The Nation Newspaper

Category: Equities

  • Stockbrokers’ chiefs set agenda as institute clocks 25

    Past Presidents of the Chartered Institute of Stockbrokers (CIS) have identified continuing capacity building and amenable operating environment as some of the ways to further enhance the practice of stockbroking in Nigeria.

    The Presidents, who spoke against the background of the 25th anniversary of the CIS, noted that though the institute and stockbroking profession have made many great strides, there is need to focus on consolidating the achievements of the past two and half decades.

    The Presidents who pinpointed challenges facing the institute such as crumbling businesses of the members arising from the global market crash of 2008 and 2009, disunity among members and investor apathy to the market over the years, however, commended it for weathering the storm and forging ahead in all its activities.

    By the Act 105 of 1992 that establishes the institute, it has been in existence for 25 years as an organisation that trains and certifies professionals in the Investment and securities market. The Silver Jubilee coincides with the Institute’s Annual Conference with the theme:  Adapting to Dynamic Changes in the Financial Market

    In his review of the activities of the institute in recent time, the President between 2014 and 2016, Alhaji Ariyo Olushekun, made a poignant summary of the challenges and the way forward:

    “My tenure coincided with the period of global economic meltdown. The Nigerian stock market was badly affected and that came with its attendant financial difficulties. Almost all stakeholders had difficulty in meeting their financial obligations to the institute. The institute therefore had to operate with a lean purse,” Olushekun said.

    He noted that the institute had made some achievements during his tenure including forbearance  of debts owed by stockbroking firms to Asset Management Corporation of Nigeria ( AMCON), waiver of Value Added Tax (VAT) and Stamp Duty on stock market transactions, six-year strategic plan for CIS and launching of CIS Building Fund among others.

    “Stockbrokers need to be well equipped to continue to provide excellent service to the investing public with integrity. Regulators need to continue to support and collaborate with CIS to develop the capital market. Investors should ensure that their investment decisions are based on sound fundamental and technical analysis,” Olushekun said.

    Commenting on the institute’s activities, the President from 2010 to 2012, Mr Mike Itegboje, explained that the global  market crash of 2008 put many Stockbroking firms into difficult position .

    “The biggest challenge was how to revive the business of our members after the crash of 2008 and 2009. That was why we pleaded for debt forgiveness. It  has been a tough journey. Now at 25, we can only thank God. The baby has become an adult, having won the battles for survival.  My vision is to see that CIS produces and certifies Secutities and Investment dealers, investment analysts and advisers to meet the national need, “ said Itegboje.

    Corroborating Itegboje, Mr Oladiipo Aina, who was the President of the institute from 2006 to 2008, noted that CIS had gone through series of challenges over the years and the way forward is to raise the bar in all its activities.

  • Shareholders back NSE’s one-kobo pricing rules

    Shareholders back NSE’s one-kobo pricing rules

    Retail shareholders have expressed support for the planned implementation of a new pricing rule that will allow stocks on the Nigerian Stock Exchange (NSE) to trade below their nominal value and as low as one kobo.

    The Nation had reported exclusively last week that the NSE has concluded arrangements to begin implementation of new pricing rules that will remove the current stopgap that has supported stocks at their nominal value and allow shares of quoted companies to trade as low as one kobo. The new rule shall stake effect on Monday January 29, 2018.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar said the new rule will lead to more effective price discovery at the stock market.

    “It is good, there are many stocks that are not worth more than one kobo at the market but currently pegged at 50 kobo because of the nominal value rule,” Umar said.

    National President, Constance Shareholders’ Association of Nigeria, Mr. Shehu Mikail, said the new pricing rule may lead to increased liquidity in the dormant stocks since new price discovery may encourage investors to take risks in the low-priced stocks.

    According to him, the new pricing rule may enable dormant companies to attract new investors who are looking for bargains.

    “The new rule will create opportunity for most of the companies that have not been traded for a long time to come back on board. It may also make directors of the companies to take their share prices more serious,” Mikail said.

    However, Chairman, Standard Shareholders Association of Nigeria, Mr. Godwin Anono, said the new rule will lead to more losses for investors, urging the Exchange to sustain the current rule that limits price decline to the nominal value.

    He described the new rule as a double-edged sword that can fuel hostile acquisitions and cause disruptions in the market.

    He said the Exchange should focus on providing more accurate information about the market and protecting the integrity of the market rather than tinkering with rules.

