Percentage of shareholders

No of holdingsPercentage holdings

50,000,001 – 100,000,000 1 16.7% 80,000,000 2.6%100,000,001 – 500,000,000 4 66.6% 960,000,000 30.9%500,000,001– 3,000,000,000 1 16.7% 2,063,000,000 66.5%

6 100% 3,103,000,000 100%

The shareholding pattern of the Bank as at 31 December 2015 was as stated below:


Information relating to property and equipment is given in Note 24 to the financial statements. In the opinion of the directors, the net realisable value of theproperty and equipment is not less than the value shown in the financial statements.

The three directors appointed by the Board of the Bank during the year were subject to Central Bank of Nigeria's approvals which were yet to be received asat 31 December 2015.

None of the directors has notified the Bank, for the purpose of Section 277 of the Companies and Allied Matters Act of Nigeria, of any direct or indirectinterest in contracts or proposed contracts with the Bank during the year, except:

*** Mfon Ekong Usoro was appointed on 10 December 2015 as an Independent Non-executive Director

Name of CompanyLeadway Assurance Limited

Mutual Benefits Assurance Plc

31 December 201431 December 2015

** Micah Jiba was appointed on 6 August 2015 to replace Nwabueze Okafor who resigned his appointment with the Bank effective 8 February, 2015

* Abdulrasheed Giwa was appointed on 10 December 2015 to replace Umar Saleh who resigned his appointment with the Bank effective 9 October, 2015

The following directors of the Bank held office during the year and represented the Bank's shareholders. The directors' direct and indirect interests in the issued share capital of the Bank as recorded in the register of directors’ shareholding for the purposes of sections 275 and 276 of the Companies and Allied Matters Act were as follows:


31 December 2015

7

Corporate governance reportfor the year ended 31 December 2015

Shareholders’ meetings

Ownership Structure

Shareholder Number of Shares


Number of Shares


ICHL Nigeria Limited 2,063,000,000 66.5% 2,063,000,000 66.5%Federal Government of Nigeria 320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%Local Governments of Nigeria 320,000,000 10.3% 320,000,000 10.3%Nigeria Labour Congress 160,000,000 5.2% 160,000,000 5.2%Estate of Hakeem Olamide Sanusi 80,000,000 2.5% 80,000,000 2.5%Total 3,103,000,000 100% 3,103,000,000 100%

Board of Directors

The Central Bank of Nigeria in May 2013, released a new Code of Corporate Governance, which requires Banks to include in their annual report andaccounts, compliance report to the Code of Corporate Governance. The new CBN Code became effective on 1 October 2013 and in compliance with the Codetherefore, we state below our compliance report. The Infrastructure Bank Plc’s ambition to become the premier focal point for infrastructure development in Nigeria carries with it a responsibility to maintainthe highest standards of corporate governance and to promote a culture of continuous improvement, where there is a code of adopting and being guided bybest practice processes and procedures.The Bank functions under a governance framework that enables the Board to discharge its role of providing oversight and strategic counsel alongside itsresponsibility to ensure the Bank’s compliance with regulatory requirements and acceptable risk. The Bank is mindful of its obligations under the relevantcodes of corporate governance, such as: the Companies and Allied Matters Act; the Central Bank of Nigeria’s (CBN) Code of Corporate Governance forBanks in Nigeria Post Consolidation (the CBN Code); and the Securities and Exchange Commission’s Code of Corporate Governance (the SEC Code).

These codes, in addition to the Bank’s Memorandum and Articles of Association, collectively provide the basis for promoting sound corporate governance inthe Bank. Our core values of teamwork, integrity, innovativeness, tenacity, result oriented, and intellectualism are the bedrock upon which we continue tobuild our corporate behaviour.

The shareholders are the highest decision making body of the Bank, based on the Memorandum and Articles of Association of the Bank, and other applicablelegislation. At the Annual General Meeting (AGM), decisions affecting the management and strategic objectives of the Bank are taken through a fair andtransparent process. Such AGMs are attended by the shareholders or their proxies.

Shareholders’ meetings are duly convened and held in line with the Bank’s Articles of Association and existing statutory and regulatory regimes in an openmanner, for the purpose of deliberating on issues affecting the Bank’s strategic direction.This occurs through a fair and transparent process and also serves as a medium for promoting interaction between the Board, Management and Shareholders.The Board ensures that Shareholders are provided with adequate notice of meetings. Directors may also, whenever they think fit, convene an Extra-ordinaryGeneral Meeting (EGM).

Lamis Dikko attended College of Advanced Studies, Zaria from 1976 to 1978; he attained his first degree in Economics from Ahmadu Bello University(1981); and was at the Queen Mary College, University of London between 1981 to 1984, where he obtained a Bachelor of Science degree in Economics. Heis also an alumnus of the Harvard Business School Leadership Program.

The shareholding structure is shown below:

State Governments and Federal Capital Territory of Nigeria

We confirm that in line with best practice, the Chairman of the Board is not a member of any Board Committee and appointment to the Board is made by theshareholders at the Annual General Meeting upon recommendation by the Board of Directors.

The authorised share capital of the Bank is made up of 3,103,000,000 ordinary shares of N1 each. As at 31 December 2015, the Bank's share capital wasfully issued and paid-up with 3,103,000,000 ordinary shares of N1 each.

The Board is the Bank’s highest decision making body responsible for governance. It operates on the understanding that sound governance practices arefundamental to earning the trust of stakeholders, which in turn is critical to sustainable growth. The Board of Directors has the responsibility of advancing theperformance of the Bank by collectively directing the Bank’s affairs, while meeting the appropriate interests of shareholders and stakeholders. The members of the Board of Directors have diversified backgrounds cutting across various professions, with exceptional banking, financial and broaderentrepreneurial experience. These competencies have impacted on the smooth operations and steady growth of the Bank. The office of the Chairman of the Board is distinct and separate from that of the Managing Director/ CEO and the Chairman does not participate in runningthe daily activities of the Bank.The Chairman of the Board is Lamis Dikko. He joined Habib Bank Nigeria Limited in 1986, where he served for twelve years and left as an Assistant GeneralManager. He moved to Intercity Bank Plc in 1998 as a General Manager and was appointed the Bank's Managing Director/CEO in 2001, a position he helduntil Intercity Bank Plc merged with eight other banks to form Unity Bank Plc in 2005. He was initially Executive Director, Credit Risk Management ofUnity Bank prior to being made the Group Executive Director, Central Region.

2015 2014


Annual Report

31 December 2015


Legal form

Principal activity and business review

Operating results

Group Group Bank Bank

In thousands of Naira 31 Dec 15 31 Dec 14 31 Dec 15 31 Dec 14

Gross earnings 3,266,042 2,164,490 3,546,637 2,467,571

Profit before minimum tax and income tax 1,055,470 668,739 1,182,078 973,246

Minimum tax (27,113) (19,776) (27,113) (19,776)

Income tax (19,305) (339,618) (19,305) (339,618)


Basic and diluted earnings per share (kobo) 33k 11k 37k 21k

Ownership structure

Shareholders Number of Shares Shareholding

Percentage

Number of

Shares

Shareholding

Percentage

2,063,000,000 66.5% 2,063,000,000 66.5%

320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%

320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%

80,000,000 2.5% 80,000,000 2.5%

Total 3,103,000,000 100% 3,103,000,000 100%

The directors present their report on the affairs of The Infrastructure Bank Plc (“the Bank”) and its subsidiaries ("the Group"), together with the financial

statements and auditor’s report for the year ended 31 December 2015.

The Infrastructure Bank Plc is a public limited company incorporated in Nigeria. It was established by Act No. 51 of 1992. The Bank's name was changed

from Urban Development Bank of Nigeria Plc to The Infrastructure Bank Plc by a special resolution effective 27 June 2011.

The Bank was established to foster the rapid development of infrastructure across the Federation through the provision of finance and banking services.

The Bank's consolidated financial statements include the results of Marina Express Train Services Limited ("METSL"), Infrastructure Heights Limited and TIB

Asset Management ("TIB AML"). METSL and Infrastructure Heights Limited are Special Purpose Vehicles (SPV) incorporated by the Bank to execute

infrastructure projects while TIB AML was incorporated to act as a Fund/Portfolio Manager in the Bank's third party funds. TIB AML was granted approval for

registration as fund/portfolio manager by the Securities and Exchange Commission to function in the capital market with effect from 27 July 2015. The Bank

typically incorporates and holds SPV shares in trust pending the admittance of subtantive investors which will result in reducing the Bank's interest to a

minority position.

During the year, the Bank's interest in Motorways Asset Limited (formerly a wholly owned SPV of the Bank) decreased from 100% to 21.06% when new

shares were issued to investors by Motorways Asset Limited. Motorways Asset Limited was incorporated by the Bank on 10 September 2013 to carry on the

Rehabilitation, Reconstruction and Expansion of the Lagos-Ibadan Dual Carriageway ("the Project"). The authorised share capital of the Company as at 31

December 2014 was 1,000,000 ordinary shares of N1 each of which 510,000 shares were fully allotted to the Bank. On 2 March 2015, Motorways Asset

Limited increased its authorised share capital from 1,000,000 ordinary shares of N1 each to 1,000,000,000 ordinary shares of N1 each and new shares were

issued to the Bank and new investors who were desirous to participate in the successful implementation of the Project. The shares issued were executed via

share subscription agreements between the new investors, Motorways Asset Limited and The Infrastructure Bank Plc. The participating investors also paid

additional consideration (i.e. 20% of the total consideration paid to Motorways Asset Limited) amounting to N260 million to Motorways Asset Limited for the

purchase of 100,000,000 ordinary shares of N1 each to the Bank. As at the reporting date, the Bank held 21.06% of the issued share capital of Motorways

Asset Limited.


(represented by the Nigeria Governors' Forum)

Local Governments of Nigeria (represented by the Association

of Local Governments of Nigeria)

Nigeria Labour Congress

Estate of Hakeem Olamide Sanusi

The highlights of the Group's and the Bank’s operating results for the year are as follows:

The issued and fully paid-up share capital of the Bank was 3,103,000,000 (2014: 3,103,000,000) ordinary shares of N1 each as at 31 December 2015. The

shareholding structure as at the balance sheet date were as shown below:

31 December 2015 31 December 2014

ICHL Nigeria Limited

Federal Government of Nigeria (represented by Ministry of

Finance Incorporated)

4


Annual Report

31 December 2015


Directors and their interests

Director Direct Indirect Direct Indirect

Lamis Dikko - 58,848,763 - 58,848,763

Johan Kruger (South African) - 29,218,320 - 29,218,320

Adekunle AbdulRazaq Oyinloye - 58,848,763 - 58,848,763

Hakeem Olopade - 25,734,912 - 25,734,912

Taiwo Dauda - 25,734,912 - 25,734,912

Oye Hassan-Odukale - 310,919,301 - 310,919,301

Akinade Akanmu Ogunbiyi - - - -

Abdullahi Musa Bello - 243,648,744 - 243,648,744

Taminu Yakubu Muhammad-Ja - 174,623,951 - 174,623,951

Umar Saleh* - - - -

Abdulrasheed Giwa* - - - -

L.O.T. Shittu - - - -

Nwabueze Okafor ** - - - -

Micah Jiba** - - - -

Promise Adewusi - - - -

Anne Sanusi 80,000,000 63,306,360 80,000,000 63,306,360

Mfon Ekong Usoro*** - - - -

Directors’ interests in contracts

Related Director Interest in entity Services to the Bank

Oye Hassan-Odukale Director Insurance

Akinade Akanmu Ogunbiyi Director Insurance

Property and equipment

Analysis of shareholding

Share range

No of shareholders

Percentage of

shareholders

No of holdings

Percentage holdings

50,000,001 – 100,000,000 1 16.7% 80,000,000 2.6%

100,000,001 – 500,000,000 4 66.6% 960,000,000 30.9%

500,000,001– 3,000,000,000 1 16.7% 2,063,000,000 66.5%

6 100% 3,103,000,000 100%

Share range

No of shareholders

Percentage of

shareholders

No of holdings

Percentage holdings

50,000,001 – 100,000,000 1 16.7% 80,000,000 2.6%

100,000,001 – 500,000,000 4 66.6% 960,000,000 30.9%

500,000,001– 3,000,000,000 1 16.7% 2,063,000,000 66.5%

6 100% 3,103,000,000 100%

Name of Company

Leadway Assurance Limited

Information relating to property and equipment is given in Note 24 to the financial statements. In the opinion of the directors, the net realisable value of the

property and equipment is not less than the value shown in the financial statements.



The three directors appointed by the Board of the Bank during the year were subject to Central Bank of Nigeria's approvals which were yet to be received as

at 31 December 2015.

None of the directors has notified the Bank, for the purpose of Section 277 of the Companies and Allied Matters Act of Nigeria, of any direct or indirect

interest in contracts or proposed contracts with the Bank during the year, except:

Mutual Benefits Assurance Plc

* Abdulrasheed Giwa was appointed on 10 December 2015 to replace Umar Saleh who resigned his appointment with the Bank effective 9 October, 2015

** Micah Jiba was appointed on 6 August 2015 to replace Nwabueze Okafor who resigned his appointment with the Bank effective 8 February, 2015

*** Mfon Ekong Usoro was appointed on 10 December 2015 as an Independent Non-executive Director

The following directors of the Bank held office during the year and represented the Bank's shareholders. The directors' direct and indirect interests in the

issued share capital of the Bank as recorded in the register of directors’ shareholding for the purposes of sections 275 and 276 of the Companies and Allied

Matters Act were as follows:


5


Annual Report

31 December 2015


Substantial interest in shares

Shareholders Number of shares

held % of shareholding

Number of shares

held % of shareholding

ICHL Nigeria Limited 2,063,000,000 66.5% 2,063,000,000 66.5%

Federal Government of Nigeria 320,000,000 10.3% 320,000,000 10.3%

160,000,000 5.2% 160,000,000 5.2%

Local Governments of Nigeria 320,000,000 10.3% 320,000,000 10.3%

Nigeria Labour Congress 160,000,000 5.2% 160,000,000 5.2%

Donations and charitable contributions

Beneficiary Purpose Amount

In thousands of Naira

Lagos State Badminton Association Donation towards second Lagos International Badminton Classics 200

Nigerain Building and Road Research Institute Donation towards fifth international conference of the Institute 1,000

1,200

Human resources

(i) Employment of disabled persons

(ii) Health, safety and welfare at work

Employee involvement and training

Auditor

BY ORDER OF THE BOARD

Ezinwanyi Ken-Ahia

FRC/2016/NBA/00000014177

Acting Company Secretary

Plot 977 Central Business District

(Adjacent National Mosque)

Abuja F.C.T.

Nigeria

21 October 2016

The Bank ensures that employees are informed on matters concerning them. Formal and informal channels are also employed in communication with

employees with an appropriate two-way feedback mechanism. In accordance with the Bank’s policy of continuous development, the Bank draws up annual

training programmes. The programmes include on the job training, classroom sessions and web-based training programmes which are available to all staff.

The auditors, KPMG Professional Services, have indicated their willingness to continue in office as auditors in accordance with section 357(2) of the

Companies and Allied Matters Act, 1990. A resolution will be proposed at the Annual General Meeting to authorise the directors to determine their

remuneration.



The Bank identifies with the aspirations of the community and the environment in which it operates. The Bank made contributions to charitable and non-

charitable organisations amounting to N1.2 million (2014: N1.6 million) during the year, as listed below:

The Bank continues to maintain a policy of giving fair consideration to applications for employment made by disabled persons with due regard to their abilities

and aptitudes. The Bank’s policies prohibit discrimination against disabled persons in the recruitment, training and career development of employees. In the

event of members of staff becoming disabled, efforts will be made to ensure that their employment with the Bank continues and appropriate training is arranged

to ensure that they fit into the Bank’s working environment.

The Bank maintains business premises designed with a view to guaranteeing the safety and healthy living conditions of its employees and customers alike.

Employees are adequately insured against occupational and other hazards.

According to the register of members at 31 December 2015, no shareholder held more than 5% of the issued share capital of the Bank except the following:

6


31 December 2015

8


Name DesignatioLamis Dikko - ChairmanJohan Kruger (South African) - Vice ChairmanAdekunle AbdulRazaq Oyinloye - Managing DirectorHakeem Olopade - Executive DirectorTaiwo Dauda - Executive DirectorOye Hassan-Odukale - Non-executive DirectorAkinade Akanmu Ogunbiyi - Non-executive DirectorAbdullahi Musa Bello - Non-executive DirectorTaminu Yakubu Muhammad-Ja - Non-executive DirectorUmar Saleh* - Non-executive DirectorAbdulrasheed Giwa* - Non-executive DirectorL.O.T. Shittu - Non-executive DirectorNwabueze Okafor ** - Non-executive DirectorMicah Jiba** - Non-executive DirectorPromise Adewusi - Non-executive DirectorAnne Sanusi - Non-executive DirectorMfon Ekong Usoro*** - Independent Non-executive Director

Delegation of authority

Board committees

** Micah Jiba was appointed on 6 August 2015 to replace Nwabueze Okafor who resigned his appointment with the Bank effective 8 February 2015

* Abdulrasheed Giwa was appointed on 10 December 2015 to replace Umar Saleh who resigned his appointment with the Bank effective 9 October 2015

Memberships of the Board of Directors during the year ended 31 December 2015 were as follows:

*** Mfon Ekong Usoro was appointed on 10 December 2015 as an Independent DirectorThe three directors appointed by the Board of the Bank during the year were subject to Central Bank of Nigeria's approvals, which were yet to be received as at 31 December 2015.

The ultimate responsibility for the Bank’s operations rests with the Board. The Board retains effective control through a well-developed Committeegovernance structure that provides in-depth focus on Board responsibilities. The Board delegates authority to the Managing Director / CEO to manage theaffairs of the Bank within the parameters established by the Board from time to time.

Board Audit and Risk Management Committee (BA&RMC)Board Governance Remuneration and Nominations Committee (BGRNC), Board Credit and Investment Committee (BCIC)Board Finance and General Purpose Committee (BFGPC)

The Board carries out its oversight function through its standing committees, each of which has a charter that clearly defines its purpose, composition, andstructure, frequency of meetings, duties, tenure and reporting lines to the Board. In line with best practice, the Chairman of the Board does not sit on any ofthe committees. The four standing committees of the Board are:

The Directors have unrestricted access to Management and Bank’s information in addition to other resources to carry out their roles and responsibilities,including access to external professional advice at the Bank’s expense.

There is a continuous engagement between the Executive Management and the Board. The Bank’s external auditors attend meetings convened by the Board,the Board Audit Committee and the Shareholders, when there is need.

Any such Director also reserves the right to discuss with the Chairman any matter he/she may wish to raise at the meeting. The Directors are also providedwith regular updates on developments in the regulatory and business environment.

All directors are provided with notices, an agenda and meeting papers in advance of each meeting and, where a Director is unable to attend a meeting, he/sheis still provided with the relevant papers for the meeting.

The Board meets quarterly and emergency meetings are convened as may be required. Material decisions may be taken between meetings through writtenresolutions as provided for by the Bank’s Memorandum and Articles of Association.

Access to information and resources


31 December 2015

9


BA&RMC BGRNC BCIC BFGPC

M CM M

M MM M MM MM M

M MM M

M MC MM M

M CC M

Board Audit and Risk Management Committee

Board Credit & Investment Committee

The Committee assists the Board in achieving its oversight responsibility relating to the integrity of the Bank’s financial statements and the financialreporting process; the independence and performance of the Bank’s internal and external auditors; the Bank’s system of internal control and mechanism forreceiving complaints regarding the Bank’s accounting and operating procedures; establishment of policies, standards and guidelines for risk management andcompliance with legal and regulatory requirements. In addition, it ensures that the risk management framework is integrated into the day to day operations ofthe business and provides guidelines and standards for administering the acceptance and on-going management of key risks such as operational, reputational,financial, market, technology and compliance, through periodic review of reports provided by Management. The Bank’s Internal Auditor has access to theCommittee and submits quarterly reports to the Committee, while the Risk Manager also presents quarterly Risk Reports to the Committee. The InternalAuditor, Risk Manager, and Executive Directors have a standing invitation to attend the meetings of the Committee.

Promise Adewusi (NED)

Taiwo Dauda (ED)Oye Hassan-Odukale (NED)Akin Ogunbiyi (NED)Abdullahi Musa Bello (NED)Tanimu Yakubu Muhammad-Ja (NED)Abdulrasheed GiwaL.O.T Shittu (NED)Micah Jiba (NED)

Anne Sanusi (Represented by her alternate Kazeem Sanusi) (NED)

NAMELamis Dikko (NED)Johan Kruger (NED)Adekunle Oyinloye (MD/CEO)

Kazeem Sanusi is the Acting Chairman of the Committee.

The Committee considers and approves loan applications within certain limits (as defined by the Board from time to time). The Committee endorses theapproval of credit policies, proposals and changes to credit policies, standards, new products, processes and approving authorities subject to ratification of thefull Board.The Committee oversees the administration and effectiveness of, and compliance with, the Bank’s credit policies. It does this by reviewing relevantprocesses, reporting on the recommendation of the Management and by any other means as it deems appropriate.

The Committee is chaired by L.O.T. Shittu. He is the Executive Director, Strategy & Research, at the Nigeria Governors' Forum. He is the Boardrepresentative of the Nigeria Governors' Forum.

He has over 25 years of experience in both public and private sectors in Nigeria including holding directorships at Ocean Atlantic Dredging Company andNigerian Communications Commission. He holds a Master of Development Banking and Finance from Giordano Del Amore Institute of Banking & Finance,Italy, as well as a bachelor’s degree in Economics from Wittenberg University, USA. Other members of the Committee have relevant backgrounds in financial management and accounting as required by the CBN code of corporate governance.

The Committee has responsibility for ensuring the implementation of sound governance practices by the Board; the review and recommendation of executiveand non-executive directors' remuneration and compensation for approval by the Board; overseeing the annual performance management evaluation of theBoard; and considering and making recommendation to the Board on nominations to the Board in line with the Bank's corporate governance documents andpolicies. The Committee is comprised of only non-executive directors.

