Corporate news summary 27/10/2018 for the week

Corporate news summary 27/10/2018 for the week

1. The much awaited announcement for the recapitalization of Microfinance Banks in Nigeria was made official during the week by the CBN. According to the apex bank’s circular, the minimum capital base of National MFBs has been increased to N5 billion, while that of State was increased to N1 billion, and Unit MFBs to N200 million. Before now, minimum capital base for National, State and Unit were N2 billion, N100 million and N20 million respectively.

The announcement did not come as a surprise to most of the MFBs we spoke to, as many had started making plans ahead of the official release. Fortunately for some of them, CBN gave till April 2020 for MFBs to recapitalize.

Also interesting to note that some of the MFBs we spoke to welcomed the development, citing the fact that there were too many MFBs already and it was imperative that they were whittled down to the more serious contenders.

2. May & Bakercommenced its N2.45billion rights issue on Monday, October 22 in a bid to raise new capital from existing shareholders. The company is offering 980 million ordinary shares of 50 kobo each at N2.50 per share to existing shareholders.

The rights issue has been provisionally pre-allotted on the basis of one new ordinary share for every one ordinary share held as at the close of business on Tuesday, September 4, 2018.

Former Minister of Defence, Lt General TY Danjuma, owns about 25% of this company (officially) so he will be expected to provide at least N612.5 million if he is to keep his percentage ownership. You know, a few months ago, May & Baker paid dividends of about N196 million this year.

Some investors cringe when they see a company raising capital shortly after paying out dividends. It’s such a bad practice.

3. Dangote Cement, the largest cement maker in Nigeria, released another monstrous result during the week. The company reported a revenue of N685 billion for the first 9 months of the year, representing a 13.5% increase from the N603 billion reported a year before.

To put this into perspective, Dangote Cement’s entire revenue was N615 billion in 2016, N492 billion in 2015 and N391 billion in 2014. So in a little over 4 years, what it earned in a year is now what it earns in two quarters.

Dangote Cement reports an average revenue of N200 billion per quarter. Its profit, by the way, rose by 12.35% to N220 billion in the first 9 months of 2018. In terms of volumes, Dangote Cement’s sales volume in Nigeria rose by 6.2% year on year to 2.5metric tons, just as its price dropped by 3.9% YoY to N43.1k per tonne.

However, volumes for its African operations (excluding Nigeria) rose by 15.9% YoY to 2.5metric tonnes, helping boost revenues.

4. Nigeria’s most efficient bank, GTB, also released its 9 months results during the week. The bank reported an 8.8% rise in gross earnings to N337.3 billion, compared to N309.9 billion a year earlier. Pre-tax profits was N164.2 billion a 9.5% pop from N150 billion a year earlier.

Interesting to note that despite the rise in gross earnings, GTB’s loan book dipped by 12.3% to N1.27trillion, compared toN1.449 trillion recorded a year earlier.

It’s no news that Nigerian banks hardly lend to the private sector, considering the structural risks out there. The CEO reiterated this, remarking that, “Despite operating in a very challenging business environment, our 3rd quarter result is a reflection of how we have appropriately positioned our balance sheet to cope with economic realities.

It further demonstrates the strength of our business strategy to deliver financial services that enriches the lives of our customers and creates more value for all our stakeholders.”

He added that, “Going into the final quarter of the year, the bank will continue to drive its digital-first customer-centric strategy to improve customer experience and expand its range of service offerings, whilst constantly differentiating itself by maintaining a high standard in service delivery and putting customers at the heart of everything that we do.

”You don’t have to be super smart to read between the lines. GTB’s deposits was also N2.2trillion, compared to N2 trillion a year earlier. What’s amazing about their results is the return on equity. This bank is posting a whopping 32.7% ROE and a 48.7% profit margin. Pure madness!!!

5. Still on results, Sterling Bank, on the back of some of the craziest ads seen this year, reported a 21% growth in gross earnings to N114.6 billion in the first 9 months of the year, compared to N94.6 billion a year earlier. The bank’s deposits from customers also rose to N723.2 billion from N684.8 billion in the same period last year.

Interesting to note that Sterling Bank’s 2016 deposits had stagnated at about N580 billion between 2013 and 2016 when the new CEO, Abu, stepped in. Advertising expenses for the bank has topped N2 billion already in the first 9 months of the year compared to N1 billion spent in the whole of 2017.

The bank’s change in strategy seems to be generating positive impacts on its balance sheet which is a good sign. Even though profits rose by 38.1% from N5.9 billion to N8.2 billion, there is still a long way to go to get to Tier 2 status, not to talk of Tier 1, but the bank’s focus on key growth sectors in the economy and target at younger demographics is the right one for the future.

