This Corporate News Compilation for the week ended January 27th, 2018 is brought to you by Bluechip Technology Ltd Nigeria.
MULTICHOICE TO FACE THE MUSIC
Another week, another South African Company in the news; this time, Nigeria and Africa’s largest cable TV operator got a Federal High Court judgement against it which could cost the company N5.9 billion in damages. This is on the back of a suit brought against the company by the Musical Copyright Society of Nigeria Ltd.
The story goes that Multichoice asked the court to stop MCSN from asking or demanding that Multichoice obtain copyright licence for the broadcast and communication to the public of musical works on the radio and television channels operated and distributed by Multichoice. This was after MCSN had requested that that Multichoice pay N4.1 billion as cumulative copyright and royalties for its body of works used by the latter during the airing of its programmes. This case dates back to 2011 and will likely end up at the Supreme Court at this rate.
MTN WANTS TO TAKE ON BANKS
MTN had a loud and clear message for the fintech and financial services community last week: it wants to be the largest bank in Africa. It aims to do this by increasing its mobile money subscribers across the continent from the current 21 million to 60 million in the next 4 years. It claims that its number of 30-day active users is growing by about 500k monthly. MTN has over 90 million subscribers in Nigeria alone and over 230 million across its operations.
WE HAVE A BUYER FOR 9MOBILE
We learnt last week that Teleology, one of the bidders for 9Mobile has been shortlisted as the preferred bidder for the telecoms firm. Teleology is promoted by Adrian Woods, the first CEO of MTN Nigeria. This has been a controversial bid so far, especially if you consider all the back and forth rumours about Globacom having acquired the company and the several times when the NCC has had to shift the date for the closure of the bids.
Also recall that Globacom and Helios Partners failed to back their technical bids with concrete financial bids. Teleology private equity firm, with an investment portfolio of $11bn, is said to have offered more than $500m for the company. Teleology will have to inherit a company with a debt profile of about N200 billion and a negative shareholders funds of over N1.5 trillion. It’s going to take an incredible turnaround to get this company back in shape and we wish the potential new owners the best of luck.
SWEET AND PROFITABLE
Dangote Sugar has been one of the best performing stocks on the Nigerian Stock Exchange since last year. In the last 1 year, it has returned about 294%. Its CEO, Abdullahi Sule, was in the news last week and he told investors that the good old days of sugar are back again. In an interesting interview, he explained that they have seen orders pick up from confectioneries, bakeries and beverage companies. Unlike in Europe and other western societies where sugar consumption has dropped, it is expected to pick up in emerging markets like Nigeria. Dangote Sugar’s sales volume dropped by 17% last year (as at September), to 507,185 metric tons.
They are forecasting an increase of 20 to 25% in 2018, he said. They also project a profitability rise of 15 to 20% compared with 2017. The company says it is targeting producing about 1.08 million tons of white sugar annually in the next 5 years and 1.5 million tons per annum in the next decade. The CEO also claimed that they took advantage of cheaper raw sugar to cut its the ex-factory (retail) price for 50 kilograms (110 pounds) of sugar by 10% last week to 14,400 naira ($40) after maintaining “gradual price increases” last year to cover costs, he said.
IT’S GOING TO BE A GREAT YEAR FOR SALT
Another Dangote Company, NASCON, also informed investors that they expect better results in 2018 and that they will be “investing in backward integration projects as a strategy to diversify and add more value to both its shareholders and the Nigerian economy.” NASCON is also up by 190% in share price in the last one year and is likely to sustain this price level in the coming months. It appears that anything Dangote touches is gold these days.
Asahi Brands Limited, the operators of Bridgestone Tyres in Nigeria, opened its 6th branded retail outlet in Nigeria last week. Retail tyre outlets had in the past been ravaged by cost overruns, weak patronage and influx of second hand tyres in the country. There are also several tyre brands in the country making this a very competitive market. However, with the ban on 41 items still in force, retail tyre brands could have a better shot at capturing market share. Financial institutions should be watching this space as the flurry of branded retail outlets springing up across the country will need some form of credit to ensure sales pick up across board. I foresee the return of credits within the next 2 years.
