The Chairman of Seplat Petroleum Development Company Plc, Dr. ABC Orjiako, Thursday assured shareholders that the company has put in place strategies that would improve its financial performance and deliver better value going forward.
Several economic headwinds and the shut-in of the Forcados terminal resulting in lower production, lower oil price realisations and higher costs, made Seplat’s revenue to fall from N113 billion in 2015 to N63.7 billion in 2016, while a loss of N45.4 billion was recorded compared with a profit of N13 billion in 2015.
However, speaking at the annual general meeting of the company held in Lagos, Orjiako said with the diversity of export solutions in place and “our increasing gas processing capacity, Seplat has the potential to deliver material production upside with less risk of significant constraints from any infrastructure disruption”.
According to him, the company is actively pursuing alternative crude oil evacuation options for production at OMLs 4, 38 and 41 and potential strategies to further grow and diversify production in order to reduce over-reliance on one particular third party operated export system in the future.
“In line with this objective, Seplat successfully implemented, in 2016, an alternative export solution during the second quarter whereby crude oil production from OMLs 4, 38 and 41 is sent via the company’s own 100,000 barrel of oil per day (bopd) capacity pipeline to available storage tanks at the Warri refinery,” he said.
Explaining the challenges faced by the company in 2016, Chief Executive Officer of Seplat Austin Avuru said: “In addition to a difficult global oil market backdrop, our business had to contend with unprecedented operational challenges due to interruptions and these are reflected in our full year results.”
He disclosed that the company has now established a longer-term alternative export route via the Warri refinery jetty and is nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bopd gross during Q2 2017.
According to him, alongside this, the company is collaborating and supporting government on the completion of the Amukpe to Escravos pipeline that will offer a third export route through the Escravos terminal.
The naira appreciated to 374 per United States dollar on Thursday, up from 382/dollar on Wednesday.
The local unit closed at 382/dollar from Monday to Wednesday.
This came just as currency analysts expect the naira to be stable across the board in the near term on increased dollar supply to both the official interbank window and the black market.
The local unit has been trading around 382/dollar on the black market in the last two weeks, while at the interbank market the naira was trading at around 305.40 per dollar.
According to Reuters, the Central Bank of Nigeria has been intervening on the official market to try to narrow the spread between the official interbank and black markets.
The CBN has sold over $4bn since February, improving dollar supply and providing support for the naira.
On the back of sustained dollar injection by the CBN, the local unit has been showing resilience against the greenback.
The CBN has injected $100m, $205m and $457.3m respectively into various segments of the forex market in the past three weeks.
Currency analysts said the creation of the “Investors & Exporters FX Window” by the CBN was a right move, adding that it had helped to narrow the gap between the official and parallel market rates of the local unit.
They, however, stressed the need for the unification of the various exchange rates by the central bank.
The Kenyan shilling could gain ground against the dollar in the coming week with dwindling end month importer demand giving way to foreign exchange inflows from charities and exporters, traders said.
The equities market appreciated highest in 11 months on Thursday, driven by gains in banking and cement shares as investors took advantage of the low valuation for some commercial bank shares.
The market rose by 2.77 per cent to cross 30,197 points, lifted by gains in First Bank Holdings Plc and Dangote Cement Plc. At the close of trading, the year-to-date return settled at 12.80 per cent. There were 39 gainers and 11 losers.
FBN Holdings Plc topped the gainers’ list, advancing by 10 per cent, to close at a year high of N5.83. This was followed by May and Baker Nigeria Plc, Learn Africa Plc, Champion Breweries Plc and Access Bank Plc, which appreciated by 9.40 per cent, 8.11 per cent, 6.99 per cent and 5.53 per cent, accordingly.
However, Linkage Assurance Plc closed the day atop the losers’ chart, declining by 9.52 per cent, to close at N0.57. This was followed by Oando Plc, 7UP Bottling Company Plc, Jaiz Bank Plc and Caverton Offshore Support Group Plc, which declined by 5.33 per cent, 4.99 per cent, 4.21 per cent and 4.17 per cent, respectively.
