A NEW DAWN 2023 ANNUAL REPORT & FINANCIALS GESTATION Clary Nelson Cole 1988
2023 ANNUAL REPORTS A NEW DAWN
VFD Group plc 2023 Annual Reports & Financials 2 TABLE OF CONTENTS Corporate Profile 5 • About the Company 6 • Corporate Values 7 • Investment Philosophy 8 • Corporate Information 9 • Directors’ Profile 10 • Management Team Profile 14 Strategic and Business Reports 17 • Chairman’s Statement 19 • Group Managing Director’s Statement 23 • Sustainability Report 31 Governance 35 • Corporate Governance Report 36 • Directors‘ Report 47 • Statutory Audit Committee Report 58 • Statement of Directors’ Responsibilities 59 • Certification of Financial Statements 61 • Statement On VFD Group Board Evaluation 62 • Independent Auditor‘s Report 65
A New Dawn 3 www.vfdgroup.com Financial Statements 71 • Consolidated and Separate Statement of Comprehensive Income 72 • Consolidated and Separate Statement of Financial Position 74 • Consolidated and Separate Statement of Changes in Equity 76 • Consolidated and Separate Statement of Cash Flows 78 • Notes to the Consolidated and Separate Financial Statements 81 • Statement of Value Added 134 • Five-year Financial Summary 135 Shareholder/Investor Information 137 • Notice of Annual General Meeting 138 • Proxy Form 143 • Profile of Directors for Appointment 147 • Dematerialization Form for Migration 151 • E-Dividend Mandate Activation Form 153 • E-Share Registration Application Form 155 • E- Service/Data Update Form 157
01 CHAPTER 2023 ANNUAL REPORTS & FINANCIALS CORPORATE PROFILE • ABOUT THE COMPANY • CORPORATE VALUES • CORPORATE INFORMATION • DIRECTORS’ PROFILE • MANAGEMENT TEAM PROFILE
VFD Group plc 2023 Annual Reports & Financials 6 VFD Group is a proprietary investment company with a diversified portfolio of investments that cut across banking, non-banking financial institutions, market infrastructure, technology, real estate and hospitality, media, entertainment, and energy, with no bias towards a particular sector. The Group’s investment framework is based on comprehensive due diligence, and risk management processes, ensuring that all investments made are secure and wellprotected. The Company’s team of seasoned specialists possess a deep understanding of the markets and are able to identify and seize opportunities that others might miss. The Company upholds a disciplined approach to investment management, constantly monitoring the investment portfolio, and reevaluating the Group’s investment policy. The Group understands the importance of corporate governance in building and growing a world-class businesses and has adopted world-class corporate governance practices. The Company’s corporate philosophy is built around integrity, teamwork, innovation, and a sound commitment to its shareholders. These values guides VFD Group’s business practices and have been key to its success in a highly dynamic industry. By embracing the highest standards of competence and excellence, VFD ensures that all investors and shareholders attain their financial goals, get significant capital appreciation, and are confident their investments are well secured. The Company has a proven strategy of seeking and focusing on overlooked opportunities with the patience to play the long game and a strong conviction it would yield significant returns. The Company is true to this, especially for investments with retail opportunities that can significantly leverage technology. VFD Group actively promotes transparency and direct communication with all investors, upholding a high ethical standard and refusing to influence short-term results, making the Company a trusted and reliable partner for all investors and shareholders. ABOUT THE COMPANY VFD Group Plc was incorporated with the Corporate Affairs Commission (CAC) on July 07, 2009, and commenced business operations effectively on January 01, 2011.
A New Dawn 7 www.vfdgroup.com CORPORATE VALUES OUR VISION To be a commercially viable proprietary investment company with global influence focused on building socially conscious ecosystems. OUR MISSION To build sustainable ecosystems by aggregating potentially viable businesses through investments and collaborations. OUR VALUES We recognize individual strengths and expertise, and work in lockstep to stay ahead of the market. Synergy is instrumental to the accomplishment of our goals. For us, innovation starts from a willingness to make things better and do things dierently. We take into consideration the feelings of all our stakeholders before making decisions while exercising fairness TEAMWORK INNOVATION EMPATHY 360 We are strategically positioned for opportunities and optimize them as they are presented to us while we take ownership of the process, activities, and engagement with an objective to create value for all. ENTREPRENEURSHIP We maintain a framework for ensuring accountability and transparency in our portfolio companies. Our records remain accurate which is crucial to our commitment to best practices. INTEGRITY
VFD Group plc 2023 Annual Reports & Financials 8 INVESTMENT PHILOSOPHY OUR BUSINESS MODEL “We aim to build a portfolio of well-diversified investments, with the potential to achieve market influence in their respective sectors and generate positive investment returns over the long term”. Our investment methodology combines a robust risk management framework, and due diligence process, to ensure low volatility and strong prospects for higher returns. Our business model focuses on deploying proprietary funds to invest in businesses we consider viable. We are focused on long-term investing in retail market-facing companies that align with our existing investment portfolio. In addition to this, we actively manage our investment portfolio and adopt robust risk management practices to ensure investments perform well. Our investment decision is based on the following: • Companies with exceptional management teams, compelling business models, and operate in industries that are within our domain of expertise. • Alignment with existing portfolio companies based on opportunities for synergies. • Ensuring that the businesses we invest in gain significant value over time, and then seeking out opportunities for profitable exits. Our sources of revenue are categorized as follows: • Treasury-related revenue; trading and interest income. • Dividend income from investee companies. • Strategic disposal of equity stake in investee companies. • Income from revaluation of equity investment in investee companies that fall below the subsidiary status. VFD considers active representation on the board as an essential component of relating with investee companies. We achieve this by: • Assuming the role of an active shareholder, working collaboratively with investee company boards to unlock value and maximize returns for all shareholders. • Enhancing the corporate governance structures of companies that we invest in. We believe that a functioning board creates a strong competitive advantage that could greatly contribute to the achievement of corporate objectives We thrive and seek out ways to drive efficiency in all areas of our business by: • Utilizing consultants for critical functions, which created cross-functional and multidisciplinary skill sets across the company. • Maintaining a lean operating structure with a maximum of 20–25 staff with key project management, organizational, and business development skillsets.
A New Dawn 9 www.vfdgroup.com CORPORATE INFORMATION SN DIRECTORS: 1 Mr. Olatunde Busari (SAN) Chairman 2 Mr. Nonso Okpala Group Managing Director 3 Mr. Adegboyega Fatoki Independent Non-Executive Director (Appointed on May 25, 2023.) 4 Ms. Omolola Bolusire Independent Non-Executive Director (Appointed on May 25, 2023.) 5 Ms. Rashida Saleh Independent Non-Executive Director (Appointed on October 28, 2023.) 6 Mrs. Nneka Okekearu Independent Non-Executive Director (Appointed on October 28, 2023.) 7 Mr. Mobolaji Adewumi Non- Executive Director 8 Mr. Gbenga Omolokun Non- Executive Director 9 Mr. Azubike Emodi Non- Executive Director 10 Mr. Chuks Celestine Ozigbo Non- Executive Director 11 Mr. Kelvin Orogun Non- Executive Director 12 Mr. Femi Akinware Non- Executive Director 13 Mr. Suleiman Lawal Non- Executive Director (Resigned April 19, 2023) 14 Mrs. Ngozi Aghanya Non- Executive Director (Resigned April 19, 2023) 15 Ms. Jewel Okwechime Non- Executive Director (Resigned April 19, 2023) 16 Mr. Adeniyi Adenubi Executive Director Governance, Government & Subsidiary Relations 17 Mr. John Okonkwo Executive Director, Finance, Risk Management and Compliance 18 Mr Folajimi Adeleye Executive Director, Treasury & Business Development (Resigned October 28, 2023) RC No. RC 829196 COMPANY SECRETARY Gbeminiyi Shoda The Structure HQ REGISTERED OFFICE: 8 MacGregor Road, Ikoyi Principal BANKERS VFD Microfinance Bank Limited United Bank for Africa Plc First Bank of Nigeria Limited Access Bank Plc Zenith Bank Plc AUDITORS: PwC Plot GA 1 Civic Towers, Ozumba Mbadiwe Avenue Victoria Island, Lagos, Nigeria
VFD Group plc 2023 Annual Reports & Financials 10 ADEGBOYEGA FATOKI Independent NonExecutive Director OLATUNDE BUSARI (SAN) Chairman NONSO OKPALA Group Managing Director/CEO BOARD OF DIRECTORS Olatunde (SAN) is the Chairman of VFD Group Plc. He holds a B.Sc. in Political Science from the University of Ife, an LL.B from the University of Ibadan, and an LL.M from the University of Lagos. He was called to the Nigerian Bar in 1989 and is a Senior Advocate of Nigeria. Nonso is the Group Managing Director/CEO of VFD Group Plc. He was previously the Chief Financial Officer (CFO) of Heirs Holdings Ltd and is replete with over 18 years experience in the Nigerian financial services industry garnered while working with reputable firms like KPMG, BGL and United Bank for Africa Plc (UBA). Adegboyega has over thirty-seven years’ experience in the banking, finance, and energy services industry. He worked as a Systems Analyst cum Programmer, Head if Information Technology, Chief Compliance Officer, and Head of Business Support Group, covering risk management, financial control, operations and information communication and technology. He is the Managing Director of VFD Microfinance Bank Limited. He has over 15 years of rich expertise in business process, general management, technology, and strategy across various industries including Manufacturing, Financial Services, Public Sector and Pharmaceuticals. Gbenga is skilled in establishing and scaling new business ventures and acts as mentor to members of AIESEC, Ile-Ife, Osun State.
