The Nation Newspaper

Category: Investors

  • Jaiz Bank grows half year profit by 295%

    Nigeria’s pioneer non-interest commercial bank, Jaiz Bank Plc sustained its three-digit profit growth in the first half as net profit leapt by 294.6 per cent to N815.65 million. It had grown net profit by 244 per cent in the first quarter.

    Key extracts of the interim report and accounts of the bank for the six-month period ended June 30, 2019 showed that total revenue rose by 41.2 per cent from N4.47 billion in first half 2018 to N6.31 billion in first half 2019. Gross profit grew by 47.8 per cent to N5.12 billion in first half 2019 as against N3.46 billion recorded in comparable period of 2018. Profit before tax leapt by 292.3 per cent to N966.93 million compared with N231.22 million in corresponding period of 2018 while profit after tax jumped by 294.6 per cent from N206.69 million to N815.65 million.

    The half year report strengthened the growth outlook of the non-interest bank, which had sustained considerable growths in key performance indices in recent period. The three-month report for the period ended March 31, 2019 had shown that gross earnings rose by 38.7 per cent while pre and post-tax profits jumped by 225.08 per cent and 244.19 per cent respectively. Earnings per share rose by 190 per cent.

    The three-month report indicated that gross earnings rose to N2.59 billion in first quarter 2019 as against N1.87 billion in first quarter 2018. Gross profit grew by 51.9 per cent increased from N1.39 billion to N2.11 billion. Profit before tax jumped from N146.57 million to N476.46 million. After taxes, net profit rose to N428.68 million in first quarter 2019 compared with N124.58 million in first quarter 2018. Consequently, earnings per share increased to 1.45 kobo in first quarter 2019 as against 0.50 kobo in corresponding period of 2018.

    Managing Director, Jaiz Bank Plc, Mr. Hassan Usman, said the first half 2019 results further demonstrated that the bank has the capacity to grow sustainably in line with its strategic vision of becoming the leading non-interest bank in Sub-Saharan Africa by 2022.

    He said the bank would maintain steady focus on elements that contributed to improved performance thus far, assuring that the upward growth trend would be improved upon in the remaining period of the financial year.

    In its latest audited report for the year ended December 31, 2018, Jaiz Bank had grown net profit by 55 per cent to N834.37 million. Gross earnings rose by 11 per cent from N7.86 billion in 2017 to N8.74 billion in 2018. Profit before tax increased from N894.01 million to N897.70 million. After taxes, net profit rose from N537.12 million to N834.37 million.

    The balance sheet showed stronger underlying strength during the period. Total assets rose by 24 per cent from N87.31 billion to N108.46 billion. Deposits also grew by 25 per cent from N68.12 billion in 2017 to N85.03 billion in 2018. The non-interest bank expanded its financing and investment activities by 37 per cent to N69.36 billion in 2018 as against N50.79 billion in 2017. Jaiz Bank, as a non-interest bank, makes profit basically from profit-sharing on investments and gains on trading activities.

    Key underlying ratios showed improvements in returns and operational strength of the bank. Return on assets rose by a quarter from 0.6 per cent in 2017 to 0.8 per cent in 2018. While cost-to-income inched up from 85.84 per cent to 87.28 per cent, return on equity improved from 6.54 per cent to 6.85 per cent. Capital adequacy remains considerably above regulatory threshold at 21.13 per cent while liquidity ratio increased by 50 per cent from 18.64 per cent to 27.94 per cent. Staff strength and number of branches also increased by 6.0 per cent and 16 per cent respectively.

    Jaiz Bank was created out of the former Jaiz International Plc which was set up in 2003 as a Special Purpose Vehicle (SPV) to establish Nigeria’s first full-fledged non-interest bank. The bank is owned by some 27,000 shareholders including the Islamic Development Bank (IDB). It obtained a regional operating license to operate as a non-interest bank from the Central Bank of Nigeria (CBN) on November 11, 2011 and began full operations as the first non-interest bank in Nigeria on January 6, 2012. In 2016, it obtained the national banking license from the CBN and started to rapidly spread its network across the country.

    Jaiz Bank recorded another milestone on February 9, 2017 as the first non-interest financial institution to be listed on the Nigerian Stock Exchange (NSE) with the admission of the entire issued share capital of the bank to the main board of the Exchange.

    Under its five-year growth plan, Jaiz Bank projects to grow its income and profitability consecutively. According to the five-year financial forecast, total income is expected to be about N81.17 billion while profit after tax is projected at N11.09 billion for the five-year period.

  • Transcorp’s profit down by 57% to N5.2b in first half

    Transnational Corporation of Nigeria (Transcorp) Plc witnessed major contractions in incomes and profitability in the first half of this year, raising concerns about the conglomerate’s ability to meet its performance in 2018.

    Key extracts of the interim report and accounts of the corporation for the half-year ended June 30, 2019, showed that gross income dropped by 30.2 per cent, while profit before tax halved by 56.8 per cent. Despite 59.2 per cent drop in taxes, net profit nosedived by 56.6 per cent.

    Group turnover dropped from N54.1 billion in the first half of 2018 to N37.8 billion in 2019 first half. Gross profit also declined to N17.3 billion as against N24.6 billion in comparable period of 2018. Profit before tax dropped from N11.9 billion to N5.2 billion, while profit after tax slumped to N4.7 billion as against N10.9 billion in the corresponding period of 2018.

