The Nation Newspaper

Category: Equities

  • University Press retains N151m dividends amidst declining profit

    University Press retains N151m dividends amidst declining profit

    The board of directors of University Press (UP) Plc has recommended distribution of N150.99 million to shareholders as cash dividends for the immediate past year, retaining the same dividend payout that it had distributed for 2013, 2012 and 2011 business years.

    A dividend recommendation released yesterday showed that shareholders would receive a dividend per share of 35 kobo for the year ended March 31, 2014, the same amount received at least in 2013 and 2012. The dividend would become payable on September 25.

    However, the company’s bottom-line contracted further as it struggled with sluggish sales and rising costs.

    Key extracts of the audited report and accounts of UP for the year ended March 31, 2014 showed that total sales rose marginally from N2.31 billion in 2013 to N2.44 billion in 2014. Gross profit however dropped marginally from N1.17 billion to N1.166 billion. The decline became more pronounced with pre-tax profit dropping from N393.3 million in 2013 to N348.12 million in 2014.

    After taxes, net profit slipped to N233.93 million in 2014 as against profit after tax of N260.70 million in 2013. This implied earnings per share of 54.22 kobo in 2014, lower than 60.43 kobo posted in 2013.

    However, total assets rose from N2.82 billion in 2013 to N2.97 billion in 2014. Shareholders’ funds also increased from N2.17 billion to N2.24 billion.

    University Press is one of the oldest surviving companies in Nigeria. Incorporated in 1949, it converted to a public limited liability company and listed its shares in 1978. Fundamentally, it is the leading quoted printing and publishing company.

    University Press is owned by about 11,000 shareholders with three major investors holding 23.71 per cent. Oxford University Press, United Kingdom, the foreign partner, holds 9.19 per cent equity stake. Cashcraft Asset Management Limited, a Nigerian investment firm, holds 8.26 per cent while Dr. Lalekan Are, who chairs the board of directors, holds the largest individual equity stake of 6.26 per cent.

    The company has benefitted immensely from stable board and management. Mr Samuel Kolawole remains the managing director. It complied broadly with the code of corporate governance and best practices with appropriate committees, checks and controls to ensure independence and integrity of the decision-making and accounting processes.

  • Shareholders approve N568b Lafarge Africa

    Shareholders approve N568b Lafarge Africa

    The consolidation of Lafarge’s cement businesses in Nigeria and South Africa into a Nigerian-listed building materials giant to be known as Lafarge Africa Plc crossed the Rubicon yesterday as shareholders of Lafarge Cement Wapco Nigeria Plc overwhelmingly approved the historic consolidation.

    The consolidation would be done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria, which would subsequently be renamed Lafarge Africa. Lafarge Africa, which would retain Lafarge Wapco’s subsisting listing on the Nigerian Stock Exchange (NSE), is estimated with initial market capitalisation of $3 billion, about N468 billion.

    At the annual general meeting yesterday in Lagos, shareholders also approved a new capital issue of N100 billion, which could raise the market value of the emergent Lafarge Africa to more than N568 billion. After the consolidation, Lafarge Africa will be the 6th most capitalised quoted company in Nigeria.

    Lafarge Wapco’s share price rose by 1.71 per cent with addition of N1.88 to close yesterday at the NSE at N112.07. This translated into market value of N336 billion, the 8th most capitalised company on the stock market.  Ashaka Cement, which is also part of the consolidation, also rose by 2.07 per cent with addition of 60 kobo to close at N29.60 per share. This implied a market capitalisation of N66 billion, the 29th position on the NSE.

    All the resolutions relating to the consolidation were passed by a significant majority of the eligible shareholders with approvals ranging between 78 per cent and 98 per cent, notwithstanding that Lafarge Group abstained from voting on the special resolutions.

    Under the transaction, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent; Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent; to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

    Shareholders who spoke at the meeting roundly commended Lafarge Wapco for its improving fundamentals and dividends. Shareholders’ leaders who spoke at the meeting included Chief Sola Abodunrin, chairman, Ibadan Zone Shareholders Association (IBZA); Sir Sunny Nwosu, national coordinator, Independent Shareholders Association of Nigeria (ISAN); Chief Timothy Adesiyan, president, Nigeria Shareholders Solidarity Association (NSSA); Mr. Nonah Awoh and Bishop Goodluck Akporie of Onitsha Zone Shareholders Association among others.

