The Securities and Exchange Commission (SEC) has warned some operators in the Nigerian capital market to desist from practices that violate rules and regulations in the market.
The commission in a statement on Monday, said its attention had been drawn to an emerging trend of unethical conduct by brokers, issuing houses/book runners and other receiving agents in primary and secondary market transactions.
The SEC said the concerned operators carry out their activities by inducing investment through the sharing of brokerage fees or receiving agents commission with private banking officers, asset/fund managers, pension fund administrators (PFA)s and other institutional investor classes who are not duly registered or recognised by the Commission as being eligible to be paid commission.
The commission therefore warned: “Notice is hereby issued that only capital market operators duly registered by the commission are eligible to be paid brokerage fee/receiving agents’ commission and such operators shall not pay or offer a percentage of the commission earned from services provided in a transaction as an incentive for investment.
“Any capital market operator found to engage in this practice or similar acts shall be subject to strict regulatory actions in accordance with the rules and regulations of the commission.”
The SEC has enjoined the public to utilise its whistle blowing mechanism to provide information on any known or suspected case for necessary action.
Meanwhile, the stock market opened for the week on a negative note as investors booked profit in bellwethers. The Nigerian Stock Exchange (NSE) All-Share Index (NSE) ASI fell 2.2 per cent to close at 30,199.32, while market capitalisation shed N302.4 billion to close at N13.3 trillion. Activity level weakened as volume and value traded shed 50.6 per cent and 74 per cent to 145.2 million units and N1.7 billion respectively. The top traded stocks by volume were Fidelity Bank (28.3 million units), Access Bank Plc (20.3 million units) and United Bank for Africa Plc (20.1 million units) while MTN Nigeria Plc (N948.2 million), Zenith Bank Plc (N168.3 million) and Access Bank (N117.4 million) led the top traded stocks by value.
In terms of price movement, 19 stocks depreciated compared with appreciated. R.T Briscoe Nigeria Plc led the price losers with 9.3 per cent, followed by MTN Nigeria Plc with 7.1 per cent, while Veritas Kapital Assurance Plc shed 4.7 per cent.
Investors in the nation’s stock market gained N885bn last week as the market capitalisation of equities rose to N13.601tn.
The All-Share Index of the Nigerian Stock Exchange appreciated by 6.96 per cent to close the week at 30,881.29 basis points.
A total turnover of1.698 billion shares worth N57.895 billion in 24,328 deals were traded by investors on the floor of the NSE last week in contrast to a total of 1.172billion shares valued at N17.887 billion that exchanged hands in 18,380 deals the previous week.
The financial services industry (measured by volume) led the activity chart with 1.121 billion shares valued at N8.708bn traded in 13,380 deals, thus contributing 66.01 per cent and15.04 per cent to the total equity turnover volume and value respectively.
The Information and Communications Technology Industry followed with 324.332 millionshares worthN40.717 billion in 3,330 deals.
The third place was occupied by the consumer goods industry with a turnover of75.831 million shares worth N2.948bn in 2,957 deals.
Trading in the top three equities, namely MTN Nigeria Communications Plc, Sovereign Trust Insurance Plc (measured by volume) accounted for 726.103 million shares worth N41.622bn in 4,972 deals, contributing 42.75 per cent and 71.89 per cent to the total equity turnover volume and value respectively.
Thirty equities appreciated in price during the week, higher than 16 in the previous week; 40equities depreciated in price, lower than 42 equities of the previous week; and 98 equities remained unchanged, lower than 109 equities in the preceding week.
Analysts at Afrinvest Securities Limited said building on the momentum from MTN Nigeria’s listing, the local bourse sustained a positive performance last week as the ASI recorded gains on four of five trading sessions, closing above the psychological benchmark of 30,000bps for the first time in six weeks.
They said, “The equities market has recently received a boost from the listing of MTN, but investor sentiment remains weak. We believe the lack of reforms and broad economic weakness continue to be drawbacks to an upturn in performance despite cheap valuation relative to emerging and frontier market peers.
“Following a bullish performance this (last) week, we expect sell pressures next (this) week as investors look to take profits on stocks that have recorded strong gains.”
Analysts at Cordros Capital Limited noted that a rally in the shares of market heavyweights, MTN Nigeria (+28.6 per cent) and Dangote Cement Plc (+13.6 per cent) drove the market to its highest weekly gain since January 12, 2018.
“Clearly, the gain was not broad-based, at such we reiterate our cautious trading pattern. Meanwhile, we believe that the blend of positive macroeconomic fundamentals and compelling valuations still supports a near-term recovery,” they added.
AIICO Insurance Plc says it will pay N415.81m dividend to its shareholders for 2018 financial period.
During its 49th annual general meeting in Lagos, the company’s Chairman, Bukola Oluwadiya, said the dividend payment was 20 per cent higher than the corresponding period of 2017.
He said that the board had decided to move to a progressive dividend policy to deliver superior returns to its shareholders.
“Our plan is to maintain or grow the ordinary dividend per share over time, depending on business performance, growth projections and regulatory solvency requirement,” he said.
According to the chairman, the company during the period under review recorded growth in major business lines.
He said that its net asset value increased by 39.4 per cent to N15.2bn from N10.9bn in the corresponding period of 2017.
The chairman disclosed that total assets rose by 19 per cent to N109bn against N92bn in 2017.
“We will continue to strengthen our balance sheet and build a strong financial base needed to propel our company to the next phase of growth,” he added.