    Total assets, however, rose by 3.4 per cent from N297.1 billion in first half of 2018 to N307.4 billion in first half of 2019. Shareholders’ funds also rose from N105.4 billion to N109.2 billion in the same periods.

    The half-year report further highlighted the slowdown in conglomerate’s performance after profit dropped by 61 per cent to N5.4 billion in first quarter of 2019. The three-month report for the period ended March 31, 2019 showed that turnover dropped from N26.30 billion in first quarter 2018 to N18.31 billion in first quarter 2019. Profit before tax dropped to N2.55 billion in 2019 as against N5.94 billion in comparable period of 2018. After taxes, net profit halved from N5.41 billion to N2.09 billion. Earnings per share consequently dropped from 5.55 kobo in first quarter 2018 to 1.58 kobo in first quarter 2019.

    Transcorp had distributed N1.22 billion as cash dividend for the 2018 business year, representing a dividend per share of 3.0 kobo. The audited report and accounts for the year ended December 31, 2018 had shown that Transcorp’s turnover rose by 30 per cent while profits before and after tax grew by 82 per cent and 94 per cent respectively.

    Group turnover posted a record growth to N104.2 billion in 2018 compared with N80.28 billion in 2017. Gross profit rose from N36.42 billion in 2017 to N48.25 billion in 2018. Profit before tax increased to N22.4 billion as against N12.3 billion while profit after tax jumped from N10.61 billion in 2017 to N20.63 billion in 2018.

    Transcorp’s Chairman, Mr. Tony Elumelu, said the conglomerate’s power subsidiary, Transcorp Power Limited, would be investing as much as $2.5 billion in power projects to help boost power supply in Nigeria.

    He said about $1billion has so far been injected by the company  in projects with a combined capacity of 700 megawatts while it is also bidding for Afam Electricity Generation Company, which operates a natural-gas fired power generation plant in Rivers State.

    “We have expressed interest in the acquisition of Afam power plant, which we are going to spend a lot of money on. It will give us 1,400 megawatts and we can do more,” Elumelu said.

  • Foreign portfolio drops by N326.9b in first half

    Foreign portfolio transactions in the Nigerian stock market dropped by N326.9 billion in the first half of this year, as foreign investors continued to trade more on the sell side than buy side.

    Official report at the Nigerian Stock Exchange (NSE) obtained by The Nation indicated that total foreign transactions for the six-month period ended June 30, 2019 stood at N472.78 billion, a decline of 40.9 per cent from N799.70 billion recorded in the comparable period of 2018.

    Alongside the steep decline in foreign transactions, foreign outflows continued to outpace inflows with net foreign portfolio investment (FPI) deficit rising from N38.41 billion in first half of 2018 to N42.84 billion in 2019.

    Foreign inflows dropped from N380.65 billion in the first half of 2018 to N214.97 billion in the first half of 2019, while foreign outflows also declined from N419.06 billion in first half 2018 to N257.81 billion in first half 2019.

    The first-half report, however, showed considerable increase in Nigerian domestic investments in recent month, with Nigerian investors leading activities at the stock market in the past two months. Domestic investors accounted for 65.06 per cent and 67.45 per cent of total transactions in the market in May and June respectively.

    Three consecutive growths in transactions pivoted domestic investors atop the activities table for the first half of 2019 with 54.16 per cent of total transactions, compared with the situation in first half 2018 when foreign investors dominated with 50.07 per cent. Domestic investors accounted for total transactions of N614.73 billion in first half 2019 as against N472.78 billion recorded by foreign investors.

    Total transactions at the equities market had dropped by N509.71 billion or 31.91 per cent from N1.597 trillion in first half 2018 to N1.088 trillion in first half 2019.

    Domestic transactions had increased consecutively from N54.02 billion in March 2019 to N71.99 billion, N143.87 billion and N200.51 billion in April, May and June 2019 respectively. Domestic retail investors appeared to have been attracted by attractive share prices, displacing institutional investors to become the most dominant bloc of domestic investors. Domestic investors recoded total turnover of N329.69 billion as against N285.04 billion recorded by institutional investors in first half 2019. Domestic institutional investors had led in first half of 2018 with N483.65 billion against N313.84 billion recorded by domestic investors.

    Low appetite for Nigerian equities had led to significant depreciation in share prices at the stock market. The Nation had reported that investors in Nigerian equities suffered average depreciation of 4.66 per cent in their portfolios during the first half of this year, equivalent to net loss of N546.2 billion during the six-month period.

    Benchmark index for the Nigerian equities market had shown that Nigerian equities traded mostly on the negative during the period, declining in four out of the six months. The market also closed both the first and second quarters on the downside.

    The All Share Index (ASI) – the main value-based index that tracks share prices at the NSE, closed June 2019 at 29,966.87 points, indicating average decline of 3.55 per cent, 3.46 per cent and 4.66 per cent for the month of June, the second quarter and half-year period respectively.

    The ASI had opened 2019 at 31,430.50 points, 17.81 per cent down from its 2018’s opening index of 38,243.19 points. It had, however, rallied a world-leading gain of 42.30 per cent in 2017.

    The FPI report, coordinated by the NSE, aggregated transactions from major custodians and capital market operators and it is widely regarded as a credible measure of the FPI trend. The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.

    Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. Segmental analysis delineates the proportion of foreign to local participation, institutional to retail investors as well as the momentum of activities among others.

