The Nation Newspaper

Category: Investors

  • Transcorp slows down in Q1

    Transnational Corpo-ration of Nigeria (Transcorp) Plc recorded a major contraction in performance in the first quarter as the conglomerate’s profit dropped by 61 per cent to N5.4 billion.

    Key extracts of 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.

    The performance in first quarter represented a slowdown for Transcorp, which had recently distributed N1.22 billion as cash dividend for the 2018 business year, representing a dividend per share of three 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.

    Transnational Corporation of Nigeria (Transcorp)  Chairman Mr. Tony Elumelu said the conglomerate’s power subsidiary, Transcorp Power Limited, will be investing as much as $2.5 billion in power projects to boost power supply.

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

     

  • Stanbic IBTC nets N19.2b in first quarter

    Stanbic IBTC Holdings recorded mixed performance in the first quarter of 2019 as marginal growth in the top-line compressed into a decline in the bottom-line.

    Interim report and accounts of the financial services group for the three-month period ended March 31, showed that gross earnings increased to N58.69 billion in first quarter 2019 as against N57.39 billion in comparable period of 2018. Profit before tax however dropped from N26.69 billion to N23.51 billion, while profit after tax slipped from N23.07 billion to N19.15 billion. Earnings per share consequently dropped from N2.23 to N1.81.

    The results showed that the group’s liquidity position remained robust. Liquidity ratio increased to 130.06 per cent compared with the 110.68 per cent achieved in December 2018, well above the regulatory minimum requirement of 30 per cent.

    Stanbic IBTC Holdings Plc Chief Executive Mr Yinka Sanni said the slowdown in economic activities as well as socio-political environment impacted the first quarter results.

    According to him, the operating environment in the first quarter of the year was challenging, evidenced by the slowdown in economic activities that were impacted by the socio-political environment leading to muted client activity. These factors affected the growth pace of the overall business volumes and earnings.

    He noted that the group achieved a resilient performance, despite the challenging environment, expressing optimism that the group is well positioned to take advantage of economic activities as the macroeconomic position improves.

    “We will continue to leverage our universal financial services capability to ensure delivery on our guidance for 2019,” Sanni said.

    Stanbic IBTC Holdings had recorded considerable growths across all key performance indicators in 2018 with the net profit rising by 54 per cent to N74.4 billion.

    Key extracts of the audited report and accounts for the year ended December 31, 2018 showed that the group grew its top-line earnings to N222.4 billion in 2018 compared with the N212.4 billion in 2017. Profit before taxation rose by 44 per cent to N88.2 billion as against N61.2 billion while profit after tax rose by 54 per cent to N74.4 billion in 2018 as against N48.4 billion in 2017.

    The balance sheet showed that group’s total assets grew by 20 per cent to N1.66 trillion in 2018 compared with the N1.39 trillion in 2017. Customer deposit grew by seven per cent to N807.7 billion from N753.6 billion. Gross non-performing loans decreased by 50 per cent to N17.7 billion in 2018 compared with N35.3 billion. This decrease impacted positively the gross non-performing loan to total loan ratio, which improved to 3.9 per cent, well below the regulatory threshold of 5.0 per cent and 8.6 per cent recorded in 2017. The non-performing loans figure became more impressive when viewed against the 14 per cent increase in gross loans and advances from N403.9 billion in 2017 to N458.9 billion in 2018.

  • Fidelity Bank eyes Tier 1 status on rapid digital growth

    Fidelity Bank Plc plans to leverage its rapidly expanding digital banking to drive growth and leapfrog into a Tier 1 bank over the next four years.

    At its Annual General Meeting (AGM) in Lagos, the bank said its sustained investment in digital innovations would engender enhanced customer service delivery and open fresh streams of revenue.

    Its Chief Executive Officer Mr. Nnamdi Okonkwo said the bank was on track towards breaking into the league of Tier 1 banks by 2022.

    According to him, the 2018 financial year marked the beginning of the second phase of the growth aspirations the bank.

    He said the bank will not relent on efforts to increase the adoption rates and migration of customers to its digital banking platform.

    According to him, with 25 per cent of the bank’s fee-based income coming from digital banking, the bank is introducing a digital lending solution and AI-Chatbots to spur further growth in the industry verticals, where it currently operates.

    “We are investing heavily in digital technologies to drive our retail strategy, reduce cost and consequently improve revenue and returns for our shareholders,” Okonkwo said.