The Managing Director, AIICO Insurance, Edwin Igbiti, said that the strategic intent of the company over the next five years was to regain market leadership through rapid and profitable growth.
Igbiti added that the company had redesigned its go-to-market strategy and realigned organisational structure to reflect customer-centric strategy.
He said that the company would streamline and leverage capabilities across the group to grow market share, increase shareholder value and build customer-centric capabilities for superior service delivery.
The Founder, Independent Shareholders Association of Nigeria, Mr Sunny Nwosu, who commended the company for the performance and dividend declared during the period under review, urged it to improve on the dividend payout in the years ahead.
He said that the company should strengthen strategies to sustain growth to ensure enhanced return.
Since the stock market downturn of 2018 and 2009, when investors recorded huge losses, it has been difficult for the market to witness high patronage. Regulators have been trying to restore investor confidence to the market.
The Securities and Exchange Commission (SEC) has, in recent times, introduced various strategies and policies to ensure that more investors return to the nation’s capital market. Apart from ensuring that more investors return to the market, SEC believes that investors should equally enjoy significant returns on their investments. Hence, they have been introducing policies that enable shareholders receive their dividends regularly. And in line with its determination to ensure that companies deliver higher returns to shareholders, SEC, penultimate week exposed new rules and sundry amendments to some of the existing rules to the market operators before they are implemented.
The New Rule SEC is seeking to create a new sub rule to regulate the conduct of Annual General Meetings (AGMs) and make some amendments to some existing rules. Specifically, the new sub-rule specifically seeks to reduce the cost of organising shareholder meetings, by making illegal the distribution of gifts to shareholders, observers and any other persons at AGM and extraordinary general meetings (EGMs).
Should the rule be agreed on, “public companies shall not convene any meeting with select group(s) of shareholders prior to an AGM/EGM.” Justifying the proposed rules, the SEC observed: “that some companies arrange meetings with select groups of shareholders ahead of general meetings to discuss proposed resolutions and agree on strategies which are often detrimental to the interest of other shareholders.”
According to SEC companies that violate these provisions, “shall be liable to a penalty of not less than N10 million.” SEC decried the huge amount spent by such public companies on corporate gifts at AGMs/EGMs, which greatly impact their profitability. It argued that at a time when few companies are making reasonable profits and even fewer can afford to pay dividends, the latest move would positively impact on earnings per share of many if the amount “budgeted for gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses.”
“Public companies spend a significant amount of money on corporate gifts at AGMs/EGMs and this has a great impact on their profitability. Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share,” SEC said.
Apart from the rule of the conduct of AGM/EGMs, the commission also proposed amendment to Rule 42 that will lead to the creation of Sub-rule 190 (3) which states that “public companies shall disclose some minimum corporate governance information on their websites including governance structure, composition and structure of the board, shareholding and dividend analysis among others.
Justifying this amendment, SEC said as part of the Corporate Governance Scorecard implementation strategy, companies are expected to disclose a Minimum Corporate Governance Report on their websites. The information is expected to be structured to contain reasonable corporate governance information on the public companies.
In another proposed new rule, SEC is moving to reinstate the individual sub-broker function to the market. Individual sub-broker function was removed in November 2017. However, SEC said the deletion of that rule generated a lot of comments from the Nigerian Stock Exchange (NSE) and Association of Stock Broking Houses (ASHON), who thereafter requested for the reinstatement of the function.
“The Rules Committee revisited the issue and the commission agrees that reinstatement of Individual Sub – broker function will help in enhancing financial inclusion, deepening the market, and attracting more retail investors as well as enable the Sub – brokers have more presence at the grass root level,” SEC explained.
Shareholders React While SEC may have been pushed by the rowdy nature of some AGMs during the sharing of gifts and is trying to check the situation, shareholders said rather than stop companies from providing gifts, the regulator should find a better way to manage the situation. A legal practitioner and shareholder activist, Mrs. Oludewa Thorpe, said although it is true that some retail shareholders have become nuisance to companies, the relationship is mutually beneficial.
“Stopping distribution of gifts and pre-AGM meetings is like throwing the baby away with the bath water. The financial outlay (for gifts) is minimal compared to the benefit derived by the company. Rather than stopping it, the process should be fine-tuned,” Thorpe said. The founding National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, said shareholders could be properly managed even though some of them, sometimes, behave unruly.
“In some cases, shareholders don’t go home with any money(dividend). It is that gift that they take home. If it a souvenir, it tells them that they are shareholders of the company. The gifts also keep them happy that they are also enjoying from their company and that is very important. For SEC to be interfering, it is never by force. If the companies are capable of doing this, they should be allowed to do so. There are companies that do not come with any gift to AGM. There are so many other things that SEC ought to interfere and not gifts that cost little to the companies,” Nwosu said.
On pre-AGM meetings, he said it was the prerogative of the management and not even the board because they use that to call stakeholders , agents, key distributors and others to explain to them how the business is being managed and receive advice when necessary.
“SEC should have a rethink and leave management and board to decide whether or not to distribute gifts. If SEC is asking for N10 million, indirectly they are trying to make money from the companies. I don’t think that draconian rules should be introduced now,” he said. In his reaction, Chairman, Ibadan Zonal Shareholders Association, Mr. Eric Akinduro, said the move was to short change retail investors in the market. According to him, the gifts are at the discretion of individual company, noting that the amount they spend on gifts is very small compared to what companies spend as end of year appreciation to regulators and others.
“What is the total value of gifts companies are giving to shareholders. Did the company complain? I have never seen an AGM where shareholders compelled companies to distribute gifts. It is at the discretion of the companies. Again, these gifts, particularly souvenirs, can go a long way as marketing strategy to sell the company’s products,” Akinduro said.
