SHAREHOLDERS of Lafarge Cement WAPCO Nigeria Plc, yesterday, approved payment of 75 kobo dividend for the year ended December 31, 2011, amounting to N2.25 billion.
In absolute terms, the 75 kobo dividend represents an increase of 200 per cent, when compared to the 25 kobo paid in the previous financial year.
The company explained that turnover for the period under review also increased by 42 per cent to N62.2 billion, pointing out that the development was made possible by the “approximately 37 per cent increase in the volume of cement dispatched for the year compared with 1.6 million tonnes recorded in 2010”.
Profit after tax also increased by 75 per cent from N4.88 billion in the previous financial year to N8.5 billion
Chairman of the company, Chief Olusegun Osunkeye, explained that the repayments of principal and interest on the loans for the construction of the Lakatabu capacity expansion project has commenced, adding that “this means that in order to conserve cash for loan repayments we need to exercise restraint in the level of increase on dividend pay-out”.
Briefing shareholders during the company’s yearly general meeting in Lagos, Osunkeye said in order to limit interest cost on the loans for the project, a refinancing initiative was embarked upon in 2011.
“The first step taken was to access the Central Bank of Nigeria (CBN) Power and Aviation Intervention Fund (PAIF) by using this window to refinance the portion of the variable loans spent to construct the 90 Mega Watts power plant”, said Osunkeye
He added: “The CBN through the Bank of Industry approved and disbursed the sum of N12.46billion as loan to the company under the PAIF. The tenor of the loan is 10 years and at a fixed interest rate of 7 per cent per annum.
“Secondly, a three year fixed rate Corporate Bond at 11. 5 per cent Per annum was issued in October 2011. The proceeds from the bond issue (N11.88 billion) was utilised to further refinance part of the expensive existing variable interest loan
“The two refinancing initiatives have helped to achieve a more balance loan portfolio with significant potential for the interest cost reduction”.
Making reference to future plans, he explained that based on estimates from industry experts, Nigeria has an estimated deficit of 16 million housing unit.
“Nigeria’s road network also presents a significant opportunity for the cement sector. According to available estimates, only approximately 30 per cent of the existing road network is paved in comparison to approximately 63 per cent average for emerging countries.
“The completion of the Lakatabu capacity expansion project therefore favourably position the company to benefit from these potentials”, Osunkeye added.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu while commending the board and management of the company said the Lakatabu project is capable of generating more returns for investors in future.
CHAIRMAN of GlaxoSmithKline (GSK) Consumer Nigeria Plc, Chief Olusegun Osunkeye, has advised shareholders associations to join ongoing efforts to reduce drastically unclaimed dividend in the company’s account.
Specifically, Osunkeye, who spoke during GSK’s 41st yearly general meeting in Lagos, urged the leadership of shareholders’ groups to proffer solutions on how to encourage their members to collect their outstanding dividend in the books of the company.
He disclosed that as at February 23, this year, unclaimed dividend in the books of the company was N323 million, adding that shareholders should make more efforts to collect returns on their investment.
The company also advised shareholders to open bank accounts, stockbroking accounts with Central Securities Clearing System (CSCS) accounts for the purpose of dividend.
“This to inform all shareholders that the Registrars of the company are holding share certificates and dividend warrants which have been returned by the post office as unclaimed.
“Some dividend warrants sent to the shareholders’ registered addresses or their bankers are yet to presented for payments or retuned to the Registrars office for revalidation”, said GSK.
Meanwhile, for the year ended December 31, 2011, shareholders who attended yesterday’s meeting approved proposal by the board of the company to pay N1.20 kobo amounting to N1.14 billion.
Osunkeye explained that within the period under review, turnover was N21.52 billion, 28 per cent increase over the previous year while profit before tax and profit after tax were N3.50 billion and N2.30 billion, 19 per cent and 16 per cent growth over the previous year respectively.
Explaining further, Osunkeye said: “We remain strongly committed to our people’s development drive which aimed at achieving the aggressive business growth agenda. We take steps to ensure that employees are equipped with competencies and capabilities required to deliver in their various roles, as well as handle challenges and complexities that may arise in the course of executing their assignments.
“In order to build a strong pipeline for the continuous inflow of agile and talented individuals, the management training scheme was introduced and the first batch was released into different departments in December 2011.”