    The bank’s Chairman Mr. Ernest Ebi said directors of the bank would continue to provide the right leadership with focus on governance, risk management and capital preservation.

    “Every action and everything we have done thus far have been around these areas. The fundamentals are very strong we intend to keep things that way,” Ebi said.

    Shareholders commended directors and management of the bank for sustaining good performance. Shareholders approved the payment of N3.19 billion as cash dividend for the 2018 business year, representing a dividend per share of 11 kobo.

    The Association for the Advancement of the Rights of Nigerian Shareholders (AARNS) Chairman, Dr. Farouk Umar, commended the bank for paying dividend regularly. He urged the management to improve on its financial performance.

    Former President, Nigeria Shareholders Solidarity Association (NSSA), Mr. Timothy Adesiyan, also commended the bank for investing in digital banking, noting that digital banking has led to increased profitability and progress.

    Key extracts of the audited report and accounts of Fidelity Bank for the year ended December 31, 2018 showed that gross earnings increased by 4.8 per cent to N188.9 billion in 2018, driven primarily by 22.7 per cent growth in earning assets.

    Total deposits increased by 26.3 per cent to N979.4 billion in 2018 as against N775.3 billion in 2017. Profit before tax rose by 30.6 per cent to N25.1 billion as against N19.2 billion in 2017 while profit after tax increased by 29 per cent to N22.9 billion in 2018 compared with N17.8 billion in 2017.

  • Emerging outlook of banking sector

    With the successful consummation of its merger with Diamond Bank, reports show Access Bank as the largest bank by size and top-line earnings, but the contest remains in the bottom-line. Analysts believe that value accretion from the merger may further catapult Access Bank in the leadership of the banking sector. Capital Market Editor, Taofik Salako, reports

    Nigerian banks generally maintained steady growth in the first quarter of the year, building on the performance of last year. Emerging results showed improved bottom-line; although banks appeared to be slow with the top-line in the first three months. The striking difference in the results is the emerging structural change in fundamental positions of banks.

    Access Bank, which during the quarter consummated a business combination with the defunct Diamond Bank Plc, is clearly now the largest bank in terms of assets and top-line earnings, leaping from  the third position by the end of last year.

    The three-month report for the period ended March 31, 2019 showed that Access Bank grew top-line earnings by 16.5 per cent to N160.12 billion in first quarter of the year, as against N137.54 billion in first quarter of last year. Profit before tax jumped by 66 per cent from N27.44 billion to N45.10 billion. After taxes, net profit leapt by 86.03 per cent from N22.12 billion in first quarter 2018 to N41.15 billion in first quarter 2019. Earnings per share also rose from 77 kobo to N1.39.

     

    Fundamental shift

    From its third position last year, Access Bank’s total assets rose by 29.9 per cent from N4.95 trillion in December 2018 to N6.43 trillion in March 2019. Customer deposits leapt by 53.1 per cent from N2.56 trillion to N3.92 trillion, while shareholders’ funds increased by 17.8 per cent from N482.64 billion by December 31, 2018 to N568.74 billion by March 31, 2019. Most analysts believe that the first-quarter performance reflected both the immediate impact of the merger and the steady organic growth of Access Bank.

    First-quarter results showed that Guaranty Trust Bank (GTBank) Plc grew top-line earnings by 1.2 per cent to N110.33 billion in the first quarter of the year as against N108.97 billion in the first quarter of last year. Profit before tax rose by 8.3 per cent from N52.62 billion to N56.98 billion. Profit after tax also rose from N44.67 billion to N49.30 billion. With these, earnings per share increased from N1.58 in the first quarter of last year to N1.74 in the first quarter of this year.

    GTBank, Nigeria’s most capitalised financial institution, in terms of market valuation, closed first quarter 2019 with total assets of N3.56 trillion and shareholders’ funds of N627.2 billion. Customers’ deposits had risen by  six per cent to N2.41 trillion in March 2019 as against N2.27 trillion recorded by December 31, 2018 while loan and advances rose from N1.26 trillion in December 2018 to N1.28 trillion in March 2019.

    Last year, Access Bank had surpassed other competing leading banks, recording double-digit growths across key performance indicators. It rode on the back of improved operating efficiency and risk management to cross the N100 billion profit mark. The audited report and accounts for the year ended December 31, 2018 showed that the bank grew pre- and post-tax profits by 32 per cent and 58 per cent. Gross earnings had risen by 15 per cent. Total assets increased by 21 per cent while customers’ deposit grew by 14 per cent.

