Conoil records N359.41 million profits amid delayed subsidy payments

Conoil Nigeria plc posted N359.41 million profit in the first six months of 2015 as Fuel marketers in Africa’s largest economy continue to grapple with unpaid government debts and macroeconomic headwinds.

The delays in subsidy payments have hindered firms from buying Premium Motor Spirit (PMS), a major revenue driver, on time, culminating in lower sales in the period under review.

Analysts say if this situation continues, a lot firms may find practicable difficult to pay money owed to banks for the purported importation of products.

The devaluation of the naira may also see the dollar denominated debts in the capital structure of these firms spiral out of control.

Conoil finance costs were up 116.16 percent to N1.90 billion in June 2015 as against N882.36 million.

Debt to equity ratio which measure  how much of a company’s balance sheets are funded by lenders money was 107.41 percent in the review period though lower than 123.78 percent recorded last year.

This means Conoil is highly geared and exposed to currency.

A slump in crude prices by more than half in the past year has put pressure on the currency of Africa’s biggest oil producer, forcing the central bank to twice devalue the naira since November, 2014.

The company felt the hit of the economic doldrums at the top line as sales fell by 45.19 to N43.02 billion percent in the period under review from N78.50 billion as at June 2014.

Profit before tax (PBT) reduced by 64.47 percent to N528.54 million in June 2015 as against N1.48 billion in June 2014.Cost of sales reduced by 45.88 percent to N38.24 billion in June 2015 compared with N70.67 billion the previous year.

Operating expenses were down by 9.61 percent to N4.98 billion in June 2015 as against N5.51 billion last year.

Fuel marketers in Africa largest economy earlier in the year were in dispute with federal government over subsidy arrears amounting to $1 billion that caused crippling fuel shortages and nearly brought economic activities nearly ground to a halt.

“I think the way forward is to deregulate the sector. So petroleum products can sell at a free market. Other developing countries such as Indonesia and Malaysia have recently deregulated the sector due to tight federal revenue squeeze which Nigeria is facing,” said Tejumola Esho, Oil and Gas analyst with Renaissance Capital, in a recent note.

Conoil’s   share price was N28.41 on the floor of the exchange while market capitalization was N19.71 billion on the floor of the exchange.

STANBIC IBTC HOLDINGS PLC Q2 UNAUDITED RESULT JUNE 30, 2015

STANBIC  STANBIC IBTC HOLDINGS PLC Q2 UNAUDITED RESULT JUNE 30, 2015
	‘000,000	‘000,000	‘000,000
	2015	2014	Chg	%
G.E.	68,295.00	61,715.00	6,580.00	10.66
PBT	9,537.00	19,946.00	-10,409.00	-52.19
Tax	-158.00	3,762.00	-3,920.00	-104.20
PAT	9,695.00	16,184.00	-6,489.00	-40.10
Bonus Ratio			:
Dividend			0.90
Initial Dividend
Closure Date			31/07/2015
Payment Day			28/08/2015
09/07/2015				more…

 

Latest Dividend 31/07/2015     –     N0.90k     more…

LAFARGE AFRICA FULL YEAR OPERATIONAL RESULTS UP 8% DIVIDEND PROPOSED TO INCREASE BY 9% CONCLUDES FIRST PHASE OF ACQUISITION OF FLOUR MILL’S STAKE IN UNICEM ASHAKA MANDATORY TENDER OFFER (MTO) ON TRACK

Lafarge Africa Plc, a leading cement and building solutions provider, reports an operational Profit after Tax of N37 billion, which is 8% higher than prior year, after adjusting for one-offs. Operations of United Cement Company Ltd (UNICEM) were included on an equity basis in Q4. Cash of N49 billion was generated from the operations. The Board of Directors of Lafarge Africa at its meeting of March 11th 2015, approved a dividend of N3.60 representing a 9% increase over prior year subject to shareholders approval. Lafarge Africa Plc, formerly known as Lafarge Cement Wapco Nigeria Plc, is a combination of all Lafarge’s Nigerian operations – (AshakaCem Plc, UNICEM, Atlas Cement Company Limited) and Lafarge South African Holdings Limited assets in order to create a stronger platform for growth in SubSaharan Africa, with value creating opportunities. The transaction was concluded in September 2014. On 7 November 2014, Nigerian Cement Holdings B.V. (NCH), a 50% affiliate of Lafarge Africa Plc, entered into an agreement with Flour Mills of Nigeria, defining a roadmap to purchase Flour Mills of Nigeria’s 30% investment in UNICEM (the 3rd largest cement manufacturer in Nigeria). We are pleased to announce that the first phase of the acquisition (15%) was completed recently. In accordance with Section 131(1)(a) of the Investments and Securities Act, 2007, Lafarge Africa is required to make a Tender Offer to all other shareholders of AshakaCem Plc. Consequently, the Board of Lafarge Africa granted approval for a Tender Offer to be made to all Qualifying Shareholders of AshakaCem Plc. The Mandatory Tender Offer was successful and is in the final stages of regulatory approval. In his statement, the Chairman, Board of Directors, Chief Olusegun Osunkeye CON, OFR, said “it is with pleasure that we publish the first audited results of our newly transformed Company. The good performance even in a volatile market affirms the strength of our new Company and our commitment to achieving excellence”. Commenting on the results, the GMD/CEO, Lafarge Africa Plc, Mr. Guillaume Roux mentioned that ‘our Company has shown impressive performance; our business combination plans have been well executed within set timelines. We are committed to improving operational performance by leveraging on opportunities this presents to us to deliver sustainable returns to our shareholders’.