A New Dawn 11 www.vfdgroup.com Omolola is a senior consultant with over twenty one (21) years of experience in program and project management, operations Management, and business development. She has a track record of success in various industries both in the UK and Nigeria. She is presently the President/CEO of The Conceirge Solutions Place, a business she founded. Before she founded The Conceirge Solutions Place, she worked as an Investment and Treasury Management Consultant for the Nigeria Social Insurance Trust Fund (NSITF) and consultant /Workstream lead at the Nigeria Export Promotion Council (NEPC). She had worked at KPMG UK, Canary Wharf, Thames Valley Police, Daily Mail Group London, Vodaphone UK and Jigijagaban Medical Mission.project management. Rashida is an experienced human resources, treasury, and contract management professional with over 25 years of expertise, 15 of which was spent in senior management roles in financial services, and oil & gas services. Her core skills include treasury management, contract management, human resource management, strategic planning, operations, and change management. Nneka is a creative and dynamic leader with proven success in the management of catalytic projects on financial inclusion, enterprise development, highly complex customer relationships and audit. She has over two decades of expertise in SME development and project management. OMOLOLA BOLUSIRE Independent NonExecutive Director RASHIDA SALEH Independent NonExecutive Director NNEKA OKEKEARU Independent NonExecutive Director
VFD Group plc 2023 Annual Reports & Financials 12 CHUKS OZIGBO Non-Executive Director BOARD OF DIRECTORS GBENGA OMOLOKUN Non-Executive Director MOBOLAJI ADEWUMI Non-Executive Director Mobolaji is the Managing Director at Abbey Mortgage Bank. He is an experienced professional with over 16 years of financial service expertise having worked with regional and global leaders in the financial services sector, such as the First Bank of Nigeria Ltd, ASO Savings, United Bank for Africa, KPMG Nigeria and other institutions across Europe and the US. He is the Managing Director of VFD Microfinance Bank Limited. He has over 15 years of rich expertise in business process, general management, technology, and strategy across various industries including Manufacturing, Financial Services, Public Sector and Pharmaceuticals. Gbenga is skilled in establishing and scaling new business ventures and acts as mentor to members of AIESEC, Ile-Ife, Osun State. Azubike is the Managing Director, Anchoria Asset Management Limited. He has over 15 years of experience as a financial service specialist across retail and commercial banking. Azubike has worked with Zenith Bank and Maxxon Pro Service Inc. Canada where he worked as an Investment Advisor/Financial Planner. Chuks is currently a Director at Lyca Digitals Ltd. He has over 22 years of experience across Banking and Finance, business operations and development. Chuks has worked with UBA where he was the Group Head, Corporate Banking, First Inland Bank, First Atlantic Bank, and Fidelity Bank. AZUBIKE EMODI Non-Executive Director
A New Dawn 13 www.vfdgroup.com KELVIN OROGUN Non-Executive Director FEMI AKINWARE Non-Executive Director Kelvin is the Managing Director and Chief Executive Officer of Cashpot Limited, a money remittance company with headquarters in London and offices in Lagos Nigeria. Prior to starting Cashpot, he was the Managing Director, Africa Market- Small World Financial Services Group Ltd. Kelvin has worked in Universal Trust Bank and companies within the UK. Femi is an experienced telecommunications executive, an entrepreneur, and a seasoned engineer with over 24 years of accomplished leadership spanning nearly every aspect of telecoms business. Femi spent 15 years working on mergers and acquisitions, asset building, corporate development, business process re engineering, IT consultancy, and business start-ups. Niyi has over 15 years experience in Institutional and Corporate Banking, Investment Management and Consulting Sectors. His vast experience in the financial sector comes from working in Private Equity, and Venture Capital in some of the top firms in London. Niyi has played Financial Advisory roles in numerous firms within Nigeria and the United Kingdom, most notably with the Royal Bank of Scotland and ATOS Consulting. John has over 18 years’ experience in Finance, Audit, Risk Management, Sustainability Services and Corporate Governance Services. He was previously the Chief Financial Officer at Heirs Holdings Limited, and a Manager in the Internal Audit, Risk & Compliance Services division of KPMG. He is an Alumnus of the Advanced Management Programme of the Lagos Business School (LBS). NIYI ADENUBI Executive Director Governance, Government & Subsidiary Relations JOHN OKONKWO Executive Director, Finance, Risk Management and Compliance
VFD Group plc 2023 Annual Reports & Financials 14 MORENIKE OMINIKE Chief of Staff JOHN OKONKWO Executive Director, Finance, Risk Management and Compliance MANAGEMENT TEAM Nonso is the Group Managing Director/CEO of VFD Group Plc. He was previously the Chief Financial Officer (CFO) of Heirs Holdings Ltd and is replete with over 18 years experience in the Nigerian financial services industry garnered while working with reputable firms like KPMG, BGL and United Bank for Africa Plc (UBA). Niyi has over 15 years experience in Institutional and Corporate Banking, Investment Management and Consulting Sectors. His vast experience in the financial sector comes from working in Private Equity, and Venture Capital in some of the top firms in London. Niyi has played Financial Advisory roles in numerous firms within Nigeria and the United Kingdom, most notably with the Royal Bank of Scotland and ATOS Consulting. John has over 18 years’ experience in Finance, Audit, Risk Management, Sustainability Services and Corporate Governance Services. He was previously the Chief Financial Officer at Heirs Holdings Limited, and a Manager in the Internal Audit, Risk & Compliance Services division of KPMG. He is an Alumnus of the Advanced Management Programme of the Lagos Business School (LBS). Morenike is the Chief of Staff at VFD Group plc formerly the Head, Regulatory Compliance. She has over a decade progressive experience in the financial services industry in Portfolio Management, Operations and Compliance. She Holds a B.Sc In Electrical & Electronics Engineering from Olabisi Onabanjo University, Ogun State and an MBA from Business School Netherlands(BSN). She is a SEC Sponsored Compliance Officer and a member of the NONSO OKPALA Group Managing Director/CEO NIYI ADENUBI Executive Director, Business Development & Investment Management
A New Dawn 15 www.vfdgroup.com Compliance Institute of Nigeria (Designate Compliance Professional). In the past, she worked with Afrinvest Asset Management Limited where she excelled as a Head, Fund/Portfolio Manager, Operations Associate and Compliance Officer. She also worked with Asset and Resource Management Company (ARM) as the Head of Compliance overseeing Compliance activities for the group and all its subsidiaries. Obi has over 19 years of proven experience in Risk Management, Branch Operations, Internal Control and Customer Experience Management. Prior to joining VFD Group, Obi worked in different capacities across Nova Merchant Bank, Access Bank Plc, and Universal Trust Bank. He holds an M.Sc. in Economics from the University of Ibadan, a management program from the Wharton School of Business and B.Sc. in Mathematics from the University of Ibadan. OBI CHIMBO Chief Risk/ Compliance Officer
2023 ANNUAL REPORTS & FINANCIALS CHAPTER 02 • CHAIRMAN’S STATEMENT • GROUP MANAGING DIRECTOR’S STATEMENT • SUSTAINABILITY REPORT STRATEGIC AND BUSINESS REPORTS
OLATUNDE BUSARI (SAN) FCIS, C.ARB CHAIRMAN, BOARD OF DIRECTORS VFD GROUP PLC VFD Group plc 2023 Annual Reports & Financials