Board Governance Remuneration and Nominations Committee

The Committee evaluates the Bank’s risk policies on a periodic basis to accommodate major changes in the internal or external environment.

IndexC = ChairmanM = Member ED = Executive DirectorNED = Non-Executive Director

The membership of the various Board Committees at the end of the year 2015 is set out below:

Hakeem Olopade (ED)


31 December 2015

10


Attendance at Board Committee Meetings

BA&RMC BGRNC BCIC BF&GPC BoD

Number of meetings held: 4





N/A N/A N/A N/A 43 N/A 3 N/A 3

N/A N/A 4 5 44 N/A 4 N/A 44 N/A 4 5 43 N/A 4 N/A 22 3 N/A N/A 3

N/A 2 N/A 2 3N/A N/A 2 2 3N/A 3 3 0 3

Abdulrasheed Giwa (NED) N/A 1 N/A N/A N/A3 4 N/A N/A 40 0 N/A N/A 00 0 N/A N/A 0

N/A 4 N/A 5 41 4 N/A 5 4

Key:NED - Non-Executive DirectorED - Executive DirectorMD/CEO- Managing Director/Chief Executive Officer BA&RMC- Board Audit and Risk Management CommitteeBGRNC - Board Governance, Remuneration and Nominations CommitteeBCIC- Board Credit and Investment Committee MeetingBF&GPC - Board Finance and General Purpose Committee MeetingBoD - Board of Directors Meeting.

Code of ethics

Tanimu Yakubu Muhammad-Ja (NED)Umar Saleh (NED)

L.O.T Shittu (NED)Nwabueze Okafor (NED)

The Committee is chaired by Promise Adewusi. He is the Deputy President of the Nigeria Labour Congress and also National President of the Senior StaffAssociation of Nigerian Universities having retired from the University of Lagos after 35 years of meritorious service. Promise Adewusi is also a lawyerhaving obtained his Bachelors and Masters of Law from the Lagos State University in 2002 and 2007 respectively. He was called to the Nigerian Bar in 2004.He is a seasoned member of the Nigerian Labour movement and author of several books on Labour Law and Trade Unionism in Nigeria. He represents theNigeria Labour Congress on the Board of the Bank.

During the financial year ended 31 December 2015, directors' attendance at the Board and Board Committee meetings are shown below:

The Committee is chaired by Johan Kruger, a Board representative of ICHL Nigeria Limited. Johan Kruger has more than 35 years experience in theprovision and funding of public infrastructure in South Africa. He graduated from the Stellenbosch University in South Africa in 1975 where he obtained aBachelor's degree in Civil Engineering. He also studied business Commerce for non-degree purposes and attended the Advanced Executive ManagementCourse at the International Institute for Management Development (IMD), Lausanne, Switzerland. He has held a wide range of positions including being theGeneral Manager of the Development Bank of South Africa and founding the Infrastructure Finance Corporation (INCA), a private sector companyspecialising in infrastructure funding. Johan Kruger is an international consultant on infrastructure financing and development and his clients include theWorld Bank, United States Agency for International Development, Standard Bank of South Africa and the Government of Ukraine.

The Committee is responsible for reviewing and recommending to the Board on issues relating to the Bank’s organisational structure, human resourcesstrategy and policies relating to recruitment, and disengagement of staff at all levels, compensation benefits, and related issues of strategic importance thatdirectly affect the Bank’s ability to recruit, develop and retain the highly qualified staff needed for it to achieve its mandate.

Board Finance and General Purpose Committee

The Infrastructure Bank Plc has a Code of Conduct, which specifies expected behaviour of its employees and Directors. The Code is designed to empoweremployees and Directors and enable effective decision making at all levels of the business, according to defined ethical principles. The Code requires thateach Bank employee shall read the Code and sign a confirmation that he or she has understood the content. The Bank also has a Human Resources Policy Manual, which provides guidelines for addressing violations or breaches and for ensuring enforcement ofdiscipline with respect to staff conduct. The Manual also has a Disciplinary Guide, which sets out examples of possible offences and violations and prescribesappropriate disciplinary measures. The Head, Corporate Services is responsible for the design and implementation of the Code of Conduct, while the Head,Internal Audit and compliance is responsible for monitoring compliance. In meeting its mandate to provide sound governance structure for the Bank, theBoard also approved a Directors Disclosure Policy, Succession Planning Policy, Corporate Governance Policy and Compliance Manual for the Bank in thecourse of the year 2015.

The Company Secretary has the primary duty of assisting the Board and Management in developing and implementing good corporate governance standards.The Company Secretary ensures that there is timely and appropriate information dissemination within and to the Board of Directors.

The Company Secretary

NAME OF DIRECTORS

Lamis Dikko (NED)Johan Kruger (NED)Adekunle Oyinloye (MD/CEO)Hakeem Olopade (ED)Taiwo Dauda (ED)Oye Hassan-Odukale (NED)Akin Ogunbiyi (NED)Abdullahi Musa Bello (NED)

Micah Jiba (NED)Promise Adewusi (NED)Anne Sanusi (Represented by her alternate Kazeem Sanusi)


Annual Report

31 December 2015

Adekunle AbdulRazaq Oyinloye

FRC/2013/CIBN/00000002382 FRC/2013/IODN/00000002360

21 October 2016 21 October 2016

Statement of directors’ responsibilities in relation to the financial statements for the year ended 31 December 2015

The directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance with

the International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of Nigeria, the

Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of

Nigeria circulars.

The directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters

Act of Nigeria and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are

free from material misstatement whether due to fraud or error.

The directors have made assessment of the Bank’s ability to continue as a going concern and have no reason to believe that the Bank will

not remain a going concern in the year ahead.

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

Taiwo Dauda

Managing Director/CEO Executive Director

11


Annual Report

31 December 2015

To the members of The Infrastructure Bank Plc:

•

•

•

•

L. O. T. Shittu

Chairman, Audit Committee

FRC/2013/IODN/00000004953

21 October 2016

Members of the Statutory Audit Committee are:

1 L.O.T Shittu Chairman

2 Johan Kruger Member

3 Akin Ogunbiyi Member

In attendance:

Ezinwanyi Ken-Ahia - Acting Company Secretary

We have deliberated on the findings of the external auditors who have confirmed that necessary cooperation was received from

management in the course of their final audit and we are satisfied with management’s responses thereon and with the effectiveness

of the Bank’s system of accounting and internal control.

Report of the audit committee

In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act of Nigeria, the members of the Audit

Committee of The Infrastructure Bank Plc hereby report on the financial statements for the year ended 31 December 2015 as follows:

We have exercised our statutory functions under section 359(6) of the Companies and Allied Matters Act of Nigeria and

acknowledge the co-operation of management and staff in the conduct of these responsibilities.

We are of the opinion that the accounting and reporting policies of the Group and Bank are in agreement with legal requirements

and agreed ethical practices and that the scope and planning of both the external and internal audits for the year ended 31

December 2015 were satisfactory and reinforce the Group’s internal control systems.

We are satisfied that there were no insider related credits to be disclosed in compliance with the Central Bank of Nigeria Circular

BSD/1/2004.

12


Annual Report

31 December 2015

Consolidated and separate statement of financial position

As at 31 December 2015

Group Group Bank Bank

In thousands of Naira Notes 2015 2014 2015 2014

Assets

Cash and cash equivalents 17 1,162,701 8,913,471 1,010,576 63,181

Loans and advances to customers 18 2,087,635 460,767 2,087,635 626,930

Fee income receivables 19 1,198,196 3,331,844 1,697,102 3,664,344

Other assets 20(a) 678,966 498,340 743,506 498,340

Pledged assets 21 - 253,000 - 253,000

Investment in subsidiaries 22 - - 230,238 80,748

Equity-accounted investee 23 259,967 - 260,000 -

Property and equipment 24 2,069,450 2,011,080 2,069,432 2,011,007

Intangible assets 25 451 782 451 782

Deferred tax asset 15(b) 158,389 146,041 158,389 146,041

Total assets 7,615,755 15,615,325 8,257,329 7,344,373

Liabilities

Borrowings 26 787,500 10,296,602 787,500 1,996,602

Accruals 27 72,884 57,964 71,004 56,864

Employee benefits 28 252,142 28,132 252,142 28,132

Current tax liabilities 15(c) 56,958 42,400 56,958 42,400

Other liabilities 29 2,186,835 2,027,079 2,120,417 1,473,963

Deferred tax liabilities 15(b) 431,158 408,870 431,158 408,870

Total liabilities 3,787,477 12,861,047 3,719,179 4,006,831

Equity

Share capital 34(a) 3,103,000 3,103,000 3,103,000 3,103,000

Capital contribution 34(b) 1,391,230 1,391,230 1,391,230 1,391,230

Revaluation reserves 34(c) 993,185 941,181 993,185 941,181

Accumulated losses 34(d) (1,659,137) (2,681,133) (949,265) (2,097,869)

Total equity attributable to owners of the Bank 3,828,278 2,754,278 4,538,150 3,337,542

Non controlling interest - - - -

Total equity 3,828,278 2,754,278 4,538,150 3,337,542

Total liabilities and equity 7,615,755 15,615,325 8,257,329 7,344,373

___________________________ ________________________

Adekunle AbdulRazaq Oyinloye Lamis Dikko

FRC/2013/CIBN/00000002382 FRC/2013/IODN/00000004932

Managing Director/CEO Chairman, Board of Directors

_________________________

Taiwo Dauda

FRC/2013/IODN/00000002360

Executive Director, Finance and Admin.

The audited financial statements was approved by the Board of Directors on 21 October 2016 and signed on its behalf by:

The statement of accounting policies and accompanying notes form an integral part of these consolidated and separate financial

statements.

15


31 December 2015

16

Consolidated and separate statement of profit or loss and other comprehensive incomefor the year ended 31 December

Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Gross earnings 3,266,042 2,164,490 3,546,637 2,467,571

Interest income 10(a) 417,744 276,934 424,254 306,109 Interest expense 10(b) (81,212) (408,511) (81,212) (408,511)

Net interest income/(expense) 336,532 (131,577) 343,042 (102,402)

Fees and commission income 11(a) 1,968,371 1,870,251 2,268,371 2,144,157 Fees and commission expense 11(b) (39,879) (39,170) (39,879) (39,170)

Net fees and commission income 1,928,492 1,831,081 2,228,492 2,104,987

Other income 12 879,927 17,305 854,012 17,305 Operating income 3,144,951 1,716,809 3,425,546 2,019,890

Impairment on financial assets 14 (894,376) (188,200) (1,089,377) (188,200)

Net operating income after net of impairment loss 2,250,575 1,528,609 2,336,169 1,831,690

Personnel expenses 13(a) (676,476) (413,859) (676,476) (413,859) Depreciation and amortisation 24 & 25 (81,635) (61,399) (81,580) (61,344) Other operating expenses 13(c) (436,961) (384,612) (396,035) (383,241)

Total expenses (1,195,072) (859,870) (1,154,091) (858,444)

Operating profit 1,055,503 668,739 1,182,078 973,246 Share of loss of equity accounted investees (net of income tax) 23 (33) - - -

Profit before minimum tax and income tax 1,055,470 668,739 1,182,078 973,246

Minimum tax 15(a) (27,113) (19,776) (27,113) (19,776) Income tax 15(a) (19,305) (339,618) (19,305) (339,618)


Other comprehensive income, net of income taxItems that will not be reclassified to profit or loss:Fair value gain on property and equipment 24 92,783 431,584 92,783 431,584 Tax on other comprehensive income 15(b)(ii) (27,835) (129,475) (27,835) (129,475)

64,948 302,109 64,948 302,109

Total comprehensive income for the year 1,074,000 611,454 1,200,608 915,961

Profit attributable to:Equity holders of the Bank 1,009,052 309,345 1,135,660 613,852 Profit for the year 1,009,052 309,345 1,135,660 613,852

Total comprehensive income attributable to:Equity holders of the Bank 1,074,000 611,454 1,200,608 915,961 Total comprehensive income for the year 1,074,000 611,454 1,200,608 915,961

Earnings per shareBasic earnings per share (kobo) 16 33k 11k 37k 21kDiluted earnings per share (kobo) 16 33k 11k 37k 21k

The statement of accounting policies and accompanying notes form an integral part of these consolidated and separate financial statements.


31 December 2015

17

Consolidated and separate statements of changes in equityfor the year ended 31 December 2015

Group

In thousands of Naira Notes Share capitalCapital

contributionRegulatory risk

reserveRevaluation

reservesAccumulated

losses Total Non-controlling

interest Total equity

Balance at 1 January 2015 3,103,000 1,391,230 - 941,181 (2,681,133) 2,754,278 - 2,754,278

Profit for the year 34(d) - - - - 1,009,052 1,009,052 - 1,009,052 Other comprehensive income 34(c) - - - 64,948 - 64,948 - 64,948

Total comprehensive income - - - 64,948 1,009,052 1,074,000 - 1,074,000

Transfer between reserves:Depreciation on revaluation surplus 34(c) & (d) - - - (12,944) 12,944 - - -

Balance at 31 December 2015 3,103,000 1,391,230 - 993,185 (1,659,137) 3,828,278 - 3,828,278

Balance at 1 January 2014 2,402,540 1,391,230 36,077 648,116 (3,035,599) 1,442,364 - 1,442,364

Profit for the year - - - - 309,345 309,345 - 309,345 Other comprehensive income 34(c) - - - 302,109 - 302,109 - 302,109

Total comprehensive income - - - 302,109 309,345 611,454 - 611,454

Transfer between reservesDepreciation on revaluation surplus 34(c) & (d) - - - (9,044) 9,044 - - - Transfer from regulatory risk reserve - - (36,077) - 36,077 - - -

Transactions with equity holders:Additions to share capital from right issues 34(a) 700,460 - - - - 700,460 - 700,460

Balance at 31 December 2014 3,103,000 1,391,230 - 941,181 (2,681,133) 2,754,278 - 2,754,278

Attributable to equity holders of the Bank


31 December 2015

18

Consolidated and separate statements of changes in equityfor the year ended 31 December 2015Bank

In thousands of Naira Notes Share capitalCapital

contributionRegulatory risk

reservesRevaluation

reservesAccumulated

losses Total equity

Balance at 1 January 2015 3,103,000 1,391,230 - 941,181 (2,097,869) 3,337,542

Profit for the year 34(d) - - - - 1,135,660 1,135,660 Other comprehensive income 34(c) - - - 64,948 - 64,948

Total comprehensive income - - - 64,948 1,135,660 1,200,608

Transfer between reserves:Depreciation on revaluation surplus 34(c) & (d) - - - (12,944) 12,944 -

Balance at 31 December 2015 3,103,000 1,391,230 - 993,185 (949,265) 4,538,150

Balance at 1 January 2014 2,402,540 1,391,230 36,077 648,116 (2,756,842) 1,721,121

Profit for the year 34(d) - - - - 613,852 613,852 Other comprehensive income 34(c) - - - 302,109 - 302,109

Total comprehensive income - - - 302,109 613,852 915,961

Transfer between reserves:Depreciation on revaluation surplus 34(c) & (d) - - - (9,044) 9,044 - Transfer from regulatory risk reserve - - (36,077) - 36,077 -

Transactions with equity holders:Shares issued during the year 34(a) 700,460 - - - - 700,460

Balance at 31 December 2014 3,103,000 1,391,230 - 941,181 (2,097,869) 3,337,542

The statement of accounting policies and accompanying notes form an integral part of these consolidated and separate financial statements.


31 December 2015

19

Consolidated and separate statements of cash flowsfor the year ended 31 December 2015

Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Cash flows from operating activitiesProfit for the year 1,009,052 309,345 1,135,660 613,852

Adjustments for:Depreciation of property and equipment 24 81,304 61,068 81,249 61,013 Amortisation of intangible assets 25 331 331 331 331 Specific impairment on loans and advances 14 236,887 187,617 236,887 187,617 Collective impairment on loans and advances 14 82,955 583 82,955 583 Impairment of fee income receivables 14 574,534 - 769,534 - Gain on loss of control 22(iv)-3 (285,405) - (259,490) - Gain on renegotiation of overdraft 12 (556,712) - (556,712) - Net interest income/(expense) 10 (336,532) 131,577 (343,042) 102,402 Share of loss of associate 23 33 - - - Income tax expense 15(a) 46,418 359,394 46,418 359,394

852,865 1,049,915 1,193,790 1,325,192 Changes in:Loans and advances, 30(a) (1,946,710) (271,189) (1,964,948) (313,005) Fee income receivable 30(b) 1,559,114 (1,578,391) 1,197,708 (1,910,891) Pledged assets 30(c) 253,000 (253,000) 253,000 (253,000) Other assets 30(d) (180,626) (109,853) (60,765) (245,241) Accruals 30(e) 14,920 15,500 14,140 15,900 Other liabilities 30(f) 725,219 667,706 646,454 336,458 Short term employee benefit 30(g) 224,010 5,389 224,010 5,389

Interest received 10 417,744 276,934 424,254 306,109 Interest paid 10 (81,212) (311,332) (81,212) (311,332) Tax paid 15(c) (49,755) (49,571) (49,755) (49,571)

Net cash flows from/(used in) operating activities 1,788,569 (557,892) 1,796,676 (1,093,993)

Cash flow from investing activitiesPurchase of property and equipment 24 (46,892) (411,283) (46,892) (411,283) Investment in a new subsidiary 22 - - (150,000) - Cash and cash equivalent from loss of control 22(iv)-6 (8,840,057) - - -

Net cash flows used in investing activities (8,886,949) (411,283) (196,892) (411,283)

Cash flow from financing activitiesProceeds from borrowings 26(b) 600,000 8,975,700 600,000 675,701 Repayment of borrowings 26(b) (1,252,390) (174,676) (1,252,390) (174,676) Proceeds from issue of shares 34(a) - 700,460 - 700,460

Net cash flows (used in)/from financing activities (652,390) 9,501,484 (652,390) 1,201,485

Net (decrease)/increase in cash and cash equivalents (7,750,770) 8,532,309 947,395 (303,791)

Cash and cash equivalents, beginning of year 8,913,471 381,162 63,181 366,972

Cash and cash equivalents, end of year 17 1,162,701 8,913,471 1,010,576 63,181

The statement of accounting policies and accompanying notes form an integral part of these consolidated and separate financialstatements.


31 December 2015

20

Notes to the consolidated and separate financial statementsFor the year ended 31 December 2015

1 Reporting entity

2 Basis of preparation

(a) Statement of compliance

(b)

• Leashold lands are measured at fair value (using revaluation model)• loans and receivables classified as held to maturity are measured at amortized cost using effective interest rate method. •

(c) Functional and presentation currency

(d) Use of estimates and judgments

3 Changes in accounting policies

4 Significant accounting policies

(a) Basis of consolidation(i) Non-controlling interests (NCI)

(ii) Subsidiaries

(iii) Special Purpose Entities

•

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated and separate financial statements.

NCI are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement withthe entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidatedfinancial statements from the date on which control commences until the date on which control ceases.

Special purpose entities (SPEs) are entities that are created to accomplish a narrow and well-defined objective. An SPE is consolidated if, based on an evaluationof the substance of its relationship with the Group and the SPE’s risks and rewards, the Group concludes that it controls the SPE.The following circumstances may indicate a relationship in which, in substance, the Group controls and consequently consolidates an SPE:

Entities are controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the investee andhas the ability to affect those returns through its power over the investee. The financial statements of SPEs are included in the consolidated financialstatements from the date that control commences until the date that control ceases. Losses applicable to non-controlling interests are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

The Infrastructure Bank Plc is a bank domiciled in Nigeria. It was formerly called the Urban Development Bank of Nigeria Plc and established by Act No. 51 of1992. The Bank's name was changed from Urban Development Bank of Nigeria Plc to The Infrastructure Bank Plc by a special resolution effective 27 June 2011.The address of the Bank’s registered office is Plot 977, Central Business District, Abuja F.C.T. Nigeria.

These consolidated financial statements comprise the Bank and its subsidiaries (together referred to as the "Group"). The Bank was established to foster rapiddevelopment of infrastructure across the Federation through the provision of finance and banking services.

These consolidated and separate financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by theInternational Accounting Standard Board (IASB) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial ReportingCouncil of Nigeria Act, 2011, the Banks and Other Financial Institutions Act of Nigeria and relevant Central Bank of Nigeria circulars. The consolidated andseparate financial statements were authorised for issue by the Bank's Board of Directors on 21 October 2016. The accounting policies which were consistentlyapplied by the Group for all periods presented in these consolidated and separate financial statements are included in Note 4.

Basis of measurementThese consolidated and separate financial statements have been prepared on the historical cost basis except for the following material items, which are measuredon an alternative basis on each reporting date:

These consolidated and separate financial statements are presented in Nigerian Naira, which is the functional currency of the Group. Except as indicated, financialinformation presented in Naira has been rounded to the nearest thousand.

The preparation of consolidated and separate financial statements in conformity with IFRS reuires, management to make judgments, estimates and assumptionsthat affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from theseestimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate isrevised and in any future periods affected.Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on theamounts recognised in the financial statements are described in Note 5.

There were no new standards and amendments to standards that may have material impact on the amounts recognised in the financial statements as at 31December 2015.

other financial liabilities that are not classified as at fair value through profit or loss are measured at amortized cost using the effective interest rate method.

The Bank assumes a niche position in the Nigerian financial services landscape, interfacing between the market for public sector lending and private sectorinfrastructure project financing, and the market for long term financial instruments and securities.The Bank is a development finance partner and financial facilitator; structurally and functionally complimentary to the commercial banking sector and the needsof public and private sector infrastructure development promoters.


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•

•

•••

(iv) Loss of control

(v) Interest in equity-accounted investee

(vi) Transactions eliminated on consolidation

(b) Foreign currency(i) Foreign currency transactions

(c )(i)

In the separate financial statements of the Bank, investments in associates are accounted for at cost.

A financial asset is measured initially at fair value plus, (for an item not at fair value through profit or loss), transaction costs that are directly attributable to itsacquisition or issue.Subsequent to initial measurement, financial assets are measured either at fair value or amortised cost depending on their classification.

