The Nation Newspaper

Category: Equities

  • Prestige Assurance cancels 1.6b shares

    Prestige Assurance Plc has cancelled about 1.6 billion ordinary shares of 50 kobo each under a capital restructuring programme aimed at removing bubble assets.

    Official listing report by the Nigerian Stock Exchange (NSE) at the weekend indicated that Prestige Assurance has concluded its capital reduction with the cancellation of 1.6 billion ordinary shares and listing of the post-restructuring share capital of 3.817 billion ordinary shares.

    The company had earlier been  suspended to update its register of shareholders for the share capital reconstruction of the company.

    Under this, Prestige Assurance reduced its share capital from N2.685 billion or 5.370 billion ordinary shares of 50 kobo each to N1.909 billion or 3.817 billion ordinary shares of 50 kobo each in the issued and fully paid up ordinary shares of the company.

    This led to reduction of N776 million or 1.55 billion ordinary shares. “The share capital so reduced will be applied in writing off the capital of the company which is lost or unrepresented by available assets,” according to a regulatory filing on the reconstruction.

    Prestige Assurance stated that the essence of the capital reconstruction was to enable it wipe out its accumulated retained losses of N776.511 million.

    The company noted that the reconstruction would reposition it on a trajectory for subsequent accumulated retained profit while creating more value to its shareholders.

    Besides, the reconstruction would allow the company to declare dividend and improve its perception in the market thereby making it more competitive.

    Shareholders of the insurance company had on Friday, August 18, last year at its 47th Annual General Meeting (AGM) in Lagos approved the share reconstruction and authorised the board of directors to take necessary actions to implement the share reduction.

    Established in 1952 as a branch of The New India Assurance Company Limited, Mumbai, Prestige Assurance was incorporated as a limited liability company on January 6, 1970 and licensed to write  non-life insurance in Nigeria. To reflect the majority shareholding of the public in the company, its name was changed to Prestige Assurance Plc on September 24,1992 in line with the indigenisation decree passed by government of Nigeria. After successful recapitalisation in 2007 and subsequent rights issue in 2015, Prestige Assurance is a subsidiary company of The New India Assurance Company Ltd, Mumbai, which has the majority equity stake of 69.5 per cent shareholding.

     

  • Unity Bank clarifies plan for recapitalisation

    •Says no agreement on Milost Global

    Unity Bank Plc yesterday clarified that it did not enter into any definitive agreement or sign any binding commitment with Milost Global Incorporation.

    At an interactive session at the Nigerian Stock Exchange (NSE) yesterday in Lagos, the management of the bank stated that it had with the mandate of shareholders of the bank had engaged in series of discussions and engagement with prospective value-plus investors. Milost Global was one of the prospective investors introduced to the bank.

    The bank stated that all through the process of engaging prospective investors, it was properly guided by the extant regulations concerning capital raising and equally made the process open to all prospective investors.

    “It is not unusual that this introduction and expression of interests would involve some level of preliminary discussions and exchange of nonbinding documentary communications between the intending parties towards establishing mutual foundation on which the transaction contemplated will be initiated,” Unity Bank noted.

    According to the bank, the purported “term sheet” dated September 4, 2017 said to have been executed was a “proposal” submitted by Milost Global Inc “for discussion purposes only and not a commitment” by the parties.

    “No definitive documentation governing the proposed financing was executed,” the bank clarified.

    The bank stated that there was no agreement whatsoever with Milost Global alluding to its acquisition of 60 per cent equity stake in Unity Bank and there was no iota of truth in the allegation that the bank had executed a ”binding commitment agreement”.

    “The bank’s position is on the premise that a document prepared by Milost and which the bank acknowledged merely contained the suggested terms and conditions on which Milost was planning to consider its possible participation in the capital funding of the bank. As stated in our previous correspondence, the bank through the mandate of its board and shareholders has been involved in series of preliminary engagements with several prospective investors including Milost, but the bank did not execute a binding definitive agreement with Milost Global Inc. It is therefore a misnomer for anyone to claim that the bank issued a false statement relative to the nature of the communication between Milost and the bank,” Unity Bank stated.