Other Key Highlights for the period

 Consolidated Revenues were flat at N206 billion when compared to 2013. The Nigerian operations showed a growth of 8% cushioning the short term market challenges in South Africa.

 EBITDA was relatively stable at N55.3 billion in 2014 compared to N55.7 billion in 2013, with Nigeria growing by 16%.

 Profit After Tax grew by 8% when adjusting for one-offs in 2013 and the UNICEM scope change. Profit After Tax was N35 billion in 2014.

FUTURE OUTLOOK

Lafarge Africa Plc has shown remarkable performance in the year and we remain highly committed to driving business excellence. We expect cement demand to increase both in Nigeria and South Africa in 2015. In Nigeria, the demand growth should be supported by increasing needs for housing and infrastructures, but could be lower than normal growth levels given the exchange rate development. This should be partly cushioned through the South African cash flow. We remain very optimistic and highly committed to delivering innovative building materials while leveraging on the operational strength and pedigree of the Lafarge Group.

NSE, CBI to Launch Corporate Governance Rating System

The Nigerian Stock Exchange (NSE) has concluded arrangements with the Convention for Business Integrity (CBI) to launch the foremost Corporate Governance Rating System (CGRS) in Nigeria.
The CGRS will be launched in Lagos today.

The NSE, in a statement said the CGRS launch, will be attended by corporate sector participants joined by government and civil society delegates from across Nigeria and globally.
“Some of the speakers scheduled to speak at the event themed “Better for Business” are Mr. Andrea Grimminger of PGS Advisers International; Mr. Michael Lakota, the Managing Director/CEO of Siemens Nigeria Ltd. and Mr. Jermyn Brooks Director, Transparency International. The discussions will provide unique insights on issues of leadership and corporate governance within the African context.

“The event will also present the details on the Corporate Governance Rating System (CGRS) framework which is designed to evaluate companies based on the quality of their corporate integrity; corporate compliance; understanding of fiduciary responsibilities by their directors and their corporate reputation. The CGRS will mark the beginning of a new era in market transparency and it is a new model for 21st century corporate reporting, “the NSE said.
Meanwhile, at the close of trading last Friday, trading activities on the NSE decreased by 30.84 per cent as investors bought 362.56 million shares worth N3.86 billion, in 4,846.00 deals, compared to 524.22 million shares worth N7.65 billion, in 4,779.00 deals exchanged on Thursday

In the same vein, the benchmark index depreciated by 0.76 per cent to close at 38,197.73 points from 38,490.67 attained on Thursday. Market capitalisation also decreased to 12.61 trillion from N12.71 trillion the previous trading day.
A total number of 13 stocks gained on the bourse on last Friday while 39 stocks declined leaving 60 stocks unchanged. FBN Holdings Plc emerged the toast of investors as it appreciated by 7.27 per cent to close at N11.80 kobo, followed by Diamond bank Plc with a 4.85 per cent gain to close at N5.84 kobo. Others on the gainers chart include Academy Press Plc, NPF Microfinance Bank Plc and Forte Oil Plc. On the flip side Learn Africa Plc topped the losers chart with 9.03 per cent declines to close at N1.31.