    Group gross earnings rose to N528.7 billion in 2018 compared with N459.1billion in 2017. Interest and non-interest incomes contributed 72 per cent and 26 per cent to the top-line. Profit before tax rose from N78.2 billion to N103.2 billion while profit after tax increased to N95.0 billion in 2018 as against N60.1 billion in 2017.

    With these, earnings per share rose from N2.11 in 2017 to N3.31 in 2018. Return on average equity (ROAE) stood at 19.0 per cent while return on asset closed 2018 at 2.1 per cent. Access Bank’s total assets rose to N4.95 trillion in 2018 as against N4.10 trillion in 2017. Loans and advances had increased from N2.06 trillion to N2.14 trillion while customer’s deposits improved to N2.57 trillion from N2.25 trillion.

    Zenith Bank Plc recorded mixed performance in the first quarter with a decline in the top-line counterbalanced by improvement in the bottom-line. Gross earnings dropped from N169.19 billion in first quarter 2018 to N158.11 billion in first quarter 2019. Profit before tax meanwhile rose from N54.00 billion to N57.29 billion. Profit after tax also increased from N47.08 billion to N50.23 billion. Earnings per share thus rose from N1.50 in first quarter 2018 to N1.60 in first quarter 2019. Zenith Bank closed the period with total assets of N5.88 trillion and shareholders’ funds of N780.89 billion.

     

    Growing value

    Market analysts believe that the merger may provide further impetus for growth for Access Bank, citing the bank’s pedigree of value accretion and seamless integration. Analysts at GTI Capital said the share price of Access Bank could rise by about 70 per cent over the next 12 months, a target premised on the first-quarter performance of the bank and the enlarged growth opportunity.

    “In light of the above and the favourable macroeconomic outlook for 2019, we anticipate a better dividend payout by Access Bank for the 2019 financial year. Hence, we maintained our price target of N11.30 for Access Bank,” GTI Capital stated in a first-quarter earnings review.

    The board of Access Bank has recommended payment of a final dividend per share of 25 kobo to shareholders, bringing the total dividend per share for the 2018 business year to 50 kobo. The bank had paid an interim dividend of 25 kobo per share.

    Under the terms of the merger with the defunct Diamond Bank, Access Bank took over all assets, liabilities and undertakings of the defunct bank, which was subsequently dissolved without being wound up. In exchange, Diamond Bank’s shareholders received a cash consideration of N1 per share and two ordinary shares of the enlarged Access Bank for every seven ordinary shares of Diamond Bank held as at the effective date.

    Directors and management of the banks have said the merger will create significant values for all stakeholders, underlining the inherent synergies and value accretion in the business combination.

    Group Managing Director, Access Bank Plc, Mr Herbert Wigwe said the enlarged Access Bank is well-positioned to beat the competition in the  banking industry and attain its goal of being the financial hub for Africa.

    He pointed out that increased earnings during the first quarter underscored the value potentials of the newly expanded business model.

    According to him, following the successful completion of the merger with Diamond Bank in March 2019, the bank has now fully positioned itself in the retail market to bring the power of banking to the doorsteps of millions.

    “We are providing a broader platform to facilitate payments services in Nigeria and across Africa, by harnessing our significantly enhanced digital technology capabilities,” Wigwe said.

    He noted that the capital and liquidity position of the bank remained above regulatory levels, with capital adequacy ratio (CAR) at 19.5 per cent and liquidity ratio of 47.6 per cent, which further demonstrated the capacity of the enlarged balance sheet to cope with possible negative shocks.

    He pointed out that the bank has made solid progress throughout the first quarter of the year in line with its 2018-2022 five-year strategy, assuring that it remains committed to the achievement of its strategic imperatives going forward as it continues to invest in people, technology and most importantly, product offerings to customers.

    “Our focus is to become the world’s most respected African Bank by leveraging on the strength of our retail and wholesale business to provide unrivalled value to our customers,” Wigwe said.

    He noted that the enlarged bank will create significant opportunities and benefits to customers, shareholders, staff and other stakeholders, pointing out that similarity of several common values and technologies has made its business combination a seamless one.

