Some Business News Stories From The Last Week
Courtesy of SBA Research, here are the main news stories from the past week:
Cadbury: Tribunal upholds SEC’s sanctions
Punch
The Investment and Securities Tribunal on Sunday said that it has upheld the sanctions imposed by the Securities and Exchange Commission on Cadbury Nigeria Plc and its directors for culpability in accounts misstatements of the company between 2002 and 2005.
SEC had on March 28, 2008 imposed sanctions on Cadbury Plc and its directors, reporting accountants and other senior executives based on the outcome of its investigation into the alleged false misrepresentations in the accounts presented to the apex capital market regulatory authority.
Dissatisfied with sanctions imposed Cadbury and its directors Mr. J.S.T Bogunjoko and Mr. Biodun Jaji, had filed appeals to the investment tribunal seeking to turn the decision of SEC.
PenCom Licences Oceanic PFC
Thisday
Oceanic Bank international Plc’s quest to become a one stop financial super market is fast becoming a reality as it has added another subsidiary, Oceanic Pension Fund Custodians Limited.
The addition came following the granting of an operational licence to Oceanic Pension Fund Custodians by the National Pension Commission (PenCom).
The bank said in a statement that PenCom granted the license after a rigorous evaluation of the documents submitted by Oceanic Pension custodians and a rigorous physical inspection of the premises of the company.
“Consequent upon a detailed evaluation of your compliance with the requirements, terms and conditions specified in the A-I-P and the inspection of your premises, ICT infrastructure and operational processes and procedures, the National Pension Commission (the commission) hereby approves the issuance of a license to Oceanic Pension Fund Custodians Limited to carry out the business of a pension fund custodian,” the statement quoted PenCom to have said.
President of Independent shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, commenting on the new subsidiary, expressed optimism that it would contribute greatly to the bank??s bottom-line.
He said: “Oceanic PFC will add value to the parent company-Oceanic Bank. It will also add value to the bank??s customers because they will have opportunity of doing all their businesses in the bank without any threat. Eventually, the new subsidiary will help to increase the bank??s turnover and this will positively affect those of us who have invested in the bank. Once the bottom-line of the parent company is increased, it means bigger cake for us and that is what we expect at the end of the current financial year.”
Oceanic Pension Fund Custodian came on board following the new contributory pension scheme designed to enable workers to save in order to cater for their livelihood during their old age.
The system requires that every employer with a workforce of above five to register his staff for the scheme.
The contributed funds will be managed by the Pension Fund Administrators though they will not have access to the funds. The funds will be kept by a Pension Fund Custodian.
The PFAs are institutions with minimum paid up share capital of N150, 000,000.00. The PFCs must have a net worth of less than N5billion unimpaired by losses and a total balance sheet of at least N125,000,000.00 (N125 billion). The PFCs are also required to issue a guarantee to the full sum and value of pension funds and assets held by them or to be held by them.
Pharma-Deko to raise N550m for expansion
Punch
As part of efforts aimed at repositioning the company for better service delivery, Pharma-Deko Nigeria Plc has concluded plans to raise the sum of N550m.
The amount, which is expected to be raised by way of rights issue will be utilised for the expansion of the company’s operations.
The company, which operates in the healthcare sub-sector will be issuing by way of rights to its existing shareholders, 200 million ordinary shares of 50 kobo at N2.75 per share.
Packaged by Oceanic Registrars as the issuing house, the offer according to the company??s Managing Director, Mr. Adekunle Abibu, will be successful despite the trends in the capital market, since some existing shareholders have indicated their willingness to pick up their rights.
The managing director, who spoke at the company??s shareholders?? forum in Lagos on Thursday, said that the proceeds from the rights issue would enable the company beef up its production and manpower capacity and also boost its working capital
He added that the company was repositioning to enable it manufacture products of its core competence since it had limited working capital
According to him “We have decided to upgrade our infrastructure, production and supply capacities as these will enable us provide our products at competitive market prices.
“We have reached a stage where our expansion is being hindered by our production capacity and we have decided to intensify our planning mechanism to introduce new products, thereby increasing our market share”
He pointed out that the enhanced capital base would enable it embark on projects that would increase its profitability, adding that, the company had been able to reduce its accommodated loss as at 2006 financial year of N600m to N57m as at the end of the third quarter of 2008
Meanwhile, some of the shareholders who spoke at the forum urged the company to deepen its customer base as this was the only way maximum returns would be guaranteed.