    They applauded the performance of the company noting that they expected the emergence of Lafarge Africa to lead to further improvements in the performance and returns of the company. They approved a dividend per share of N3.30 for the 2013 business year as against N1.20 paid for the previous year.

    Speaking at meeting, chairman, Lafarge Cement Wapco Nigeria, Chief Olusegun Osunkeye said the overwhelming supports from majority of the minority shareholders were strongly reflected the fact that they saw the strong value opportunity in the creation of Lafarge Africa.

    “I am extremely pleased with the outcome of today’s vote.  Lafarge Africa is not only a value enhancing transaction for shareholders but it will provide significant value to all stakeholders through the creation of a Nigerian listed Sub-Saharan Africa building materials giant that will be better able to support the development needs of our continent,” Osunkeye said.

    According to him, the newly created entity will have a combined production capacity of around 12 million metric tonnes comprising Lafarge Wapco’s 4.5 million metric tonnes, Lafarge South Africa Holdings’ 3.6 million metric tonnes, United Cement Company of Nigeria’s 2.5 million metric tonnes, Ashaka Cement’s 1.0 million metric tonnes and Atlas Cement Company – an import operation with bagging capacity of 0.5 million metric tonnes.

    He noted that there were already projects underway to expand on this capacity and by 2017; Lafarge Africa Plc will have installed cement capacity of 17 million metric tonnes while the inclusion of South Africa also provides operations in aggregates and fly ash.

    In his remarks, Guillaume Roux, who will be the managing director and chief executive of Lafarge Africa Plc, said the creation of Lafarge Africa would allow the company to continue in its drive to be the best in the areas in which it operates.

    According to him, the consolidation implies a broader geographic coverage which means that Lafarge Africa will be better positioned to serve its customers more widely.

    “It also places the company in a stronger position to be able to benefit from the economic growth and development opportunities available in both Nigeria and South Africa,” Roux said.

    With the approval yesterday, Lafarge Africa will move on to require regulatory approval from the Securities & Exchange Commission (SEC) to finalise the transaction. This is anticipated to take place during the third quarter of 2014. Once approved and in line with Nigerian regulation, a mandatory tender offer will be open to minority shareholders of Ashaka Cement to give them the opportunity to swap their shares for Lafarge Africa’s shares.

    Audited report and accounts of Lafarge Wapco for the year ended December 31, 2013 showed that profit after tax grew by 92 per cent to N28.2 billion in 2013 as against N14.7 billion recorded in 2012. Profit before tax grew by 30 per cent from N21.3 billion to N27.7 billion. Turnover increased by 12 per cent to N98.8 billion as against N87.9 billion in 2012. The company witnessed significant reduction in interest expenses N5.5 billion to N3.8 billion as a result of the reduction in interest charges due to the full repayment of the Naira syndicated bank loans. Consequently, basic earnings per share grew from N4.90 to N9.42; an increase of 92 per cent.

    Lafarge Wapco’s new ready-mix concrete business contributed N1.6 billion to the total turnover of N98.8 billion. The company not only focused on increasing its turnover but has ensured that its operational costs are curtailed without compromising on service to its customers. The strong operational performance and efficient working capital management resulted in an increase in cash holdings of N11.5 billion. With the company being in a more cash positive position, it was able to reduce its debt by 42 per cent, paying off its variable rate medium term syndicated Naira and foreign currency loans ahead of tenor. Accordingly, Lafarge Wapco’s debt position closed 2013 at N21.5 billion comprising a fixed rate corporate bond and a power intervention fund loan. The debt-to-equity ratio halved to 23 per cent in 2013 as against 55 per cent in 2012.

  • The rising profile of Lafarge Wapco

    The rising profile of Lafarge Wapco

    This is a momentous period for Lafarge Cement Wapco Nigeria Plc, both in Nigeria and globally. From the landmark global merger that would consolidate Lafarge’s global leadership in cement and building materials to the consolidation of Lafarge’s operations in Nigeria and South Africa to create Lafarge Africa Plc as a continental leader, Lafarge Cement Wapco’s fundamentals and operations appeared on a formidable structure. As shareholders of Lafarge Cement Wapco Nigeria meet today at the Annual General Meeting (AGM), Capital Market Editor Taofik Salako reports on the key considerations that will dominate the meeting

    Today’s annual general meeting is important to Lafarge Cement Wapco Nigeria Plc and also its shareholders. With 175 per cent increase in dividend payout and sustained growths in key fundamentals over the periods, the mood for the meeting, for speculative and short-term investors, could be dictated by the growing earnings and returns of the cement company. But for most of the shareholders, the long-term investors that have traversed the decades with Nigeria’s oldest cement company, the main considerations would be the emerging opportunities in the continental and global consolidations being spearheaded by Lafarge.