He told shareholders that inline with one of the company’s strategic priority of continuous improvement , “we embarked on a journey to transform our business through aggressive innovations.”
“In 2011, we launched 15 new products quality. This was quite unprecedented in the annals of GSK. The performance of these new products contributed significantly to the overall business growth. We are committed to sustaining the double-digit growth of our business in 2012 with innovations still playing a pivotal role. Lined up for launch in 2012, are new and value-adding products that would be driven by science and deep consumer insight”
Speaking during the meeting, the National Co-ordinator, Independent Shareholders Association of Nigeria, Sunny Nwosu, said that the company performed well despite challenges in the sector.
THE bilateral trade between Nigeria and Brazil has hit $8.9 billion (about N1.4 trillion) in the last five years.
The bilateral trade has all along been in favour of Nigeria, mainly because of the country’s crude oil export to the South American country.
And to further strengthen the trade link between the two countries, the Nigerian Brazil Chamber of Commerce has been inaugurated.
Secretary-General of the new chamber, Sorronnadi Ezebuiro stated at the inauguration in Lagos recently that this would serve as a tool to sustain Nigeria’s relationship with Brazil.
He listed Brazil’s exports to Nigeria to include automobiles, chemicals, electronics, while Nigeria’s exports are crude oil, oil palm, hide and some stones to the Samba country.
Ezebuiro, a monarch from one the South Eastern States, added that both countries have many things in common, being biggest nations in their respective continents, and should intensify efforts to increase bilateral trade.
He described Brazil as the largest country in Latin America and Nigeria, the most populous nation in Africa.
According to him, “Nigeria is the biggest exporter to Brazil. We are Brazil’s most important trading partner and the most important destination of investment in Africa.
“Both countries are key players in the economies of their regions. Brazil is a leading political and economic power in Latin America. Nigeria is equally the leading political and economic power in West Africa.
“Nigeria is the second largest trade partner of Brazil in Sub-Saharan Africa and 11th in the world. Brazil is the third largest importer of Nigerian crude oil after USA and India. Nigeria’s balance of trade with Brazil is very favourable”.
He listed Brazil’s key industries to include textiles, shoes, chemicals, cement, agriculture, motor vehicles and parts, other machineries and equipment.
“Major export products include aircraft, coffee, vehicles, soybean, sugar, rice, orange juice, iron ore, steel, textiles, footwear, electrical equipment and others.
“Brazil’s current account surpluses had continued to hit record levels, indicating that exports were growing strongly. Its income per head is now twelve times that of India and China. Nigeria has a great deal to learn and tap from Brazilian experience. So come on board, let’s take advantage”, he added.
Ezebuiro explained that the chamber came into existence in 1991 and became the pioneer chamber to be formed before the emergence of other making it the foremost.
He said that the activities of the chamber were put on hold due to the death of the first President, Otunba T.O.S Benson.
AT last, mining of coal in commercial quantity has commenced at the Zuma site, located in Okobo/ Enejema Communities in Ankpa Local Government Area of Kogi State.
The development may have brightened hopes for the achievement of the Federal Government’s target of 30 per cent power generation from coal, to produce 10,000 mega watts of electricity by 2015.
Until now, mining activities in the vast coal fields of Kogi State have been on small scale, mostly by artisanal miners.
The coal deposit site alone is expected to generate about 1000 mega watts of electricity, to be linked to the national grid, sold to Independent Power Producers (IPPs) and small house-holds, according to the Chairman of Western Goldmines, Dr. Innocent Ezuma, the indigenous investor exploiting coal at the Zuma mining field.
The Minister of Mines and Steel Development, Musa Mohammed Sada,
in company of the Governor of Kogi State, Capt. Idris Wada, visited the mining site and expressed optimism that government’s target was realisable, giving the quantum of coal already produced and the level of ongoing exploration and mining activities.
He said: “I am impressed by what I have seen here. It gives us hope that we would realize our target of 10,000 Mega watts of electricity by 2015. Under the energy source power mix, coal has been assigned the task of generating 30 per cent while gas and hydro are to account for the balance of 70 per cent.