He explained that pre-AGM meetings are not bad as far discussions at such meeting will help to improve companies’ performance. “Most of the pre-AGM meetings, as far as I know, are to update leaders of shareholders group, who care to attend to keep them abreast of operations of the companies. The shareholders leaders will then pass such information to their members who are at grass root level because they may not be able to attend the AGM proper,” he added.
He noted that SEC may be looking at the budget reported in annual reports, hence the assumption that huge amount is being spent on gifts at AGMs. “AGM expenditure is not only on corporate gifts. Other expenses like printing and distribution of annual reports, payment for venue, lodging and feeding of board members in hotels, provision of security and other logistics are included. Corporate gift is just small fraction of the expenses,” he said.
Also speaking, the National Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie said he supported the banning of distribution of the gifts if it will bring sanity to the venue of AGMs. According to him, some of shareholders come to AGM because of the gifts and not to listen to how their companies are performing or to contribute meaningfully to the progress of the company.
“This is not palatable. But pre-AGM meetings should be allowed to be handled by the companies’ boards of directors and management with their shareholders. It is not the duty of regulator to decide how the companies run their affairs. SEC can only play advisory role but not to threatening to impose fine of N10 million on any company that did not comply.
“The truth is that SEC cannot regulate the conduct of AGMs. That is why we have boards made of experienced men and women who can take best decisions in that respect .SEC should look into why many companies are no longer posting annual reports with in 21days allowed by the law only to bring them at venue of the meeting. In some cases, the annual reports are not even enough for the shareholders.
“Pre-AGMs should be allowed to continue by the companies that wish to do so provided they do it orderly because on the AGM meeting we don’t have enough time to ask many questions. “l think SEC need to apply wisdom in dealing with the delicate issues like this so that the good intention would not be ruined.”
On her part, the National Coordinator of PSAN, Mrs. Bisi Bakare said the gifts shared at AGMs should not be stopped by the commission, saying the gifts have created a kind of bond among shareholders who meet one every year.
“The gifts at AGM is a smile to an annual birthday which you mark in appreciation of another successful business year. Apart from the statutory requirements to approve the accounts and all others, it is a celebration between the company and its shareholders. The abuses will definitely be checked not that the shareholders should be denied their delights,” she said.
Bakare said such rules and proposal from SEC show that the commission has lost focus in the capital market. “What is the cost of the gifts being distributed at AGM to shareholders whom are owners of the companies with CSR and donations recorded by companies each year. If owners of the business cannot benefit from their hard earned money they invested, who else should do so. Again, the issue of rowdiness is caused by staff of some stockbroking firms who give names of investors to fake shareholders to attend AGMs, collect the gifts and share with the staff at the end of the meeting,” she said.
On the pre-AGM special meetings, Bakare said this is part of shareholders’ right which they should not be denied. “How many hours do we spend on the floor of AGM. But pre-AGM gives enough opportunity to ask cogent questions and give advice that will enable company to move forward. There are question/ advice that cannot handled on the floor of AGM for the sake of the company image. We, at PSAN are totally against SEC’s proposal and it will never work,” she said.
The Central Bank of Nigeria (CBN) is to limit Deposit Money Banks (DMBs) access to government securities to redirect their lending focus to the private sector.
CBN Governor, Mr. Godwin Emefiele, said yesterday in Abuja that the intention was to stimulate growth in the economy.
The CBN unfolded its new policy direction on banks’ access to investing in treasury bills and bonds just as the apex bank further resolved to hold all parameters of monetary policy constant by retaining the Monetary Policy Rate (MPR), otherwise known as interest rate, at 13.5 per cent.
The MPR is the rate at which the CBN lends to commercial banks and often determines the cost of borrowing in the economy.
It also retained the asymmetric corridor of +200/-500 basis points around the MPR; left both the Cash Reserve Ratio (CRR) at 22.5 per cent and Liquidity Ratio at 30 per cent.
Emefiele, who read the committee’s communiqué at the end of the two-day Monetary Policy Committee (MPC) meeting in Abuja, said in arriving at the decision to hold all rates at current levels, nine members out of 11, voted to hold all parameters of monetary policy constant. Two members voted, however, to reduce the MPR by 25 basis points.
He said: “As in the past, the committee considered the options of whether to be more accommodative, tighten or hold its position. The committee felt that although the slight inflation uptick should result in tightening, it felt that doing this will limit the ability of DMBs to increase credit at this time, given the need to support or redirect the focus of DMBs to new credit in support of consumer, mortgage and other priority sectors of the economy, including, SMEs, agriculture and manufacturing.
“It also felt that given the fragile state of the economy, increasing the cost of credit would further diminish investment flow and impact negatively on output growth.
“As regards loosening, some members felt that it was desirable to aggressively stimulate growth, restart the capital market activities and increase lending at lower rates; which would ultimately stimulate domestic aggregate demand.
“Those against loosening felt that given that there was a marginal increase in headline inflation for April 2019, there is need to restrain from loosening in order not to exacerbate inflationary pressures.
“They also felt the economy would experience liquidity surfeit and without corresponding increase in real sector output, inflationary pressures could be elevated; resulting in likely exchange rate pressures.
“As for members who favoured a hold position, maintaining monetary policy rate at its present level was essential for better understanding of the momentum of growth before determining any possible modifications.
“They also felt that retaining the current policy stance provides an avenue for evaluating the impact of the Bank’s intervention policies to support lending to the priority sectors of the economy.”
