The Acting Director General of the Securities and Exchange Commission, Ms. Mary Uduk, in this interview with Obinna Chima, on the sidelines of the recently held Annual Meetings of the World Bank and the International Monetary Fund, held in Washington DC, highlighted various initiatives introduced by the regulator to strengthen the capital market. Excerpts:
What is your assessment of the performance of the capital market so far in 2019?
The capital market can be assessed in three areas: Our efforts at policies and regulation, the development in the primary segment of the market as well as secondary market performance. In terms of policies and regulations, we have continued to implement nitiatives as contained in the Capital Market Master Plan. These include e-dividend, direct cash settlement, financial literacy, commodities ecosystem, among others. I will like to tell you that these, and many more, are shaping the landscape of the Nigerian capital market. In terms of the primary market, we have some new equities issues comprising rights, bonuses and global offer of securities. Some corporates have also issued bonds and some have taken advantage of our new rules on Green bonds to issue this innovative product. In addition, we have equally expanded the number and value of our registered Collective Investment Scheme. Now for the secondary market, if you look at the equities market, especially on the NSE, the market has lost about 16 per cent so far this year, on the back of relatively weak economic fundamentals and investors’ sentiments. Meanwhile, the trading statistics in the fixed income segment of the market appears relatively higher. However, in this last quarter of the year, we hope to see some improvement in the equities segment, especially as investors see opportunities to pick low-priced stocks. As you know, even in a down market, there are still opportunities, since what is down has higher probability of rising. So, generally, during the period under review, the market witnessed some relative activities in both the primary and Secondary segment of the market. Also, in the primary market, there was a new trend in the last one year with the listing of the telecomm companies (MTN Nigeria) and also the recent IPO and dual listing of Airtel. The dual listing of Airtel signified the interest of the foreign issuers into the Nigerian capital market. Consequent to the Airtel IPO, some off shore companies are in discussion with the Commission for an IPO that would be dually listed in Nigeria and the United Kingdom.
But what are the reforms SEC is working on to enhance growth and confidence in the market?
Yes, investors’ confidence is central to our job as the regulator of the capital market. People must have confidence to invest, not just in the performance of the market, but that stakeholders will play by the set rules and standard and that the market is efficient. If you look at many of our initiatives, they are designed to achieve these. For instance, the e-Dividend system enables shareholders’ dividend to be paid directly into their bank accounts without the stress of dealing with physical dividend warrants and to reduce unclaimed dividend. Also, the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds of their shares sales are credited directly into their own account. Similarly, non-interest finance is to boost the confidence of those that may not want to invest in the conventional capital market products. We have also continued to discourage people from investing in Ponzi schemes. Our enforcement action against Dantata Success and Profitable Company and others are necessary to make investors distinguish between regulated and illegal investment schemes. We have also signed a memorandum of understanding (MoU) with the Nigerian Financial Intelligence Unit (NFIU) to curb and combat fraud in the capital market. In the area of financial literacy, you know knowledge is power and it can bring confidence. We have employed various means to bring financial literacy to students, academics, military, and the general public, among others. In the area of multiple accounts regularisation, we have assisted in regularising accounts of investors that used different names during IPOs. This was to enhance market liquidity and reduce unclaimed dividend. So, these and many more we are doing to improve the confidence of existing and potential investors in the Nigerian capital market.
I also need to mention that in order to encourage financial inclusion and with the aim of catching them young, we have developed the curriculum on capital market studies and we are now training the teachers. That is the stage where we are now. With fintechs, we are trying to encourage innovation through the use of technology. At the last Capital Market Committee, we resolved that the capital market is not going to sit on the fence and that is why we set up an implantation Committee on the Fintech Roadmap. This road map will be launched later this month, which shows how important fintech is to us. In addition, we are still in continuous engagement with PenCom to encourage more Pension Fund Administrators’ participation in the market. Many of them have large sums of money under management that they can deploy in our markets. We are also planning to re-constitute the Administrative Proceedings Committee (APC)
How do you think the market has fared in the area of corporate governance and what are your expectations?
As you are aware, companies must have good governance structure and be run properly for them to be profitable and sustainable. This is even more relevant for public companies, given that ownership is separated from control. Thus, shareholders and investors must have comfort that their companies are well governed under the appointed managers. With the scorecard which now allows the commission to assess compliance, investors are now better off. The companies are complying and that is boosting investor confidence. The companies now disclose their level of compliance to corporate governance practices which enhances transparency. Now that we have a national code, we expect to see high level of compliance because we have a national code now in addition to the sector code. With these two layers of code, and reporting structure where they need to report the level of their compliance, it will more confidence to foreign investors to invest in our country. This helps to attract foreign investors. But when there are violations to these codes, we sanction them. As securities regulator, we must push for this, otherwise, investors’ rights and confidence will be eroded and they will not be interested in participating in our market. You can imagine the impact of that on the country’s level of investment and growth. Therefore, we monitor companies’ compliance with our Code of Corporate Governance and when they are in violation, we sanction them appropriately. You are probably aware of some of the recent cases where we are taking action against the management of some companies. There are other cases we are looking into that will become public in due time. We encourage whistle-blowers to use our policies in this respect and bring to our notice any of corporate governance violation case that we may not observe. We are also working towards re-introducing the APC that is more strengthened.
How will you feel if you are able to bring the Nigerian National Petroleum Corporation to list on the exchange?