“Mr. President is up-beat about this. That’s why I am here because we believe this is the kind of investment that would lead us to the realisation of our 2015 target. Our doors remain open to this investor and others whose operations will complement government’s efforts in the realisation of our energy goals as well as employment generation
“The purpose of mineral exploitation is to ensure that the people in whose place the mineral is located derive the benefits of its exploitation through the upgrade of their livelihood, employment creation for them and other social amenities, while government too benefits from the taxes to be paid by the investors and workers alike.
“I therefore, implore the communities in which this mining activity is located and the Kogi State government to cooperate with the investor to ensure the project’s sustainability. It is also an opportunity for the state and the community to invest in the company so that you can become part owners of the investment.”
The Kogi State Executive Governor, Capt. Idris Wada who also expressed delight at the investment assured of the State’s cooperation and support to ensure the sustainability of the investment.
He declared the state’s willingness to partner with the investor by investing in the company and called on the host community to cooperate with the investor by not taking the laws into their hands in the event of any disagreement but to report any issue in contention to the state government.
“I want to implore the host community to cooperate with the investor. Be patient with him because it takes time for investment to grow. We are there at Lokoja and our doors are open. If there be any issues that are n contention with the investor, don’t take the laws into your hands, report to us and we would hand it in the best way possible,” he added.
He pledged the immediate provision of a cottage hospital with full medical team; a water treatment plant for potable water and the relocation and upgrade of a primary school in the area for the benefit of the host community as a mark of his support for the investment and called on more investors to patronise the state.
Earlier, the Chairman of Western Goldfields, Dr. Innocent Ezuma described the coal being mined at the site as being of the best quality in the world and is expected to be used for power generation at the Zuma Power Plant at Itobe, in Kogi State as well as for supplies to other interest that may have need for it.
He said already, the investment has provided over 300 direct jobs, with a projection of raising it to 5000 in the next two years.
The House of Representatives has raised the alarm over the spate of vandalism of petroleum products pipeline, and expressed fears that the issue has grave consequences on the entire economy of the country.
Also, the house has expressed concern about the poor state of the nation’s refineries and argued that Nigeria can only achieve energy security if petroleum products were refined in the country.
Chairman, House of Representatives Committee on Petroleum (Downstream), Mr. Dakuku Peterside, made these observations at a joint session with the management of Department of Petroleum Resources (DPR) in Lagos.
The committee members were in Lagos for oversight of agencies, ministries and departments under their supervision.
Peterside noted that persistent pipeline vandalism was impacting on not just downstream operation but the upstream and mid stream operations of the Nigerian oil and gas sector.
He said: “The other thing is the persistent pipeline vandalism. It is having a very serious effect on not just downstream operation but the upstream and mid stream operations. We think that all agencies in the sector must work together to combat what I can call terrorism of the industry. Pipeline vandalism does a lot of harm, not just only to our people but the entire economy of the country and it deserves very serious attention, and we think the DPR should champion that course”.
The committee noted that most environmental challenges confronting the country today were associated with pipeline vandalism and products handling and expressed dissatisfaction over the current state of the Atlas Cove jetty, Nigeria’s major reception facility . The Jetty located in Takwa Bay, Lagos, has not been restored to full standard despite the repair work carried out on it after the 2006 fire incident.
The lawmakers further observed that most filling stations in Lagos were located in areas that were strictly residential, noting that apart from the environmental consequences associated with this, the action is also against the physical planning law of Lagos State.
“Another thing we noticed is the location of tank farms, you need to take a second look at the tank farm location and the accompanying environmental challenges. Some of the environmental challenges are associated with the issue of pipeline vandalism and the other times product handling. We were at the Atlas Cove this morning, we are yet to take a position on what we observed or what we saw in Atlas Cove. But again, am not quite impressed about what the government is doing to ensure that that national asset gets the deserved attention.
He continued: “It is unfortunate that because most of our pipelines are not functional, we use tankers to convey products. Many of the tankers are not in very good condition and they litter products all over the place, they further endanger the environment and constitute serious health hazards. We think that your regulation must extend to that area too”.
He said government must ensure that the traditional refineries were working at optimal capacity to ensure availability of adequate products for domestic consumption.
“ I don’t think our refineries are in their very best states and for as long as we cannot refine our products in- country, we cannot talk about energy security. For strategic national consideration, we need to step efforts to refine our products in- country to ensure that the existing refineries are working at optimal capacity, that they produce products that meet the best quality available in the industry”, he said.
