The Nation Newspaper

Category: Investors

  • NIPCO pays N563m dividends

     

    Shareholders of NIPCO Plc have approved payment of N563 million as cash dividends for the 2018 business year as the downstream oil and gas company recorded net profit of N1.58 billion. Shareholders will receive a dividend per share of N3.

    At the Annual General Meeting (AGM) in Abuja, NIPCO Plc Chairman Chief Bestman Anekwe said the company recorded total turnover of N254 billion in 2018 as it deepened petroleum products outlets and doubled its Liquefied Petroleum Gas (LPG) market share in Nigeria.

    He said the company has continued to record outstanding achievements despite the prevailing difficult environment in the last few years.

    He noted that NIPCO has maintained its culture of outstanding performance and industry leadership by focusing on pursuing its major objectives.

    “We are yet improving on our core competencies and remain committed to our vision of being the first choice company in the oil and gas industry to all stakeholders. We have maintained a constant expansion of our retail outlets and furthermore our company has maintained the lead in the LPG subsector by doubling the number of LPG skids and plants all over the country,” Anekwe said.

    According to him, the company’s strategic venture in the upstream sector will hopefully give it competitive advantage to explore new frontiers in the business environment.

    NIPCO Plc Managing Director Mr. Sanjay Teotia said the company plans to go into production of Liquefied Petroleum Gas (LPG) in its new investments surge.

    He said conscious efforts are being made in preparation for the take off of the LPG production.

    “Your company is thinking of venturing into LPG production against the background of the nation’s richness in natural gas. In the near future, we are going into its production,” Teotia said.

    According to him, the strategy to diversify and grow the streams of income through the expansion of the company’s oil and gas business will gain momentum in the period ahead.

    He pointed out NIPCO currently possesses the largest and the most active LPG storage facility and it has remained the supplier of choice.

    “Our shareholders will continue to smile with good returns on their investment year in year out but with a caveat that challenges in the sector are addressed headlong by concerned stakeholders,” Teotia said.

     

  • Capital markets focus on investor education

    Capital markets across the world have launched a week-long investor’s education programme aimed at enlightening investors on basics of investing and the emerging trends in the global securities market.

    The International Organisation of Securities Commissions (IOSCO) on Monday launched its third annual World Investor Week (WIW), after successful organisation of the week-long event in 2017 and last year. IOSCO is global body of securities regulators and its members regulate more than 95 per cent of the world’s securities markets in more than 115 jurisdictions. Nigeria is a member of IOSCO.

    The WIW is a week-long, global campaign, which aims to promote investor education and investor protection, highlighting the various initiatives of securities regulators in these two critical areas.

    The WIW started on September 30, and will run through October 6, 2019. IOSCO members will provide, in their jurisdictions, a wide variety of activities, such as launching publications or services, promoting contests and organizsing workshops, conferences and other events. Many members leverage the event to organize further investor education activities throughout the year.

    According to IOSCO, given the digital environment, the WIW 2019 includes key messages regarding online investing, digital assets and initial coin offerings, as well as re-emphasizing the basics of investing.

    IOSCO noted that in last year’s WIW, IOSCO members and stakeholders from some 90 jurisdictions on six continents undertook a range of activities, such as offering investor-focused information and services, promoting contests to increase awareness of investor education initiatives, organizing workshops and conferences and launching local and national campaigns in their jurisdictions.

    Chairman, International Organization of Securities Commissions (IOSCO) and Chief Executive Officer, Hong Kong Securities and Futures Commission, Ashley Alder, said the third edition of the World Investor Week evidences IOSCO’s continuous efforts and commitment to investor education and protection.

    Ashley said IOSCO has been encouraging new initiatives among its members and preparing them for dealing with the challenges of increasingly interconnected and digitalised capital markets.

  • Fidson Healthcare assures shareholders of sustained growth

    The board of Fidson Healthcare Plc has assured shareholders that ongoing expansion and business growth initiatives would continue to strengthen the performance of the healthcare company in the years ahead.

    Addressing shareholders at the Annual General Meeting (AGM) in Lagos, Chairman, Fidson Healthcare Plc, Mr. Segun Adebanji, said the company has continued to strengthen its operating facilities through expansion and retooling.