    Lafarge Wapco had grown net earnings by 92 per cent in 2013, prompting the board of directors of the cement company to increase dividend payout by 175 per cent. The board of directors had recommended increase in dividend per share to N3.30 for the 2013 business year as against N1.20 paid for the previous year. This underlined continuous growth for investors who had received dividend per share of 75 kobo for the 2011 business year.

     

    Fundamentals of the business

    Key extracts of the audited report and accounts of Lafarge Wapco for the year ended December 31, 2013 showed that profit after tax grew by 92 per cent to N28.2 billion in 2013 as against N14.7 billion recorded in 2012. Profit before tax grew by 30 per cent from N21.3 billion to N27.7 billion. Turnover increased by 12 per cent to N98.8 billion as against N87.9 billion in 2012. The company witnessed significant reduction in interest expenses N5.5 billion to N3.8 billion as a result of the reduction in interest charges due to the full repayment of the Naira syndicated bank loans. Consequently, basic earnings per share grew from N4.90 to N9.42; an increase of 92 per cent.

    Lafarge Wapco’s new ready-mix concrete business contributed N1.6 billion to the total turnover of N98.8 billion. The company not only focused on increasing its turnover but has ensured that its operational costs are curtailed without compromising on service to its customers. The strong operational performance and efficient working capital management resulted in an increase in cash holdings of N11.5 billion. With the company being in a more cash positive position, it was able to reduce its debt by 42 per cent, paying off its variable rate medium term syndicated Naira and foreign currency loans ahead of tenor. Accordingly, Lafarge Wapco’s debt position closed 2013 at N21.5 billion comprising a fixed rate corporate bond and a power intervention fund loan. The debt-to-equity ratio halved to 23 per cent in 2013 as against 55 per cent in 2012.

    Already, emerging results showed positive outlook for the current business year. Lafarge Wapco recorded significant growths in sales and profit in the first quarter of this year as pre-tax profit totaled N8.62 billion in three months.

    Interim report and accounts of Lafarge Wapco for the three-month ended March 31, 2014 showed that sales rose by 16 per cent while pre and post tax profits grew by 20 per cent and 34 per cent respectively. The report showed that turnover rose to N27.03 billion in first quarter of 2014 as against N23.24 billion recorded in comparable period of 2013. Profit before tax increased from N7.20 billion to N8.62 billion. Profit after tax also rose from N6.07 billion to N8.15 billion. Earnings per share grew by 34 per cent from N2.02 to N2.71.

    The company indicated that net finance cost reduced from N980 million to N760 million due to lower interest charges following the full repayment of the Naira syndicated bank loans. Investment income simultaneously grew by N160 million to N260 million.

    Managing director, Lafarge Cement Wapco Nigeria Plc, Joe Hudson, said the good performance in the first quarter was a reflection of the increasing demand for the company’s quality products and an outcome of the implementation of various volume and cost improvement strategies.

    “We are especially pleased that the new line in Ewekoro continues to gain momentum and remain very optimistic about the rest of the year despite the challenging operating environment,” Hudson said.

    Chief financial officer, Anders Kristiansson, noted that the company further strengthened its financial position during the quarter as it remains committed to delivering value to shareholders and other stakeholders in 2014.

    Chairman, board of directors, Lafarge Cement Wapco Nigeria Plc, Chief Olusegun Osunkeye said the latest earnings reports showed steady growth and demonstrated the strength of the company in delivering value to shareholders and to other stakeholders.

     

    Consolidating the leadership

    Besides the earnings and returns, shareholders would focus on emerging opportunities from the new Lafarge as they vote on a proposal to merge Lafarge Wapco with other Lafarge’s business in South Africa. Already, Lafarge Wapco has been the toast of investors since its parent company, Lafarge Group, announced plan to merge its businesses in Nigeria and South Africa to create a new company to be known as Lafarge Africa Plc.

    The consolidation of the South Africa and Nigeria’s businesses will be done through Lafarge Wapco, which will subsequently be renamed Lafarge Africa while sustaining its listing on the NSE. Under the proposed terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent; Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent; to Lafarge Wapco. The transaction is valued at $1.35 billion while the market value is over $3 billion.