Corporate news summary 27/10/2018 for the week

6. The shareholder revolt at NEM took another turn during the week, when theNigerian Stock Exchangereported that it had fined NEM Insurance Plc for contravening Rule 19.3 of its Rulebook. This was after the NSE received a complaint from Bernateva Partners – the solicitor to Eaton Acquisitions Limited, a major shareholder in NEM Insurance Plc – to reverse the decisions reached at the Annual General Meeting (AGM) held at Ibadan, Oyo State in June 2018.

Typically, Nigerian companies deploy the age-long tactics of taking AGMs to far cities (away from the company’s primary place of business), when it wants to take controversial decisions.

The shareholders claimed that NEM Insurance had failed to notify them of the AGM, in accordance with section 217 (1) of the Companies and Allied Matters Act (CAMA) among other regulations.

NSE investigations found out that the company did not dispatch the Notice of the 48th AGM and Annual Reports to the shareholders at least 21 days before the date of the meeting.

The shareholders who did not receive the Notice of AGM were not given the opportunity to attend and exercise their voting rights in respect of any of the resolutions passed at the 48th AGM, including the proposed special resolution to raise additional capital through special/private placement.

7. Airtel Africa Ltd, a subsidiary of India’s Bharti Airtel Ltd, reported last week that it had raised $1.25 billion from six global investors. The investors include SoftBank Group Corp, Warburg Pincus LLC and Temasek Holdings (Private) Ltd.

The company said that the funding will be used to reduce its existing debt which currently stands at about $5 billion and to fund its expansion plans in Africa. Reports also indicate that the funding raise places the company’s valuation at about $4.4 billion only.

8. Data from the NCC indicates that internet users in Nigeria increased to 106 million for the month of September 2018. This was contained in the NCC’s monthly internet subscribers data for September. Airtel, MTN and Globacom gained more internet subscribers during the month under review, while 9mobile was the biggest loser.

MTN gained about 1 million users, closing the month at 40,469,906 as against 39, 459, 642 in August. Airtel gained 417,171 new users increasing its subscription in September to 27,925,411 compared to 27,508,240 in August.

Globacom gained 14,840 new internet users, increasing its subscription in September to 27,433,607 from 27,418,767 recorded in August. 9mobile, lost 90,555 internet users in September, decreasing its subscription to 10,151,138 compared to 10, 241,693 recorded in August.

Overall, internet users in Nigeria increased to 105,980,062 in September from the 104,628,342 in August, showing an increase of 1,351,720. As at the end of 2017, Nigeria’s internet users were about 98,381,456, suggesting that we have only gained about 7, 598, 606. Assuming they have bought N9k worth data per user all year, that’s easily a N68.3 billion incremental value from last year.

9. The Nigerian Government is basicallyscrambling to soften the impact of the regulatoryassault on MTN. The CBN’s charge against MTN has negatively impacted Nigeria’s ability to attract foreign investments in recent times.

Thus, it’s no surprise that several government officials have been signaling reconciliatory tones suggesting that an “amicable solution” will soon be reached with MTN, even as the case remains in court.

Some legal experts we spoke to indicated that MTN’s case against the CBN is strong and may just be a mutually beneficial way to settle this impasse.

Being in court could allows both parties to either settle out of court (to save legal fees) or allow the court to settle the matter, buying the government some time and excuse not to carry on with its threat.

Corporate news summary 27/10/2018 for the week
12. Meanwhile, theExecutive Vice Chairman of the Nigerian Communications Commission (NCC), Prof Umar Garba Danbatta, had said that “MTN must list on Nigeria’s Stock Exchange on or before May 2019 as contained in the agreement over the 2015 fine settlement between the regulator and the telecom company.”

This is while Mary Uduk, SEC’s acting DG, insists that MTN is yet to apply to the commission. According to her, “We are still expecting that MTN will come to the market, what we cannot say is when they will come. We also have a New Listings Committee of the CMC whose responsibility includes fashioning out ways for these multi nationals and other companies already not listed to list.

The committee is meeting with some of these companies and we hope that very soon they will have breakthroughs.” Our sources suggest that MTN is concerned about investor appetite for the offer, especially as foreign portfolio investor outflows out of the country has increased of late. They are also not happy with some activities planned ahead of the listing, which have not gone according to plan.

