The Nation Newspaper

Category: Equities

  • Stock Exchange suspends trading on Ikeja Hotel

    Stock Exchange suspends trading on Ikeja Hotel

    Authorities at the Nigerian Stock Exchange (NSE) have suspended trading on the shares of Ikeja Hotel PLC in response to the high-stake dispute in the Ibru family. The Ibrus own the majority shareholdings in the hospitality and tourism company.

    The Securities and Exchange Commission (SEC) has been notified of the suspension. The suspension will be in place until further notice.

    In a suspension notice, the Exchange stated that it has placed full suspension on Ikeja Hotel, implying that no trading will henceforth take place in the shares of the company. Unlike technical suspension where trading can take place without price movement, full suspension disallows both trading and price movement.

    The Exchange noted that the full suspension was taken “to safeguard the investments of shareholders of Ikeja Hotel Plc following the continued dispute between the major shareholders which has negatively impacted on the company’s governance structure”.

    The NSE stated that it acted pursuant to the provisions of rule 15.45: suspension on trading of securities, rulebook of the Exchange, 2015. The suspension took effect on November 10, 2016.

    The Nation had earlier reported that Nigeria’s apex capital market regulator, SEC was scrutinising investigative report on the boardroom crisis at Ikeja Hotel, after the simmering ownership and management crisis within the Ibru family snowballed into a major onslaught by the Economic and Financial Crimes Commission (EFCC).

    Reliable capital market sources told The Nation that the capital market regulators had dusted up investigative reports on Ikeja Hotel to review the facts and proactively act to protect shareholders’ interests.

    A source at SEC said the apex capital market regulator had received a comprehensive report from the NSE, and the Commission has started reviewing the investigative report in line with the market’s complaint management framework.

    Ikeja Hotel, incorporated in 1972 and quoted on the NSE in 2007, controls a chain of hotels directly and through other subsidiaries and affiliates including Tourist Company of Nigeria (TCN) Plc and Capital Hotel Plc. Ikeja Hotel owns Sheraton Hotel, Ikeja, Lagos. TCN owns Federal Palace Hotel while Capital Hotel owns Abuja Sheraton Hotel. The Ibru family owns the single largest individual shareholding.

    The EFCC had declared Mr. Goodie Ibru wanted alleging capital market fraud, stealing and money laundering, among others. The family of Mr. Goodie Ibru immediately responded accusing EFCC of bias and mischief, stating that the public notice declaring Goodie Ibru wanted as scandalous, misleading and unfortunate.

    In earlier response to the attempt to oust him as chairman, Goodie Ibru had dismissed earlier claims of corporate abuses, noting that those opposed to him had rather ganged up to frustrate attempts to recapitalise the company. Goodie Ibru’s family in the counter-notice to the EFCC notice, reiterated his position that the Ikeja Hotel crisis “centres on family misunderstanding and boardroom politics.”

     

     

  • Hamda Ambah is FSDH Merchant Bank MD

    Hamda Ambah is FSDH Merchant Bank MD

    Corporate and Investment Banking Executive Director, FSDH Merchant Bank, Mrs Hamda Ambah, will take over as Managing Director of the wholesale bank, succeeding Mr. Rilwan Belo-Osagie who is retiring.

    After 24 years in the company, Belo-Osagie will retire on January 31, next year. In accordance with the bank’s succession plan, Mrs Ambah will assume duties on February 1, next year.

    Mrs Ambah started her banking career at the International Merchant Bank PLC in December 1982. She joined FSDH in August 1993 as an assistant general manager with responsibility for the company’s relationships with large corporate organisations and non-bank investors. She rose through the positions of deputy general manager and general manager to become an executive director in September 2009.

    FSDH Merchant Bank Chairman, Mr Osaro Isokpan, said the board of the bank was confident that Ambah will continue to run the bank with the guiding principles of integrity, professionalism and excellent service delivery while steering the institution to greater heights.

    He noted that Mrs Ambah, who currently supervises the corporate and investment banking groups, the branches and the FSDH wholly-owned subsidiaries, has always played an important role in the growth of FSDH.

    Mrs Ambah is a graduate of the University of Lagos, Nigeria and Imperial College of Science and Technology. She is a member of the Chartered Institute of Stockbrokers (CIS) and was awarded the institute’s 1999 IBTC award for the best examination candidate in corporate finance.

  • ‘Economic crisis is opportunity for investors’

    The tough macroeconomic situation in Nigeria provides opportunity for discerning investors with long-term capital to take positions as the government continues implementation of key initiatives aimed at boosting the national economy.