The CBN urged government to ensure increase in tax revenue to enable it to fund its budget adequately.
Emefiele said the MPC particularly expressed concern at the development whereby banks abandoned their key roles of stimulating growth by investing in government instruments at the detriment of the economy.
He also highlighted some measures to address the situation.
He said: “The truth is that yes, according to our own regulations, there is a particular minimum percentage of treasury bills or government securities that the banks must invest in, in order to remain liquid. But again, we have observed and unfortunately and increasingly so, that the banks, rather than even focusing on granting credit to the private sector, they tend to direct their focus mainly on buying government securities.
“The MPC has frowned on that and has directed the management of the CBN to put in place policies or regulations that would restrict the banks from unlimited access to government securities.
“It is important and expedient that the committee gives this directive to management because this country badly needs growth. For us to achieve growth, those whose primary responsibility that it is to provide credit, who act as intermediaries in providing credit and are called catalysts to credit and growth in the economy must be seen to perform that responsibility.”
According to him, it is unfortunate that rather than perform their responsibility to the private sector that is the engine of growth in the economy, banks are directing liquidity to other sectors of the economy.
The CBN governor said the apex bank would implement the directive of the MPC.
On the issues that have discouraged banks from lending to the real sector as well as the Non-Performing Loans (NPLs) in the industry, Emefiele said measures would be taken to mitigate losses.
Providing update on the level of bad debts in the industry, the CBN boss said: “If you recall, the prudential is that banks should have maximum of five percent in NPLs. I must say at this time it is about 19 per cent on the average which is a significant improvement from where it was a year or two ago.
“About a year or two ago, it was close to 15 to 17 per cent and moderating to 10 per cent I would say is a substantial and significant and encouraging improvement in the level of NPLs.
“And I do think that with the steps that would be taken by the CBN to support the bank through administrative, legal and regulatory framework, that certainly we would see to it that NPLs are brought down so that deposit money banks can be encouraged to go back and begin to lend more aggressively to those sectors that they consider to be risky.”
Commenting on the MPC decision, an analyst at Ecobank Nigeria Limited, Mr. Kunle Ezun, backed the decision of the MPC.
He, however, called for a reduction of the MPR at the next meeting to support real sector growth.
Speaking in a telephone interview, Ezun said: “For me, I think what the MPC did was the best thing by keeping the rate for 13.5 per cent points for the policy rate and keeping the asymmetric corridor at +200/-500 basis points.
“If you cut the rates in an environment where you have exchange rate as a monster, it becomes a big issue because the idea is that the rate becomes so low that people could get naira at a cheap rate to purchase forex. So keeping the rate at 13.5 per cent is the best in the interim.”
On his part, the CEO of Stanbic IBTC Nominees Limited, Mr. Akeem Oyewale, said: “From the information the MPC provided, it means that right now there is still need to observe the impact of the transmission mechanism of the recent cut in MPR earlier this year.
“They still want to observe the market. There are usually lags in cutting rates and the intended impacts in the economy. You could recall that the MPC just cut the MPR this year.
“The MPC is privileged to have access to a lot of information and in reaching the decision that it took, I believe that it must have been the optimal decision in the views of the MPC.
“The market likes stability, so if there is stability in the MPR, then investors can at least plan as against having massive swings in rates.”
Consolidated Hallmark Insurance (CHI Plc) has restated its commitment to continue to reward investors, having paid dividend for seven out of its 11 years in operations.
The Chairman of CHI Plc, Mr. Obinna Ekezie, stated this in his address to shareholders of the company 24th annual general meeting (AGM) held in Lagos yesterday.
Ekezie said the company’s disciplined approach to cost management led to a profit after taxation(PAT) of N407.074 million for the year ended December 31, 2018.
Out of the profit, the directors recommended a dividend of N162.6 million, that translated to two kobo per share.
“We shall remain committed to our promise of regular dividend payment, God willing, having paid dividends seven nancial years out of eleven of our operations in the past. This year, we are proposing a total dividend payment of two kobo per share subject to your approval at this meeting. This will translate to a total dividend payout of N162.6 million from our 2018 operations,” he said.
Speaking on the financial performance of the company, the Managing Director/CEO, CHI Plc, Mr. Eddie Efekoha said the results of their performance in 2018 was an improvement on the growth projections for the industry.
“It is an all-time high rise in revenue, hitting a gross premium written of N6.865 billion, an increase of 20.85 per cent over the 2017 gure. Business retention remains good, even as we have further energized our Retail and agency segments to grow new business in ow into the group. The retail segments achieved a combined growth of 135per cent in 2018 on their 2017 performance,” he said.
According to him, CHI Plc’s revenue diversi cation drive was a major factor that aided the sustained nancial performance through the challenging market conditions of 2018, further reinforcing its role as a formidable player in the Insurance Industry.
“We have continued to ful l our claims payment obligations to customers promptly amidst rising claims in the industry, with N4.787 billion on claims settlement in 2018 when compared with the N3.354 billion. The 42.72 per cent increase, though signi cant, is a reduction of the 93 per cent growth in 2017 claims expenses over that of 2016. The increase in the gure for 2018 is attributable largely to a few large one-offs with a single payment on a marine hull loss amounting to N2,174 billion. Signi cant recoveries on overall claims expenses amounting to N2.984 billion were, however, made from our robust reinsurance arrangement,” Efekoha said.
