By Taofik Salako, Deputy Group Business Editor

Nigeria’s premier financial technology company, E-Tranzact International Plc witnessed a decline in the top-line and suffered a net loss of N1.89 billion in 2020 despite reported growth in electronic transactions due to the COVID-19 pandemic.

Audited report and accounts of E-Tranzact for the year ended December 31, 2020 released at the Nigerian Stock Exchange (NSE) showed turnover dropped from N25.19 billion in 2019 to N22.72 billion in 2020.

Gross profit halved from N2.025 billion in 2019 to N1.15 billion in 2020. The company, however, recorded operating loss of N2.14 billion in 2020 as against modest operating profit of N60.32 billion the previous year.

Loss before tax stood at N1.87 billion in 2020 compared with pre-tax profit of N291.61 million in 2019. After taxes, net loss rose to N1.89 billion in 2020 compared with net profit of N147.04 million in 2019. Loss per share stood at 45 kobo in 2020 as against positive earnings per share of 4.0 kobo in 2019.

E-Tranzact International  launched a N7 billion rights issue in 2020 to raise equity funds from existing shareholders.

E-Tranzact offered 4.67 billion ordinary shares of 50 Kobo each at N1.50 per share. The rights were pre-allotted on the basis of 10 new ordinary shares for every nine ordinary shares held as at March 25, 2020.

Shareholders of E-Tranzact had in December 2018 authorised the board of the company to raise additional capital of up to N7 billion through the issuance of any form of equity instruments, whether by way of public offering, private placement, rights issue, offer for subscription or other methods they deem fit, with or without preferential allotments, either locally or internationally, at such dates and on such terms and conditions as shall be determined by the directors.

Shareholders also empowered the directors to consider as an alternative or addition issuance of convertible or non-convertible loans while allowing the company to issue undersubscribed shares to interested investors as well as absorb excess subscriptions. Shareholders had also increased the company’s authorised share capital from N2.1 billion or 4.2 billion ordinary shares of 50 kobo each to N9.1 billion or 18.2 billion ordinary shares of 50 kobo each.

Market analysts expected E-Tranzact to use its new issue to correct its free float deficiency, which was 1.78 per cent below the benchmark set for its listing category at the Nigerian Stock Exchange (NSE). E-Tranzact had a free float of 18.22 per cent, 1.78 per cent below the 20 per cent benchmark. E-Tranzact had been given a deadline of December 07, 2020 to redress the deficiency by either reducing the concentrated core shareholdings or dilute them.

Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

 

By Taofik Salako, Deputy Group Business Editor

Chams Plc recorded net loss of N920 million in 2020 as the information technology company suffered 36 per cent drop in the top-line.

Key extracts of the audited report and accounts of Chams for the year ended December 31, 2020 showed that sales dropped from N3.29 billion in 2019 to N2.11 billion in 2020. Cost of sales however dropped from N2.28 billion to N1.35 billion.

With operating expenses, the company saw a reversal of its pre-tax profit of N358.86 million in 2019 to a pre-tax loss of N913.13 million in 2020. After taxes, net profit reversed from N322.62 million in 2019 to net loss of N919.68 million in 2020. With these, earnings per share turned negative from positive earnings per share of 6.0 kobo in 2019 to loss per share of 17 kobo in 2020.

Chams is in the process of recapitalising its business to further drive the implementation of its medium-term strategic plan.

Shareholders of Chams had in 2020 endorsed the company’s plan to raise new equity funds and deleverage its balance sheet through debt-to-equity conversion.

The intelligent business solutions company plans to raise N500 million through a rights issue to existing shareholders while also executing debt-equity conversion to boost its working capital and  enhance implementation of its five-year strategic plan.

The proposed capital injection had earlier been approved by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE).

Chairman, Chams Plc, Sir Ademola Aladekomo had explained that the company embarked upon a new five-year strategic plan and vision to grow shareholder value by focusing on African digital solution with emphasis on Nigeria.

He said Chams would take advantage of COVID-19 pandemic to expand its innovative solutions in order to boost income.