Responding, the DPR Director, Mr. Osten Olorunsola, noted that most of the outlet stations were built without DPR’s approval, adding that the agency had in the past ordered the demolition of such facilities. He said products adulteration, particular diesel, vandalism of pipelines, product round tripping have remained major issues the industry has continued to battle with.
He added that despite the inadequate manpower and equipment and funding issues, the DPR ensured adequate monitoring of crude terminals and engaged both staff, police and naval personnel on surveillance duties at areas where there are reports that people adulterate products.
He said: “There has been quite a lot of adulteration of diesel very recently, and I mentioned one, this Waziri jetty, where we have caught people mixing and mixing, and you shut it down, you inform police, you bring in navy, but drive their around 12 mid night, they are still doing it, even guarded by their people. So is very difficult but are working on it as much as possible.”
On price discrepancies, Olorunsola said the agency had shut down more than 100 filling stations across the country due to sharp practices by oil marketers.
“On price control, indeed people have seen all sorts of pricing. This year alone, we have shut down quite a lot stations where we saw people putting prices above the pump price, because ones you get there, you will see it, they will put N140, they put N150, they say is N97, they put it at N105. So when we see these, definitely, we clamp down on them immediately. But I just also want to warn, even when you see N97, please watch very well because you may actually be paying more, because they can then under-deliver for you. They may be selling 0.6 of a litre for a litre, so at the end, you are actually paying a lot more so but if you see any please, just call us”, he added.
The nation’s equity market is set for a breather, typified by new sources of funds for trading in equities and redirection to the real sector of the economy, as the amended National Pension Commission (PENCOM) guidelines require a minimum of 10 percent investment in equities, BusinessDay can now reveal.
The document which Business Day gathered would be released very soon, will now make it mandatory for a minimum of 10 percent investment of the N2.6 trillion PENCOM assets in equities, a development that will buoy the market with at least N26 billion on implementation. This is against 25 percent in the previous guidelines, which was not complied with, due to investors’ apathy towards the equities market, as a result of its volatility. The highest investments made, ranged between three and seven percent.
Already some stock broking firms and other players in the capital market have commenced repositioning strategies through strategic alliances with the Pension Fund Administrators (PFAs) and establishment of mutual funds subsidiaries to benefit from the new direction towards the equities market.
While the PFAs are the licensed managers of the contributory pension scheme which manages the largest pool of long-term investible funds, a Mutual Fund is a collection of stocks, bonds, short-term money market instruments, other securities, or any combination of such assets. Investors buy shares in the fund, and a manager makes the decision to buy and sell the securities that make up the fund’s portfolio. Besides, only 30 stocks out of the lot were being patronised under the old dispensation, due to low valuations by stock brokers. But with the new guidelines, investments in equities cannot fall below 10 percent of the total PenCom assets.
Albert Okumagba, managing director of BGL Limited, recently called on PenCom to persuade PFAs to increase their investment in equities from the current less than 10% to up to 20%, arguing that “PFAs are the biggest buy-side institutions in the Nigerian market and their asset pool is the biggest in terms of long-term capital, however short term money market instruments currently take precedence.”
Similarly, Oscar Onyema, managing director, Nigerian Stock Exchange (NSE) recently observed that in many cases, the PenCom regulation that PFA’s should have a maximum of 25 percent of their portfolios in equities, has not been complied with, saying, “As of June 2011, only 17 percent of this capital was invested in the equities market, with short-term money market instruments taking precedence.”
However, the PFAs, under the new dispensation, are to maintain four separate funds of 35years and below, 45years and below, above 45years and Sharia Compliant fund, with the intention of seeking to match contributors return with their risk profiles and ethical preferences.
With the new development, our stock broking firm “must win more PFAs, our Mutual Fund is in progress, proprietary trading is also in progress but should be intensified to take advantage of the expected rally. On the new infrastructural bonds, we will take advantage to be involved in road projects,” says a top industry operator.
Speaking further, he said, “The Nigerian Capital Market in the past three weeks has retained a bullish outlook despite global economic challenges, particularly from the Eurozone. This has triggered a level of concern among investors – wanting to know the factors behind the rally which in our opinion is buoyed by the activities of some speculators positioning ahead of the proposed amendment to PenCom guidelines.”