    The bank noted that the nomenclature “Commitment Letter” was apparently adopted by Milost in its communication to buttress its seriousness to proceed with the transactions subject to relevant compliance requirements.

    According to the bank, considering that Milost and the bank were only still engaged in preliminary discussions, which must necessarily be subjected to relevant regulatory, statutory and corporate governance compliance parameters before such discussions could become elevated to the level of a “binding commitment agreement” properly so called, the issue of “Termination” of the “Transaction” does not arise.

    “The bank is fully aware of all regulatory steps and requirements on such investment proposition and the imperative to comply with them, and will continue to engage all stakeholders on achievements made in this regard,” Unity Bank assured.

     

  • Africa Prudential predicts more listing as economy improves

    more companies will seek public listing in the months ahead as ongoing efforts by the government continue to improve macroeconomic environment.

    Chairman, Africa Prudential Plc, Chief Eniola Fadayomi, said the relentless determination of the Federal Government to improve the Nigeria’s rating on ease of doing business will facilitate the inflow of foreign investments and open up opportunities for new registrar mandates from companies going public.

    Addressing shareholders at the annual general meeting of the company yesterday in Lagos, Fadayomi said successful rights issues by many quoted companies are expected to spur the primary market for initial public offerings and offers for subscription.

    Accoring to her, with the Federal Government sustaining its policy reforms and benefits from investment in infrastructure and favourable policies from the Central Bank of Nigeria, the outlook for the real sectors of the economy is bright.

    “We are optimistic that your company will rightfully position itself in 2018 to maximise all the business opportunities that will arise from the budget implementation by seeking appointment as registrars from those companies that would be seeking public listing on the Nigerian Stock Exchange (NSE),” Fadayomi said.

    She added that the bullish trend in the capital market is expected to continue as both foreign and local investors’ confidence improves.

    Shareholders of Africa Prudential unanimously approved a dividend payment of N800 million or 40 Kobo per share to all shareholders whose names appeared in the company’s register of members at the close of business on Friday, March 12, 2018.

    In his remarks, Managing Director, Africa Prudential Plc, Mr. Peter Ashade noted that despite the challenging operating environment in 2017, the company ended the year with an impressive performance.

    The company recorded a 38 per cent increase in turnover to N3.36 billion and 43 per cent increase in profit before tax to N2.06 billion in 2017.

    He pointed out that the company in 2017 focused on the need for diversification of its business portfolio to achieve long term sustainability and viability, which necessitated the change of name that was approved at the last annual general meeting.

    “In 2018, we will intensify effort to build on the progress so far recorded in our business diversification drive by pursuing relentless innovation in product development and process improvement effort, offering exceptional customer experience to our client and leveraging technology for improved productivity and efficiency,” Ashade said.

    Shareholders who spoke at the meeting commended the board and management of the company. Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, commended the company for declaring a dividend of 40 Kobo in spite of the various projects the company undertook in the year under review.

    President, Pragmatic Shareholders Association of Nigeria, Mrs Bisi Bakare, commended the innovative approach of the management with the introduction of key products such as Easycoop, E-records, USSD *4018# and VAR.

    She urged the company to do more to enhance shareholders’ value in the years ahead.

     

  • Jaiz Bank, IDB sign $20m SMEs financing deal

    Jaiz Bank Plc and Islamic Corporation for the Development of Private Sector (ICD), the development arm of Islamic Development Bank (IDB), yesterday signed a $20 million line of agreement to finance Small and Medium Sized Enterprises (SMEs) in the country.

    The financing deal covers sectors such as industry, communications, technology, health, manufacturing, agriculture among others.

    Managing Director, Jaiz Bank, Mr. Hassan Usman signed on behalf of the bank while the Regional Office Director of ICD, Mr. Okan Altasil signed for the corporation.

    Hassan promised to judiciously use the facility to promote financial inclusion and development of the grassroots.

