HENATES

BOARDROOM DOORS SWING AT FBN HOLDINGS. On July 19, 2016, as the Board of directors of FBN Holdings PLC met, the doors revolved letting out and in, old and new members. Out were two directors, Alhaji Abdullahi Mahmoud and Mr M K Ahmed as they retired from the board as per corporate governance rules. Mr Ahmed was recently appointed to the board of Skye Bank as chairman by the Central bank. In were two ladies, Mrs Cecilia Akintomide and Mrs Oluwande Muoyo as two new independent non executive directors. Also at the same meeting, changes were approved for boards of some subsidiaries as well. Nominated to serve on the board of FBN Merchant bank were the duo of Mrs Akinlolu Osinbajo and Folaranmi B Odunayo. In the case of FBN General Insurance, Mr Olugbenga Shobo, the deputy managing director of First Bank, was nominated to chair the board with Bode Opadokun as nominee chief executive. Also nominated to this board but as independent directors were Mrs Titilayo Adebiyi and Alha...

Nine months to June 2016 Tripple  Gee PLC did not quite bargain for what it ended the period with. It turned to be a trip through time that turned rough because of dollar scarcity. According to the figures for the period sent to the stock exchange, the company's turnover dropped by 29.3% to N101.5m principally because it could muster enough dollars to import needed goods. On the other hand, some of the threat from this fizzled as cost of sale at a faster rate ( 48.8% to N41.2m) leading to only 14.2% decrease in gross profit to N60.3m. However, distribution and administration expenses refused to follow suit as it decreased only marginally by 2.95% to N52.5m and finance charges went down by 9.95% to N8.6m. Hence, by the end of the nine months  Tripple Gee reported 90.1% dive in profit before tax to N0.66m from far more comfortable N6.6m nine months into 2015 year. The directors are hopeful though that the last quarter of the year will be more memorable since foreign excha...

John Holt PLC seems to have found its winning formula in these hard times, that is if figures for the nine months to June, are anything to go by. According to the results released this week, John Holt, expectedly, did not record wow type of growth in income within the period but it sure, had a good and effective hold over its costs. Total income had grown by 9.58% to N2093m, ahead of 8.44% increase in core revenue to N2056m because other operating income more than doubled to N37m. The harvest was more because under good control, cost of sale rose by only 1.25% to N1463m; marketing and distribution expenses dropped by 49% to N121m and cost of administration closed the half year at N231m, down 47.5%. Spreading good butter on the bread was also 19.6% decrease in finance charges to N144m and 87.5% reduction in loss from exchange rate to N66m from N528m. Hence, as against N919m loss by the first of 2015, John Holt PLC ended June this year with N68m modest profit before tax or N1....

Presently, we are told, Nigeria and Nigerians have to learn to wait and be patient because the economy will recover next year. One because government, we are told, is putting in place policies to get it back on its feet principally by generating more revenue and increasing national production from the non-oil sector. Hopefully too, by the time agriculture and solid minerals present the magic wand, then all will be well and the African giant can once again stride not like a beggar nation, but as the black man's hope. Unfortunately, nothing can be further from what is going to happen given the road we are taking today, courtesy of President Buhari and his die hard commitment to free food for pupils and courtesy of our economic theorists who don't seem to realise that many things in the world are now defying science, talk less of social science like economics. What will happen if we do in fact find a replacement for oil and gas, is that then we will find that the world ha...

Wema Bank PLC seems to be battling one major challenge this financial year: Out of control growth in interest expense. According to the figures for the first half released recently, interest expense growth at 38% to N11,634.8m more than doubled the increase in interest revenue which closed June 15.2% up at N20157.3m. The only other recorded growth that surpassed that of interest expense was fee and commission rise by 42.3% to N3091.9m but, you got it, the actual figure added was so small that it could not fill the hole from interest paid growth. Yet it was helped in this regard by 64.1% drop in impairment provision to N61.5m; 5.22% increase in net trading income to N695.6m and marginal growths in personnel expense (3.9% to N5179.7m) and other operating expenses by 2.04% to N5080.1m. The issue was that interest expense drag downwards was assisted by 41.2% decrease in Other income to N319.2m. Hence, Wema bank, in spite of clocking 16.3% increase in gross earnings to N24264m set...