I will feel great. As you rightly said, the listing of MTN and Airtel was a very positive outcome and they substantial raised the capitalisation of the equities market. It also meant we now have the telecoms sector of the economy represented on the stock market. Therefore, it will be great to also have the petroleum sector well represented on our market and having NNPC will make it greater. Recall that one of the provisions of the Petroleum Industry Governance Bill (PIGB), if approved, is to list 10 per cent and an additional 30 per cent of NNPC companies between five and 10 years. If this is done, it will significantly improve the size and performance of our market. Meanwhile, it will also be important for the NNPC companies to be well commercialised such that they can return positive profits to their shareholders. But, I believe that with the country’s potential in the oil and gas sector as well as with appropriate governance and commercialisation policy, investors, the market and the entire economy will benefit from such listing. And it will be a great achievement indeed.
Investors staked N2.537 billion on 185.944 million shares in 3,083 deals at the stock market yesterday. This, represented an increase of 68.7 per cent compared with N1.504 billion invested in 151.714 million shares in 2,854 deals the previous day.
Despite the increase in value of investment, the Nigerian Stock Exchange (NSE) All-Share Index declined by 0.21 per cent to close at 26,809.92, while market capitalisation shed N27.5 billion to close at N27.5 billion as the bears sustained their hold on the market. However, the decline was lower than the 0.45 per cent fall recorded the previous day.
A look at the activity chart in volume terms showed that Zenith Bank Plc recorded the highest transaction of 60.9 million shares, followed by FCMB Group Plc with 37.3 million shares, while GTBank Plc accounted for 27.9 million shares. In value terms, Zenith Bank remained the leader with N1.1 billion, trailed by GTBank Plc that recorded N744.4 million, while Nestle Nigeria Plc recorded N242.1 million.
Meanwhile, 14 stocks depreciated, led by Champion Breweries Plc with 9.6 per cent, followed by Courtville Business Solutions Plc with 9.0 per cent. Learn Africa Plc shed 8.9 per cent, while Wema Bank Plc and Chams Plc fell by 5.4 per cent. Chams Plc recently appointed a new managing director, Mr. Gavin Young to succeed Femi Williams, who retired after many years of meritorious service.
According to the company, until his appointment, Young was a strategic consultant to key subsidiaries of Chams Plc including Chams Switch Ltd and Chams Mobile Ltd.
“A seasoned fintech professional with a proven track record in managing companies, including subsidiaries of listed companies spanning diverse geographical areas of Africa , Young brings to Chams Plc, over three decades of robust industry experience to raise the bar in all the company’s performance indicators. Young, specifically focuses on all areas of electronic banking and fintech; issuing, acquiring, switching. His primary areas of specialisation are payments switching and processing, developing and managing payment card schemes, terminal and other electronic infrastructure management, transaction processing, transaction acquiring systems, and mobile payments among others,” the company said in a statement.
On the positive side, NASCON Allied Industries Plc led the 12 price gainers with 10 per cent. NPF Microfinance Bank Plc followed with 9.1 per cent, while Forte Oil Plc chalked up 6.1 per cent. Double One Plc appreciated by 5.6 per cent.
The Nigerian capital market has shown resilience over the years and has been playing its role of capital formation and distribution to an acceptable level.
Although there is still room for improvement, it must be realised that the level of the development and growth of the Nigerian capital market (NCM) over the years, has been affected by the performance of the economy in general.
Specifically, the NCM became active with the establishment of the Nigerian Stock Exchange (NSE) in 1960, the same year Nigeria got its independence. But the market has evolved over the years and has taken a new shape which has given hopes that with more efforts by regulators, favourable economic policies push and good policies, the market will get to the desired level.
Looking at the performance of the market over the years, it has done fairly well considering the many challenges in the operating environment. The market has have challenges such lack of capital market-friendly economic policies, ignorance on the part of many people, policy summersaults and political instability.
But despite these challenges, the NCM has witnessed improved performance. For instance, total of new issues before 1989 was below N1 billion but increased to N10 billion and crossed the N10 billion mark in 1997.
Between 1996 and 2001, a total of 172 new issues (securities of public companies amounting to N56.40 billion) were floated in the capital market. The total of new issues was valued at N5.85 billion in 1996 but it rose by about 532 per cent to N37.198 billion in 2001. This improved to N61.284 billion in 2002, N180.079 billion in 2003 ,while 2004 and 2005 accounted for N195.418 billion and N552.782 billion respectively before it crossed the trillion naira mark to hit N1.935 trillion in 2007 when the market was at its peak.
In terms of number of securities on the NSE, it grew from eight in 1961 to 60 in 1971,194 in 1981, 239 in 1990. The number of securities improved to 264 in 2010, but reduced to 166 as at Monday due to delisting of some companies.
In terms of market capitalisation, which is the most widely used indicator in assessing the size of a capital market to an economy, it was between N10 billion and N57 billion 1988 and 1994. It improved to N1. 3593 trillion in 2003, N2.1125 trillion in 2004 and N5.12 trillion in 2006. The market capitalisation recorded the highest value of N13.2294 trillion in 2007 before falling to N9.562 trillion in 2008 due to the global financial meltdown. It closed at N13.450 trillion at the end of September 2019. The NSE All-Share Index, which was introduced with a base of 100, has also followed the same pattern of fluctuation over the years and closed at but closed at 27,675.04 at the end of September, 2019.
However, with the introduction of two other platforms, the FMDQ Securities Exchange Plc and NASD OTC Securities Exchange, the NCM has started to witness some positive changes and developments. While the FMDQ, which was launched as the platform for the trading of debt and fixed income securities and currencies, has transformed into a complete securities exchange. On the other hand, the NASD OTC is for the trading of equities not listed on the NSE and it has recorded some significant achievements.
