Spotlight Stories
CORPORATE ACTIONS: Nice and Red
The @secnigeria vs @adewaletinubu and Mofe Boyo case will continue hearing this week, alongside other corporate actions on the @nsenigeria
Corporate actions are decisions taken by companies’ boards of directors or management teams, that could have impacts on the firms themselves or shareholders.
Examples of corporate actions include the release of quarterly and full year results, payment of dividends, closing of shareholders’ registers, and announcing qualification dates and Annual General Meeting (AGM) dates.
Here is a review of corporate actions that took place last week, and those expected in the week ahead.
Corporate Actions that took place last week
Millions lost?
Last week, NPF Microfinance Bank Plc released its long overdue results for the 2018 financial year and the first quarter ended March 2019.
For the 2018 financial year, there was a sharp decrease in bottom-line.
While gross earnings increased from N3.6 billion in 2017 to N3.9 billion in 2018, profit before tax fell sharply from N819 million in 2017 to N287 million in 2018. Profit after tax also dropped from N631 million in 2017 to N195 million in 2018.
The decline was largely due to provisions made following the adoption of IFRS 9, and a N230 million fraud committed by one of the bank’s staff.
Shareholders bore the brunt of this, as its dividend payout fell by 70.5% from 17 kobo in 2017 to 5 kobo in 2018.
The bank also disclosed that it was considering a possible equity raise following a new capital base set by the Central Bank of Nigeria (CBN) for microfinance banks in the country.
Nice and Red
Red Star Express Plc released its results for the financial year ended March 2019. Revenue increased from N8.4 billion in 2018 to N10 billion in 2019. Profit before tax increased from N610 million in 2018 to N743 million in 2019. Profit after tax also rose from N347 million in 2018 to N447 million in 2019.
The company declared a dividend of 43 kobo per share, while the qualification date is on the 16th of July.
UPPlc’s costs are up
University Press Plc released its results for the financial year ended March 2019.
Revenue increased from N1.8 billion in 2018 to N2.3 billion in 2019. Profit before tax however fell sharply from N354 million in 2018 to N109 million in 2019. Profit after tax also fell from N207 million in 2018 to N109 million in 2019.
The decline in bottom-line was largely due to a spike in cost of sales, as well as administrative expenses.
Cost of sales rose by 52.6% from N686 million in 2018 to N1 billion in 2019. Administrative expenses also jumped by 32.5% from N488 million in 2018 to N647 million in 2019.
The company however declared a dividend of 15 kobo per share, unchanged from the prior year.
Up and Down the Corners
Cornerstone Insurance Plc released its results for the 2018 financial year, as well as first quarter ended March 2019. While FY 2018 results showed decent year on year improvement, the firm slipped into a loss in Q1 2019.
For the 2018 financial year, gross premium written increased from N9.2 billion in 2018 to N11.5 billion in 2019. Profit before tax was N3.2 billion, as against a N3.4 billion loss recorded in FY 2017, while profit after tax was N3 billion in 2018, as against a N3.3 billion loss recorded in FY 2017.
The company has negative retained earnings, so no dividends declared.
For the first quarter ended March 2019, loss before tax stood at N43.6 million, as against a profit after tax of N416 million in Q1 2018.
Mixed tales at AG Leventis
AG Leventis Plc released its results for the 2018 financial year and first quarter ended March 2019.
The firm recorded an N876 million profit after tax for the 2018 financial year. No dividend was declared due to accumulated losses.
The company recorded a N291 million loss in the first quarter ended March 2019.
Daar Communications
Daar Communications released its results for the 2018 financial year and first quarter ended March 2019.
For the 2018 financial year, revenue increased by 25% from N3.7 billion in 2017 to N4.6 billion in 2018. Loss after tax however jumped by 563% from N481 million in 2017 to N2.1 billion in 2018.
Q1 2019 revenue was up by 26.1% from N913 million in 2018 to N1.1 billion in 2019. The firm also made a N2.4 million profit before tax in 2019, as against a N190 million loss recorded in the corresponding period of 2018.
A slim return
Academy Press Plc returned to profit, albeit marginally, in the 2019 financial year. The firm had a profit before tax of N1.3 million, and a profit after tax of N34.6 million due to a N33.3 million tax credit.
A dividend of 5 kobo has been proposed.
No honey this year
Honeywell Flourmills Plc released its audited results for the financial year ended March 2019, after Friday’s trading hours. While the topline rose marginally, the bottom-line declined sharply.