    Minister of Industry, Trade and Investment, Mr. Okey Enelamah, said the economic crisis is too great an opportunity to waste.

    Enelamah, who spoke on ‘Matching Opportunities with patient capital,’ at the yearly investor conference organised by FBN Capital Limited, said Nigerians should see the economy from a positive perspective and deemphasise on the negative side of the recession.

    He noted that the oil price crash exposed the structural deficiency in Nigeria’s large and thriving economy. He said application of practical solutions such as creating the right environment and polices to harness the productivity of Nigerians will enhance the economic recovery noting that the economy remains large and full of potentials.

    The  FBNQuest conference, which is in its sixth year, provides a forum for investors to interact with leaders of the economy, key policy makers in government and senior executives of leading corporate institutions.

     

  • Equities lose N180b as downtrend worsens

    Nigerian equities recorded their major decline this month yesterday at the Nigerian Stock Exchange (NSE) as increasing open market sell orders overwhelmed the tenuous demand, thereby creating significant shares supply glut for several companies.

    With two decliners for every advancer and investors selling down on some of the largest companies at the stock market, the market value of quoted equities depreciated by N180 billion, equivalent to an average day-on-day loss of 1.95 per cent, within five hours of trading.

    The steep decline, the fifth in a row, pushed the negative average year-to-date return to -7.95 per cent, its highest level in recent weeks. Most indices at the NSE showed widespread selling pressure, from the industrial goods to banking, oil and gas and insurance sectors.

    Aggregate market value of all quoted equities on the NSE dropped from its opening value of N9.256 trillion to close at N9.076 trillion. The All Share Index (ASI), the value-based index that tracks prices at the stock market, declined from 26,887.54 points to close at 26,364.27 points.

    Most group and sectoral indices also closed in the red. The NSE Industrial Goods Index declined by 4.5 per cent. The NSE Oil & Gas Index dropped by 1.3 per cent. The NSE Banking Index slipped by 1.2 per cent while the NSE Insurance Index declined by 0.4 per cent. However, the NSE Consumer Goods Index appreciated by 0.52 per cent.

    Dangote Cement, the most capitalised stock at the stock market, led the 26-stock losers’ list with a loss of N8.42 to close at N164.01. Forte Oil followed with a loss of N5.98 to close at N113.72. Lafarge Africa declined by N2.74 to close at N52.14. Okomu Oil Palm dropped by N2.30 to close at N44.70. UAC of Nigeria lost 93 kobo to close at N17.67 while Flour Mills of Nigeria dropped by 70 kobo to close at N19 per share.

    Total turnover stood at 189 million shares valued at N1.60 billion in 3,434 deals. Chams Plc was the most active stock with a turnover of 40.1 million shares valued at N20.05 million. United Bank for Africa followed with 28.6 million shares worth N122.8 million. Transnational Corporation of Nigeria placed third with 18.05 million shares valued at N16.08 million.

    On the positive side, Guinness Nigeria led 12 other contrarian stocks with a gain of N2.50 to close at N88.50. Nigerian Breweries followed with a gain of N2 to close at N144. CAP gathered N1.62 to close at N34.02. GlaxoSmithKline Consumer Nigeria added 75 kobo to close at N15.75 while Eterna rose by 14 kobo.

    With most equities trading around their lowest prices, market pundits blamed the continuing sell pressure on the tough macroeconomic situation, noting that investors were being forced to sell down liquid assets to bridge financing gaps.

  • Shareholders fault FRCN’s governance code

    Shareholders have described the National Code of Corporate Governance for the Private Sector issued by the Financial Reporting Council of Nigeria (FRCN) as unnecessary and duplicitous, warning that the code could be counterproductive to national economic development.

    Shareholders under the aegis of Independent Shareholders Association of Nigeria (ISAN) stated that the code bordered on over-regulation of the nation’s corporate world, particularly the financial industry. Shareholders also noted that the code also suffers from noticeable contradictions and conflict with the subsisting Companies and Allied Matters Act (CAMA).

    According to the shareholders, the FRCN’s code could suffocate entrepreneurial aspirations and initiatives of Nigerians and persons seeking to establish business in the country. Citing the provision of the code that companies shall have not less than five directors, the shareholders said such provision was unnecessarily expansionary and costly for micro small and medium scale enterprises (MSMEs), which are the engines of the nation’s economy.

    Already, the Securities and Exchange Commission (SEC) has a subsisting code of corporate governance that applies to all public limited liability companies. The Central Bank of Nigeria (CBN) and other financial regulators also have sectoral codes and rules that guide operations and corporate governance in their sectors.