    The transaction will be concluded through a cash consideration of $200 million and the issuance of about 1.40 billion ordinary shares of Lafarge Africa to Lafarge Group. The transaction is expected to be concluded before the end of this year, subject shareholders’ approvals and regulatory and other customary authorizations. Also, Lafarge Wapco plans to raise some N100 billion in new capital, through debt or equity through the Nigerian and global capital markets.

    There are indications that shareholders would approve all the resolutions on the agenda including the consolidation and new capital issue. Ahead of the meeting, most shareholders’ groups have voiced supports for the consolidation and new capital issue as they commended the performance of the company.

    Lafarge has outlined the key benefits of the consolidation. Osunkeye said that the new company will create the platform for strong growth as the transaction allows the company to consolidate its Nigerian operation with that of South Africa.

    “I am proud to be part of the creation of this leading African building materials platform. It will provide access to growth in two of the largest economies on the continent. It will mean that our shareholders are invested in a larger and more geographically diverse business; and it will contribute significantly to the economic growth of both our nations,” Osunkeye said.

    Lafarge executive Vice President and country chief executive officer, Nigeria and Benin Republic, Guillaume Roux said the new platform would strongly position to benefit the two countries and Africa as the company cement capacity currently at 5.5 million metric tonnes will increase to 12 million tones.

    He said the strong operational track record and management skills within the combined businesses as well as continued support and expertise from Lafarge group would position Lafarge Africa to offer a full range of value added solutions to meet customers’ needs.

    “Today’s announcement marks a key milestone. It adds momentum to our push for differentiation in order to deliver innovation that increases and improves our product portfolio. Our objective is to bring more housing and even better solution to contribute to building better cities that are more beautiful, more compact, more connected and more durable,” Roux said.

    Roux had earlier outlined plan double Lafarge’s production capacity in Nigeria as part of a new expansion programme that would see additional investments by the foreign majority shareholders in its Nigerian subsidiaries.

    Roux, who noted that Lafarge had recently increased its capacity from 3.0 million metric tonnes to 8.0 million metric tonnes, said the group would be making new investments in the next few years to double its capacity and strengthen its position as a leader in the Nigerian cement industry.

    He pointed out the historic importance of Lafarge Wapco as the oldest cement company in Nigeria and the operational spread of the group’s business from the south to the north adding that the expansions will also be across the regions.

    He underscored the importance of Nigerian market to the Lafarge global operations noting that the group has continuously demonstrated its commitments to the long-term development of its business and the Nigerian economy by sustained investments, development of new innovative solutions and building of Nigeria’s indigenous know-how and capacity.

    “We will make a lot of new investments in the next few years,” Roux said.

    He said that contrary to recent speculations about presence of low-grade cement products in Nigeria, there could be no low-grade cement in the country as Nigeria has the most modern cement industry in Africa.

     

    Global leader

     Today’s meeting also comes as Lafarge and Holcim of Switzerland take further steps to create a company with more than $40 billion in sales in Europe’s largest deal this year. Both companies on Monday proposed a multi-billion euro series of asset sales as they seek regulatory approval for their merger to create the world’s biggest cement maker.

    Chief executive officer, Holcim, Bernard Fontana said the companies planned to officially apply for approval from EU competition regulators this summer. The tie-up is expected to be completed in the first half of 2015. Both Lafarge and Holcim have repeatedly said their merger, which would create a group with global headquarters in Zurich, would not entail any plant closures or industrial job cuts.

     

    Re-pricing the stock

     While the emergent Lafarge Africa would be the sixth largest company on the Nigerian Stock Exchange (NSE), the NSE  on April 22, 2014 admitted Lafarge Wapco to the special pricing model for the highly capitalised stocks. With this, investors with 10,000 shares of Lafarge Wapco can move the price of the stock as against the 50,000 shares generally required for other stocks. Lafarge Wapco has been trading above N100 in recent period. Lafarge Wapco’s share price closed on Monday at N111 per share.

    Justifying the inclusion of Lafarge Wapco, head, market surveillance, Nigerian Stock Exchange (NSE), Mr. Abimbola Babalola said a review of trading activities of the company in the last six months showed that the company met the criteria set by the Exchange.

    According to him, the Exchange commenced the pilot programme for the “Group B” stocks with nine stocks including Dangote Cement, Guinness Plc, Nestle Plc, Nigerian Breweries, SIM Capital Fund, Skye Shelter Fund, Nigerian Energy Sector Fund (NESF) and Total Plc.

