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Editors Pick

THIS WEEK: Earnings blitz rivets through Nigerian stock exchange

Corporate actions are decisions taken by a company’s board of directors or management.

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The earnings season is still well underway as the Nigerian Stock Exchange published a blitzer of results during the week. Whilst the likes of GTB, Zenith Bank and Access Bank are yet to release their half year audited accounts, we still had enough results to whet our appetite.

This week, we review some of the Corporate actions released on the website of the Nigerian Stock Exchange from quoted companies. By the way, corporate actions include the payment of dividends, closing of shareholders’ registers, announcing qualification dates and Annual General Meeting (AGM) dates.

Here is a review of corporate actions that held last week and those expected to take place this week.


Corporate Actions that held last week

Seplat Plc

Seplat Plc released its financial statements for the period ended June 2018 on Monday, 29th of July, 2018. The company also held an investor conference call following the release of the results.

Management stated that completion of the Amukpe Ecravos route has been shifted to the fourth quarter of 2018. Revenue from gas was also playing an increasingly key role, while it had received outstanding receivables from the Nigerian Petroleum Development Company (NPDC).

MRS Oil Plc held its Annual General Meeting (AGM) on the 1st of August 2018, while, Ikeja Hotel Plc, and John Holt Plc all held theirs on the 2nd of August, 2018 respectively.

STACO Insurance Plc

The board of STACO Insurance Plc, in a notice, released to the Nigerian Stock Exchange (NSE) after trading hours on Friday, announcing the dismissal of the company’s Chief Executive Officer (CEO), Sakiru Oyefeso. The board hinged its decision on his misappropriation of funds and breach of corporate governance best practice. Bayo Fakorede has been appointed CEO, subject to the approval of the National Insurance Commission (NAICOM).

Following the completion of a N1.6 billion private placement in May 2017, three new investors came on board: Imperial Asset Managers, Electron ENergy Limited and Ventry Development Limited.  They collectively control about 34.2% of the company’s issued share capital.

The new stakeholders had tried to get the CEO to step down following the discovery of financial misappropriation, but no avail. They were then forced to take up the matter with the National Insurance Commission (NAICOM).

EKO Corp Plc

EKO Corp (parent company of the popular EKO Hospital) released its results for the first quarter ended March 2018 after closing hours. Turnover dropped from N367 million in 2017 to N362 million in 2018.

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The company made a loss before tax of N66.5 million in 2018, as against a profit before tax of N56.2 million in the comparative period of 2017. Loss after tax stood at N66.5 million, as against a profit after tax of N54.7 million made in 2017.

Geoff Ohen Limited, the investment vehicle controlled by Gregory Ohen has asked the court of appeal to set aside the judgement of a federal high court which voided its purchase of a 110 million shares at N4 per share. Failing that, the company has asked that it be refunded the sum of N440 million and accrued interest since August 2007.

The squabble between Ohen and the hospital’s founders which has lasted nearly a decade, had been close to a resolution before an Extra Ordinary General Meeting (EGM) meant to ratify the resolutions made in 2007 was suspended due to a court order.

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Nairametrics had previously covered what led to the tussle, in one of our corporate stories.

Unity Kapital Assurance Plc

Unity Kapital released its full-year 2017 results after trading hours on Friday. Gross premium written increased from N2.1 billion in 2016 to N2.4 billion in 2017. The company made a loss before tax of N558 million in 2017, as against a profit before tax of N408 million in 2016.

It also made a loss after tax of N700 million in 2017, as against a profit after tax of N285 million made in the comparative period of 2016.

Nigerian Breweries Plc

Nigerian Breweries Plc released its result for the half year ended June 2018. Revenue dipped slightly from N95.4 billion in 2017 to N95.2 billion in 2018. Profit before tax dropped from N16.2 billion in 2017 to N12.3 billion in 2018. Profit after tax also fell from N12.32 billion in 2017 to N8.23 billion in 2018. The company paid N11 billion as excise duty tax. Competition in the sector got to a new height with the fierce introduction of Budweiser into the country. The outlook for Nigeria Breweries is a bit cloudy and at N103 per share the stock has basically been flat over a 3 year horizon.

Cutix Plc 

The company, in a notice released this week, stated that the qualification date for its bonus and dividend payment is October 12, 2018. Th firm’s shareholders’ register will be closed from October 15 to October 19, 2018.

The company’s Annual General Meeting will be held on October 26, 2018. Payment date is November 6, 2018. The company will be paying a dividend of N0.20 per share and a bonus of 1 new share for every 1 share held.

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This has led to the stock rallying sharply in the last few weeks. Cutix is currently the second-best performing stock on the Nigerian Stock Exchange up 117.91% year to date.

Forte Oil Plc

Forte Oil released its results for the half year ended June 2018. Revenue increased from N46.7 billion in 2017 to N61.8 billion in 2018. Profit before tax, however, fell sharply from N677 million in 2017 to N390 million in 2018.