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary and any related NCI and other components of equity.Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

The Group's interest in equity accounted investees comprises interest in associates.Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. This isgenerally represented by a shareholding of between 20% and 50% or other qualitative factors.Investments in associates are accounted for using the equity method of accounting. They are initially recognised at cost, which includes transaction costs.Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and OCI of equity-accounted investees, untilthe date on which significant influence ceases.

The activities of the SPEs are being conducted on behalf of the Group according to its specific business needs so that the Group obtains benefits from theSPE’s operation.The Group has the decision-making powers to obtain the majority of the benefits of the activities of the SPE or, by setting up an ‘autopilot’ mechanism; theGroup has delegated these decision-making powers.The Group has the rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks incident to the activities of the SPE.The Group retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain benefits from its activities.The assessment of whether the Group has control over an SPE is carried out at inception and normally no further reassessment of control is carried out in theabsence of changes in the structure or terms of the SPE, or additional transactions between the Group and the SPE. Day-to-day changes in market conditionsnormally do not lead to a reassessment of control. However, sometimes changes in market conditions may alter the substance of the relationship between theGroup and the SPE and in such instances the Group determines whether the change warrants a reassessment of control based on the specific facts andcircumstances. Where the Group’s voluntary actions, such as lending amounts in excess of existing liquidity facilities or extending terms beyond thoseestablished originally, change the relationship between the Group and an SPE, the Group performs a reassessment of control over the SPE.

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidatedfinancial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at the date of the transaction.Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at thatdate. The foreign currency gain or loss on monetary item is the difference between amortised cost in the functional currency at the beginning of the period,adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period.Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spotexchange rate at the date that the fair value was determined.

Financial instruments Non-derivative financial assetsThe Group recognizes loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date at which theGroup becomes a party to the contractual provisions of the instrument.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognisedinitially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost usingthe effective interest method, less any impairment losses. Refer to accounting policy 4(d) for the impairment of financial assets.

The Group derecognises a financial asset when the contractual rights to the cash flows from the assets expire, or it transfers the right to receive the contractualcash flows on the financial asset in a transaction in which substantially all risks and rewards of ownership of the financial asset are transferred. Any interest intransferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when and only when the Group currently hasa legally enforceable right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial assets: loans and receivables and cash and cash equivalent.

Loans and receivables

Loans and receivables comprise of loans and advances to customers, fee income receivables and other receivables. (see Note 18).

If the terms of a financial asset are modified, the Group evaluates whether the cashflows of the modified asset are substantially different. If the cashflows aresubstantially different, then the contractual rights to cashflows from the original financial asset are deemed to have expired. In this case, the original financialasset is derecognised and a new financial asset is recognised at fair value.

On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the consideration received (including any new assetobtained less any new liability assumed) and any cummulative gain or loss that had been recognised in the OCI is recognised in profit or loss


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(ii) Non-derivative financial liabilities

(iii) Amortised cost measurement

(iv) Fair value measurement

(d)(i)

Objective evidence that financial assets are impaired can include:• Default or delinquency by a borrower;• Restructuring of a loan or advance by the group on terms that the group would not otherwise consider;• Indications that a borrower or issuer will enter bankruptcy;• The disappearance of an active market for a security;•• Economic conditions that correlate with defaults in the group.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurementdate in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as activeif transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the useof unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price - i.e. the fair value of the consideration given orreceived. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quotedprice in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financialinstrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price. Subsequently,that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported byobservable market data or the transaction is closed out.

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it isimpaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that theloss event has an impact on the future cash flows of the asset that can be estimated reliably.

Impairment

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired. The Group also derecognises a financial liability when its terms are modified and the cashflows of the modified liability are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

The Group has the following non-derivative financial liabilities: borrowings and other liabilities.Such liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities aremeasured at amortised cost using effective interest rate method. Interest expense is included in 'interest expense' in the statement of profit or loss.

The Group considers evidence of impairment for loans and advances at both a specific and collective level. All individually significant loans and advances areassessed for specific impairment. All individually significant loans and advances found not to be specifically impaired are then collectively assessed for anyimpairment that has been incurred but not yet identified. Loans and advances that are not individually significant are collectively assessed for impairment bygrouping together loans and advances with similar risk characteristics.

In assessing collective impairment the group uses statistical modelling of historical trends of the probability of default, timing of recoveries and the amount ofloss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater orless than suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actualoutcomes to ensure that they remain appropriate.

Fee income receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are initiallyrecognised at their original invoice value, as the interest that would be recognised from discounting future cash receipts over the short credit period is notconsidered to be material. Subsequent to initial recognition, fee income receivables are recognised at amortised cost less any impairment allowances for estimatedirrecoverable amounts.

The Group recognizes borrowings and other liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date atwhich the Group become a party to the contractual provisions of the instrument.

Cash and cash equivalentsCash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts that are repayable ondemand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement ofcash flows. Cash and cash equivalents are carried at amortised cost in the statement of financial poistion.

Financial assets

Other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the group;

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition, minusprincipal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised andthe maturity amount, minus any reduction for impairment.


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(ii) Non-financial assets

(e) Share capitalOrdinary shares

(f) Property and equipment

(i) Recognition and measurement

(ii) Subsequent costs

(iii) Depreciation

Leasehold land Over the shorter of useful life or lease periodBuilding 50 yearsComputer hardware and equipment 3 yearsFurniture and fittings 5 yearsMotor vehicles 4 yearsOffice equipment 3 years

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is thesmallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit orloss.The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of moneyand the risks specific to the asset.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction fromequity, net of any tax effects.

Capital work in progress is not depreciated. Upon completion, it is transferred to the relevant asset category.

All items of property and equipment except leasehold land, are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includesexpenditures that are directly attributable to the acquisition of the asset.

The cost of replacing a part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economicbenefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. Thecosts of the day-to-day servicing of property and equipment are expensed as incurred.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment, since thismost closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are as follows:

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

Leasehold land is initially measured at cost and subsequently at fair value less any subsequent accumulated amortisation and subsequent accumulated impairmentlosses. If an asset's carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equityunder the heading of revaluation surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of thesame asset previously recognised in profit or loss. Furthermore, if an asset's carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shallbe recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decreaserecognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus.

When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property andequipment.Gains and losses on disposal of items of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of propertyand equipment and are recognised within other income in profit or loss.When leasehold land is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the land and the netamount restated to the revalued amount. If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be recognised in othercomprehensive income. The revaluation surplus on the leasehold land is transferred to retained earnings on a systematic basis over its useful life.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value ofestimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance accountagainst loans and advances. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes theamount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

The carrying amounts of the group’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If anysuch indication exists then the asset’s recoverable amount is estimated.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. Animpairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to theextent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if noimpairment loss had been recognised.


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(iv) De-recognition

(g) Intangible assets (i) Initial recognition and measurement

(ii)

(iii) Amortisation

Software: 5 years

(iv) De-recognition

(h) Employee benefits(i) Defined contribution plans

(ii) Short-term employee benefits

(iii) Termination benefits

(i)

(j) Provisions

Pledged assetsFinancial assets transferred to external parties that do not qualify for de‐recognition are presented in the statement of financial position from financial assetspledged as collateral, if the transferee has received the right to sell or re‐pledge them in the event of default from agreed terms. Initial and subsequentmeasurement of assets pledged as collateral is at fair value.

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probablethat an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-taxrate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount isrecognized as finance cost.

Intangible asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognitionof the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset isderecognised.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All otherexpenditure, including expenditure on internally generated goodwill and brands, is recognised in the statement of comprehensive income as incurred.

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.Amortisation is recognised in the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets, other thangoodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefitsembodied in the asset. The estimated useful lives for the current and comparative periods are as follows:

Software that is acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure

The Group operates a defined contribution pension scheme as stipulated in the Pension Reform Act 2014. Employees are entitled to join the scheme oncommencement of employment. Employees contribute 8% each while the Group contributes 10% of the employee's annual basic salary, housing and transportallowances respectively.

Employee contributions are funded through payroll deductions while the Group's contribution is expensed in profit or loss. Contributions under this scheme areremitted to the individuals' Pension Fund Administator.

An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or lossarising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit orloss in the year the asset is derecognised.

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal orconstructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in thestatement of profit or loss and other comprehensive income in the periods during which related services are rendered by employees. Prepaid contributions arerecognised as an asset to the extent that a cash refund or a reduction in future payment is available. The Group has no further payment obligations once thecontributions have been paid.

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailedplan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntaryredundancy. The Group settles termination benefits within twelve months and are accounted for as short-term benefits.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised forthe amount expected to be paid under short term bonus or profit sharing plans if the Group has a present legal or constructive obligation to pay the amount as aresult of past service provided by the employee, and the obligation can be estimated reliably.


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(k)

(l) Revenue(i) Fee and commission income

(ii) Interest income and interest expense

• the gross carrying amount of the financial asset; or• the amortised cost of the financial liability

(m)

(n)

(i) Current income tax

(ii) Deferred tax

Income taxIncome tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recogniseddirectly in equity or other comprehensive income.

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable inrespect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflectsuncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any taxarising from dividends.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and theamounts used for taxation purposes.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the reporting date, to recover or settlethe carrying amount of its assets and liabilities.

Interest income and expenses are recognised in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discountsestimated future cash payments or receipts through the expected life of the financial instrument to:

Fee and commission revenue, including administrative fees, processing fees, legal fees, monitoring fees and transaction advisory fees are recognised as the relatedservices are performed. Fees and commission expenses included in net fee and commission revenue are mainly transaction and service fees relating to financial instruments, which areexpensed as the services are received.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that futuretaxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is nolonger probable that the related tax benefit will be realised; such deductions are reversed when the probability of future taxable profits improves.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enactedor substantively enacted by the reporting date.

Interest income of the Group comprises interest income on cash and cash equivalents and interest income on loans advanced to customers.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interestrate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, the calculation of interest income reverts to the gross basis.

The Calculation of effective interest rate includes transactions cost and fees and points paid or received that are an integral part of the effective interest rate.Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.

Interest expense of the Group comprise interest expense on borrowings.

Government grants

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by theGroup.

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the group willcomply with the conditions associated with the grants. Grants that compensates the group for expenses incurred are recognised in profit and loss as other incomeon a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised in theprofit and loss on a systematic basis over the useful life of the asset.

Financial guarantee contractsFinancial guarantee contracts are contracts that require the Group (issuer) to make specified payments to reimburse the holder for a loss it incurs because aspecified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee liabilities are initially recognised at their fair value, which is the premium received, and then amortised over the life of the financial guarantee.Subsequent to initial recognition, the financial guarantee liability is measured at the higher of the present value of any expected payment, when a payment underthe guarantee has become probable, and the unamortised premium. Financial guarantees are included within other liabilities.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has been possible that future taxable profits will beavailable against which they can be used.


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(o)

(p)

(q)

(r)

(s)

(t)

(u) New standards and interpretations not yet adopted

(i)

(ii)

Earnings per shareThe Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable toordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting theprofit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinaryshares.

IFRS 9 Financial instruments On 24 July 2014 the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes the IASB’s project toreplace IAS 39 Financial Instruments: Recognition and Measurement.

IFRS 15 - Revenue from contracts with customers

IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment onfinancial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instrumentsfrom IAS 39.

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction ofReal Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue – Barter of Transactions Involving Advertising Services. The standard contains asingle model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.

The Group is yet to carry-out an assessment to determine the impact that the initial application of IFRS 9 could have on its business; however, the Group willadopt the standard for the year ending 31 December 2018.

Segment reportingAn operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenuesand expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group'sdirectors to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Other IncomeOther income includes rental income, sweat equity income and gain on modification of overdraft facility. Rental income from owner occupied property isrecognised in profit or loss on a straight line basis over the term of the lease.Sweat equity income represents benefits received by the Bank in the form of equity interest in the investee company without payment for such equity shares bythe Bank. These benefits are provided to the Bank because of its efforts in developing the investee company. Sweat equity income is recognised at fair value.The gain on modification of overdraft facility represents the difference between the carrying amount of new financial liability with modified terms and carryingamount of the financial liability extinguished.

A number of new standards, amendment to standards and interpretation are effective for annual periods beginning after 1 January 2015, and have not beenapplied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adoptthese standards early.

Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial andoperational decisions, or one other party controls both. The definition includes subsidiaries, associates, as well as key management personnel.Transactions between the Group and its subsidiaries meet the definition of related party transactions. These transactions are eliminated on consolidation and notdisclosed in the consolidated financial statements.In general, transactions with related parties are accounted for in accordance with the standards applicable to such transactions.

Operating expensesExpenses are decreases in economic benefits during the accounting period in the form of outflows, depletion of assets or incurrence of liabilities that result indecrease in equity, other than those relating to distributions to equity participants.Expenses are recognized on an accrual basis regardless of the time of actual outflow. Expenses are recognized in the income statement when a decrease in futureeconomic benefit relating to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

Fiduciary activitiesThe Group acts as fund managers to the Public Mass Transit Revolving Fund established by the Federal Government. The role of the Group is to roll out the fundthrough on-lending on concessionary rates to eligible operators to acquire vehicles which shall be used for mass transit, with a mid plan to grow the fund andmake it self-sustaining. The Group manages the funds for the purposes in line with the terms of the agreement. The carrying value of the liability as at reportingdate are disclosed in the financial statements (see Note 31). The carrying amounts of the liability under custody are recognised at cost.

Fees and commissions earned from providing such services are determined in line with the agreement between the Group and the Federal Government of Nigeriafor which the Group holds its assets.

Expenses are measured at historical cost. Only the portion of cost of a previous period that is related to the income earned during the reporting period isrecognized as an expense. Expenses that are not related to the income earned during the reporting period, but expected to generate future economic benefits, arerecorded in the financial statement as assets. The portion of assets which is intended for earning income in the future periods shall be recognized as an expensewhen the associated income is earned.

Related party transactions


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(iii)

• IFRS 14 Regulatory Deferral Accounts• Accounting for acquisitions of interests in Joint Operations (Amendments to IFRS 11)• Equity Method in Separate Financial Statements (Amendments to IAS 27).• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)• Investment Entities: Applying the consolidation Exception (Amendments to IFRS 10, IFRS 12 and IFRS 28)• Amendments to IAS 1- Disclosure initiative

The following new or amended standards are not expected to have a significant impact of the Group’s consolidated financial statements.

Clarification of acceptable methods of depreciation and amortisation (Amendments to IAS 16 and IAS 38) The amendments to IAS 16 Property, Plant and Equipment explicitly state that revenue-based methods of depreciation cannot be used for property, plant andequipment. The amendments to IAS 38 Intangible Assets introduce a rebuttable presumption that the use of revenue-based amortisation methods for intangibleassets is inappropriate. The presumption can be overcome only when revenue and the consumption of the economic benefits of the intangible asset are ‘highlycorrelated’, or when the intangible asset is expressed as a measure of revenue.The Group (or Company) has assessed that the straight-line method would be the most appropriate method and will adopt the amendments for the year ending 31December 2016.

This new standard will most likely have a significant impact on the Group, which will include a possible change in the timing of when revenue is recognised andthe amount of revenue recognised.

The Group is yet to carry-out an assessment to determine the impact that the initial application of IFRS 15 could have on its business; however, the Group willadopt the standard for the year ending 31 December 2018.


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28


5 Use of judgments and estimates

(a) Key sources of estimation uncertainty

(i) Impairment losses on loans and receivables

The Group also applies same principle in estimating impairment losses on receivables.

(ii) Determining fair values

(b) Critical accounting judgments in applying the Group’s accounting policiesCritical accounting judgments made in applying the Group’s accounting policies include:

(i) Financial asset and financial liability classification

(ii) Depreciation and carrying value of property and equipment

(iii)

(iv)

The estimation of the useful lives of assets is based on management’s judgment. Any material adjustment to the estimated useful lives of items ofproperty and equipment will have an impact on the carrying value of these items.

Determination of impairment of property and equipment, and intangible assetsManagement is required to make judgments concerning the cause, timing and amount of impairment. In the identification of impairment indicators,management considers the impact of changes in current competitive conditions, cost of capital, availability of funding, technological obsolescence,discontinuance of services and other circumstances that could indicate that impairment exists. The Group applies the impairment assessment to itsseparate cash generating units. This requires management to make significant judgments and estimates concerning the existence of impairmentindicators, separate cash generating units, remaining useful lives of assets, projected cash flows and net realisable values. Management’s judgment isalso required when assessing whether a previously recognised impairment loss should be reversed.

The Group’s accounting policies provide scope for assets and liabilities to be designated at inception into different accounting categories.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which theestimates are reviewed and in any future period affected.Management discusses with the Board of Directors the development, selection and disclosure of the Group's critical accounting policies and theirapplication, as well as assumptions made relating to estimation uncertainties. Information about assumptions, estimation and estimation uncertaintiesthat have a significant risk of resulting in a material adjustment within the next financial year and about critical judgment in applying accounting policiesthat have the most significant effect on the amounts recognised in the financial statement is disclosed below:

Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy 4(f)(i).

At each financial statements reporting date, the Group reviews its loan portfolios for impairment. The Group first assesses whether objective evidence ofimpairment exists for individual loans. If such objective evidence exists, impairment is determined by discounting expected future cash flows using theloan’s original effective interest rate and comparing this amount to the loan’s net carrying amount. Determining the amount and timing of future cashflows on impaired loans requires significant judgment. If the Group determines that no objective evidence of impairment exists for an individuallyassessed loan, that loan is included in a group of loans with similar credit characteristics and collectively assessed for impairment. Objective evidence ofimpairment for a group of loans may include observable data indicating that there has been an adverse change in the payment status of borrowers in agroup, or national or local economic conditions that correlate with defaults on assets in the group. Management uses estimates based on historical lossexperience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its futurecash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce anydifferences between loss estimates and actual loss experience.

The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques.For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgmentdepending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and thelevel of future taxable profits.

Recognition of deferred tax assets and deferred tax liabilitiesDeferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Bank's financial statements and thecorresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be availableagainst which those deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax liabilities and deferred tax assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or theasset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement ofdeferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Bank expects, at the end ofthe reporting period, to recover or settle the carrying amount of its assets and liabilities.


31 December 2015

29

(v)

(vi)

(vii) Valuation of financial instruments

• Level 1: Inputs that are quoted market prices (unadjusted) in an active market for an identical instrument.

•

•

Level 2: Valuation techniques based on observable inputs either directly- i.e. as prices or indirectly- i.e. derived from prices. This category includesinstruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that areconsidered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3: This includes financial instruments, the valuation of which incorporate significant inputs for the asset or liability that is not based onobservable market data (unobservable inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity orcomplexity of the product. These inputs are generally determined based on inputs of a similar nature, historic observations on the level of the inputor analytical techniques.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. Forall other financial instruments the Group determines fair values using valuation techniques. Valuation techniques include net present value anddiscounted cash flow models, comparison to similar instruments for which market observable prices exist and other valuation models. Assumptions andinputs used in valuation techniques include risk-free interest rates, credit spreads and other factors used in estimating discount rates, bonds and equityprices. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reportingdate that would have been determined by market participants acting at arm’s length.

The Group measures fair values using the following fair value hierarchy which reflects the significance of the inputs used in making the measurements.

The objective of valuation technique is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

Determination of control over investeesManagement applies its judgment to determine whether the control indicators set out in Note 4(a)(iii) indicate that the Group controls a special purposevehicle and or subsidiary.Certain special purpose vehicles incorporated by the Group for the purpose of executing infrastructure projects on which the Bank would act in anadvisory and/or finance arranging capacity are run according to predetermined criteria that are part of the initial design of the vehicles. In addition, theGroup is exposed to variability of returns from the vehicles through its holding of equity securities in the vehicles. In considering whether the Group hascontrol, the Group considers whether it manages the key decisions that most significantly affect these vehicles' returns. As a result, the Group hasconcluded that it controls its special purpose vehicles (see Note 22).

-Loans and advances to customers-Fee income receivables-Other receivables

-Other liabilities

Determination of significant influence over investeesManagement applies its judgment to determine whether the Group has significant influence over an investee company as set out in Note 4(a)(v).The Group has determined that it exercises significant influence over an investee company due to its representation on the Board of such company andits significant participation in the Company's operating and financial policies.

The Group uses widely recognised valuation models for determining the fair value of common and more simple financial instruments. Observable pricesand model inputs are usually available in the market for listed debt and equity securities. Availability of observable market prices and model inputsreduces the need for management judgment and estimation and also reduces the uncertainty associated with the determination of fair values.

Financial instruments not measured at fair valueThe following financial instruments of the Group are not measured at fair value because their carrying amounts are reasonable approximation of fairvalues:-Cash and Cash equivalents

-Borrowings


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6 Financial risk management

OverviewThe Bank has exposure to the following risks arising from financial instruments:• Credit risk• Liquidity risk• Operational risk• Market risk

Risk management framework

The Infrastructure Bank Plc's risk management framework has the following components:

•

••

•

•

•

•

•

RISK GOVERNANCE STRUCTURE

The main objective of Enterprise risk management in TIB is to minimise loses, maximise efficiency and reduce earnings volatility. The risk framework runs on aplatform of policies and processes that can proactively identify, measure, manage, control, monitor and report on enterprise risk exposures in the Bank on anintegrated basis.

(d) Ensuring compliance with applicable laws, conventions, guidelines and regulations.

TIB also has in place a framework of core values, standards and controls, a code of conduct and delegated authorities by which all staff are bound. The Boardregularly addresses risks attached to business activities and there exists a feedback loop through the management team.

The Risk management policies and procedures are based on the premise that the Bank can perform its trade and economic developmental roles using commercialapproaches while operating within its chosen risk tolerance levels.

(a) Achieving the strategic goals derived from the Bank's strategic plans;(b) Operational efficiency in the form of effective and efficient use of the Bank's resources;(c) Ensuring reliability and timeliness of reporting relevant financial and non-financial information; and

The Bank's risk management framework is aimed at four key objectives:

Control activities - This covers the plans, policies, procedures and reporting requirements, which are the main instruments of control under the riskmanagement framework; andMonitoring - This covers the regular monitoring and reporting of risk management deficiencies to appropriate authorities so that the Bank can react swiftlyas circumstances warrant.