It is obvious that since 2015 when N2.4bn deposit for shares was received by Transcorp Hotels PLC, it found itself in a honeymoon of sorts. By June 2015, Transcorp  earned N190.2m as finance income. By June this year, according to figures released recently for the half year, this had jumped to N828.9m. Cool money, in fact, the leading growth in income within the period as core revenue rose by only 5.06% to N7607.6m and other operating income dropped by 15.4% to N221.3m. Unfortunately, it may not be that cool for long. This is because the company had to squeeze receivables down by 22.9% to N8554.5m and watch cash drop by 45% in order to pay for 11.4% futuristic increased investment in fixed assets to N70561.6m closing balance in spite of depreciation and make trade creditors happy by reducing payables by 42.9% to N3896.3m. In the end, its rather strong working capital surplus of N12984.8m by June 2015 went down 41.1% to N7653.5m. Decoded: There is less room to earn finance incom...

One thing was obvious from the conclusions reached by the Central Bank of Nigeria Monetary policy committee meeting on Monday: Wisely, there is no immediate panic rethink on the newly introduced foreign exchange inter bank market. Instead the committee resolved to give the market more free hand to fix the nation's exchange rate through the interplay of market forces. Fine but there is a caveat: For the Naira to survive the ordeal ahead, there is urgent need to export more to earn foreign exchange and produce more at home to discourage imports that ideally should become too expensive now to encourage increased consumption. None of these can be achieved through monetary policy alone, indeed the real key to them is in creating the right environment for this to happen. And fiscal policy holds the ace in this regard. Unfortunately, that too is where the danger of misplaced optimism and stubborn determination to stay populist, continues to pose real danger. In the wake of IMF ...

It is no more news that La Farge Africa PLC is one of those companies shedding tears because of blows from Naira floatation. That is because it sounded the alert recently but how painful is the wound inflicted? Well from the mid year figures released last week, it was a blow that landed when La Farge Africa was trying to take control in the wake of difficult 2015. The figures indicate that the Group was battling with increase in expenses by 12.9% to N12217.7m and cost of sale by 5.89% to N92225.1m while revenue decreased by 29.4% to N107364.8m when the blow from the Naira landed. Added to these pressures was the leap in finance charges to N4559.4m from N1757.3m and left alone, it even looked set to land La Farge in loss but a manageable one. Then bang! Within the half year loss from other operations that was N7550.4m by 2015 first half, rose to N28547.7m because of potential losses from Naira devaluation. Potential because it will surface as the loans denominated in dollars a...

By June this year,  the national average diesel price was N183.41, up 23.3% on May and it cost a lot more in Borno state than any where else in Nigeria. According to the monthly diesel price monitor for the month released recently by the National Bureau of Statistics (NBS), the average price per litre in Borno was N221.67, 20.9% above the national average. It also represented 17.1% increase on average price per litre in the state by June 2015 (N189.29) when Borno came 4th on the top ten scale nationwide. The Borno state average for June was also 10.8% higher than Kebbi and Taraba states where the average price per litre was N200 in June. Aside from these three, top ten average price for diesel in June occurred in Katsina (N194); Bayelsa (N192.5); Rivers (N191.11); Niger (N188.33); Kano (N186.67);Jigawa (N186.36) and Bauchi (N185.71). The National average price of N183.41 per litre in June represented 23.3% increase on the national average for May, that is, a month earlie...

The Central Bank of Nigeria has called for bids for an appropriate network access control (NAC) system for its wired and wireless network. According to notice with reference number CBNITD/REP/NAC/2016/010, the contract is intended to be a major contract and will follow due process in place for its type. The CBN said in the notice: "The bank intends to deploy an appropriate network admission control (NAC) system which would provide the functionalities of both administrator and monitor access to the bank's wired and wireless network" Hence, it added "CBN now invites bids for design, deployment, installation, testing and commissioning of a NAC solution. Training, maintenance and support should be part of the bid" According to the CBN, the request for proposal is being extended to eligible and competent vendors ". To be eligible there must be evidence of corporate registration; certified copy of memorandum and articles of association; evidence of last...

From the figures released this week for the half year to June, Cadbury Nigeria PLC is far more in control this year than it was in 2015. According to the unaudited results, there was a marginal drop in core revenue by 1.55% to N13917.1m which was accompanied by a lower 1.47% decrease in cost of sale  to N9866.6m and so, gross profit decreased by 1.79% to N4050.5m. However, not to worry, there was firm grip on other costs aside from the fact that Other income more than trippled to N40.1m and finance income rose by 31% to N83.7m thus bringing total income drop to 1.22%. The main thing was that due to good cost control, administration costs dropped by 21.1% to N1056.8m and selling and distribution expenses went down by 6.82% to N2901.2m. In the end, compared to N250.7m loss by June 2015, Cadbury Nigeria reported N216.4m profit before tax which works out at N1.54 gain on each N100 income compared to N2.21 loss previously. CADBURY NIGERIA: Nm                  Half year        ...