    Against the background of the performance in 2018, Wigwe said the banking group has continued to make significant progress in spite of the challenges in the operating environment.

    According to him, the bank made solid progress throughout 2018 in line with its 2018-2022 five-year strategy, and it remains committed to the achievement of its strategic imperatives going forward.

    Looking forward, Wigwe assured that the banking group will continue to invest in its people and technology in order to improve operational efficiency and service touch points with earnings growth in 2019.

     

    Ambitious plan

    Access Bank had in 2018 started implementation of a new five-year strategic plan aimed at making it Nigeria’s foremost bank by 2022. The new plan was expected to build on the successes of a series of transformative strategies that had resulted in sustained growth over the years. From 2013 to November 2017, Access Bank had increased its total assets at a cumulative yearly growth rate (CAGR) of 18 per cent and delivered shareholder returns of 90 per cent. The bank had also grown its customer base from 90,000 in 2002 to over eight million in 2017 and in the same period opened 351 new branches. Thus, the new five-year strategy was expected to accelerate this growth story to position Access Bank as the leading bank by 2022.

    The new strategy has many strategic levers including digitally led, retail banking growth and consolidation in wholesale markets, customer focused, analytics driven, with robust risk management, strong global collaboration in key gateway markets and the creation of a universal payments gateway. To deliver the transformation, Access Bank will adopt a new organisational structure.

    The retail bank will have a customer segment focus, driven by digital and payments. The corporate bank will build deep sector expertise and deploy global relationship managers. Also, Access Bank’s subsidiaries will be organised around strategic clusters, with strong collaboration between them to secure trade finance and correspondent banking.

    The bank’s transformation programme will be underpinned by robust risk management together with high levels of automation to enhance the compliance and risk functions and drive customer insights.

    In next phase of its transformation programme, Access Bank will also embark on a series of bold initiatives. At home, the goal is to be the ‘Number One Bank’ in Nigeria by growing the retail customer base, SME client base, and by dominating the top 100 Nigerian corporates. Internationally, Access Bank will develop an integrated global franchise by strategically developing its presence in key African markets, enhancing collaboration in global financial gateways, including London and New York, Asia and the Middle East, and strengthening its trade hubs in India, Dubai and China. A strengthened presence in key African markets, and the creation of universal payments gateway combined with an integrated global franchise, ideally positions Access Bank to be Africa’s gateway to the world.

    While the merger with defunct Diamond Bank took the financial services sector by storm, the success of the maiden N15 billion green bond by Access Bank has been lauded as one of the “bold initiatives”.

    The first corporate green bond to be issued in Africa to be fully certified to have met global climate bonds standard, the Five-Year Fixed Rate Senior Unsecured N15 billion Green Bond was awarded an Aa- rating by Agusto & Co, while the underlying framework was verified by PwC (UK) and the bond was certified by the Climate Bonds Initiative as having met the global climate bonds standard. The green bond was achieved by way of a book build which was fully subscribed. Access Bank would use the net proceeds from the green bond to foster its green bond framework, including support for projects directed at flood defense, solar generation facilities and agriculture.

    Deputy Chief Executive, Climate Bonds, Justine Leigh-Bell, said Access Bank’s Climate Bond-certified corporate green bond represented a major milestone in the development of the local green finance market. “In addition to being an inspiration to other private companies, the leadership demonstrated by Access Bank is critical for the long term development of the green finance market in Nigeria and a great example for other African nations to follow,” Leigh-Bell said.

    Wigwe noted that the green bond issuance highlights the bank’s commitment to sustainability and its status as a pioneer in green financing in both the domestic and international capital markets.

     

     

  • Firm suspends production over growing losses

    The board of directors of Greif Nigeria Plc has suspended its operations as the packaging company continues to wriggle in losses.

    At the board meeting at the Apapa, Lagos office of the company, directors of Greif Nigeria resolved that the company should stop receiving new orders from customers and also stop production for an indefinite period.

    The board stated that it took the decision because the company recorded a loss of more than N260 million in 2018 and the loss had also continued in the first quarter of the 2019 business year.

    According to the board, efforts made to win back key customers and also get price increase from the customers were yet to yield positive result.

    “It had, therefore, been resolved that the company stop receiving new orders from customers and also stop production for an indefinite period,” the company stated in a regulatory filing signed by its Managing Director, Mr David Onabajo.