    According to him, old machines and equipment have been replaced with modern ones as the company repositions through business realignment and useful industry collaboration in order to take advantage of the growth opportunities in the market.

    “We are currently expanding our capacity utilization through increased production and contract manufacturing for other notable companies in the industry,’’ Adebanji said.

    He pointed out that the company has also continued to leverage on its World Health Organisation (WHO)-certifiable factory as it recently entered a partnership with GlaxoSmithKline (GSK) that will see it manufacture for GSK’s West African operations going forward.

    He added the strategic partnership and other market penetration strategy and cost optimization were some of many initiatives to sustain growth and return value to shareholders of the company.

    He noted that with the conclusion of the company’s rights issue earlier this year, the company has already taken steps to improve its financial structure in line with the purpose of the new capital raising, which was aimed at refinancing expensive debt and working capital funding in a bid to improve margins.

    At the meeting, shareholders approved payment of a dividend per share of 15 kobo. The company’s turnover rose by 15 per cent from N14.06 billion in 2017 to N16.23 billion in 2018. Profit before tax however dropped to N160.9 million in 2018 as against N1.6 billion in 2017. The decline was attributed to increased cost of sales margin from 49 per cent in 2017 to 61 per cent in 2018 and 92 per cent increase in finance cost.

     

  • Nasarawa mulls new bond issue to fund infrastructure

    Nasarawa State is considering raising new capital from the capital market through the issuance of a bond.

    Nasarawa State Governor Abdullahi Sule said the state government was considering issuance of a new bond after it had repaid its previous bond issue.

    He said the net proceeds of the bond issue would be used to finance infrastructural development to further enhance the growth of the state.

    “Yes, we are looking at that, since the last bond has been fully paid off. We are trying now to find the possibility of taking a new facility on infrastructural development, like market development, transportation, among others,” Sule, a former private sector chief and former Managing Director of Dangote Sugar Refinery Plc said.

    He noted that Nasarawa State is one of the least-indebted states in Nigeria, noting that though the past government floated a bond issue, it had paid off the bond before the coming of the new government.

    “We are very lucky. The past administration took one major debt through a bond and before we came in they paid off. But they had inherited debts like contractors’ fees and some other debts from banks. But we didn’t have a major overdraft from any banks. Since we came in, servicing of debts have been the least of our concerns,” Sule said.

    He outlined that the government is focused on long-term economic development of the state noting that he has set up a 15-man ‘Investment and Economic Advisory Council’, to chart the way forward for the economic development of the state.

    He added that the government is working to develop small and medium enterprises (SMEs), especially in the areas of agriculture, mining and trading.

    According to him, there is an arrangement for the Central Bank of Nigeria (CBN) to offer about N1.2 billion to Nasarawa farmers, which be used to empower the youths in growing small scale businesses.

    He assured investors that Nasarawa is a peaceful state where all stakeholders are focused on the progress of the state.

     

  • Fed Govt, Access Bank list N30.3b bonds

    The Federal Government has listed its latest issuances under the Federal Government of Nigeria Savings Bonds (FGNSB) on the Nigerian Stock Exchange (NSE). The Federal Government listed two new issues totalling N295.94 million.

    The listing of the sovereign bonds came a day after top-tier bank, Access Bank Plc, listed a corporate bond valued at N30 billion.

    The new listings by the government included a two-year N91.11 million 11.15 per cent series 60 bond, which is expected to mature in September 2021 and a three-year N204.83 million 12.15 per cent bond due to mature in September 2022.

    Access Bank listed a N30 billion seven-year 15.5 per cent fixed rate subordinated unsecured bond, which is due to mature in 2026.

    The Federal Government had, in March 2017, introduced the Federal Government of Nigeria (FGN) Savings Bond (FGNSB) to woo retail investors to the sovereign debt market and deepen capital formation. The minimum subscription was fixed at N5,000 while the maximum was pegged at N50 million. With a fixed quarterly interest payment of above 13 per cent, the FGNSB offers guaranteed return.

     

  • New Chams management assures on good corporate governance

    The management of Chams Plc has assured the investing public that it will uphold good corporate governance by providing adequate and timely information to the investing public.

    Chams Plc’s new Group Managing Director, Mr Gavin Young, made the assurance during a courtesy visit to the management of the Nigerian Stock Exchange (NSE).