13. Still on Telcos,Emerging Markets Telecommunication Services Ltd, trading as 9mobile, celebrated its 10th year anniversary in Nigeria last week. How time flies, I still remember that 0809ja Banky W ad. Unfortunately, this might be the last year for the company if the takeover of 9mobile pulls through as expected. Happy anniversary to them.

14. Nigeria’s Fintech startup, Cowrywise, launched its iOS app during the week. The company is just fresh out of YCombinator, as one of the 11 Nigerian companies selected. The app can now be downloaded on Android, iOS app, web app and Facebook ChatBot called Sisi.Cowrywise. It was also announced that it is expanding its engineering team and announcing an opening for a Senior Software Engineer.

15. During the week,Quickteller launched Global Mall, a new service that allows Nigerians pay for goods and services from over 100 international stores including Amazon, Zara, eBay and Macy’s. Global Mall allows users to pay for their shopping needs in Naira. According to, Adetayo Teluwo, Group Head, Digital Payments, Products and Marketing Management at Interswitch, “The beauty about the service is that the customer does not need to bother about changing currencies or looking for forex.

All payments are done in Naira.” So basically, the Quickteller Global Mall affords international business people the opportunity of having their goods shipped, cleared and safely delivered, all through one platform.

16. Nigeria’s Minister of Budget and National Planning, Senator Udoma Udo Udoma, disclosed during the week that the Federal Government has issued the first gold refining licence to Kian Smith Limited.

The Minister made this disclosure while speaking during the ongoing 24th Nigerian Economic Summit in Abuja. According to him, “I am happy to inform us that the first gold refining licence has been issued to a company called Kian Smith Limited, which was one of the companies that participated in the labs.

Corporate news summary 27/10/2018 for the week
The Federal Government is finalising modalities to purchase gold from local refiners, via a Federal Gold Reserves Scheme.” Kian Smith is a Nigerian company registered in 2011.

The company operates in minerals, commodities and marine services. The Managing Director of the company is Nere Teriba and you can check her out here and here.

17. The African Circle Pollution Management Limited (ACPML)announced that it acquired 16 new trucks valued at N5 billion which is about N312.5 billion each. The figure looks outrageous right? We were gobsmacked too.

The newly acquired trucks, which are fitted with the latest technology features, would be used to evacuate waste generated by ships calling at the seaports.

Manufactured by Mercedes Benz, the trucks are to enhance the company’s operations at seaports in Lagos, Calabar, Port Harcourt, Warri and Onne.

18. Last week,Consonance Investment Managers announced the completion of an equity investment in Student Accommod8, a leading developer and operator of Purpose Built Student Accommodation (PBSA) across tertiary institutions in Nigeria.

The undisclosed amount will be used to further develop Student Accommod8’s portfolio of PBSA, strengthen their talent pool and update their IT infrastructure.

Student Accommod8’s PBSA provides an affordable and secure environment focused on providing a quality home and community experience for all students to meet their academic potential.

19. Diamond Banksurprised the investing community last week, when it announced the resignation of about 4 of its directors. The company reported the resignation of Mr. Oluseyi Bickersteth, Mr. Rotimi Oyekanmi,

Mrs. Juliet Anammah and Mrs. Aisha Oyebode. The bank claimed that the resignation was part of its plans to raise capital. The bank has been trying to raise fresh capital after huge loan losses worsened by an economy that has just recovered from a recession.

Corporate news summary 27/10/2018 for the week
The economic crisis turned a once lucrative oil sector loan book sour, with several banks looking for new avenues to make money. According to some industry watchers, the bank is in dire need of new capital to fuel growth and profitability.

It is thought that the new investors are in global financial services and are said to be ready to wake up the sleeping giant, also talks may have reached an advanced stage with the resignation of the four directors. However, the bank denied that it was looking to raise capital through new investors, saying that, “Diamond Bank is not in talks with any party, global or otherwise, for any capital injection,” on Friday.

“While previous communication from the bank has highlighted a need to shore up the bank’s capital adequacy ratio (CAR), the preferred option is an internal capital management programme.”

20. Back to results, two ofNigeria’s largest Brewersreleased results during the week. Nigeria Breweriesreported that its topline revenue dropped by 5.62% to N254 billion from N270 billion of the same period last year.

Guinness, which reports year end in June, revealed first quarter results for the period ending September 2018 showed that revenues dropped by 6% to N28 billion for the first 9 months of the year.

Corporate news summary 27/10/2018 for the week
No surprises here, Nigerians drink less beer than before even as competition is eating up growth for beer makers. There are several alcoholic beverage drinks out there for Nigerians to consume. Both companies rarely report volumes publicly.

Source: in conjunction with

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