    Greif Nigeria had suffered a major contraction in its business in 2018 as the packaging company struggled with significant decline in sales.

    Key extracts of the audited report and accounts of Greif Nigeria for the year ended October 31, 2018 showed that sales dropped by 62 per cent from N1.405 billion in 2017 to N534.611 million in 2018. As against modest profit of N77.55 million in 2017, the company posted pre-tax loss of N245.23 million in 2018. After taxes, net loss rose to N262.59 million in 2018 as against net profit of N49.42 million recorded in 2017. Earnings per share consequently declined from N1.16 in 2017 to a loss per share of N6.16 in 2018.

    Greif Nigeria had forewarned investors that the immediate past business year was a very challenging year for the company.

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    The company had stated that economic and competitive environment in the steel drum and packaging sector gave rise to a very tough situation for its business, which resulted in the closure of two of its branches during the 2018 financial year.

    Greif Nigeria could not meet the timeline for the filing of its 2018 audited financial statements for the year ended October 31, 2018 on the due date of January 29, 2019 because it had to carefully scrutinise the operations during the year.

    The company stated that the delay of its financial statements was due to the fact that the external auditors had to exercise due diligence on the financial statements during the audit exercise to ensure all tax related issues were resolved, and make certain that the results reflect the actual position of business operations for the year, as well as conform with all relevant statutory requirements.

  • Prestige Assurance’s net profit drops by 20%

    Prestige Assurance Plc suffered contraction in its profitability in 2018 despite considerable growth in the insurance company’s top-line. Net profit dropped by 20.3 per cent to N423.8 million in 2018 despite 37.7 per cent growth in gross premium to N4.66 billion.

    Key extracts of the audited report and accounts for the year ended December 31, 2018 showed that Prestige Assurance’s gross premium increased from N3.39 billion in 2017 to N4.66 billion. Profit before tax however decreased from N697.99 million in 2017 to N645.43 million in 2018. After taxes, net profit dropped from N531.84 million in 2017 to N423.8 million in 2018. With these, earnings per share declined from 9.90 kobo in 2017 to 7.89 kobo in 2018.

    Prestige Assurance had undergone a major capital restructuring in 2018. The insurance company had in June 2018 concluded share reconstruction exercise that resulted in cancellation of about 1.6 billion ordinary shares of 50 kobo each. The reconstruction was undertaken to remove bubble assets.

    Under the share reconstruction, Prestige Assurance had reduced its share capital from N2.685 billion or 5.370 billion ordinary shares of 50 kobo each to N1.909 billion or 3.817 billion ordinary shares of 50 kobo each in the issued and fully paid up ordinary shares of the company.

    This led to reduction of N776 million or 1.55 billion ordinary shares. “The share capital so reduced will be applied in writing off the capital of the company which is lost or unrepresented by available assets,” according to a regulatory filing on the reconstruction.

    Prestige Assurance had stated that the essence of the capital reconstruction was to enable it wipe out its accumulated retained losses of N776.511 million.

    The company noted that the reconstruction would reposition it on a trajectory for subsequent accumulated retained profit while creating more value to its shareholders.

    Besides, the reconstruction would allow the company to declare dividend and improve its perception in the market thereby making it more competitive.

    Shareholders of the insurance company had on Friday, August 18, 2017 at its 47th annual general meeting (AGM) in Lagos approved the share reconstruction and authorised the board of directors to take necessary actions to implement the share reduction.

    Prestige Assurance in November 2018 distributed 1.53 billion ordinary shares of 50 kobo each to its shareholders as bonus shares, almost restoring 1.6 billion ordinary shares that it had cancelled under a recent capital restructuring.

    Prestige Assurance distributed bonus shares of 41 ordinary shares of 50 kobo each for every 100 ordinary shares of 50 kobo each held as at the close of business on November 27, 2018.

    With then current issued outstanding shares of 3.817 billion ordinary shares of 50 kobo each, Prestige Assurance issued 1.53 billion ordinary shares on the basis of 41 shares for 100 shares.

    The company capitalised N782.57 million from its share premium account to pay for the new shares issuance. The scrip issue increased the company’s issued share capital from N1.91 billion or 3.82 billion ordinary shares to N2.69 billion or 5.38 billion ordinary shares.