While indicating willingness to pick up their rights, the President of the Independent Shareholders Association of Nigeria, Mr Sunny Nwosu, urged the company to ensure that the shareholders were adequately rewarded when the company returns to profitability since the company had not paid dividend since the last four years.
Insurer pays N200m claims
Punch
Regency Alliance Insurance Plc has paid about N200m as claims to its customers between January and September 2008.
A statement on Saturday said the company now made payments within 24 hours of receiving discharge vouchers, adding that it was aimed at providing succour for policyholders as fast as possible.
Among those whose claims were paid include, Bank of Industry, Delta State Oil Producing Areas Development Commission, Seven Up Bottling Plc, UBA Plc, Nigerian National Petroleum Corporation and Wema Bank.
Others are West Africa Seasoning Co Limited, Nigeria Aviation Handling Co Plc, Olam Nigeria Limited, Alhaji Ganiyu Ogunwale, Mr. Alex Toju Amorghoye and Mr. Femi Williams.
The statement signed by the company’s Group Head, Corporate Affairs, Mr. Adeniyi Ojebisi, added that the claims were made for losses arising from motor, fire and burglary, money-in-transit, marine and workmen compensation insurance policies.
Ojebisi assured the company??s clients that the quick claim settlement policy would be maintained.
According to him, “The era of delay is gone. I advise those who have claims to contact us on-line or report at our nearest branch.”
He also disclosed that the company had introduced some services including a specialised car tracking device as part of its value added services.
According to the spokesman, the device, which control system is installed in either the client??s telephone handset or computer, has been proved to be effective in other countries.
Goldlink posts N696m profit in third quarter
Punch
Goldlink Insurance Plc has recorded a profit of N696m in the third quarter ended September 30, 2008.
In a statement on Friday, the company said the figure represented an increase of 27 per cent over the N549m recorded in the corresponding period of 2007.
The statement added that the unaudited report of the company for the period under review showed that it recorded a profit after tax of N620m, compared with N490m recorded in 2007, representing an increase of 26 per cent.
According to the statement, an analysis of the third quarter result indicated that the profit figure was far in excess of the entire profit that the underwriting firm generated in 2007.
Another major development in the company, the statement added, was the increment in the shareholders’ funds from N5.9bn in 2007 to N7.3bn in 2008.
It added that the total asset of the company now stood at N9.7bn, compared with N7.3bn in 2007, a growth of 33 per cent.
The result, which was announced on the floor of the Nigeria Stock Exchange, surpassed projections for the period and will further boost the confidence of investors in the company, according to the statement.
Observers had attributed the impressive performance to the dedication of the company??s manpower and significant improvement in its processes, the statement added.
Goldlink is one of the nation’s composite insurance firms with licences to underwrite general insurance, special risks and life businesses.
Capital Oil’s depot, jetty, truck park gulp over N100bn
Vanguard
CAPITAL Oil and Gas Industries, a company with varied interests in the country’s downstream sector says it has invested over N100 billion in the development of its petroleum products depot, jetty and 1097 capacity trucks holding bay all sited in Lagos state.
Mr. MCK Ubah, an Executive Director of the company made the disclosure while speaking with journalists on Thursday following the visit of Governor Peter Obi of Anambra State who inspected the company’s facilities.
Ubah disclosed that the company’s petroleum products cargo jetty will be ready for commissioning before the end of the year and that when completed it would alleviate the problems of congestion being experienced at the Ibru jetty.
Starcomms records 84% turnover growth
Vanguard
Starcomms Plc, the first telecommunications company to be listed on the floor of the Nigerian Stock Exchange and one of the Nigeria’s leading CDMA, full service telecommunications operator has recorded an 84 per cent consolidated revenue growth from N14.7 billion to N27.133 billion for the nine month period ended September 2008.
Commenting on the performance, Mr. Maher Qubain, CEO Starcomms, said this was made possible by the aggressive market strategy adopted by the company which resulted in a 137 per cent subscriber growth to 1.92 million while the active subscriber base rose by 142 per cent to 1.55 million.
The telecommunications market continues to grow rapidly in Nigeria but declining ARPUs (average revenue per subscriber) are the inevitable result of deepening market penetration. Consequently Starcomms has built a strong foundation of quality subscribers on which to base future growth.
Qubain stressed that broadband active customer base also grew by 144%; while coverage footprint doubled with network extension to 19 major cities, with anticipated network coverage of 31 cities, 20 states and 140 towns by year end. In order to facilitate this, an expanded transmission backbone to cover 2,107Km, the largest microwave backbone of any CDMA operator in Nigeria is already in place.