Flour Mills of Nigeria PLC has once again harvested nice flowers from its ongoing group restructuring. According to audited figures for the year to March released this week,  Flour Mills once again reaped bountifully from sale of a subsidiary to end the year with better margin. In 2015 financial year, Flour Mills had recorded capital gains of N14290m from asset disposal as part of ongoing restructuring to guarantee its closing N7724.8m profit before tax. In the year to March 2016, N22397.8m was gained from similar disposal and it helped ensure N11489.3m profit before tax for the year. Hitherto, management gallant efforts to control cost had been destabilised by N7720.5m net losses from non core operations as against only N685.1m loss therein in 2015 year. Flour Mills had successfully kept cost of sale growth by 11.5% to N304961.7m within range of increase in core revenue by 11% to N342586.5m and even behind 12.9% increase recorded in total income to N367421.4m. Then effective...

When Oando PLC released its 2015 annual report not too long ago, it turned out that the external auditors did the unexpected: It drew shareholders attention to a matter it considered worth emphasising. It declared that "...conditions along with other matters, indicated the existence of a material uncertainty which may cast significant doubt on the group's ability to continue as a going concern" The issue that led to this statement was the fact that by 2015 Oando's working capital deficit was N247.9bn. The auditors feared that this was too huge a liquidity burden. However, by 2015 close, the Naira still officially exchanged for N197 to the dollar officially and prior demands could still be met although at a slower pace. Neither the external auditors nor Oando management anticipated the subsequent free float of the Nair through the established interbank market alongside OTC for futures. And so, when the Nair's dropped at the market to N282 to the dollar, t...

At Unilever Nigeria PLC the lever is working far better than it did in 2015 and should make 2016 a far better year. According to the half year report to June released this week, the recovery which actually started in 2015 has gained enough momentum to put smiles on faces. The main game changer remains marked drop in marketing and administration expenses especially in the three months to June. In that quarter, marketing and administration costs decreased by 18.8% to N3334.9m leading to full half year drop of 4.15% to N6689.4m. It was aided by 116.7% increase in finance income to N163.7m within the quarter for overall 62.1% rise to N220.9m for half year. The icing was 44.4% decrease in finance charges to N894.9m driven by a higher 55.9% drop recorded in the quarter to June. But for these, the slightly lower core revenue growth and higher increase in cost of sale during the third quarter would have led to, at best, lower profit. Full half year core revenue had increased by 12....

No one needs to be a great scholar or philosopher to see it any more. Up till now only a few perceived what the immediate impact of free float of the Naira will be but then, that is no reason now to say I told you so. Nigeria now has an inter bank foreign exchange market where buyers and sellers are free to interact and agree on deal prices as they like, of course, through their banks On the side too, a futures over the counter market also exists organised by an authorised independent operator with own rules and regulations for coming on board to trade in future expectations. However no one, not even those who called for it all these years, expected it to be a win win oracle for all. No policy ever has such an impact not to talk of a policy from a social science that glorifies caveats in the guise of all things being equal. So now the pains are. Inflation rate, says the National Bureau of statistics has hit 16.48%, a ten year high and can not be expected to have capped yet. The com...

It appears as if PharmaDeko PLC has lost grip over its costs even as turnover tumbled by half year to June and so, may end the year in loss league. According to interim results released last week, tough times not only depressed PharmaDeko's total income by 55.6% to N380.3m, it forced loss of firm grip on cost thus landing the company into loss league. By the close of 2015 half year, the company had recorded a modest N140.9m profit before tax and ended the year with N701.7m although only N286.2m of that came from normal operations. By June this year, N138m loss was reported principally because all cost units refused to go down in toe with income drop and so, it may be tough to report profit come year end. In all, cost of sale decreased by only 46% to N208.5m; selling and distribution cost dropped by 41% to N80m and in fact, administration expenses rose, not decreased, by 18.2% to N229.8m. Hitherto, income from other sources had tumbled to 95.6% to N0.93m thus helping to en...

Inflation rate in Nigeria as measured through monthly composite index compiled by the National Bureau of Statistics hit 16.48% in June compared to 15.58% the previous month. According to the figures released today, July 18, the composite index came under pressure upwards mainly from significant increases in electricity, household water and related prices, furniture and fittings, road transport, imported food prices, and fuels and lubricants. At 184.77 for June the index thus added 10 points within six months since by January it stood at 174.45. This has been the trend more or less since 2015. In 2009, it took about 14 months to add the same 10 points, about eleven months through 2011 and by 2012 it took about 8 months. The years between 2013 and early 2015, inflation rate was mostly single digit and barely able to add one percentage point in six months. Now since February 2016 it has added one percentage point each month and indeed, in May and June shifted to plus 1.5 percent...