 

By Taofik Salako, Deputy Group Business Editor

Seplat Petroleum Development Company Plc has launched a process to raise new debt capital from the international capital market to enable it debts and finance corporate growth plan.

In a regulatory filing, Seplat, which is quoted on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NSE), stated that it had mandated major global investment bankers and financial institutions to launch the process.

According to the indigenous oil and gas company, Citi, J.P. Morgan, Standard Bank and Standard Chartered Bank were mandated as global coordinators while Natixis, Rand Merchant Bank and Société Générale were as mandated as bookrunning managers.

The professional parties were expected to organise a global investor call and one-on-one meeting with fixed-income investors, after which Seplat will issue new debts.

Seplat plans to issue dollar-denominated, senior unsecured guaranteed notes, subject to market conditions. The company is rated B2 by Moody’s, B by  S & P and B- by Fitch.

The net proceeds of the new capital raising, according to the company, will be used “to redeem the existing Seplat 2023 notes, repay drawings under the revolving credit facility, for general corporate purposes, and to pay transaction fees and expenses”.

The Board of Seplat had earlier this month recommended payment of $58 million to shareholders as cash dividends for the 2020 business year, despite running into a major loss during the period.

Shareholders will receive a final dividend of $0.05 per share, in addition to interim dividend of $0.05, bringing to dividend for the year to $0.10 per share.

The audited report and accounts for the year ended December 31, 2020 showed Earnings before interest, taxes, depreciation, and amortization (EBITDA) at $265.8 million while operating profit stood at $121 million, before non-cash impairments and unrealised fair value losses.

The report also showed cash position of $259 million after $100 million RCF repayment, $58 million dividends paid in the year, and $150 million capital expenditure. Net debt stood at $440 million with most maturities after 2021.

FSDH Group, an investment banking group, described Seplat’s performance as “weak” in 2020 with revenues declining 10.8 per cent and a loss of N30.7 billion in 2020 compared with a profit of N85 billion in 2019.

According to the report, total revenue in 2020 was N190.9 billion as against N214.2 billion in 2019. The crude oil revenue declined 1.0 per cent to N150.4 billion while gas revenue slipped 34.9 per cent to N40.5 billion in 2020.

The report noted that the fall in oil revenue reflects lower realised oil prices of $39.95/bbl for the period as against $64.4/bbl in 2019, offset by added production primarily from the Eland assets.

Following its acquisition, Eland’s revenues and costs are included in the full year 2020 accounts but not reflected in 2019. Brent remained volatile throughout the year, following the twin shocks of the Saudi Arabia – Russia price war and the COVID-19 pandemic, trading between a high of $68.91/bbl in January and a low of $19.33/bbl in April, before ending the year at $51.80/bbl.

Gas sales revenue declined by 34.9 per cent to N40.5 billion in 2020, due to lower gas sales volumes of 37.1 Bscf compared to 47.8 Bscf in 2019.

The lower gas sales volumes reflect lower-than-expected gas production due to constrained demand due to the pandemic’s impact and delays in completing the Oben-50 gas well, following restoration in demand. There were no gas-processing revenues in 2020, compared with the one-off gas-processing revenue of N20.5 billion in 2019, the Oben gas plant tolling payment by NPDC. The average realised gas price was slightly higher, at $2.87/Mscf as against $2.84/Mscf in 2019.

According to the report, following a reassessment of the business models and assumptions to establish their reasonableness and practicality, particularly in the current and expected oil price environment, Seplat booked a non-cash provision of N52 billion across assets in 2020. Including all adjustments, the operating loss for the year was N11.4 billion as against operating profit of N95.8 billion in 2019.

“The loss reflects lower oil prices realised and an impairment provision of N52 billion booked in the period, which includes a non-financial asset charge of N41.2 billion (IAS 36) and financial asset charges of N10.8 billion (IFRS 9). The financial asset charge includes charges against a deposit made for a potential investment that the company no longer plans to pursue. Other income of N30.2 billion includes an adjustment for an N18.0 billion underlift position, shortfalls of crude lifted below Seplat’s share of production, which is priced at the date of lifting and recognised as other income. The higher net finance charge of N18 billion in 2020 includes interest on the $350 million RCF in December and the consolidation of Eland finance,” the report stated.