However, the costs of subsidies on handsets and dealer commissions based on the much higher level of subscriber acquisitions adversely impacted core EBITDA (earnings before interest, tax, depreciation and amortization), which was N2.258 billion [US$19.3 million] which is below forecast. Net loss after tax was (N2.149 billion), also below forecast. Earnings will remain below forecast for the balance of this year.
This notwithstanding, the benefit of the significant increase in new subscribers will be felt next year, as the company has already made much of the investments required for next years growth. EBITDA and Net Profit after Tax is expected to improve significantly in the coming year as Starcomms has seen the positive impact of scale economies, both in terms of network costs as well as in terms of cheaper sourcing of handsets.
During 2008, Starcomms management has taken a conscious decision to emphasize long-term growth over short-term profitability targets as it is not in the Company??s interest during a period of such high growth to sacrifice growth opportunities for the sake of meeting shorter term targets.
The management has thus remained steadfast in its belief that long-term growth and profitability will be enhanced by the growth strategies and tactics deployed during 2008. Starcomms, like all high growth telecoms operators, should be regarded as a growth stock at this stage in its development. Once maturity is attained, capital expenditure per sub and expenses associated with rolling out the network will fall, which will positively affect earnings.
Starcomms, which is 65 per cent Nigerian owned is committed to continue to deliver world class innovations and service at competitive prices. Apart from being the first Nigerian telecommunications company to be listed on the floor of the NSE, the company is also the first operator to launch genuine 3G broadband services, as well as being the first operator to deploy an IP-based network, and is proud to be regarded as the leading innovator in the telecommunications sector in Nigeria.
Union Bank to hold AGM in Sokoto, posts N29 bn profit
Vanguard
Union Bank of Nigeria Plc has concluded arrangement to hold its Annual General Meeting (AGM,) in Sokoto, where shareholders are expected to ratify its 2008 financial results ended March 31, 2008.
The AGM is scheduled to hold on Wednesday 26, November , 2008, with the bank posting an impressive pre tax profit of N29.75 billion in year 2008 from N15.32 billion in 2007 , while gross earnings increased from N71.09 billion to N92.94 billion.
Post-tax profit rose from N12.13 billion to N24.74 billion for the Bank, while that of the Group peaked at N26.86 billion from N13.88 billion recorded in 2007.
Union Bank also recorded a gross earnings of N113 billion for the full year result under review , representing an increase of about 28 per cent, from N89.24 billion achieved in 2007 .
According to the result released by the Bank last week, its Group pre-tax profit grew by 88 per cent from N17.58 billion to N33.01 billion in the financial year under review.
Similarly, total assets increased from N619.80 billion in 2007 to N907.07 billion for the Bank, and from N700.09 billion to N1, 128.90 billion for the Group. Also, deposit liabilities for the Bank rose from N417.41 billion in 2007 to N649.33 billion in 2008, while that of the Group hit N686.31 billion from N432.08 billion. Shareholders’ funds for the Bank and Group increased to N111.3 billion and N119.2 billion, respectively, from N96.63 billion and N102.71 billion, respectively that they were last year.
Resulting from this excellent financial score-sheet, the Bank will, subject to shareholders?? ratification, give a bonus issue of one new share for every six shares currently held and pay a dividend of N1.00 per share, in demonstration of its resilient capacity to meet and surpass shareholders?? expectations on returns on investment.
The register of members would be closed for the purpose of the dividend and bonus issue between Monday, November 17 and Friday, 21, while the warrants would be distributed from Wednesday, December 3, 2008.
Nigerian Breweries wins NSE President’s Merit award
Guardian
NIGERIAN Breweries Plc has emerged the winner of the prestigious yearly Nigerian Stock Exchange (NSE) President’s Merit Award in the breweries sector category. The company won the award at the 31st edition of the award held in Lagos over the weekend.
According to a statement from Nigerian Breweries signed by its Corporate Affairs Adviser, Mr. Yusuf Ageni, this is the 16th time that the company would win the award, having won it 15 previous times including last year.
Ageni, who attributed the feat to Nigerian Breweries’ current robust growth profile, which is reflected in its financials, assured shareholders of a brighter future.
Nigerian Breweries had declared a total of N18.1billion as Profit Before Tax (PBT) for the half year ended 30th June, 2008. This represented a 43 per cent increase over the N12.7 billion, which it declared as PBT for the same period in 2007.