Profit before tax fell by 87.5% from N4.8 billion in 2017 to N607 million in 2018. Profit after tax also dropped sharply by 98.4% from N4.4 billion in 2017 to N68.3 million in 2018. No dividend was declared.
The poor results were largely due to a spike in cost of sales, which rose from N55.4 billion in 2018 to N62.8 billion in 2019.
Learning costs
Learn Africa Plc released its results for the 15 months ended March 2019, and they show a similar pattern compared to University Press Plc, its peer.
Revenue increased from N2.4 billion in 2018 to N3.4 billion in 2019.
Gross profit however declined slightly from N1.3 billion in 2018 to N1.2 billion in 2019. This was due to a 100% increase in cost of sales from N1.1 billion in 2018 to N2.2 billion in 2019.
Profit after tax however fell sharply from N266 million in 2018 to N161 million in 2019. The decline was due to a sharp increase in income tax from N29 million in 2018 to N217.9 million in 2019.
The company declared a dividend of 15 kobo per share.
Renovation, Renovation, Renovation
Ikeja Hotels Plc held a Facts Behind The Figures Session at the Nigerian Stock Exchange (NSE). Management of the company disclosed its intentions to raise capital to refurbish the 1st to 4th floors of Sheraton Lagos.
To paraphrase Eniola Theophilus Netufo, the Chief Operating Officer (COO) of the firm, the company’s priorities are Renovation, Renovation, Renovation in a bid to maintain its leading position.
He further disclosed that the firm had turned a new leaf, and was determined to submit all regulatory filings as at when due.
The company also sent a notice this week, indicating that it would hold a board meeting on the 19th of July to consider its second quarter 2019 results and an interim dividend.
Two steps back
Prestige Assurance Plc released its Annual General Meeting (AGM) notice. Items on the agenda include a proposal to raise its authorized share capital.
The company’s moves in the last few years have been somewhat odd. The firm carried out a share reconstruction sometime in May last year, then issued bonus shares shortly after.
Nairametrics had queried the move, as Prestige was close to wiping out its retained losses from profits made.
Guitar Boy… later
Jubril Adewale Tinubu, the Group CEO of Oando Plc, turned a year older within the week. In a post on his twitter page, he disclosed his excitement about his next career in music under JAT records.
Tinubu, in a separate tweet a few days after, stated that his musical career would be paused for now, due to his responsibilities in the oil and gas space.
SEC vs JAT and Mofe: An update
In related news, the suit between the Securities and Exchange Commission (SEC) and the duo of Tinubu and Boyo came up for hearing last week.
Counsel to SEC, Anthony Idigbe, had opposed a motion by Oando Plc to be joined in the suit. Tayo Oyetibo, the counsel for the duo however argued in favour of the company joining. Yinka Delano is counsel to Oando.
The case has been adjourned until July 4, to hear arguments on the motion for consolidation.
It also fixed July 22 for hearing of the substantive suit.
Division of labour
Seplat Plc announced the resignation of a non Executive Director, Mr. Macaulay Agbada Ofurhie, from the board of the company effective 30th June, 2019.
Mr. Ofurhie was appointed to the board in March 2010. No reason was given for the move.
The company also announced the appointment of Mrs. Edith Onwuchekwa as its Company Secretary/Chief Governance and Compliance Officer effective 24th June 2019.
In her new role, Mrs. Onwuchekwa will guide and support the board of directors of SEPLAT in ensuring compliance with regulatory and statutory requirements.
Prior to joining Seplat, she was the Legal and Compliance Director at Lafarge Plc.
Dr. Mirian Kene Kachikwu, who held the position from November 2014 till date, will however remain the General Counsel of the company and head its legal directorate.
N2 billion wanted
Sovereign Trust Insurance Plc has commenced a N2 billion rights issue. The insurance underwriter is offering 4,170,411,648 ordinary shares of N0.50 each at N0.50 per share on the basis of one new ordinary share for every two ordinary shares held as at 15 January, 2019.
The offer opened on Monday the 24th of June and will close on Wednesday the 31st of July, 2019.
VAT is coming
Barring the appointment of a Minister of Finance, commissions earned or payable on transactions conducted on stock exchanges in Nigeria, will be subject to Value Added Tax (VAT) effective 25th of July, 2019.
Then Coordinating Minister of the Economy, Ngozi Okonjo-Iweala had signed an order exempting such transactions from VAT on the 25th of July, 2014. The exemption was for a period of 5 years and was part of measures to encourage investments in the capital market.