Further analysis showed that loss before tax was N28.9 billion in 2020, compared to a profit before tax of N89.9 billion in 2019. The group’s tax charge for 2020 was N1.8 billion, compared to N9.0 billion for 2019. The reduction in the effective tax rate was principally due to the recognition of tax losses available for utilisation against future profit. Consequently, the loss for the year was N30.7 billion as against profit after tax of N85 billion in 2019.

The resultant basic loss per share was N46.42 per share in 2020, compared to an earnings per share of N149.35 per share in 2019. The reduction was mainly due to lower oil prices and impairment charges. The board recommended a final dividend of N19 per share in line with the dividend policy, bringing the total dividend to N37.32 per share as against N30.70 per share in 2020.

 

 

By Taofik Salako, Deputy Group Business Editor

Afriland Properties Plc has explained its conservative dividend payment policy as a deliberate strategy to drive growth and ensure better returns to shareholders.

At the Annual General Meeting (AGM) in Lagos, shareholders of Afriland Properties approved payment of N68.7 million as cash dividend for the business year ended December 31, 2020, representing a dividend per share of 5 kobo.

Chief Executive Officer, Afriland Properties Plc, Uzoamaka Oshogwe, said the company was ploughing back most of its funds to be able to generate more profits for its business and the shareholders.

She assured that Afriland will continue to explore more ways to ensure that its business remains profitable.

She pointed out that last year, the company started and completed the construction of some offices nationwide while significant progress was made on other non-proprietary projects.

“We have positioned your company to take advantage of government’s policy direction; optimise future rental income from our proprietary properties and to actively pursue an aggressive development of select properties for residential and commercial purposes, with a view to maximising shareholders wealth,” Oshogwe said.

She said the company will continue to explore the possibility of partnering with reputable organizations with a view to optimizing its property portfolio and thus delivering superior value to shareholders.

Chairman, Afriland Properties, Emmanuel Nnorom, said the real estate industry was affected negatively by the coronavirus pandemic as public and private properties such as offices, apartments, hotels, sports, and entertainment venues were singled out as potential spreading locations for the coronavirus.

He said the company commenced and completed several projects during the year such that by the end of the year it had more than 41 projects in different locations in the country and at various stages of completion.

“Our performance during the year was affected by the events in the larger economy, however, we will further strengthen our balance sheets and business model this year by tapping into the opportunities that will be created in the building and construction sector,” Nnorom said.

In the year under consideration, the company recorded revenue of N1.42 billion, representing a marginal decline of four per cent from N1.48 billion recorded in 2019. Profit before tax stood at N1 billion in 2020 as against the N1.3 billion in 2019. Total assets stood at N27.07 billion, representing an increase of nine per cent as against N24. 86 billion recorded in 2019.

A shareholder, Sir Sunny Nwosu, who spoke at the meeting, commended the management of the company for keeping up with activities despite the Covid-19 pandemic and its resultant effect on major businesses.

While advising the company to gear up efforts to increase dividends in the next financial year, Nwosu praised Afriland’s effort at increasing its retained earnings as well as its efforts at resuscitating the former Raymond House building into the iconic building now known as Afriland Towers,  which according to him holds a pride of place in the Lagos business district.

Another shareholder, Bisi Bakare, commended the fact that the business kept busy during the peak of the pandemic, as it recorded the completion of several projects during the year under focus, which culminated in its declaration of a modest profit at the end of the financial year.

By Taofik Salako, Deputy Group Business Editor

Union Bank of Nigeria (UBN) Plc has restated its commitment to the sale of its United Kingdom’s (UK) subsidiary, Union Bank UK (UBUK) Plc, despite the delay in the transaction process.

Chief Financial Officer, Union Bank of Nigeria (UBN) Plc, Joe Mbulu said UBUK remains classified as “available for sale” as the sale process continues, although delayed due to the pandemic-induced lockdowns.

Union Bank had entered into a share sale and purchase agreement to divest its 100 per cent equity stake in UBUK more than a year ago. The delay had generated concerns within the investing public.

