CSCS plc, the clearing house of the Nigerian capital market recently released its annual report for the financial year ended 2016. Total income reduced from N7.6 billion in 2015 to N6.4 billion in 2016. Profit before tax reduced from N5 billion in 2015 to N3.7 billion in 2016.
There were a few grey areas in the result which we will like to highlight;
1. X alert cost sharing formula yet to be agreed
Page 94 of the annual report reveals that a sharing formula from the CSCS report is yet to be agreed. One finds this strange given the management of both the CSCS and NSE occupy the same building. Why have the two bodies being unable to agree on a sharing formula in over two years ? Which of the bodies is currently footing the cost of the X alert ? X alerts are the sms investors when a buy or sell transaction is made on an account.
- The company includes no explanatory notes for Dumez-Divestment fund, totalling N232 million.
3. Share buy back Section 28 of the annual report which deals with Financial liabilities lists Share Buy back totalling N54 million as a liability. A huge jump from the N1.2 million budgeted in 2015 and N.1 million budgeted in 2014. Here is a copy of the report.
No explanations are given for this sub head. What shares are to be bought back and at what price ? Who are the sellers of these shares ? The Company and Allied Matters Act (CAMA) has no provisions for share buy back. When did shareholders give authorization of the said buy back ? If management. A search of the company’s annual reports from 2011-2016 show no mention of approval of the buy back.
The CSCS was incorporated in July 1992, but commenced operations on April 14 2007. It became a public limited liability on the 16th of May 2012. The functions of the CSCS are to act as a central depository for share certificates for quoted companies on the Nigerian Stock Exchange (NSE), to act as a sub registry for all quoted securities in conjunction with the registrars of the quoted company. In addition, CSCS is the issuer of central securities identification numbers to shareholders and a custodian (in conjunction with custodian members for local and foreign instruments.