    “We would ethically deploy the funds to develop SMEs which is our focus area. We are going to use it to finance the retail end of the economy with the hope of bringing financing to those financially excluded, in line with our mission of making life better for people through ethical financing,” Hassan said.

    The ICD management said the reason for extending such financing to some Nigerian banks was because SMEs have crucial role to play in a country’s growth and development.

    “This is an important niche in all the member countries, especially in Africa. ICD is now focusing on increasing access to funding to the private sector by channelling the funds to established financial institution in its member countries,” ICD stated.

    The ICD had previously extended a total of $120 million line of financing facility for the development of SMEs in Nigeria.

  • SEC mulls stiffer sanction for fund diversion

    Nigeria’s apex capital market regulator-Securities and Exchange Commission (SEC) yesterday indicated that it has started the process of amending its rules and regulations to impose additional monetary sanctions on companies and governments that divert or misapply funds raised from the capital market.

    Under the proposed amendment, any company or government that diverts or misapplies funds raised from the capital market will pay additional penalty equivalent to two per cent above the subsisting monetary policy rate (MPR). The MPR is currently at 14 per cent, implying a proposed penalty of 16 per cent at the current rate.

    In a circular issued yesterday, SEC noted that it had received reports on instances of misapplication of issue proceeds, referring to the practice by some issuers to use funds raised for a specific purpose for another purpose without recourse to the Commission for a variation of the use of the net proceeds.

    “To curtail such diversion and misapplication of issue proceeds, it became necessary to propose a stiffer penalty,” SEC stated.

    Also, the Commission is considering amending its rules on publication of interim financial statement to provide exception to companies listed on the Alternative Securities Market (ASeM) of the Nigerian Stock Exchange (NSE) from mandatory publication of their reports in a newspaper.

    Under the existing rules, all public companies are required to publish their “signed” quarterly balance sheet, income statement and cash flow statements in at least one national daily newspaper. However, the accounting policies, notes and other relevant information shall be posted on the company’s website which address shall be disclosed in the newspaper publication.

    The amendment will exclude companies on ASeM from the requirement to publish in a national daily. The amendment provides that “public companies listed on the AseM may publish their “signed” quarterly balance sheet, income statement and cash flow statements, accounting policies, notes and other relevant information on the company’s website only”.

    According to SEC, the proposed rule will reduce the cost of publication for small companies listed on the AseM.

    The Commission also plans to amend the rule on shelf registration. “A shelf Prospectus shall be effective for a period of three years from the date of its issue and shall be subject to renewal as may be approved by the Commission. Provided, that the Shelf Prospectus of supranational agencies shall be effective for an indefinite period until determined by the Commission,” the proposed amendment stated.

    Also, in the case of a shelf prospectus which is effective for an indefinite period, information in the shelf prospectus shall be updated prior to the issuance of any tranche or series, the shelf prospectus shall be updated by the filing of an addendum to the shelf prospectus with the Commission while the addendum may include an information statement and any other relevant information and shall be incorporated by reference in any tranche or series to be issued.

    SEC explained that the shelf life of a shelf programme by Supranational Agencies was made effective and valid indefinitely by a 2013 Rule amendment, to allow supranational agencies unfettered and quick access to the capital market in view of the fact that their status made for little change in their material information.

    However a 2015 amendment which sought to extend the shelf life of the shelf programmes of other issuers from two years to three years –in line with international best practice, inadvertently substituted the word ‘Supranational Agencies’ with ‘Sub-nationals’.

    “It is necessary to urgently correct this error to avoid perpetuating an irregularity since the regular changes in the material information of sub-nationals should make it imperative that their shelf programme have a fixed life as material information of Sub-nationals quickly becomes stale or of no effect,” SEC stated.

  • Lafarge Africa lists N131b rights shares

    Lafarge Africa Plc has listed about 3.1 billion ordinary shares of 50 kobo each, increasing the cement company’s market capitalisation to N278.79 billion at the weekend.