    He said Chams was prepared to ensure sustainable shareholder value by focusing on innovations in its core area of identity management.

    According to him, the company would place premium on investment in innovative solutions and software across the commercial, consumer and government sectors of the economy to sustain its competitive edge.

    Young, who was accompanied by the immediate past group managing director of the company, Femi Williams, assured the Exchange that Chams would always take the issue of compliance with all the post listing requirements seriously.

    He said the company’s focus is to perfect and package innovative solutions so that it can realise value from its investments.

    As Chams is one of Nigeria’s foremost identity companies, we are also focussing on innovation in the identity space, and particularly verification, as there are now over 40 million National Identity Numbers (NIN) and BVN records to which we can link to provide such verification solutionsn,” Young said.

    He pointed out that the company has good working relationships with the National Identity Commission (NIMC) and Nigerian Inter Bank Settlement System (NIBSS) noting that Chams’ subsidiaries are making good progress in the Fintech payment segment.

    Young, who had worked with  Chams for over one decade in various capacities at both formal and informal level as well as the company’s subsidiaries, including investment companies, commended his predecessor, and his team for taking the company out of debt overhang within the last two years.

    Williams, who had worked for Chams for over two decades in various capacities, outlined many milestones recorded by the company during his four-year tenure, including declaration of dividend after three years of continuous losses, 100 percent appreciation of the company’s share price on the Exchange, balance sheet restructuring, maintenance of business relationship with Osun State Government till date, creation of Project Arise in 2017 and payment of all loans, among others.

    Nigerian Stock Exchange (NSE) Chief Executive Officer, Mr Oscar Onyema, congratulated the company on its tradition of seamless transition and urged the management to take advantage of opportunities created by the Exchange for ease of communication to the market.

    He emphasised the need for the company’s board to adhere to principles of corporate governance.

     

  • CIS explains executive conversion programme

    The Chartered Institute of Stockbrokers (CIS) has said its Executive Conversion Programme (ECP) was introduced to attract highly-rated professionals in the academia as part of efforts to deepen the research base of Nigerian capital market.

    CIS explained that the ECP was a strategic temporary window to provide opportunity for some of the institute’s leading examiners to formally enter the professional cadre of the securities market in order to upscale the quality of human capital.

    Addressing the second batch of senior lecturers, mostly professors of accounting and finance at the brainstorming session in Lagos, President, Chartered Institute of Stockbrokers (CIS), Mr Adedapo Adekoje, said one of the strategic initiatives of the institute was to advance professionalism in order to cope with the challenges of global competitiveness.

    He pointed out that finance-related senior lecturers have enormous task of marrying theories with practice in other to improve the quality of research that would enhance investment decision by both indigenous and foreign investors.

    First Vice President, Chartered Institute of Stockbrokers (CIS), Mr. Olatunde Amolegbe, expressed satisfaction at the level of the participants’ discussion which reflected their deep knowledge of the financial market.

    “The fact that you all have significant pedigree in finance related discipline and research, we urge you to view this training as a practical approach to your theoretical background. This will further integrate you into the business of securities market and also impose on you the necessity to conduct research that will bring about an array of investment opportunities in the capital market,” Amolegbe said.

    Chartered Institute of Stockbrokers (CIS) Registrar and Chief Executive Mr. Adedeji Ajadi stated that the idea of ECP was to improve professionalism of securities dealers in research and development adding that the institute would continually collaborate with tertiary institutions to attract students into the market as part of the strategy to grow its membership base.

    “We recognised that we need to marry the intellectual side of things with the practice side of things. So, bringing top academics into the Institute will help us to integrate practice with the theoretical side of things, thereby enhancing the overall quality of our members, Ajadi said.

    Former President of CIS and one of the facilitators, Mr. Ariyo Olushekun who made extensive presentation on ethics advised the participants to uphold the highest standard of professionalism in their dealing with clients.

    Olushekun cited many case studies to demonstrate the need for integrity on the part of stockbrokers as their words must be their bonds.

    A council member of the institute and also a facilitator, Mallam Kasimu  Garba Kufri, took the participants on “ The Practice of Securities Trading and Investment”.

    Participants expressed satisfaction with the institute’s initiative and appreciated it for creating the special window for them.