The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management framework. The Infrastructure Bank (TIB) Plc Board is responsible for managing all risks associated with the operations of the Bank, whilst management has responsibilityfor implementing and managing all policies and procedures approved by the Board to act as mitigants against specific risks.

The Bank’s risk management policies are established to ensure that risks arising from the Bank's business are properly identified, evaluated, managed andmonitored in line with the Bank's risk appetite and also in order to assist the achievement of the Bank's strategic goals and protect its franchise, brand and assets.Risk management policies and systems are reviewed regularly to recognise both new and emerging risks in the Bank’s activities.

The Internal environment - This covers the way risk is viewed by the Board, Management and Staff derived from its operation in a difficult environment,the ethical standards, values and commitment to excellence that have been established over the years;

Setting objectives- This covers the Bank's strategic plan, which shapes the strategic goals and objectives of the Bank;Event Identification - This is the identification of potential internal and external factors and/or events likely to affect the attainment of the Bank's objectives;

Risk assessment - This covers the assessment of the risks (inherent and residual) to the attainment of the Bank's objective arising from a mix of potential future events;Risk response -This covers the various responses that may be triggered by an unexpected occurrence of a material risk event based on the Bank's riskappetite. The responses may take the form of avoidance, acceptance, reducing or sharing risks;Information and communication - This covers the arrangement for the capture and timely dissemination of relevant internal and external information toenable staff and the board carry out their responsibilities;

Board of Directors


Board Credit and Investment Committee

Managing Director/CEO

Internal Audit and Compliance Department

Risk Management Department

Other Departments, Teams and Units

RISK GOVERNANACE ORGANOGRAM


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BOARD OF DIRECTORS


1 Alhaji LOT Shittu - Chairman2 Mr. Johan Kruger - Member3 Hon. Micah Jiba - Member4 Mr. Akinade Ogunbiyi - Member5 Mr. Oye Hassan-Odukale - Member

a.

b.c.d.

e.f.g.h.i.

j.k.

l.m.

The Audit Roles and responsibilities of the Committee includes the following:a.

b.c.d.e.

f.

g.

h.i.j.

k.

l.m.

n.

o.

p.

Board Credit & Investment Committee

The committee has the following members:1 - Chairman2 - Member3 - Member4 - Member5 - Member

The Committee Chairman shall review a summary of reported cases, cases investigated, the process of investigation and the result of the investigation;

To establish an internal audit function and ensure there are other means of obtaining sufficient assurance of regular review or appraisal of the system of internalcontrols in the Bank;To approve the purpose, authority and responsibility of the internal auditing activity, which should be clearly and formally defined in an audit charter. This chartershould be consistent with the definition of internal auditing by the Institute of Internal Auditors (IIA); andTo review at audit committee meetings, the quarterly internal audit reports on the adequacy and effectiveness of management, governance, risk and controlenvironment, deficiencies observed and management’s mitigation plans.

The Board Credit and Investment Committee is charged with the responsibility of evaluating and approving all credits beyond the powers of the Management andbelow the powers of the Board.

Mr. Johan Kruger Mr. Tanimu Muhammad-JaMr. Oye Hassan-Odukale Mr. Adekunle Oyinloye (MD/CEO)Hakeem Olopade (ED, Projects)

To discuss policies and strategies with respect to risk assessment and management; To meet separately and periodically with management, internal auditors and external auditors;To review and ensure that adequate whistle-blowing procedures are in place and that a summary of issues reported are highlighted to the Chairman;

To review, with the external auditor, any audit scope limitations or problems encountered and management’s responses to same;

To review the independence of the external auditors and ensure that where non-audit services are provided by the external auditors, there is no conflict of interest;

To review the integrity of the Bank’s financial reporting and oversee the independence and objectivity of the external auditors;To have access to external auditors to seek explanations and additional information without management presence;To ensure the development of a comprehensive internal control framework for the Bank, obtain assurance and report annually in the financial report, on theoperating effectiveness of the Bank’s internal control framework;To oversee management’s process for the identification of significant fraud risks across the Bank and ensure that adequate prevention, detection and reportingmechanisms are in place; To at least on an annual basis, obtain and review a report by the internal auditor describing the strength and quality of internal controls including any issues orrecommendations for improvement, raised by the most recent internal control review of the Bank;

To ensure that the Bank’s risk management policies and practices are disclosed in the annual report;

To render periodic reports to the Board on the Banks’ risk management practices, internal controls and level of compliance with regulatory directives; andTo ensure that the internal control system of the Bank is documented and designed to achieve efficiency, effectiveness of operations and reliability of financialreporting.

To assist in the oversight of the integrity of the Bank’s financial statements, compliance with legal and other regulatory requirements, assessment of qualificationsand independence of external auditor, and performance of the Bank’s internal audit function as well as that of external auditors;To discuss the annual audited financial statements and half yearly unaudited statements with management and external auditors;

To obtain and review periodically relevant reports to ensure the ongoing effectiveness of the Bank’s risk management framework;To review and approve the Bank’s risk management policy including risk appetite and risk strategy; To establish a management framework that defines the Bank’s risk policy, risk appetite and risk limits - (the framework is formally approved by the Board);To ensure that the risk management framework is integrated into the day-to-day operations of the business and provide guidelines and standards for administeringthe acceptance and on-going management of key risks such as operational, reputational, financial, market, technology and compliance risk;

To review the Bank’s compliance level with applicable laws and regulatory requirements, which may impact the company’s risk profile;

To conduct at least annually, a thorough risk assessment covering all aspects of the Bank’s business. The results of the risk assessment are used to update the riskmanagement framework of the Bank; To review the adequacy and effectiveness of risk management and controls; To oversee management’s process for the identification of significant risks across the Bank and the adequacy of prevention, detection and reporting mechanisms; To periodically review changes in the economic and business environment, including emerging trends and other factors relevant to the Bank’s risk profile;

To review and recommend for approval of the Board, risk management procedures and controls for new products and services;

The Board of Directors is the apex governing body of the Bank and is responsible for credit policy formulation in the Bank.

The Board Audit and Risk Management Committee has the oversight function of insulating the Bank from operational and lending risks. The Committee has the following membership:

The Risk Management roles and responsibilities of the Committee includes the following:


31 December 2015

32


a.b.

c.d.

e.f.g.

h.

i.j.

k.l.m.

n.

o.p.

q.

r.s.

The Bank, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employeesunderstand their roles and obligations.

The Bank’s Board Committees oversee how management monitors compliance with the Bank’s risk management policies and procedures, and reviews the adequacyof the risk management framework in relation to the risks faced by the Bank.

The Bank's exposure to the risks are explained in more detail below:

To monitor on an on-going basis the Bank’s risk quality and performance, review periodic credit portfolio reports and assess portfolio performance; andTo periodically review investment portfolios and risk returns parameters, and define new investments returns per latest analytical review.

To ensure that the approved and appropriate credit and risk management policies, processes and methodologies, disbursements, recoveries & remedial actions etc.are applied to manage the various risks and credits to which the Bank may be exposed;To endorse the approval of credit policies, proposals and changes to credit policies, standards, new products, processes and approving authorities subject to the

ratification of the full Board;To ensure compliance with the Bank’s credit policies and statutory requirements prescribed by the regulatory/supervisory authorities;To ensure that the Bank’s overall credit risk exposure is maintained at prudent levels and consistent with the available capital through quarterly review of varioustypes of credit exposure; To review the Bank’s investment policies, approving the appropriate investment portfolio mix and approving equity investment proposals as well as debtfinancing;

To review and recommend to the Board facilities and Investments that are beyond management (Management and Peer Review Meetings -MPRM & Managementand Investment Decision Meetings -MIDM) approval limits;To approve exceptions/write-offs, waivers and discounts on non-performing credit facilities within specified limits;To ensure that all credits and investments are as per delegated amount from time to time or all credits and investments must be presented to the Board CreditInvestment Committee (it is important that this occurs prior to substantial commitments of resources and in principle commitment on non-standard types ofproject);To define expenses approval limits for business development and special projects (this does not involve operational/day to day expenses);To approve the Banks and institutions and the limits per institution and the ratings and other conditions where excess capital may be invested;

To recommend a financial delegation level for the Credit and Investment Committee to the Board; To ensure that the Management as well as individuals responsible for credit risk management, possess the requisite expertise and knowledge to accomplish therisk management function;To approve all material aspects of rating and estimation processes;To be involved in capital planning and establish a strong internal credit control culture; To review and approve approval authorities to individuals and committees;

iii. Analytical process to be followed; iv. Contingent liabilities relating to guarantees available to third parties in respect of projects; v. Monitoring systems; vi. Default procedures; andvii. Recovery process.

The roles and responsibilities of the Board Credit and Investment Committee include the following:To review and set credit strategy and policy;To review and approve credit policy and risk management manual. This includes providing clear guidelines on:i. Maximum exposure limits for: Single obligors names based on the rating; Geographic areas; Sectors and Excess conditionalities.ii. Capital requirements and minimum spread per type of exposure;


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(i) Credit risk

Exposure to credit risk

GroupNote

31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-DecIn thousands of Naira 2015 2014 2015 2014 2015 2014

Carrying amount 1,162,701 8,913,471 2,087,635 460,767 1,198,366 3,331,844

Individually impaired:Specifically impaired loans - - 438,480 353,197 1,088,166 458,632 Gross amount - - 438,480 353,197 1,088,166 458,632 Allowance for impairment - - (424,504) (187,617) (1,088,166) (458,632)

Carrying amount - - 13,976 165,580 - -

Collectively impaired:Performing loans/receivables - - 2,154,300 292,645 1,198,366 3,331,844 Cash and cash equivalents 1,162,701 8,913,471 - - - - Staff loans - - 4,104 4,333 - - Gross amount 1,162,701 8,913,471 2,158,404 296,978 1,198,366 3,331,844

Allowance for impairment - - (84,745) (1,790) - - Carrying amount 1,162,701 8,913,471 2,073,659 295,188 1,198,366 3,331,844

Total carrying amount - amortised cost 1,162,701 8,913,471 2,087,635 460,768 1,198,366 3,331,844

BankNote


Carrying amount 1,010,576 63,181 2,087,635 626,930 1,697,272 3,664,344

Individually impaired:Specifically impaired loans - - 438,480 353,197 1,283,166 519,424 Gross amount - - 438,480 353,197 1,283,166 519,424 Allowance for impairment - - (424,504) (187,617) (1,283,166) (519,424)Carrying amount - - 13,976 165,580 - -

Collectively impaired:Performing loans/receivables - - 2,154,300 458,808 414,106 3,664,344 Cash and cash equivalent 1,010,576 63,181 - - - - Staff loans - - 4,104 4,333 - - Gross amount 1,010,576 63,181 2,158,404 463,141 414,106 3,664,344 Allowance for impairment - - (84,745) (1,790) - - Carrying amount 1,010,576 63,181 2,073,659 461,351 414,106 3,664,344

Total carrying amount - amortised cost 1,010,576 63,181 2,087,635 626,930 414,106 3,664,344

For this purpose the Management through its Management Investment Decision Meetings (MIDM), Board Credit and Investment Committee (BCIC) and theBoard of Directors are mandated to assess the creditworthiness of potential borrowers, and no disbursements are made without approvals at the appropriate levelbased on the delegated authority established by the Board of Directors.

The Group's credit policy is therefore aimed at minimizing the risk of lending to borrowers that is more likely to default, or whose credit quality is subject toprobable deterioration.

Credit risk is the risk of an unexpected financial loss to the Group if a customer or third party to a financial instrument fails to meet its contractual obligations.It is the potential financial loss due to default of one or more debtors/obligors. Credit risk is the largest source of risk for the Group arising essentially from itslending and treasury operations.

The CEO directs the development of credit assessment procedures, models and application templates suitable for the proper assessment of credit worthiness ofcounterparty.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the end of the reporting period wasas follows:

ReceivablesLoan and advances

ReceivablesLoan and advances

Cash and cash equivalents

Cash and Cash equivalents


31 December 2015

34


Collaterals held and other credit enhancements

Type of credit exposure Group Group Bank Bank31-Dec 31-Dec 31-Dec 31-Dec

In thousands of Naira 2015 2014 2015 2014Against individually impaired:Cash 14,000 165,580 14,000 165,580 Against collectively impaired:Cash - 21,000 - 21,000 Total 14,000 186,580 14,000 186,580

Credit concentration

GroupNote


Carrying amount 1,162,701 8,913,471 2,087,635 460,767 1,198,366 3,331,844

Concentration by sector:Federal Government - - - - - 3,331,844 Local Government - - - 13,751 - - Private sector 1,162,701 8,913,471 2,087,635 447,016 1,198,366 -

1,162,701 8,913,471 2,087,635 460,767 1,198,366 3,331,844

Concentration by location: 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-DecIn thousands of Naira 2015 2014 2015 2014 2015 2014

Abuja - - 317,271 269,615 313,445 3,332,014 North East - - - 13,724 - - North West - - - - 34,482 - South West 1,162,701 8,913,471 1,770,364 177,429 1,349,345 -

1,162,701 8,913,471 2,087,635 460,768 1,198,366 3,332,014

Bank

31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-DecIn thousands of Naira Note 2015 2014 2015 2014 2015 2014

Carrying amount 1,010,576 63,181 2,087,635 626,930 1,697,272 3,664,344

Concentration by sector:Federal Government - - - - - 3,664,344 Local Government - - - 13,751 - - Private sector 1,010,576 63,181 2,087,635 613,179 1,697,272 -

1,010,576 63,181 2,087,635 626,930 1,697,272 3,664,344

Concentration by location: 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-DecIn thousands of Naira 2015 2014 2015 2014 2015 2014

Abuja - - 317,271 435,778 313,445 3,664,514 North East - - - 13,724 - - North West - - - - 34,482 - South West 1,010,576 63,181 1,770,364 177,429 1,349,345 -

1,010,576 63,181 2,087,635 626,931 1,697,272 3,664,514

(ii) Liquidity risk

Management of liquidity risk involves keeping sufficient liquid reserves and keeping committed credit lines available. The Bank’s approach to managingliquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,without incurring unacceptable losses or risking damage to the Bank’s reputation.

Concentration by location for loans and receivables are measured based on the location of the borrower.

The Group monitors concentrations of credit risk by sector and by geographic location. An analysis of concentrations of credit risk at the reporting date is shownbelow:

The Bank holds collateral and other credit enhancements against certain of its credit exposures. The table below sets out the principal types of collateral heldagainst loans and advances to customers.

The general credit worthiness of a customer tends to be the most relevant indicator of credit quality of a loan extended to it. However, collateral providesadditional security and the Bank generally requests that borrowers provide it. The Bank may take collateral in the form of a first charge over fixed assets andcash contribution to a debt service reserve account.

ReceivablesLoans and advances

ReceivablesLoans and advancesCash and cash equivalents

Cash and Cash equivalents


31 December 2015

35


Group

In thousands of Naira NoteCarrying

amountContractual

cash flowLess than 3

months 6 months 12 months 1 - 5 yearsMore than 5

years

31 December 2015Non-derivative assetsCash and cash equivalents 17 1,162,701 1,162,701 1,162,701 - - - - Loans and advances 18 2,087,635 2,596,884 317,271 4,104 - 2,275,509 - Fee income receivables 19 1,198,196 1,198,196 1,198,196 - - - - Other receivables 20 170 170 - - - - 170

4,448,702 4,957,951 2,678,168 4,104 - 2,275,509 170 Non-derivative liabilitiesBorrowings 26 787,500 855,733 60,524 659,273 70,546 65,390 - Other liabilities 29 2,041,178 2,041,178 2,041,178 - - - -

2,828,678 2,896,911 2,101,702 659,273 70,546 65,390 - Gap (asset - liabilities) 1,620,024 2,061,040 576,466 (655,169) (70,546) 2,210,119 170 Cumulative liquidity gap 576,466 (78,703) (149,249) 2,060,870 2,061,040


amountContractual

cash flowLess than 3

months 6 months 12 months 1 - 5 yearsMore than 5

years

31 December 2014Non-derivative assetsCash and cash equivalents 17 8,913,471 8,913,471 8,913,471 - - - - Loans and advances to customers 18 460,767 460,767 452,018 8,749 - - - Fee income receivables 19 3,331,844 3,331,844 3,331,844 - - - - Other receivables 20 489,430 489,430 489,260 - - - 170

13,195,512 13,195,512 13,186,593 8,749 - - 170 Non-derivative liabilitiesBorrowings 26 10,296,602 10,296,602 230,000 8,568,493 1,498,109 - - Other liabilities 29 1,960,775 1,960,775 1,112,605 848,170 - - -

12,257,377 12,257,377 1,342,605 9,416,663 1,498,109 - - Gap (asset - liabilities) 938,135 938,135 11,843,988 (9,407,914) (1,498,109) - 170 Cumulative liquidity gap 11,843,988 2,436,074 937,965 937,965 938,135

Bank


amountContractual cashflow

Less than 3 months 6 months 12 months 5 years

More than 5 years

31 December 2015Non-derivative assetsCash and cash equivalents 17 1,010,576 1,010,576 1,010,576 - - - - Loans and advances to customers 18 2,087,635 2,596,884 317,271 4,104 - 2,275,509 - Fee income receivables 19 1,697,102 1,697,102 1,697,102 - - - - Other receivables 20 170 728,805 - - - - 170

4,795,483 6,033,367 3,024,949 4,104 - 2,275,509 170 Non-derivative liabilitiesBorrowings 26 787,500 855,733 60,524 659,273 70,546 65,390 - Other liabilities 29 1,974,760 1,974,760 1,974,760 - - - -

2,762,260 2,830,493 2,035,284 659,273 70,546 65,390 - Gap (asset - liabilities) 2,033,223 3,202,874 989,665 (655,169) (70,546) 2,210,119 170 Cumulative liquidity gap 989,665 334,496 263,950 2,474,069 2,474,239


amountContractual cashflow

Less than 3 months 6 months 12 months 5 years

More than 5 years

31 December 2014Non-derivative assetsCash and cash equivalents 17 63,181 63,181 63,181 - - - - Loans and advances to customers 18 626,930 626,930 452,018 174,912 - - - Fee income receivables 19 3,664,344 3,664,344 3,664,344 - - - - Other receivables 20 489,430 489,430 489,260 - - - 170

4,843,885 4,843,885 4,668,803 174,912 - - 170 Non-derivative liabilitiesBorrowings 26 1,996,602 1,996,602 230,000 268,493 1,498,109 - - Other liabilities 29 1,407,659 1,407,659 559,489 848,170 - - -

3,404,261 3,404,261 789,489 1,116,663 1,498,109 - - Gap (asset - liabilities) 1,439,624 1,439,624 3,879,314 (941,751) (1,498,109) - 170 Cumulative liquidity gap 3,879,314 2,937,563 1,439,454 1,439,454 1,439,624

The Bank’s achievement of these objectives is predicated on the ability to access funds of the right temperament (tenor, interest rate, size). Failure to tap fundsappropriately both on- and off-shore would be a business constraint.The maturity profiles of the contractual cash flows of financial instruments at 31 December 2015 were as follows:


31 December 2015

36


(iii) Market risk

(iv) Currency risk

The table below summaries the Bank’s financial instruments at carrying amount, categorised by currency:

Financial instruments by currencyGroupIn thousands of Naira Note Total Naira US $ GBP Others

31 December 2015Cash and cash equivalents 17 1,162,701 1,161,783.28 725 162 31 Loans and advances 18 2,087,635 2,087,635 - - - Fee income receivables 19 1,198,196 1,198,196 - - - Other receivables 20 664,265 664,265 - - -

5,112,797 5,111,879 725 162 31

Borrowings 26 787,500 787,500 - - - Other liabilities 29 2,041,178 2,041,178 - - -

2,828,678 2,828,678 - - -

31 December 2014Cash and cash equivalents 17 8,913,471 8,912,368 960 135 8 Loans and advances 18 460,767 460,767 - - - Fee income receivables 19 3,331,844 3,331,844 - - - Other receivables 20 484,525 484,525 - - -

13,190,607 13,189,504 960 135 8

Borrowings 26 10,296,602 10,296,602 - - - Other liabilities 29 2,027,079 2,027,079 - - -

12,323,681 12,323,681 - - -

BankIn thousands of Naira Note Total Naira US $ GBP Others

31 December 2015Cash and cash equivalents 17 1,010,576 1,009,658 725 162 31 Loans and advances 18 2,087,635 2,087,635 - - - Fee income receivables 19 1,697,102 1,697,102 - - - Other receivables 20 728,805 728,805 - - -

5,524,118 5,523,200 725 162 31

Borrowings 26 787,500 787,500 - - - Other liabilities 29 1,974,760 1,974,760 - - -

2,762,260 2,762,260 - - -

31 December 2014Cash and cash equivalents 17 63,181 62,078 960 135 8 Loans and advances 18 626,930 513,052 166,163 - - Fee income receivables 19 3,664,344 3,664,344 - - - Other receivables 20 484,525 484,525 - - -

4,838,980 4,723,999 167,123 135 8

Borrowings 26 1,996,602 1,996,602 - - - Other liabilities 29 1,473,963 1,473,963 - - -

3,470,565 3,470,565 - - -

The Bank is minimally exposed to the financial risk related to the fluctuation of foreign exchange rates. This is so because its revenues, capital expenditures areprincipally based in Naira. A significant change in the exchange rates between the Naira(N) (functional and presentation currency) relative to the US dollarwould have an insignificant effect on the Bank’s results of operations, financial position and cash flows. The Bank does not enter into any forward exchangecontracts to manage the currency risk fluctuations.

The Bank has not entered into any derivative or other financial instruments to mitigate the market risk.

On a macro-economic level there is no doubt that a huge demand for investment in infrastructure exists in the country. The demand ranges from social toeconomic infrastructure, and the Bank may find itself in a position that it will be able to choose between investment alternatives. Demand driven portfoliogrowth could result in unwanted results such as concentration and over exposure to certain borrowers (or states / regions), and this is guarded against whendesigning the portfolio parameters. Caps are placed on single borrower exposure, maximum state exposure, as well as sector exposure.