    The supplementary shares arose from the cement company’s recent rights issue. Lafarge Africa had on November 24, 2017 launched an offer to raise N131.65 billion through a rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The new shares were pre-allotted to shareholders on the basis of five new ordinary shares for every nine ordinary shares held as at the close of business on November 1, 2017. The acceptance list opened on Friday November 24, 2017 and ran till the close of business on Friday, December 15, 2017.

    With the listing of the additional shares totalling 3.098 billion ordinary shares, the total issued and fully paid up shares of Lafarge Africa increased from 5.576 billion to 8.673 billion ordinary shares.

    The allotment results earlier showed that LafargeHolcim, which held the majority equity stake of 72.59 per cent in Lafarge Africa, fully picked up its rights, contributing some N96 billion to the recapitalisation. LafargeHolcim had earlier indicated it would subscribe fully to its rights under a debt-for-equities deal that will see conversion of LafargeHolcim’s dollar-based loan to equities.

    Chairman, Lafarge Africa Plc, Mr. Mobolaji Balogun has said the recapitalisation would help to reduce the group’s exposure to adverse foreign currency translation losses as experienced in 2016 following a 40 per cent depreciation of the Naira against the Dollar.

    In the third quarter ended September 30, 2017, Lafarge Africa’s net finance expense jumped from N7.4 billion in third quarter 2016 to N17.31 billion in 2017.

    Balogun noted that the decision of LafargeHolcim to convert existing loans into equity demonstrates the core investor’s continued belief in the Nigeria story, pointing out that the rights issue is the largest so far in the Nigerian capital market and the largest investment in a listed company by an investor.

    According to him, the rights issue will help to reduce the group’s foreign currency exposure by 50 per cent while the remaining portion of the debt, with the support from LafargeHolcim, has been refinanced and hedged for 12 months.

     

  • Stock Exchange mulls stabilisation plan for new listings

    The Nigerian Stock Exchange (NSE) is considering a trading arrangement that will allow specified agent to buy shares or other newly listed securities with a view to stabilise the price of such shares or securities within a period.

    A draft of the rules on “Rules for Price Stabilization of Securities” obtained at the weekend will allow an agent-to be known as stabilisation manager, to buy shares or other newly listed securities within the immediate period of listing to checkmate negative price fluctuation.

    Hanley et al (1993) in Journal of Financial Economics described price stabilisation as a regulatory framework for ‘the buying of a security for the limited purpose of [preventing or] or retarding a decline in its open market price in order to facilitate its distribution to the public’.

    In a circular on the new rules, the Exchange noted that the price stabilisation is aimed at supporting and maintaining the price of listed securities for a limited period after the listing or offer, thus establishing an orderly market for securities in the immediate secondary market after an offer.

    Executive Director, Regulation, Nigerian Stock Exchange (NSE), Tinuade Awe, said the the purpose of the proposed Rules for Price Stabilization of Securities is to define the circumstances and manner in which price stabilization will be permitted by the Exchange, in accordance with the provisions of the Investments and Securities Act (ISA), Consolidated Rules and Regulations of the Securities and Exchange Commission, 2013 (SEC Rules), and the Rulebook of The Exchange.

    She noted that the proposed rules address the parameters of substantive price support in securities offerings while they also serve as a defence to the necessary extent against prohibited trading practices, such as market manipulation, and breach of market abuse rules.

    “Given that transparency is a prerequisite for the prevention of market abuse, it is important to ensure that adequate information is disclosed or reported prior to, during, and after any trading effected for the stabilization of securities, in order to avoid market abuse and illegal market practices. In addition, market integrity requires adequate public disclosure of stabilisation measures. Reporting of the stabilisation transactions is also necessary to allow competent authorities to supervise stabilisation measures,” Awe said.

    She outlined that the proposed rules include definition of key terms, permitted price stabilisation and permitted stabilising activities, over-allotment, requirements for price stabilisation, stabilisation period, price conditions, eligibility criteria for stabilisation managers, responsibilities of the stabilisation manager, disclosure and reporting obligations of the stabilisation manager among others.