Some other analysts were of the opinion that the development makes the equities market to retain its current upbeat outlook, particularly as stock valuations remain attractive, while the bond yields are expected to contract as Pension Fund Administrators increase their holdings in variable assets to 10 percent.
The guidelines’ new outlets include Infrastructural Bonds, Infrastructural Fund, Supra National Bonds and Private Equity, to complement the existing ones, which are government securities, corporate bonds, money market instruments, ordinary shares and mutual funds.
However, some analysts have picked holes in the Sharia category of investment, as they claim it failed to distinguish among the different age groups, hence the likelihood of further amendment. This is, according to them, aside from the risk of policy inconsistency which may materially affect market activities in the event of policy reversals.
Nigeria’s daily fuel imports are down 45 percent this year, or by 27 million litres a day, on the back of the partial removal of petroleum subsidies by the Federal Government.
The amount of fuel imported into the country is running at a rate of 32 million litres a day, down from 59 million litres a day, before the 49.2 percent hike in fuel prices, from N67/ litre to N97/litre, and this is having a positive effect on the value of the naira, as well as the foreign exchange (FX) reserves.
“Over the period of many weeks, the naira exchange rate has firmed on the back of a sharp fall in imports of petroleum products,” said FBN capital analysts, in a research note released yesterday.
“A reduction in the subsidy does not reduce the total cost of the import but does reallocate the split between the consumer and the provider of the subsidy. A reduction in the volume of imports, by contrast has a positive impact on FX demand and on the public finances.”, the note said.
The naira has been relatively stable at the N157 to the dollar level for most of the year, and has advanced 3.2 percent this year, versus the dollar. Nigeria’s FX reserves rose to $37.3 billion, a 21-month high, last week, after ending 2011 flat on the year. The reserves are up 13.3 percent year-to-date.
FBN capital says the cut in the subsidy on premium motor spirit (PMS) in January has led to a number of changes in the market and in market practice. The Petroleum Products Pricing Regulatory Agency (PPPRA) has introduced changes in the import regime, such as the appointment of certified cargo inspectors and the launch of a new inspection system, which has helped to cut the number of companies benefitting from the subsidy scheme to 42 from 128 last year. The changes have brought about “striking progress” according to sources at the Presidency, helping to curb fraudulent imports.
In a debate in the National Assembly in February, it emerged that imports had been running last year at 59 million litres while consumption was estimated at 35 million litres. A detailed report by the House of Representatives ad-hoc committee on fuel subsidy recently alleged fraud totaling the equivalent of N1.07 trillion (about $ 6.8billion). Payments totaling N2.6 trillion ($16 billion) in fuel subsidies were made in 2011 through a fraudulent process, the committee said.
“Nigeria consumes about 35million litres of petrol a day. If we assume that all of the petrol consumed in Nigeria is imported and by implication subsidised, then the government should be spending about N1.1 trillion ($7 billion) on petrol subsidies per annum, instead, the government is estimated to have spent more than double that, up to $16billion, on petrol subsidies in 2011.” Yvonne Mhango, Renaissance Capital Sub-Saharan Africa, economist, wrote in a recent research note.
The Central Bank of Nigeria’s (CBN) Monetary Policy Committee, (MPC) met this week, and referred to the “reduction in arbitrage opportunities” in the industry, as a result of the partial removal of the fuel subsidy. CBN Governor, Sanusi Lamido Sanusi, in a statement made after the MPC meeting hinted at the need for structural reforms to take place in the Nigerian economy, including perhaps a total phase out of the subsidy.
“Our view on fuel subsidy has always been very clear: that we cannot spend 4 percent of our Gross Domestic Product (GDP) on petroleum subsidies. There are of course other issues. These incude issues around the transparency of the entire process, which have come into light, and which are being investigated,” he said.
President Goodluck Jonathan this week submitted a report on the $6.8 billion fuel subsidy fraud to the Economic and Financial Crimes Commission (EFCC) for investigation and possible prosecution of oil company officials behind the scam.
The real solution though, would be to move to full price deregulation, according to FBN capital, “This would yield substantial fiscal savings, attract investment in refining, remove the need of the PPPRA and several other public bodies, and in time, improve supplies across the country.”