    Established in 1952 as a branch office of The New India Assurance Company Limited, Mumbai, Prestige Assurance was incorporated as a limited liability company on January 6, 1970 and licensed to write all classes of non-life insurance in Nigeria. In order to reflect the majority shareholding of the Nigerian public in the company, its name was changed to Prestige Assurance Plc on September 24,1992 in line with the indigenisation decree passed by government of Nigeria. After successful recapitalisation in 2007 and subsequent rights issue in 2015, Prestige Assurance is currently a subsidiary company of The New India Assurance Company Ltd, Mumbai, which has majority equity stake of 69.5 per cent shareholding.

  • Newrest ASL blames illiquidity, costs for voluntary delisting

    The board of Newrest ASL Nigeria Plc has blamed the illiquidity of its shares and the costs of maintaining listing on the Nigerian Stock Exchange (NSE) for its decision to voluntarily delist the shares of the company from the Exchange.

    Newrest ASL in February 2019 filed application to delist its entire 634 million ordinary shares of 50 kobo each from the Daily Official List of the Exchange. The board of Newrest ASL had approved the commencement of the voluntary delisting in December 2018 and presented the proposal for approval of shareholders at an extraordinary general meeting in January 2019. Shareholders approved the board’s recommendation to delist.

    Head, Listings Regulation, Nigerian Stock Exchange (NSE), Godstime Iwenekhai, had stated that the voluntary delisting was due to inability of Newrest ASL to meet up with the 20 per cent free float requirement of the Exchange.  The NSE, however, did not list Newrest ASL among companies with free float deficiencies.

    Explaining the reasons for voluntary delisting, the company stated that its purpose for listing was to raise capital and provide liquidity to its shareholders but the current illiquidity at the stock market has rendered this primary objective unattainable.

    The company noted that there was a significant fall in trading volumes from about 78.09 million shares in 2017 to 9.03 million shares in 2018.

    “Thus, neither the company nor any shareholder is benefitting from the continued listing on the NSE,” Newrest ASL stated.

    According to the company, the attendant cost and time required to comply with listing requirements such as quarterly and annual fillings, annual certifications, filing fees, penalties or sanctions, corporate governance certifications and many meetings are not commensurate with the benefits accruable to the company.

    The company added that the increasing competitive environment and the struggle to defend market share have resulted in market pressure to reduce price, which might significantly impact operating margin.

    Newrest Group, which, together with its affiliates, holds majority equity stake of 81.82 per cent in Newrest ASL, is the promoter of the voluntary delisting and it is seeking to buy out minority shareholders who may not want to be part of an unlisted company.

    Under the proposal, Newrest Group will pay N7.70 per share to every shareholder exchanging their Newrest ASL shares. Alternatively, shareholders may decide to stay in the unlisted company. Newrest ASL has extended the period for the acceptance of the exit consideration till April 25, 2019.

  • Thomas Murray upgrades CSCS to A+

    Thomas Murray, the global post-trade risk and custody specialists, has upgraded its rating of the Central Securities Clearing System (CSCS) Plc from A to A+, which denotes a ‘low’ overall risk. Thomas Murray maintains proprietary assessments of over 140 Central Securities Depositories (CSDs) globally as part of the Thomas Murray Depository Risk Assessment services.

    The overall assessment of ‘A+’ reflects a weighted average of seven risk components. The assessment for asset servicing risk has been omitted from the overall risk assessment since CSCS takes no active part in the entitlement calculation or processing of corporate actions in the market.

    The outlook for the CSCS risk assessment is ‘positive’ owing to the fact that there are numerous pending developments scheduled for implementation within the short to medium term. Official time schedules have not been announced in all cases, but it is anticipated that, upon implementation, these developments have the potential to improve the risk assessment of CSCS.

    According to the report, one of such developments include the organisation becoming a direct member of the Central Bank of Nigeria (CBN) RTGS system, ensuring that DVP settlement would be realised for both on-exchange and OTC transactions by linking the securities leg and cash leg of settlement. CBN approval would be required prior to establishing a link meaning that the timeframe for this would be largely dependent on the CBN.

    Managing Director, Central Securities Clearing System (CSCS) Plc, Mr. Haruna Jalo-Waziri, said the upgrade from A to A+ was a significant milestone towards being a globally respected and leading central securities depository in Africa.

    “The key upgraded areas further indicate that we have made notable improvements in managing our market’s overall risks as we increasingly continue to align ourselves with global best practices. I am extremely proud of the collective efforts made over the years by our committed staff to enable us to make such progress,” Jalo-Waziri said.