    “I am very excited for the opportunity the institute has given me. I shall be glad to become a member of the institute so as to contribute to the development of the Nigerian capital market,” a Professor of Banking and Finance from Imo State University, Michael Ndugbu said.

    Another participant, a Professor of Mathematics at the Lagos State University, Professor Michael Adetunmobi described the programme as an opportunity  to join the stockbroking community.

    Also, the Dean, Faculty of Management Sciences, Bayero University, Kano, Professor Kabir Hamid said the knowledge gained from the training would help him to balance theory and practice of the workings of the capital Market.

     

  • Wapic Insurance floats N5.93b rights issue

    Wapic Insurance Plc has launched a new capital raising programme aimed at raising about N5.93 billion from the shareholders of the insurance company.

    The new share issuance is expected to beef up the capital base of the company as insurers move to comply with industry new minimum capital requirement.

    Wapic Insurance indicated that it plans to issue 15.61 billion ordinary shares of 50 kobo each to existing shareholders at 38 kobo per share. Wapic Insurance’s share price dropped 5.41 per cent at the weekend to 35 kobo per share.

    The rights issue will be pre-allotted to shareholders on the register of the insurance company as at the close of business on Thursday September 19, 2019 on the basis of seven new ordinary shares of 50 kobo each for every six ordinary shares of 50 kobo each already held.

    Already, Wapic Insurance has submitted application to the Nigerian Stock Exchange (NSE) for regulatory approval that will allow the publicly quoted insurance company to list the additional shares to be issued under the rights issue on the NSE.

    The National Insurance Commission (NAICOM) had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion. Insurance companies are required to comply fully with the new minimum capital base by June 30, 2020.

    In anticipation of increase in minimum capital requirements for insurers, shareholders of Wapic insurance had in 2017 given approval to the board of the company t raise up to N10 billion in new capital to bolster the insurance company’s capital base.

    Wapic Insurance Plc Chairman Mr. Aigboje Aig-Imoukhuede had explained that the company was being proactive with the new capital raising plan.

    “The company is approaching its shareholders at this time to seek approval to raise additional capital as a proactive step towards getting the company ready and set for a much-anticipated regulatory increase in the minimum capital of insurancecompanies,”Aig-Imoukhuede said.

    He noted that a similar regulatory capital increase was imposed on the banking industry during the consolidation era and only the banks that were proactive in raising the required capital emerged as winners.

     

  • Unbundling the oldest conglomerate

    A proposal to unbundle the real estate businesses of Nigeria’s oldest conglomerate, UAC of Nigeria Plc, is attracting positive investors’ sentiment, Capital Market Editor Taofik Salako reports

    UACN Property Development Company (UPDC) Plc doubled its share price last week, reminiscent of the magical turnaround of equities. It led the rally at the Nigerian equities market with a price gain of 51.52 per cent.

    In the first week of this month, UAC of Nigeria (UACN) Plc’s share price rose by 21 per cent, followed by UPDC, which rose by 12.50 per cent. This implied that UPDC had risen by about 70.5 per cent over the past two weeks, from 88 kobo to N1.50 per share. And the rally appears unbroken yet.

    Details at the Nigerian Stock Exchange (NSE) show that while bargain-hunters are opening up buy orders to attract shares supply, the shareholders of the two companies are unwilling to trade away their shares. Under the rules at the NSE, for every price movement, UACN, as a medium-priced stock, requires a minimum volume of 50,000 shares and UPDC, a low-priced stock, requires 100,000 shares. The tickle for the bullish run was a proposal by UACN to unbundle UPDC and its associated company, UPDC Real Estate Investment Trusts (UPDC REITs) Plc.

     

    New strategy

    UACN, Nigeria’s oldest surviving conglomerate, has unveiled a massive restructuring programme that will see the unbundling of its publicly-quoted real estate subsidiary, UPDC and associated company- UPDC REIT.

    Under the first part of the multi-structured restructuring plan, UPDC will float a rights issue of N15.96 billion to reduce outstanding debt to a level that it is serviceable from recurring cashflows. After this, UPDC will unbundle its shareholding in UPDC REIT by directly transferring the shares to its shareholders on the basis of post-rights issue shareholdings. Thus UPDC’s shareholders will become direct shareholders in UPDC REIT.