The Nigerian Stock Exchange (NSE) yesterday defended the listing of MTN Nigeria Communications Plc, saying it followed due process and did not violate listing rules just as the illiquidity of MTN shares continues while a few shareholders continue to reap big.
The share price closed yesterday at N131.70 per share after four days of trading, representing almost 50 percent rise in price.
The NSE, in a statement, said there seemed to be a misconception that a concession was given to MTN Nigeria on the minimum free float required for companies listed on the exchange.
It said its Rule Book defined free-float as the number of shares that an issuer has outstanding and available to be traded on the Exchange.
This includes all shares held by the investing public, and excludes shares held directly or indirectly by promoters, directors and their close relatives; strategic investors holding five per cent and above of the issued share capital; or government.
The NSE’s defence came just as investors urged the Securities and Exchange Commission (SEC) to ensure that the ongoing investigation into the process that led to the listing of MTN Nigeria on the NSE is thorough, especially as it relates to the crossing of shares.
However, MTN in a reaction to the push-back that has trailed its listing, said it met all listing conditions and violated no guidelines.
In its statement, the NSE pointed out that its rules for listing on the Premium Board, which is the platform on which MTN Nigeria is listed, require a company to have a minimum free float of 20 per cent of its issued share capital or that the value of its free float is equal to or above N40 billion on the date the exchange receives the issuer’s application to list.
“MTN Nigeria met with the free float requirement of N40 billion. The free float of MTN at the time of listing was in excess of N90 billion,” NSE added.
According to the NSE, where a company lists following an initial public offering, shares are expected to be available for trading on the day of listing, while in a listing by introduction, no shares have been offered for subscription by the company prior to listing.
It said: “Thus, without any intervention, it is possible that there will be no shares available for trading on the listing date. Indeed, currently, no rule of the exchange compels shareholders in a listed company to tender their shares for trading. Shareholders are at liberty to trade their shares at any time and price suitable to them. Thus, in order to stimulate trading in the shares of companies that list by introduction, the NSE’s practice is to urge the company to make shares available on the day of listing. In the case of MTN Nigeria, the NSE had requested the company as part of the listing process to make shares available and The Exchange expects the company to do that.
“We will like to assure our stakeholders and the general public that the exchange will continue to uphold global best practices in its business operations and will sustain engagement with its stakeholders to continually develop regulatory frameworks that ensure our market completely reflects our values of ambition, fairness and inclusion.”
THISDAY had reported that investors on the NSE and stakeholders waiting to purchase MTN shares through an initial public offering might do so at a very high premium whenever the telco decides to float the IPO.
This was because of the free float accommodation and some other waivers MTN Nigeria was granted by the capital market regulators to pave the way for its listing last Thursday.
The telco company, in a statement yesterday by its Company Secretary, Uto Ukpanah, said its listing on the NSE led to the creation of a new telecoms and technology asset segment for the NSE.
This, the telco stated, also deepened the equity capital markets base of the country, which makes it possible to broaden the shareholding base of MTNN over time.
“The listing by introduction means that the existing shares of MTN Group (78.8 per cent), the Nigerian investors (19.4 per cent) and other investors (1.8 per cent) are listed. All MTNN shareholders will be free to trade their shares on the NSE.
“MTN Nigeria met all of the conditions required to list as a member of the Premium Board of the NSE and was required to publish a commencement listing price. The outstanding matter relating to the Attorney General of the Federation created a high degree of uncertainty over the valuation of MTNN, which makes it difficult to determine a fair price.
“For MTN Nigeria at present, the associated risks and potential returns could not be fairly assessed and priced. As a result, and in the best interest of all shareholders, both the current and future, the commencement listing price was set at N90 per ordinary share, which was determined with reference to the private shares sale transactions by MTNN shareholders over a 180 trading day period,” it said.
According to MTN, the N329 billion medium term facility it signed in 2013 would be fully paid by November 2019, while the N200 billion facility it signed last week formed part of its new debt program, in line with the medium term business plan of the company.
“The new facility, when drawn down, will be used to support our medium term capital expenditure projects; fund our working capital needs, meet operational expenditure requirements and position the company to take advantage of future expansion opportunities.
“The preference shares have not been redeemed. The redemption of the preference shares was always envisaged as a necessary part of simplifying the capital structure of the company ahead of, or soonest after listing. After obtaining necessary regulatory approvals, the preference shares redemption will be taken from the distributable reserves of the company and paid for with cash generated from its operations,” it added.
Meanwhile, Afrinvest has expressed concerns over the illiquidity of MTN shares on the exchange, adding that this is partly connected to the cheap valuation of the company at the point of listing.
“In our discussion with management, we discovered that the N90 listing price was arrived at using the average trading price of linked units at the over-the-counter (OTC) market over 180 days. We also obtained information that MTN Nigeria’s shareholder loan of US$402 million was converted to cumulative preference shares linked to ordinary shares in 2008.
However, prior to the listing on NSE, the shares were delinked, and the ordinary shares were subdivided into 50 shares at 2 kobo per share from N1 per share. There are plans to redeem the preference shares worth N144.7 billion (US$402 million),” it said.
AfriInvest said the N1 trillion (US$5.2 billion) fine imposed on MTN in 2015 for not disconnecting unregistered SIM cards and the $2 billion fine slammed against the company by the Office of the Attorney General of the Federation in relation to taxes on the importation of equipment and payments to suppliers might be part of the reason for MTN’s cheap valuation at listing and why the IPO is on hold.
Since the listing of the telco by introduction last Thursday, its share price has remained scarce in the market, thereby fuelling suspicion of possible manipulation.