    Nigeria suffered a net deficit of N26.6 billion in foreign portfolio transactions in the first quarter of this year amid fears of political and macro-economic uncertainties. The contry recorded a negative balance of N26.6 billion in inflow and outflow transactions by foreign portfolio investors in first quarter 2019 compared with a positive balance of N30.88 billion recorded in comparable period of 2018.

    The report also showed that foreign portfolio transactions dropped by N159.95 billion in first quarter 2019, representing a decrease of 41.89 per cent from the turnover in first quarter 2018. Total foreign portfolio transactions dropped from N381.82 billion in first quarter 2018 to N221.87 billion in first quarter 2019.

    Foreign outflows surpassed inflows in 2019 with the sellers accounting for N124.24 billion as against N97.63 billion by the buyers. In first quarter 2018, foreign inflows had outpaced outflows with N206.35 billion and N175.47 billion respectively.

  • Fidson Healthcare gets N2.3b equity from shareholders

    Fidson Healthcare Plc has successfully raised about N2.345 billion from its shareholders to recapitalise its operations. The healthcare company had set out to raise N3 billion through a rights issue to existing shareholders, but the offer was undersubscribed by N655 million.

    Fidson Healthcare had offered 750 million ordinary shares of 50 kobo each through a rights issue to existing shareholders at N4 per share. The rights issue was pre-allotted on the basis of one new ordinary share for every two ordinary shares held as at December 28, 2018.

    Regulatory filing however showed that shareholders subscribed to 586.36 million ordinary shares of 50 kobo each at N4, implying a subscription level of 78.18 per cent. The company has listed the additional shares at the Nigerian Stock Exchange (NSE), thus increasing its outstanding paid up shares from 1.5 billion ordinary shares of 50 kobo each to 2.086 billion ordinary shares of 50 kobo each.

    Fidson Healthcare had planned to raise N4.5 billion new equity funds through a rights issue of 900 million ordinary shares of 50 kobo each to existing shareholders at N5 per share. However, the company decided to reduce the offer size and offer price.

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    Chairman, Fidson Healthcare Plc, Mr. Segun Adebanji, said the net proceeds of the rights issue would be used to refinance some expensive debts, strengthen the working capital position of the business and fund some strategic capital expenditure.

    According to him, the capital injection from the rights issue would enable the board and management to reposition the business in order to take advantage of visible growth opportunities.

    He praised shareholders for their continued support, assuring that the company has a promising future.

    “Together we will continue to reap the bountiful rewards of our investment in the year ahead,” Adebanji said.

    Managing Director, Fidson Healthcare Plc, Mr Fidelis Ayebae, said the company would take advantage of the net proceeds from the rights issue to inject fresh working capital into the business in order to maximise the opportunities that exist in the market.

    According to him, a revenue growth of over 20 per cent is projected for 2019, with increased focus on growing its ethical product segments. The business development work being done in hospitals to enhance the patronage of Fidson brands is also expected to increase demand.

    He said about 20 new products will be introduced into the market in 2019 to take advantage of the available capacity at the new factory.

    He added that further cost savings will be generated by directly importing key raw materials, taking advantage of the Central Bank of Nigeria (CBN) window for manufacturers, and renegotiating with its suppliers.

    He said the company is also switching its energy source from diesel to gas, noting that Fidson expects that through its cost savings initiatives, to reduce production costs and increase gross margins significantly in 2019.

    “The prospects look good for Fidson in the near-term, enabling the company to cement its leadership position in the pharmaceutical industry,” Ayebae said.

  • Access Bank excites tourists with XclusivePlus

    Access Bank Plc is offering holiday makers the opportunity to enjoy bespoke financial services and exclusive privileges across the world through its premium service, XclusivePlus.

    XclusivePlus is a premium service that is available to any customer of the bank that appreciates preferential treatment. It is a subscription-based service that costs only N5,999 per month in exchange for unique services that suit individual’s lifestyle needs.

    Head, Consumer Proposition, Access Bank Plc, Adaeze Ume said that the introduction of XclusivePlus was as a result of a survey conducted among the bank’s customers, which revealed a rise in customers’ expenditure on luxury travel, luxury experiences and luxury products.

    She said XclusivePlus was designed to give all customers of the bank the opportunity to realise their dreams and enjoy the best of treatments with the barest minimum cost possible.

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    “For many average affluent individuals, a life of luxury remains a dream. However, for as low as N5,999 per month, Access Bank will help you live this dream with the unique XclusivePlus service – a package that gives you a luxurious life on a not-so-luxury budget,” Ume said.

    According to her, XclusivePlus is a premium lifestyle offering specifically designed to provide customers with the exceptional service and exclusive privileges that they deserve. It was launched in October 2018 and today has thousands of subscribers who understand the value of the proposition.

    She noted that it takes less than two minutes to subscribe to XclusivePlus with only N5, 999, adding that subscriber can also choose to make an upfront payment for one year and get a 20 per cent discount.

    She outlined the benefits of XclusivePlus to include free upgrade to a Visa Signature debit card – a debit card with access to local and international spend, travelling in style with free access to over 800 premium airport lounges globally and free medical emergency cover for the subscribers and their loved ones anytime they travel.

  • SAHCO records N665.6m loss

    Skyway Aviation Handling Company (SAHCO) Plc recorded a net loss of N665.65 million in 2018 despite almost a quarter increase in the aviation handling company’s turnover.