    Director, Head of Operations, Thomas Murray, Mr. Jim Micklethwaite, said the upgrade across several areas recognised the significant and widespread improvements to processes and controls put in place over the last few years by CSCS, particularly due to the upgraded functionality within its new core system, TCS BaNCS.

    “We will monitor CSCS’ improvements as they continue to adopt international best practices,” Micklethwaite said.

    He explained that the CSD risk assessment reviews and assesses the risk exposures for investors associated with the processes the CSD has in place to facilitate the safekeeping and the clearing and settlement of securities, where applicable. It assesses eight key risks.

    The methodology considers the capabilities of the depository and the quality and effectiveness of its operational infrastructure. It also assesses the depository’s willingness and ability to protect its participants or clients from losses.

    As part of the assessment, the scope and quality of the depository’s services is assessed. The assessments are on a consistent global scale, using the familiar AAA to C grading scale. Once the grading is assigned there is an ongoing surveillance process to monitor the depository.

     

  • NSE lifts suspension on Afromedia

    The Nigerian Stock Exchange (NSE) has lifted suspension on trading in the shares of Afromedia Plc; one year after it suspended the advertising media company for failure to comply with post-listing requirements.

    The NSE stated that the lifting of suspension on the shares of Afromedia was sequel to the submission of its relevant financial statements to the Exchange.

    The NSE had on April 9, 2018 suspended trading in shares of Afromedia for failing to adhere to best corporate governance and extant post-listing requirements that require quoted companies to submit their periodic financial statements and reports within stipulated timelines.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

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    Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    The Exchange stated that “Afromedia Plc has now filed its outstanding financial statements”, thus the suspension placed in trading on the shares of the company was on Monday, April 8, 2019.

    Incorporated in 1959 and listed on the NSE in 2009, the Afromedia Group consists of five subsidiaries and associated companies. These include Afromedia Gambia Limited, Afromedia Africa Propriety Limited, Optmedia Limited, Outdoor Exchange West Africa Limited and Independent Poster Care Limited.

  • SAHCO’s IPO records 65% subscription

    The initial public offering (IPO) of Skyway Aviation Handling Company (SAHCO) Plc was undersubscribed by 35.35 per cent as the company was only able to raise N1.22 billion out of IPO value of N1.89 billion.

    Official final allotment report for the IPO showed that a total of 1,212 applications were received for 262.52 million ordinary shares of 50 kobo each at N4.65 per share, totaling N1.22 billion.

    SAHCO had floated an IPO of 406.074 million ordinary shares of 50 kobo each at N4.65 per share. The IPO was an offer for sale, implying that the net proceeds of the IPO would go to the existing majority core investor in SAHCO, which was divesting partially to allow retail minority ownerships. Ten per cent of the shares offered for sale were earmarked for staff of SAHCO under an Employee Stock Ownership Plan to be set up and administered by a Trustee.

    The IPO, which opened on November 5, 2018 and was scheduled to close on December 19, 2018, was extended for 12 working days to January 09, 2019 as concerns over valuation and slowdown in the equities market appeared to weaken demand for the shares of the ground handling company.

    SAHCO was privatised by the Federal Government in 2009. Sifax Group acquired the entire share capital of the company. The Share Sale Purchase Agreement (SSPA) however mandates the majority core investor to divest 49 per cent of the shares of the company to the general Nigerian investing public.

    The board of the company had stated that SAHCO planned to ride on the back of the success of its IPO to further push its vision of becoming the leading provider of aviation handling services in the West African region.

    Chairman, Skyway Aviation Handling Company (SAHCO) Plc, Barrister Taiwo Afolabi, said the said the IPO opened up opportunities for Nigerians across the federation to be part of the privatisation success, noting that SAHCO is the leader in aviation cargo and Nigeria’s only ground handling company with affiliation with maritime cargo.

    He outlined that the company’s future strategy is to create long term shareholder value through the profitable operation and expansion of its business into other West African markets with a vision to become the leading provider of passenger, ramp and cargo handling services in the West African region.

    “In order to achieve this objective, SAHCO seeks to pursue growth and opportunities consistent with its business operations by focusing on operational excellence and efficiency, enhanced service delivery, strategic partnerships and alliances that would enhance its capability both in the domestic market and globally as well as strategic investments among others,” Afolabi said.