Meanwhile, the NSE, at an interactive session on Thurday, launched X-Academy, a knowledge-platform designed to provide education services to individuals who want to gain a better understanding of the various aspects of the capital market. X-Academy offers a wide range of courses geared towards bridging the knowledge gap of dealing members, issuers, investors and the general public about products and services of the capital market.
The establishment of X-Academy is said consistent with the Exchange’s tradition of pioneering far-reaching innovations within the Nigerian capital market. It also feeds directly into the National Financial Inclusion Strategy which was launched by the Federal Government in 2012 to reduce the number of adult Nigerians who are financially excluded, from 46.3 per cent in 2010 to 20 per cent in 2020.
Speaking at the session, the Chief Executive Officer, NSE, Mr. Oscar Onyema, noted that the training programmes at X-Academy would provide individuals and businesses with a robust and effective array of training solutions that would ensure participants were abreast with trends in the rapidly evolving financial markets.
He said, “As a socially responsible organisation devoted to enhancing the fortunes of Nigerians and our investors, we are confident that participants of programmes offered by X-Academy will be better positioned to make informed financial decisions”.
Also speaking at the event, the Acting Head, Corporate Services Division, Ms Pai Gamde, stated, “X-Academy is a crucial step to enhancing financial literacy levels in Nigeria and equipping professionals with requisite skill sets to deliver innovative solutions for the challenges confronting our financial sector.”
The Nigeria Deposit Insurance Corporation (NDIC) has stated its resolve to lead in enhancing capacity building and bridging skills gaps in the banking industry in general and the Deposit Insurance Scheme (DIS) in particular in Africa.
The NDIC’s Managing Director/Chief Executive, Alhaji Umaru Ibrahim, made this remark during the accreditation ceremony of the NDIC Academy as a training service provider for its staff and the banking industry by the Council of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
According to a statement, Ibrahim said with the NDIC Academy’s new status, it was positioned to fulfil the corporation’s goal of serving as a centre of academic excellence for capacity building on the DIS for countries in the sub-Saharan Africa.
He added that the corporation prides itself on establishing high standards of professionalism and competency among its staff through the corporation’s NDIC Academy and other human capital development initiatives, including the Chartered Banker/MBA programme of University of Bangor, Scotland in partnership with the CIBN.
The NDIC CEO emphasised the importance of continuous high level training in order to achieve the corporation’s core mandates of deposit guarantee, bank supervision, bank distress resolution and bank liquidation. The ultimate goal, he said, would be to enhance depositor protection and public confidence in the banking system.
In his earlier address, the President and Chairman, Council of CIBN, Prof. Segun Ajibola, commended the corporation for its consistent efforts towards meeting high standards for the benefit of the banking industry and larger economy. Ajibola described the NDIC’s readiness to subject itself to the rigours of the accreditation process as a testimony of its management’s commitment towards capacity development in order to equip its workforce with critical skills to enhance their performance and productivity.
The Law Union & Rock Insurance Plc ended the 2016 financial year with N3.935 billion gross premium, up from N3.858 billion.
The company grew its profit before tax (PBT) by 101 per cent, from N328 million in 2015 to N658 million in 2016, while total assets rose from N8.580 billion while shareholders’ funds grew by 13.03 per cent from N4.45 billion to N5.039 billion.
Addressing the shareholders at the 48th annual general meeting (AGM) of the company in Lagos, the Chairman of Law Union & Rock Insurance, Mr. Remi Babalola, said the company recorded marginal increase its top-line and significant growth in its bottom-line.
Babalola said: “If you look at the performance of the company in 2016, you will realise that the company is doing better every year. Since 2012 we have been doing better than other years. The company had a very good brand, but faced some challenge which made things not go very well for them. We were among the topmost insurance companies in the country if you trace through history.
By the time we came into the company, it was struggling, therefore what we did was to change the management, the board, and improve the policies. Also, we put good risk management practices. We then came up with a corporate plan and good strategy and we allowed the management to implement that strategy.”
He said the company has brought in a foreign investor as part of the shareholders, disclosing that the company did a private placement last year which was successful and the foreign investor has put money into the company.