Some reforms Over the years, the apex regulatory body for the market, the Securities and Exchange Commission (SEC) has strived to make the market attractive. For instance, the coming on board of FMDQ and NASD further widened participation. The commission equally made sure that the market integrity was restored by considerably enforcing rules. SEC also strengthened disclosure requirements and led the implementation of international financial reporting values for listed companies. However, the game changer was the 10-year Capital Market Master-plan, which is currently being implemented to transform the market.
Operators said the policies and initiatives so far introduced by SEC in line with the master plan, are capable of making the market investors’ haven once the external challenges subside.
For instance, the strengthening of capital market operators (CMOs) with the successful completion of the recapitalisation last year is a good development that has helped to reposition them for better competition.
Also, SEC’s collaboration with Central Bank of Nigeria (CBN) and Nigerian Inter-Bank Settlement System (NIBSS) for the introduction of the electronic dividend (e-Dividend) payment platform that will address the challenge of unclaimed dividends in the market is another positive move. Another laudable development is the introduction of direct cash settlement (DCS), which allows investors to have direct access to the proceeds of their shares sold by brokers.
Speaking on the benefits of some of the initiatives introduced, the acting Director General, SEC, Ms. Mary Uduk, said: “For instance, with the dematerialisation process completed, investors no longer need to not worry about the loss or damage to their physical share certificates as they are now electronically stored. Further, the current e-Dividend system enables shareholders’ dividend to be paid directly into their bank account without the stress of dealing with physical dividend warrants.
Also, the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds of their shares sales are credited directly into their own account as against that of the stockbroker. “We are equally working on ensuring that companies’ annual reports are distributed electronically thereby ensuring timeliness of information to shareholders and cost reduction to public companies.”
Stakeholders’ assessment The Managing Director/Chief Officer of APT Securities and Funds Limited, Kasimu Kurfi said the performance of capital markets in the last 59 years had been very interesting as, “the number of listed securities moved from 13 in 1961 to over 250 while our market capitalisation rose from million to billion by 1990 into trillion by 2005 to ever highest of over N16 trillion by 2008 before it fell to the N13 trillion level.”
He added: “Today the equity market capitalisation is N13.45 trillion with ASI of 27,630.56. The market trading system changed from call over system to automated trading system into more advanced system call Order Management System (OMS) that on line trading using your hand set to trade in the market. “Foreign investors are trading in our market most of the time is 50 per cent, 50 per cent between local and foreign investors. It also serves as a window of foreign exchange (FX) inflow into the market by increasing our foreign reserves.
“It also serves as a provider of capital to most of our banks, insurance companies and many other companies that are listed in the market. Today we have about 200 stockbroking firms compared with about eight as at 1979. Investment bankers, registrars, and many other operators that make a living in the system.
“The federal government is making money through VAT, Stamp duties. The market growth from single exchange and has been joined by FMDQ, which traded more than N180trillion last year and NASD Plc.” Another stockbroker and Chief Executive Officer, Sofunix Investment and Communications Limited, Mr. Sola Oni said unstable macroeconomic environment, nurtured by uncertainty in the political and economic space remained a major drag to market rebound in Nigeria.
He explained: “The market has faithfully continued to serve as a barometer that gauges the economy. Nigeria’s economy is characterised by sluggish growth while insecurity and weak economic fundamentals, among others have further worsened the precarious nature of the market.
“This is not peculiar to Nigeria. Trade tension between the United States of America and China is taking tolls on the world economy. This has dire effects on the operations of emerging markets.”
Oni, explained that the emerging markets in which Nigeria is a member is characterised by high volatility and high returns while they provide diversification opportunities for investors in developed markets. He noted that the federal government’s lethargic approach towards utilising the market remains a major challenge.
According to him, the market was grossly undervalued across the board as investor apathy continued to deepen by the day. “Investors are still apprehensive of macroeconomic instability and inclement operating environment. This partly explained the prolonged downward trend on The Exchange. Aside from mega listing of MTN and a few others, there is abysmal dearth of new listing. Government is crowding out equity investors as monetary policy favours investment in fixed income,” he stated.
Oni , urged the new Economic Advisory Council (EAC), headed by Prof. Doyin Salami, to conduct a clinical review of all policies that would impact on market growth and development for effective implementation.
He explained that EAC’s engagement should focus on how to fix the economy with multiplier effects on global competitiveness of our market, noting that the Nigerian capital market remained a major hub through which the country can serve as an investment destination.
However, he said that in spite of the challenges there was hope on the horizon considering initiatives put in place by market regulators to scale up activities. “There is a more effective and efficient regulatory approach with the deployment of information and communications technology (ICT) by SEC and NSE to operationalise their services. “Market monitoring, enforcement of rules and ease of exchange of information between the regulators and other stakeholders in the ecosystem have been up scaled,”he said.
Oni, added that the arrival of Lagos Commodity and Futures Exchange (LCFE), NASD and FMDQ Securities Exchange had further diversified the market. “They have created multiple sources of transaction for the stakeholders in the capital market ecosystem. The future is bright,” he stated.
On his part, Chairman, Ibadan Zone Shareholders Association, Mr. Eric Akinduro, said the market had over the years achieved tremendous growth. “Through the capital market we are able to have access to the wealth of some companies including the foreign owned businesses. Capital market as a reflection and true picture of the economy, we cannot isolated from our economy.
“The economy has not been favourable to the operations of the capital market but with time it will be better. Many companies are operating under very harsh conditions yet which led to low or no return on our investments.