A New Dawn 19 www.vfdgroup.com We restructured the firm to enhance our focus as a proprietary investment company, aligning our management structure and organizational model with our strategic objectives Esteemed Shareholders, Respected Board Members and Distinguished Attendees. It is with great honor that I present a succinct overview of VFD Group PLC’s performance for the fiscal year 2023 at this 9th Annual General Meeting. The previous year was marked by significant milestones that have not only shaped the history of our company but also laid a robust foundation for accelerated performance in 2024. These achievements are a testament to the unwavering support and contributions of our esteemed shareholders and dedicated staff. Over the past three years, we have strategically laid the groundwork for the kind of investment company we aspire to be. The year 2023 marked a pivotal step in our journey. We restructured the firm to enhance our focus as a proprietary investment company, aligning our management structure and organizational model with our strategic objectives. MACROECONOMIC OUTLOOK AND OPERATING ENVIRONMENT The year 2023 commenced with a high degree of optimism. However, the global economic landscape posed unprecedented challenges that tested the resilience of economies worldwide. The year was characterized by a Global Recession, a downturn that permeated economies globally, impacting businesses of all scales, from multinational corporations to small enterprises. Persistent inflation, exacerbated by ongoing supply chain disruptions and geopolitical tensions, eroded purchasing power and stifled investment. In response to inflation, central banks worldwide implemented interest rate hikes. While these measures were necessary for long-term economic stability, they inadvertently dampened economic activity, leading to slower growth and job losses. CHAIRMAN’S STATEMENT
VFD Group plc 2023 Annual Reports & Financials 20 The year 2023 witnessed a surge in inflation, reaching around 6.6% - 8.7% according to International Monetary Fund (IMF) and World Bank reports. This, coupled with rising interest rates, posed a significant threat to economic stability, influencing everything from borrowing costs to the price of everyday goods. China, a significant driver of global growth, experienced a considerable economic slowdown in 2023. Estimates suggest global growth fell to around 2.9% - 3.0%, with advanced economies experiencing a sharper decline. This slowdown had a cascading effect on other economies, particularly those heavily dependent on Chinese exports. Also, the conflict in Ukraine not only precipitated a humanitarian crisis but also disrupted energy supplies and critical commodity exports, further escalating prices, and adding uncertainty to the global market. DOMESTIC ENVIRONMENT The first half of 2023 in Nigeria was characterized by a mix of electoral tensions, policy decisions by the government, and their impact on the private sector and other productive sectors. Amidst these initial political tensions and risks, the economic direction taken by the new administration in Nigeria, led by President Bola Ahmed Tinubu, has reduced policy uncertainty. The country moved towards adopting pro-market policies that mitigated exchange rate risks and eased the fiscal constraints burdening the Nigerian economy since 2015. However, 2023 presented a complex economic picture for Nigeria. Nigeria’s domestic economic landscape in 2023 faced a perfect storm of interrelated issues. High inflation eroded purchasing power and choked consumer spending. Economic growth remained sluggish, averaging around 3.3%, failing to generate enough jobs for the country’s ever-expanding population. The government’s attempt to reform fuel subsidies, a step crucial for long-term fiscal health, added further strain on household budgets. Moreover, persistent security concerns in various regions continued to disrupt economic activity and discourage investment. These combined domestic challenges significantly hampered Nigeria’s economic progress in 2023. While the global economic situation remains fluid, Nigeria is poised for a turnaround in 2024. Analysts predict a 3.1% GDP We are unwavering in our commitment to good governance and upholding the highest ethical standards. This focus fosters long-term value for all our stakeholders, including employees, investors, and the communities we serve.
A New Dawn 21 www.vfdgroup.com growth driven by a recovering oil sector and impactful government reforms. This translates to a potential rise in purchasing power and increased business investment. The inflation rate is expected to dip, and the Naira may stabilize due to anticipated increases in Dollar inflows. The current administration brings hope for clearer policies and better governance, fostering a more supportive business environment. This positive outlook creates exciting opportunities. A growing emphasis on infrastructure development and diversifying beyond oil presents new avenues for businesses, particularly family enterprises, in non-oil exports. Consumer spending is also expected to rebound in the second half of the year as inflationary pressures ease. Additionally, improved stability in the foreign exchange market, anticipated for the latter half of 2024, should reduce import costs for businesses. SUPPORTING OUR COMMUNITY We are unwavering in our commitment to good governance and upholding the highest ethical standards. This focus fosters longterm value for all our stakeholders, including employees, investors, and the communities we serve. Building on our past efforts, we actively pursue impactful social responsibility initiatives in 2023. These initiatives prioritize the wellbeing of our operating communities through targeted investments in areas like education and innovation. • Community Investment: We provided critical support to vulnerable communities within our business foothold. This year’s focus included a donation to the Lagos State Kids Marathon and the Zainab Saleh
VFD Group plc 2023 Annual Reports & Financials 22 National Female Karate Competition, promoting children’s health and fitness through participation in organized athletics. • Educational Empowerment: We fostered literacy and cultural awareness by donating Chimamanda Ngozi Adichie’s “Mama’s Sleeping Scarf” to 100 schools across our region. • Fostering Innovation: We championed innovation by supporting the Anambra Innovation District, by awarding grants to SMEs within Anambra. For a comprehensive overview of our social responsibility efforts, please refer to our Sustainability Report. BOARD CHANGES During our 2023 financial year, there were significant changes to our board of directors. Suleiman Lawal, Ngozi Aghanya, and Jewel Okwechime resigned from the board on April 29, 2023. We extend our sincere thanks to them for their dedicated service and instrumental contribution to our board. On May 25, 2023, we welcomed Adegboyega Fatoki and Omolola Bolusire as independent nonexecutive directors, further diversifying the board and ability to provide valuable governance. Building on this momentum, Nneka Okekearu and Rashidah Saleh joined the board as independent non-executive directors on October 28, 2023. Additionally, Folajimi Adeleye resigned from the board on October 28, 2023. We are grateful for the dedication and insight Folajimi brought to the board. These strategic changes mark a significant step forward in our board’s composition, ensuring a well-rounded team with diverse perspectives to guide the company’s future success. KEY MILESTONES IN 2023 The year 2023 proved to be a transformative year for VFD Group, marked by several significant milestones: • Successful Listing on the Nigerian Exchange Group (NGX): This achievement, attained by only a select few Nigerian companies, underscores VFD Group’s commitment to strong corporate governance and transparency. • Strategic Transformation: The completion of a strategic review ushers in a new era for the company, with redefined strategies and business models positioned for future growth.