The Financial Reporting Council of Nigeria, the nation’s accounting and financial reporting standards custodian, yesterday refused to spare the rod against the Institute of Chartered Accountants of Nigeria (ICAN), Forte Oil plc, Alliance & General Insurance Limited and General Life Assurance Limited, for contravention of corporate governance rules.
Jim Obazee, executive secretary of the FRC who spoke with a select group of journalists in Lagos said ICAN was directed to postpone its annual general meeting (AGM) scheduled for May 25, 2012 “because of issues from its corporate governance and financial reporting”.
Obazee stated that the council of ICAN did not approve the institute’s financial statement when it met on January 18, 2012 and that the report of the honourary treasurer also noted that the financial statement which is subject to ratification of the council was not done.
In addition to ordering the postponement of the AGM, the FRC directed that ICAN hold the event not earlier than 21 days after the ratification of the 2011 financial statement by its council, in accordance with section 217 (1) and 217 (2b) of the Companies and Allied Matters Act CAP C20 LFN, 2004.
He also noted that the actions of ICAN confronted legal requirements of the CAMA and Financial Reporting Council of Nigeria Act No.6, 2011.
The FRC, he said, had directed ICAN to explain why the management allowed their external auditors to report on the 2011 financial statements that were not ratified by the council.
Obazee said Forte Oil plc was also being indicted for allotting 102 million shares valued at N24.7 billion to certain shareholders during the company’s hybrid offer (public and rights issues) in 2008.
He explained that the share holders did not only refuse to pay for the shares but also received dividends to the tune of N259 million as shareholders on the shares, which they later dumped.
The FRC boss said, quoting from the 2010 annual report of the oil firm: “We draw attention to Note 9 to the consolidated financial statements on the hybrid offer (public offer and rights issue) in 2008 for which the majority of proceeds were received in 2009. The proceeds for 102 million ordinary shares allotted to certain shareholders of the group amounting to N24.7 billion have not been received by the company as at date of this report. Full provision for this amount has not been charged directly to shareholders’ funds in these consolidated financial statements.”
He also noted dividends amounting to N530 million were released for payment to the registrar in respect of the unpaid shares, as part of the dividends declared for the year ended 31 December 2008, and approved by the shareholders on 22 July 2009. Of this amount, only N271 million unpresented cheques have been recovered from this amount, he added.
Obazee said the FRC had requested Forte to provide it with all the details of the hybrid offer, including but not limited to circumstances under which the company allotted shares to group directors and shareholders without payment for the shares; the accounting policies the board approved to address such allotment of shares that were not cash-backed and ‘on dividends not recovered’.
Due to this development, the company’s issued share capital is less than 25 per cent of the authorised capital prescribed by section 99 of the Companies and Allied Matters Act, Cap C20 LFN 2004.
The FRC also want to know the circumstances in which share capital account was credited with un-received payment for the said allotted shares; the accounting policy the board adopted to address dividends paid on capital that was not raised; the reason the said ‘dividends not recovered ‘ was treated as memorandum as against contingency.
“ Council also directed that as an interim measure, Forte Oil plc should write-off the yet to be recovered portion of the dividend paid on the said allotted shares, but furnish the FRC with the details of the beneficiaries of the dividends, and report the said beneficiaries to the Securities and Exchange Commission (SEC). A copy of the report should be forwarded to FRC”, he said.
Alliance and General Insurance Limited and Alliance and General Life Assurance Limited are indicted for preparing two financial statements for the same year end.
“The FRC, in collaboration with NAICOM, is currently investigating the 2010 audited financial statements of the two companies referenced above, wherein the companies prepared two sets of financial statements for the same year end . In the course of NAICOM’s review of the 2010 audited accounts submitted to the commission by the above named companies, some errors /lapses were observed and communicated accordingly. Rather than deal with the issues raised in the accounts, the companies provided entirely different sets of accounts , incorporating items that were not originally included in the accounts under review. Curiously, the different sets of accounts were signed by the same auditor – AAE Professionals”, he said.
Obazee noted that NAICOM must review and approve the financial statements of these entities before it gets to the FRC.
The FRC has of recent come under fire for not taking serious action against corporate governance infractions, with the Federal Government threatening to withdraw its support for the council.