“We are looking for leverage in the areas where we are going to bring in technology to enhance product and diversify the company,” he said. Speaking on the insurance industry, he said insurance business in Nigeria has not started because when you compare the contribution of the insurance sector to the Gross Domestic Product (GDP) it is very low.
“When we compare with Ghana, Kenya and South Africa, while we have zero per cent in terms of GDP, they have above three per cent. There is tremendous opportunity in the insurance business, but it needs the right risk management, appropriate capital, right technology and well-motivated workforce. These are what the Law Union and Rock has right now,” he added.
According to Babalola, upon the approval of the shareholders of the company to raise additional capital by way of private placement requisite regulatory approvals were obtained for the issue.
He added that consequent upon a conditional approval issued by the National Insurance Commission (NIC) that the investor’s post-placement position should not exceed 20 per cent of the company’s equity, the placement subscribed was 83.3 per cent, thereby bringing the total shares subscribed to the 859 million ordinary shares.
The Chief Executive Officer, Mouka Nigeria Limited, Mr. Ray Murphy, says the London Stock Exchange Group’s ‘Companies to Inspire Africa’ report is meant to increase awareness of investment opportunities in Nigeria and Africa in general.
He said the initiative could also enhance capital inflows into the continent.
“It (London Stock Exchange Group’ Company to Inspire Africa report) is to increase awareness of investment opportunities, to get capital inflows going again; obviously, as companies grow they need further levels in capital,” Murphy noted.
Mouka was recently listed in the London Stock Exchange Group’s inaugural ‘Companies to Inspire Africa’ report, a landmark report that identifies the fastest-growing and most dynamic businesses across Africa, the company said in a statement on Thursday.
The ‘Companies to Inspire Africa initiative’ is part of London Stock Exchange Group’s broader support campaign for dynamic companies that have shown excellent growth rate and potential to power Africa’s development.
Murphy described his company’s recognition in the report as great honour, saying “Mouka’s inclusion in the inaugural Companies to Inspire Africa report was in recognition of the company’s unfailing commitment and passion to manufacturing high quality mattresses and pillows that adds comfort to life for every Nigerian.”
During the London LSEG’s regional event in Lagos recently, Murphy expressed his delight at the listing.
He said, “I think for us it is a tremendous honour to be recognised internationally for the performance of the company within Nigeria. It is a tremendous honour. We were contacted several months back by the London Stock Exchange Group, they were putting together this programme of companies to inspire Africa and they identified companies with some criteria.
“I think the first is exponential growth, so we were one of a select band of companies, not just in Nigeria but throughout Africa, which are recognised for their successes and we were asked to participate in this ‘Company to Inspire Africa initiative.”
He added, “The companies selected were about 300 around Africa which we were identified but out of that 300, nearly 60 of them were in Nigeria and Mouka was one of those selected in Nigeria.”
The Nigerian National Petroleum Corporation (NNPC) is in talks with American and Chinese investors interested in working to grow the corporation’s business interests in the non-core oil sectors of its operations.
The corporation, which disclosed this in a statement, added that so far, it has identified potential investors to collaborate with in expanding its research and development (R&D), health, shipping and telecommunications business interests. These investors, it noted are Americans and Chinese.
According to the corporation, the collaboration was necessary following the volatility in crude oil prices in the international market. NNPC explained that it would look to its non-core oil sector to stay afloat, adding that it has specifically established contacts with some Chinese investors to partner in its R&D venture.
The statement quoted the Chief Operating Officer in charge of Ventures at the corporation, Dr. Babatunde Adeniran to have said this at the recent 10th edition of the Annual sub-Saharan Africa Oil and Gas Conference in Houston, Texas, where he affirmed that response from the Chinese prospects had been favourable. Adeniran, the statement noted, said the NNPC had also extended it dragnet to American investors who he affirmed were interested in working with the corporation on R&D.
He said there had been low investment in R&D in the industry in sub-Sahara Africa, thus necessitating NNPC’s commitment to key in to maximise available opportunity in the sub-sector and region.