“Stock market was the best investment opportunities until after the crash in 2008/09 with every one that investment during the period mentioned got their fingers burnt and are yet to recover till today. Going forward, the government should be more consistent in policy that will affect the market positively. Government should see the market as a catalyst to economic development in view of this security and protection are very key. No investor will invest in an economy that is not safe,” Akinduro said.
Similarly, Mr. Moses Igbrude of Independent Shareholders Association of Nigeria (ISAN), said the capital market could not be isolated from the general economy. Igbrude, said the nation’s economy had been facing challenges occasioned by insecurity, power, lack of infrastructure, multiple taxation and policies inconsistencies, among others.
The ISAN Publicity Secretary said that many companies had folded up due to high cost of production which made them uncompetitive. He said government, as a matter of urgency, should address the issue of power to make our country competitive in ease of doing business. Igbrude, called on SEC and NSE to partner the federal government to address multiple taxation and illegal collection of taxes by touts going on in the country.
He also stressed the need for tax incentives to encourage more listing on the nation’s bourse. “SEC and NSE should also put a very good advocacy programme in place to encourage and awaken Nigerians’ interest in the capital market to reduce dominance of foreign investors,” Igbrude said.
According to him, this would boost local participation in the market and as well enable local investors to absorb shares offloaded by foreign investors any time there was perceived economic instability.
The Nigerian Stock Exchange (NSE) All-Share Index appreciated by 0.08 per cent as the Nigerian equities market sustained its positive trend yesterday. The NSE ASI closed at 27,586.79, while market capitalisation added N10.6 billion to be at N13.4 trillion.
Similarly, activity level increased as volume of trading rose 164 per cent to 294.4 million shares, while value traded increased by 123.9 per cent to N3.5 billion respectively. The top traded stocks by volume were UAC-Property Development Company Plc (61.7 million shares), Access Bank Plc (55.1 million shares) and Guaranty Trust Bank Plc (52.0 million shares) while GTBank (N1.4 billion), MTN Nigeria Communications Plc (N487.3 million), and Access Bank Plc (N369.4 million) were the top traded stocks by value.
A total of 13 stocks appreciated, led by International Breweries Plc with 10 per cent, trailed by Cornerstone Insurance Plc with 8.7 per cent. Continental Reinsurance Plc chalked up 8.6 per cent, just as Ecobank Transnational Incorporated Plc and Mutual Benefits Assurance Plc went up by 5.4 per cent and 4.7 per cent in that order. Caverton Offshore Support Group Plc and Cutix Plc garnered 4.4 per cent and 3.3 per cent respectively.
United Bank for Africa (UBA)Plc also gained 3.2 per cent as investors continued to react to the half year results announced last Friday.
UBA posted a growth of 21 per cent in its profit before tax for the year ended June 30, 2019, rising to N70.3 billion from N58.1 billion in 2018. Profit after tax grew faster by 29.6 per cent to N56.7 billion, compared to N43.8 billion achieved in the corresponding period of 2018.
The bank’s total assets grew by 4.8 per cent crossing the N5 trillion mark to N5.10 trillion as at the end of June, while customer deposits also rose by 4.8 per cent to N3.51 trillion, compared to N3.35 trillion as at December 2018.
Conversely, Tripple Gee & Company Plc led the price losers with 9.5 per cent, trailed by Sterling Bank Plc with 8.0 per cent. UACN Property Development Plc went down by 6.8 per cent, just as LASACO Assurance Plc shed 6.6 per cent among others.
Meanwhile, sectorally the performance was mixed as two of the five sectors tracked rose while two declined. The NSE Insurance Index led 1.8 per cent. The NSE Industrial Goods Index rose 0.6 per cent. Conversely, the NSE Consumer Goods Index led the losers with 0.4 per cent, while the NSE Banking Index fell by 0.3 per cent. The NSE Oil & Gas Index declined 0.2 per cent.
The Securities and Exchange Commission (SEC) is to engage relevant stakeholders as part of efforts to reduce unclaimed dividends in the nation’s capital market.
The acting Director General of SEC, Ms. Mary Uduk, who stated this in Lagos, said the engagements would concern electronic-Dividend(e-dividend) registration and multiple accounts regularisation in a bid to reduce the unclaimed dividends.
According to her, as part of the engagement, brokers and registrars are required to make available to the Committee on Multiple Subscription Account, on a periodic basis, the number of regularised accounts.
Uduk said specific areas of engagement are ensuring that complete investor data are transferred among operators such as brokers, registrars and Central Securities Clearing System (CSCS), discouraging unclaimed dividends from building up from securities of newly-listed companies.
“Another thing we need to do is developing the modalities for validating register of members, where the registrars are furnished with incomplete information such as missing account numbers. We believe the capital market of our dreams can only be achieved through the collaboration of all stakeholders,” she said.
Following the expiration of free e-dividend mandate registration period offered to investors, the SEC boss also unveiled plans to partner the Central Bank of Nigeria (CBN) to ensure that e-dividend charges are included in the guideline for bank charges.
According to Uduk, “SEC has been underwriting the e-dividend charges of N1.50 kobo but since we stopped, we have received a lot of complaints from investors due to the e-dividend charges. But after extensive discussions with the capital market committee, the commission intends to partner with the apex bank to issue charges on E-DMMS transactions. The CBN has a published charge for the banks. This means that any transactions carried out by any bank, there is an established charge.”
She explained that since the e-dividend registration charge is not part of the charges from the CBN, investors are having issues with banks where they are charged for some transactions that are not listed as bank charges, which they do not know.