Corporate Actions for this week
Further hearing on the JAT plus Mofe vs SEC case will go on. The subset in this case, would be in deciding if the company should be joined as a party.
UACN Property Development Company will be holding its Annual General Meeting on the 3rd of July, 2019, at Golden Tulip Hotel, Amuwo-Odofin, Lagos.
Beta Glass Plc will hold its Annual General Meeting (AGM) on the 4th of July at the Federal Palace Lagos by 12 noon.
Blurb
Dangote Sugar, sweet in more ways than one
Significant growth in gross revenue was driven largely by sale to Nigerian Bottling Company Limited and Seven-Up Bottling Company Limited.
By refining capacity, Dangote Sugar Refinery Plc (DSR Plc) is acknowledged as the largest Sugar Refinery in sub-Saharan Africa and one of the largest in the world. With up to 60 percent market share, it is also clearly, the most dominant player in the Nigerian sugar market.
DSR Plc recently released its audited Financial Statements for the year ended December 31, 2020 and overall and year-on-year group performance results were very good.
Despite the impact of the Covid-19 induced lockdown which curtailed distribution across the country and resulted in decreased revenues from income generated from freights, gross revenues increased by over 33 percent year-on-year to ₦ 214.3 billion. The significant growth in gross revenue was driven largely by a rise in revenue from the sale of its 50kg sugar, with the two main customers being the Nigerian Bottling Company Limited and Seven-Up Bottling Company Limited who operate principally from Lagos.
READ: Dangote Sugar completes acquisition with Savannah Sugar Company Limited
Year-on-year, gross profit increased by over 40 per cent to ₦ 53.75 billion, Profit before tax increased by almost 53 per cent to ₦ 45.62 billion, and Profit after tax increased by 33 per cent to ₦ 29.78 billion.
Notwithstanding the good result, the group operating results showed some issues and headwinds. First, during the year, DSR Plc wound up Dangote Niger Sugar Limited (one of four companies that had been set up to acquire large expanse of land and locally grow sugarcane as part of its concerted backward integration project). The winding-up was sequel to continued community dispute over land acquired in Niger State for this purpose. This winding-up event cost DSR Plc approximately ₦ 100 million.
Second, there continues to be a heavy reliance on Lagos for its gross revenues as revenues generated from Lagos State increased significantly from circa 33 per cent at the end of 2019 to over 50 per cent by the end of 2020. The share of the Lagos segment in gross revenue thus continued to grow and currently represents a significant market concentration risk for DSR Plc.
READ: Nigeria’s biggest oligopolies: Who are the real beneficiaries?
Third, provision for impairment on financial assets or in simple terms, receivables that are unlikely to be collectable, also trended upwards from ₦ 1.3 billion in 2019 to ₦ 1.45 billion by end of 2020 with net financing expenses also rising significantly from ₦ 516.2 billion in 2019 to ₦ 1.92 billion by the end of 2020. This rise in expenses was largely driven by a significant rise in exchange losses incurred in the ordinary course of business, rising from about ₦ 7 million in 2019 to over ₦ 1.57 billion at the end of 2020.
Finally, administrative expenses represented mainly by employee salaries grew year-on-year by over ₦ 1.2 billion.
With the recent reopening of land borders, we expect that revenues and margins will become squeezed as sales and production volumes become constrained by the influx of largely smuggled, lower quality, and much cheaper sugar and its substitutes. DSR Plc’s sugar refinery is also strategically located very close to the Apapa port and its logistics operations, distribution of raw materials and delivery of finished goods will continue to be impacted by the infamous Apapa Traffic Gridlock and road diversions/closures around the axis. Although the effort of Lagos state and the recent introduction of the electronic call up of truck by the NPA has eased the issue, still, it needs to be watched closely.
READ: Dangote Sugar yearly revenue surge by 33%, announces a dividend of N1.50
Earnings per share at the end of 2020 was ₦ 2.45 (2019: ₦ 1.87; 2018: ₦ 1.85)
Subject to approval at its forthcoming Annual General Meeting, DSR Plc board of directors have proposed a dividend of N1.50k per ordinary share (2019: ₦ 1.10k, 2018: ₦ 1.10k).
This performance is sweet in more ways than one.
Commodities
Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station
Brent crude futures were up by more than 2%, trading at $70.84 a barrel in early Asian trade, the highest since Jan. 8, 2020