    Key extracts from the audited report and accounts  SAHCO for the year ended December 31, 2018 showed that the company recorded a net loss of N665.65 million in 2018 as against net profit of N217.73 million in 2017. Loss before tax had stood at N302.9 million in 2018 compared with pre-tax profit of N125.90 million in 2018.

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    Total turnover had however increased by 23.19 per cent from N4.98 billion in 2017 to N6.14 billion in 2018. Earnings per share consequently turned negative from positive earnings of 51.23 kobo in 2017 to loss per share of 49.18 kobo in 2018. The company’s total assets meanwhile rose by 58.75 per cent from N14.59 billion in 2017 to N23.09 billion in 2018. Net assets per share also improved from N12.95 in 2017 to N14.01 in 2018.

    The board of directors of the company has indicated it would not be recommending any dividend payment based on the 2018 results.

    SAHCO had in April 2019 listed its shares on the Nigerian Stock Exchange (NSE), after an initial public offering (IPO) that was undersubscribed by 35.35 per cent.

  • Flour Mills’ net profit drops by 71% to N4b

    Flour Mills of Nigeria Plc witnessed contractions in sales and profitability in the immediate past business year, as net profit declined by 70.6 per cent from N13.6 billion in 2018 to N4 billion in 2018.

    Key extracts of the audited report and accounts of the company for the year ended March 31, 2019 showed that trunover dropped by 2.8 per cent from N542.67 billion in 2018 to N527.40 billion in 2019. Gross profit dropped by 22.4 per cent from N68.8 billion in 2018 to N53.3 b illion in 2019. Profit before tax declined by 38.5 per cent to N10.17 billion in 2019 as against N16.54 billion in 2018. After taxes, net profit dropped by 70.6 per cent to N4 billion in 2019 as against N13.6 billion in 2018. Consequently, earnings per share dropped from N4.83 in 2018 to N1 in 2019.

    The board of directors of the food group has, however, recommended increase in dividend payout by 20 per cent, opting to dip into the group’s retained earnings to support the increase. Shareholders will receive a dividend per share of N1.20 for the 2019 business year as against N1 paid for the 2018 business year.

    Further analysis showed a decline in the underlying profitability of the group. Gross profit margin dropped from 12.7 per cent in 2018 to 10.1 per cent in 2019. Net profit margin dipped to 0.8 per cent in 2019 as against 2.5 per cent in 2018. However, the group’s debt-to-equity ratio improved from 101.7 per cent in 2018 to 84.1 per cent in 2019. Also, Flour Mills’ net asset per share stood at N36.80, almost a triple of its current market valuation.

    In a statement, the group expressed optimism that it will witness continuous growth in key segments of its food and agro-allied businesses in the new business year, noting that targeted strategies are expected to deliver improved margins and operational efficiencies.

    According to the company, continuous implementation of turnaround initiatives in the agro-allied business, accelerated expansion in the business-to-customer segment, optimal operation of its supply chain and further balance sheet management are expected to result in higher profitability.

    The group noted that it undertook series of strategic actions designed to improve returns and deliver maximum gains for its investors in 2018 including the restructuring process that saw all its businesses in the agriculture sector aligned under its wholly owned holding company, Golden Fertiliser Company.

    The company pointed out that the consolidation of its agricultural businesses has started yielding appreciable contributions to the group in the areas of cost maximisation and improved operational efficiency as the businesses make the most of their competitive advantage and synergies.

    The management of the company stated that strong cost control measures put in place during the year supported the company despite the prevailing economic headwinds and harsh operating environment, especially for businesses in the congested Apapa, Lagos axis.

    According to the company, it has continued to consolidate its investments in the agriculture sector with a strong focus on innovative and efficient use of resources. As such, the group is resizing and simplifying the operations of some of the farms which form an integral part of its backward integration strategy with a few of the smaller experimental farms being scaled down, while continuing focus on key units.

    Group Managing Director, Flour Mills of Nigeria Plc, Paul Gbededo, said the group has made substantial progress as growth and efficiency initiatives across various functions and businesses started to show anticipated gains.

    According to him, Flour Mills has undergone several functional and structural changes within the last year, with innovation and focus on customer at the heart of the group’s strategic direction.

    “We are positive that we will see even greater achievements in our financials in the following quarters as we continue to focus on value creation for our shareholders,” Gbededo said.

    Group Chief Finance Officer, Flour Mills of Nigeria Plc, Anders Kristiansson, noted that the group’s strategy to restructure its balance sheet base and optimise financing costs have started to yield desired results.

    He pointed out that in spite of ongoing pressures on consumer disposable income in many target categories; the group has continued to deliver stronger performance.

  • Dubai: An investment haven beckons

    Dubai, one of the seven emirates under the United Arab Emirates (UAE), has taken the world of business by storm. By riding on the crest of its robust infrastructure, investor-friendly business environment and its attractive free zones, it has firmly established itself as the global hub for trade and investment. Drawn by the emirate’s irresistible and mouth-watering incentives, many Small and Medium Enterprises (SMEs), startups and multinationals from Nigeria and other African countries are rushing to Dubai to either begin operations or expand. Assistant Editor CHIKODI OKEREOCHA, who has just returned from Dubai, reports.

    For businesses and investors in Nigeria and other African countries searching for a bountiful Return on Investment (RoI) and a boost in efficiency and global competitiveness, Dubai, one of the seven emirates under the United Arab Emirates (UAE), is the destination of choice.