A New Dawn 23 www.vfdgroup.com • Rights Issue Approval: The N12.5 billion rights issue was successfully approved by the Securities and Exchange Commission (SEC) following the approval of the board of VFD Group PLC. • Appointment to NGX Board of Directors: VFD Group’s appointment to the prestigious Nigerian Exchange Group board reflects industry recognition of its leadership and expertise. • Streamlined Operations: The company’s successful relocation to a new corporate office signifies operational efficiency and a commitment to a modern work environment. APPRECIATION I want to express my appreciation once again to the members of our Board, our valued shareholders, and dedicated business partners. Your unwavering contribution, trust, and loyalty have been instrumental in our continued success. To the elite staff at VFD Group, a heartfelt thank you. Your diligence, resilience, and unwavering dedication to achieving our shared goals are inspiring. Together, we have accomplished so much this year, and I am excited for the opportunities that await us in 2024. Onward to a brighter future! Thank you. OLATUNDE BUSARI (SAN), FCIS, C.Arb
NONSO OKPALA GROUP MANAGING DIRECTOR / CEO, VFD GROUP PLC. 24 VFD Group plc 2023 Annual Reports & Financials
A New Dawn 25 www.vfdgroup.com VFD Group is primarily an investment firm, with a focus on long-term investments in retail marketfacing companies that complement our existing investment portfolio. Dear Owners of VFD Group, Welcome to the 2023 Annual General Meeting of VFD Group Plc. I extend a warm welcome to all our esteemed stakeholders, both longstanding contributors and recent additions through our rights issue. It is customary for us to provide an account of our stewardship for the year ended 31st December 2023. As VFD Group Plc reaches a milestone year, this statement serves as a comprehensive reflection of our past, our present, and our plans. My goal is therefore twofold: firstly, to provide an ode to the last fifteen years, and secondly, to usher in a new dawn of strategy, finesse, and expansion as we continue to collectively build a distinguished African enterprise with global aspirations. I will work through this outline to ensure all matters are addressed. OUTLINE: • VFD at 15 • Tribute to Founders • Investor Appreciation • 2023 Highlights and Financial Performance • Future Operational Framework GROUP MANAGING DIRECTOR’S STATEMENT
VFD Group plc 2023 Annual Reports & Financials 26 VFD AT FIFTEEN (15) In December 2024, VFD Group will celebrate its fifteenth anniversary. Reflecting on the journey, it feels like ages ago when thirty-two friends and I pooled in resources, modest in cash yet rich in skill and determination, to bring the VFD Group story to life. Over the years, the journey, the sweat, and the rewards have not been ours alone, thankfully. On behalf of VFD Group Plc and its entities I extend our heartfelt gratitude to everyone who has poured in generous amounts of effort, dedication, and trust into this endeavour. Thanks to you all, our initial investment, which was indeed a leap of faith into an uncertain future, stands strong at 15 years and is positioned for another 15 years of success. TRIBUTE TO FOUNDERS OF VFD GROUP I remain honoured to serve as the Group Managing Director of VFD Group Plc, a role that has garnered recognition and acclaim within and outside the business community. While I appreciate the growth and exposure this position has afforded me, I am constantly reminded of what sets my tenure and the company apart. Just as Charlie Munger was to Warren Buffet, I must recognize the muster of remarkable individuals, who alongside me are fondly known as the Founding 5 and have been the bedrock of our company. They have contributed their talents and dedication to laying the groundwork for our success, embodying the spirit of resilience and innovation that defines VFD Group plc. As we celebrate our 15th anniversary, it is only fitting to honour these pioneers who have played a big role in bringing our compelling business vision to life. Since day one, they have led key functions and businesses within the Group, demonstrating unwavering commitment to our shared mission. Bolaji Adewumi, who was a colleague of mine at KPMG, and in the early days handled our finance operations before serving as our Executive Director of Finance for two years. He is currently the Managing Director of Abbey Mortgage Bank, our investee company, where he successfully orchestrated a turnaround of the oldest mortgage bank in Nigeria from a six (6) year loss making company to profitable and dividend paying, all within two years of resumption. Adeniyi Adenubi, who served as our initial corporate investor with an investment of ₦2 million back then, has always been the ideological compass of the firm with a significant voice on matters of strategy, governance, and social impact. In the early days, matters never went off to the execution bay without his wise counsel. Today he is the Executive Director, Subsidiary and Government Relations of VFD Group. Azubike Emodi, who has been an integral part of the company, and an ally since our university days in the Faculty of Business Administration. When our company was in its early emerging stage, I called on “Zuby,” and without hesitation, he assumed leadership of our lending business, VFD Microfinance, while also leading the Group’s business development. I have always appreciated how he expertly stabilized Anchoria Asset Management following the departure of its founding Managing Director. Currently, he oversees our real estate and hospitality arm, HEREL Global Limited, with exceptional skill and foresight. Gbenga Omolokun, aa fellow KPMG alumnus, played a vital role in tempering our youthful enthusiasm and ambitious drive with a voice
A New Dawn 27 www.vfdgroup.com of caution and risk management during the early days of the Company. His insistence on implementing robust processes and procedures has had a lasting impact on our organization, contributing to our stability and success to this day. As Executive Director of Operations, Gbenga’s leadership was instrumental in shaping our approach to technology and innovation, particularly in the development of our digital banking platform. Subsequently, he took on the role of Managing Director at VFD Microfinance Bank (VBank), where his expertise further propelled our growth. Whilst Gbenga will be to taking a step back from his day-today involvement in the Group after many years, he remains a significant shareholder and active member of our VFD family. We extend our best wishes to him for continued success in all his future endeavours. Though I single out these four, their legacy does not erase the contributions of Tunde Aliu who drafted the prospectus of “PremiumGreen” the company that transitioned into VFD Group Plc, Chukwuma Kalu who was the second largest shareholder of the group in the early days and Bode Afolayan who succeeded Bolaji as Executive Director of Finance. All these incredible individuals, along with many others, are the foundation on which VFD Group Plc stands on today. Their dedication and sacrifices have been instrumental in our journey, and I am deeply grateful to each of them and their families. As we embark on the next chapter of our evolution, their legacy remains a guiding light for VFD Group Plc, shaping our identity and driving our aspirations. Reflecting on the dynamic journey of the past fifteen years, I am filled with both gratitude and excitement. VFD GROUP INVESTOR APPRECIATION Moreso, I would also like to appreciate one of our early investors Nneka Ejiawoko who embodies a Warren Buffet quote I love “Our favourite holding period is forever.” Not only has she been an investor since our inception, her only investment in the capital market, till date, in the last 15 years has been in VFD Group Plc shares. She was one of the early investors in “PremiumGreen” now VFD Group Plc with an entry share price of ₦10 in 2008 and a total investment sum of ₦606,405 now valued at ₦24,458,362, a 3900% growth. Back then, she was working with a telecommunications company until she resigned to work in our subsidiary VBank as Head of client experience. Her investment “VFD Group Plc,” has declared profit and paid dividend consistently for over five years now. Religiously, Nneka has reached out to us in excitement every dividend payment season, reminiscent and in appreciation of our improbable humble beginning. The story of Nneka and many others is the reason my job and that of my colleagues gives the kind of satisfaction money cannot buy. Indeed, the company has served us, and the intention remains to build VFD Group Plc into a household name that continues to serve us and our extended community into the future. To mark the Company’s fifteenth anniversary, I am pleased to announce the publication of a book, which is amongst one of the planned activities to commemorate our anniversary— written by the acclaimed writer Eghosa Imasuen, that will chronicle the journey of the Company, telling the very story of our foundation and creation. I am sure Bolaji, Niyi, Zuby, Gbenga, and I enjoyed the process of reliving moments from our early days during the informationgathering sessions with Eghosa.
VFD Group plc 2023 Annual Reports & Financials 28 “On that note, I say all these to say, VFD Group Plc is grateful for the 15 years you have given her. Can I then convince you to give 15 more?” 2023 HIGHLIGHTS AND REFLECTIONS I am pleased to report the following highlights for the years operations: 1. Listing on Nigeria Stock Exchange Main Board: We successfully listed on the Nigerian Exchange Limited (NGX) Main Board on 6th October 2023 marking a significant milestone from our 2016 vision board. Our intention to list on the exchange was driven by the need to give our investors options to leverage their investment for maximum benefit. In the last rights issue, we observed, with delight, shareholders were able to access credit on the back of the newly listed VFD Group shares. That was really a full circle moment for us and validation of our years of work. 2. Redemption of the Series 1 Commercial Paper: As part of our strategic plans to tap into the established money market, we initiated and redeemed our series one commercial paper on the 28th of July 2023. This is geared towards diversifying our funding options but also establishing our brand credibility in this strategic market. When the long-term debt pricing is right, we intend to also do same in the bond market. 3. Group Appointment on the NGX Board: We always saw the demutualisation of the Nigerian Stock Exchange as a strategic opportunity to align with a sector that will lead the advanced ownership of assets, not only equity and debt assets, but assets that extends from real estate to intangible talent-based assets like intellectual properties (IPs) and lifestyle assets under the shared asset philosophy. We think that Nigeria has a head start in this asset holding sector and the opportunity is phenomenal, so is the strategic influence we can buildout into Africa. As a result of the above stated, we acquired 5% in the Nigeria Exchange Group and requested a board seat to infuse our ideas and strategy intent. We are pleased to disclose that our request for a board seat was granted and as Group Managing Director, I am currently on the Board of this historic and strategically important institution – Nigeria Exchange Limited, Nigerian’s premiere stock exchange. Since being on the Board, I have worked as Chairman of the Strategy, Finance, and Investment Committee and together with the other distinguished members of the Board of the company, we have provided sufficient commercial orientation of this traditionally non-commercial institution. Thus, reversing a loss of ₦260 million to a profit of ₦726 million in 2023 on the company level and on the Group level, a profit of ₦5.2 billion in 2023 from ₦716 million in 2022.