Meanwhile, the account regularization is yielding the desired fruits as 3.5 billion shares had so been regularized. The regularisation was extended to December 31, 2019.
“Through this exercise, some Nigerian investors in Diaspora have been able to consolidate their shareholding accounts. Similarly, several local investors with numerous accounts have also been able to consolidate their investments. We therefore enjoin the general public to take advantage of this initiative to regularise their shareholding accounts before the December 31, 2019 deadline,” SEC had said.
It was a positive performance at the equities market last week as the market pared losses of the previous weeks to gain 3.25 per cent, following bargain hunting in bellwether stocks.
Having declined to an unprecedented record low, the market recovered as investors moved in to take advantage of low valuations in a week that President Muhammadu Buhari swore-in the ministers that would help to drive fiscal policies.
Specifically, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) that 1.40 per cent the previous week, appreciated by 3.25 per cent to close at 27,800.17, while market capitalisation added N83 billion to close at N13.5 trillion.
The market recorded gains in four out of the five trading days of the week. Although gains by bellwether such as Dangote Cement Plc, Nestle Nigeria Plc contributed to the positive performance, some analysts said the constitution of the federal government cabinet also contributed.
However, commenting on the allocation of portfolio to the various ministers, analyst at Afrinvest Research raised some doubts in the key ministries.
For instance, they said in the oil and gas industry where progress has been negligible for decades, President Buhari retained the position of minister of petroleum resources.
“In our opinion, the President lacks the agility and the skill set to transform the sector based on his performance in the same position for the past two years, hence momentum in the sector is expected to remain weak. We expect slow progress towards passing and implementing the reforms need to attract investment into the industry,” they stated.
Afrinvest, noted that in the Ministry of Finance, Budget and National Planning, the re-appointment of Zainab Ahmed, provides clarity on the direction of fiscal policies.
“Accordingly, we expect a sustained drive to boost tax collection to narrow the federal government’s widening fiscal deficit. But as we do not expect strong improvements in the short-term, we expect continued funding of deficits in the cheaper Eurobond market.
“The easy monetary policy in advanced markets makes this strategy even more compelling in the near term, but we note that currency risk lurks. In our view, this ministry remains one to watch as the federal government’s fiscal challenges would partially dictate the pace of improvement in the economy.
“The concern is whether the federal government would take necessary actions such as reining in spending and removing subsidies to free up more resources. In this regard, adopting the strategies employed during the first term of President Buhari would yield little progress,” they added.
Speaking on the Works & Housing and Transport Ministries, where Babatunde Fashola and Rotimi Amaechi respectively, retained their jobs, they stated they were, “optimistic of the continuity of current priority projects and faster completion times.”
“The key risk for these ministries is that capital releases may fall short of budget allocation as capital spending becomes increasingly discretionary in the face of weak revenue mobilisation and increasing recurrent expenditure,” they added.
According to Afrinvest, the Ministry for Industry, Trade and Investment is another important ministry under its watch.
“Foreign direct investment (FDI) into the country has dipped consistently from the peak of $8.9 billion in 2011 to $2.0 billion in 2018. Relative to the size of the economy, FDI has deteriorated from the peak of 3.2 per cent in 2009 to 0.5 per cent in 2018. There is a need to sustain business environment reforms, loosen regulations and promote liberalization of sectors to encourage the investment needed to boost growth significantly.
“We only saw progress in business environment reforms in the past four years, but regulation became tighter and the FG consolidated its hold on important sectors such as power and oil & gas,” they explained.
Market turnover
In terms of market turnover, investors traded a total turnover of 2.337 billion shares worth N19.712 billion in 18,379 deals last week, which is a jump of 2.2 per cent compared with 726.607 million shares valued at N10.459 billion that exchanged hands in 12,915 deals the preceding week.
However, the Financial Services industry remained the most traded, leading the activity chat with 1.815 billion shares valued at N10.441 billion traded in 10,701 deals. The sector thus contributed 77.7 per cent and 52.9 per cent to the total equity turnover volume and value respectively. The Conglomerates industry followed with 197.802 million shares worth N286.209 million in 1,066 deals, while the third place was Industrial Goods industry that recorded a turnover of 100.366 million shares worth N2.176 billion in 788 deals.
Trading in the top three equities namely, Sovereign Trust Insurance Plc, Transnational Corporation of Nigeria Plc and Zenith Bank Plc accounted for 1.244 billion shares worth N3.348 billion in 2,907 deals. They contributed 53.2 per cent and 16.9 per cent to the total equity turnover volume and value respectively.
With regard to the Exchange Traded Products, a total of 3,943 units valued at N1.684 million were traded last week in 16 deals compared with a total of 1,292 units valued at N15, 283.55 transacted the previous week in seven deals.
In the bond market, investors traded a total of 1,673 units of Federal Government Bonds valued at N1.674 million were traded in 31 deals compared with a total of 4,009 units valued at N4.111 million transacted two weeks in 16 deals
Top price gainers and losers
Meanwhile, 40 equities appreciated in price during the week, higher than 15 equities in the previous week, while 25 equities depreciated in price, lower than 34 equities in the previous week.
The price gainers’ chat was led by Ecobank Transnational Incorporated with 33.3 per cent, trailed by Oando Plc with 20.9 per cent. Fidelity Bank Plc chalked up 20 per cent just as UAC of Nigeria Plc garnered 18.8 per cent. Law Union & Rock Insurance Plc went up by 18.2 per cent, just as C & I Leasing Plc and Honeywell Flour Mills Plc gained 17.7 per cent and 14.5 per cent respectively. United Capital Plc and Transcorp Plc appreciated by 13.1 per cent in that order, while Chams Plc closed 13.0 per cent higher.