    “It is another way of grounding a lot of companies. Leave it at 50 kobo, there are many ways of stimulating price discovery, it is not good,” Anono said.

    Under the new pricing rules, share prices shall be allowed to trade as low as a floor price of one kobo. The new rule will effectively remove the current rule which places minimum allowable price to trade for any stock at its nominal value, irrespective of the market forces.

    The new rules stipulates that “notwithstanding its par value, the price of every share listed on the Exchange shall be determined by the market, save that no share shall trade below a price floor of one Kobo per unit”.

    Par value is the nominal value of a share as stated in the Memorandum of Association of the company while price floor means the amount below which the price of one unit of a share shall not be permitted to trade, and the minimum amount which must be paid for a share in the event of a drop in the unit price of that share.

    Regulatory documents obtained by The Nation had indicated that the amendments to the pricing technology at the stock market will also see a categorisation of quoted companies under three groups with different pricing rules.

  • Nigeria to regulate issuance of green bonds

    Nigeria to regulate issuance of green bonds

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), has started the process to introduce a comprehensive regulatory framework for the issuance of green bonds in the country.

    A green bond is any type of debt instrument, the proceeds of which would be exclusively applied to finance or re-finance in part or in full new and or existing projects that have positive environmental impact.

    A draft of the regulation obtained by The Nation indicated that green bonds would be used exclusively to finance renewable and sustainable energy, clean transportation, sustainable water management, climate change adaptation, energy efficiency, sustainable waste management, sustainable land use, biodiversity conservation and any other categories as may be approved by SEC from time to time.

    The draft, which is currently undergoing exposure to stakeholders for their review and comments, stated that any issuer of a green bond must fulfill some special conditions in addition to the general registration requirements for debt issuances as stated in the Rules and Regulations of the Commission for States, Local Governments, Corporate and Supranational agencies.

    According to the rules, an issuer of a green bond shall also file a feasibility study and report stating clearly, the measurable benefits of the proposed green project or assets such as green house gas reduction, reduction of water use and reduction of harmful emissions.

    The issuer must also file a prospectus which shall include project categories, project selection criteria, decision-making procedures, environmental benefits, use and management of the proceeds as well as a letter from the issuer committing to invest proceeds of the bond in green projects or assets.

    The issuer must also provide an independent assessment or certification issued by a professional certification authority or person approved or recognised by the commission in addition to any other documents that may be required by the commission.

    “The net proceeds shall only be utilised for the purpose stated in the approved offer documents and shall be tracked as stated in the approved internal policy of the Issuer which shall be disclosed in the offer documents,” the rules stated.

    The parties to the issue are expected to create an escrow account meant specifically for the net proceeds of the offer while the proceeds shall be domiciled with the custodian. While the trustees shall ensure that the proceeds are used for the purpose stated in the prospectus, the issuer and the trustees shall be the signatories to the escrow account.

    “The issuer shall invest proceeds in green projects within the given timeframe prescribed in the prospectus. Unallocated proceeds shall be invested in money market instruments with investment grade rating and this shall be disclosed in the offer documents,” according to the rules.

    According to the rules, where the issuer proposes to utilise a proportion of the issue proceeds of the issue of green bonds, towards refinancing of existing green assets, the issuer shall clearly provide in the offer document the details of the portfolio, assets and projects which are identified for such refinancing.

    The issuer is also expected to publish the utilisation of proceeds in at least two national dailies on an annual basis which shall contain the details of the key factors capturing the environmental impact of such investments and the same shall be disclosed in its annual report and website

    Besides, the issuer shall publish an assessment report issued by an independent professional assessment or certification agency on its website or other media and conduct and report annual follow-up assessments of the green projects and associated environmental benefits throughout the tenor of the bond.

    Nigeria is planning to float Africa’s first sovereign green bond issue with a target of N20 billion to provide environment-friendly infrastructure to not less than 44 Nigerian universities and more than 1.1 million people in other different communities.

    Vice President, Professor Yemi Osinbajo, at an investors’ conference for the green bond at the Nigerian Stock Exchange (NSE), said the issuance of the green bond would open up vast opportunities for the country, the capital market and the populace.

    He said the net proceeds of the N20 billion green bond, the first to be launched by any African government, would be used to fund projects that will reduce carbon emissions and develop renewable energy.