    By dangling the proverbial carrot in the form of mouth-watering incentives to existing and prospective businesses, including Small and Medium Enterprises (SMEs), startups and multinational corporations (MNCs) seeking to either begin operations or expand their footprints, Dubai has strategically positioned itself as the most sought-after business and investment haven.

    Some of the incentives that are attracting businesses and investors from Africa, including Nigeria to Dubai, include world-class infrastructure, 100 per cent foreign ownership for mainland businesses in some sectors, 10-year hassle-free visa for investors, reduced fees for electricity consumption for large, medium and small factories.

    Dubai’s strategic geographic location, forward-looking government and policies, Ease of Doing Business (EoDB), excellent logistics facilities and world class infrastructure, among others, also earned the city its pride of place as the preferred global investment destination.

    For instance, with regards to EoDB, the UAE was ranked 11th globally in World Bank’s Ease of Doing Business Rankings 2018, up by 10 spots since 2017. The UAE was also ranked first regionally, even as it claimed the number five spot globally in the Institute for Management Development (IMD) World Competitiveness Rankings 2019.

    Such favourable rankings are believed to have warmed Dubai, the UAE’s largest and most populous city, to the hearts of not a few investors and business owners from Nigeria and other African countries eager to take advantage of her global footprint in the world of business.

    The Government of Dubai has also gone a notch higher by establishing a consultative council that includes international companies, allocating as much as 20 per cent of government tenders to SMEs, reducing municipality fees, waiving property registration fines, and scrapping fees related to the aviation industry with the aim of attracting investment to the sector.

    These initiatives, The Nation learnt, were designed and diligently implemented to ensure a conducive and investor-friendly business environment, boost confidence in the market and reduce the financial burden on businesses and investors coming into Dubai.

    The Marketing and Corporate Communications Director, Dubai Chamber of Commerce & Industry (DCCI), Mr. Rami Halawani, explained that the incentives were in line with the emirate’s overall ambitious international expansion strategy aimed at positioning it as an international business hub.

    Halawani, who spoke with select journalists from Africa and India during a ‘Business in Dubai FAM Trip’ organised by Dubai Commerce Marketing, last week, said the incentives, in addition to the Chamber’s push to promote Dubai as a leading trade and investment destination, have led to a significant increase in the number of African companies registered with the Chamber.

    At the five-day event, which centred on business in Dubai, with the aim of drawing attention to how improved regulations and the afore-mentioned incentives made Dubai the global hub for trade, investment and leisure, Halawani said the number of companies in Nigeria and other African countries registered with Dubai Chamber increased from about 12, 000 in 2015 to 17, 500 in 2017.

    This represents an increase of 32 per cent. As at end of 2018, the number exceeded 20,000. He also said as part of Dubai’s push in the African market, it has invested about $27 million in Africa in the last three years. The investment, Halawani said, was part of the strategy to link Africa to Dubai, a global metropolitan city and a gateway to the rest of the gulf.

    He further justified the emirate’s increased focus on Africa thus: “Africa is rich in energy and mineral resources, but lacks the capital, resources and infrastructure to bring this natural wealth to the market. The UAE has access to the capital required by Africa to unlock the potential of its natural resources as well as the infrastructure to sustain economic growth.”

    According to the DCCI spokesman, Dubai remains a global gateway to Nigeria and other African markets, which is why the Chamber operates four representative offices within Africa. They include Ethiopia, Ghana, Mozambique and Kenya. The Chamber, he said, was also studying the possibility of expanding into Nigeria, Angola, Uganda and the Central African markets.

    Halawani also said Dubai Chamber was working closely with her African offices to organise trade missions to Dubai, which have been joined by African business leaders that are actively looking for UAE business partners.

    “Through our trade missions, events, international offices, workshops, research, we continuously try to provide businesses with the opportunity to explore new markets, identify investment opportunities and build linkages…” he said.

    Halawani listed some of the key sectors that offer the most potential for future collaboration between businesses in the UAE and their African counterparts to include financial services, retail, logistics, travel and tourism.

    He, however, said the bourgeoning trade/business relations between the UAE and the continent was not limited to only large companies, but extended to start-ups and SMEs with the aim of accelerating their growth in Dubai.

     

    Nigeria on Dubai’s  radar

    Encouraged by Nigeria’s considerable oil reserves and an agriculture sector that boasts significant potential, Dubai has her eyes set on improving her trade/business relations with Africa’s largest and most populous economy. The country ranked seventh on Dubai’s trading list, with non-oil trade reaching AED 5.34 billion in 2018.

    Indeed, the volume of non-oil trade between Nigeria and the UAE has been increasing, with the total value of Nigeria’s non-oil export to the UAE standing at $608 million in 2017, according to statistics from the Economic Research Department of the Dubai Chamber.

    The data, which was made available to The Nation in Dubai, showed that while UAE’s non-oil export to Nigeria stood at $612 million in 2017, rising from $605 million in 2016, the value of her non-oil imports from Nigeria was $608 million, down from $730 million in 2016.

    While pearls and precious metals accounted for the largest share of UAE’s non-oil imports from Nigeria, valued at $590 million in 2017, wood and plaiting materials came second with total import value put at $9.8 million. Vegetable products were valued at $5.8 million.

    On the other hand, machinery/electronics, transport equipment, base metals, plastic rubber and chemicals formed the bulk of UAE’s non-oil export to Nigeria. The value of machinery/electronics and transport equipment export stood at $313 million and $85 million, respectively.