MEGA DEAL FOR AN AMERICAN COMPANY
American company, KBR INC, announced that it has been awarded a contract from Indorama Eleme Fertilizer & Chemicals Limited (Indorama) and Toyo Engineering Corporation (Toyo) for the Train 2 ammonia plant at Indorama’s Port Harcourt. Under the terms of the contract, KBR will provide technology licensing, basic engineering design, proprietary equipment and catalyst for Indorama’s planned second ammonia plant in Port Harcourt. KBR is a leader in ammonia technology and has been involved in the licensing, design, engineering, and/or construction of more than 230 grass roots ammonia plants and over 100 revamp ammonia projects globally.
A GERMAN COMPANY SETPS UP SHOP
I am beginning to lose track of the many foreign companies opening shop in Nigeria and it is a good thing. German company, Olco Multi-business Limited has opened shop in Nigeria. The company is focused on crowd funding initiatives, job search and educational consultancy using 3 verticals – Fundmie, Workmie and Olco Study respectively. The company said that its plan is to use Fundmie to help startups raise funds “from the public”. I’m not sure if they know that raising funds from the public will require SEC approval if it is designated for an investment in a company. Nevertheless, this is an interesting space that has been in need of some structure. Who will be their likely competitors?
GOOD NEWS FOR COCOA PRODUCERS
Nigerian politicians were agog last week as they celebrated the “invention” of Nigeria’s first cocoa pod breaking machine. The machine was created by an indigenous firm, Oluarowolo Nigeria Limited and it is hoped that this will help boost cocoa production in Nigeria.
In fact, the Minister of State for Agriculture and Rural Development, Senator Heineken Lokpobiri, announced that the FG is ready to partner with the inventors to mass produce the machines. Farmers traditionally break cocoa pods using wood and machete which is not only laborious and time consuming but also uneconomical. The machines, by the way, are not new inventions as the technology exists in other parts of the world. There are also papers online that outline how the machines can be produced. This doesn’t in anyway take away the good work done by Oluarowolo.
NAME YOUR CURRY
Vanguard conducted an interesting market research on curry brands in Nigeria. According to the research, Nigeria’s curry market is divided into 2 main segments – local and foreign. The locally made brands include Tiger Curry and Euroma Curry produced by Tiger Foods Limited; Gino Curry produced by Africa GB Foods Manufacturing Nigeria Limited; Terra Curry powder, manufactured by TGI Nigeria and Ama Wonder Curry produced by KIB Food Processing Company. The foreign brands that have market share are Ducros produced by McCormick, France; Organic Curry powder, Lion Curry powder, and Rajah Mild Madras Curry. The report suggests that no one owns this market yet. Which of the curry products do you prefer using?
MR BIGGS IS CHANGING
Fast food pioneer, Mr Biggs, is looking to regain its mojo. They announced last week that they will be reworking their menu to include Nigerian dishes like bitter leaf soup, Ofe Owerri, Fisherman’s soup and other rice sauces to its traditional jollof rice and chicken meals. Mr Biggs’ dominance as a major food retail outlet has diminished over the years with the rise of The Place, Mama Cass, Mega Chicken as preferred fast food restaurants for locally made Nigerian dishes.
FMCG’S ARE GETTING WISER
An interesting Reuters report during the week provides insights into what most consumer goods companies in the country are doing to confront the Nigerian consumer market. The report claims that the likes of Unilever and Nestle are setting up manufacturing plants in the country in a bid to mitigate against the CBN restrictions on access to forex. Another tactic used by these firms is to sell their products in much smaller packs and sachets. Selling in smaller packs is not a new tactic but the reports highlights how consumer good firms such as Nestle, P&G and Unilever have come to rely heavily on it. Most lower and middle income households prefer to use smaller packs not just as a way of reducing cost but as a way of also cutting out waste. You have to agree that economic recessions often come with their own advantages.