  • Amoo now ED at Jaiz Bank

    Mr. Abdul Fatah Amoo, a former senior management executive at Sterling Bank Plc, has assumed duty as the executive director in charge of operations at Jaiz Bank Plc. Amoo, a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), will also double as chief finance officer (CFO) of the bank. His appointment by the board of directors of the bank had been confirmed by the Central Bank of Nigeria (CBN).

    Amoo has nearly three decades of working experience which cuts across professional accounting practice, finance and banking. He has spent the last 15 years at senior management positions in the Nigerian banking sector.

    During the course of his career, Amoo had the opportunity of setting up the financial control function, managing operations group, running e-business group and supporting running of retail banking and non-interest banking business of his bank, thus equipping him with the unique expertise required for back to front end business processing.

    “He is skilled in strategic planning and implementation among others, and we are confident that he possesses the required professional and leadership competencies for the job role,” the bank stated.

  • Prestige Assurance targets N3.1b profit by 2021

    The management of Prestige Assurance Plc yesterday outlined the growth outlook of the insurance company with a projection that the company will grow its pre-tax profit by more than 251 per cent to N3.08 billion by 2021.

    Presenting the underlying facts about the operations of the company to the investing public yesterday at the Nigerian Stock Exchange (NSE), the management of the company indicated that strategic initiatives being taken by the management would ensure sustained growth over the next five years.

    According to the forecasts, pre-tax profit is expected to rise to N877 million by the end of 2017 and thereafter rise consecutively to N8.08 billion by 2021. Profit after tax is expected to increase to N596 million in 2017 and N2.09 billion in 2021. Earnings per share is projected to increase to 11 kobo by 2017 and 39 kobo by 2021.

    The company plans to grow its top-line continuously over the five year period with gross premium income expected to increase to N3.4 billion in 2017 and subsequently to N9 billion in 2021.

    Chief Financial Officer, Prestige Assurance Plc, Mr. Oluwadare Emmanuel, said the company’s strategic growth plan focused on prompt payment of claims to customers and dividend payment to shareholders.

    According to him, the company has restructured its balance sheet in order to be able to make dividend payments while it has implemented many digital transformation initiatives and robust software to ensure prompt claims payment.

    He added that successful launch of new products such as Prestige Mediclaim Policy, Prestige Salary Protection Shield and Travel Insurance (OMP), expansion of retail market reach by employing marketing associates and opening new branches were aimed at deepening the company’s market penetration and build a solid base for growth.

    Emmanuel said the outlook for the Nigerian insurance industry remains encouraging despite operating challenges.

    According to him, though Nigeria has shown positive signs of development in this industry with gross premium written doubled within 2006 to 2015, there is still room for more growth.

    “The transformation agenda of the present government supported by Central Board of Nigeria and that of NAICOM will definitely promote the sale of insurance policies. With more channels of distribution such bancassurance, web aggregator, digital marketing, micro insurance, mobile phone marketing, agency and one man shop will lead to high penetration of insurance to the grass roots, thereby creating opportunity for the industry to tap into the informal sector in order to increase the number of policyholders across the nation,” Emmanuel said.

    He however noted that there could be another round of recapitalization and consolidation in the industry as many insurance companies will require additional capital to enable them pursue their growth initiatives and to meet up with the impending regulatory risk based supervision and capital assessment.

    He pointed out that while ongoing reforms are geared towards enhancing transparency in the Nigerian insurance industry and improving the general perception and image of the insurance business in Nigeria, the Federal Government should facilitate the ease of doing business by amending the Companies Income Tax Act (CITA) in relation to computation of insurance taxation, easy entry of foreign investment and provision of suitable environment that guarantees Return on Investment (RoI).

    He outlined the challenges being faced by insurance companies to include low penetration, lack of trust, slow implementation and enforcement of compulsory insurances, fake policies in circulation and regulatory reforms.

  • Guinness Nigeria grows Q1 sales by 30%

    Guinness Nigeria grows Q1 sales by 30%

    Guinness Nigeria Plc has announced its first quarter results for the period ended September 30, 2017, delivering total turnover of N29.9 billion and gross profit of N10.4 billion. These represented a 30 per cent increase in sales and 24 per cent growth in gross profit.

    Managing Director, Guinness Nigeria Plc, Mr. Peter Ndegwa said the results reflected continued growth within the spirits business as well as benefit of an expanding portfolio.

    According to him, the company’s marketing expenses increased by 12 per cent indicating continued investment behind its brands while administrative expenses were reduced by 17 per cent driven by the organisation’s productivity agenda.

    He noted that the company has put in place these processes and changes as part of its strategy to drive efficiency which will help position it for more sustainable growth.