The Board of Union Bank had stated that the sale was in line with the bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.

According to the bank, following a competitive bid process, MBU BidCo Limited (MBU), an acquisition vehicle owned by MBU Capital Limited (MBU Capital), was selected as the preferred bidder. The completion of the sale is, however, still subject to regulatory approvals from the relevant regulatory authorities in Nigeria and the UK.

MBU Capital is an investment management firm founded in 2013 and based in Mayfair, London. MBU Capital has active interests in financial services, healthcare, education, real estate and technology. MBU Capital (UK) LLP is authorised and regulated by the Financial Conduct Authority.

Chief Executive Officer, Union Bank of Nigeria (UBN) Plc, Emeka Emuwa said the bank decided that as the banking landscape shifts towards digital and agency banking to drive financial inclusion, the Nigerian market presents robust long-term opportunities for it.

He pointed out that the divestment allows the bank to channel its focus and capital towards mining the Nigerian opportunities fully.

“Through the sale, we are better positioned to deliver greater value to the organisation and its stakeholders as well as continue to build the future of banking in Nigeria. The terms of the sale of UBUK delivers substantial value to our shareholders, while also entrusting its customers and trading partners to a high-quality financial services institution which will work with existing management to deliver a stronger and more profitable entity,” Emuwa said.

Founder and Chief Executive Officer, MBU Capital, Mohammed Iqbal said the investment group was delighted with the acquisition, describing it as a huge opportunity to build on UBUK’s strengths in international markets to create a new-style bank which is focused on the needs of UK and international SMEs and entrepreneurs.

According to him, many customers are seeking a bank which truly understands the needs of entrepreneurial, fast-growing businesses.

“We believe that our acquisition and vision for UBUK offers the potential for significant growth for the bank. We look forward to working with our new colleagues at UBUK to continue to service the needs of its clients. We also look forward to sustaining and deepening relationships with UBUK’s existing trading partners,” Iqbal said.

By Taofik Salako, Deputy Group Business Editor

The government has been advised to use the capital market for accelerated development by directing borrowed funds to specific projects and infrastructure that could stimulate the production base of the economy.

Former Anambra State Governor, Mr Peter Obi said the government’s borrowings should be targeted at development of the productive base of the economy, rather than supporting or supplementing consumptive tendency.

Speaking on “The expected role of capital market in a developing economy “ at a webinar organised by the Association of Securities Houses of Nigeria (ASHON), Obi noted that many countries that made proper use of borrowed funds have grown their economies significantly.

He advocated for a well-articulated fiscal and monetary policy to drive activities in the capital market.

Managing Director, Planet Capital, Mr Chidi Agbapu, called for self discovery and emphasised the interplay of actions, thoughts and feelings in the making of one’s attitude.

He pointed out that many people created artificial barriers for themselves due to lack of will to actualise their dreams.

Speaking on “ The place of the capital market in the Changing Socio-Economic Order,” Chief Consultant, Biodun Adedipe and Associates, Dr Biodun Adedipe called for a more constructive engagement with the market by providing a bouquet of incentives that encourages innovations and development of the capital market.

He also noted the need for the government to make use of the capital market to fund its major infrastructural projects.

Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu,  urged stockbroking firms to align their business models with the newly demutualised Nigerian Stock Exchange to maximise the anticipated opportunities and minimise the risks.

Following its approval to convert into public company by the Securities and Exchange Commission (SEC) and Corporate Affairs Commission (CAC) at the weekend, the NSE will henceforth operate as a profit making organisation under the Nigerian Exchange Group Plc(NGX Group ) with three subsidiaries: Nigerian Exchange Limited (NGX Limited),  NGX Regulation Limited ( NGX REGCO) and NGX Real Estate Limited (NGX RELCO).

Addressing securities dealers at the webinar themed “ The future of securities dealing business in Nigeria post-demutualisation of NSE “ Ezeagu urged ASHON’s members to align their business models with the new market structure.

“The changes that this new orientation will bring in the business model of the Exchange may impact our own operating models as securities dealers. However we anticipate that there must be responsibilities and risks attached to every relationship, some of these risks may crystalise, some are not within our radar, we know that researchers usually expect some serendipity results and make provisions for it just like we try to do in this matter,” Ezeagu said.