    The data, however, listed the high potential non-oil imports from Nigeria to include cocoa, sesame seeds, cashew nuts and natural rubber. High potential exports by UAE to Nigeria include electrical machinery, pearls/precious stones, copper and articles of leather.

    The Chamber listed the high potential sectors in Nigeria to further boost bilateral trade between Africa’s largest economy and the UAE to include agribusiness, packaging, manufacturing and energy, among others.

     

    Startup mentorship is icing

    on the cake

    To underscore the growing emphasis on startups, Dubai Chamber will be selecting 10 startups from the UAE and Africa later this year to participate in its 5th Global Business Forum (GBF) on Africa in Dubai, from November 18-19, 2019.

    Organised under the theme: “Scale Up Africa”, GBF Africa 2019 will be held under the patronage of Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

    The high-level forum, The Nation learnt, will bring together African and UAE government and business leaders to explore avenues of economic cooperation and facilitate bilateral trade and investment flows.

    It will also place a key focus on forging the connections that will enable scale up, and explore how public and private sector players in Africa and the UAE can work together to sustainable partnerships.

    However, the icing on the cake of the 5th edition of the GBF Africa 2019 is Global Business Forum Mentorship Programme, which is a three-month programme that will pair African and UAE startups and entrepreneurs with mentors.

    The new mentorship programme was an extension of Dubai Chamber’s GBF on Africa platform, and was aimed at fostering cross-border cooperation between the two startup communities and help participants expand their global presence.

    Already, 10 startups, five each from the UAE and Africa, have been shortlisted and will be given the opportunity to showcase their business concepts and solutions at the Forum.

    The five UAE startups include Evolvin Women, a start-up helping unemployed women from developing countries; ORENDA+Bloom, a gender balance consultancy; Tuitify, a startup using Artificial Intelligence (AI) and virtual reality to improve employee training and productivity.

    Others are Designhubz, a platform that enables retailers and brands to sell their products in 3D; and Pixel House, a production agency offering video production, photography and branding solutions.

    From Africa, the five startups that will join the programme include FarmGate Africa, a Nigerian startup that uses advanced technologies to connect international buyers and farming clusters; quip.link, an online marketplace for renting and selling construction equipment.

    There are also Complete Farmer, a crowd-farming platform focused on building sustainable farms; Engineering Hub Ltd, a provider of IT services and solutions for mobile and banking integration platforms; and RideSafe, a mobile application offering real-time health solutions.

    Prior to their selection, the 10 shortlisted startups participated in the first-ever Chamberthon, which took place in Kigali, Rwanda earlier this year. During the Chamberthon, 20 UAE and African startups worked together to develop the structure and criteria of the GBF mentorship programme.

    DCCI President & CEO Hamad Buamim said the selection of participating startups was an important step forward in establishing bridges of communication and cross-border cooperation between UAE and African startups.

    He pointed out  that many of the selected startups specialise in advanced technologies, smart solutions, AI and financial technology (fintech), adding that collaboration in these key areas would pave the way for mutual benefits and growth for both business communities.

    Buamim said: “Startups are playing an active role in fostering innovation as they leverage and test out cutting-edge technologies that improve the way we live and work.

    “The GBF entorship programme provides an ideal platform for high-potential startups to develop their business concepts, benefit from collaboration, access new growth opportunities through the GBF on Africa platform, and build valuable partnerships.”

    Buamim added that the theme of this year’s forum highlights the importance of sustainable development as an engine and catalyst for economic and social progress in Africa, while also setting the tone for constructive dialogue about key trends that are driving the continent’s next phase of growth.

    GBF Africa 2019 is anchored on four main pillars namely, Accelerator Eco-system, which will help turn young startups into thriving multinational businesses; Rewiring Trade, which will focus on Africa and Dubai working together to rewire trade for the digital era.

    Others are Scale through Collaboration, which seeks to promote collaboration among governments, startups, established companies and non-governmental organisations (NGOs) and Pan African scale, which will seek to leverage the market power of the whole continent through digital trade.

  • Stakeholders call for forensic audit of Lafarge Africa

    Stakeholders are seeking a forensic audit of Lafarge Africa PLC to determine the fairness and propriety of its management’s decision, and allay fears of increase of LafargeHolcim’s majority shares in the company under several guise, writes Capital Editor TAOFIK SALAKO

    Shareholders and concerned capital market operators have called on the capital market authorities to undertake a forensic audit of Lafarge Africa Plc to determine the fairness and propriety of the cement group’s management decisions to the Nigerian share-holders.

    They alleged that Lafarge Holcim, the majority core investor in Lafarge Africa, used subterfuges under the guise of financial engineering and group restructuring to unduly overleverage the Nigerian company, propped up Lafarge Holcim’s failing South African business and in the many cycles of capital restructuring and share issuances, increase Lafarge Holcim’s majority shareholding in the Nigerian company.

    The Nigerian Stock Exchange (NSE) at the weekend listed Lafarge Africa as the latest company with a free float deficiency, after Lafarge Holcim increased its majority shareholding to 83.3 per cent from about 71.4 per cent. The NSE flagged Lafarge Africa as a company “below listing standard” with a free float of 16.13 per cent, 3.87 percentage points below the minimum 20 per cent free float for companies listed on the main board of the Exchange.

    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.