    On the second part, UACN will unbundle its majority equity stake in UPDC by directly transferring its shareholdings in the real estate company to UACN’s shareholders, thus making the existing UACN’s shareholders the direct owners of shares in UPDC. UACN will also unbundle the shares of UPDC REIT allocated to it under the UPDC-UPDC REIT transaction to its shareholders, thus making UACN’s shareholders direct owners in UPDC REIT.

    “On the account of UPDC’s unbundling of its interest in the UPDC REIT, post the implementation of the strategic initiatives described above, each UAC shareholder will hold shares in three entities – UAC, UPDC and the UPDC REIT benefitting from the future prospects of each,” UACN and UPDC stated in a statement on the proposed transactions.

    With the completion of the rights issue and the unbundling of UPDC and UACN, UPDC will no longer own any units in UPDC REIT, UPDC REIT will cease to be an associate of UPDC, UPDC shareholders will become direct unitholders in UPDC REIT in addition to their shares in UPDC, UPDC will cease to be a subsidiary of UACN and UACN’s shareholders will become direct shareholders in UPDC and unitholders in UPDC REIT.  UACN holds the majority equity stake of 64.16 per cent in UPDC, which in turn, holds 61.5 per cent majority stake in UPDC REITs. UPDC also owns major stake in UPDC Hotels Limited, a hotel and leisure company that owns Golden Tulip Hotels, formerly FESTAC Hotel, Lagos.

    The boards of UACN and UPDC, which had agreed on the deals, have submitted the proposed transactions for the review of the Nigerian capital market regulators. The transactions will also need to be approved by appropriately by shareholders of both companies. Market analysts expect the transactions to scale through approval processes.

     

    Value creation

    According to the parties, the unbundling is a win-win strategy for the three companies. UACN stated that it decided on the unbundling after weighing the long-term opportunities in the Nigerian real estate sector against the fundamental differences between the cashflow profile and capital needs of UPDC and other entities in the UACN’s portfolio.

    Recapitalisation of UPDC will reduce finance costs and achieve sustainable capital structure for the company while unbundling will enable the company to function in a more efficient and focused manner and reduce operational complexities. Unbundling the UPDC REIT will create additional liquidity in the REIT, which will lead to improved price discovery while UPDC’s shareholders will get immediate benefits from the UPDC REIT, a profitable and dividend-paying entity.

    Already, there are ongoing efforts to strengthen the board and management of UPDC to ensure that the recapitalised and standalone UPDC retains its leadership position in the Nigerian real estate sector. Meanwhile, operations, contracts and legal obligations of UACN and UPDC will continue as normal and in line with the Memorandum of Articles and Association of the  companies.

    The unbundling is a major step for UACN, which has struggled to cope with the fast-paced market changes. UACN had started business in Nigeria in 1879, well ahead of the 1914 amalgamation that created Nigeria. It over the years amassed a vast structure, occupying unique position as the only group with six publicly quoted companies. The UACN Group consists of several active companies spreading through manufacturing, services, logistics and real estate sectors of the Nigerian economy. Besides UPDC and UPDC REIT, other companies included CAP Plc-the largest and most profitable chemical and paints company in Nigeria, Livestock Feeds Plc and Portland Paints and Products Nigeria Plc. UACN had acquired Livestock Feeds and Portland Paints in 2013. Other members of the group included UAC Foods Limited, UAC Restaurants Limited, MDS Logistics Plc, Warm Spring Waters Nigeria Limited, Grand Cereals Limited, and Unico CPFA Limited.

    The unbundling is obviously part of the ongoing restructuring plan aimed at streamlining the conglomerate into a more efficient holding company. With the real estate in long-running depression and the peculiarity of its capital requirement and structure, UPDC has been a weak point over the years, posting losses for the past three consecutive years. Audited reports and accounts of UPDC showed that turnover had dropped consecutively from N6.34 billion in 2016 to N3.98 billion in 2017 and N2.30 billion in 2018. Net loss had widened from N1.52 billion in 2016 to N2.93 billion in 2017 and N15.04 billion in 2018. UPDC’s last dividend payment was for the 2014 business year, thus it has not contributed to the UACN Group’s dividend payment over the past four years. As an indicator of the depreciation in shareholders’ value, net assets per share had dropped consecutively from N21 in 2014 to N6.90 in 2018. Also, UPDC’s share price had depreciated from N9.50 by the close of 2014 business year to N1.91 by the close of 2018 business year. UPDC’s external auditors, Ernst & Young, had in its latest audit of the real estate company drew attention to the fact that a “material uncertainty exist which may cast significant doubt” on the going concern of the company. The auditors noted the running losses and the continuing surplus of current liabilities over current assets. UACN has been the financial backbone of UPDC, providing loans and equity supports to keep the real estate company running.