Yesterday, it extended the gains as investors traded 110.719 million units of MTN for N14.582 billion in 292 deals, while its share price rose further by 10 per cent or N11.95 to close higher at N131.70.
THISDAY had reported that investors on the NSE and stakeholders waiting to purchase the shares of MTN Nigeria Communications Plc, through an initial public offering (IPO), might do so at a very high premium whenever the telco decides to float the IPO.
This was because of the free float accommodation and some other waivers MTN Nigeria was granted by the capital market regulators to pave the way for its listing last Thursday.
Since the listing of the telco by introduction last Thursday, its share price, has remained scarce in the market, thereby fuelling suspicion of possible manipulation.
A total of N578.114bn dividends has so far been declared for payment to shareholders by companies that have held their Annual General Meetings for the 2018 financial year.
According to the latest data obtained from the Nigerian Stock Exchange by our correspondent, Dangote Cement Plc paid the highest dividend of N16 per share, which translated to N272.640bn.
Guaranty Trust Bank Plc paid N80.84bn dividend, Zenith Bank Plc paid a total of N78.491bn dividend, Nestlé Nigeria Plc paid N30.517bn, Access Bank Plc paid N17.772bn and Stanbic IBTC Holdings Plc paid N15.361bn.
Nigerian Breweries Plc, Dangote Sugar Refinery Plc, Seplat Petroleum Development Company Plc, FBN Holdings, Cement Company of Northern Nigeria Plc, Total Nigeria Plc, Fidelity Bank Plc, 11 Plc and Okomu Oil Palm Plc paid N14.634bn, N13.212bn, N10.641, N9.333bn, N5.257bn, N4.753bn, N3.187bn, N2.975bn and N2.862bn, respectively.
FCMB Group Plc paid N2.773bn, Nascon Allied Industries Plc paid N2.650bn, Julius Berger Nigeria Plc paid N2.640bn, Custodian Investment Plc paid N2.059bn, CAP Plc paid N2.031bn, United Capital Plc paid N1.8bn, and Transnational Corporation of Nigeria Plc paid N1.219bn.
Wema Bank Plc, Transcorp Hotels Plc and Africa Prudential Plc paid N1.157bn, N1.140bn and N1bn, respectively.
Other companies paid dividends in nine digits, while one company― The Initiates Plc ― paid in six digits (N444,990).
Some shareholders have expressed their displeasure over the dividends paid by the companies.
The shareholders, who expected to have received higher dividends, complained at different Annual General Meetings in Lagos, describing the dividends paid as meagre.
A shareholder with Union Bank of Nigeria, Mrs Olubukola Adesanmi, said, “The dividend is too small; we are just trying to manage it. We believe companies can do better.
“We know there are some issues facing the companies; they keep complaining about taxes, fines and all those things. What they are giving us is ‘kobo-kobo’ but we are just trying to manage it; it is not commensurate with the investments we have.
“I have shares in other banks, like FCMB, Wema Bank, and insurance and fast-moving consumer goods companies; the story is all the same. I have over 500 shares in Union Bank.”
Another shareholder, Mr Kehinde Oniwinde, said he always tried to register his displeasure during AGMs.
He said some companies had not even paid dividends in a long time and nothing was done to them.
According to him, it is unfair that shareholders are not being well compensated or not compensated at all in some cases.
Oniwinde said, “Companies can do better; we always encourage the companies to try and do better. What do you expect when you invest money? You expect to make gain; you don’t expect any loss; but if the loss comes, there must be a reason for it and it should not be a regular thing.
“For some of us that have quite a number of shares in companies, I think a lot more can be done. Those that don’t pay dividends should be probed; there should be a consideration for people that invest money in the company.
“I have been buying shares since the ’70s and I have shares in 72 companies; some about N20m, some N12m, and others less than N10m. I expect these investments to yield tangible returns.”
The President, Advancement of the Rights of Nigerian Shareholders, Dr Faruk Umar, said although no shareholder had come to him personally to complain, he confirmed that many shareholders had complained about low dividends at different AGMs.
He stated that he was also not pleased with the dividends paid by some companies, citing the United Bank for Africa Plc and FBN Holdings.
Umar said, “I also complained that the dividend paid by UBA should have been N1 rather than 85 kobo. But the group managing director said that they would try to achieve it next year.
“At the AGM of FBN Holdings, I also complained about the dividend but they gave a good explanation that they would try to achieve one digit Non-Performing Loan ratio, which would enable them to pay N1 dividend.
“If you look at the profitability, it is very high. If not because of the NPL ratio, they would have paid close to N1. So, I commend them for the 26 kobo they paid, which they said was from their insurance and merchant bank subsidiaries.”
Umar added that he was sure that when the group achieved one-digit NPL, it would be able to pay a dividend from the banking subsidiary, which would increase the amount to be received.
He said he had received explanations from banks, which said dividends were regulated by the Central Bank of Nigeria.
Umar said his findings revealed that if the NPL ratio was one digit, banks would not be outlawed by the CBN to pay dividends.
He said, “If you also look at the first-quarter results, many companies have not recorded losses; they have improved marginally on their profits. I am hopeful that the dividend next year will be higher than the one paid in 2018.”
The Group Chairman, UBA, Mr Tony Elumelu, noted that the year 2018 was not rosy for many companies because of the difficult operating environment.
He said the economy witnessed a slow recovery but the bank tried its best to deliver good results and value for shareholders.
He assured shareholders that being a shareholder himself, he would ensure that the request for an upward review of dividends was considered while hoping for better economic and operating environment.