The company’s un-audited and provisional result for the half year also showed that it made a turnover of N68.1 billion, representing a 31 per cent increase over the N51.9 billion achieved for the corresponding period of 2007.
The rise in turnover resulted in an increase in operating profit from N12.5 billion in the first half of 2007, to N17.7 billion for the corresponding period in 2008, representing an increase of 42 per cent. Due to this, the Profit After Tax (PAT), increased from N8.5 billion to N12.3 billion in the first half of 2008, showing an increase of 46 per cent.
The company also declared an interim dividend of N7, 562,562,340, that is N1.00 per ordinary share of 50 kobo each in the share capital.
This represented an increase of 82 per cent over the N4, 159,409,287, that is, 55 kobo per ordinary share of 50 kobo in the share capital, which the company paid as interim dividend in 2007.
Wema Bank to increase capital base soon, says boss
Guardian
AS part of efforts to meet the challenges of the competitive banking industry, the management of Wema Bank Plc, yesterday announced plans to raise its capital base.
This, according to the acting managing director of the bank, Mahmoud Lai Alabi, who spoke with reporters in Ogbomoso at the commissioning of the bank’s new branch in the city, will enable the financial institution to be continuously relevant in the dynamic, increasing and competitive banking environment.
Pointing out that Wema Bank is in a growth phase, Alabi disclosed that the organisation has commenced the review of its entire structure to make it relevant in the present dispensation.
He said: “Wema Bank is now in a growth phase, in the sense that we are reviewing our entire structure. This is in terms of enhancing our human resources, in both the number and quality, raising our Information Technology (IT) platform and our capital base so that we can be relevant in the dynamic, increasing competitive banking environment.
“We are adequately capitalised as we are but we want to shore up our capital base to further enhance our services.”
Giving assurance of quality service, Alabi said: “The bank would reach out to the traders, educational institutions, local governments with special products that are targeted at these categories of people. It is our intention not to sit down in our offices but to go to them and introduce the products already designed for them”.
“We shall continue to be a bank of the people both for the rich and the poor. We give them that assurance,” he stated.
According to him, the bank’s “customers remain the reason for the bank’s existence and one of our core objectives is to continue to provide quality and prompt customer services to support their efforts as they initiate new businesses and implement growth strategies.
The acting chairman of the bank, Mr. Festus Ajani, in his address at the ceremony, said that “as an organization with a commercial orientation operating in a competitive environment, we are aware that the bank’s success depends on the ability to provide excellent services to our customers”.
Ajani thanked Governor Adebayo Alao-Akala for providing assistance to the bank, adding that his support had constituted the motivation that had propelled the board, management and staff to greater achievements.
While commissioning the new branch, the governor, who was represented by the Commissioner for Finance, Chief Bayo Bankole, said the move will further assist in boosting the state economic growth and reduce poverty.
He, however, reminded the management of the bank of its corporate social responsibility to the people of the state.
In his goodwill message, the Soun of Ogbomoso, Oba Jimoh Oyewumi, called on the management of the bank to ensure that it gave consideration to the indigenes of the town in the recruitment of staff, adding that this would further solidify the cordial relationship between the bank and the people.
BAGCO bags NSE merit award
Guardian
NIGERIAN Bag Manufacturing Company Plc (BAGCO) was adjudged the best company for 2007 financial year in the printing, publishing and packaging sector by the Nigerian Stock Exchange.
The company received the accolade and award at a ceremony organised by the Nigerian Stock Exchange recently.
BAGCO indeed pleasantly surprised everyone present to emerge the winner out of three nominees, since it became a public liability company in 2007 and was listed on the Stock Exchange in 2008.
The award was received by the Executive Vice Chairman of BAGCO, Dr. (Chief) Emmanuel Ukpabi.
BAGCO was incorporated in 1964 as a private limited liability company, as a subsidiary of Flour Mills of Nigeria Ltd., now Plc. It commenced operation in 1972 to meet the bagging requirements of its parent company and later extended its services to meet the commercial requirements of external customers from its two plants, one in Lagos and one in Kano, which are capable of producing over 25 million sacks per month.
The company has grown into being the foremost provider of flexible woven polypropylene sacks and other packaging materials like multifilament yarn and webby in Nigeria.
BAGCO recently diversified its operation with the production of top range flexible packaging materials such as laminates, inner liners, shrink-films and stretch films, amongst others. The current volumetric capacity is 3,000mt per year but with plans for short and long term expansion programme.