A New Dawn 29 www.vfdgroup.com We are positive that the company can deliver our benchmark 30% return on equity under the leadership of the Alhaji Umaru Kwairanga and the current Group Managing Director – Temi Popoola. 4. Approval of the ₦12.5 billion rights Issue: As part of our strategic plan to deleverage our balance sheet to enhance profitability and increased capacity for additional investment, we obtained your approval as well as that of the The Securities and Exchange Commission (SEC) to raise ₦12.5 billion via Rights offer. As of 31st December 2023, the rights offer, based on participation, was deemed successful. The success cures the negative carry that we experienced in 2023 and I would like to thank all investors who made this a success. 5. Breakeven of VFD Ghana: We are please to announce that VFD Ghana, our Ghanaian subsidiary broke-even and turned in ₦1.7 billion. This success validates our expansion strategy and places VFD Ghana as a significant contributor to our bottom line. This would not have been possible without the exceptional leadership of Hubert Asamoah, Group Managing Director of VFD Ghana. On the back of his market establishment experience, we have further mandated him to establish VFD South Africa. Congrats Hubert and I wish you the best in South Africa. 6. Completion and Movement to a befitting Head Office: The completion and relocation to our new head office at 8 Macgregor Road, Ikoyi coincidently in the 15th year of operation is one of pride. Our workforce of 21 experts, brings in operational excellence daily at this location. The office seeks to capture and reflect the spirit of VFD, one of style, standard, excellence, and respect for the needs of our staff. Lastly, and most importantly, it showcases a rich collection of African Modern and Contemporary artworks as provided by our investee company, ARTSPLIT. As shareholders, please feel free to visit the office via a prior booking tour on our company’s website (www.vfdgroup.com), we look forward to hosting you. 7. Divestment Income: After almost 15 years of operations, divestment income has started yielding. In 2020, we invested ₦250 million in a struggling leasing company called Atiat Leasing Limited to acquire 386,099,837 ordinary shares of the company representing 64.35%. In December 2023, we sold 42.5 million ordinary shares to generate ₦1billion representing an ROI of 3014%. In 2024, we intend to execute more partial divestment in some of our key companies to enhance our cash reserve and profitability, cementing the viability of our business model as we push our investment portfolio more to listed and marketable instruments relative to unlisted companies.
VFD Group plc 2023 Annual Reports & Financials 30 2023 HIGHLIGHTS OF FINANCIAL PERFORMANCE – GROUP AND COMPANY PERFORMANCE Before I proceed to share the 2023 financial highlights, I would like to give clarity to our business model. As a proprietary investment company, the core assets derived from our business operations are as follows: • Cash and cash equivalent • Investment in financial instruments • Investment in Investee Companies – Quoted • Investment in Investee Companies – Unquoted Though theoretical, this sets a baseline for evaluating our balance sheet. These assets described are financed by equity contributions of shareholders from the following sources: • Short Term Borrowings – E.g. Commercial Papers • Long Term Borrowings – E.g. Bonds • Bank Borrowings 1. The critical success factors for our business model therefore requires: A. An optimal balance sheet structure where: • Cash and cash equivalent match short-term borrowings. • Financial instruments match bank borrowings. • Quoted Investments match long-term debt. • Unquoted Investment match Equity. B. That the cost of funds to acquire the asset is consistently less than the yield on the asset. This being a positive carry, is the shareholders ideal. C. Our company and portfolio companies must achieve an ambitious 30% Return on equity. • This target is justified by the high cost of equity, shareholders’ expectations for returns
A New Dawn 31 www.vfdgroup.com exceeding prevailing debt rates, and the prime lending rate exceeding 24% in the last 18 months. At VFD Group, this 30% ROE serves as our performance benchmark, to be achieved through diverse income streams including interest, treasury operations, dividends, governance and consulting, and divestments. 2. Based on the above stated, the core of our managements task are as follows: • Getting all our companies to achieve 30% ROE or more. • Placing the companies that do not meet that expectation on a special programme to achieve the set target via a combination of funding (equity and debt injection), leadership change and/or staff rationalisation. • Integrating cross selling and collaboration to unlock intrinsic value. • And in a situation were all these do not yield the desired expectation, exiting the company or making a partial divestment. • Partial divestments can also be done to enhance our liquid position like we did with Atiat in December 2023. Therefore, for the year 2023, we report the financial highlights as follows: A. Asset Growth: We grew our total assets by 45%, from ₦151.5 billion in 2022 to ₦219.4 billion in 2023, significantly enhancing our earning potential. B. Gross Earnings: Our gross earnings increased by 33%, rising from ₦33.8 billion in 2022 to ₦45.1 billion in 2023, demonstrating the inherent value and yield of our current business portfolio. C. Profit after Tax: Despite top-line growth, our bottom line was impacted by the challenging macroeconomic headwinds, and for the first time in our history we recorded an operational loss after tax of ₦750 million in 2023 compared to a profit after tax of 6.9 billion in 2022 due mainly to the Naira depreciation from ₦447 to ₦899.4 (101.2%), which materially increased the cost of the hedge instruments we used to address exchange volatility on our forward transactions and significantly impact on our overall interest expense for the period. With this knowledge, we move forward with enthusiasm and a shared vision, as we have taken great steps to ensure that the company is adequately protected from future Naira depreciation events. Here at VFD Group, we are also faced with an environment characterized by high interest rates, rising inflation, and significant Naira depreciation. However, VFD Group remains committed to adapting and thriving. Our dedicated team continues to excel in our efforts to enhance value for all our shareholders.
VFD Group plc 2023 Annual Reports & Financials 32 VFD GROUP: WE ARE CONSTANTLY EVOLVING. Amid our successes, it is crucial to recognize that our journey has not been without hurdles. Over the past 15 years, VFD Group has faced significant challenges, pushing us to evolve and adapt. We have learned from each hurdle, refining our strategies to stay agile and responsive. This adaptability has been vital, allowing us to emerge stronger than before. Day 1 At the early stage, we began with a straightforward goal to pool capital and establish a solid record of governance and profitability. With this in mind, we founded wholly owned subsidiaries, each with a focus on high-leverage capabilities such as lending, microfinance, currency exchange, and asset management. This approach allowed us to aggressively aggregate capital and demonstrate our ability to deliver results. As we maintained full ownership of these businesses and centrally directed their financial and operating strategies, we earned recognition as a cohesive group of companies, thus earning the name “VFD Group.” Day 2655 Until 2016, our operations primarily followed the aforementioned business model. However, with most of the founders fully engaged in the company’s day-to-day operations, we recognized the need for a strategic shift. The inherent risk of our leveraged equity position and illiquidity made us susceptible to systemic shocks stemming from interest and currency exchange. In 2016, we piloted a strategy centred on coownership through collaborative investment efforts. Inspired by the success of Obinna Ufudo and his co-investors with their investment in NEM Insurance, we sought to replicate this model. We approached them to spearhead an investment in NEM Insurance Plc, which they led adeptly. Within just 18 months, we successfully exited the investment at 2.5x multiple of our initial investment, generating significant cash flow. This success not only strengthened our financial position but also validated a revised business model to prioritize increasing our capital allocation to quoted companies over our previous focus on unquoted companies and greenfield investments. 2024 AND THE NEXT 1825 DAYS (FIVE YEARS) The next five years, from 2024 onward, marks a critical phase in our evolution, aptly themed “A new dawn.” This phase symbolizes our transition from a Founder-led organization to a publicly quoted, multiple shareholder-led entity, with an inclusive mindset of equally protecting minority interests. To facilitate this transition, we have developed a comprehensive framework that encompasses a new shareholder structure, a refined investment philosophy, and a redefined corporate culture centred around our identity. Our J10 – Shareholder Structure The J10 Shareholders Policy, approved by the Board of VFD Group Plc, embodies our dedication to the tenets of a publicly quoted, shareholder-led entity. This policy was crafted to broaden the company’s ownership base beyond its founders, continuing a tradition of active and dedicated shareholders. At the core of the J10 Shareholders Policy lies