Conversely, Okomu Oil Palm Plc led the price losers with 18.0 per cent, trailed by NCR(Nigeria) Plc with a decline of 14.6 per cent. LASACO Assurance Plc shed 12.1 per cent, while Continental Reinsurance Plc depreciated by 10.3 per cent. Tripple Gee & Company Plc ended the week 10 per cent lower.
MRS Oil Nigeria Plc lost 9.8 per cent, just as Cadbury Nigeria Plc and Mutual Benefits Assurance Plc gained 9.7 per cent and 9.0 per cent in that order. Unity Bank Plc and Linkage Assurance Plc shed 8.7 per cent and 7.6 per cent respectively.
FMDQ Securities Exchange Plc on Monday formally launched its new status and corporate identity as a full fledge securities exchange with registration to trade in all securities including fixed income, equities, derivatives, commodities and foreign exchange.
Formerly known as FMDQ OTC Securities Exchange, the transition of FMDQ from an over-the-counter (OTC) platform to a full-blown securities exchange represents a paradigm shift in the Nigerian capital market. It ends the unwritten mono-stock exchange policy and opens up the capital market to intense competition.
Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) approved the amendment of the registration of FMDQ OTC Plc from ‘an OTC Market’ to a fullfledged ‘securities exchange’ in March 2019.
FMDQ then secured necessary approvals for a name change to ‘FMDQ Securities Exchange Plc (FMDQ Exchange) with immediate effect, thereby aligning its name to its upgraded status in the capital market. Furthermore, in June 2019, the Exchange received SEC’s registration of its wholly owned central securities depository subsidiary – FMDQ Depository Limited, which is positioned to provide collateral caching, custodian and settlement services with excellent operational capabilities tailored to provide value to its stakeholders.
FMDQ Depository Limited completes the value chain of pertinent market infrastructure in the Nigerian financial markets, particularly the posttrade spectrum, following the operationalisation of FMDQ Clear Limited.
FMDQ noted Monday that the implications of its new status are far-reaching as the careful implementation of the FMDQ Entities – FMDQ Exchange, FMDQ Clear and FMDQ Depository – have not only created robust linkages between hitherto fragmented spheres of the markets, but also presented the market with an efficient, innovative and integrated financial market infrastructure (FMI) group for the seamless execution, clearing and settlement of financial markets transactions.
Having set the pace in the fixed income, currency and derivatives markets, FMDQ Exchange, as a full-fledged securities exchange, will position itself to cover new markets equities and commodities – in the near- to mid-term.
Managing Director, FMDQ Securities Exchange Plc (FMDQ Exchange), Mr. Bola Onadele. Koko said the development of the Exchange over the last five years was reflective of the progressive and dedicated strategic leadership provided by its board of directors, as well as the company’s ever-intensifying commitment to proactively deliver value to its stakeholders.
According to him, having successfully consolidated past gains and taken on new frontiers through the operationalisation of a budding integrated FMI Group across the full value chain of the securities market – execute, clear and settle – the Group is poised to enhance efficiencies in FMDQ’s markets to the benefit of market participants.
He noted that it was in view of the resolute affirmation of the FMDQ entities to influence and promote sustainable development in the Nigerian financial market, one which is in alignment with global standards, that a new identity was unveiled on Monday.
“As it commences its second lustrum, FMDQ as a one-stop FMI Group with a platform to execute, clear and settle transactions in the Nigerian financial markets, remains committed to collaboratively deliver innovative and forwardthinking solutions to the market,” Onadele.Koko said.
The erstwhile OTC Exchange commenced operations in November 2013, following its launch as an OTC market, primarily to organise the interbank market with focus on the fixed income, currency and derivative markets, and as a self-regulatory organisation, providing a world-class governance structure for the markets within its purview.
In view of this, FMDQ Exchange set out to transform the markets, in line with its audacious agenda to make the markets globally competitive, operationally excellent, liquid and diverse; commonly known by market participants as FMDQ’s GOLD Agenda.
The board and management of Nigerian Aviation Handling Company (NAHCO) Plc at the weekend assured shareholders that ongoing implementation of a strategic five-year growth plan will lead to a more agile and profitable company.
At the Annual General Meeting (AGM) in Kano, directors of NAHCO laid out strategic growth objectives, key implementation drives, challenges and transformational initiatives being taken to sustain the company as the leading ground handling company with sustainable returns to shareholders.
The first AGM by the new board and management of the company, directors of the company outlined that they have launched a new five-year strategy and transformation plan that covers between this year and 2023, which is expected to drive growth, service improvement, improved profitability and also ensure that NAHCO maintains its leadership position, despite increasing competition in the ground handling business.
The assurance came as shareholders approved the distribution of N406 million as cash dividend for the 2018 business year, representing a dividend per share of 25 kobo.
Nigerian Aviation Handling Company (NAHCO) Plc Chairman, Dr Seinde Fadeni, said the new board and management have reset the company’s group structure and operations and have started implementing key initiatives to address cost structure, realign products and interface with customers and other stakeholders with a view to ensuring optimal performance in the years ahead.
He said the company has started modernisation of its warehouses in order to position itself for global changes in cargo handling and management noting that NAHCO is currently investing in warehouse refurbishment, facility and equipment upgrade to ensure leadership in all areas of air cargo within the West and Central African region.
He pointed out that while increased costs of operations and administrative expenses impacted the company’s performance in 2018, the new management has been addressing these cost centres to ensure improved efficiency and competitive returns.