Cornerstone okays accounting reporting standard, presents Q3 scorecard
Guardian
IN order to enhance the accounting reporting standards, guidelines and provisions that would enable international best practices and full compliance with the provisions of Nigerian regulators, Cornerstone Insurance Plc has made more extensive provisions for doubtful premium debtors and diminution in value of investments, a business rejuvenation programme aimed at repositioning the company.
The chairman of the company, Mr Adedotun Sulaiman, recently assured that although the decision of the board to improve the company’s accounting reporting standards resulted in significant provisions which impacted negatively on the bottom-line, shareholders would reap the benefits in the years ahead.
He said with increased finance, human and managerial capital, Cornerstone Insurance was poised to be the leader in insurance services and returns to shareholders.
According to him, the company aims to remain the leading insurance brand, and be the value-adding and convenient place for customers to transact a wide range of related financial services and a preferred place for employees to make their career and to generate industry-leading returns to shareholders.
He explained that the company’s transformational agenda was anchored on attracting and retaining the best people, creating the most conducive and supportive environment for them to work and using the best technology to deliver the best possible service.
“We are confident that the progress we are making in refocusing our business on the needs of customers, quality of our management and personnel and our investment in technology will deliver higher earnings in the future,” Sulaiman said.
He allayed fears on possible negative spillovers from the global financial crisis assuring that the prospects for the Nigerian economy and the insurance industry are quite bright.
According to him, Nigeria is blessed with rich and enormous potential for significant economic growth and with the sustenance of the progressive measures and policies being pursued by the present administration to achieve its seven point agenda, the general outlook is favourable for corporate growth.
He added that the Nigerian insurance industry would progressively attain its rightful role as an enabler of economic and social progress with Cornerstone Insurance playing the leading roles in the industry.
Meanwhile, the company’s interim report and accounts for the third quarter ended September 30, 2008, gross premium income grew by 28 per cent, while net premium income increased by 27 per cent.
The report indicated that gross premium income rose from N2.34 billion in the third quarter of 2007 to N3.0 billion in the third quarter of 2008. Net premium income increased from N2.02 billion in 2007 to N2.57 billion in 2008.
The balance sheet also expanded to N9.4 billion by third quarter 2008 compared with N8.65 billion recorded in the comparable period of 2007. Net asset also improved from N6.32 billion in 2007 to N6.97 billion in 2008.
Cornerstone’s decision to make adequate provisions in line with the guidelines prior to the compliance audit by the end of year, the company’s pre-tax profit dropped from N1.09 billion in 2007 to N590.1 million in third quarter 2008. Profit after tax also dropped to N468.07 million in third quarter 2008 as against N840.72 million recorded in comparable period of 2007.
Audited report and accounts of the company for the year ended December 31, 2007 showed that group pre-tax profit rose from N232 million in 2006 to N387 million in 2007. Profit after tax also rose from N129.5 million in 2006 to N324.96 million in 2007. Gross premium grew marginally from N2.74 billion in 2006 to N2.78 billion in 2007.
Also, total assets grew from N6.2 billion in 2006 to N8.98 billion in 2007. Shareholders’ funds stood at N6.6 billion in 2007 as against N3.9 billion in 2006.
Benue Cement announces N4.7 billion profit
Guardian
THE Benue Cement Company Plc, a subsidiary of Dangote Industries Limited, has announced its third quarter results for the period January 1 to September 30, 2008, posting a 118.81 per cent increase in turnover compared to the same period in 2007.
Operating profit for the period was N4.7 billion a significant increase of 175.05 per cent compared to the same period in 2007 as the company’s new production capacity comes online. BCC is in the process of expanding production to three million tons a year and continues to enjoy regular fuel and power supply to the plant thereby allowing uninterrupted operations.
Dangote Cement is investing heavily in developing local cement production capacity in Nigeria and the expansion of BCC is a key aspect of this process. In the first half of 2008, BCC commissioned the first of its two kiln lines as planned. The kiln has been producing at its expected capacity and this has impacted positively on the Q3 results. The second kiln was commissioned in September 2008 and production is being progressively increased.
Speaking in Lagos, Dangote Cement CEO Tony Hadley said: “The expanded capacity we have invested in at BCC is now coming on stream and we are delighted that this is reflected in the strong Q3 results we are announcing. BCC is not yet operating at full production capacity, and we are ramping up the second kiln, which will take us up towards three million tons. We expect further increases in production to be reflected in our year end results and expect strong performance throughout 2009.”
News | 
donne4real | November 22, 2008