Oceanic Bank International Plc has been named the winner of the 2007 Nigerian Bank of the Year Award organised by The Banker magazine, a publication of the Financial Times of London.
The awards ceremony was held on Wednesday night at the Dorchester Hotel, London. Oceanic Bank was adjudged the Nigerian Bank of the Year for the second year running.
The bank had won the Nigerian Banker of the Year award in 2006.
Oceanic Bank, according to the organisers, was picked, among other reasons, for formulating and adopting business transformation strategies that clearly put it in the direction of making it emerge a leading banking institution in the continent.
Oceanic is also one of the 29 banks on the African continent which received the honour as well as the second, only to the Standard Bank group of South Africa, on the most capitalised of the banks. It currently ranks 14th on the table of the Top 100 Sub-Saharan African banks in the December 2007 edition of The Banker magazine.
The organisers said of the bank: “Oceanic Bank Interna-tional (OBI) expanded its service offerings by adding on new subsidiary companies in areas like life and general insurance, capital markets, securities and custodian services. The bank has continuously upgraded its systems, processes and staff competency to improve service delivery and increase efficiency using world class institutions, such as SAP.
“The adoption of the Mckinsey-Lead Strategic Transformation Project signifies a robust business transformation programme for OBI to create what it expects to be the leading financial services group in west and central Africa. It allows the group to fully capitalise on its performance and positioning, and ensures that Oceanic Bank captures the next wave of growth opportunities.”
The organisers also explained that one of the reasons they recognised the bank was because: “The bank achieved branch efficiency through expansion strategies, and alternative delivery channels through increased ATM deployment in strategic locations. It also developed value-added services, and innovative, technology-based products and solutions for high value institutional customers.”
“I am deeply blessed and honoured to be working with such talented, dedicated and hardworking team. Without them, this award will not have been possible”.
She said the award was a further challenge to her at the bank to be more innovative, responsive and more alive to the modern demands in the industry. She also said that the bank would encourage more entrepreneurship ventures and be more involved in products that would alleviate poverty in the country.
Ibru said Oceanic Bank was highly committed to delivering value to the Nigerian economy, and to its core stakeholders, “we will not relent on our high standards” she said. “This award will only spur us on as we continue with our various strategies towards being an African bank to be reckoned with in the international community.”
In his opening speech, Mr Philip Timewell, editor-in-chief of The Banker, had paid tribute to banks from the emerging markets for turning in excellent financial performances when their counterparts in Europe and America were facing serious crises as a result of the recent spate of turbulences in the financial markets.
The event was attended by representatives of banks from over 143 countries which entered for the awards. Highlights of the night included the lifetime achievement award given to William Rhodes, a 50-year veteran of Citibank.
Among those who came out to support Oceanic Bank were members of the Ibru clan, led by Olorogun Michael Ibru, as well as the Ibru children – Oboden, Obaro, Ejiro, Osio and Rode.
An elated Obaro praised her mother for making Nigeria proud. “She is truly an amazing woman, I am so happy and proud of her and wish her and Oceanic Bank continued success in the future,” he said.
From a total of 12 branches as at September 31, 2000, the bank, under the leadership of Mrs. Ibru grew its branch network to 320 business offices – 286 branches, 24 e-Banking centres and 10 collection points.
The bank currently ranks amongst the top four banks in the industry in terms of branch network. In the 2006/2007 financial year alone, it added a total of 135 business offices to its branch network while two subsidiaries – Oceanic Capital Limited and Oceanic Insurance Limited – became fully operational.
Oceanic Bank further strengthened its intervention in strategic areas of the economy, making significant interventions that have helped boost economic growth.
The bank is one of the few that have recorded outstanding successes in the funding of SMEs through the Small and Medium Enterprises Equity Investment Scheme (SMEEIS).
Though investment under the scheme has been made optional by the Central Bank of Nigeria, Oceanic Bank has continued to raise its level of commitment. As at July 2007, the bank’s SMEEIS investments had totalled N2.664 billion in about 34 enterprises, compared to N1.934 billion in 27 enterprises reported at the end of its 2005/2006 financial year.
These investments covered manufacturing, telecommunications, metal works, agriculture, information/communication technology, electronic payment services, hotel and tourism, and water treatment, amongst others.
Others present at the award ceremony included Bismarck Rewane of Financial Derivatives; Hajia Amina Abdulahi (Group General Manager in charge of investments at NNPC); Apostle Hayford Alile (Chairman of Oceanic Bank); Nkosana Moyo (Actis); Ovie Ukiri (Executive Director, Oceanic Bank); Dr. Yemi Ogunbiyi and many more.