Adeniran, further outlined in the statement which was signed by NNPC’s Group General Manager, Public Affairs, Mr. Ndu Ughamadu, other non-core oil and gas sectors that are of interest to NNPC to include healthcare, shipping and telecommunications.
On health, he stated that NNPC has 52 clinics across Nigeria, indicating it perhaps has the largest healthcare investment owned by a single business entity in Nigeria.
“NNPC Medical is already talking to top class medical centres across the world for partnership. Billions of dollars went into medical tourism in Nigeria yearly. NNPC is poised to take advantage of the gaps in the healthcare delivery in Nigeria,” said Adeniran.
In a similar development, the corporation also disclosed that it has received about 34 bids submitted by different companies for the digitisation of all of its legacy documents domiciled in its corporate headquarters.
It explained that the bid opening exercise was conducted in the full glare of representatives of the bidding companies and Civil Society Organisations (CSOs) in Abuja.
Quoting its Group General Manager, Information and Technology Division (ITD), Mr. Danladi Inuwa, at the bid opening, the corporation said the exercise was geared towards having electronic copies of all NNPC documents in line with global best practices.
“I am happy that there is much show of interest in this process. The process is going to be transparent from the beginning to the end and we want the best yield in terms of value addition and best services and this was why the bid tender was extended to twelve (12) weeks,” Inuwa who was represented by represented by General Manager Applications, Mr. Kunle Osobu.
The statement also quoted the General Manager, Supply Chain Management (SCM) of NNPC, Mrs. Sophia Mbakwe, as saying that the corporation would seek to engage the services of reputable organisations that would digitise its legacy documents.
Mbakwe stated that the process would be transparent, in line with the corporation’s bid to reposition its business activities as an accountable organisation.
The UACN Property Development Company (UPDC) Plc led price gainers at the stock market on Tuesday as investors increased demand for the equity on news that the company is being repositioned to deliver better value to all stakeholders. UPDC appreciated 9.4 per cent to close at N1.86 per share, trailed by Fidson Healthcare with 8.8 per cent. Vitafoam Nigeria Plc, Honeywell Flour Mills Plc and Newrest ASL Plc appreciated by 4.9 per cent apiece to complete the top price gainers.
Market analysts linked the renewed demand for UPDC shares to the efforts by the management to reposition the company. The Chairman of UPDC, Mr. Larry Ettah told shareholders at the annual general meeting (AGM) held in Lagos yesterday that despite the challenging business terrain, the company continued its ongoing project developments in 2016 and commenced new ones.
Providing details on the company’s plan for the future, he said: “A key strategic imperative for 2017 is to deleverage the company. This is being achieved through deployment of an aggressive sales strategy, one for one Rights Issue that is about to be launched, and divestment from low yielding investment properties. The fundamentals of the company are strong and the brand remains positioned to deliver value to all stakeholders.” According to him, Nigeria’s real estate market still presents substantial opportunities as well as a number of challenges for property investors and developers.
He said: “Cumbersome and time-consuming processes for land acquisition, insecure land title, infrastructuredeficiency are few of the challenges of the sector. Existing concerns such as underdeveloped mortgage market, paucity of medium to long term infrastructure and financial institutions with reasonable interest rates are areas the federal government would need to pay particular attention to in the near future in order to move the sector forward.”
Ettah said that housing demand in residential real estate has consistently exceeded supply, explaining that a keyconstraint in bridging the huge gap in housing delivery on the demand side is affordability.
“The reduced purchasing power of Nigerians and the inability of the low-income earners to pay the prevailing exorbitant rents have led to increased demand for affordable houses. Consequently, developers in recent times have shifted focus to the middle-income segment of the market, where there appears to have been a significant level of income stabilisation. The federal government and certain state governments have embarked on initiatives regarding affordable homes and have specific agencies set-up towards that end,” he said.
Nigeria’s indebtedness will climb to 24.1 per cent of its Gross Domestic Product by 2018, the International Monetary Fund has said.
The IMF, which stated this in its World Economic and Financial Surveys, also projected that by the end of 2017, the country’s current indebtedness would have reached 23.3 per cent of the GDP.