    Eligible securities for price stabilisation will include shares in an initial public offering, securities equivalent to shares, stock units of a unit trust, debt securities including convertible and exchangeable debt securities under an offering to be listed and traded on the Exchange.

    Stabilisation period shall not exceed 30 calendar days from the date of listing, or 30 calendar days from the first day of the trading of the securities in the offering, as may be applicable.

     

  • H. Pierson Associates partners Dutch firm on insurance

    A leading Netherland-based company, Second Floor SA, is collaborating with one of Nigeria’s foremost management consulting firms, H. Pierson Associates, to leverage its risk practice to support the insurance sector on risk-based supervision compliance and initiation of solvency II.

    This is as the Nigeria Insurance Commission (NAICOM) prepares to roll out the regulatory requirement for insurance companies in Nigeria. Insurance sector is the most populous sector at the Nigerian stock market.

    The collaboration between the two firms, offers the Insurance sector Risk-based Supervisory Compliance Consulting, GRC and Capital Management Consulting, Own-Risk Self-Assessment (ORSA) Tools as well as GRC and Solvency II Tools.

    Second Floor SA is a leading governance risk and compliance (GRC) and Solvency II solutions provider in Europe. It serves about 20 per cent of the European insurance market and supports over 500 solo entities.

    Second Floor has great experience working for European Insurance regulatory authorities and operators in driving risk-based supervision and solvency II migration.

    1. Pierson, on the other hand, has spent a major part of its 28 years in providing Strategy, end-to-end risk management consulting, capacity building and risk-culture transforming solutions in the market.
    2. Pierson noted that the partnership’s tools offered to clients will be low priced model with free trial flexibility; this is believed to be key for Nigerian companies who are in a cost-conscious mode.

    Market analysts described the partnership as a welcome development which will change the face of the insurance industry.

    According to analysts, the partnership is a very welcome development as combining the joint expertise of H. Pierson and Second Floor will serve to further strengthen insurance companies, the regulatory landscape and the insurance sector in general.

     

  • UBA grows pre-tax profit to N105b in 2017

    • Declares N29b dividend

    United Bank for Africa (UBA) Plc recorded a well-rounded performance in 2017 with considerable growths in the top-line and the bottom-line. Profit before tax rose by 16 per cent to N105 billion in 2017, sustaining year-on-year growth that had seen UBA as one of the best performing stocks at the stock market.

    Key extracts of the audited report and accounts of UBA for the year ended December 31, 2017 released at the weekend at the Nigerian Stock Exchange (NSE) showed that gross earnings rose by 20 per cent while pre and post tax profits grew by 16 per cent and 8.8 per cent respectively.

    Market analysts praised what they described as positively surprising performance of the bank.

    “Given the strong set of results, we expect to see upward revisions to consensus 2018 estimated profit before tax forecast and a positive reaction from the market,” FBNQuest, the investment banking arm of FBN Holdings, stated in its first reaction to the UBA results.

    “Overall, we find UBA’s performance fair, as key line items – particularly the gross earnings and profit after tax – showed time-relative improvements, and broadly in line with expectations,” Cordros Capital stated.

    The report showed significant growth in the contribution and market share from UBA’s pan-African subsidiaries. Gross earnings rose to N462 billion in 2017 as against N314 billion recorded in 2016. Profit before tax increased from N90.6 billion to N105 billion while profit after tax rose from N72.3 billion in 2016 to N78.6 billion in 2017.

    The bank’s subsidiaries outside Nigeria contributed a third of the group’s top-line and 45 per cent of the profit for the year, a remarkable improvement from 31 per cent contribution made by the ex-Nigeria offices in 2016. This, according to market analysts affirms the success of the bank’s expansion strategy, with target of 50 per cent contributions by 2020.

    The bank’s operating Income grew to N326.6 billion, a 20.6 per cent increase compared to N270.9 billion recorded in 2016. This, according to analysts, affirms the capacity of the group to deliver strong performance through varying economic cycles and challenging business environment.