Forte Oil Records N4.1bn Gross Profit in First Quarter

Forte Oil Plc was among the companies that reported their results for the first quarter (Q1) ended March 31, 2015. The integrated energy solutions provider posted gross profit of N4.1 billion, compared with N4.1 billion in the corresponding period of 2014. Although the company strived to reduce costs in the areas of sales,, distributions and administration, finance charges rose by 37.5 per cent.
This affected the bottom line in Q1 as profit after tax fell from N1.1 billion to N784 million. However, market analysts said the performance of the company would improve significantly in the quarters ahead as the assets acquired with the banks borrowings begin to yield results.
Forte Oil last year successfully concluded its three-year business transformation that led to a complete turnaround of the company from a loss making entity of N19 billion in 2011 to a profit and a sustainable business entity. The company delivered an annual group profit of N1.1 billion in 2012, N6.5 billion in 2013 and N6.01 billions it in 2014.
The company paid  cash dividend of N250 per share and a bonus of one for five for the 2014 financial year, which where approved  by the shareholders last Wednesday at the 36th annual general meeting of company in Lagos.
Looking at the future of the company,  the Group Chief Executive Officer of Forte Oil, Mr. Akin Akinfemiwa, said the management was confident  the company is on the right path to becoming Nigeria’s foremost integrated solutions provider with the unveiling of its five-year growth and consolidation strategy.
“Our quest to dominate the downstream petroleum sector in Nigeria and by extension Africa, remains a key aspect of our consolidation strategy. We are currently pursuing opportunities for mergers and acquisitions in a bid to drive volume, revenues and ultimately maximize profits for shareholders,” he said.
According to him,  the organic growth of the company’s downstream business through the acquisition of strategically positioned outlets to create an optimised network and drive revenues and profits remains on course.
“We remained committed to making our power business a key driver of our growth initiative by ensuring that it contributes 40 per cent  to our group profit before tax in the near future. To this end, we have contracted and commenced a major overhaul of our 414-megawatts Geregu Power Plant to Siemens AG,”Akinfemiwa said.

Fixing challenges of industrialization, a catalyst for Africa’s future in the next 15 years

It is time for Africa to take the lead and accelerate sustainable industrialisation for the continent.

This, is a catalyst that will drive the African future for the next 15 years, in line with the newly adopted sustainable development goals (SDGs), especially goal number nine.

Goal nine urges countries of the world to build resilient infrastructure, promote sustainable industrialization and foster innovation.

Challenges of power, infrastructure and proper financing of the real sector will have to be faced headlong by the African region, if they must achieve the new set of goals .

A high-level sideline event at the 70th United Nations General Assembly, convened by the United Nations Industrial Development Organization (UNIDO) on the operationalisation of the 2030 agenda for Africa’s Industrialisation, called for an inclusive partnership of African Countries irrespective of income or financial levels.

Africa industrialisation has been unsuccessful for the past 40 years and this is the time to reverse the trend. Investors should be encouraged to move into Africa where industrialisation is yet to be realised, Nkosazana Dlamini Zuma, Chairperson of the African Union Commission said at the side event on Saturday.

To fix the problem of energy in Africa, a tenth of the annual taxes collected can go a long way, African Development Bank’s President, Akinwunmi Adesina opined.

A lingering problem the continent which is power can be fixed with 10% of the $548 billion collected annually as taxes across different sectors.

“As at today total amount of taxes we collect in Africa is $548 billion a year, we need only $55 billion to solve Africa’s energy problem, 10% of Africa’s taxes can solve that problem if we stop capital flows out of Africa, with $60 billion a year we will stop that problem.

“If all our financial institutions and even the donor partners met 0.7% of their side of the GNI we will generate $168 billion and that will solve the problem”, Adesina said adding that there was no need to be scared of the financing “we just have to make use of the private sector to increase investment and unlocking the financing”.

African leaders at the event underscored the need for accelerated industrialisation, through manufacturing, agriculture, infrastructure, real estate, amongst others.

Nigeria’s President, Muhammadu Buhari urged African leaders to adopt practical policies and strategies that will see the region attaining industrialization.

According to him, Africa needs to safeguard the interest of local production in an era of rampant globalisation, reiterating the need for enhanced regional and cross border cooperation.

Noting that Nigeria alongside many other African countries were facing power shortages, negatively imparting on the potential growth of the region. Buhari said “industrialization cannot take place without reliable energy infrastructure. We are therefore working on a comprehensive overhaul of our power industry”.

“For us in Nigeria, we are placing emphasis on diversification of our economy using Small and Medium Enterprises, energy and mining sectors and agro-allied industries. Specifically, we can attest to the viability of Small businesses to boost growth and create more jobs for the youth and serve as the precursor of full industrialisation” he added.

Ethiopian Prime Minister, Hailemariam Desalegn in his remarks said Africa must not repeat the mistake of its forefathers, by not focusing on its comparative advantage adding that this has stopped them from quickly industrialising.

Africa, he said must not neglect Agriculture adding that industrialisation should be export led with a focus on our local companies while trying to attract Foreign Direct Investments.

“African leaders should focus on key binding prospects. This is the time to have renewable energy resources which is our comparative advantage in Africa. ADB and others should help with financing”.

Africa cannot develop with what it does not have, we need a mix of energy both conventional and renewable energy

The leaders called on the international community to raise its financial support in line with Goal 9 of 2030 Agenda for Sustainable Development and to back industrial and infrastructural projects.

They called on the private sector to recognize Africa’s export and domestic market potentials, while also inviting foreign investors to increase their commitment to the continent .