Thursday, November 29, 2007
UBA posts N29.5bn profit
United Bank for Africa (UBA) has announced a profit before tax and exceptional items totaling N29.5 billion for the financial year ended September 30, 2007. The figure showed an increase of 115 percent compared with N12.8 billion recorded in 2006 (18 months period).
Also, the directors have pushed dividends to shareholders up by 20 percent to N1.20 per share this year. A cursory analysis of the result shows the bank setting industry records in most financial indices.
According to the bank’s audited accounts presented to the Nigerian Stock Exchange (NSE), the Bank’s balance sheet size stood at N1.64trillion, up 56percent from last year’s figure of N1.05trillion. The bank’s deposit base also grew from N776-billion to N905-billion during the same period.
"Besides being the largest bank, UBA’s results show that it is also the most profitable bank in the country. Profits before tax and exceptional items grew (115%) to N29.5-billion from N12.8-billion in 2006 (18 months period)".
A statement from the bank indicated that the figures were underpinned by a marked improvement in the operational efficiency of the company that saw improvement in the cost to income ratio from 80 percent in 2006 to 69 percent in 2007.
On the back of these impressive and results, the directors of the bank are proposing a dividend of N13.79-billion to be distributed to the shareholders of the bank at N1.20 for every share held.
This is 20% higher than the N1.00 dividend the bank promised during its just concluded public offer and again emphasizes the management’s objective of enhancing value and returns to shareholders. Investors who participated in the bank’s public offer are also eligible to receive the declared dividend.
UBA is the largest quoted company in the country with a market capitalisation of N650.79bn as at November 26, 2007. It serves its six million Nigerian customers from a network of over 700 branches and 900 ATMs, striving to ensure that the benefits of the banking industry consolidation reach the average Nigerian.
The Bank had acquired the private sector deposits of the liquidated Trade bank, City Express bank, Metropolitan bank and Afex bank, which has helped bring much needed relief to depositors of these institutions and is part of the bank’s efforts to lead the way in increasing the public’s confidence in the nation’s burgeoning financial sector.
Officials of the bank said that its medium term aspiration is to be the leading financial services franchise in the continent and a significant player on the global stage. The bank has a presence in six African countries including Ghana, Uganda, Sierra Leone, Liberia, Cote d’ Ivoire and Cameroon. It is the only Nigerian bank with a branch in the United States of America. Only last month, it acquired a 49% stake in the London-based and FSA-regulated Afrinvest which it is currently restructuring to be the arrowhead of its European distributive operations.
Other Results
WEST AFRICAN PORTLAND CEMENT PLC released 9 months result
for period ended September 30, 2007. The company’s Turnover
was flat while Profit after Tax went down by 11% when
compared to the prior period.
for period ended September 30, 2007. The company’s Turnover
was flat while Profit after Tax went down by 11% when
compared to the prior period.
Wednesday, November 28, 2007
TERM OF THE DAY:Market Saturation
When the amount of product provided in a market has been maximized in the current state of the marketplace. At the point of saturation, further growth can only be achieved through product improvements, market share gains or a rise in overall consumer demand.
Many companies are already aware of the problems of market saturation and have intentionally designed their products to "wear down" or otherwise need replacement at some point. For example, selling a light bulb that never burned out would limit consumer demand for more of this product.
Services revenue also becomes an important consideration when product revenue begins to slow; For instance, in the U.S, IBM smartly changed its business model toward providing services once it saw saturation in the large computer server market.
Many companies are already aware of the problems of market saturation and have intentionally designed their products to "wear down" or otherwise need replacement at some point. For example, selling a light bulb that never burned out would limit consumer demand for more of this product.
Services revenue also becomes an important consideration when product revenue begins to slow; For instance, in the U.S, IBM smartly changed its business model toward providing services once it saw saturation in the large computer server market.
Financial Business News
ROYAL EXCHANGE ASSURANCE PLC released its 9 months result
for period ended September 30, 2007. The Company’s Gross
Premium and Profit after Tax went up by 76% and 101%
respectively.
A.G. LEVENTIS NIGERIA PLC released 9 months result for
period ended September 30, 2007. The company’s Turnover
went down by 9% while Profit after Tax increased by 16%
when compared to the prior period.