Market risk is the risk that changes in market prices, will affect the Bank’s income. The objective of market risk management is to manage and control marketrisk exposures within acceptable parameter, while optimising the return.


31 December 2015

37

Notes to the consolidated and separate financial statementsFor the year ended 31 December 2015(v) Interest rate risk

Interest rate profile

Group Group Bank Bank31-Dec 31-Dec 31-Dec 31-Dec

In thousands of Naira Note 2015 2014 2015 2014Financial instrumentsCash and cash equivalents 17 1,162,701 8,913,471 1,010,576 63,181

18 2,087,635 460,767 2,087,635 626,930 Borrowings 26 (787,500) (10,296,602) (787,500) (1,996,602)

2,462,836 (922,364) 2,310,711 (1,306,491)

Sensitivity analysis for fixed rate instruments

Group Group Bank Bank31-Dec 31-Dec 31-Dec 31-Dec

In thousands of Naira 2015 2014 2015 2014

Increase in interest rate by 100 basis points (+1%) 24,628 9,224 23,107 13,065 Decrease in interest rate by 100 basis point (-1%) (24,628) (9,224) (23,107) (13,065)

Interest rate movements affect reported equity through retained earnings arising from increase or decrease in net interest income.

(vi) Operational risk

(vii) Strategic risk

(viii) Reputational risk

(ix) Concentration risk

(x) Legal / Compliance risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Bankhas no financial instruments linked to variable interests. The risk that the Bank will realise a loss as a result of any change in the fair value of financial assets orliabilities is thus immaterial. The Bank has not entered into any derivative financial instrument to manage this risk.

The Bank's policy is that all loans to borrowers must be structured according to the interest rate structure and maturity profile of the funding used. Therefore, incases where funding is raised at variable rates and loans are offered at fixed rates, and vice versa, the Bank must avail of interest rates swap or other hedginginstruments with commercial banks, and the cost thereof is calculated into the cost of funding. The Bank’s policy is therefore one of zero appetite for interestrate risk and the Managing Director/CEO ensures that all funding and loan transactions adhere to this policy.

At the end of the reporting period the interest rate profile of the Bank's interest bearing financial instruments as reported to the Management of the Bank are asfollows:

Loans and advances to customers

The table below shows the impact on the Group’s profit before tax if interest rates on financial instruments had increased or decreased by 100 basis points, withall other variables held constant.

A factor that will substantially influence the rating and creditworthiness of the Bank is concentration risk, which is the exposure to a single project, client,sector, credit category or geographic area. The Bank applies matrices stipulating maximum exposure expressed as either a percentage of equity or portfolio size,which are monitored and reviewed from time to time by the Board Credit and Investment Committee and the Board Audit Risk Management Committee.

Reputational risk could result directly or indirectly from actions by the Bank or clients respectively. The Bank endeavors to manage issues that may causedamage to reputation by maintaining a regular reporting framework, which is subject to periodic review by the Board.

The Bank’s reputation as a stable and responsible organisation able to maintain liquidity and a fair return on assets is the foundation of the Bank. Manyreputational risks may be avoided through proper systems eliminating rogue trading; mitigated or reduced through avoidance of undue exposure to certainproducts or markets; and by diversifying its exposure. Reputational risk is further mitigated by benchmarking to international codes of best practice in bankingand corporate governance such as Code of Corporate Governance issued by the Central Bank of Nigeria, Securities and Exchange Commission, Basel 2 and theKing 2 codes.

The Bank during the year had a retreat to review and revalidate its strategy during the year. The Bank carried out a robust and thorough self-review of its futuregoals, vis-à-vis its current position, with a view to achieving its ambitious corporate strategy. The outcome of this exercise was a revalidation of the corporatestrategy and recognition of the significant progress made in the previous 12 months.

Operational risks arise from inadequate or failed processes, people and systems or from external factors affecting these. Management at all levels haveresponsibility for identifying, assessing, controlling and reporting operational risks. Management is guided by a framework of core values, group policies, acode of business conduct and delegated authorities in place. Internal audit department carries out periodic reviews to ensure adequate management ofoperational risks.

Nigeria is a sovereign state in which the rule of law applies. The judicial system is functional and legitimate business contracts are valid. The legal environmentitself is supportive of normal business operations. A number of risks in the legal environment are always put into consideration in taking business decisions.

Strategic risk is the risk that results from adverse business decisions, ineffective or inappropriate business plans, or failure to respond to changes in thecompetitive environment. This risk is being managed by ensuring that the Bank's strategic goals and objectives are set in line with its corporate mission andvalues, culture, business direction and risk tolerance; active engagement with all stakeholders - customers, investors, regulators, staff, etc.; and board approvalof significant strategic actions, such as material acquisitions or capital actions.


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38


7 Capital management

Capital base

Capital adequacy computations

In thousands of Naira Note Group Group Bank Bank2015 2014 2015 2014

Tier 1 capitalOrdinary share capital 34(a) 3,103,000 3,103,000 3,103,000 3,103,000 Capital contribution 34(b) 1,391,230 1,391,230 1,391,230 1,391,230 Accumulated losses 34(d) (1,659,137) (2,681,133) (949,265) (2,097,869)

2,835,093 1,813,097 3,544,965 2,396,361

(Less):Deferred tax assets 15(b) (158,389) (146,041) (158,389) (146,041) Intangible assets 25 (451) (782) (451) (782) Investment in subsidiaries 22 - - (230,238) (80,748) Total Tier 1 capital 2,676,253 1,666,274 3,155,887 2,168,790

Compliance risk is the current and prospective risk to earnings or capital arising from violations of, or non-conformity with laws, rules, regulations, prescribedpractices, internal policies, and procedures, or ethical standards. This risk may expose the Bank to fines, penalties, damages, and the voiding of contracts.

The Banks capital base consists of regulatory capital; which is made up of Tier 1 capital (only permanent shareholder's equity and disclosed reserves) and Tier 2capital. Tier 1 capital comprises share capital, share premium and retained earnings, while Tier 2 capital includes the Bank's qualifying loan capital and shall notexceed 100% of Tier 1 capital. The Bank is expected to maintain a minimum ratio of Tier I capital to total assets of 5%.

The objective of the Bank’s capital management is to ensure compliance with all the prudential requirements and to maintain healthy capital ratios in order toeffectively support its business and to maximize shareholders’ value.The capital adequacy ratio is the quotient of the capital base of the Bank and the Bank's risk weighted asset base. In accordance with Central Bank of Nigeriaregulations for Development Financial Institutions, a Capital Adequacy Ratio (CAR) of not less than 10% is to be maintained. The following table provides anoverview of the of the capital levels and risk-weighted assets (RWA):

During the year, the Central Bank of Nigeria (CBN) issued "Regulatory and Supervisory Guidelines for Development Finance Institution" which required theBank to maintain a minimum capital of N10billion in order to operate as a Retail Development Finance Institution but the Central Bank of Nigeria has notcommunicated the deadline for the new capital requirement.In response to the new guidelines, the Bank has commenced capital raising exercise in order to increase its shareholders' funds from N4.45 billion as at 31December 2015 to N10 billion as required by CBN. The Bank plans to finalise its capital raising exercise before the end of the 2016 financial year.

The Bank’s policy is to maintain a strong capital base and also to comply with the minimum capital requirements imposed by the Central Bank of Nigeria, so asto maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and theadvantages and security afforded by a sound capital position.

The allocation of capital between specific operations and activities is primarily driven by regulatory requirements. The Bank’s capital management policy seeksto maximise return on risk while satisfying all the regulatory requirements. The Bank’s policy on capital allocation is subject to regular review by the Board.

The objective of the Bank’s capital management is to ensure that adequate capital is retained at all times to support the risks the Bank undertakes in the courseof its business. The Bank identifies risks that are material to the Bank’s business and the regulatory capital that is required to be set aside for such risks.However, the Bank intends to continue to be conservative and would aim to maintain a reasonable buffer over 10% regulatory capital requirement set by CentralBank of Nigeria.

The Bank recognizes that earnings are the first line of defence against losses arising from business risks and that capital is one of the tools to address such risks;also important are establishing and implementing documented procedures, defining and monitoring internal limits of the Bank’s activities/exposures, strong riskmanagement, compliance and internal control processes as well as adequate provisions for credit, market and operational losses. However, since capital is vitalto ensure continued solvency, the Bank’s objective is to maintain sufficient capital such that a buffer above regulatory capital adequacy requirements isavailable to meet risks arising from fluctuations in asset values, business cycles, expansion and future requirements.

• Meet the regulatory capital adequacy requirement and maintain a prudent buffer;• Generate sufficient capital to support overall business strategy;• Integrate capital allocation decisions with the strategic and financial planning process;• Enhance Board and senior management’s ability to understand how much capital flexibility exists to support the overall business strategy;• Enhance the Bank’s understanding on capital requirements under different economic and stress scenarios; and• Build and support the link between risks and capital and align performance to these.

The Bank seeks to achieve the following goals through the implementation of its capital management framework:

TIB has a zero tolerance for non-compliance with Know-Your-Customer and know your customers business. Staff are exposed to regular training and awarenesson anti-money laundering practices.

The Internal Audit / Compliance functions ensure the smooth functioning of the compliance process. He is also charged with the task of ensuring that the Bankcomplies with all statutory and regulatory requirements.

Being in a highly regulated industry, The Infrastructure Bank Plc is required to fully comply with the spirit and letter of governing laws and regulations. Toensure compliance with applicable laws and regulations, the Bank has put in place a comprehensive compliance policy that details the roles and responsibilitiesof all employees.


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39


Tier 2 capitalRevaluation reserve 34(c) 993,185 941,181 993,185 941,181

993,185 941,181 993,185 941,181 Total Tier 2 capital 993,185 941,181 993,185 941,181

993,185 941,181 993,185 941,181

Total regulatory capital 3,669,438 2,607,455 4,149,072 3,109,971

Risk-weighted assets 7,588,597 3,748,578 8,303,115 3,737,409

Capital ratios

Total regulatory capital expressed as a percentage of total risk-weighted assets 48% 35% 50% 44%

Total tier 1 capital expressed as a percentage of risk-weighted assets 35% 26% 38% 33%

As shown above, the Bank currently has a capital adequacy ratio of 50% (2014: 44%), indicating an improvement of the Bank's performance over the prior year.

Total Tier 2 capital limited to 100% of Tier 1 capital


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40


8 Operating segment

(a) External revenue for the years ended 31 December 2015 and 31 December 2014 is detailed as follows:Group Group

In thousands of Naira Note 2015 2014

Finance advisory and finance arranging fee 11(a) 1,782,537 1,655,792 Fund management 11(a) 185,834 214,459 Treasury management 10(a) 155,206 161,842 Development loans 10(a) 262,538 115,092 Other income 12 879,927 17,305

Total external revenue 3,266,042 2,164,490

(b) Geographical information

(i) All the Bank's business transactions and assets during the reporting periods were solely in Nigeria.

(ii) Non-current assets comprise: Group GroupIn thousands of Naira Note 2015 2014

Property and equipment 24 2,069,450 2,011,080 Intangible assets 25 451 782

2,069,901 2,011,862

(c) Major customer

9 Classification of financial assets and liabilities

GroupIn thousands of Naira Note Loans and receivables Other financial liabilities Total carrying amount

31 December 2015Cash and cash equivalents 17 1,162,701 - 1,162,701 Loans and advances 18 2,087,635 - 2,087,635 Fee income receivables 19 1,198,196 - 1,198,196 Other receivables 20 664,265 - 664,265 Total financial assets 5,112,797 - 5,112,797

Borrowings 26 - 787,500 787,500 Other liabilities 29 - 2,041,178 2,041,178 Total financial liabilities - 2,828,678 2,828,678

In presenting information on the basis of geography, revenue is based on the geographical location of customers and assets are based on the geographicallocation of the assets.

Motorways Asset Limited the special purpose vehicle incorporated by the Bank for the Lagos-Ibadan expressway project was the major customer of theBank in respect of project financing and advisory services. Project financing and advisory income earned during the year from this customer was N1.25 billion (2014: N150 million). Other income recognised during the year mostly relates to N556 million earned as gain on renegotiation of the terms of the overdraft facility with UnityBank Plc, gain amounting to N285 million on loss of control and rental income of N37 million on the Bank's owner occupied property.

The table below sets out the Group’s classification of each class of its financial assets and liabilities:

The Bank is a retail development finance institution dedicated to providing finance and banking services to foster the rapid development of urbaninfrastructure throughout Nigeria.

The Bank’s products and services are similar and are structured and distributed in a fairly uniform manner across borrowers. Based on the evaluation ofthe Bank’s operations, management has determined that The Infrastructure Bank Plc has only one reportable segment since the Bank does not manage itsoperations by allocating resources based on a determination of the contribution to net income from product, service or operation.

The Bank derives its revenue mainly from project finance advisory and arranging; fund management, treasury management, lending and provision oftechnical assistance.


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In thousands of Naira Note Loans and receivables Other financial liabilities Total carrying amount

31 December 2014Cash and cash equivalents 17 8,913,471 - 8,913,471 Loans and advances 18 460,767 - 460,767 Fee income receivables 19 3,331,844 - 3,331,844 Other receivables 20 489,430 - 489,430

13,195,512 - 13,195,512

Borrowings 26 - 10,296,602 10,296,602 Other liabilities 29 - 1,960,775 1,960,775

- 12,257,377 12,257,377

BankIn thousands of Naira Note Loans and receivables Other financial liabilities Total carrying amount

31 December 2015Cash and cash equivalents 17 1,010,576 - 1,010,576 Loans and advances 18 2,087,635 - 2,087,635 Fee income receivables 19 1,697,102 - 1,697,102 Other receivables 20 728,805 - 728,805

5,524,118 - 5,524,118

Borrowings 26 - 787,500 787,500 Other liabilities 29 - 1,974,760 1,974,760

- 2,762,260 2,762,260

In thousands of Naira Note Loans and receivables Other financial liabilities Total carrying amount

31 December 2014Cash and cash equivalents 17 63,181 - 63,181 Loans and advances 18 626,930 - 626,930 Fee income receivables 19 3,664,344 - 3,664,344 Other receivables 20 489,430 - 489,430

4,843,885 - 4,843,885

Borrowings 26 - 1,996,602 1,996,602 Other liabilities 29 - 1,407,659 1,407,659

- 3,404,261 3,404,261


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10 Net interest income/(expense) Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

10(a) Interest incomeCash and cash equivalents 155,206 161,842 149,888 161,842 Loan and advances to customers 262,538 115,092 274,366 144,267

Total interest income 417,744 276,934 424,254 306,109

10(b) Interest expenseBorrowings (81,212) (408,511) (81,212) (408,511)

Total interest expense (81,212) (408,511) (81,212) (408,511)

Net interest income/(expense) 336,532 (131,577) 343,042 (102,402)

10(c)

10(d)

11 Net fees and commission income Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

11(a) Fees and commission incomeProject advisory fees (See note (c)(i) below) 1,782,537 1,655,792 2,082,537 1,929,698 PMTF processing fees (See note (c)(ii) below) 170,013 152,775 170,013 152,775 Monitoring fee 14,702 15,089 14,702 15,089 Commission on letters of credit - 16,595 - 16,595 Other income from PMTF 1,119 30,000 1,119 30,000

Total fees and commission income 1,968,371 1,870,251 2,268,371 2,144,157

11(b) Fees and commission expensesProject advisory expenses (39,879) (39,170) (39,879) (39,170)

Total fees and commission expenses (39,879) (39,170) (39,879) (39,170)

Net fees and commission income 1,928,492 1,831,081 2,228,492 2,104,987

11(c) Details of fees and commission expenses(i)

(ii)

(iii)

12 Other income Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Rental income 37,222 10,701 37,222 10,701 Other income 588 6,604 588 6,604 Gain on loss of control (see note 22(a)(iv)) 285,405 - 259,490 - Gain on renegotiation of overdraft (see note 26(c)) 556,712 - 556,712 -

Total other income 879,927 17,305 854,012 17,305

The net fee and commission income above excludes amounts included in determining the effective interest rate on financial assets and financial liabilities thatare not at fair value through profit or loss.

Included in the project advisory fees is N1.25 billion (2014: N1.46 billion) earned by the Bank on the Public Private Partnership Rehabilitation, Reconstructionand Expansion of the Lagos - Ibadan Dual Carriageway. During the year, the Bank was mandated to act as transaction advisor to Motorways Asset Limited onthe Lagos-Ibadan Dual Carriageway project after its voluntary disengagement as transaction advisor to the Federal Government of Nigeria.

Project processing fees represents fees earned by the Bank in its capacity as fund managers to the Public Mass Transit Revolving Fund (PMTF). The feesearned by the Bank are in line with the terms of the agreement between the Bank and the Federal Government of Nigeria.

Included in interest income for the year ended 31 December 2015 is a total of N86.3 million (2014: N72.1 million) relating to impaired loans and advances tocustomers.

Total interest income and expenses calculated using the effective interest rate method that relates to financial assets and financial liabilities not carried at fairvalue through profit or loss are N312.9 million (2014: N276.9 million) for the group and N319.4 million (2014: N306.1 million) in respect of the Bank.


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13 Expenses Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

13(a) Personnel expensesSalaries and allowances 465,680 398,943 465,680 398,943 Pension contributions 20,140 14,916 20,140 14,916 Performance bonus (see note 28 (c)(ii)) 190,656 - 190,656 -

676,476 413,859 676,476 413,859

13(b) Employee information:

2015 2014Number Number

500,001 - 800,000 1 1800,001 - 1,000,000 2 21,000,001 - 2,000,000 9 82,000,001 - 3,000,000 4 43,000,001 - 4,000,000 1 24,000,001 - 5,000,000 0 05,000,001 - 6,000,000 3 36,000,001 - 7,000,000 1 17,000,001 - 8,000,000 3 38,000,001 - 9,000,000 3 39000001 - 10,000,000 0 010000001 - 12,000,000 3 112000001 - 18,000,000 7 8Above 18,000,001 5 4

42 40

The average number of persons in employment at the Group and Bank level during the year comprise:Bank Bank2015 2014

Number NumberManagement staff 7 7 Senior staff 27 25 Other staff (Junior staff) 8 8

42 40

13(c) Other operating expenses Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Maintenance expenses 21,848 18,885 21,848 18,828 Training and recruitment 32,407 12,325 31,757 12,325 Office running expenses 68,579 79,204 60,079 79,204 Travel and accommodation 76,326 55,623 75,383 55,623 Marketing expenses 12,581 16,804 12,581 16,804 Motor vehicle running cost 4,402 6,479 4,402 6,479 Welfare and hospitality 6,171 2,342 6,171 2,342 Directors fees and allowances 65,605 64,599 65,605 64,599 Professional fees (see note (i) below) 52,639 46,454 48,890 46,454 Audit fees 14,323 14,580 13,280 13,280 Insurance premium 17,125 14,521 17,125 14,521 Donations 1,200 1,600 1,200 1,600 Bank charges 1,876 2,641 1,783 2,627 Statutory charges and penalty (see note (ii) below) 40,778 48,555 31,725 48,555 Club membership 4,206 - 4,206 -

436,961 384,612 396,035 383,241

The number of employees of the Group, other than directors in receipt of emoluments including allowances within the following ranges were:


31 December 2015

44


(i)

(ii)

14 Impairment on financial assets Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Specific impairment charge on loans and advances to customers 18(b) 236,887 187,617 236,887 187,617 Collective impairment charge on loans and advances to customers 18(c) 82,955 583 82,955 583 Impairment charge on fee income receivables 19(b) 574,534 - 769,534 -

894,376 188,200 1,089,377 188,200

15 Taxation Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

15(a) Tax expenseCurrent tax expense:Education tax 21,607 21,503 21,607 21,503 NITDA levy 11,704 9,637 11,704 9,637 Under provision in prior year (see note (i) below) 3,889 - 3,889 -

37,200 31,140 37,200 31,140

Deferred tax expense:(Origination)/reversal of temporary differences (17,895) 308,478 (17,895) 308,478

Income tax expenses 19,305 339,618 19,305 339,618

Minimum tax 27,113 19,776 27,113 19,776

Total tax expense 46,418 359,394 46,418 359,394

(i)

(ii)

Reconciliation of effective tax rate Groupin thousands of Naira Tax rate Amount Tax rate AmountProfit before tax 1,055,470 668,739 Adjustment for NITDA levy (11,704) (9,637) Profit after adjustment for NITDA levy 1,043,766 659,102

30% 313,130 30% 197,731 Non-deductible expenses 4% 46,889 17% 110,747 Tax exempt income -8% (84,819) 0% - Recognition of previously unutilised tax losses -28% (293,095) 0% - Underprovision in prior year 0% 3,889 0% - Minimum tax 3% 27,113 3% 19,776 NITDA levy 1% 11,704 1% 9,637 Education tax 2% 21,607 3% 21,503

4% 46,418 55% 359,394

Under provision in prior year arose from 2013-2014 financial years tax audit carried out by Federal Inland Revenue Service during the year, which rose to anadditional education tax liability of N1.1 million and an additional NITDA Levy of N2.8 million.

The Bank was assessed based on the minimum tax legislation because it had no taxable profit. Hence, the Bank consequently applied the provisions of theCompanies Income Tax Act that mandated a minimum tax assessment, where a tax payer does not have any tax liability arising from its tax assessment.

20142015

Income tax using the domestic corporation tax rate

Included in professional fees is N16.55million being fees earned by KPMG for non audit services rendered to the Bank during the year. The non audit servicesto review the employee incentive scheme framework and tax services to review and file the Bank's company income tax for 2015 tax year respectively. The feespaid by the Bank for these services are N14.9 million and N1.65 million for the advisory and tax services respectively (2014: Nil).

Statutory charges and penalty comprise additional assessments and penalties by the Federal Inland Revenue Services (FIRS) in respect of withholding taxes andvalue added tax. The FIRS conducted tax audit for the 2014 and 2015 tax years and the additional assessments have been recognised in the Bank's books.