“It is my belief that our company will grow more rapidly in the coming years in light of the measures and innovations being implemented,” Fadeni said.
According to him, the company’s five-year strategic plan was anchored on five strategic pillars of operational excellence, digital transformation, people and culture transformation, organic and inorganic growth and diversification. These pillars would be driven by three main enablers including adequate funding and capitalisation, financial grip and enhanced risk management.
He explained that the company’s strategy for growth entails maximising parent company and subsidiary companies’ opportunities and capacity utilisation while taking advantage of market trends and the group’s dominant market position.
“We are restructuring our strategic business units (SBU) and subsidiary companies in such a way that from now on, every member of the NAHCO Group contributes more to the overall profitability of the group. We have set a revenue target that is ambitious but achievable. We expect to grow our revenues by a factor of four times 2018 figure and achieve this over the next five years. We have resolved to maximise the revenue opportunities inherent in the synergies of our group,” Fadeni said.
He pointed out that the company is developing sustainable business plans for two of its subsidiaries-NAHCO Free Zone (NFZ) and Mainland Cargo Options (MCO) while exploring best strategy to ensure long –term viability of NAHCO Energy Power and Infrastructure (EPI).
“The company’s outlook for 2019 is positive, with the unwavering commitment of the board, management and staff, we are fully committed to perform better and deliver more value to you, our esteemed shareholders. We will continue to implement the strategic direction we have set for the transformation of NAHCO,” Fadeni said.
Fadeni noted that one of the critical elements of the company’s growth strategy is the asset renewal strategy and policy for all its plant machinery and equipment including ground support equipment (GSE) and cargo management equipment, which will help to improve service delivery and efficiency while reducing maintenance costs.
He said the company has commenced purchase of necessary machinery and equipment from international OEMS and reputable vendors with some of the equipment already received and commissioned into service.
According to him, the company has also commenced the upgrade of its infrastructure, facilities and equipment starting from the Lagos Warehouse Complex. Early 2019, it added a cold room facility to its Kano warehouse. It has also committed material investment and upgrades to its strategic business units in Abuja and Lagos.
“We have started on a good note in 2019, as we move into our 40th year of commercial operations with the acquisition of new and modern equipment and a new business strategy for growth. We are on a clear path of positive transformation. This is our new NAHCO, more profitable, more agile; the new board is committed to this transformation which will reposition the company for growth, carry out the necessary people transformation and culture change, achieve operational excellence and increased profitability,” Fadeni said.
Nigerian Aviation Handling Company (NAHCO) Plc Group Managing Director, Mrs Olatokunbo Fagbemi, said the new management has continued to make steady progress in driving the company’s new vision “to be the leading service provider, continuously innovating and reshaping our chosen markets”. Fagbemi assumed office in December 2018.
She explained that the “New NAHCO” is being built on core values of safety, integrity, innovation, reliability, respect and empathy noting that the “New NAHCO” is to ensure there is regular communication, transparency in decision making and sincerity in governance.
“We are building a culture of safety, security, innovation, integrity and ownership. Our “New NAHCO” is building a cohesive management team and an efficient workforce. Our “New NAHCO” is harnessing the strengths and opportunities of the group structure to drive growth and profit. Our “New NAHCO” is focused on retaining existing customers and on-boarding new customers. Our “New NAHCO” is focused on strong balance sheet, profit and loss and enhanced free cashflow. Our “New NAHCO” is focused on consistently delivering value to all stakeholders,” Fagbemi said.
She noted that NAHCO has continued to maintain internationally acceptable and recognised standards of its operations as the company earlier this year accomplished the feat of acquiring IATA Safety Audit for Ground Operations (ISAGO) certification in three major airports of Lagos, Abuja and Kano, making NAHCO the only ground handler in Nigeria to achieve this.
She added that the company also has achieved the Third Country EU Regulated Agent (RA3) revalidation of its operations in the major airports of Lagos, Abuja, Port Harcourt and Kano by the European Union.
“NAHCO has come out successful in all the airlines audits we have done this year. We have also received commendation for the new measures we have put in place to ensure stricter security and compliance to international standards at our facilities. In addition, our staff have received commendations from several airlines,” Fagbemi said.
She assured that in the coming months, the company will increasingly become an efficient organisation that is fit and able to deliver services at optimum prices to the delight of its stakeholders.
According to her, NAHCO is working with full understanding of the market place to create a win-win strategy with its suppliers and service providers to ensure that the costing and pricing is optimal and sustainable.
As the International Air Transport Association (IATA) pushes for more modern processes in anticipation of projected double in the size of the air cargo industry over the next two decades, Fagbemi said NAHCO is positioning for the global implementation of the e-Air Waybill (e-AWB) with a view to be able to provide ecargo service to all its customers and partners within the next 24 months.
She assured that the company is proactive and resilient enough to thrive despite domestic and global challenges, urging shareholders to support the company as it implements its growth plan and transformation agenda.
“We have a team that is seasoned and has a clear view of the strategic direction and what the competitive landscape is now vis a vis what it would be in the next few years. We have committed, dedicated and trained people focused on the customer,” Fagbemi assured.
Audited report and accounts of NAHCO for the year ended December 31, 2018 showed that turnover grew by 24 per cent to N9.83 billion. Gross profit margin increased from 29 per cent in 2017 to 32 per cent last year. With 19 per cent increase in operating costs and 27 per cent increase in administrative expenses, profit before tax dipped by 16 per cent to N503.2 million while profit after tax dropped to N196.8 million last year.