    “Although trading conditions continue to be difficult, we delivered a credible performance with a net sales growth of 30 per cent for the quarter. This was against the backdrop of changes in commercial footprint in the prior year as well as benefit of an expanding portfolio. We also continue to see value from our focus on productivity in areas like sales as we empower our teams for success on the frontline as well as driving efficiency in logistics. This has released resources that we are able to re-invest behind our brands,” Ndegwa said.

    He added that a critical part of the strategy is to expand the company’s portfolio and as it continues to innovate with the introduction of new brands and formats, while spending on A & P is also critical to driving growth not just for innovation brands but also for core brands like Guinness and Malta Guinness.

    He said the net proceeds of the recent rights issue would be used to reduce the level of borrowings and consequently funding cost, particularly reduction of foreign currency loan by 60 per cent, which will in turn  reduce the foreign currency volatility on the company’s balance sheet.

  • Nigeria holds conference on GIPS standards

    Major stakeholders in the Nigerian investment market are expected to meet on Tuesday November 21, 2017 to discuss ways to entrench the Global Investment Performance Standards (GIPS) in Nigeria as part of efforts to deepen the capital market and enhance investors’ returns.

    The GIPS standards are a set of global minimum requirements and recommendations for calculating and reporting investment performance. When voluntarily and fully complied with, investment managers’ performances are ascertained as plausible and fairly comparable across all regions.

    Nigeria, through its country sponsor, endorsed the GIPS standards in May 2015. The Nigerian country sponsor comprises of Fund Managers Association of Nigeria (FMAN), Pensions Operators Association of Nigeria (PenOp), The CFA Society Nigeria, and capital market and pension industry regulators.

    At the Nigeria Investment Performance Stakeholders Conference being hosted by King Thrones Limited, an investment advisory firm, the country sponsor and other major stakeholders in the Nigerian investment management industry will deliberate on ways to entrench a market approach to the adoption of the GIPS standards.

    Chief Relationship Officer, King Thrones Limited, Mr. Akin Adeniyi , said the conference is aimed at advancing the works of the country sponsor with a view to providing appropriate public information and guidance around the standards’ ideals as well as the framework for its market operations going forward.

    “The essentials of this gathering rest on the need first and foremost to sensitise all stakeholders in the market, starting with investors, to their advisers, investment managers, pension funds, insurers, mutual funds, trade groups, regulators, consultants, and a host of others, of the workings and benefits of these standards, and the general expectations in the adoption process by investment management firms,” Adeniyi said.

    He noted that the entrenchment of the GIPS standards in Nigeria will increase capital inflow into the Nigerian collective investment market as GIPS standards will create improved performance reporting modalities for the easy ascertainment and comparative analysis of factual historical records and reliable forecasting.

    At the conference, during which Director General, Securities and Exchange Commission (SEC), will present a keynote address, stakeholders will have the opportunity to interact and debate on relevant issues, with the primary objective of establishing a clear understanding of the roles and responsibilities of market operators in the journey to attaining compliance with the global investment performance reporting standards.

    Adeniyi outlined that GIPS standards will enhance the development of the Nigerian market by further promoting fair representation and full disclosures of facts behind every performance presentation, especially to prospective investors.

    “Potential and existing clients are assured that the information shown in a GIPS – compliant performance presentation reflects the results of the presenting firm’s past investment decisions – which is equally crucial in the investor’s final decision-making process. Investors are also assured that the returns are calculated and presented on a consistent basis and that they are objectively comparable for a given strategy to those reported by other firms claiming compliance with the standards,” Adeniyi said.

    Since their introduction in 1999, the GIPS standards have gathered momentum with investment management firms worldwide adopting these voluntary and ethical requirements for calculating and presenting historical investment performance. By the operations of both the GIPS Council and the Executive Committee, strong partnerships are formed with country sponsors to promote and educate the GIPS standards, and these have greatly contributed to their rapid global reach.

    With the endorsement of its country sponsor of the standards in August, 2017, Kazakhstan became the 41st and most recent country to join the growing list of countries embracing these ethical standards.  Nigeria and Denmark had become 30th and 31st respectively on the May 26, 2015.

  • Falcon Chemicals launches cost effective paints

    Falcon Chemicals, an indigenous chemical manufacturing company based in Ogun State, has introduced a cost-effective, locally-produced decorative paint raw material for gloss and emulsion paint.