    “There are also identified provisions of the code which directly conflict with existing laws governing certain sectors, which FRCN has included in the code all in a bid to elevate itself to another super-regulator over and above existing sectoral regulators for some companies,” ISAN stated.

    While identifying possible contradictions in the FRCN code, the shareholders’ group charged FRCN to lead by example by constituting its board in line with its new corporate governance code in order to justify the enforcement and sanction regime in the new code.

    ISAN listed grew areas in the code to include provisions that allow executive directors of the companies to be appointed board members of another company or companies, the time frame provided or “cool off period” before former executive director can be appointed chairman of the same company he served, engagement of two auditing firms and board size.

    The shareholders pointed out that the appointment of substantive executive directors into boards of other companies as contained in the FRCN code breached the whole essence of internationally accepted corporate governance and best practices.

    The Sunny Nwosu-led group noted that the prescribed 10 years “cool-off period” before former chief executive can assume the position of chairman in the same company amounts to serious setback in utilisation of limited experts, managerial proficiencies and scarce human capital resources.

    The minority retail shareholders said a major lacuna and breach of the law has been triggered with the provision of article 5.4 of the new code on the size of the board, noting that while FRCN’s code provides a minimum of eight board members for companies, the Companies and Allied Matters Act (CAMA) provides for minimum of two directors.

  • Stock Exchange lists first waste management company

    The Nigerian Stock Exchange (NSE) yesterday listed The Initiates Plc (TIP), a waste management company that blazed the trails as the first within that business line to be listed on the stock market.

    The TIP was listed by way of introduction on the Alternative Securities Market (ASeM) of the NSE, a less stringent board for the listing of emerging small and medium enterprises. A total of 889.98 million ordinary shares of 50 kobo each were listed at 85 kobo per share on the ASeM.

    Speaking at the listing ceremony, managing director, The Initiates Plc, Mr. Reuben Ossai said listing by introduction of the company was part of the management’s strategic plan to promote inclusive growth, transparency and price discovery.

    He outlined that in order to avoid over exposure to the effects of falling crude prices, the company has diversified its operations to provide incineration services, which has led to a remarkable improvement in revenue base for the company.

    He pointed out that the company has a bright prospects as Nigeria is expected to witness technological growth, increased urbanisation, private sector controlled economy and environmental awareness that will lead to increased waste yield and complexity and more public demand for environmental protection and waste management services.

    “These changes stress the need for the revision and implementation of environmental laws and policies that will improve the commercial value of waste management services. Hence, companies involved in the waste management industry shall have a huge market to serve, making it a very profitable venture over the long term. The Initiates Plc seeks to develop these processes and remain a key player in the waste management industry,” Ossai said.

    In his remarks, chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said the listing of TIP places the company on a pedestal for growth and sustainability.

    He reiterated that the Exchange is committed to helping indigenous companies grow into globally competitive brands while facilitating the creation of durable wealth and engendering the sustainability of emerging businesses in Nigeria, through the ASeM board.

    Onyema said TIP had successfully passed stringent listing requirements, adding that the company deserves commendation for submitting to international best practices in governance.

    TIP was incorporated in Nigeria in March 1995 and commenced operation with five employees in 1997. The company operated as a consultancy service provider in her first decade laying foundation through development of operational systems. It currently has a total of 52 employees.

    In June 2015, the company converted to public limited liability status citing the need for continuous improvement in its operating standards and institutionalisation of transparency in its system.

    The financial statement of the company for the first half ended June 30, 2015 showed a turnover of N226.7 million, gross profit of N102.5 million and profit after tax of N39.4 million. Earnings per share stood at 6.0 kobo. Total assets stood at N830.93 million while shareholders’ funds stood at N653.67 million. The company paid a dividend of N14 million for the 2015 business year.

  • Zenith Bank records N121b profit in Q3

    Zenith Bank Plc grew its top-line and bottom-line in the third quarter as the bank’s pre-tax profit rose by 16.6 per cent to N121.3 billion within the nine-month period. Zenith Bank’s share price rose by 25 kobo to N15 at the Nigerian Stock Exchange (NSE).

    Key extracts of the nine-month results for the period ended September 30, 2016 released yesterday at the NSE showed that gross earnings rose by about 13 per cent while pre and post tax profits rose by 16.6 per cent and 20.4 per cent respectively. The balance sheet of the bank also appeared stronger with total assets rising to N4.65 trillion.