    “The Programme became permanent in 2013 and the nine initial pilot stocks remained. Lafarge Cement WAPCO Nigeria Plc will become the 10th stock on the programme. We have observed that the prices of these high priced stocks have been rather stable with none falling below the N100 mark which is currently the benchmark,” Babalola said.

    Generally, the building and construction industry still holds immense potential. The largest country in Africa, with some 170 million population, Nigeria is in critical need of development of infrastructure and this has continued to grow year-on-year. With steady Gross Domestic Products (GDP) growth, the outlook for the construction industry remains bright as it is generally accepted that the level of GDP per capita positively correlates with the level of construction activity. Investors in Lafarge Wapco would particularly look out for the growth trend that suggests improved benefits from the recent strategic investments.

  • Equities open second half with N279b gain

    Equities open second half with N279b gain

    The stock market set out for the second half with a promising bullish rally as investors sought to take early positions ahead of expected second quarter earnings. With more demand than supply, investors earned about N279 billion in new capital gains, implying a week-on-week 2.0 per cent.

    The bullish start to the second half nudged the average year-to-date return to 4.12 per cent with investors in oil and gas and industrial goods stocks well ahead of the market’s average.

    New earnings reports for the first half are expected to trickle in this month and build up substantially in the next month. Post-listing rules at the Nigerian Stock Exchange (NSE) require quoted companies to submit their earnings reports, not later than three months after the expiration of the period. Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31.

    The first-half reports for the period ended June 30, 2014 are expected to be submitted over the next three months. Unity Bank blazed the trails last week with the early submission of its six-month report for the period ended June 30, 2014.

    Pricing trend showed widespread bullish sentiments with the composite index and sectoral indices closing on the upside. The All Share Index (ASI), which tracks prices of all quoted equities and doubles as Nigeria’s country index, reached a new highpoint of 43,031.81 points at the weekend as against its week’s opening index of 42,187.62 points. Aggregate market value of all quoted equities also crossed from the N13 trillion mark to N14 trillion mark rising from the week’s value-on-board of N13.930 trillion to close at N14.209 trillion.

    All other indices showed similar uptrend. The NSE 30 Index, which tracks 30 most capitalised stocks on the NSE, rose by 1.38 per cent. The NSE Banking Index rallied 1.24 per cent while its counterpart index for insurance was better at 1.94 per cent. The NSE Industrial Goods Index rose by 1.92 per cent. The NSE Consumer Goods Index inched up by 0.22 per cent. The NSE Oil and Gas Index was muted with average gain of 0.46 per cent while the NSE Lotus Islamic Index, which tracks selected Shariah-compliant stocks, recorded a week-on-week gain of 0.38 per cent.

    Year-to-date analysis showed that investors in the oil and gas sector remained ahead of the market with six-month-and-a-week return of 33.85 per cent. The NSE Industrial Goods Index indicated year-to-date return of 6.97 per cent while the NSE 30 Index trailed with 1.99 per cent. Investors in financial services stocks remained in the red with -2.34 per cent and -2.53 per cent for banking and insurance subsectors respectively.

    Across Africa, equities trended upward on new buying momentum. South Africa’s FTSE JSE indicated a weekly return of 2.7 per cent while the Kenyan NSE 20 rose by 1.0 per cent. Global indices also showed similar upbeat. The United Kingdom’s FTSE rose by 1.8 per cent while the United States’ benchmark, the Standard & Poors (S & P) 500 also rose by 1.2 per cent. The India BSE Sens recorded a week-on-week gain of 3.4 per cent to push its year-to-date return to 22.6 per cent. France CAC 40 rose by 1.1 per cent while Germany’ XETRA DAX and Japan’s Nikkei returned 2.1 per cent and 2.3 per cent respectively.

    At the NSE, total turnover stood at 2.27 billion shares worth N28.62 billion in 26,730 deals last week as against a total of 2.89 billion shares valued at N30.03 billion traded in 30,650 deals in previous week. The financial services sector led the activity chart with 1.74 billion shares valued at N15.51 billion in 11,381 deals, contributing 76.7 per cent and 54.2 per cent to the total equity turnover volume and value respectively. Conglomerates sector followed with a turnover of 193.61 million shares worth N1.22 billion in 2,610 deals while the oil and gas sector placed third with 153.88 million shares worth N3.85 billion in 5,808 deals.

    The trio of FBN Holdings Plc, Continental Reinsurance Plc and Transnational Corporation of Nigeria Plc were the most active stocks with a total of 907.74 million shares worth N7.82 billion in 4,632 deals, representing 39.96 per cent and 27.33 per cent of aggregate turnover volume and value respectively.