According to him, the governing council of the ASHON has been deliberating on proactive measures to take in order to realign business model and ensure the sustainability of members’ businesses in the changes that may follow the demutualisation.

He noted that it was such proactive thinking that led the council to engage with other exchanges or platforms with a view to creating avenues for members to diversify and sustain their businesses and enhance their earnings base. Such platforms include the Lagos Commodities and Futures Exchange (LCFE), the NASD, and FMDQ.

“We were involved in the demutualisation process with the council and management of the Nigerian Stock Exchange from inception and participating in the various decision inputs and Committee memberships.  We engaged vigorously and achieved our aim of protecting the interest of our members.  Our expectations on the completion of the demutualization process are that we shall have shares credited to our accounts as shareholders and the demutualized Nigerian Stock Exchange will become an aggressive profit oriented entity, “  Ezeagu said.

 

By Taofik Salako, Deputy Group Business Editor

The board of directors of Nigerian Breweries (NB) Plc has recommended the adoption of a dividend conversion option under which shareholders can exchange their cash dividends for ordinary shares of the brewing company.

In a circular made available at the Nigerian Stock Exchange (NSE), directors of the company will seek shareholders’ approval for the implementation of the conversion scheme, which will apply to the cash dividend for the 2020 business year.

According to the resolutions, shareholders are expected to authorise that “shareholders entitled to receive cash dividends in respect of the financial year ended December 31, 2020, be offered a right of election to receive ordinary shares in the company instead of cash dividends, and that such new ordinary shares be credited as fully paid, which, when issued, shall rank pari-passu in all respects with the company’s existing ordinary shares”.

Also, the election to receive ordinary shares instead of cash dividends shall have been exercised on or before April 21, 2021. The new ordinary shares to be received by shareholders shall be determined by their cash dividend entitlements divided by a reference share price, which reference share price shall be the 10-day average, starting on  March 11, 2021, of the company’s closing share price on the floor of the NSE.

Shareholders are expected to authorise the directors “to allot to shareholders who elected to receive ordinary shares in the company in lieu of cash dividends, such number of new ordinary shares as shall be determined by the directors”  in line with the reference conversion price and amount of cash dividend presented.

With the April 22, 2021 Annual General Meeting (AGM) almost two weeks after the closing date for the exercise of the conversion option, shareholders are expected to ratify all actions already taken by the directors and all new necessary steps to give effect to the conversion.

The Board of Directors of NB earmarked the entire net profit of N7.5 billion recorded in 2020 for payout to shareholders as cash dividends for the business year.

The company will pay a final dividend of N5.52 billion in addition to an interim dividend of N1.999 billion earlier paid during the business year. With these, shareholders will receive a final dividend per share of 69 kobo in addition to 25 kobo earlier paid during the year, bringing the total dividend per share to 94 kobo.

The dividend recommendation was part of the highlights of the audited report and accounts of the company for the year ended December 31, 2020 released at the NSE.

The report showed that turnover rose by 4.3 per cent to N337.01 billion in 2020 as against N323 billion recorded during the corresponding period in 2019.

In the statement signed by NB Company Secretary and Legal Director, Uaboi Agbebaku, the Board of Directors commended the company’s management for its efforts in mitigating the impact of the COVID-19 pandemic on the business.

The board also noted the prudent management of resources as reflected in a seven per cent reduction in expenses incurred on marketing, distribution, and administration.

The company pointed out that only qualifying shareholders whose names appeared on its register of members at the close of business on March 10, 2021 would be paid the final dividend.

The company stated that despite the negative impact of COVID-19 on its operations, it made noteworthy donations in cash and kind valued at about N531 million out of a phased commitment of N600 million to the federal and seven state governments’ COVID-19 Task Forces Relief Funds.

The Board of Directors expressed confidence that the company is well-positioned to continue to deliver return on investment to shareholders.

According to the company, it remains committed to not only keeping its balance sheet strong but ensuring that the health, safety and welfare of its employees, customers and partners are protected.