A New Dawn 33 www.vfdgroup.com the provision that enables any shareholder either new or existing, inclusive of the founders, the opportunity to augment their ownership stake in the company up to 10%, thereby preserving their influence regardless of their prior association with the Company. The evidence of this policy is underscored by the example of “Jotani Investments Limited,” currently holding the position of the secondlargest shareholder in VFD Group Plc. The J10 illustrates our commitment to inclusivity, transparency and compliance and we invite both individuals and entities to acquire up to a 10% stake in the company whereby securing an automatic Board seat in the process. Investment core - 30% Return on Equity (ROE) On our investments, one of the biggest challenges we face today is how to optimize capital allocation in continuously developing economies like we see in Nigeria. By sheer adaptability, we have squared up with this consistent challenge by first, ensuring that our naira denominated investments yields a minimum of 30% ROE and this has guided our process of capital allocation to ensure the most effective use of capital. This critical principle is our most compelling investment ideology today. Best put, “Don’t invest if you are not convinced you will get 30% ROE by way of dividend payment and capital appreciation.” A second aspect of our investment strategy involves targeting underperforming companies with the aim of initiating a turnaround plan to achieve a 30% ROE within a maximum timeline of 36 months. Among the companies in our portfolio falling into this category are NGX Group Plc, CSCS Plc, and HEREL Global Limited. Each of these companies are led by exceptional CEOs and boasts best-in-class Board members. Specifically, Temi Popoola, CEO, Nigeria Exchange Limited (NGX Group); Jalo Waziri, CEO, Central Securities Clearing System Plc (CSCS Plc); and Azubike Emodi, MD, HEREL Global Limited. These leaders have demonstrated their exceptional abilities, and their business models are conducive to achieving our target return. I would like to take this opportunity to commend Azubike Emodi for successfully revitalizing two companies to meet this ROE target, with a third currently underway. The concluding part of our investment strategy concerns companies within our portfolio led by exceptional teams that have yet to demonstrate the ability to attain the target returns. In these instances, we will assess options to either reshape their business model or accelerate our exit strategy, even at the cost of potential losses. The aim is to redirect the proceeds from such divestments into investments capable of meeting our ROE target rate. This proactive stance guarantees that our capital is consistently directed towards avenues where it can maximize value for our shareholders. Cash is King, No Emperor Reading the annual Chairman’s statement of Berkshire Hathaway Inc. by Warren E. Buffett is an annual ritual, and his influences are immense on our company. This year, a section of the report caught my attention, and I would like to share with you. “Your company also holds a cash and U.S. Treasury bill position far in excess of what
VFD Group plc 2023 Annual Reports & Financials 34 conventional wisdom deems necessary. During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial papers, bank lines or debt markets. We did not predict the time of an economic paralysis, but we were always prepared for one. Warren Buffet” These words reinforce the importance of prudent financial management, a principle that aligns perfectly with our vision for VFD Group Plc. Building a solid legacy demands discipline, and we are committed to upholding this standard. Moving forward, we reaffirm our commitment to accountability, and this is our pledge to you. We will: 1. Implement strategies to increase revenue and cash reserves, particularly executing the mandated 30% return on equity (ROE). 2. Advocate for a 40-50% dividend payout from all our investee companies, based on the anticipated target return. We will also strategically dispose of interests in companies that fall short of expectations. 3. Leverage GaaS (Governance as a Strategy) detailed in the upcoming section, to optimize our supervisory operations over investee companies and significantly reduce our cost of operations. 4. Continuously seek to reduce operating costs by increasing cross collaborative functioning across ecosystem to enhance value and payouts to shareholders. 5. Ensure that a significant portion of our investments in any given financial year are in near cash and well-traded quoted investments. 6. Enhance our treasury activities to optimize our liquidity status. In summary, we are building a formidable company like Berkshire Hathaway, one that can withstand economic paralysis, and now more than ever, our commitment is unwavering. VFD CULTURE AND OUR EVOLVING NEEDS: OUR PRINCIPLES Leadership as our Stock-in-Trade While capital undoubtedly plays a crucial role in this sector, Leadership has been our guiding force since our humble beginnings, underscoring its paramount importance even in the face of scarce resources. Leadership commands capital, Leadership is everything. As we celebrate this milestone, we recognize the need to harness the power of leadership not only for our internal goals but also for the betterment of our communities and the continent’s youthful population. To this end, we are committed to addressing some key questions: How can we tailor our human resource strategy to cultivate and empower leadership? How do we support visionary entrepreneurs lacking resources? How do we ensure the resilience and proactive futureproofing of our organizational culture? Our track record speaks volumes. Five years ago, we collaborated with Sam Chidoka, a man
A New Dawn 35 www.vfdgroup.com with a solid and illustrious investment banking career who had all it took to build a great investment bank. He was at the time leading one without owning a stake in it. We worked with him to establish Kairos Capital and today, he is in talks on a consolidation of Kairos Capital, Anchoria Asset Management and Anchoria Investment and Securities Limited to form Anchoria Capital Group which will be a full suite investment banking and management company to rival others established. His success is a story that excite us most. Looking ahead, we aim to refine this process as a crucial aspect of our strategy over the next five years to expand our ecosystem and human capital. The “Humans of VFD” our beloved employees have always been a priority and whilst we maintain a high-performing and lean team as a strategic imperative, we are building out our model that enables us to achieve the balance between excellence and staff satisfaction in today’s world. Building on this, we initiated a comprehensive audit of our organizational culture last year through an engagement with a consulting firm led by Chike Onyia, Esq., and Dr Maxwell Ubah, examining key pillars of inclusion, values, representation and growth; the report is available on www.vfdgroup. com. We are committed to addressing the identified gaps and have mapped out a series of trainings, culture integration exercises and development opportunities to enhance our people experience. Inclusion here also includes our commitment to placing more women in leadership positions as well as on our board. We will regularly report progress to our stakeholders towards a target of being one of the best places to work in Nigeria. Employee satisfaction is important to our bottom line as well. Governance as a Strategy (GaaS) One critical aspect of our business model is how we interact with our investee companies pre and post investment to create a conducive relationship. We have articulated and currently execute our corporate engagement procedure termed “Governance as a Strategy” (GaaS) which involves a framework that directs the operational and financial strategies of the investee company to achieve its set objectives including but not limited to 30% ROE and broader ecosystem integration themes. The objectives of GaaS are as follows: • Implement world-class governance practices that preserve our ideological compass and are adaptable to local contexts, ensuring equitable representation, integrity, transparency, and accountability, thus fostering trust and transparency. • Establish clear rules of engagement with investee companies, encouraging collaboration and minimizing defensive structures. The aim is to target stakes in companies between 15% and 35%, ensuring board representation while allowing collaborative efforts with other shareholders. • Create an adaptable framework for holding management accountable and streamlining operations to optimize efficiency and minimize costs, ensuring efficient allocation of human and financial resources. • Identify, understand, and mitigate risks in investee companies through centralized coordination and talent engagement, aligning governance practices with business objectives.
VFD Group plc 2023 Annual Reports & Financials 36 CLOSING REMARKS Fifteen years ago, our vision was ambitious and multifaceted when we embarked on this journey. We aimed to become the voice of our generation, an inspiration to the next generation and an assurance to the previous generation that their corporate legacy would endure. We set out to establish an uncommon company with audacious goals to prioritize long-term economic development over short-term commercial gains. A company that would reflect a nuanced corporate culture that served as a global benchmark, guiding and inspiring future generations. One with a solid foundation in governance. Our goal culminated in a drive to create and sustain substantial wealth for our stakeholders, ensuring enduring prosperity and success. To our shareholders, our commitment is unwavering. We will annually deliver a composite return on equity of 30%, a testament to our dedication to your investment. This commitment is backed by our varied interest in diverse but complimentary sectors and industries, establishing an ecosystem with the potential to build a moat around our businesses. I want to end this piece with an expression of profound gratitude to our shareholders and stakeholders over the last fifteen years, particularly those who have been with us from inception to date. This journey would not have been possible without you. The journey is just beginning, and your support is critical for the next fifteen years. Always at your service, Nonso Okpala GMD/CEO
VFD Group plc 2023 Annual Reports & Financials 37 SUSTAINABILITY REPORT VFD Group Plc recognizes the growing importance of sustainability in today’s business landscape. We are committed to operating in a responsible and ethical manner, considering the environmental, social, and economic impacts of our activities. This report outlines our current sustainability practices and future aspirations.