31 December 2015

45


Reconciliation of effective tax rate Bank in thousands of Naira Tax rate Amount Tax rate AmountProfit before tax 1,182,078 973,246 Adjustment for NITDA levy (11,704) (9,637)Profit after adjustment for NITDA levy 1,170,374 963,609

Income tax using the domestic corporation tax rate 30% 351,112 30% 289,083 Non-deductible expenses 1% 8,907 2% 19,395 Tax exempt income -7% (84,819) 0% - Recognition of previously unutilised tax losses -25% (293,095) 0% - Underprovision in Prior year 0% 3,889 0% - Minimum tax 2% 27,113 2% 19,776 NITDA levy 1% 11,704 1% 9,637 Education tax 2% 21,607 2% 21,503

4% 46,418 37% 359,394

15(b) Deferred tax assets and liabilitiesGroupThe net deferred tax assets/(liabilities) are attributable to the following:

In thousands of Naira Assets Liabilities Net Assets Liabilities Net

Revaluation of land - (431,158) (431,158) - (408,870) (408,870) Property and equipment 117,579 - 117,579 99,110 - 99,110 Allowances for loan losses 25,424 - 25,424 537 - 537 Unrelieved losses 15,386 - 15,386 46,394 - 46,394

158,389 (431,158) (272,769) 146,041 (408,870) (262,829)

BankThe net deferred tax assets/(liabilities) are attributable to the following:

In thousands of Naira Assets Liabilities Net Assets Liabilities Net

Revaluation of land - (431,158) (431,158) - (408,870) (408,870) Property and equipment, and software 117,579 - 117,579 99,110 - 99,110 Allowances for loan losses 25,424 - 25,424 537 - 537 Unrelieved losses 15,386 - 15,386 46,394 - 46,394

158,389 (431,158) (272,769) 146,041 (408,870) (262,829)

2015

2015 2014

2014

2015 2014


31 December 2015

46


Movement on the net deferred tax assets/(liabilities) during the year:

(i) Deferred tax assetGroup Group Bank Bank


Balance, beginning of year 146,041 454,519 146,041 454,519 Origination/(reversal) of temporary difference recognised in profit/Loss 12,348 (308,478) 12,348 (308,478)

Balance, end of year 158,389 146,041 158,389 146,041

(ii) Deferred tax liabilitiesGroup Group Bank Bank


Balance, beginning of year (408,870) (279,395) (408,870) (279,395)

(27,835) (129,475) (27,835) (129,475) Reversal of temporary differences recognised in profit/loss 5,547 - 5,547 -

Balance, end of year (431,158) (408,870) (431,158) (408,870)

Net deferred tax liabilities (272,769) (262,829) (272,769) (262,829)

15(c) Taxation payable Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Balance, beginning of year 42,400 61,905 42,400 61,905 Charge for the year 60,424 50,916 60,424 50,916 Under provision in prior year 3,889 - 3,889 - Pre-2008 tax transferred to other liability (see note 15(c)(i) below) - (20,850) - (20,850) Payments during the year (49,755) (49,571) (49,755) (49,571)


(i)

16 Basic and diluted earnings per share

Group Group Bank Bank2015 2014 2015 2014

In thousands of NairaProfit attributable to ordinary shareholders 1,009,052 309,345 1,135,660 613,852

In thousands of unitWeighted average number of ordinary shares (basic and diluted) 3,103,000 2,918,769 3,103,000 2,918,769

33k 11k 37k 21kEarnings per share (basic and diluted)- Kobo

Origination of temporary differences recognised in other comprehensive income during the year

The calculation of basic earnings per share at 31 December 2015 was based on the profit attributable to ordinary shareholders of N873.5 million (2014: N309.3million) for the group and profit attributable to ordinary shareholders of N1.04 billion (2014: N613.9 million) for the Bank and an average number of ordinaryshares outstanding of 3,103,000,000 (2014: 2,918,769,000).

Pre-2008 tax transferred to other liability relates to pre-2008 company income tax per the back duty tax assessment conducted by FIRS. This was transferred toother liabilities based on the loan novation agreement made between the Federal Government represented by the Ministry of Finance Incorporated (MoFI), theInfrastructure Bank and ICHL. Based on the said agreement, the Federal Government agreed and covenanted to exempt and fully indemnify ICHL, the parent ofthe Bank, for all losses as a result of failure of the Bank on or prior to May 2007, to pay and or remit any and all taxes accrued and payable to the Nigerian TaxAuthority.


31 December 2015

47


17 Cash and cash equivalents Note Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Cash balances excluding overdraftBalances with banks 1,162,701 8,864,059 1,010,576 13,769

1,162,701 8,864,059 1,010,576 13,769 Money market placementsFixed deposits - 49,412 - 49,412

- 49,412 - 49,412

Cash and cash equivalents 1,162,701 8,913,471 1,010,576 63,181

18 Loan and advances to customers Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Loan and advances (see (a) below) 2,592,779 645,841 2,592,779 812,004 Staff loan and advances 4,104 4,333 4,104 4,333 Gross amount 2,596,884 650,174 2,596,884 816,337 Specific allowances for impairment (see (b) below) (424,504) (187,617) (424,504) (187,617)Collective allowances for impairment (see (c) below) (84,745) (1,790) (84,745) (1,790)

2,087,635 460,767 2,087,635 626,930

Current 250,605 460,767 250,605 626,930 Non current 1,837,030 - 1,837,030 - Carrying amount 2,087,635 460,767 2,087,635 626,930

(a)

(b) Specific allowances for impairment Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Balance, beginning of year 187,617 64,056 187,617 64,056 Charge during the year 14 236,887 187,617 236,887 187,617 Write-off during the year - (64,056) - (64,056)


(c) Collective allowances for impairment Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Balance, beginning of year 1,790 1,207 1,790 1,207 Charge during the year 14 82,955 583 82,955 583


19 Fee income receivables Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Fee income receivables (See note (a) below) 1,827,730 3,386,844 2,521,636 3,719,344 Gross amount 1,827,730 3,386,844 2,521,636 3,719,344 Allowance for doubtful income receivables 19(b) (629,534) (55,000) (824,534) (55,000)

Net carrying amount 1,198,196 3,331,844 1,697,102 3,664,344

Current 1,198,196 3,331,844 1,697,102 3,664,344 Non current - - - - Carrying amount 1,198,196 3,331,844 1,697,102 3,664,344

(a)

Included in loans and advances to customers is a facility of N1.705 billion availed to Motorways Asset Limited (MAL), an associate of the Bank, during the year. The facility is arevolving advance facility to finance the working capital needs, project development activities and payment for certified works by contractors on the rehabilitation, reconstruction andexpansion of the Lagos-Ibadan dual carriageway. The total loan commitment was N4 billion, however as at 31 December 2015, a total of N1.7 billion had been disbursed and theloan had an outstanding balance of N1.8 billion as at 31 December 2015 (2014: Nil). This facility has a tenor of 24 months commencing 29 April 2015 and is secured with a lien onthe current account balance of MAL, future proceeds of cash calls from shareholders of MAL and proceeds from sale of issued but un-allotted 15% of MAL at an interest rate of 13%per annum.

Included in account receivables is N1.253 billion due from Motorways Asset Limited ("MAL") in respect of transaction advisory services rendered by the Bank to MAL on theRehabilitation, Reconstruction and Expansion of the Lagos Ibadan Dual Carriage way project. During the year, the Bank was mandated to act as advisor to Motorways Asset Limitedfor the N167 billion Public Private Partnership.


31 December 2015

48


(b) Allowances for doubtful fee income receivables Note Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Balance, beginning of year 55,000 55,000 55,000 55,000 Charge during the year 14 574,534 - 769,534 -


20(a) Other assets Note Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Other assets:Prepayment 11,972 8,910 11,972 8,910 Withholding tax recoverable 29 - 29 - VAT receivable 2,700 4,905 2,700 4,905

14,701 13,815 14,701 13,815 Other receivables:Mandatory deposit with CBN (See note (i) below) 170 170 170 170 Due from Marina Express Consortium 458,632 458,632 458,632 458,632

- - 184,401 - Infrastructure tower project (See note (iii) below) 664,095 479,193 544,234 479,193 Other receivables - 5,162 - 5,162

1,122,897 943,157 1,187,437 943,157

Gross carrying amount 1,137,598 956,972 1,202,138 956,972

Allowances for doubtful other receivables 20(b) (458,632) (458,632) (458,632) (458,632)Net carrying amount 678,966 498,340 743,506 498,340

Current 14,701 18,977 14,701 18,977 Non current 664,265 479,363 728,805 479,363 Carrying amount 678,966 498,340 743,506 498,340

(i)

(ii)

(iii)

20(b) Allowances for doubtful other receivables Note Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Balance, beginning of year 458,632 562,369 458,632 562,369 Write-off during the year - (103,737) - (103,737)


20(c) Analysis of the carrying amount of other assets (net of impairment allowance) based on their nature is shown below:

In thousands of Naira Note Group Group Bank Bank2015 2014 2015 2014

Financial assets:- Mandatory deposit with CBN 170 170 170 170 Non financial assets:- Prepayment and other asset balances 678,796 498,170 743,336 498,170 Net carrying amount 678,966 498,340 743,506 498,340

Deposit for Investment relates to a convertible loan to METSL. The Bank took the decision to convert this facility to equity ordinary shares, the approval for the outstanding loan tobe converted to equity ordinary shares within the strike price dependent on the entry price of the new investors into METSL was granted via a resolution at its 37th Board meetingheld on 10 December 2015. The loan was therefore reclassified to other assets as the Bank did not have a loan as at 31 December 2015.

Deposit for Investment (See note (ii) below)

Mandatory deposit with Central Bank of Nigeria relates to restricted deposit with the Bank's regulator, which is not available for use in the Group's day to day operations.

Infrastructure Tower Project of N544 million (2014: 479 million) represents amount incurred in the implementation of detailed engineering designs and construction plans for theproposed development of the Infrastructure Tower Project as at 31 December 2015. See note 22(a)(ii) for details of the project.On 22 November, 2013, the Bank signed a design and construction agreement with China Railway No3 Engineering Nigeria Limited to develop a twenty-seven storey state-of-the-artmulti-purpose head office tower on the Bank's site located at Plot 977, Central Business District, Adjacent National Mosque, Abuja. The cost of the project is estimated at US $300million only and the Bank is committed to make equity down payment which shall be equivalent to 15% of the construction costs or up to US $45million (approximately N11.62billion) into the Special Purpose Vehicle (SPV).

The Bank obtained approval on 23 April 2015 from the Federal Capital Development Authority for the use of the Bank's land at Plot 977 Cad. zone (Apo) Central Business Districtas "Mixed Use Development" The Bank further obtained the building plan approval from the Abuja Metropolitan Management Council on 01 February 2016 for the development of a block comprising twenty two(22) floors and four basement levels comprising of offices and seventy six residential units. The Bank has commenced the process of collaboration with ERIS Property Group, a real estate development Company based in South Africa on the Infrastructure Towers Project.


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49


21 Pledged assetsThe nature and carrying amounts of the non tradable financial assets pledged as collaterals are as follows:

Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Fixed deposit - 253,000 - 253,000 - 253,000 - 253,000

22 Investment in subsidiaries Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Investment in Marina Express Train Services Limited (See note (a)(i) below) - - 79,239 79,239 Investment in Infrastructure Heights Limited (See note (a)(ii) below) - - 999 999 Investment in TIB Asset Management Limited (See note (a)(iii) below) - - 150,000 - Investment in Motorways Asset Limited (See note (a)(iv) below) - - - 510

- - 230,238 80,748

All investments in subsidiaries are non-current.(a) Details of investment in subsidiaries(i) Investment in Marina Express Train Services Limited (METSL)

(ii) Investment in Infrastructure Heights Limited

The pledged assets represents financial assets that were pledged by the Bank to secure financing from Access Bank PLC in prior year. The borrowing was repaid during the year andthe lien on the Bank's Fixed Deposit was removed.

•Prepare, present and agree with LAMATA an acceptable and functional conceptual/preliminary design for the Redline project between Agbado and Marina;•Identify and agree with LAMATA all obligations of the Lagos State Government with respect to the Planning, Implementation and delivery of the Red line project;

The authorised share capital of the company is 8,000,000 ordinary shares of N1.00 each out of which 3,000,000 ordinary shares of N1.00 each had been issued and fully paid up bythe Bank.The Bank's investment of N79.2 million (2014: N79.2 million) in Marina Express Consortium, therefore, represents the cost of investment in the ordinary shares of the company.The ordinary shares are yet to be allotted to other members of the consortium, thus Marina Express Train Service Limited presently remains a wholly owned subsidiary of TheInfrastructure Bank Plc as at 31 December, 2015.

Infrastructure Heights Limited is a Special Purpose Vehicle incorporated by the Bank on 12 November, 2014 to develop a twenty-seven storey state-of-the-art multi-purpose headoffice tower on the Bank's site located at Plot 977, Central Business District, Adjacent National Mosque, Abuja. The authorised share capital of the company is 1,000,000 ordinaryshares of N1.00 each of which 999,001 have been allotted to The Infrastructure Bank Plc.

The Bank has an exposure of N544 million (2014: 479 million) being amount incurred in the implementation of detailed engineering designs and construction plans for the proposeddevelopment of the Infrastructure Tower Project as at 31 December 2015. The Bank has committed to make equity down payment which shall be equivalent to 15% of the cost of theproject which is USD 45 million. Also, the Bank intends to limit its exposure to USD 10million and intends to invite other investors to contribute the balance USD 35 million.However, as at 31 December, 2015, Infrastructure Heights Limited remains a wholly owned subsidiary of The Infrastructure Bank Plc.

During the year, the Right of Way agreement between the Federal Ministry of transport and the Lagos State Government of Nigeria was signed on 22 May 2015. The grant of theRight of Way is to enable Lagos State Government progress with its contractual negotiations with METSL for the Public Private Partnership ("PPP") infrastructure project. Withrespect to this transaction, the Bank provided transaction advisory service to METSL and earned a facilitation fee of N300 million for facilitating the grant of the Right of Way.In addition to this major achievement, the preferred bidder status conferred on the consortium now Marina Express Train Services Limited has been extended for 30 months startingfrom the 17 November 2014 to enable METSL adhere to the following:

Marina Express Train Services Limited was incorporated in Nigeria as a private limited liability company on 26 January 2011. The Company emerged from a consortium agreementformed in 2009 by the Bank in conjunction with Mainstreet Bank (now Skye Bank), Unity Bank Plc and a construction company to bid for the Light Metro Rail Transit (LMRT) RedLine Concession in Lagos State. The preferred bidder status was conferred on the consortium in November 2011 and Marina Express Train Services Limited was incorporated tocarry out the project.

During the year, the company obtained the approval of the Federal Capital Development Authority the land use plan and site development plan as "Mixed Use Development" and thiswas confirmed by the office of the Director, Urban and Regional Planning, Federal Capital Development Authority (FCDA) Abuja. In addition, the Bank entered into a collaborationwith ERIS Property Development ("ERIS"), a real estate development company based in South Africa on the infrastructure tower project.

•Prepare, present and agree a financial prepared for the integrated Build-Operate-Transfer (BOT) Structure;•Conclude negotiations of terms and conditions of the Concession Agreement (CA) with the State and •Prepare, present and agree the Redline Project delivery programme.


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50


(iii) Investment in TIB Asset Management (TIB AML)

(iv) Investment in Motorways Asset Limited (MAL)

(1) Movement in percentage interest in MAL arising from loss of control :In thousands of units 2015 2014

Authorised share capital in MAL 1,000,000 1,000 Total issued shares 475,000 510 Total allotment to The Infrastructure Bank 100,000 510 Percentage interest 21% 100%

(2) Movement in investment in MAL:Group Group Bank Bank


Balance, beginning of year - - 510 - Additional allotment from MAL - - 259,490 510 Reclassification to investment in associate as a result of loss of control (see note (23) b l )

- - (260,000) -

Balance, end of year - - - 510

(3) Determination of gain or loss of controlIn thousands of Naira Group Bank

2015 2015

Carrying amount of Investment in MAL as at 4 June 2015 (25,405) 510 Consideration received (260,000) (260,000)Gain on loss of control (285,405) (259,490)

Furthermore, the Group have accounted for its 21% interest using equity method in line with IAS 28 Investment in associate . See note 23 for details of equity accounting of theBank's interest in MAL.

Subsequent to year end, FBN Trustees Limited was appointed as Trustees to the Fund. The Trustee will be the legal owner of the Fund and keep custody of the Funds assets onbehalf of the Funds investors. Also, efforts are ongoing by The Bank and its partners Sigrun and Gemfonds to secure the participation of local and international investors to invest inthe Fund. In addition, TIB AML has initiated discussions with the Nigerian Sovereign Investment Authority (NSIA) to discuss the possibility of receiving an anchor investment intothe Fund.

On December 5, 2014, The Infrastructure Bank Plc formed and alliance with Gemfonds and Sigrun to set up a joint infrastructure fund to be named The Nigeria Infrastructure Fund 1(the "Fund") to be managed by TIB Asset Management Limited. The Fund is set up to invest in and lend to, primarily, in Public Private Partnership green field infrastructureopportunities in Nigeria.

Motorways Asset Limited is a Special Purpose Vehicle incorporated by the Bank on 10 September, 2013 to carry on the Rehabilitation, Reconstruction and Expansion of the Lagos-Ibadan Dual Carriageway ("the Project"). The authorised share capital of the Company was 1,000,000 ordinary shares of N1.00 each as at 31 December 2014 of which total issueordinary shares of 510,000 shares was allotted to the Bank. Hence this company was reported as a subsidiary as at 31 December 2014.

During the year, the authorised share capital of MAL increased from 1,000,000 ordinary share capital at N1 each to 1,000,000,000 ordinary share capital at N1 each and shares wereissued to new subscribers who were desirous to participate in the successful implementation of the Project. Consequently, additional shares of 99,490,000 units of shares was allottedto TIB bringing the total units allotted to TIB to 100,000,000 out of the total allotment of 475,000,000. Thus, the 100,000,000 units of shares earned the Bank allows the Bank only21% interest in MAL thereby reducing the Bank's voting rights from control status in prior year to significant influence as at 31 December 2015. The share issue to the other investors was executed via share subscription agreements signed between the investors, Motorways Asset Management Limited and The InfrastructureBank. The participating investors also contributed sweat equity amounting to N260 million. This represents 20% of the total consideration paid by the investors to Motorways AssetLimited. The total sweat equity amount of N260 million was used to purchase 100,000,000 units of ordinary shares in Motorways Asset Limited as at 31 December, 2015.

Thus, effective 4 June 2015, TIB lost control in MAL as its shareholding reduced from 99.9% in 2014 to 21.06%. This implies that the control that existed as at 31 December 2014had been lost. Thus, the assets and liabilities of MAL have been deconsolidated from the consolidated financial statements of the Bank. The amount recognised in profit or loss asgain on loss of control is the fair value of the consideration received from the investors. This amount is included in other income. See note 12.

TIB Asset Management Limited is an entity incorporated by the Bank in May 2013 to act as a fund/portfolio manager. The authorised share capital of the company is 500 million outof which 125 million ordinary shares of N1 each were allotted to the Bank as at 31 December 2014. During the year, additional 25 million ordinary shares of ₦1 each were allotted tothe Bank and was fully paid up by TIB during the year. As at 31 December 2015, TIB AML remains a wholly owned subsidiary of the Bank. We have therefore consolidated thetransactions of this company in the consolidated financial statements of the Bank as at 31 December 2015.

During the year, the company obtained approval from the Securities and Exchange Commission to function as a fund/portfolio manager in the capital market with effect from 27 July2015. Following the issuance of the fund manager license, the fund documents mainly comprising the Trust Deed and Private Placement Memorandum (PPM) are in the process ofbeing finalised.

The details of the loss of control have been accounted as follows:


31 December 2015

51


(4) The financial information of MAL on 4 June 2015 (the date of loss of control) were as follows;In thousands of NairaAssetsCash and cash equivalent 1,775,062 Deferred infrastructure 23,436,818 Other assets 510 Total assets 25,212,390

LiabilitiesBorrowings 22,291,179 Deposits for shares 1,409,490 Other liabilities 1,537,126 Total liabilities 25,237,795

EquityShare capital 510 Accumulated losses (25,915)Total equity (25,405)

(5) The cashflow effect of loss of control on 4 June 2015 were as follows;In thousands of Naira

Net cash flows from operating activities 1,349,041 Net cash flows used in investing activities (23,424,704)Net cash flows from financing activities 15,010,668 Net decrease in cash and cash equivalent (7,064,995)Cash and cash equivalent, beginning of the year 8,840,057 See note (4) above 1,775,062

(6) The cashflow effect of loss of control as at 31 December 2015 were as follows;In thousands of Naira

Consideration received, settled in cash - Cash and cash equivalent in subsidiary disposed 8,840,057 Cash outflow on acquisition (for cashflow purposes) (8,840,057)

(b)

(i)

Condensed statement of comprehensive income for the year ended 31 December 2015In thousands of Naira Group balances Elimination

entriesMotorways Assset

LimitedThe Infrastructure

Bank PlcMarina Express

Train Service Limited

Infrastructure Heights Limited

TIB Asset Management

Limited

Operating income 3,144,951 (285,913) - 3,425,546 - - 5,318 Operating expenses (1,195,072) - (25,665) (1,154,091) (505) (400) (14,411) Share of loss of equity accounted investees (net of income tax) (33) - - - - - - Net impairment on financial assets (894,376) 195,000 - (1,089,376) - - - Profit before tax 1,055,470 (90,913) (25,665) 1,182,079 (505) (400) (9,093) Taxation (46,418) - - (46,418) - - - Profit for the year 1,009,052 (90,913) (25,665) 1,135,661 (505) (400) (9,093)

The condensed financial data of the consolidated entities as at 31 December 2015, are as follows:

Condensed results of consolidated entities

MAL has commenced work on the development of the Lagos Ibadan expressway based on the executed agreements with the FGN and construction contractors. The total costsincurred on the infrastructure project have been capitalised in the books of MAL as at 31 December 2015. The Federal Government of Nigeria (FGN) on the back of TIB's financearranging mandate, made direct payments of ₦25 billion to the two contractors handling the project in 2014. In line with the terms of the agreements executed between MAL andFGN, the payments to the contractors by the FGN represents part of the FGN Contribution to the project and these shall be recognised fully in the financial statements of MAL when:

•An agreement is reached between MAL and FGN on the valuation of work done based on these direct payments to the contractors and;•After the mechanism for the recognition of FGN shares within the capital structure of MAL is agreed by the parties.