The President, Independent Shareholders Association of Nigeria, Mr Sunny Nwosu, said a lot of regulatory changes, such as the IFRS 9, coupled with the difficult operating environment, contributed to the poor performance of companies.
He said although the dividends paid were below some shareholders’ expectations, companies that paid dividends should be lauded for even the little paid, adding that some companies had not even paid dividends in years.
The President, Constance Shareholders Association of Nigeria, Mr Shehu Mikali, said he did not believe the dividends were small.
He stated that the dividends were quite reasonable, taking into consideration the business environment that such companies operated in during the year.
Mikali said, “Most of the companies have been able to pay; so, we have to give kudos to them because it is not easy to do business in an area where there are insecurity and infrastructural challenges.
“The dividends are better than nothing, and this time is better because some of the companies that have not paid in a while paid dividends this year.”
He stated that rather than complain, shareholders ought to give advice to such companies on how they feel the company could better perform and urge the government to make the economic environment more palatable and conducive for companies.
He added that the government should also work on constituting the board of directors of the Securities and Exchange Commission to enable the apex regulatory authority of the capital market to perform better.
“If it is a government that knows what it is doing, these are areas it ought to have done something about. When all that needs to be put in place with respect to regulation had been done and the regulators are doing their best to investors’ interest, we will have better accountability from such companies and better returns,” Mikali noted.
He described the Nigerian economy as a viable place to do business, saying the government could do more to make it better.
The nation’s stock market recorded its highest gain since February 12 last week as the market capitalisation of equities rose by N1.874tn following the listing of MTN Nigeria Communications Plc on the Nigerian Stock Exchange.
The market started the week on a negative note, as the NSE All Share Index dropped by 98 basis points on Monday while the market capitalisation of equities dropped to N10.701tn from N10.842tn on Friday the previous week.
Further declines were recorded on Tuesday and Wednesday as market sentiment remained bearish.
The NSE ASI, however, increased by 52bps and 153bps on Thursday and Friday respectively following MTN Nigeria’s listing on Thursday.
MTN’s share price gained 21 per cent to close the week at N108.90 with a total bid of 262 million units (227 million units at N108.90 and 34 million units between N90.00 and N108).
Analysts at Afrinvest Securities Limited said 528,600 units of MTN’s shares had been traded so far at a total value of N57.6m.
“Major trades carried out so far are 244,000 units crossed at N108.90; 44,850 units crossed at N108.90 and 203,600 units crossed at N108.90,” they said in a note.
Analysts at Vetiva Capital Management Limited said with significantly high demand for the stock expected to continue, they expected market activity to remain upbeat as investors continued to source the shares.
They said, “We expect the market to close positive at week open as the index continued to rally on the back of the new listing.”
The Nigerian Stock Exchange, in its weekly market report, said a total turnover of 1.172 billion shares worth N17.887bn in 18,380 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.477 billion shares valued at N10.876bn that exchanged hands the previous week in 20,740 deals.
The financial services industry (measured by volume) led the activity chart with 680.592 million shares valued at N7.395bn traded in 11,035 deals, thus contributing 58.09 per cent and 41.34 per cent to the total equity turnover volume and value, respectively.
The conglomerates industry followed with 266.636 million shares worth N818.249m in 1,152 deals. The third place was occupied by the Information and Communications Technology industry with a turnover of 82.390 million shares worth N6.085bn in 346 deals.
Trading in the top three equities, namely Transnational Corporation of Nigeria Plc, Access Bank Nigeria Plc and Guaranty Trust Bank Plc (measured by volume), accounted for 421.064 million shares worth N4.681bn in 3,073 deals, contributing 35.94 per cent and 26.17 per cent to the total equity turnover volume and value, respectively.
The ASI and market capitalisation appreciated by 0.08 per cent and 17.29 per cent to close the week at 28,871.93 and N12.717tn, respectively.
Sixteen equities appreciated in price last week while 42 equities depreciated, compared to the 18 gainers and 49 losers recorded the previous week.
The top gainers for the week were Thomas Wyatt Nigeria Plc, Neimeth International Pharmaceuticals Plc, A.G. Leventis Nigeria Plc, Transnational Corporation of Nigeria Plc and NPF Microfinance Bank Plc, which gained 24 per cent, 22 per cent, 16.67 per cent, 9.73 per cent and 8.89 per cent, respectively.
Regency Assurance Plc, Forte Oil Plc, Champion Breweries Plc, FCMB Group Plc and Wema Bank Plc, whose respective share prices shed 20 per cent, 18.88 per cent, 18.18 per cent, 13.89 per cent and 13.89 per cent were the top losers for the week.
Temporary relief came to the Nigerian stock market last week following the listing of MTN Nigeria Communications Plc. Trading in the shares of MTN in two days reversed Nigeria’s equities market fortune to the positive territory.
The high demand for the stock after its listing without commensurate supply led to a jump of 21 per cent in its price from N90 to N108.90.
The gain by the telecoms giant effectively wiped off losses from the prior sessions. Consequently, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 0.08 per cent to close at 28,871.93 points. Market capitalisation added N1.9 trillion to close higher at N12.7 trillion.
But investors on the NSE and stakeholders waiting to purchase the shares of MTN Nigeria Communications Plc through an initial public offering (IPO) may do so at a very high premium whenever the telco decides to float the IPO. This is because of the free float accommodation MTN Nigeria was granted by the capital market regulators to pave the way for its listing, even as MTN exercised its option on preference shares worth N145 billion a day after the listing and went ahead to borrow a further N200 billion from Nigerian banks, to pay off the preference shareholders at the listing price of N90 per share, a source revealed.