     

    Deleveraging assets

    Financing structure has been a major drawback for UPDC. Net finance costs stood at N5.03 billion and N4.76 billion in 2017 and last year. With the crash in the stock market and inability of most companies to raise new equity capital through public offerings, UPDC has been unable to raise the quantum of ‘patient’ capital required for its long-termed real estate business. The unyielding depression in the real estate sector with the attendant parlous performance of UPDC compounded the situation, leaving the many rights issue floated to recapitalise the company undersubscribed.

    UACN had kept faith, picking up its rights in full. It was through the resultant dilutions that UACN’s majority shareholding rose beyond 60 per cent. Chairman, UACN Property Development Company (UPDC) Plc, Mr Babatunde Kasali, said the company has continued to work on its deleveraging strategy to reduce its debt portfolio. He noted that the company’s borrowing cost has reduced from an average of 23.5 per cent in 2017 to 18.2 per cent in 2018, although this still remains a high cost of finance for a real estate business. He added that the company successfully reduced overall level of interest-bearing debts from N19.2 billion in 2017 to N18.5 billion in 2018 while lower debt levels and more favourable credit terms helped to reduce finance cost from N5.5 billion in 2017 to N4.8 billion in 2018. The N16 billion rights issue that is a component of the unbundling plan is expected to the leverage status and put the real estate company on a stable financing position going forward. With current share price significant below net assets per share and the vast assets held by UPDC, most analysts appeared to see value in the unbundling. UPDC has major investments in not less than 10 joint ventures which hold vast real estate assets.

    On its part, UACN seeks to consolidate its profitability by streamlining operations, unearth values in subsidiaries and focus on profitable businesses. UACN Plc Chairman, Mr. Dan Agbor, said one of the key elements of the strategic plan of the conglomerate is to operate as a much simpler and leaner holding company, with the main focus being on the subsidiary companies.

    “We are strengthening and empowering the management and boards of subsidiary companies to drive value creation and increasing their accountability for delivering ambitious plans. Towards this end, we are carrying out a comprehensive review of our organisational structure to ensure increased autonomy and effectiveness of operating subsidiary companies,” Agbor said.

     

    A glimpse

    There are early gains already from the restructuring. Key extracts of the interim report and accounts for the period ended June 30, 2019 showed considerable growths in sales and profitability. Group turnover rose to N41.57 billion in first half of the year as against N36.98 billion recorded in comparable period of last year. Profit before tax rose by 61.4 per cent from N2.10 billion to N3.39 billion while profit after tax increased to N2.43 billion in first half 2019 compared with N1.51 billion in corresponding period of last year. UACN had appointed Mr. Folasope Aiyesimoju as the Group Managing Director of the company with effect from April 1, 2019 to lead a new generation of management. In one of the early value extraction under Aiyesimoju, UACN recently announced of agreement to sell 8.0 per cent of its equity stake in MDS Logistics Limited to co-investor, Imperial Logistics, in a deal that will increase Imperial Logistics’ equity stake from 49 per cent to 57 per cent. The transaction valued MDS at $40 million, about N12.24 billion. In consideration for the additional 8.0 per cent equity stake, Imperial Logistics will transfer selected profitable contracts to MDS and pay $2.4 million in cash. The transaction is however still subject to relevant regulatory approvals.

    Aiyesimoju described the MDS transaction as an important milestone for the conglomerate noting that the deal was in line with the group’s strategy of working closely with partners in empowering best-in-class management teams. According to him, since the commencement of the partnership in 2013, the group has been impressed by Imperial Logistics’ operational excellence in warehousing, distribution and transport.