    Trading remained muted in other non-equity securities. A total of 223,359 units of Exchange Traded Products (ETPs) valued at N4.45 million were traded in 19 deals while a total of 730 units of FGN bonds valued at N863, 405were traded in a transaction.

  • Shareholders back Lafarge Wapco on product line

    Shareholders back Lafarge Wapco on product line

    National Coordinator Independent Shareholders Association of Nigeria, Chief Sunny Nwosu has commended Lafarge WAPCO on its financial performance and shareholders revenue while pursuing standardization of its product lines.

    Beyond the financial performance, Lafarge WAPCO also scores high in stakeholder relationship and stakeholder-centric attributes he also said.  Nwosu commended the improved financial performance of the company exemplified by the recently announced transformation of the company into Lafarge Africa Plc through a transaction that involves combining Lafarge Group’s Nigeria operations with those in South Africa and transferring these to Lafarge WAPCO.

    He revealed that the transaction translates to consolidating Lafarge’s 35 per cent holding in Unicem, 58.61 per cent in AshakaCem, 100 per cent in Atlas among others.

    He expressed the dismay of  the shareholders on cement war relating  to standardisation noting that representatives  of several shareholders  association in Nigeria which represents the interest of the minority shareholders have aligned their thinking with the company  on the need to continue the production of 32.5 cement grade especially as it has been known to be best suited for building and plastering  as it has quick drying effect.

    He said: “With the huge housing deficit of over 18 million housing units, there is the need to ensure that the majority of the people should not be denied the usage of 332.5 grade especially in housing construction.  We want to align ourselves with the professionals that underscored the fact that there is no sub standard cement in the country and that the incessant building collapse in the country is not as a result of poor quality cement but poor mix by users.”

    National Coordinator Share Holders United Front, Mr. Gbenga Idowu said the shareholders are happy with the returns they are getting. They hailed the continuous improvement of the product and asked policy makers to encourage cement manufacturers so as to bridge the housing deficit.

    He further said that though they are not professionals but from their experience they can justifiably say that 32.5 is not sub standard in any way as the grade has been proven over time.

    Another Shareholder and a developer Chief Timothy Adesiyan said the 32.5 cement grade is not the issue but the incursion of quacks into the construction sector who know next to nothing about construction modalities.

    He commended the company’s various initiatives that are meant to take the company to the next level and said they cannot allow anything to affect their returns as shareholders.

  • Vetiva rebalances VG 30 ETF

    Vetiva rebalances VG 30 ETF

    Following the bi-annual review of the NSE 30 Index,  Vetiva Fund Managers Limited has rebalanced its Vetiva Griffin 30 Exchange Traded Fund (VG 30 ETF), which tracks the NSE 30 Index.

    In a statement by the fund manager, Vetiva noted that the rebalancing was sequel to the bi-annual review for relevant indices at the Nigerian Stock Exchange (NSE) including the NSE 30 Index. The reviewed indices took effect on July 1, 2014.

    The NSE-30 Index is a modified market capitalization index with the numbers of included stocks fixed at 30. The stocks are selected based on market capitalization from the most liquid sectors and liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included in the Index, the stock must be traded for at least 70 per cent of the number of times the market opened for business.

    The fund manager pointed out that as the investment objective of the VG 30 ETF is to track the price and yield performance of the NSE 30 Index, any change to the NSE 30 Index including a change in the composition of the NSE 30 Index and in the weighting of the securities within the NSE 30 Index, will require the VG 30 ETF Trust to make corresponding adjustments to its portfolio from time to time.

    The portfolio manager stated that it may adjust the composition and weighting of the securities held in the VG 30 ETF Trust’s portfolio from time to time and shall, to the maximum extent practicable, immediately conform to changes in the composition and weighting of the securities within the NSE 30 Index.

    “Further to the above, Vetiva Fund Managers Limited has rebalanced the VG 30 ETF Portfolio in line with the changes to the NSE 30 Index,” the fund manager stated.

     

  • Obama decries big bonuses at bank trading desks as risky

    Obama decries big bonuses at bank trading desks as risky

    President Barack Obama’s critique of trader bonuses at Wall Street banks as still risky to the economy drew objections from financial executives who said the compensation system already has been fixed.