    Director of Operations, Falcon Chemicals, Mr Babatunde Adefarati, said the product was an outcome of the ingenuity of the company’s research team.

    Speaking at a paint coating show in Lagos, Adefarati said that the company’s new product which is a Titanium substitute for both water based decorative paints and solvent based paints were sourced locally through a team of researchers in the organisation.

    He said the product will dramatically change the world of painting in Nigeria as the new product will save paint manufacturers cost of production and also help boost the quality of their work.

    He said the company has made a partial arrangement with another big processing plant to undertake the procedure of making the product on a large scale, adding that the arrangement with the bigger manufacturing company is to help in effective processing of the raw material leading to an end product with a world class standard.

  • UACN gets regulatory approval to raise N15.4b new equity capital

    Authorities at the Nigerian Stock Exchange (NSE) have approved application by Nigeria’s oldest surviving business, UAC of Nigeria (UACN) Plc, to raise about N15.4 billion in new equity funds.

    A regulatory document at the weekend indicated that the Quotation Committee of the Exchange, which oversees listing of shares, has approved the supplementary capital raising.

    UACN plans to raise N15.36 billion through a rights issue of 960.43 million ordinary shares of 50 kobo each at N16 per share. The new shares will be pre-allotted to existing shareholders on the basis of one new share for every two shares held as at the close of business on Thursday October 19, 2017.

    Shareholders of UACN had earlier approved the plan to raise new equity funds by selling new ordinary shares to existing shareholders.

    UACN will use the net proceeds of the new equity issue to bolster its working capital and support the recapitalisation and operations of its subsidiaries.

    In an explanatory statement on the proposed rights issue, the board of the conglomerate had stated that many subsidiaries within the group including three quoted companies- UACN Property Development Company, Livestock Feeds and Portland Paints and Products Nigeria, need working capital support to boost their operations and reduce dependence on costly bank loans.

    According to the board, it is important that the conglomerate is resourced to support the subsidiaries at the critical time.

    “In the prevailing environment of economic challenges and recession, there would also be opportunities for additional investment in current and adjacent categories that we play in,” the board stated.

    Directors of the conglomerate said they believed that the N15 billion rights issue would enable them to support the subsidiaries through these difficult times and provide the required flexibility to deepen the group’s position as opportunities for additional investments emerge in the chosen markets.

    At the meeting  on June 14, 2017 meeting, shareholders authorised the board to raise up to N15.4 billion by way of a rights issue, through the issuance of ordinary shares on such other terms and conditions as the directors may deem fit or determine.

  • National Assembly to partner regulators on capital market development

    The National Assembly has reiterated its commitment towards the development of the Nigerian capital market.

    Chairman, Senate Committee on Capital Market, Senator Mustapha Bukar, gave the assurance in Lagos during a visit to the Nigerian Stock Exchange (NSE). Also in the entourage was the clerk of the Committee, Hajia Habeebat Mohammed.

    Bukar said the Committee would work to create a right environment for investment to thrive noting that he and other members of the committee are ready to work hand in hand with capital market stakeholders.

    According to him, the committee would consider revision and amendment of some laws governing capital market activities in order to encourage the growth of the market.

    “I want to achieve two or three things during this tenure, one, I want to see how the capital market can grow during this tenure, support infrastructure development in this country and also to see how it can grow the Nigerian economy and let Nigerians see how it can compete like any other market in the world,” Bukar said.

    He said the committee has adopted a listening strategy because it needs to know and understand the issues affecting the market and the things the National Assembly can do in terms of legislations in order to create an enabling environment for the market to grow.

    “It is important for us to talk to the actors and then we see how we can work together to make the market a better place,” Bukar said.

    He said the need to have more Nigerian players in the market cannot be overemphasized noting that having more Nigerians in the market would deepen domestic investors’ base and attract other people to come into the market.

    He said that a bill has been passed and its provisions are being examined, after which it will be submitted to the Senate very soon.

    “There are so many legislations being discussed and there will be public hearings on them. The next thing is to make sure that it is presented to both the lower and upper chamber so it can be passed into laws by the National Assembly,” Bukar said.

    He lamented that after the 2008 capital market problem which affected all the entire world, the Nigerian market has yet to recover fully from the decline it had in 2008, thus underlining the need to re-engage with the populace and the private sector in order to grow investors’ confidence

    “That confidence has to be rebuilt, so we need to go and do a lot of roadshows and other explanations to attract the private sector back and address those issues that concern them,” Bukar said.