CHAMS PLC: BOUNCING BACK. Chams PLC seems likely to bounce back from loss league this financial year given the journey so far by half year to June. From the interim figures released this week, Chams PLC is making for less as income but good cost control is paying very good dividend. Total income had dropped by 42.6% to N1015.9m principally because core revenue tumbled by 57.6% to N683.5m while finance income helped cushion the full impact of this by ending at N161m. Chams PLCs hands on showed well as cost of sale went down faster by 76.3% to N289.5m and administration expenses dropped by 85% to N566m. With income from other sources chipping widow's 8.28% growth to N171.4m, Chams PLC ended the half year with bountiful N160.3m profit before tax as against loss of N3393m by the same time in 2015. Broken down this came to N15.8 gain on each N100 income by June compared to N191.8 loss on the same level of income previously. Chams PLC had a hard time with liquidity though...

The Nigerian Consumer Protection Council (CPC) has queried Nigerian Breweries PLC seeking to know if truly beer offers any health benefits, amongst other claims. The CPC on Tuesday July 11, opened investigation into claims reportedly made at the 3rd Annual Beer Symposium held earlier in the month that beer is not an alcoholic beverage and  that if taken moderately, has nutritional and health benefits. According to the CPC it was claimed that moderate beer taking could prevent kidney stones, increase antioxidant activity in the body, reduce risk of heart disease and help in blood pressure management. The Director General of the CPC, Mrs Dupe Atoki explained that these claims could tempt innocent consumers to reach out for beer aside from the fact that no beer yet has been registered in Nigeria for its therapeutic value. In a preliminary response dated July 14, signed by Kufre U Ekanem, and sent to the Nigerian stock exchange, Nigerian Breweries promised to respond fully to the...

UNITED CAPITAL PLC: UNITED EFFORTS BUT..... United Capital Plc depended on all streams of income to end the half year to June 2016 with so much promise but only the growth chipped in by interest income made the real difference. According to the interim figures released this week, gross earnings of United Capital plc increased by 32.9% to N3655.4m but only net interest earned ended the period with higher percentage growth. Investment income came close growing by 27.6% to N1720.8m followed by 19.9% rise in fee and commission to N980.3m. Good try but they were not up the gross earnings growth and so, could not have determined this. Two other income streams did not even come into reckoning. Net trading income dropped by 60% to N14.2m thus being the main drag within the half year and Income from other sources rose by only 7.65% to N244.8m. The game changer was net interest that more than doubled (up 102%) to N695.3m from N344.2m by June 2015. Then it turned out that United Capi...

The Central Bank of Nigeria (CBN) has asked banks and discount houses in Nigeria not to be involved in the issuance of commercial papers (CPs) in whatever capacity unless such is quoted or is intended to be quoted with an authorised securities exchange in Nigeria. According to a circular signed by A. O Idris for Director, Banking supervision dated July 12 2016, banks and discount houses are "now only permitted to deal in commercial papers that are registered on an Authorised securities exchange with effect from July11, 2016". "Accordingly" the CBN declared "banks are prohibited from transacting in CPs (that are not quoted on an Authorised securities exchange) in any capacity whatsoever including but not limited to as issuer; guarantor; issuing, placing; paying and collecting agent (IPPCA), collecting and paying agent (CPA) etc from the effective date." Then it added "The CBN having approved the quotation rules of FMDQ OTC Securities Exchange ha...

The Nigerian Stock Exchange (NSE) is currently proposing major changes in its rules and regulations to establish a more robust and effective disciplinary procedure for dealing members. According to a release signed by Tinuade Awe esq as head of regulations, stakeholders and the investing public are encouraged to view the proposals and send their comments to the exchange on or before August 9, this year. The amendments cover three packaged areas: Investor Protection rules amendment which seeks to only expunge a word; Disciplinary procedure for dealing members and amendments to the Rule book of the exchange 2015. The main amendment is the one being proposed to establish clear disciplinary procedure for erring dealing members. It sets up three disciplinary organs: Adjudication panel; Appeals committee and The National Council. The proposed amendment sets out clear powers and procedures of the adjudication panel and the appeals committee. It defines types of breaches and tries...