WAKANOW IN FINANCIAL HOT WATER
Nairametrics reported last week that Nigeria’s largest travel agency, Wakanow, was facing financial challenges and could be faced with being yanked off its BSP programme by IATA. Sources informed us that the company has been ravaged by a combination of high operating costs, restriction on repatriation of forex, and the depreciation of the naira. These affected the company’s financial situation leading them to reduce overheads and lay off some of their workers. We also understand that they are urgently looking to raise funds and are considering a likely merger or acquisition with South Africa’s TravelStart. Another report tracked during the week revealed that Wakanow announced a “transition from a 2-week airline billing settlement cycle, to pioneer a daily direct remittance and prepaid card payment”. This in other words means, travellers hoping to use Wakanow will now have to pay for their tickets same day as against having a 2 week period to settle payments. This further buttresses our article as banks have refused to provide Wakanow with the guarantees it would need to continue with the BSP programme.
STILL ON THE TRAVEL SECTOR
The situation at Wakanow probably highlights a greater problem in the aviation sector as we understand that most travel agencies are facing challenges meeting up with their payment obligations to airlines as well as to IATA. Sources also indicate that Leadway Assurance, which provided most of the insurance covers that has enabled the BSP programme to function is also considering pulling out if the default rates continue to spike. The larger problem we see here is the snuffing of liquidity which a lack of credit could cause to the sector. You will be wise to review your credit policies with players in this industry.
RICH? NEED A US CITIZENSHIP?
Nigerians looking for a path to Citizenship in the US have various options that they can use. One of them is the fifth employment-based preference (EB-5) immigrant visa category for qualified foreign investors seeking to invest in a business that benefits the U.S. economy by creating or preserving at least 10 full-time jobs. To be a part of this, you will need to invest a minimum of $500k USD in the US. This path is obviously not for the average Joe; however, just in case you know someone then this might be useful. Nigerian real estate investment firm, 3INVEST, has said that commencement of development work on a 20 storey prime real estate in Texas that will include 162 guestrooms and 58-residence is underway. The ambience features 15,000 square feet of riverfront meeting space and a Skybar Club, providing sweeping views of the city. The project cost a whopping $116 million, and will sit on 337,000 square-foot of land; it is also being developed as a mixed-use property. The managing director of 3INVEST, Ruth Obih said the project will be concluded in 2019. The project is called the Thompson San Antonio Hotel and the Arts Residence and is being promoted by Houston EBS. The company’s chief executive is a young Nigerian by the name of Acho Azukie. By the way, Ruth Obih is also in her 30’s and started this company in 2007. You probably listen to their shows on air on radio.
BANKS AND PHONES
Sterling Bank shares are up by 161% in the last 1 year. The stock joins the league of tier 2 stocks that have done quite well in the last 1 year. However, the company was in the news for something different. The bank announced that it has partnered with 9Mobile and Solo Phones to introduce a contract smartphone pre-bundled with mobile plans to new and existing customers of the bank. Maybe I am wrong, but this looks like the first of its kind for GSM phones in Nigeria. I believe Solo Phones also has a similar partnership with Airtel Nigeria.
The contract package comes with a monthly mobile bundle plan (Voice +SMS+ Data plan + Social media+ Recharge bonuses) in addition to a SOLO Aspire 4 smart mobile phone and the minimum period for the contract is 12 months. Airtel’s deal comes with a SOLO aspire M smartphone and will cost a monthly rental of N4,150. SOLO was formed in 2012 by a group of highly experienced telecommunication professionals, led by Tayo Ogundipe, a Nigerian-born, former senior global executive with HTC and Sony Ericsson.
OANDO AND MANGAL SCORE TRUCE
The never-ending story of Oando took another twist last week after it announced that it had reached a “Peace Accord” with Alhaji Mangal, one of the shareholders who petitioned against the oil giant. Recall, that Alhaji Mangal alongside Volipi’s Ansbury accused the company of financial impropriety and demanded SEC investigations. Oando countered that Alhaji Mangal had breached an SEC provision by not disclosing that he has over 5% equity in the company.