    In an interview aired today on American Public Media’s Marketplace radio program, Obama said bonuses encourage traders to “take big risks” that imperil the financial system’s stability. Cutting that risk remains an “unfinished piece of business” and his administration will be “looking at additional steps,” he said.

    Even as White House press secretary Josh Earnest told reporters that the president wasn’t suggesting specific action, people in the financial community said Obama’s comments were off base.

    “This idea that Wall Street is this sort of great evil is at best simplistic,” Marketfield Asset Management Chairman Michael Shaoul said today on Bloomberg Television. “I think Wall Street is an easy target.”

    If Obama follows through it would add to pressure on banks that have already cut or reassigned scores of traders. Many traders have joined hedge funds ahead of a Dodd-Frank Act measure known as the Volcker Rule — named after former Federal Reserve Chairman Paul A. Volcker — that restricts the once-lucrative business of speculating for the accounts of the nation’s biggest lenders. .

    A separate regulation under the 2010 Dodd-Frank law would require delayed bonuses for some bank executives. A draft was released in 2011 but has since stalled without action at the Securities and Exchange Commission.

    Alan Johnson, founder and managing director of New York-based Johnson Associates Inc., who advises Wall Street banks on compensation, said in a phone interview that Obama’s comments were “just weird.”

    “Trading is so far down from the peak, they’ve spent an endless amount of time and energy to reform trader pay — to say that trader pay needs to be reformed is just bizarre,” he said.

    The ability to make big risky bets has been dramatically reduced, he said, calling Obama’s comments “just political — when in doubt, blame Wall Street.”

    Though Obama’s comments on bonuses aired today, the interview was recorded a day before government statisticians reported the economy added 288,000 jobs last month and the unemployment rate dropped to 6.1 percent, the lowest since before the financial crisis peaked six years ago.

    While U.S. corporate profits and stock indexes have soared to record highs, middle-class incomes haven’t yet made up the ground lost during the recession.

    Photographer: Andrew Harrer/Bloomberg

    U.S. President Barack Obama.

    Ahead of congressional elections in November, public disapproval of Obama’s handling of the economy is running higher than on the eve of the 2010 midterm elections, when the president’s Democratic party was handed what he called a “shellacking” and lost control of the House.

    Fifty-seven percent of Americans said they’re unhappy with Obama’s economic stewardship in a June 6-9 Bloomberg National Poll compared with 51 percent in October 2010. Almost two-thirds say the country is on the wrong track.

    Wall Street employees took home an average bonus of $164,530 last year, the most since the 2008 financial crisis and the third highest on record, according to estimates released in March by New York state Comptroller Thomas DiNapoli.

    While the collective bonus pool rose 15 percent to $26.7 billion in 2013, the increase was fueled by compensation deferred from prior years. Delaying payouts is meant to discourage employees from trying to reap quick payouts by taking risks that can hurt their firm in the future.

  • FBN Holdings rolls out 1.87b shares in Oasis Insurance takeover bid

    FBN Holdings rolls out 1.87b shares in Oasis Insurance takeover bid

    FBN Holdings has activated its billion-naira takeover bid for minority shareholdings in Oasis Insurance Plc.

    FBN Holdings is making the takeover bid through FBN Life Assurance Limited, an insurance subsidiary of FBN Holdings.

    Under the plan, FBN Assurance is making a mandatory takeover of 1.87 billion ordinary shares of 50 kobo of Oasis Insurance currently held by minority shareholders.

    A declaratory report on the takeover obtained yesterday by The Nation indicated that acceptance list will now open on July 7 and close on July 28, 2014. The qualification date for the offer was July 1, 2014 as a result of the T+3 trading cycle at the Nigerian Stock Exchange (NSE).

    According to the report, shareholders of Oasis Insurance Plc whose names appeared on the register of members of Oasis maintained by First Registrars on 31 December, 2013 and are eligible to participate in the offer should indicate by filling the necessary documents.

    Such shareholders who wish to tender some or all of the ordinary shares registered in their name would have to complete the acceptance form, together with valid share certificate, which should be stamped and signed by their stockbrokers and then submitted to First Registrars, not later than 4pm on July 7, 2014.

    However, qualified shareholders who hold their shares in Central Securities Clearing System (CSCS) and who wish to participate in the offer should complete the acceptance form contained in the take-over bid document in accordance with the instructions printed thereon. The completed acceptance form, which should be stamped and signed by their stockbrokers with their statement of CSCS account, should be submitted to First Registrars, not later than 4pm on July 28, 2014

    FBN Holdings, through FBN Assurance, had acquired the majority equity stake in Oasis Insurance. It had acquired about 4.63 billion ordinary shares of 50 kobo each of Oasis Insurance from the previous core investors-Oasis Group Limited and MetroWest Investments Limited.