Do not envy most of the state governors in today's Nigeria; Abuja, although not officially a state, now gets more money to play with than they get individually. According to the figures on the allocation for the month of March released recently by the National Bureau of Statistics (NBS), from the allocation to the Federal Government, Abuja got N2834.5m gross with N25.5m being deduction for a net of N2809m. Only five ourtof the 36 states of the federation got that much as net allocation from revenue accrued to the federation in March. These are Akwa Ibom (N8268.4m); Delta (N6427.1m); Lagos (N5464.4m) Rivers (N4077m) and Kano (3423.6m). Every other state got less. In fact, five states got less than half of the Abuja allocation. These are Osun (N999.7m); Ekiti (N1187.1m); Cross River (N1229.9m); Gombe (N1258.3m) and Plateau(N1400.2m). Yes, deductions  affected the take of all the states but it made only two more states get less than Abuja. These are O...

If you are one of those who opened and operate mobile accounts with banks in Nigeria then since July 4, this year, you are not allowed to deposit above N50,000 into your account at once. According to a circular dated July 4, 2016 signed by Kevin Amugo, director, financial policy and regulation department and sent to banks in Nigeria, two of the three tier type of accounts allowed in Nigeria since 2013 as part of Know Your Customer (KYC) policy now have new transaction limits. The first tier are the accounts allowed to be opened with identification documents and or identification by a third party. This first tier of accounts was intended to make it easier for majority of Nigerians without valid identification to access financial services in spite of this handicap. First tier accounts  can not be used for international fund transfer; can be linked to mobile phones and can be used in ATM transactions but must a savings account only. Und...

INTERNATIONAL ENERGY INSURANCE: TO DIVEST 81%  IN PENSION SUBSIDIARY The interim board of directors of International Energy Insurance plc appointed by the National Insurance Commission of Nigeria (NAICOM) has finally got to the final stage of unbundling of 81% holding in IEI Anchor Pension Managers Ltd. According to an update signed by the Interim managing director/CEO, Mr Peter Irene, the resolution for the sale of the shares had been passed since the annual general meeting held on January 26, 2010 in an attempt to stay within operational guidelines issued by NAICOM that restricts more than 25% holding purchased from funds raised through public offers or private placements. Over the years, the sale could not be concluded due to non approval by National Pension Commission of a sale to a bidder preferred by the old board of directors. The interim board, knowing that even the money to be realised was needed, established a three stage plan for the execution of the sale. ...

RED STAR EXPRESS PLC: 2016'S RED ALERT If nothing else, the financial year to March 2016 issued a red alert of sorts to Red Star Express plc which if not noted could negatively affect the immediate future. According to the figures for the year released recently, both total core revenue dropped marginally although the main good news from the year also emerged therefrom: That cost of sale that generated the income dropped at a slightly faster rate. Core revenue had decreased by 0.38% to N6633.0m, while total income went down by  0.84%  to N6656.6m as both other operating income and finance income recorded 60.7% and 43.8% drops respectively. However, cost of sale decreased by 0.97% to N4674.5m thus engendering 1.05% increase in gross profit to N1958.5m. This foundation was not strong enough though, because administration and marketing expenses increased, not decreased, by 2.57% to N1399.3m. Hence, even though finance cost went down ...

From Monday August 1, 2016, only preregistered over the counter trading by corporations and between banks will be allowed in the Nigerian foreign exchange market. According to a circular from the Central Bank of Nigeria dated July 8, the process of approval and processing of OTC trading which is called onboarding must be done as per FMDQ-Advised trading, auction and surveillance systems from August. It was issued to Authorised dealers and signed by Dr Alvan E Ikoku, Director of Financial markets department. "In furtherance of its effort in engendering transparency and professionalism in the Nigerian foreign exchange market," the circular said "the Central Bank of Nigeria hereby directs that all FX related trades by Authorised dealers (Banks) and Corporate institutions with effect from Monday August 1, 2016 must be executed through FMDQ Advised trading, auction and surveillance systems" "Therefore" it added "all Authorised dealers... are to exec...

AVON CROWN CAPS PLC: ALL FOR THE TAXMAN. One thing is obvious from the figures of Avon Crown caps Plc for then financial year to March 2016: Shareholders had no cause to smile but the tax man smiled to the bank. According to the figures released recently, Avon Crown Caps ended the year with N152.1m profit before tax which represented real jump on the N22m reported in 2015 financial year. But the shareholders can only smile because their company survived the year better off but tax provision actually drove into loss due to shareholders. Within the year, there was provision for N33.4m income tax; then N18.5m education tax and N283.9m in under provision from previous year. In other words, total tax charged to the profit and loss appropriation account was N321.2m leaving Avon Crown Caps with N169.1m loss after tax. The year had ended fairly better even though only 9.32% increase in total income to N14440.8m had occurred despite 9.42% growth in core inc...