In 2014, MAL executed a Finance, Operate an Maintain Agreement (FOMA) with the Federal Government of Nigeria, represented by the Federal Ministry of Works (FGN). Theagreement grants the project right by the FGN to MAL for a period of 40 years. MAL shalkl have the right to take possession of the relevant expressway section, free of allencumbrances and enjoy the benefits of the project rights to the exclusion of any other persons. The FGN's financial contribution to the Lagos Ibadan expressway project to beexecuted by MAL shall be ₦50 billion while MAL's financial contribution to the project shall be ₦117 billion which shall be raised through the contribution of debt and equity.The FOMA grants MAL the rights to various sources of revenue from the project, including but without limitations:•Revenue from toll pursuant to clause 9 (Tolling) of the agreement;•Revenue from developments undertaken pursuant to clause 5.7 (developments);•Revenue from grant of advertising rights along the expressway and the developments;•Revenue from all forms of commercial activities along the expressway;•Revenue from commercialisation of utilities along the expressway; and•Any other revenue as identified by the grantee with the consent of the grantor.


31 December 2015

52


Condensed statement of financial position as at 31 December 2015In thousands of Naira Group balances Elimination entries The Infrastructure





Limited

Cash and cash equivalents 1,162,701 - 1,010,576 1,612 - 150,513 Loans and receivables 2,087,635 - 2,087,635 - - - Fee income receivables 1,198,196 (498,906) 1,697,102 - - - Other assets 678,965 (916,847) 743,506 167,779 684,017 510 Pledged assets - - - - - - Investment in subsidiary - (230,238) 230,238 - - - Investment in associate 259,967 (33) 260,000 - - - Property and equipment 2,069,450 - 2,069,432 18 - - Intangible assets 451 (23,748,646) 451 311,828 - 23,436,818 Deferred tax asset 158,389 - 158,389 - - -

Total assets 7,615,755 (25,394,670) 8,257,329 481,237 684,017 23,587,841

Financed by:Borrowings (787,500) 22,291,179 (787,500) - - (22,291,179) Accruals (72,884) - (71,004) (1,120) (510) (250) Employee benefits obligations (252,142) - (252,142) - - - Current tax liabilities (56,958) - (56,958) - - - Other liabilities (2,186,836) 1,307,162 (2,120,417) (681,067) (683,158) (9,356) Deferred tax liabilities (431,158) - (431,158) - - -

Total liabilities (3,787,477) 23,598,341 (3,719,179) (682,187) (683,668) (22,300,785)

Condensed statement of cashflows as at 31 December 2015In thousands of Naira Group balances Elimination entries The Infrastructure





Limited

Net Cash flows from operating activities 1,788,569 - 1,796,676 (8,621) - 513 Net Cash flows from investing activities (8,886,949) (8,690,057) (196,892) - - - Net Cash flows from financing activities (652,390) (150,000) (652,390) - - 150,000 Increase/(decrease in cash and cash equivalents) (7,750,770) (8,840,056) 947,394 (8,621) - 150,513 Cash and Cash equivalents, beginning of year 8,913,471 8,840,057 63,181 10,233 - - Cash and Cash equivalents, end of year 1,162,701 - 1,010,576 1,612 - 150513


31 December 2015

53


(ii)

Condensed Statement of Comprehensive income for the year ended 31 December 2014In thousands of Naira Group balances Elimination entries The Infrastructure




Motorways Asset Limited

Operating income 1,716,809 (303,081.00) 2,019,890 - - - Operating expenses (859,870) - (858,444) (926) (250) (250) Net impairment on financial assets (188,200) - (188,200) - - - Profit before tax 668,739 (303,081) 973,246 (926) (250) (250) Taxation (359,394) - (359,394) - - - Profit for the year 309,345 (303,081) 613,852 (926) (250) (250)

Condensed Statement of financial position as at 31 December 2014

In thousands of Naira Group balances Elimination entries The Infrastructure Bank Plc

Marina Express Train Service

Limited



Cash and cash equivalents 8,913,471 - 63,181 10,233 - 8,840,057 Loans and receivables 460,767 (166,163) 626,930 - - - Income receivables 3,331,844 (332,500) 3,664,344 - - - Other assets 498,340 (933,343) 498,340 151,396 619,167 162,780 Pledged assets 253,000 253,000 - - - Investment in subsidiary - (80,748) 80,748 - - - Property and equipment 2,011,081 - 2,011,007 74 - - Intangible assets 782 (1,803,208) 782 1,803,208 - - Deferred tax asset 146,041 - 146,041 - - - Total assets 15,615,326 (3,315,962) 7,344,373 1,964,911 619,167 9,002,837

Financed by:Borrowings (10,296,602) 166,163 (1,996,602) (166,163) - (8,300,000) Accruals (57,964) - (56,864) (600) (250.00) (250.00) Employee benefits obligations (28,132) - (28,132) - - - Current tax liabilities (42,400) - (42,400) - - - Other liabilities (2,027,079) 2,765,970 (1,473,963) (1,998,591) (618,168) (702,327) Deferred tax liabilities (408,870) (408,870) - - - Total liabilities (12,861,047) 2,932,133 (4,006,831) (2,165,354) (618,418) (9,002,577)

Condensed statement of cashflows as at 31 December 2014In thousands of Naira Group balances Elimination entries The Infrastructure





Net Cash flows from operating activities (557,892) - (1,093,993) (3,957) - 540,057 Net Cash flows from investing activities (411,283) - (411,283) - - - Net Cash flows from financing activities 9,501,484 - 1,201,485 - - 8,300,000 Increase/(decrease in cash and cash equivalents) 8,532,309 - (303,791) (3,957) - 8,840,057 Cash and Cash equivalents, beginning of year 381,162 - 366,972 14190 - - Cash and Cash equivalents, end of year 8,913,471 - 63,181 10232.8 - 8,840,057

23 Equity-accounted investee Group Group Bank BankIn thousands of Naira 2015 2015 2015 2015

Cost of interests in associates (see note 22 (a)(iv) above) 260,000 - 260,000 - Share of current year loss (net of tax) (33) - - - Dividends paid - - - - Carrying amount of investment in associates 259,967 - 260,000 -

The condensed financial data of the consolidated entities as at 31 December 2014, are as follows:

During the year, MAL was reclassified from investment in subsidiaries to investment in associate. The reclassification arose from the increase in the authorised share capital of MALfrom 1,000,000 ordinary share capital at N1 each to 1,000,000,000 ordinary share capital at N1 each and shares were issued to new subscribers who were desirous to participate inthe successful implementation of the Project. Consequently, additional shares of 99,490,000 units of shares were allotted to TIB to bring the total units allotted to TIB to 100,000,000out of the total allotment of 475,000,000. This led to dilution of the Bank's interest as the 100,000,000 units represents 21.06% interest in MAL. This implies that MAL which wasformerly a wholly owned subsidiary of the Bank as at 31 December 2014 became an associate company as at 31 December 2015 and have been accounted for using equity method.

During the year, the Bank executed a mandate to act as Transaction Advisor to Motorways Asset Limited, on the Lagos-Ibadan Expressway project for which the Bank earned N1.25billion. This was after the Bank disengaged as Transaction Advisor to the Federal Ministry of Works on the same project. Also, the Bank signed a loan agreement with MAL for arevolving advance facility to finance the working capital needs of MAL, project development activities and payment for certified works by contractors on the rehabilitation,reconstruction and expansion of the Lagos-Ibadan dual carriageway. The loan agreement had a committed amount of N4 billion, however, as at 31 December 2015, a total of N1.7billion had been advanced and the loan has an outstanding balance of N1.8 billion as at 31 December 2015. This facility has a tenor of 24 months commencing 29 April 2015 and issecured with a lien on the current account balance of MAL, future proceeds of cash calls from shareholders of MAL and proceeds from sale of issued but un-allotted 15% of MAL.


31 December 2015

54


In thousands of Naira 2015

Percentage ownership interest: 21.06%

Non-current assets 25,542,224 Current assets 68,916 Non-current liabilities (7,209,233) Current liabilities (17,017,980) Net assets 1,383,927

Revenue - Loss from continuing operations (157) Total comprehensive income (157)

Group's share of profit and total comprehensive incomeGroup's interest in net assets of investee, beginning of year - Cost of investment in equity accounted investee 260,000 Total comprehensive income attributable to the Group (33) Dividend received during the year - Group's interest in the net assets of investee, end of year - - - - 259,967

Summary financial information for the equity accounted investee, not adjusted for the percentage ownership held by the Group is as follows:

Investment in associates is currently carried at cost plus the share of the group percentage holding in net assets of the associate.


31 December 2015

55


24 Property and equipmentGroup In thousands of Naira Leasehold land Building Office equipment Computer hardware &

equipmentFurniture & fittings Motor vehicles Total

Cost:Balance at 1 January 2014 1,050,709 111,542 29,220 38,087 29,965 89,760 1,349,283 Additions 276,049 4,709 9,627 19,517 2,780 38,600 351,282 Revaluation gain 431,585 - - - - - 431,585 Reclassification from other assets 60,000 - - - - - 60,000 Balance as at 31 December 2014 1,818,343 116,251 38,847 57,604 32,745 128,360 2,192,150

Balance at 1 January 2015 1,818,343 116,251 38,847 57,604 32,745 128,360 2,192,150 Additions (See (b) below) - 2,232 1,780 17,388 2,623 22,869 46,892 Revaluation gain (See (b) below) 92,783 - - - - - 92,783 Balance as at 31 December 2015 1,911,126 118,483 40,627 74,992 35,368 151,229 2,331,825

Accumulated Depreciation:Balance at 1 January 2014 (31,456) (9,664) (16,701) (21,881) (11,293) (29,008) (120,003) Depreciation charge for the year (17,598) (2,255) (6,564) (9,406) (5,512) (19,732) (61,068) Balance as at 31 December 2014 (49,054) (11,919) (23,265) (31,287) (16,805) (48,740) (181,071)

Balance at 1 January 2015 (49,054) (11,919) (23,265) (31,287) (16,805) (48,740) (181,071) Depreciation charge for the year (21,606) (2,342) (7,986) (14,086) (5,649) (29,635) (81,304) Balance as at 31 December 2015 (70,660) (14,261) (31,251) (45,373) (22,454) (78,375) (262,375)

Carrying amounts

At 31 December 2014 1,769,289 104,332 15,582 26,317 15,940 79,620 2,011,080

At 31 December 2015 1,840,466 104,222 9,376 29,619 12,914 72,854 2,069,450


31 December 2015

56


BankIn thousands of Naira Leasehold land Building Office equipment Computer hardware &

equipmentFurniture & fittings Motor vehicles Total

Cost:Balance at 1 January 2014 1,050,709 111,542 29,220 37,922 29,965 89,760 1,349,118 Additions 276,049 4,709 9,627 19,517 2,780 38,600 351,282 Revaluation gain 431,585 - - - - - 431,585 Reclassification to other assets 60,000 - - - - - 60,000 Balance as at 31 December 2014 1,818,343 116,251 38,847 57,439 32,745 128,360 2,191,985

Balance at 1 January 2015 1,818,343 116,251 38,847 57,439 32,745 128,360 2,191,985 Additions (See (b) below) - 2,232 1,780 17,388 2,623 22,869 46,892 Revaluation gain (See (b) below) 92,783 - - - - - 92,783 Balance as at 31 December 2015 1,911,126 118,483 40,627 74,827 35,368 151,229 2,331,660

Accumulated Depreciation:Balance at 1 January 2014 (31,456) (9,664) (16,701) (21,844) (11,293) (29,009) (119,966) Depreciation charge for the year (17,598) (2,255) (6,564) (9,351) (5,512) (19,732) (61,012) Balance as at 31 December 2014 (49,054) (11,919) (23,265) (31,195) (16,805) (48,741) (180,978)

Balance at 1 January 2015 (49,054) (11,919) (23,265) (31,195) (16,805) (48,741) (180,978) Depreciation charge for the year (21,606) (2,342) (7,986) (14,031) (5,649) (29,635) (81,249) Balance as at 31 December 2015 (70,660) (14,261) (31,251) (45,226) (22,454) (78,376) (262,227)

Carrying amounts

At 31 December 2014 1,769,288 104,332 15,582 26,244 15,941 79,619 2,011,007

At 31 December 2015 1,840,466 104,222 9,376 29,601 12,914 72,853 2,069,432

(a) S/N

123

456789

10

(b)

(c) There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (2014: Nil)(d)

N925 million

N326 million N99,000

FRC/2016/NIESV/00000014891Market value basisIncome approachN26.4 million

Ogunyemi Oludare FRC/2012/0000000000254FRC/2014/NIESV/00000007371Market Value BasisIncome Approach

NilStella Y. Daku (ANIVS)FRC/2016/NIESV/00000014818

Revaluation Surplus

FRC Number of the valuer

Basis of ValuationMethod of Valuation

FRC/2013/000000000584FRC/2013/NIESV/00000001150Market Value BasisIncome Approach

Otunbade, Taoreed A

N1.01 billion

Name of Valuer

FRC number of the Independent Valuer Company

The Bank's leasehold land and building located at Plot 977, Central Business District, Abuja, FCT and property located at No. 52 Ahmadu Bello Way, Victoria Island, Lagos are pledged to Unity Bank Plc as collateral for securing borrowings.

There were no contractual commitments for the acquisition of property and equipment as at 31 December 2015 (2014:Nil)

N92,783,000

Fair value

N70.01millionNil

Independent Valuer CompanyEffective date of revaluationCarrying amount that would have been recognised if the assets being carried under the cost method

KanoThe Bank has interest in Leashold lands located in Abuja (Head Office), Lagos and Kano. The details of the Bank's interest in Leasehold land are as follows:Description Abuja (Head Office) Lagos

Jide Taiwo and Co. Estate Surveyors and Valuers

31 December, 2015Knight Frank31 December, 2015

E-Philips & CoEstate Surveyors and Valuers

31 December, 2015


31 December 2015

57


25 Intangible assets Group

In thousands of NairaPurchased computer

softwareTotal

Cost:Balance at 1 January 2014 4,935 4,935 Addition - - Balance as at 31 December 2014 4,935 4,935

Balance at 1 January 2015 4,935 4,935 Addition - (0) Balance as at 31 December 2015 4,935 4,935

Accumulated amortisation:Balance as at 1 January 2014 (3,822) (3,822) Amortisation charge for the year (331) (331) Balance as at 31 December 2014 (4,153) (4,153)

Balance as at 1 January 2015 (4,153) (4,153) Amortisation charge for the year (331) (331) Balance as at 31 December 2015 (4,484) (4,484)

Carrying amounts:

At 31 December 2014 782 782

At 31 December 2015 451 451

Bank

In thousands of NairaPurchased computer

softwareTotal

Cost:Balance at 1 January 2014 4,935 4,935 Addition - - Balance as at 31 December 2014 4,935 4,935

Balance at 1 January 2015 4,935 4,935 Addition - - Balance as at 31 December 2015 4,935 4,935

Accumulated amortisation:Balance as at 1 January 2014 (3,822) (3,822) Amortisation charge for the year (331) (331) Balance as at 31 December 2014 (4,153) (4,153)

Balance as at 1 January 2015 (4,153) (4,153) Amortisation charge for the year (331) (331) Balance as at 31 December 2015 (4,484) (4,484)

Carrying amounts:

At 31 December 2014 782 782

At 31 December 2015 451 451

(a) There were no capitalised borrowing costs related to the acquisition of the intangible assets during the year (2014: Nil)


31 December 2015

58


26(a) BorrowingsBorrowings comprise: Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Bank overdraft (See note (c) below) - 1,498,109 - 1,498,109 Term loan (See note (d) below) 787,500 8,798,493 787,500 498,493

Total 787,500 10,296,602 787,500 1,996,602

Current 787,500 10,296,602 735,417 1,996,602 Non-current - - 52,083 - Carrying amount 787,500 10,296,602 787,500 1,996,602

26(b) The movement in borrowings during the year is as follows:Group Group Bank Bank


Balance, beginning of the year 10,296,602 1,397,980 1,996,602 1,397,980 Additions during the year 600,000 8,950,154 600,000 650,154 Repayments made during the year (1,252,390) (51,532) (1,252,390) (51,532) Movement from loss of control (8,300,000) - - - Gain from restructuring of overdraft (556,712) - (556,712) -

Balance, end of year - Gross 787,500 10,296,602 787,500 1,996,602

(c) Details of overdraft facility obtained by the Group are as follows:

(d)

(i)

(ii)

27 Accruals Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Accrued audit fees 15,160 14,380 13,280 13,280 Other accrued expenses 57,724 43,584 57,724 43,584

Total 72,884 57,964 71,004 56,864

28 Employee benefits Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

(a) Defined contribution plan:Contributory Pension Scheme (See note (c)(i) below) 7,396 1,580 7,396 1,580

7,396 1,580 7,396 1,580

(b) Short term employee benefitAccrued salaries & wages 54,090 26,552 54,090 26,552 Performance bonus (see note (c)(ii) below) 190,656 - 190,656 -

244,746 26,552 244,746 26,552

Total 252,142 28,132 252,142 28,132

Current 252,142 28,132 252,142 28,132 Non-current - - - - Carrying amount 252,142 28,132 252,142 28,132

Included in term loan is N600 million time loan facility obtained from Guaranty Trust Bank Plc to bridge financing needs for ongoing projects. The term loan is a180 days facility repayable by June 2016. The interest rate is 15% per annum subject to prevailing money market conditions and it is 125% cash backed with thesum of N750,000,000.

Details of term loan facility obtained by the Group are as follows:

During the year, the Bank restructured the terms of its overdraft borrowing from Unity Bank PLC. The Bank renegotiated its overdraft facility of N1406,711,980as at 13 March 2015 with Unity Bank PLC to N850 million and paid N600,000,000. The balance of N250,000,000 was restructured over a period of 24 months atan interest rate of 16% per annum with a maturity date of 18 June 2017.A gain of N556,711,980 on the modification of the terms of the overdraft facility was recognised in other income (See note 12).As at 31 December 2015, the amortised cost of the new term loan was N187.5million. This has been included in the term loan balance above.The term loan was secured through a legal mortgage over the Bank's property located at No. 52 Ahmadu Bello Way, Victoria Island, Lagos.

Included in term loan is N187.5 million representing the outstanding liability on the N250 million renegotiated facility from Unity Bank. The loan is a 24 monthfacility maturing on 18 June 2017. The interest rate is 16% per annum and it is secured with the Bank's property located at No. 52 Ahmadu Bello Way, VictoriaIsland, Lagos.


31 December 2015

59


(c) Details of employee benefit obligations(i)

(ii)

29 Other liabilities Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

N. H. F. contribution payable 4,010 3,631 4,010 3,631 ITF contribution payable 1,017 408 1,017 408 P. A. Y. E. payable 11,769 41,708 11,769 41,708 Withholding tax payable 10,893 9,374 10,893 9,374 VAT payable 31,986 9,181 31,986 9,181 Back duty tax payable 2,013 2,002 2,013 2,002 Trade payable - 23,188 - 23,188 Deposit for shares 66,803 606,803 - - Sundry liabilities 33,933 32,813 33,319 26,397 Ex-gratia 53,265 64,131 53,265 64,131 Deferred income 83,969 44,881 83,969 44,881 Project deposits by counterparties (see note (a) below) 9,491 9,491 9,491 9,491 PMTF debt service reserve fund (see note (b) below) 903,094 879,468 903,094 879,468 Due to PMTF (see note (c) below) 931,133 - 931,133 - Other liabilities - Escrow agency - 300,000 - 300,000 Financial guarantee (see note 36) 42,949 - 42,949 58,594 Payables for shares allotted 510 - 1,509 1,509

Total 2,186,835 2,027,079 2,120,417 1,473,963

Current 2,186,835 2,027,079 2,120,417 1,473,963 Non-current - - - - Carrying amount 2,186,835 2,027,079 2,120,417 1,473,963

(a)

(b)

(c)

30 Reconciliation notes to consolidated and separate statement of cash flows30(a) Loans and advances Group Group Bank Bank

In thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 18 650,174 442,622 816,337 566,969 Movement in loans and advances:Additions during the year 1,715,116 278,893 1,715,116 278,893 Repayments during the year (22,501) (122,796) (22,501) (110,155)Interest income earned on loans 10(a) 262,538 115,092 274,366 144,267 Interest income receivable (8,443) - (2,033) - Movement for cashflow statement 1,946,710 271,189 1,964,948 313,005 Adjustment for non cash items:Reclassification to other asset - - (184,401) - Write-off during the year - (63,637) (63,637)Total movement in loans and advances 1,946,710 207,552 1,780,547 249,368

Balance, end of year - Gross 18 2,596,884 650,174 2,596,884 816,337

Public Mass Transit Revolving Fund (PMTF) debt service contribution represents the deposits and advance repayments received from the beneficiaries of thePublic Mass Transit Revolving Fund Scheme being managed on behalf of the Federal Government of Nigeria. The deposit is held to mitigate against the risk ofliquidity constraints, which may be experienced from time to time by the beneficiaries in repayment of their loan obligations to the fund. The deposit is non-interest bearing and will be repayable when the beneficiaries complete their loan repayment obligations.

Project deposit by counterparties represents deposits contributed by private developers, various states and local government towards meeting up with theconditions for infrastructure loan.

Performance bonus amounting to N190 .7 million (2014: Nil) was approved by the Board of the Bank on 6 August 2016.

The Bank offers its employee benefits under defined contribution plans in line with the Pension Reform Act of 2014, where the employees contribute 8% and theBank contributes 10% each of the total annual basic, housing and transport allowances to Pension Fund Administrators (PFAs). The Bank does not have anyadditional legal or constructive obligation to pay further contributions if the PFAs do not hold sufficient assets to pay all employee benefits relating to employeeservice in the current and prior periods.