Adewale Tinubu(Left), Sanusi Lamido Sanusi(Middle), Alhaji Mangal(Right)
The “Peace Accord” (perhaps there was a war), the company claimed, was facilitated by the Emir of Kano (you know who). Alhaji Mangal said Oando had addressed the issues he had in the petition while Oando offered him a seat on the board. If you know Oando very well, you will understand that getting a board seat there is like passing a camel through the eye of a needle. SEC, by the way, insists that it will carry on with its investigations. We all know how all this will end don’t we?
THE DANGOTE EMPIRE KEEPS GETTING BIGGER
Africa’s richest man has once again pulled off another major deal for his empire. The Kano state government gave Dangote Group over 150 hectares of land for the development of the $150m Dangote/Black Rhino solar power plant in Zakirai, Gabasawa local government area of the state. The land is for the provision of 100 megawatts (MW) of solar power plant and is expected to be completed within two years. Haters, don’t hate.
Africa Prudential proposes dividend of N1 billion for shareholders
Africa Prudential Plc has proposed a sum of N1 billion as dividend for shareholders.
The Board of Directors of Africa Prudential Plc has proposed a sum of N1 billion as dividend to shareholders for the period ended 31st of December 2020.
This is according to a disclosure signed by the firm’s secretary, Joseph Jibunoh and sent to the Nigerian Stock Exchange, as seen by Nairametrics.
According to the notification, the proposed dividend will be paid electronically to qualified shareholders on the 26th of March, 2021, subject to appropriate withholding tax and approval from the company’s Annual General Meeting (AGM) scheduled a day earlier.
The breakdown of the proposed dividend shows that a sum of 50 kobo will be paid for each outstanding 2,000,000,000 ordinary shares of the company, held by its shareholders, totalling N1 billion. The proposed dividend is 28.6% lower than the 2019 figures of N1.4 billion.
The comparative decline in the company’s proposed dividend for the year might be attributed to a recent dip in profit and other key metrics recorded by the firm in its latest audited financial statement for 2020. For example, the firm posted a profit of N1.45 billion for the year, indicating a decline of 13.98% YoY. In addition, its earnings per share declined by 14.29% to print at 72 kobo.
What you should know
- Africa Prudential had recently announced the appointment of Mrs Zubaida Rasheed as Director.
- Africa Prudential Plc, formerly known as UBA Registrars Ltd, was incorporated as a private limited liability company on 23rd March 2006. It was listed in the NSE on 17th of January, 2013.
Dangote Sugar proposes N18.2 billion as final dividend for 2020
Dangote Sugar Refinery Plc has proposed a sum of N18.2 billion as the final dividend for shareholders.
The Board of Directors of Nigeria, Dangote Sugar Refinery Plc has proposed a sum of N18.2 billion as the final dividend for shareholders for the period ended 31st December 2020.
This announcement was contained in the audited financial statement of the leading integrated sugar company.
In line with the statement of the Board of DSR, the approval of this proposed dividend at the forthcoming Annual General Meeting will see Dangote Sugar pay out a final dividend of N1.50 for each of the outstanding 12,146,878,241 ordinary shares of the company, held by its shareholders.
The proposed dividend is 36.36% higher than the final dividend of N1.1 per share (N13.36 billion) the sugar company paid its shareholders in 2019.
What you should know
- Dangote Sugar Refinery declared in its audited statement for the period ended 31st December 2020 that its profit for the year climbed to N29.8 billion, from N22.4 billion in 2019.
- According to these figures, DSR’s earnings per share for 2020 are pegged at N2.45. Hence, with a dividend of N1.50 per share, Dangote Sugar is set to payout 61.2% of its profits for 2020.
- At the close of trading activities on the floor of the Nigerian Stock Exchange today, shares in Dangote Sugar Refinery declined by 0.83% to close lower at N17.85.
- At this price, the dividend yield of Dangote Sugar shares is 8.40%.
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