Nestle Nigeria Plcrecorded a well-rounded performance in the first half with increased sales and profitability. All key performance indices trended upward during the six-month period, raising the prospects that Nigeria’s highest-priced quoted company may surpass its previous performance.
Key extracts of the half-year report for the period ended June 30, 2019 showed that sales rose to N141.91 billion in first half 2019 as against N135.3 billion in corresponding first half of 2018. With decline in cost of sales from N79.71 billion to N75.83 billion, gross profit rose from N55.58 billion to N66.08 billion. Operating profit rose from N32.15 billion to N40.43 billion.
Considerable reduction in finance costs, from N1.12 billion to N888.68 million, boosted the bottom-line with net finance income of N2.42 million in first half 2019 as against deficit of N280.67 million in first half 2018. With these, profit before tax rose from N31.87 billion in first half 2018 to N40.44 billion in first half 2019. After taxes, net profit increased to N26.25 billion in first half 2019 compared with N21.46 billion in comparable period of 2018.
The company attributed the growth to consistent investment behind its brands, intensified efforts to communicate with consumers and continuous investment in route to market to deliver better value to consumers.
In a statement signed by Company Secretary, Nestle Nigeria, Bode Ayeku, the board of the company commended its consumers for their trust and continued loyalty as well as the discipline and dedication of its staff for driving sustainable and profitable growth.
Directors of the company noted that amid a challenging economic context, the company remains confident in its capacity to innovate to keep delighting consumers with nutritionally superior products and foster its people’s ability to win.
“In turn, these investments will continue to create shared value for our shareholders and for the people of Nigeria. In line with our purpose which is enhancing quality of life and contributing to a healthier future, we will remain focussed on enabling thriving and resilient communities through local sourcing, expanding the commercialisation of our food and beverages to deliver accessible and affordable nutrition to more people and strengthening our value chain to gain further efficiencies,” the board stated.
Nestle Nigeria distributed N30.52 billion as final dividend for the 2018 business year, bringing total dividend payout for the year to N46.42 billion. The company had in November 2018 paid N15.9 billion as interim dividend.
Shareholders received a final dividend per share of N38.50 in addition to interim dividend per share of N20, bringing total dividend per share for the year to N58.50.
With the dividend payout above the N43.01 billion net profit recorded in 2018, the company explained that the total payout of N46.42 billion included net profit for the year and part of the net profit for the 2019 business year.
According to the company, the final dividend of N38.50 per share comprised of N34.20 from the profit for the 2018 business year and N4.30 from the net profit for the 2019 business year.
Key extracts of the audited report and accounts of Nestle Nigeria for the year ended December 31, 2018 had shown that the company rode on the back of improved operating efficiency and finance cost management to optimise its bottom-line performance in 2018, growing net profit by 27.5 per cent to N43.01 billion.
The report showed that turnover rose to N266.27 billion in 2018 as against N244.15 billion in 2017, representing an increase of 9.06 per cent. Cost of sales increased by 6.33 per cent from N143.28 billion in 2017 to N152.35 billion in 2018. Gross profit thus rose faster by 12.94 per cent to N113.92 billion in 2018 compared with N100.87 billion in 2017.
Marketing and distribution expenses increased to N43.49 billion from N35.16 billion while administrative expenses dropped from N10.02 billion to N9.79 billion.
Operating profit consequently improved from N55.7 billion in 2017 to N60.64 billion in 2018. Finance costs dropped by 82.75 per cent from N15.109 billion to N2.606 billion. Profit after tax grew by 27.53 per cent from N33.72 billion in 2017 to N43.01 billion in 2018. With these, earnings per share rose by 27.52 per cent to N54.26 in 2018 as against N42.55 in 2017. Total assets increased by 10.58 per cent to N162.34 billion in 2018 as against N146.80 billion in 2017. Shareholders’ equity also improved from N44.88 billion to N50.22 billion.
FBN Holdings Plc’s gross earnings rose by 0.3 per cent to N294.2bn year-on-year at the end of June 2019, from N293.3bn in the corresponding period of 2018.
In a statement, it disclosed this in is audited financial account for the first half of the year.
Its net-interest income was down by two per cent to N146.7bn in the period under review from N149.6bn in June 2018.
Non-interest income rose by 3.6 per cent to N63.6bn, from N61.3bn; while operating income was down by 0.3 per cent to N210.3bn, from N210.9bn in first half of 2018.
It stated that impairment charge for credit losses fell by 58.1 per cent to N22.1bn, from N52.8bn; while operating expenses rose by 24.3 per cent to N148.3bn, from N119.3bn in June 2018.
In the period under review, its profit before tax rose by 2.6 per cent to N39.9bn, from N38.9bn; while profit after tax fell by 5.4 per cent to N31.7bn, from N33.5bn the corresponding period of 2018.
Commenting on the results, the Group Managing Director, UK Eke, said, “Despite the difficult operating environment, we remain resolute in delivering on our guidance across key metrics including our commitment towards a single digit NPL ratio by the end of year, as evidenced by the reduction in Non Performing Loans from the last quarter.
“Essentially, Atlantic Energy – our largest NPL, was written off, translating into a decline in the NPL ratio from 25.9 per cent in December 2018 to 14.5 per cent as at June 2019, a step that brings us closer to our FY 2019 target and creates more headroom for quality asset growth.
“This is paving the way for sustained improvement in asset quality and a further reduction in impairment charges that will allow us to take advantage of enhanced earnings opportunities when they arise. Furthermore, we have remained focused on deepening our transaction-led income and are uniquely positioning for stronger revenue growth and value creation.”