Contributions to defined contribution plan are recognised (when an employee has rendered service in exchange for those contributions) as a liability, afterdeducting any contribution already paid and as an expense. A sum of N20.1 million ( 2014: N14.9 million ) has been charged to the Statement of Comprehensiveincome in this respect.

Amount represents funds belonging to Public Mass Transit Fund as at year end. These funds were warehoused in the Bank's collection account with GuarantyTrust Bank PLC prior to year end and remained in the Bank's current account as at 31 December 2015.


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60


30(b) Fee income receivable Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 19 3,386,844 1,808,453 3,719,344 1,808,453 Movement in fee income receivables:Additions 1,644,386 1,578,391 2,005,792 1,910,891 Receipts (3,203,500) - (3,203,500) - Movement for cashflow statement (1,559,114) 1,578,391 (1,197,708) 1,910,891

Balance, end of year - Gross 19 1,827,730 3,386,844 2,521,636 3,719,344

30(c) Pledged assets Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 21 253,000 - 253,000 - Balance, end of year 21 - (253,000) - (253,000)

Movement for cashflow statement 253,000 (253,000) 253,000 (253,000)

30(d) Other assets Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year (gross) (956,972) (950,855) (956,972) (815,467)Movement in other assets:Reclassification from/to other assets - 103,737 (184,401) 103,737 Balance, end of year (gross) 1,137,598 956,972 1,202,138 956,972

Movement for cashflow statement 180,626 109,853 60,765 245,241

30(e) Accruals Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 27 57,964 42,464 56,864 40,964 Balance, end of year 27 (72,884) (57,964) (71,004) (56,864)

Movement for cashflow statement (14,920) (15,500) (14,140) (15,900)

30(f) Other liabilities Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 29 2,027,079 1,338,522 1,473,963 1,115,144 Reclassification from tax payable 15(c) - 20,851 - 20,851 Payables for shares allotted 22 - - - 1,510 Movement from loss of control (565,463) - - - Balance, end of year 29 (2,186,835) (2,027,079) (2,120,417) (1,473,963)


30(g) Short term employee benefit Group Group Bank BankIn thousands of Naira Notes 2015 2014 2015 2014

Balance, beginning of year 28 28,132 22,743 28,132 22,743 Balance, end of year 28 (252,142) (28,132) (252,142) (28,132)



31 December 2015

61


31 Fiduciary activitiesFund under management

In thousands of Naira 2015 2014

PMTF liabilities (26,213,961) (26,041,782)

As at year end, the aggregate amount of the liabilities to the Bank which are not included in the balance sheet is shown below:

The Bank provides fund management services to the Federal Government of Nigeria in the administration of the N10 billion Public Mass Transit Revolving Fund(PMTF) Phase I established by the Federal Government of Nigeria from the 2009 Supplementary Act with the intention to provide affordable road transportationon a large scale to identified target group across the country and N15billion Phase II of the PMTF Scheme created from the Subsidy Reinvestment andEmpowerment Program (SUREP) to provide buses for the Scheme as a palliative to the increase in the general transportation costs for the citizenry, following thepartial removal of petroleum subsidies in January 2012.

The Bank administers the Fund in accordance with the Fund Management Agreements and the Public Mass Transit Fund (PMTF) lending policy guidelines of theFederal Government of Nigeria dated 23 February 2010 and 23 January 2012 for the Phase 1 and Phase 2 PMTF funds respectively.

The Bank shall indemnify and keep the FGN indemnified up to the full value of the Fund as may be affected or impaired by any factor either directly or indirectlyattributable to failure on the Bank’s part to perform its roles and obligation except if the failure is arising directly from the failure of the FGN to perform its ownobligation. The Bank cannot assign or in any way transfer any of its rights or obligations in respect of the fund to any third party without the written consent ofthe Federal Government.

Funds under management are liabilities to the Bank and are not recognised in the statement of financial position.


31 December 2015

62


32 Group subsidiaries(a) List of significant subsidiaries

Nature of Business2015 2014

Marina Express Train Services Limited Infrastructure development Nigeria 100% 100%Infrastructure Towers Limited Infrastructure development Nigeria 100% 100%TIB Asset Management Limited Fund management Nigeria 100% 100%

(b) List of significant associatesThe table below provides details of the significant associates of the Group.

Nature of Business2015 2014

Motorways Asset Limited (see note 22 (a)(iv) and note 23) Infrastructure development Nigeria 21% 100%

(c) Significant restrictions

33 Related Parties

Parent

Subsidiary

Nature of transaction Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Fee and commission income - - 300,000 - Interest income on loan - - 11,828 29,260

- - 236,828 29,260

Nature of transactionIn thousands of Naira Group Bank Group Bank Group Bank31 December 2015Income receivable - 300,000 - (75,000) - 225,000 Other receivable - 184,401 - - - 184,401

- 484,401 - (75,000) - 409,401

31 December 2014Other receivables - 166,163 - - - 166,163

- 166,163 - - - 166,163

During the year, the Bank transacted business such as the provision of transaction advisory services to METSL one of its subsidiary companies which is regarded as arelated entity. The gross income derived from this related party transaction during the year ended 31 December 2015 amounted to N300 million (2014: Nil).In addition, the Bank provided a loan with a conversion option to METSL in 2013 and which also matured in May 2015. The loan is securitised with all asset debenture ofMETSL as well as a share pledge over all the shares of METSL issued or authorised.

The transactions with Marina Express Train Services Limited for the year ended 31 December 2015 are listed below:

Gross carrying amount

The table below provides details of the significant subsidiaries of the Group.

The balances outstanding for Marina Express Train Services as at 31 December 2015 and 31 December 2014 are listed below:

Impairment charge Net carrying amount

Parties are considered to be related if one party has the ability to control the other party or exercise influence over the other party in making financial and operationaldecisions, or one other party controls both. The definition includes subsidiaries, associates, joint ventures, as well as key management personnel.

Ownership interest

The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from the supervisory frameworkswhich operates in the banking industry. The supervisory framework requires the Bank to keep certain levels of regulatory capital and liquid assets, limit their exposure toother parts of the Group and comply with other ratios.

The parent company of the Group is ICHL Nigeria Limited which has 66.5% interest in The Infrastructure Bank Plc.The ultimate parent company of the Group is Armdof Asset Limited by virtue of its majority shares in ICHL Nigeria Limited.

Transactions between The Infrastructure Bank Plc and its subsidiaries; Marina Express Train Services Limited (METSL), Infrastructure Heights Limited and TIB AssetManagement Limited also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the consolidatedfinancial statements.

Principal place of business

Ownership interest

Principal place of business


31 December 2015

63


Nature of transactionIn thousands of Naira Group Bank Group Bank Group Bank31 December 2015Income receivable - 120,000 - (120,000) - -

- 120,000 - (120,000) - -

31 December 2014Other receivables - 120,000 - - - 120,000

- 120,000 - - - 120,000

Associate

Nature of transaction Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Fee and commission income 1,252,000 - 1,252,000 150,000 Interest income on loan 132,029 - 132,029 -

1,139,143 - 1,139,143 150,000

Nature of transactionIn thousands of Naira Group Bank Group Bank Group Bank31 December 2015Income receivables 1,252,000 1,252,000 (172,759) (172,759) 1,079,241 1,079,241 Loans and advances 1,837,030 1,837,030 (72,127) (72,127) 1,909,157 1,909,157

3,089,030 3,089,030 (244,886) (244,886) 2,988,398 2,988,398

31 December 2014Income receivables - 150,000 - - - 150,000

- 150,000 - - - 150,000

The balances outstanding for Motorways Asset as at 31 December 2015 and 31 December 2014 are listed below:

Impairment charge Net carrying amount

Loans and advances amount of N1.7 billion represents the outstanding balance on a revolving advance facility granted to finance the working capital needs of MAL,project development activities and payment for certified works by contractors on the rehabilitation, reconstruction and expansion of the Lagos-Ibadan dual carriageway.The loan agreement had a committed amount of N4 billion, however as at 31 December 2015, a total of N1.7 billion had been advanced and the loan has an outstandingbalance of N1.8 billion as at 31 December 2015. This facility has a tenor of 24 months commencing 29 April 2015 and is secured with a lien on the current accountbalance of MAL, future proceeds of cash calls from shareholders of MAL and proceeds from sale of issued but un-allotted 15% of MAL.

Gross carrying amount

The transactions values for Motorways Asset for the year ended 31 December 2015 are listed below:

During the year, the Bank transacted business such as the provision of transaction advisory services on Lagos Ibadan Expressway Project with MAL which is regarded asa related entity. The gross income derived from this related party transaction during the year ended 31 December 2015 amounted to N1.25 billion (2014: N150 million).In addition, the Bank executed an agreement for a revolving advance facility with MAL. The facility had a commitment of N4 billion. However, as at 31 December 2015,only N1.7 billion had been advanced.

The balance outstanding for Infrastructure Heights Limted as at 31 December 2015 and 31 December 2014 are listed below:

Gross carrying amount Impairment charge Net carrying amount

Transactions between The Infrastructure Bank Plc and its associate; Motorways Asset Limited (MAL) also meet the definition of related party transactions.


31 December 2015

64


Transactions with key management personnel

Loans to key management

Key management personnel compensation

Key management personnel compensation comprise:In thousands of Naira 2015 2014

Executive compensation 158,885 127,500 Post-employment benefits 5,879 5,158 Directors fees 18,000 24,894 Directors allowances 47,605 39,705 Performance bonus and other short term benefits 110,237 -

340,606 197,257

Directors' remunerationThe directors' remuneration shown above (excluding pension contributions and other allowances) includes:

Group Group Bank BankIn thousands of Naira 2015 2014 2015 2014

Chairman 5,638 2,250 5,638 2,250

Highest paid director 83,550 77,500 83,550 77,500

Impairment losses have been recorded against the receivables balances outstanding for Marina Express Train Services Limited, Motorways Asset Limited and PolarAssets & Utilities Limited and specific impairment allowance have been made for the impairment losses noted on the stated receivables at the reporting date.

Interest rates charged on balances outstanding from loans to related parties are at ruling market prevailing rates. The interest charged on balances outstanding to relatedparties amounted to N143.9 million(2014: N29.3 million). No interest payment was received on balances outstanding to related parties

The related party transactions disclosed above were based on normal market rates for such transactions and were due and payable under normal payment terms.

There are no loans to key management personnel during the period ended 31 December 2015. (2014: Nil)

Compensation to the Bank's key management personnel include salaries, non-cash benefits and contributions to the post-employment defined contribution plans.

The Bank’s key management personnel, and persons connected with them, are also considered to be related parties. The definition of key management includes the closemembers of family of key personnel and any entity over which key management exercise control. The key management personnel have been identified as the executiveand non-executive directors of the Bank. Close members of family are those family members who may be expected to influence, or be influenced by those individuals intheir dealings with the Bank.


31 December 2015

65


34 Capital and reserves

34(a) Share capitalShare capital - Authorised Group Group Bank BankIn thousands of unit 2015 2014 2015 2014

3,103,000,000 ordinary shares of N1 each 3,103,000 3,103,000 3,103,000 3,103,000

Share capital - in issue at 31 December - fully paidGroup Group Bank Bank


Ordinary share in issue and fully paid at 1 January 3,103,000 2,402,540 3,103,000 2,402,540

Additions to share capital from right issues - 700,460 - 700,460

Ordinary share in issue and fully paid as at 31 December 3,103,000 3,103,000 3,103,000 3,103,000

34(b) Capital contribution reserveGroup Group Bank Bank


Contributions from FGN 1,391,230 1,391,230 1,391,230 1,391,230

1,391,230 1,391,230 1,391,230 1,391,230

34(c) Revaluation reservesGroup Group Bank Bank


Balance, beginning of year 941,181 648,116 941,181 648,116Transfer from statement of comprehensive income 64,948 302,109 64,948 302,109Transferred to retained earnings (see note 34(d) below) (12,944) (9,044) (12,944) (9,044)


34(d) Accumulated lossesGroup Group Bank Bank


Balance, beginning of year (2,681,133) (3,035,599) (2,097,869) (2,756,842) Transfer from statement of comprehensive income 1,009,052 309,345 1,135,660 613,852 Transfer from regulatory risk reserve - 36,077 - 36,077 Transfer from revaluation reserve (see note 34 (c) above) 12,944 9,044 12,944 9,044

Balance, end of year (1,659,137) (2,681,133) (949,265) (2,097,869)

This represents contribution by the Federal Government of Nigeria in form of budgetary allocations in its capacity as a shareholder prior to 2007,when the private investors acquired a controlling interest in the Bank. No equity shares were issued in respect of the contribution.

Revaluation reserves represents surplus arising from the revaluation of the Bank's interest in its Head office leasehold land, Kano land and Lagosland. These lands were valued on the basis of open market value subject to existing use. The valuation of the Head office leasehold land wascarried out by Knight Frank & Co., Estate Surveyors and Valuers, that of Kano land by E-Philips & Co., Estate Surveyors and Valuers and thevaluation of the Lagos land was carried out by Jide Taiwo & Co Estate Surveyors and Valuers.

Accumulated losses are the carried forward recognised income net of expenses plus current period profit attributable to shareholders.


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35 Contravention of laws and regulations

36 Contingent liabilities and commitment

37 Events after the reporting date

During the year, the Bank did not pay any penalties in respect of contravention of BOFIA or CBN circulars during the year (2014: Nil).

The Group in the ordinary course of business is currently involved in 5 litigation cases (2014: 4 litigation cases). The Directors are of the opinion that none ofthe aforementioned cases is likely to have a material adverse effect on the Bank and are not aware of any other pending or threatened claims and litigationsbesides those included in the above number.

In 2014, the Bank indemnified the Federal Government of Nigeria on the Lagos-Ibadan Expressway Project. The indemnity was to secure the payment byFGN of its N25 billion equity investment in the Special Purpose Vehicle (Motorways Asset Limited) which was established to implement the Lagos-IbadanExpressway project. The indemnity which commenced on 28 September, 2014 is expected to run for a period of 48months. The amortised portion of the fee ofN15.5 million (2014: N3.9 million) is included in fee and commission income. The unamortised portion of the fee as at 31 December 2015 is N42.9 millionand this amount is included in other liabilities. See note 29.

There were no events after the reporting date that could have material effect on the financial statement that have not been disclosed or adjusted.

There are contingent liabilities in respect of legal actions against the Bank for amounts totaling N616 million (2014: N616 million) for which provisionsamounting to N28.3 million (2014: N10.8 million) have been made. The actions are being vigorously contested and the Directors are of the opinion that nosignificant liability will arise therefrom in excess of the provision made in the financial statements.

During the year, the Bank was joined as the fourth defendant in a litigation case with respect to the concession of the Lagos-Ibadan Expressway. The suitwhich commenced at the Federal High Court Lagos by a writ of summons dated 20 May 2015, had the following claims:'- claim challenging the purported termination of the former concession agreement over the Lagos-Ibadan Expressway;'- claim challenging the grant of a re-concession to any person until the final determination of its suit; '- claim restraining the Bank from financing or making any financial arrangements with respect to the re-concession pending the determination of the suit;'- claim restraining the defendants from implementing the concession agreement dated 16 January 2015.'The claims were on the premise that the concession agreement dated 16 January 2015 was entered into during the pendency of the existing suit.

As at 31 December 2015, the case remained pending. However, subsequent to year end, the court dismissed the case on the ground that the suit having notbeen filed within 3 months of the cause of action is statute barred. This ruling is currently on appeal. The Directors are of the opinion that none of theaforementioned cases is likely to have a material adverse effect on the Bank.

Other national disclosures


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Other financial informationValue added statementFor the year ended 31 December 2015

Group Group Bank BankIn thousands of Naira 2015 % 2014 % 2015 % 2014 %

Gross earnings 3,266,042 2,164,490 3,546,637 2,467,571

Interest expense (81,212) (408,511) (81,212) (408,511) 3,184,830 1,755,979 3,465,425 2,059,060

-

Net impairment loss on assets (894,376) (188,200) (1,089,377) (188,200)

Bought-in-materials and services (395,661) (15,271) (354,702) (13,900)

Value added 1,894,793 100 1,552,508 100 2,021,346 100 1,856,960 100

Distribution of Value Added % % % %To Employees:Employess costs 676,476 36 413,859 27 676,476 33 413,859 22

To governmentGovernment as taxes 46,418 2 359,394 23 46,418 2 359,394 19

To providers of financeInterest on borrowings 81,212 4 408,511 26 81,212 4 408,511 22

Retained in business: - For replacement of property and equipment and software 81,635 4 61,399 4 81,580 4 61,344 3

- To augment reserve 1,009,052 53 309,345 20 1,135,660 56 613,852 34

1,894,793 99 1,552,508 100 2,021,346 99 1,856,960 100


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Other financial informationFinancial summary- Group

December December December December DecemberIn thousands of Naira 2015 2014 2013 2012 2011

AssetsCash and cash equivalents 1,162,701 8,913,471 381,162 3,073 106,454 Loans and receivables 2,087,635 460,767 377,359 360,386 74,329 Fee income receivables 1,198,196 3,331,844 1,753,453 - - Other assets 678,966 498,340 388,486 372,567 6,577 Pledged assets - 253,000 - - - Equity-accounted investee 259,967 - - - - Property and equipment 2,069,450 2,011,080 1,229,280 1,146,546 773,991 Intangible assets 451 782 1,113 1,444 661 Deferred tax assets 158,389 146,041 454,519 - - Total assets 7,615,755 15,615,325 4,585,372 1,884,016 962,012

LiabilitiesBorrowings 787,500 10,296,602 1,397,980 1,270,930 988,260 Provision and accruals 72,884 57,964 42,464 71,886 25,452 Employee benefits obligations 252,142 28,132 22,743 38,268 80,717 Current tax liabilities 56,958 42,400 61,905 29,110 25,000 Other liabilities 2,186,835 2,027,079 1,338,521 883,950 660,685 Deferred tax liabilities 431,158 408,870 279,395 283,201 178,476

Total liabilities 3,787,477 12,861,047 3,143,008 2,577,345 1,958,590

Net asset 3,828,278 2,754,278 1,442,364 (693,329) (996,578)

EquityShare capital 3,103,000 3,103,000 2,402,540 1,551,500 1,551,500 Capital contribution 1,391,230 1,391,230 1,391,230 1,391,230 1,391,230 Revaluation reserves 993,185 941,181 648,116 660,802 416,444 Regulatory risk reserve - - 36,077 - - Accumulated losses (1,659,137) (2,681,133) (3,035,599) (4,296,861) (4,355,752) Total equity 3,828,278 2,754,278 1,442,364 (693,329) (996,578)

Gross earnings 3,266,042 2,164,490 2,282,658 697,279 234,749

Profit/(loss) before taxation 1,055,470 668,739 867,383 58,868 (584,575)

Profit/(loss) after taxation 1,009,052 309,345 1,284,653 50,608 (588,725)

Profit/(loss) attributable to equity holders 1,009,052 309,345 1,284,653 50,608 (588,725)

Earnings per share - Basic 33k 11k 53k 2k -38k - Diluted 33k 11k 53k 2k -38kNumber of ordinary shares of N1 each 3,103,000 2,918,769,000 2,402,540,330 1,551,500,000 1,551,500,000


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Other financial informationFinancial Summary- Bank

December December December December DecemberIn thousands of Naira 2015 2014 2013 2012 2011

AssetsCash and cash equivalents 1,010,576 63,181 366,972 1,481 106,454 Loans and receivables 2,087,635 626,930 501,706 360,386 74,329 Fee income receivables 1,697,102 3,664,344 1,753,453 - - Other assets 743,506 498,340 253,098 367,879 6,577 Pledged assets - 253,000 - - - Investment in subsidiaries 230,238 80,748 79,239 79,239 79,239 Equity-accounted investee 260,000 - - - - Property and equipment 2,069,432 2,011,007 1,229,152 1,146,546 773,991 Intangible assets 451 782 1,113 1,444 661 Deferred tax assets 158,389 146,041 454,519 - - Investment property - - - - - Total assets 8,257,329 7,344,373 4,639,252 1,956,975 1,041,251

LiabilitiesBorrowings 787,500 1,996,602 1,397,980 1,270,930 988,260 Provision and accruals 71,004 56,864 40,964 70,886 24,952 Employee benefits obligations 252,142 28,132 22,743 28,673 31,433 Current tax liabilities 56,958 42,400 61,905 29,110 25,000 Other liabilities 2,120,417 1,473,963 1,115,144 696,805 541,768 Deferred tax liabilities 431,158 408,870 279,395 283,201 178,476

Total liabilities 3,719,179 4,006,831 2,918,131 2,379,605 1,789,889

Net asset 4,538,150 3,337,542 1,721,121 (422,630) (748,638)

EquityShare capital 3,103,000 3,103,000 2,402,540 1,551,500 1,551,500 Capital contribution 1,391,230 1,391,230 1,391,230 1,391,230 1,391,230 Revaluation reserves 993,185 941,181 648,116 660,802 416,444 Regulatory risk reserve - - 36,077 - - Accumulated losses (949,265) (2,097,869) (2,756,842) (4,026,162) (4,107,812) Total equity 4,538,150 3,337,542 1,721,121 (422,630) (748,638)

Fund under management 26,213,961 26,041,782 25,772,475 19,346,059 10,076,646

Gross earnings 3,546,637 2,467,571 2,282,658 697,279 234,749

Profit/(loss) before taxation 1,182,078 973,246 875,441 81,627 (336,635)

Profit/(loss) after taxation 1,135,660 613,852 1,292,711 73,367 (340,785)

Profit/(loss) attributable to equity holders 1,135,660 613,852 1,292,711 73,367 (340,785)

Earnings per share - Basic 37k 21k 54k 5k -22k - Diluted 37k 21k 54k 5k -22kNumber of ordinary shares of N1 each 3,103,000 2,918,769,000 2,402,540,330 1,551,500,000 1,551,500,000

THE INFRASTRUCTURE BANK PLC AND …The Infrastructure Bank Plc and Subsidiary Companies Annual Report 31 December 2015 Chief Executive Officer's statement Financial performance Business

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