LASACO ASSURANCE PLC
UNAUDITED Q-3 RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 2.09 0.54 1.55 288.6%
PBT (N'b) 0.96 0.16 0.81 514.4%
TAXATION (N'b) 0.99 0.12 0.87 739.4%
PAT (N'b) 0.87 0.15 0.72 496.1%
* Means Decrease & * Means Increase
Net Profit Margin 41.51% 27.06%
UNITED BANK of AFRICA PLC
AUDITED ACCOUNT FOR THE YEAR ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 109.51 90.45 19.07 21.1%
PBT (N'b) 25.36 12.81 12.55 98.0%
TAXATION (N'b) 3.92 1.26 2.66 211.1%
PAT (N'b) 21.44 11.55 9.89 85.6%
EXCEPTIONAL ITEMS (N'b) 4.16 nil
* Means Decrease & * Means Increase
Net Profit Margin 19.58% 12.77%
PROPOSED DIVIDEND/SHARE = N1.20k
CLOSURE DATE TO BE ANNOUNCED LATER
PAYMENT DATE TO BE ANNOUCED LATER
EKO CORP PLC
UNAUDITED Q-3 RESULTS FOR THE PERIOD ENDED JUNE 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER(N'm) 405.83 353.47 52.36 14.8%
PBT (N'm) 88.45 110.35 -21.90 -19.8%
TAXATION (N'm) 8.84 11.00 -2.16 -19.6%
PAT (N'm) 79.61 99.32 -19.71 -19.8%
* Means Decrease & * Means Increase
Net Profit Margin 19.62% 28%
FCMB PLC
UNAUDITED Q-2 RESULTS FOR THE PERIOD ENDED OCTOBER 31, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 21.87 10.88 10.99 101.1%
PBT (N'm) 6.76 2.82 3.94 139.7%
TAXATION (N'm) 1.42 0.59 0.83 140.0%
PAT (N'm) 5.34 2.23 3.11 139.6%
* Means Decrease & * Means Increase
Net Profit Margin 24.43% 20.51%
RED STAR EXPRESS
UNAUDITED Q-2 RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 1.59 1.34 0.25 18.5%
PBT (N'b) 0.21 0.19 0.02 9.4%
TAXATION (N'b) 0.06 0.06 0.01 9.3%
PAT (N'b) 0.15 0.14 0.01 9.5%
* Means Decrease & * Means Increase
Net Profit Margin 9.36% 10.12%
SUPPLEMENTARY ALLOTMENT
The supplementary allotment of 537,281,740 ordinary shares and right issue of 12,170,791ordinary shares of
INTERCONTINENTAL BANK PLC was today listed amongst the Daily Official Listing of the Nigerian Stock
Exchange today at N13.50k.
TECHNICAL SUSPENSION
The shares of JAPAULOIL PLC and INTERNATIONAL BREWERIES PLC were today lifted off technical
suspension following the conclusion of their public offers.
for period ended September 30, 2007. The Company’s Gross
Premium and Profit after Tax went up by 76% and 101%
respectively.
A.G. LEVENTIS NIGERIA PLC released 9 months result for
period ended September 30, 2007. The company’s Turnover
went down by 9% while Profit after Tax increased by 16%
when compared to the prior period.
LASACO ASSURANCE PLC
UNAUDITED Q-3 RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 2.09 0.54 1.55 288.6%
PBT (N'b) 0.96 0.16 0.81 514.4%
TAXATION (N'b) 0.99 0.12 0.87 739.4%
PAT (N'b) 0.87 0.15 0.72 496.1%
* Means Decrease & * Means Increase
Net Profit Margin 41.51% 27.06%
UNITED BANK of AFRICA PLC
AUDITED ACCOUNT FOR THE YEAR ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 109.51 90.45 19.07 21.1%
PBT (N'b) 25.36 12.81 12.55 98.0%
TAXATION (N'b) 3.92 1.26 2.66 211.1%
PAT (N'b) 21.44 11.55 9.89 85.6%
EXCEPTIONAL ITEMS (N'b) 4.16 nil
* Means Decrease & * Means Increase
Net Profit Margin 19.58% 12.77%
PROPOSED DIVIDEND/SHARE = N1.20k
CLOSURE DATE TO BE ANNOUNCED LATER
PAYMENT DATE TO BE ANNOUCED LATER
EKO CORP PLC
UNAUDITED Q-3 RESULTS FOR THE PERIOD ENDED JUNE 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER(N'm) 405.83 353.47 52.36 14.8%
PBT (N'm) 88.45 110.35 -21.90 -19.8%
TAXATION (N'm) 8.84 11.00 -2.16 -19.6%
PAT (N'm) 79.61 99.32 -19.71 -19.8%
* Means Decrease & * Means Increase
Net Profit Margin 19.62% 28%
FCMB PLC
UNAUDITED Q-2 RESULTS FOR THE PERIOD ENDED OCTOBER 31, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 21.87 10.88 10.99 101.1%
PBT (N'm) 6.76 2.82 3.94 139.7%
TAXATION (N'm) 1.42 0.59 0.83 140.0%
PAT (N'm) 5.34 2.23 3.11 139.6%
* Means Decrease & * Means Increase
Net Profit Margin 24.43% 20.51%
RED STAR EXPRESS
UNAUDITED Q-2 RESULTS FOR THE PERIOD ENDED SEPTEMBER 30, 2007