    Investors may also be considering historic value creation from similar unbundling in the market. In the aftermath of the decision of Central Bank of Nigeria (CBN) directing  commercial banks to either adopt a holding company structure or sell their non-bank subsidiaries, United Bank for Africa (UBA) Plc had decided to unbundle its non-bank subsidiaries through direct transfer of shares to shareholders. These resulted in the creation of United Capital Plc and Africa Prudential Registrars, two publicly-quoted companies and Afriland Properties Plc, three companies that have delivered significant values to shareholders since creation. Shareholders of UBA were allotted shares in the three companies, in what the market termed a three-for-one deal.

    As the UACN-UPDC-UPDC REIT unbundling processes move through approval and implementation stages, bargain-hunters will surely keep up the bids to take positions in the emerging companies.

  • Access Bank’s profit hits N74.1b H1

    Access Bank has released its first earnings report after its merger with Diamond Bank, showing 62 per cent growth in profit before tax in the first six months of this year. The board has approved payment of N8.89 billion as interim dividend to shareholders, equivalent 25kobo per share.

    Key extracts of the audited report and accounts for the six-month report ended June 30, 2019 showed that gross earnings rose by 28 per cent to N324.4 billion in first half 2019 compared with N253.0 billion recorded in corresponding period of last year. The top-line growth was driven by 46 per cent increase in interest income on the back of continued growth in the bank’s core business and 22 per cent growth in non-interest income underlined by strong recoveries.

    Operating income grew by 34 per cent to N202.3 billion in first half 2019 as against N151.4 billion in comparable period of 2018. Profit before Tax rose from N45.8 billion to N74.1 billion, representing an increase of 62 per cent. Profit after tax rose correspondingly from N39.6 billion in first half of last year to N63.01 billion in first half of the year.

    The balance sheet size expanded by 31 per cent as total assets increased to N6.48 trillion by June, this year compared with N4.95 trillion reported by December 2018. Capital Adequacy Ratio (CAR) stood at 20.8 per cent, considerably above the minimum regulatory requirement.

    Group Managing Director, Access Bank Plc, Mr. Herbert Wigwe said the bank’s performance in the first half of the year reflected its sustainable business model and effective execution as the bank made strong gains towards the achievement of its strategic goals.

    He said the bank’s focus on retail gained momentum during the period as continued investments in its channels platform resulted in a 29 per cent contribution to gross fee and commission income, which rose by 92 per cent when compared with the previous period.

    According to him, the strong retail contribution demonstrates the effectiveness of the bank’s continued drive around low-cost deposits, on the back of an innovative digital platform.

    He pointed out that asset quality improved as earlier indicated to 6.4 per cent on the bank of a robust risk management approach, assuring that the improvement in asset quality is expected to trend into the future as the bank strives to hit and surpass the standard it had built in the industry prior to the merger.

    He added that the bank’s liquidity ratio improved year-on-year to 49.7 per cent, reflecting deliberate steps to optimise balance sheet in order to ensure the group’s liquidity position remains robust.

    “Going into the second half of the year, our focus is on consolidating momentum and driving access to financial inclusion through our various agency initiatives. Additionally, we will remain disciplined in our efforts to deliver enhanced shareholder value, as we continue to realise the synergies from our newly expanded franchise,” Wigwe said.

    Analysts at Cordros Securities described the results as impressive pointing out that the bank recorded strong growth in both gross earnings and profitability. The strong performance was underpinned by funded income growth, with non-funded income underperforming the prior year.

    According to analysts, the macro-prudential ratios for the bank remained strong, with the exception of non-performing loan ratio of 6.4 per cent, which remains above the statutory level but has trended downward from the 10.0 per cent recorded in first quarter of the year.

    Analysts said while the bank has significant headroom to drive growth given the macro-prudential ratios, they expect more focus on the remediation to bring non-performing loan ratios downward.

    “So far so good, it seems for the bank, as the numbers seem to show no signs, as of yet, of synergistic issues. The performance is strong, and the improvement in non-performing loans is positive. However, we seek clarity as to the driver of the moderation to gauge the sustainability. Nonetheless, at the current run-rate, the bank is on course to record a strong full year 2019 performance.

    The first half report built on a strong first quarter. Key extracts for the three-month period ended March 31, 2019 showed that gross earnings rose by 16.5 per cent to N160.12 billion in first quarter 2019 as against N137.54 billion in first quarter 2018.