Profit after tax (including profit from discontinued operations), however, jumped from N4.1 billion in 2017 to N7.9 billion in 2018.

The results appear not have had any positive impact on the company’s share price, as the stock closed down 4.49% on Friday’s trading session.

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UACN Plc

UAC of Nigeria Plc released its results for the period ended June 2018. Revenue dropped from N47.3 billion in 2017 to N36.9 billion in 2018. Profit before tax, however, rose from N1.8 billion in 2017 to N2.1 billion in 2018. Profit after tax also increased from N1.3 billion in 2017 to N1.5 billion in 2018.

The conglomerate’s subsidiaries all witnessed improved results year on year with the exception of the Animal Feeds (Livestock Feeds Plc) and Real Estate (UAC Properties) division which recorded losses.

Diamond Bank Plc

Diamond Bank released its results for the half year ended June 2018. Gross earnings increased from N97.8 billion in 2017 to N98.5 billion in 2018. Profit before tax, however, fell sharply from N9.5 billion in 2017 to N2.9 billion in 2018. Profit after tax also dropped from N8.0 billion in 2017 to N1.7 billion in 2018.

The poor results could lead to investors exiting the stock and a further drop in the company’s share price. Diamond Bank closed Friday’s trading session down 6.40% at a year low of N1.17 per share. There seem to be no end in sight for this stock. We wouldn’t be surpirsed if it ends the quater below N1.


Corporate Actions taking place this week

Flour Mills of Nigeria Plc

Flour Mills of Nigeria Plc will be closing its shareholders register from 6th of August to the 10th of August. This is in preparation of the company paying a dividend of N1.00 for the 2017 financial year.

Union Diagnostic and Clinical Services Plc

Union Diagnostic will be holding its Annual General Meeting on Tuesday the 6th of August 2018.

C&I Leasing Plc

C&I Leasing will be holding a Facts Behind the Figures presentation at the Nigerian Stock Exchange on Tuesday, August 7, 2018.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Currencies

DEVALUATION: CBN updates website to official rate of N360/$1

The central bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1.

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CBN website states oil price is still $61, Naira under pressure as Nigeria records poor export earnings, 4 key sectors the CBN plans to pump money into

Just as Nairametrics reported, the Central Bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1. The apex bank has now reflected this change on its website signaling a confirmation. The bank is yet to issue a press release to this effect.

The CBN has now officially devalued by 15% moving from N307/$1 to N360/$1. Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1

Devaluation: Nairametrics reported yesterday that the Central Bank of Nigeria (CBN) sold dollars to banks at N380/$1 in a move signifying a devaluation of the currency. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on Friday, March 20, 2020. The I&E window is the official market where forex is traded between banks, the CBN, foreign investors, and businesses. The central bank typically buys or sells in the market as part of its intervention program.

The CBN has updated its website with the official exchange rate.

Nairametrics also got hold of a letter from the CBN to banks informing them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.

Single Exchange Rate: A report yesterday also suggested that the CBN also planned to move to a single exchange rate policy for determining the price of the dollar. A senior central bank official who does not want to be identified, said, ‘Today we allowed the rate at the importer and exporters (I&E) window to adjust in response to market developments.’

The central bank has now made an apparent u-turn after it had initially that the “market fundamentals do not support naira devaluation at this time” detailing reasons why it did not need to devalue.

Falling oil price: Oil prices fell to under $20 on Friday before climbing back up to settle at $23 per barrel. Nigeria’s Bonny light trades at $26 while the benchmark Brent crude trades at $29 per barrel. In response to the crash in oil price, Nigeria’s announced a cut to its 2020 budget by N1.5 trillion as it faced the reality of a potential drop in its revenues. Nairametrics also has information that state governments are getting jittery about their ability to sustain salary payments as a reduction in their federal allocation “FAAC” is anticipated.

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Career tips

Investment options for salary earners

Investment options for the salary earners
#Investing #Entrepreneurs #Investment #Salary #Wages

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Investment options for salary earners - bank loan

Recently, one of the readers of my articles asked to know what investment options are open to salary earners. A salaried individual is like everyone else except that he or she has a fixed monthly income. This implies that their investments and expenses have to be managed strictly according to their fixed monthly income.

Since salary is assumed to be the only source of income for the salaried, it is advisable that such an individual fortify himself financially before investing so that adverse investment performance will not have untold effect on him and his family. Therefore, if you are a salaried prospective investor, you need to:

READ: Where to invest N500,000 right now

Get life insurance

Most families in Nigeria are single income families so much such that if anything bad happens to the income earner, the family gets shattered, at least financially. Again, given the risks inherent in capital market investments, it is only prudent to have a life insurance as a first step in one’s investment journey. It is very baffling to see many investors very deep into the market, yet they do not have life insurance.