    Gross earnings rose by 12.9 per cent from N337.9 billion in third quarter 2015 to N380.4 billion in third quarter 2016. Net interest income had grown by 17.6 per cent from N161.4 billion in 2015 to N189.8 billion in 2016. Profit before tax rose from N104 billion in September 2015 to N121.2 billion in September 2016. After taxes, net profit grew by 20.4 per cent to N100 billion as against N83 billion recorded in comparable period of 2015. Earnings per share rose from N2.64 to N3.18.

    Against the audited position by the 2015 year-end, the bank’s balance sheet has grown over the past nine months. Total assets rose to N4.654 trillion by September 2016 as against N4.0 trillion recorded by the year ended December 31, 2015. Deposits rose from N2.557 trillion in December 2015 to N2.692 trillion by September 2016. Loans and advances grew from N1.841 trillion to N2.425 trillion.

    Market analysts generally commended the performance of the bank, noting that the results were above market estimates. Analysts at FBN Capital said the nine-month profit before tax of N121 billion indicates possibility that the bank will surpass the N123 billion projection made by the management for the full year ending December 31, 2016.

    “On the back of these results, we would expect consensus profit before tax for 2016 to move up strongly, from N123 billion currently, given that the nine months result is N121 billion,” FBN Capital stated.

    Analysts however noted that operating expenses and interest expense figures were disappointing and could draw some scrutiny from the market.

    Analysts at Exotix Partners said they would retain their buy recommendation with a target price of N27 on the bank given the performance in the third quarter. This indicates that the bank’s share price could still rise by about 80 per cent on its opening price today.

    “The bank’s headline earnings per share and profitability are trending significantly ahead of our estimates. However, that is being driven by the significant revaluation gains, the source and sustainability of which remains unclear to us. We are also disappointed by the bank’s shrinking deposit base in real terms and declining margins – we think many investors will start questioning the bank’s traditional investment profile of being able to generate significant returns in a high interest rate environment by virtue of its ability to mobilise low-cost deposits. The bank’s unwillingness to build non-performing loans cover ahead of potential asset quality deterioration also disappoints,” Exotix stated.

    Exotix stated that it remains buyer of Zenith Bank’s shares, although the investment profile is not as strong as it used to be.

  • ‘Sound risk culture vital to corporate success’

    Nigerian companies need to embrace a sound risk culture that promotes an all inclusive general ethical climate that includes board of directors, audit committee and senior management in a firm-wide consensus that drives effective corporate strategy implementation and consistency in organizational performance.

    In its latest report titled “Risk culture: Time to reinforce the tone at the top”, a leading consulting firm, H. Pierson Associates, said a sound risk culture will help to mitigate the negative impacts of various macroeconomic and sectoral challenges militating against corporate performance.

    The firm noted that risks such as price risks for oil and gas firms, foreign exchange risks for manufacturing firms, credit default issues for financial institutions, costly compliance risk challenges against purported regulatory breaches by major firms across sectors and liquidity and capital risks for power companies among other risks to corporate sustainability have taken significant toll on shareholder value in most instances.

    According to the report, stronger oversight over the corporate risk culture is being seen by many, as the next frontier for directors of boards, towards better handling of these risks by institutions.

    A company’s risk culture refers to the institution’s norms, attitudes and behaviour as it relates to risk awareness, risk taking and risk management by the institution. In other words, the way the institution identifies, understands, discusses and acts on the risks it confronts and the risks it takes. Also key is the extent to which this culture has been embedded through mature risk practices, processes and systems.

    “A sound risk culture provides firm-wide consensus that drives effective corporate strategy implementation and consistency in organizational performance. It is therefore a point of attraction for external stakeholders such as regulators, institutional investors and credit rating agencies. For systemically important institutions, inclinations are towards regulatory assessment of the institutions’ risk cultures as well as the assessment of the boards’ diligence in overseeing same,” the report stated.

    The report described the tone at the top in building a sound risk culture as the general ethical climate evolving from the board of directors, the audit committee and senior management noting that good and consistent tone at the top is critical for sound risk governance and risk culture because employee behaviour across the organization is significantly impacted by what they see and hear every day from those at the top.

    “For our current corporate challenges therefore, our boards must increasingly set the right tone at the top through transparency, consistency and the right formal and informal communication to the rest of the organization. The boards’ risk management vision for the corporation, its true commitment to operating within clearly defined risk appetite, its effective oversight over same, its ethics and non-tolerance of compliance failures, should be communicated effectively throughout the organisation.

  • Wema Bank grows Q3 gross earnings by 16% to N38b

    •Raises N20b new capital

    Wema Bank Plc grew top-line earnings by 16.3 per cent in the third quarter as the bank strengthened its capital base with a N20 billion tier 11 capital.

