Dangote Cement Plc (DANGCEM) has secured another tax exemption approval on its three lines (Lines 3 & 4 and Obajana Line 4) but the expected Q3’18 Nigerian Investment Promotion Commission report would provide details of the development.
What it means
The related lines, which were commissioned in 2014 and had already received NIPC approval for initial three years tax holiday each, would not be taxed by the federal government for the next two years.
Tax holiday history
Dangote Cement is a recipient of a tax holiday from the Nigerian government until 2016 as some sort of incentive as the company received a N10.4 billion ($64.4 million) tax credit from the government, which was added to their bottom line, hence the reason the after-tax profits are even higher.
CardinalStone reported that the company assumed that all three lines would be granted the further 2 years tax concession applied for and, therefore, charged effective tax rate at c.19.0% for the Nigerian business in H1’19.
The independent multi-asset investment management firm retained the view that DANGCEM’S Nigerian effective tax rate would remain around the 19.0% level on the back of management’s confirmation of the approval of its pioneer tax status extension application.
It’s a buy
Considering its leadership position in the Nigerian and Continent’s cement industry, CardinalStone projected that DANGCEM remains a cost leader in the cement market, boasting a market share of c.64.0% as at H1’19.
It said, “The company has Earnings before interest, tax, depreciation and amortization (EBITDA) and profit after tax (PAT) margins of 46.6% and 25.5% (using H1’19 numbers) respectively. We have a 12-month Target Price of N212.32 on the company and see a 40.7% upside relative to the stock’s last market close. We have a BUY recommendation on the stock.”
Details of H1’19
DANGCEM’s Q2 19 results showed earning per share (EPS) that grew by 44% to N3.46 from N2.41 in Q2 18, emanating largely from a material decline in net finance cost (-71% YoY) and tax provision for the period (-51% YoY).
On the positive, COGS declined 6.5% YoY, with gross margin expanding 54bps to 58.8%. The cost savings emanated from improved energy cost (-14% YoY), with related cost per ton declining 3% YoY to N15,763. Analysts believe the improvement is linked to the new gas turbines installed in Tanzania and improved efficiency on coal utilisation.
In addition, a lower effective tax rate (ETR) of 23% compared to 47% in Q2 18, supported growth in PAT by 44% on the year to N59 billion.
Volume growth in Pan-African segment
CardinalStone is optimistic on volumes growth in the Pan-African segment, specifically, on its operations in Tanzania, Zambia and Ethiopia:
Tanzania (3.0Mt Integrated plant)
Production was constrained from January till November 2018, due to the delay in the installation of the gas turbines. The investment firm expects production to ramp up in 2019, following the successful installation of the gas turbines.
Zambia (1.5Mt Integrated plant)
Cement demand has been supported by increased infrastructure and mining projects in the country; volumes grew by 25.0% YoY to 1.0Mt in 2018. We expect this to be sustained in 2019.
Ethiopia (2.5Mt Integrated plant)
Disruptions from civil unrest hampered production and distribution over 2018, as volumes declined by 6.2% YoY to 2.1Mt. We expect activities to recover in 2019, following the appointment of a new prime minister which has improved the political situation in the country.
It said, “We expect the Pan African segment to support sales in 2019. Our projected overall volumes for this segment stand at 10.2Mt in FY’19 (+4.7% YoY), accompanied with higher pricing (+6.0% YoY). This translates to a total revenue of N326.9 billion for the segment; thus, increasing revenue contribution of the non-Nigerian segment to 34.2% (31.4% in FY’18). Overall, we project group FY’19 revenue to settle at N956.6 billion (+6.1% YoY).”
Lafarge Africa Plc. announces its board meeting and closed period for Q2 2020
The notification which was duly signed by General Counsel & Company Secretary.
Lafarge Africa Plc. notified the Nigerian Stock Exchange and the investing public that he closed period will commence on Wednesday, 8th July 2020 until the unaudited financial statement for the second quarter ended 30th June 2020, is released to the Nigerian Stock Exchange.
In a disclosure on the Nigerian Stock Exchange, it wrote: “We hereby notify the Nigerian Stock Exchange and the investing public that a meeting of the Board of Directors of Lafarge Africa Plc has been scheduled to hold on Thursday, 23rd July 2020 to consider the second quarter financial results of the Company for the quarter ended 30th June 2020.”
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The notification which was duly signed by General Counsel & Company Secretary, Mrs. Adewunmi Alode explained further stating that “Accordingly, no Director, employee, persons discharging managerial responsibility and Advisers of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.”