A New Dawn 38 www.vfdgroup.com OUR SUSTAINABILITY JOURNEY VFD Group is in the early stages of its formal sustainability journey. We acknowledge the need for continuous improvement and are actively developing a comprehensive sustainability framework. This framework will identify key environmental, social, and governance (ESG) factors material to our business and stakeholders. TRANSFORMATION TOWARDS SUSTAINABLE DEVELOPMENT VFD recognizes the challenges of climate change, resource depletion, and social inequality. We believe businesses play a crucial role in driving positive change. We leverage our strengths, including innovation and diverse employee expertise, to develop solutions that address these challenges. KEY SUSTAINABILITY FOCUS AREAS • Environmental Stewardship: We are committed to minimizing our environmental footprint. This includes transitioning to paperless operations, reducing energy consumption, and exploring clean energy solutions. • Social Responsibility: VFD fosters a diverse and inclusive workplace, promotes financial inclusion, and upholds high ethical standards. We have a zero-tolerance policy for corruption and bribery, and a robust whistle-blowing policy to encourage ethical conduct. • Economic Development: VFD contributes to economic growth by providing investment management, financial advisory, and other financial services. We are committed to responsible lending practices and client financial literacy. • Data Security and Privacy: VFD takes data protection seriously and implements best practices to safeguard client and employee information. We continuously educate staff and stakeholders on cybersecurity and data privacy measures. GOVERNANCE VFD maintains a strong governance framework with a diverse Board of Directors who provide oversight on risk management, including ESG risks. The Board undergoes annual evaluations to ensure alignment with best practices. LOOKING AHEAD VFD is committed to continuous improvement in sustainability. We will develop measurable targets for key ESG metrics and regularly report on our progress. Stakeholder engagement will be central to our sustainability efforts, and we will actively collaborate with partners to create positive change. This report is a starting point for VFD’s sustainability journey. We are dedicated to building a more sustainable future for our company, stakeholders, and the environment.
2023 ANNUAL REPORTS & FINANCIALS CHAPTER GOVERNANCE • CORPORATE GOVERNANCE REPORT • DIRECTORS‘ REPORT • STATUTORY AUDIT COMMITTEE REPORT • STATEMENT OF DIRECTORS’ RESPONSIBILITIES • STATEMENT ON VFD GROUP BOARD EVALUATION • INDEPENDENT AUDITOR‘S REPORT 03
VFD Group plc 2023 Annual Reports & Financials 41 The Corporate Governance Report contains detailed information on the VFD Group PLC’s (VFD Group) governance structures, policies, and practices, as well as environmental and social risks which is in compliance with the Securities and Exchange Commission’s Code of Corporate Governance for Public Companies of 2011, the Nigerian Code of Corporate Governance of 2018, the Rules and Regulations the Nigerian Exchange Limited, the Investment and Securities Act No. 29 of 2007, the Companies and Allied Matters Act 2023 as may be amended from time to time and global best practices in relation to its governance framework, culture and the activities of its Board of Directors, Executive Committee and Management Committee during the reporting period. To promote effective governance of VFD Group, the following structures have been put in place for the execution of VFD Group’s corporate governance strategy: VFD Group Plc holds good governance as one of its fundamental pillars and confirms its commitment to the implementation of effective corporate governance principles in its business operations. CORPORATE GOVERNANCE REPORT
A New Dawn 42 www.vfdgroup.com • Board of Directors. • Board Committees. • Executive Management Committees. COMMITMENT TO CORPORATE GOVERNANCE The Company remains committed to institutionalizing Corporate Governance principles. The Board operates in line with its responsibilities as contained in the Regulatory Codes of Corporate Governance, the Articles of Association and the Companies and Allied Matters Act. Its oversight of the operations and activities of the Company are carried out transparently without undue influence. Essentially, Corporate Governance depends on the quality and integrity of the Directors. Consequently, the Company has undertaken to create the institutional framework conducive for defending the integrity of its Directors and is convinced that on account of this, the Board of the Company is functioning in a highly effective manner. It is intended that Directors and Management would be continuously challenged to improve in areas where the need for improvement is identified. A. BOARD OF DIRECTORS As at December 31, 2023, the Board comprised a Chairman, four [4] Independent Non-Executive Directors, six [6] Non-Executive Directors and three [3] Executive Directors [including the Group Managing Director/Chief Executive Officer], all of whom bring a wide range of skills and experience to the Board. The Non-Executive Directors have the requisite integrity, skills, and experience to bring independent judgment to bear on Board deliberations and discussions. The members of the Board have competence and experience in Accounting, Investment, Risk Management, Legal, Planning and Strategy, Corporate Finance, Compliance, Information Technology and Business Administration. The Board of Directors act on behalf of shareholders and is responsible for controlling and managing the strategic business of the Company and constantly reviews and presents a balanced and comprehensive assessment of the Company’s performance and prospects. The Board is accountable to Shareholders and ensures that the conduct of the Company’s activities is within the applicable regulatory framework. The Board of Directors carries out its responsibility through its standing Committees. These are the Board Corporate Governance Committee, Board Finance & General-Purpose Committee, Board Risk Management and Compliance Committee, Board Remuneration Committee, Board Audit Committee and Board Investment Committee. Through the workings of these Committees, the Board sets broad policy guidelines and ensures the proper management and direction of the Group. In addition to the Board Committees, there is a Management Committee which ensures effective and good corporate governance at the managerial level.
VFD Group plc 2023 Annual Reports & Financials 43 The guiding principles of the Company’s Code of Corporate Governance remain as follows: • All power belongs to the shareholders. • Delegation of authority by the owners to the Board and subsequently to Board Committees and Executives is clearly defined and agreed. • Institutionalized individual accountability and responsibility through empowerment and relevant authority. • Clear terms of reference and accountability for Committees at Board and Executive levels. • Effective communication and information sharing outside of meetings. • Actions are taken on a fully informed basis, in good faith with due diligence and care and in the best interest of the Company and Shareholders. • Enhancing compliance with applicable laws and regulations and the interest of the stakeholders. Where there is any conflict between the Company’s rules and local laws and regulation, such local laws and regulation will supersede. • Conformity with overall Company strategy and direction. • Transparency and full disclosure of accurate, adequate and timely information regarding the personal interest of Directors in any area of potential conflict regarding the Company’s business. Responsibility The roles of the Chairman and Chief Executive Officer are separated and clearly defined. The Chairman is primarily responsible for the working of the Board whilst the Group Managing Director/ Chief Executive Officer is responsible for the running of the business and implementation of Board strategy and policy. The Group Managing Director is assisted in managing the business of the Group on a day-to-day basis by the Executive Management Committee, which he chairs and comprises all Executive Directors. The Board’s primary responsibility is to increase shareholder wealth. The Board is accountable to shareholders and is responsible for the management of the relationships with its various stakeholders. The Board regularly reviews group performance, matters of strategic concern and any other matters it regards as material. The Board is also responsible for the group’s structure and areas of operation, investment policy and monitoring of investment and strategic commitments, performance management, financial reporting, ensuring there is an effective system of internal control and risk management and appointments to the Board. The Board has the authority to delegate matters to Directors, Board Committees, and the Executive Management Committee. According to the Company’s Articles of Association, the responsibility of managing the Company’s business lies with the Board of Directors. The Board has the power to exercise any rights not reserved for the Company in general meetings, as required by statute or the Articles of Association. As of now, the Board consists of fourteen (14) members, an Independent Non-Executive Chairman