    Under the existing rules, companies listed on the premium board are required to have 20 per cent free float or more than N40 billion of their capitalisation in the hands of general investing public. Companies on the main board are required to have a minimum free float of 20 per cent of their market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders. However, companies on the Alternative Securities Market (ASeM) are required to have 15 per cent free float.

    Stock markets generally maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation and illiquidity.

    Shareholders and capital market operators who spoke to The Nation called on authorities at the Securities and Exchange Commission (SEC) and NSE to investigate the decisions of the board and management of the company and its operations in the past five years, alleging that the foreign majority shareholder, which controls the management, set out deliberately to short-change minority shareholders.

    They raised several posers for consideration by the regulatory authorities including what due diligence informed the group strategy launched in 2014 and the sudden decision to backtrack from the strategy after Nigerian minority shareholders had suffered heavy losses in built-up negative earnings and reduction in shareholding? Why did Lafarge Holcim opt for self-advanced loan rather than equity recapitalisation only to turn around for conversion of such loans to equities under rights issues? They noted that Lafarge Holcim historically built up its controlling shares in the Nigerian company using the same approach of overleveraged recapitalisation. They called for investigation of related-party transactions by Lafarge Holcim and directors of the company in order to determine that decisions were taken in the best interest of the company rather than pecuniary interests of the directors and the major shareholders.

    The Mobolaji Balogun-led board of directors of Lafarge Africa has put five resolutions to authorise the sale of Lafarge Africa’s South Africa’s business, Lafarge South Africa Holdings (Pty) Limited (LSAH), to Lafarge Holcim as part of the special business at the company’s annual general meeting later this month. The flagship of the cement group, Lafarge Cement Wapco Nigeria Plc, which transmuted to Lafarge Africa, had in 2014 bought the South African business from LafargeHolcim under a new growth strategy to create a leading Sub-Saharan Africa building materials giant.

    Under the transaction, Lafarge Group transferred 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.

    Specifically, Lafarge Africa had paid $200 million cash and additional allotment of 724.76 million ordinary shares to acquire the 100 per cent stake in LSAH in 2014. Lafarge Africa had paid the cash and shares allotment to Financiere Lafarge SAS, a wholly owned subsidiary of LafargeHolcim Group.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar, said the 2014 growth strategy was the beginning of problem for the Nigerian company.

    While agreeing that the decision to quit LSAH might be a good development for shareholders who had groaned under mounting losses, Umar called for investigation of the circumstances surrounding the deals and decisions in recent years.

    According to regulatory filings and shareholders’ notice, LafargeHolcim proposes to acquire LSAH through a $316.3 million inter-group loans swap. The boards of directors of Lafarge Africa and Lafarge Holcim have signed on to the deal and are recommending approval of the transaction to shareholders.

    Under the proposed sale, LafargeHolcim agreed to take over 100 per cent equity stake of Lafarge Africa in LSAH in exchange for a set-off of all the outstanding amounts due by Lafarge Africa to Caricement under the inter-group loan agreements at the closing date which is July 31, 2019. Caricement is a wholly-owned subsidiary of Lafarge Holcim.

    According to official reports, the value of the consideration at the closing date is $316.289 million being the sum total of the principal sum of $293 million and all accrued interest of $23.289 million as at July 31, 2019.

    “We will call on SEC to investigate the transaction and if necessary do a forensic audit to protect Nigerian shareholders,” Faruk said.

    He said Lafarge Africa must halt further right issues and reconsider its business growth strategy if shareholders will benefit from their investments in the company.

    “There is also a need to reconstitute the membership of the board of directors if any meaningful progress is to be made,” Faruk said.

    Capital market operators, who spoke under condition of anonymity, said Nigerian capital market authorities should do critical reassessment of Lafarge Africa in recent years.

    A leading dealing member at the Exchange said the disposal of LSAH is just portfolio restructuring and financial engineering by LafargeHolcim, adding that the transaction is a possible case for forensic audit.

    The dealing member said institutional investors such as pension funds should lead the charge for forensic audit bemoaning the propensity of many minority shareholders to trade key corporate decisions for pittances at general meetings.

    President, Constance Shareholders’ Association, Mr. Shehu Mikail, claimed that the complex transactions were part of a game plan by LafargeHolcim in collaboration with some Nigerian operators to short-change Nigerian minority shareholders.

    According to him, there is a need for forensic audit to ascertain the truth, transparency and accountability of the deals and to unearth the motive for the buyback of LSAH by LafargeHolcim.

    “This calls for proper investigation,” Mikail said, expressing worries that Nigerian shareholders would be short-changed in the ensuing transactions.

    Despite the promises of synergies across the markets, the South Africa’s subsidiary has since been a drag on the performance of Lafarge Africa, which reported a net loss of N10.37 billion by the third quarter of the 2018 business year.

    According to the cement group, LSAH’s operations have been subjected to shrinking demand in South Africa. The competitive environment, slow recovery and struggle to defend market share have heightened market pressure to reduce prices, significantly impacting LSAH’s operating margins in recent years.

    As part of its audit exercise with respect to the 2018 accounts, KPMG Professional Services as auditors of the company, had informed Lafarge Africa’s management that, based upon its assessment of the 2018 performance of LSAH, the valuation of LSAH in the accounts of Lafarge Africa would have to be impaired to a tune of N70 billion.

    The board thus delayed the approval of the 2018 accounts whilst seeking the optimal resolution of the impairment which had a potential major impact on shareholders’ value of the company.