Over the past few months, it made a few board changes with the retirement of two of its Non-Executive Directors, as well as the appointment of three new Directors. It had also spun off its South African subsidiary, Lafarge South Africa Holdings (LSAH), last year.
Lafarge Africa’s Q1 2020 revenue was up 9.8% year-on-year to N63.7 billion, driven by higher Cement Sales (a figure up 11% year-on-year to N62.3 billion) which offset the weakness in Aggregate and Concrete (down 21% y/y to N1.4bn). Its EBITDA grew by 2.4% year-on-year to N19.3 billion as well. As at Tuesday the 7th of July, the share price of the company was N10.00.
AXA Mansard Insurance Plc gives notice of Annual General Meeting
The AGM will be live-streamed to enable shareholders and stakeholders participate.
Insurance firm, AXA Mansard Insurance Plc., has given notice of its board of its Annual General Meeting (AGM) scheduled for Wednesday, July 29, 2020, at 10:00 a.m.
The announcement which was disclosed by Nigerian Stock Exchange (NSE) in a corporate disclosure on July 7th, 2020 and signed by Company Secretary, Omowunmi Mabel Adewusi read, “Notice is hereby given that the twenty-eighth annual general meeting of AXA Mansard Insurance Plc. will hold at the Oriental Hotel, no. 3, Lekki Road, Victoria Island, Lagos on Wednesday, July 29, 2020, at 10:00 a.m.”
As noted, the purpose of the AGM is to transact the following business:
- To receive the Audited Financial Statements for the year ended December 31, 2019, and the Reports of the Directors, Auditors and Statutory Audit Committee thereon
- To authorise Directors to fix the remuneration of the Auditors
- To elect Directors and
- To elect members of the Statutory Audit Committee.
In order to ensure that all relevant stakeholders can be a part of the AGM, the company will also be streaming the AGM live. It noted that “This will enable shareholders and other stakeholders who will not be attending physically to follow the proceedings.”
The link for the live streaming of the Meeting will be made available on the Company’s website at www.axamansard.com.
Recall that a few months ago, in March, the company’s Board of Directors announced the appointment of John Dickson as the company’s new Non-Executive Director. A month earlier, it also disclosed its plan to sell its pension management subsidiary (AXA Mansard Pensions Ltd) and some undisclosed real estate investments.
Its unaudited financials for the period Q1 2020 reveal a growth across revenue and profit lines. Gross written premium grew by 21% from N17.4 billion earned in Q1 2019 to N21 billion in Q1 2020. Profit for the year for the group grew by a commendable 120% from N890 million in Q1 2019 to N1.9 billion in Q1 2020.
As at Tuesday, the 7th of July when markets closed, the share price of the company was N1.59. The company’s EPS stood at 0.33 while its price to book ratio stood at 0.6082.
NSITF board to investigate suspended MD and others over financial misconduct
The board of directors of the Nigerian Social Insurance Trust Fund (NSITF) has revealed that it will investigate the activities of the suspended Managing Director, 3 Executive Directors, and 8 other senior management staff over financial breaches and gross misconduct.
This was disclosed by the Chairman of the board of NSITF, Mr. Austin Enajemo-Isire, in a statement in Enugu on Sunday July 5, 2020.
Enajemo-Isire said that the Managing Director and other top management staff of the organization would have the opportunity to clear themselves of any wrongdoing with the probe panel which was being set up.
While reacting to claims that the suspension did not follow due process as President Muhammadu Buhari did not approve it, Enajemo-Isire said that the approval for the suspension of the affected staff had been conveyed to the Labour Minister in a correspondence referenced SGF. 47/511/T/99 of June 30, 2020.
According to the Chairman, “The minister has conveyed this approval and directives to me for necessary action in terms of setting up a board-driven investigative panel.
“This is to give the affected officers the opportunity to clear themselves of the financial and procurement breaches and acts of gross misconduct and other infractions that gave rise to their prima facie indictment.
“It is in this light that I have decided to call a virtual meeting of the management board on Tuesday, July 7, 2020, to consider the modalities for our action.”
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He, therefore, appealed to staffers of NSITF and their social partners to keep calm and exercise restraint.
A few days ago, Nairametrics reported the suspension of the Managing Director and some senior management staff over corruption allegations. However, the management in its reaction debunked that claim and said that the President did not approve their suspension but that rather, it was the sole decision of the Labour Minister, Chris Ngige, who they said was overreaching himself.