The country closed 2016 with a debt to GDP ratio of 18.6 per cent. By the end of 2015, Nigeria’s debt to GDP ratio stood at 12.1 per cent, according to the Bretton Wood institution.
Nigeria’s GDP for the year ended December 31, 2016 stood at N67.98tn, according to the National Bureau of Statistics.
Going by the projection of 24.1 per cent for 2018, it means that within three years, the nation’s debt to GDP ratio would have gone up by 100 per cent, from 12.1 per cent in 2015 to 24.1 per cent.
Although Nigeria’s debt to GDP ratio is considered among the lowest in Africa, some are worried about the spate of debt accumulation in recent years, while others are not happy with the quality and utilization of debts by the nation.
The World Bank recently expressed concern over the debt payment to revenue ratio, saying that reduced revenue earnings might render the country’s debt unsustainable. A total of N1.84tn was provided for in the 2017 budget for debt servicing.
Senior Economist at the World Bank office in Nigeria, Yue Man Lee, said for the interest payment to be sustainable, the country either had to increase its revenues or work towards balancing the debt profile.
She said, “Nigeria’s debt to GDP ratio is relatively low. What is of concern is the ratio of interest payment to revenue. That is what is concerning. This reflects the fact that there has been a massive drop in revenues because of drop in oil revenues.
“There are two main strategies to reduce this debt burden. One is to increase the revenues. Here, in order not to be vulnerable to the volatility of the oil sector, the critical thing is to increase the non-oil revenues – the VAT, the income taxes and the excises outside of oil. This is something we have been discussing with the government about.”
Reduced earnings owing to the fall in prices in the international oil market have led to increased borrowing, with a projection of N2.35tn expected to be borrowed in the 2017 fiscal year. The 2016 budget projected a borrowing of N1.84tn for deficit financing.
Nigeria’s debt profile is dominated by local debts, which are characterized by high interest rates. Efforts are being made to secure more foreign loans and reduce the exposure of the Federal Government to the domestic debt market.
The United Bank for Africa Plc (UBA) on Tuesday notified the Nigerian Stock Exchange (NSE) and the investing public of its intention to launch a $500 million senior unsecured medium term debt notes. The bank said it intends to list the notes on the Irish Stock Exchange, with the expectation that it would be traded on its regulated markets.
It revealed that the Central Bank of Nigeria and the Securities and Exchange Commission have since given “No Objection” approvals to the transaction.
“UBA intends to issue the notes directly, but will retain the flexibility to substitute the issuer with an offshore special purpose vehicle, where market conditions require and allow for such, prior maturity of the notes.
“The bank intends to utilise the net proceeds of the notes for its general banking purposes. UBA will pay the net proceeds from the notes issuance into its foreign currency domicilary account, which may be retained by UBA in foreign currency or converted into naira, depending on UBA’s requirement from time to time,” the bank explained. Meanwhile, Fitch Ratings yesterday assigned an expected rating of ‘B (EXP)’ to the proposed senior unsecured medium-term notes.
Based on Fitch’s assessment on expected recoveries in a liquidation scenario, an expected Recovery Rating (RR) of ‘RR4 (EXP)’ was also assigned to the notes, implying average recovery prospects.
“The notes will constitute senior unsecured obligations of UBA and will be used for general corporate purposes. The assignment of the final rating is contingent on the receipt of final documents conforming to the information received to date. The expected rating is in line with UBA’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B’.
“In Fitch’s view, the likelihood of default on these notes reflects the likelihood of default of the bank. According to Fitch’s criteria, a bank’s IDR usually expresses Fitch’s opinion on the risk of default on senior obligations to third-party, non-government creditors as in Fitch’s view these are typically the obligations whose non-performance would best reflect the uncured failure of the entity.
“Where a bank has a Long-Term IDR of ‘B+’ or below, Fitch usually assigns an RR to the entity’s issues. RRs provide greater transparency on the recoveries component of Fitch’s assessment of the credit risk of low-rated issuer’s securities. A change in UBA’s IDR would affect the rating of the notes and may also affect recovery prospects and the RR,” the global agency stated in a report yesterday.