[Read Also: Understanding the risks in bond investing]

Life insurance is and should be a basic part of any financial plan. Life insurance is a protection for loved ones against financial hardship arising from the death of a breadwinner. This is even more important today than ever before with high cost of funeral expenses, college education and medical bills. So, the first investment option for a salaried individual is to get a life insurance.

Prepare for financial emergencies

Life is full of surprises, emergencies do happen, jobs are lost without notices, and even good investment opportunities emerge sometimes suddenly. There is, therefore, the need for a cash reserve to help weather the financial storms and emergencies when they come calling.

READ: SEC issues pre-notice on cancellation of certificates of 157 inactive CMOs

Cash reserves do not only provide for emergencies, they also help to ensure that investments are not liquidated prematurely or at inopportune times to cover unexpected expenses. There are no hard and fast rules on what the exact amount of the required cash reserve should be, but most financial experts and planners will advise that an amount that equals about six months of living expenses be set aside.

So, as a salaried person, your next investment should be to have a cash reserve. A cash reserve should not necessarily be in a savings account or under the mattress; it could be in an interest-bearing money market account, money market mutual funds with low to zero luck-up period or another form of very liquid investment that is readily convertible to cash without loss of value.

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[Read Also: Understanding the risks in bond investing]

Know your risk appetite

As a salaried and fixed income individual, your risk appetite is most likely going to be low as well as your risk tolerance, although your extended family profile could change all that. You need to know or understand your risk tolerance before you engage in any capital market investment.

Your risk tolerance will and should drive the type of investments you go into. Your risk tolerance depends on your psychological makeup, your current insurance coverage, presence or absence of cash reserve, family situation, and your age among others.

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READ: Here’s what will happen to Nigeria’s insurance sector in the short to medium term

Talking about family situation, it is reasonable to think that a married individual whose children are still in school will be more risk averse than an unmarried person. On the other hand, older people have shorter investment time horizon within which to make up for any losses. the reason for this is because the older you get the less time you have to work to recoup on losses.

In that case the risk tolerance of an older man will be less than those for younger folks. Again, the more cash reserve and insurance coverage you have, the more your propensity to take risk. Now having known your risk tolerance based on the underlying factors, you can then define your investment objectives

[Read Also: Important tips on how to profit in a bearish market]

Set your Investment objectives/goals

Having met those essentials above, you are now ready for a serious investment plan or program. A good investment plan starts with investment objectives. Investment objectives are the force that determines what you invest in. Investment objectives range from capital preservation, to capital appreciation and constant income generation.

Capital preservation as an investment objective implies that you, the investor, aim at minimising the risk of loss by maintaining the purchasing power of your investment. So, if you are risk averse or you will need money from your investment soon for children’s education or for building a house or you are nearing retirement, this should be your objective.

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READ: CBN debits banks N216.1 billion for CRR compliance

Investors whose aims are to see their investment portfolios increase in real terms over a period of time are better suited for capital appreciation as an objective. This is better for investors that are more risk tolerant and those with more potential to recoup on losses along the way.

If you are already retired or nearing retirement, and therefore depend on your retirement plan supplemented by investment income, you need an investment that generates income rather than capital gains. In that case, your investment objective should be current income generation. It is always good to have investment goals stated in terms of risk and returns.

[Read Also: I-Invest generates over N2 billion transaction in less than 6 months]

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Decide on asset allocation

Armed with the knowledge of your risk appetite and investment objective, you are now ready to decide on what to invest in, and how much to invest in any asset class. This takes you to asset allocation decisions. Asset allocation involves dividing an investment portfolio among different asset classes based on an investor’s financial requirements, investment objectives and risk tolerance.

A right mix of asset classes in a portfolio provides an investor with the highest probability of meeting his/her investment objectives. Asset allocation is the most important investment decision an investor can make in a portfolio because it demonstrates an investor’s understanding of his or her risk preferences and return expectations.

READ: How to build a profitable Mutual Fund Portfolio

It is good to strive for a diversified portfolio. Unfortunately, the Nigerian market does not provide a lot of asset classes for optimal diversification, but diversification can be achieved across sectors or industries within the few asset classes in the Nigerian stock market.

Decide on how to invest

There are different ways to invest in the capital market. You can invest directly by making the stock selections by yourself, thanks to the online stock trading platforms that abound the world over. This implies that you have what it takes to conduct the required research and analysis of the companies whose shares or stocks you wish to buy.

[Read Also: How I Would Invest My Mother’s Retirement Funds]

It also implies that you have what it takes to know when to sell or add to existing positions. Another method is to have someone “do the heavy lifting” for you. In this case, that someone, often times called fund manager or portfolio manager, does the research and analysis and selects shares that suit your investment preferences, investment objectives, risk tolerance and appetite as well as your investment time horizon.

This route is most suitable for investors that lack the knowledge and time for the required research and analysis. If you decide to go this route, mutual funds are the best bet for you.

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