A New Dawn 44 www.vfdgroup.com heads the Board, and the Group Managing Director (GMD) leads the Company’s management team as per the Board’s mandate. S/N NAME OF DIRECTOR POSITION 1 Mr. Olatunde Busari [SAN] Chairman/ Independent Non-Executive Director 2 Mr. Nonso Okpala Group Managing Director 3 Mr. Adegboyega Fatoki Independent Non-Executive Director 4 Ms. Omolola Bolusire Independent Non-Executive Director 5 Ms. Rashida Saleh Independent Non-Executive Director 6 Mrs. Nneka Okekearu Independent Non-Executive Director 7 Mr. Mobolaji Adewumi Non-Executive Director 8 Mr. Gbenga Omolokun Non-Executive Director 9 Mr. Azubike Emodi Non-Executive Director 10 Mr. Chuks Celestine Ozigbo Non-Executive Director 11 Mr. Kelvin Orogun Non-Executive Director 12 Mr. Femi Akinware Non-Executive Director 13 Mr. Adeniyi Adenubi Executive Director Governance, Government & Subsidiary Relations 14 Mr. John Okonkwo Executive Director, Finance, Risk Management and Compliance Conduct at Board Meetings P Present AWA Absent with Apology NYA Not yet Appointed R Resigned NLC No longer on the Committe NAC Not appointed to the Committee The Board met five (5) times during year ended December 31, 2023, and the attendance is represented below: S/N NAME OF DIRECTOR APRI 24, 2023 APR 29, 2023 AUG 23, 2023 OCT 25, 2023 APRIL 24, 2023 1 Mr. Olatunde Busari [SAN] P P P P P 2 Mr. Nonso Okpala P P P P P 3 Mr. Adeniyi Adenubi P P P P P 4 Mr. John Okonkwo P P P P P 5 Mr. Folajimi Adeleye P P P P R 6 Mr. Gbenga Omolokun P P P P P
VFD Group plc 2023 Annual Reports & Financials 45 S/N NAME OF DIRECTOR APRI 24, 2023 APR 29, 2023 AUG 23, 2023 OCT 25, 2023 APRIL 24, 2023 7 Mr. Mobolaji Adewumi P P P P P 8 Mrs. Ngozi Aghanya P P R R R 9 Mr. Adegboyega Fatoki NYA NYA P P P 10 Ms. Omolola Bolusire NYA NYA P P P 11 Mr. Suleiman Lawal P P R R R 12 Mr. Azubike Emodi P P P P P 13 Ms. Jewel Okwechime P P R R R 14 Mr. Chuks C. Ozigbo P P P P P 15 Mr. Kelvin Orogun P P P P P 16 Mr. Femi Akinware P P P P P 17 Mrs. Nneka Okekearu NYA NYA NYA NYA P 18 Ms. Rashida Saleh NYA NYA NYA NYA P B. BOARD COMMITTEES During the financial year ended December 31, 2023, the Board delegated some of its responsibilities to its committees as follows: 1. Board Finance and General-Purpose Committee The functions of the Finance & General Purpose Committee include reviewing the Company’s global budgets, accounts, strategy, tax strategy, treasury activities, risk assessment and Management, insurance programs/coverage, financial exposures and financial objectives and monitoring the implementation of those strategies and objectives, reviewing and approving proposals for the allocation of capital and other resources, considering and approving major capital projects being proposed by Management as well as review of extraordinary business initiatives of Management on behalf of the Board, recommend to the Board of Directors dividends to shareholders and other shareholder actions and other ancillary duties as may be assigned by the Board from time to time. COMPOSITION S/N NAME OF DIRECTOR POSITION 1 Mr. Chuks Celestine Chairman 2 Mr. Nonso Okpala Committee Member 3 Mr. Mobolaji Adewumi Committee Member 4 Mrs. Nneka Okekearu Committee Member 5 Mr. John Okonkwo Committee Member 6 Mr. Kelvin Orogun Committee Member
A New Dawn 46 www.vfdgroup.com The Finance and General-Purpose Committee met four (4) times during the 2023 financial year. The following table shows attendance of members at the meetings. S/N COMMITTEE MEMBERS APRI 5, 2023 JUL 15, 2023 OCT 23, 2023 DEC 20, 2023 1 Mr. Olatunde Busari [SAN] P P P P 2 Mr. Nonso Okpala P P P AWA 3 Mr. Adeniyi Adenubi P P P P 4 Mr. John Okonkwo P P P R 5 Mr. Folajimi Adeleye P P P AWA 6 Mr. Gbenga Omolokun P P P AWA 7 Mr. Mobolaji Adewumi NYA NYA NYA P 2. Board Remuneration Committee Its functions include making recommendations to the Board on Board’s appointments as well as recruitment, promotion, compensation, and remuneration policy for the Company, overseeing Board performance and evaluation and succession planning for key positions on the Board. The Committee provides input to the annual report of the Company in respect of Directors’ compensation, attract, retain and motivate key talent who add value to the Company based on individual and team contributions, engage as necessary, the services of an independent adviser to carry out periodic compensation surveys across comparative organizations and ensure adequate disclosure of Directors’ remuneration to stakeholders. COMPOSITION S/N NAME OF COMMITTEE POSITION 1 Ms. Omolola Bolusire Chairman 2 Mr. Adegboyega Fatoki Committee Member 3 Mr. Chuks Celestine Ozigbo Committee Member 4 Mr. Azubike Emodi Committee Member 5 Mrs. Nneka Okekearu Committee Member 6 Ms. Rashida Saleh Committee Member The Board Remuneration Committee met four (4) times during the 2023 financial year. The following table shows attendance of members at the meetings. S/N COMMITTEE MEMBERS APRI 5, 2023 JUL 15, 2023 OCT 23, 2023 DEC 20, 2023 1 Ms. Omolola Bolusire NYA P P P 2 Ms. Jewel Okwechime P R R R 3 Mrs. Ngozi Aghanya P R R R 4 Mr. Chuks Ozigbo P P P P
VFD Group plc 2023 Annual Reports & Financials 47 S/N COMMITTEE MEMBERS APRI 5, 2023 JUL 15, 2023 OCT 23, 2023 DEC 20, 2023 5 Mr. Azubike Emodi P P P AWA 6 Mr. Femi Akinware P P P NLC 7 Mr. Suleiman Lawal P P P P 8 Mr. Adegboyega Fatoki NYA P P P 9 Mrs. Nneka Okekearu NYA NYA NYA P 10 Ms. Rashida Saleh NYA NYA NYA P 3. Board Nomination and Governance Committee Its functions include reviewing and making recommendations for improvement to the Company’s VFD Group’s Corporate Governance framework, establishing a formal and transparent process for Board appointments, including establishing the criteria for appointment to the Board and Board committees, reviewing prospective candidates’ qualifications and any potential conflict of interest, assessing the contribution of current Directors against their re-nomination suitability, and making appropriate recommendations to the Board, ensuring that the company has a formal program for the induction and training of Directors, undertaking the annual assessment of the independent status of each INED, ensuring that the Company has a succession policy and plan in place for the Chairman of the Board, the MD/CEO, and all other EDs, NEDs and senior management positions to ensure leadership continuity, developing a process and ensuring that the Board undertakes an annual performance evaluation of itself, its committees, the Chairman and individual Directors, developing and reviewing the Board and committee policy and other governance policies, such as the code of ethics, conflict of interest and whistleblowing among others while ensuring adequate Corporate Governance disclosures are made in the Annual Reports and to relevant regulatory authorities. COMPOSITION S/N NAME OF COMMITTEE POSITION 1 Mr. Kelvin Orogun Chairman 2 Mr. Adegboyega Fatoki Committee Member 3 Ms. Omolola Bolusire Committee Member 4 Ms. Rashida Saleh Committee Member 5 Mr. Azubike Emodi Committee Member 6 Mr. Femi Akinware Committee Member The Board Nomination and Governance Committee met four (4) times during the 2023 financial year. The following table shows attendance of members at the meetings. S/N COMMITTEE MEMBERS APRI 6, 2023 JUL 19, 2023 OCT 17, 2023 DEC 7, 2023 1 Mr. Kelvin Orogun P P P P 2 Mr. Azubike Emodi P P P AWA
A New Dawn 48 www.vfdgroup.com S/N COMMITTEE MEMBERS APRI 6, 2023 JUL 19, 2023 OCT 17, 2023 DEC 7, 2023 3 Mr. Suleiman Lawal P R R R 4 Mrs. Ngozi Aghanya P R R R 5 Ms. Jewel Okwechime P R R R 6 Mr. Adegboyega Fatoki NYA P P P 7 Ms. Omolola Bolusire NYA P P P 8 Ms. Rashida Saleh NYA NYA NYA P 9 Mr. Gbenga Omolokun NAC NAC P NLC 10 Mr. Femi Akinware NAC NAC NAC P 4. Board Risk and Compliance Committee Its function includes overseeing Enterprise Risk Management’s vison, goals and objectives in line with best practice, monitoring the Company’s risk profile against set targets [risk appetite], approving and periodically reviewing the Company’s risk appetite and portfolio strategy, ensuring that appropriate risk management policies, processes and methodologies are in place for managing the various risks to which the Company may be exposed, establishing a Management structure that is capable of implementing the Company’s Risk Management framework and ensure that qualified and competent person[s] at senior levels are employed to manage the various risk areas. COMPOSITION S/N NAME OF COMMITTEE POSITION 1 Mr. Adegboyega Fatoki Chairman 2 Mr. Adeniyi Adenubi Committee Member 3 Mr. Kelvin Orogun Committee Member 4 Mr. John Okonkwo Committee Member 5 Ms. Omolola Bolusire Committee Member 6 Mr. Gbenga Omolokun Committee Member The Board Risk and Compliance Committee met four (4) times during the 2023 financial year. The following table shows attendance of members at the meetings. S/N COMMITTEE MEMBERS MAR 14, 2023 JUL 25, 2023 OCT 9, 2023 DEC 12, 2023 1 Mr. Adegboyega Fatoki NYA P P P 2 Mr. Gbenga Omolokun P P AWA P 3 Mr. Adeniyi Adenubi NAC NAC NAC AWA 4 Mr. John Okonkwo P P P NLC 5 Mr. Kelvin Orogun P P P P 6 Ms. Lola Bolusire NAC NAC NAC P