    The report also showed that the bank’s total assets peaked at N4.07 trillion in 2017, 16.1 per cent increase on N3.50 trillion recorded in 2016. Net loans rose by 9.7 per cent growth at N1.65 trillion, while the customer deposits grew to N2.73 trillion, representing 10 per cent increase on N2.49 trillion recorded in 2016. The bank’s shareholders’ fund also increased by 18.2 per cent to N529.4 billion in 2017.

    The board of the bank has recommended payment of N29.1 billion as cash dividend for the 2017 business year, representing a dividend per share of 85 kobo. Shareholders will receive a final dividend per share of 65 kobo in addition to interim dividend of 20 kobo earlier paid after the first-half results.

    Group Managing Director, United Bank for Africa (UBA) Plc, Mr. Kennedy Uzoka, said the results underlined the success of the bank’s strategy of expanding across Africa, diversifying revenues and capturing the broader business opportunities inherent in Africa’s growth.

    “The results reinforce the sustainability of our business model and the capacity to deliver superior long-term return to shareholders, as the economic and business environment improve,” Uzoka said.

    According to him, in 2017, the bank made strong progress in its strategic initiative of dominating transaction banking across all its countries of operation, gaining market share in all lines of its business.

    He noted that while the non-oil sectors of its largest country of operation, Nigeria, remained relatively weak, the group still grew earnings by 20 per cent to N462 billion, a third of which is attributable to non-funded income.

    Group Chief Finance Officer(GCFO), United Bank for Africa (UBA) Plc, Ugo Nwaghodoh noted that the bank, in a period of high interest rates, achieved a relatively low 3.7 per cent  cost of funds, which reflects the benefit of its rich pool of stable savings and current account deposits.

    “Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits. We remain committed to our responsible approach to balance sheet management, with focus on growing risk asset and broader balance sheet in a profitable and prudent manner,” Nwaghodoh said.

    According to the GCFO, amidst a subdued Nigerian credit market, the bank grew its loan portfolio by 10 per cent, leveraging its robust liquidity and capitalisation to support good businesses while it closed the year with a Basel II capital adequacy ratio of 19 per cent and a liquidity ratio of 50 per cent, well ahead of 15 per cent and 30 per cent regulatory requirement respectively.

    “Our disciplined approach to lending and broader risk management continues to uphold our asset quality,” Nwaghodoh said.

  • CrusaderSterling Pensions’ retiree fund posts 21.7% return

    CrusaderSterling Pensions’ retiree fund recorded a total annual return of 21.69 per cent in 2017, the highest for the year in the retiree segment of the investment management market.

    CrusaderSterling Pensions RSA fund has maintained a leading position in the segment over the last eight years. It has achieved a cumulative return of 290.99 per cent from inception as at February 26, 2018, giving it a clear leading edge over other pension fund managers. Next in terms of performance were Premium Pension Fund with a return of 280.10 per cent and ARM Pension fund with a return of 279.7 per cent from inception.

    The management of the company stated that the impressive performance has given advantage to more than 2,000 retirees currently enjoying enhanced monthly pension payments under the   CrusaderSterling Pension Management.

    The National Pension Commission (PENCOM) had in December 2017 released the framework for the enhancement of the monthly pension payout to existing Retirees who chose Programmed Withdrawal (PW) offered by PFAs as against Annuity product offered by insurance companies.

    The objective of the framework was to provide modalities for the implementation of periodic pension enhancement for retirees on Programmed Withdrawal under the Contributory Pension Scheme (CPS) by utilizing the surpluses generated from Return on Investment (ROI).

    PENCOM’s investment regulations strictly prescribe asset classes that PFAs could invest, with the twin objective of achieving safety and security of pension funds.

    Analysts noted that pension fund contributors should develop the habit of monitoring returns on investments by the fund managers so as to compare returns on a sectoral basis.

    The pension reform in 2004 had introduced a contributory pension system which transferred retirement risk and control to the employee. The major source of funds to   the pension account are the employer contribution, the employee contribution and the returns generated by the PFA chosen by the employee to manage the fund