    Key extracts of the nine-month report of Wema Bank for the period ended September 30, 2016 showed that gross earnings rose to N37.89 billion by September 2016 as against N32.57 billion recorded in comparable period of 2015. Interest income had improved by 20.1 per cent from N26.58 billion to N31.93 billion while non-interest income was almost flat at N5.96 billion third quarter 2016 as against N5.99 billion in third quarter 2015. Operating expenses improved marginally from N17.49 billion to N17.18 billion. Profit before tax however dropped marginally from N1.53 billion to N1.49 billion while profit after tax also decreased slightly from N1.30 billion to N1.27 billion.

    Managing director, Wema Bank Plc, Mr. Segun Oloketuyi, said the results showed the resilience of the bank against the harsh operating environment.

    He noted that the bank had maintained its commitment to innovation and other digital initiatives, which have continue to engender confidence with customers, leading to a growth in savings deposits by 18.1 per cent from N35.58 billion as at December 2015 to N42.02 billion as at the end of the period.

    According to him, the streamlining of the bank’s processes and the leverage on technology, led to improving efficiencies and cost optimization.

    “We will continue to seek opportunities to improve our cost-to-serve through alternative channels and continued strategic improvements of our business model without compromising our service quality,” Oloketuyi said.

    He added that the bank’s prudent risk management model continues to enable it to deal with the industry-wide spikes in loan defaults and attendant rise in non-performing loans (NPL) as the bank’s NPL stood at 2.99 per cent by third quarter 2016, below the regulatory threshold of 5.0 per cent. Meanwhile, the coverage ratio for the bank remained adequate at 124.82 per cent.

    He said the bank have just concluded a Tier II capital raising of N20 billion, which will boost its capital adequacy ratio (CAR), currently at 13.36 per cent, adding that the new capital will support the bank’s medium-term growth plan.

  • Sukuk bonds issuance will grow in West Africa, says Hogan Lovells

    Hogan Lovells, a leading global law firm with specialty in Islamic finance, has expressed optimism that the successful launch of Sukuk bonds by three West African governments will open up a vast financing channel for the region and encourage the growth of Sukuk issuance in the region.

    Hogan Lovells advised the Islamic Corporation for the Development of the Private Sector (ICD) as lead arranger on the issuance of three sovereign Sukuks in West Africa. These include sophomore issuances for the government of Cote d’Ivoire and the government of Senegal, and a debut issuance for the Republic of Togo.

    The Sukuks were listed on the Bourse Régionale des Valeurs Mobilières (BRVM), Abidjan, Cote d’Ivoire last week. Altogether with the debut issuances for Senegal and Cote d’Ivoire, the combined listing value was CFA 766 billion.

    Investors for the Sukuks were from a number of different countries across the Gulf and the Far East.

    Partner, Islamic Finance, Hogan Lovells, Imran Mufti, who led the Hogan Lovells’ team, said the landmark Sukuk bonds will enhance the development of Islamic finance in West Africa.

    “We expect to see a steady increase in the use of Islamic financing in the region as governments seek to raise funds for key infrastructure projects in sectors such as transportation, telecoms and healthcare,” Mufti said.

    He added that the listing on the BRVM should improve liquidity of the Sukuks, thus achieving a key objective of the investors.

    Manager, Sukuk Project, Islamic Corporation for the Development of the Private Sector (ICD), Zaky Sow noted that the transactions represented major milestone for Islamic finance in Africa as they cemented the use of alternative financing in the region.

    According to Sow, while the new issues would build on the debut issuances and stimulate non-conventional investment further in Cote d’Ivoire and Senegal, the latest issuance by Togo will open up new stream of investment for the country.

    “We were very happy to work with Hogan Lovells’ team once again, knowing that they would provide a first class service and expert advice, as well as a deep understanding of the market,” Sow stated.

    Nigeria has also indicated plan to issue a sovereign Sukuk to source funds from non-interest sources and create a benchmark that will help to facilitate the growth of domestic non-interest bond market. Osun State was the first and only government to have issued a Sukuk in Nigeria.

    Hogan Lovells has a first-rate reputation as a leader in Islamic finance, having advised on many first-of-their-kind transactions, such as the first major Sukuk by an African sovereign, the first convertible Sukuk, the first equity-linked Sukuk, the first Sharia-compliant securitisation, the first international Sukuk al-mudaraba and Sukuk al-musharaka, the first Sukuk buy-back, and the first Multilateral Investment Guarantee Agency (MIGA) guaranteed Islamic project financing.

    Hogan Lovells has worked extensively with ICD in Africa over the last few years, having advised on the initial Sukuk issuances for Cote d’Ivoire and Senegal.