    The sale transferred the majority 71.2 per cent equity stake in Oasis Insurance to FBN Life Assurance. The acquisition was effected through the execution of a share sale and purchase agreement between the parties following receipt of the requisite regulatory approvals from the National Insurance Commission (NAICOM), Securities & Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE). Oasis is quoted on the NSE.

    With the acquisition of 71.2 per cent, FBN Life was required to make a mandatory take-over bid to the remaining shareholders of Oasis insurance in line with section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC’s Rules and Regulations. The takeover bid could however make Oasis Insurance, a publicly quoted insurance firm, a wholly-owned subsidiary of the group.

    The acquisition would enable the FBN Holdings to deepen its insurance business as FBN Life seeks to harness Oasis Insurance’s relative strengths, thereby creating synergies for the development of the insurance business.

    Oasis Insurance is expected to leverage FBN Holdings’ wide network, including the international spread of its flagship-First Bank of Nigeria Limited, to expand its coverage of the Nigerian general insurance market through cross-selling of products on First Bank’s network.

  • ‘Firms with over N40b shareholders’ funds must convert to PLC’

    ‘Firms with over N40b shareholders’ funds must convert to PLC’

    A Bill for an Act to provide for private companies whose shareholders funds exceed N40 billion, or their annual turnover or total assets exceeds N80 billion, to convert to Public Liability Companies, passed second reading on the floor of the House of Representatives yesterday.

    The Sponsor of the Bill, Hon. Chris Emeka Azubogu (APGA Anambra ), said if passed into law, private companies whose shareholders’ funds exceed N40 billion, or their annual turnover exceeds N80 billion, or their total assets exceed N80 billion, would automatically convert to public liability companies.

    The lawmaker, who stated the bill seeks to regulate private companies, said they will have their shares listed in the stock exchange, adding that this would promote growth for both the companies and the Nigerian Capital Market.

    His words:  “If proper fundings are given to business owners or small companies in the country, it would help to build up strong business institution that will reduce the rate of unemployment.”

    Speaking in support of the Bill, Deputy Leader of the House, Hon.  Leo Ogor noted that the National Assembly has the responsibility of regulating private companies.

    “It is a bill that should be given the necessary support for the interest of the growth of the country’s economy,” he said.

    Hon. Nicholas Ossai, (PDP Delta), who also spoke in support of the Bill, noted that the listing of such companies on the Nigerian Stock Exchange would make local businesses grow.

    His words: “It will empower Nigerians. It will enable Nigerians participate in the country’s economy. It is in line with international best practices. The bill should be passed so as to improve enterprise in the country.”

    However, a member, Hon. Fort Dike opposing the Bill.

    According to him, the bill was not worth the trouble and hence the sponsor should not waste time on it as it would be unproductive.

    He said:  “The bill did not take so many things into consideration. It is anti business to force individuals to go into stock exchange. This bill should not be allowed to scale through because it will be in conflict with the general ideas of investment in the country. This bill will make the parliament look like it lacks business knowledge”

  • Unity Bank wins agric financing award

    Unity Bank wins agric financing award

    Unity Bank Plc was adjudged the “Best Bank in Agriculture Financing” at the 2014 BusinessDay Annual Banking Awards.

    Speaking after he received the award on behalf of the bank, managing director, Unity Bank, Mr. Henry Semenitari, said it was not a surprise that the bank won the award this year because it had consistently been at the forefront of agric financing.

    According to him, the bank’s leading role in agric financing is evidenced in its wide range of agricultural products for both small scale and large scale farmers – collectively known as Unity Greens – which cover general agro-allied financing, industrial as well as cooperative leasing, support schemes and products.

    He noted that the bank is also widely acclaimed as one of the most active in the implementation of Federal Government’s multi- billion naira Agriculture Intervention Schemes such as the Commercial Agriculture Credit Scheme, Growth Enhancement Support Scheme (GES), NIRSAL, Agriculture Credit Guarantee Scheme and the Agriculture Trust Fund Model.

    “With over 150 branches along the Nigerian Agrarian belt, the bank has long recognized this positioning as an area in which it can make its impact felt,” Semenitari said.

    It would be recalled that the bank had in 2013 received recognition for its support of the Northern Economy from BusinessDay.