“Now that the world has adopted the 2030 agenda, we invoke all stakeholders to join forces and form a new global partnership for its implementation, particularly for the most vulnerable countries in Africa” a communique signed at the event.

[Rights Issue] Elumelu Increases His Shares In UBA by 63%

The Chairman of United Bank for Africa and billionaire investor Tony Elumelu increased his shareholdings in UBA by 63% according to information contained in its June 2015 half year audited reports. Mr Elumelu through its Hiers Holdings vehicle owned about 116, 067, 153 ordinary shares at the end of December 2014. However, its 2015 H1 report shows the shareholdings is now 189,851,584 ordinary shares representing a 63% pop.

His current holdings put him now at 5.2% of the total outstanding shares of the company (36.2billion shares) making him the largest single significant shareholder. In fact, if you add his indirect ownership of 1.4billion ordinary shares, the banking mogul now owns about 2,072,876,000  ordinary shares or 6.4% of the bank. Stanbic Nominees and UBA Staff Shares Investment Trust scheme come the closest with about 5% each.

Recall UBA had a rights issue earlier in the year where it offered 1 for every 10 shares adding about 3.29billion shares to its shareholdings. We believe this rights issue was the opportunity Mr Elumelu needed to increase his shareholdings in the bank. The rights issue which it said was fully subscribed is believed to have been under subscribed by most retail investors leaving more high net worth shareholders with the chance to increase their stake and dilute retail investors.

Nigeria: President Buhari’s Cabinet List Out Wednesday

The much-awaited list of President Muhammadu Buhari’s ministerial nominees will be released on Wednesday, the last day of the month. Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, disclosed this yesterday in New York. Adesina described Buhari as a man of his word, saying Nigerians would not be disappointed as September, the date given for the announcement of members of his cabinet, remains sacrosanct.

With just three days to the end of September, the month Buhari promised to send the list of his ministerial nominees to the Senate for approval, his senior special assistant on media and publicity, Mr. Garuba Shehu, had earlier assured that the president will keep his promise. Shehu gave the assurance yesterday.

This was as Buhari’s party, All Progressives Congress, expressed its confidence that the president would not disappointment the citizens with regard to the appointment of ministers and governance, generally. APC National Chairman John Odigie-Oyegun told THISDAY yesterday by telephone that Buhari meant well for the country and he will do everything humanly possible to ensure good governance. THISDAY also learnt that the president was under intense pressure to relax his tough standards for qualifying persons for positions in his planned cabinet to avoid alienating many members of his party. Shehu said, “The president had said it twice that he would submit his ministerial list to the National Assembly in September. As you can see, that position has not changed.”

 

[BACK TO ‘NORM’] Why Power Generation Is Dropping Again

• 
• The modest gains recorded in the power sector over the past three months are being threatened by the activities of pipelines vandals, which have led to the fall in electricity generation by 356.8 megawatts within the last three weeks.
• Power generation climbed to an all-time high of 4,810.7MW on August 25 this year, but latest figures from the Presidential Task Force on Power showed that it had fallen to 4,453.9MW as of September 16.
• Power generation had peaked at 4,655.2MW on September 9, but this was not sustained due to vandalism of electricity and oil infrastructure, as it fell to 4,453.9MW seven days later.
• In fact, the daily average energy produced by the power generation companies as of September 16 was 3,896.08MW/hour, while the daily average energy sent out was 3,808.86MW/H.
• Peak generation capacity was 7,588MW, while the forecasted peak demand for the country was put at 12,800MW.

Fitch Will Downgrade Nigeria If This Happens

Fitch released its latest rating on Nigeria affirming a Long-term foreign and local currency Issuer Default Rating (IDRs) at ‘BB-‘ and ‘BB’ respectively. Whilst this suggest things having gotten better but hasn’t got worse either, the rating agency also reveals future events that could affect its decision to either downgrade or upgrade the current rating.

Factor that can lead to a downgrade

• A policy response to lower oil prices that undermines growth prospects, public finances or external stability
• A loss of foreign exchange reserves or an increase in government debt/GDP
• Reversal of key structural reforms and anti-corruption and transparency measures.

What could lead to Nigeria’s outlook remaining stable

• Implementation of monetary and exchange rate policies consistent with macroeconomic and external stability
• Containment of fiscal pressures and a manageable debt burden.
• Fitch forecasts Brent crude to average USD55/b in 2015, USD60/b in 2016 and USD70/b in 2017.
• Fitch does not expect a major resurgence of violence in the Delta region.

Based on the above, it is highly unlikely that we will see a downgrade as the three main factors are high up in the current Government’s agenda as well as the CBN. The Buhari Government has anti-corruption, economic growth and job creation as some of its main objectives, whilst the CBN is focused on maintaining exchange rate stability and reserves.