However, analysts at Cordros Capital Limited said since the gain recorded was not broad based, they advised investors to still maintain cautious trading.
“Clearly, the gain was not broad-based, at such we reiterate our cautious trading pattern. Meanwhile, we believe that the blend of positive macroeconomic fundamentals and compelling valuations still supports a near term recovery,” they said.
A further review of the trading pattern last week, showed that the market was bearish for three days prior to the listing of MTN. For instance, the market opened with a decline of 1.26 per cent on Monday on the back of losses in Nestle Nigeria Plc and Guaranty Trust Bank Plc. The market witnessed further decline of 0.22 per cent on Tuesday and 0.48 per cent on Wednesday. However, the bearish run reversed on Thursday and Friday following the listing of MTN on the Nigerian Stock Exchange increasing the ASI by 0.53 per cent and 1.53 per cent respectively.
Across sectors, performance was negative as all indices tracked trended southwards led by the NSE The Banking Index led with a decline of 4.3 per cent.
The Consumer Goods Index trailed, shedding 4.1 per cent, while the NSE Insurance Index shed 3.3 per cent. Similarly, the NSE Industrial Goods and NSE Oil & Gas Index dipped by 2.8 per cent and 2.3 per cent in that order.
Nevertheless, the listing of MTN on the exchange elicited excitement among its board and management.
For instance, the Chairman MTN Nigeria, Pascal Dozie, said: “Today is a major milestone in the evolution of MTN in Nigeria and it is fitting that it takes place 18 years to the day since I made the first call on the MTN network on May 16th 2001. Since our initial investment in 2001, we have worked in partnership with Nigerians to deliver the largest network in Nigeria, with over 60 million people now able to access mobile communications services.
“We employ over 1,600 people and our operations create employment for more than 500,000 Nigerians. Our technology has empowered millions of people and businesses in rural and urban areas. This has driven innovation, expanded market access and enhanced local economic inclusion. I am delighted that we can expand this impact further today, by enabling investors to trade our shares on the NSE.”
Also commenting, the Chief Executive Officer, Ferdi Moolman, said: “We have evolved from an ambitious start-up at the genesis of a new and emerging industry, to a business that is able to touch lives in every corner of Nigeria. We have established a sustainable platform for growth, from which we are able to meet the growing and dynamic needs of our customers, our communities and our country.
“This platform has been built through a sustained focus on customer-centric delivery, striving to ensure that every subscriber gets as much value for their money as possible. We are grateful to customers for their loyalty, and to our people, our partners and our regulators for the opportunity to continue to contribute to Nigeria’s growth story.
“We are only beginning to tap into the opportunities that connectivity enables and are fully focused on investing to connect every Nigerian, and to make social innovations like mobile electricity and high impact mobile solutions in education, healthcare and agriculture available in communities everywhere.”
Meanwhile, investors traded a total turnover of 1.172 billion shares worth N17.887 billion in 18,380 deals were traded last week compared with a total of 1.477 billion shares valued at N10.876 billion that exchanged hands the previous week in 20,740 deals.
However, the Financial Services Industry led the activity chart with 680.592 million shares valued at N7.395 billion traded in 11,035 deals, thus contributing 58.09 per cent and 41.34 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 266.636 million shares worth N818.249 million in 1,152 deals. The third place was ICT Industry with a turnover of 82.390 million shares worth N6.085 billion in 346 deals.
Trading in the top three equities namely, Transnational Corporation of Nigeria Plc, Access Bank Nigeria Plc and Guaranty Trust Bank Plc, accounted for 421.064 million shares worth N4.681 billion in 3,073 deals, contributing 35.94 per cent and 26.17 per cent to the total equity turnover volume and value respectively.
Also, a total of 18,181units of Exchange Traded Products (ETPs) valued at N215,365.64 executed in four deals compared with a total of 97,154 units valued at N1.318 million transacted the preceding week in two deals.
A total of 10,366 units of Federal Government Bonds valued at N9,783 million were traded last week in nine deals compared with a total of 265 units valued at N281,654.91 transacted two week in five deals.
Price gainers and losers
A look at the price movement chart showed that 16 equities appreciated in price during the week, lower than 18 in the previous week, while 42 equities depreciated in price, lower than 49 equities of the previous week.
Thomas Wyatt Nigeria Plc led the price gainers with 24 per cent, trailed by Neimeth International Pharmaceuticals Plc with 22 per cent. A.G Leventis Nigeria Plc gained 16.6 per cent, while Transcorp Plc and NPF Microfinance Bank Plc chalked up 8.8 per cent. Okomu Oil Palm Plc and UAC of Nigeria Plc appreciated by 5.0 per cent.
Other top price gainers included: Veritas Kapital Assurance Plc (5.0 per cent); Mutual Benefits Assurance Plc (4.7 per cent ) and Unilever Nigeria Plc (3.2 per cent).
Conversely, Regency Assurance Plc led the price losers with 20 per cent, trailed by Forte Oil Plc with 18.8 per cent. Champion Breweries Plc shed 18.2 per cent, just as FCMB Group Plc and Wema Bank Plc went down by 13.8 per cent apiece. Goldlink Insurance Plc closed 13.04 per cent lower, while NEM Insurance Plc dipped by 12 per cent.
Other top price losers were: University Press Plc (9.7 per cent); Access Bank Plc (9.1 per cent) and Cement Company of Northern Nigeria Plc (9.1 per cent).