    “During deliberations by the board on this matter, various options were considered including exit from South Africa, the board then arrived at the conclusion that the disposal of LSAH as the best option for halting the potential impairment. In addition and based on well considered metrics and the very limited time to explore other options, the board concluded that a buy-back by LafargeHolcim was the most appropriate means of deriving the best value from the proposed sale in the interest of all stakeholders and most especially the minority shareholders. Understanding the implication of the potential impairment on the company, LafargeHolcim acted timeously by entering into negotiations with the company with respect to the potential sale,” Lafarge Africa explained in a regulatory filing at the Nigerian Stock Exchange (NSE) yesterday.

    According to the board of Lafarge Africa, the proposed sale is expected to enhance the value of shareholders’ investments in Lafarge Africa.

    The board noted that following the conclusion of the proposed sale, Lafarge Africa’s shareholder loan of $293 million as at July 31, 2019, which represents the only existing foreign currency loan in the books of the company will be completely extinguished.

    This full repayment of the shareholder loan is expected to protect and preserve Lafarge Africa’s net Income and cash flows considering the resulting decrease sums to be applied towards debt service while the overall company’s debt will be reduced by N115 billion and an additional N47 billion by the eventual deconsolidation of LSAH.

    “The improvement in cashflow and net income, resulting from the reduction in debt service outflows, will enable Lafarge Africa to consider additional investments in cement production capacity to improve its market share in Nigeria. The sale is expected to boost the company’s profitability, through positive cash flow generation,” Lafarge Africa stated.

    Lafarge Africa had had on November 24, 2017 launched an offer to raise N131.65 billion through a rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The new shares were pre-allotted to shareholders on the basis of five new ordinary shares for every nine ordinary shares held as at the close of business on November 1, 2017. The acceptance list opened on Friday November 24, 2017 and ran till the close of business on Friday, December 15, 2017. Lafarge Holcim, using debt-for-equities conversion deal, picked up its rights fully and further subscribed to the un-allotted shares, thus raising its percentage shareholding by 4.97 percentage points from pre-rights issue position of 71.35 per cent to 76.32 per cent after the rights issue.

    Lafarge Africa also launched another rights issue in December 2017 offering 7.43 billion ordinary shares of 50 kobo each at N12 per share. The rights were pre-allotted on the basis of six new ordinary shares for every seven ordinary shares held as at the close of business on Tuesday, December 4, 2018. Acceptance list for the N89.2 billion rights issue, which had opened on Monday December 17, 2018, closed on Monday January 28, 2019. The N89.2 billion rights issue was also structured like the November 2017 rights issue, including a convertible deal that allowed LafargeHolcim to convert its debts to equities. This further increased LafargeHolcim’s majority stake.

  • ECA’s 2020 conference to focus on industrialisation

    The 53rd session of the Conference of African Ministers of Finance, Planning and Economic Development of the Economic Commission for Africa (ECA) scheduled to hold next year in Addis Ababa, Ethiopia, will focus on industrialisation.

    ECA in a statement earlier in the week, said the conference, with the theme: ‘The Future of Africa: Industrialisation in the Digital Era’, would hold from March 18-24, 2020.

    The commission said the theme was in recognition of the continent’s desire to industrialise and create jobs for the millions of its populace, the youth, in particular.

    The commission stated that although, the fourth industrial revolution presents challenges for countries in Africa, it also offers an opportunity for boosting competitiveness and industrial leapfrogging, which cannot be missed.

    ECA said to reduce poverty and catch up with other countries, policymakers and businesses in Africa need to adapt to and innovate within the new digital climate.

    “The digital economy is transforming value chains, skills development, production and trade globally. Although, the fourth industrial revolution may not yet be in immediate sight for Africa, these changes will have major implications for competitiveness and industrialisation efforts across Africa,” the body stated.

    According to the statement, the ministers will discuss how African policymakers can position themselves to effectively assess both the opportunities and challenges that the digital economy presents, to enable nations to industrialise and prosper in the digital era.

    According to ECA, advancements in digital technology offer tools for countries in Africa to leapfrog in traditional industries, including manufacturing.

    The body listed other sectors and activities that are crucial to industrial development to include logistics, agriculture, communications, services, green growth and smart cities.

    It stressed that without investments and capacity-building in these new technologies, many countries in Africa may fall further behind the technology frontier.

    The ECA explained that the fourth industrial revolution must be responded to with new policies. “Both national and continental level strategies for industrial development will need to adapt to the new digital reality.

    “This is in order to position countries in Africa to innovate and to catch up with the digital era in a manner that is consistent with the principle of leaving no one behind.

    ”Positioning countries will require the development of comprehensive digital industrialisation strategies, investments in digital infrastructure and skills, innovation and technology transfer initiatives, and appropriate regulatory frameworks for the digital economy,” it said.

    The ECA also stated that the African Continental Free Trade Area (AfCFTA) offers a platform for African governments to establish institutional arrangements for cooperation on the digital economy, and provisions to support digital capacities and industrialisation and connect African businesses.

    It added that in that context, the body in partnership with the African Union Commission is promoting the establishment of a common African technical standard for digital identification platforms.

    ECA added that it is so because the benefits of the digital economy are accessible in different African countries and regions.

    The body said the CoM 2020 theme would raise awareness among African ministers on the need to ensure that digitalisation strategies are integrated into policy and planning frameworks for industrialisation.