PERIOD 2007 2006 ABSOLUTE CHANGE %CHANGE
TURNOVER (N'b) 1.59 1.34 0.25 18.5%
PBT (N'b) 0.21 0.19 0.02 9.4%
TAXATION (N'b) 0.06 0.06 0.01 9.3%
PAT (N'b) 0.15 0.14 0.01 9.5%
* Means Decrease & * Means Increase
Net Profit Margin 9.36% 10.12%
SUPPLEMENTARY ALLOTMENT
The supplementary allotment of 537,281,740 ordinary shares and right issue of 12,170,791ordinary shares of
INTERCONTINENTAL BANK PLC was today listed amongst the Daily Official Listing of the Nigerian Stock
Exchange today at N13.50k.
TECHNICAL SUSPENSION
The shares of JAPAULOIL PLC and INTERNATIONAL BREWERIES PLC were today lifted off technical
suspension following the conclusion of their public offers.
Monday, November 19, 2007
Fidson Healthcare Limited:PRIVATE PLACEMENT
Fidson Healthcare Limited, a wholly indigenous pharmaceutical company, is a member of the Fidson Group, with corporate Head Office in Lagos and manufacturing plant in Ota, both in Nigeria . The company, which was formed in 1995; manufactures markets and exports high quality pharmaceutical products in accordance with WHO/GMP, laid down standards.
· Fidson has been very prominent in the Nigerian pharmaceutical industry since its entry. It attained a significant height in the industry when it emerged the first indigenous pharmaceutical company to manufacture anti-retroviral drug. The drug, known as Virex Anti-retroviral, was 100% formulated and manufactured in Nigeria.
· Fidson also displays outstanding performance records. Its compounded annual growth rates (CAGR) in turnover and after-tax profit have been 44.2% and 46.7% respectively. Similarly, the company has consistently paid dividend in each past financial year. At its last financial year ended June 30, 2007; the company declared and paid a dividend of N2.27 in addition to a bonus issue of 2 for 1 Ordinary share held by the existing shareholders. As at date, the company still has over N800 million as distributable reserves.
· As part of efforts to finance its growth and diversification plans, Fidson Healthcare Limited is planning to raise about N2.1 billion from the Nigerian Capital Market by privately placing 540 million Ordinary shares of 50k at a price of N3.95 each.
· Our valuation of Fidson Healthcare Limited reveals a fair value of N5.22 for each Ordinary share of the company (including the shares to be freshly issued). This therefore implies that the Private Placement price of N3.95 is being offered at a marked discount of 24.3% to valuation.
· Fidson has been very prominent in the Nigerian pharmaceutical industry since its entry. It attained a significant height in the industry when it emerged the first indigenous pharmaceutical company to manufacture anti-retroviral drug. The drug, known as Virex Anti-retroviral, was 100% formulated and manufactured in Nigeria.
· Fidson also displays outstanding performance records. Its compounded annual growth rates (CAGR) in turnover and after-tax profit have been 44.2% and 46.7% respectively. Similarly, the company has consistently paid dividend in each past financial year. At its last financial year ended June 30, 2007; the company declared and paid a dividend of N2.27 in addition to a bonus issue of 2 for 1 Ordinary share held by the existing shareholders. As at date, the company still has over N800 million as distributable reserves.
· As part of efforts to finance its growth and diversification plans, Fidson Healthcare Limited is planning to raise about N2.1 billion from the Nigerian Capital Market by privately placing 540 million Ordinary shares of 50k at a price of N3.95 each.
· Our valuation of Fidson Healthcare Limited reveals a fair value of N5.22 for each Ordinary share of the company (including the shares to be freshly issued). This therefore implies that the Private Placement price of N3.95 is being offered at a marked discount of 24.3% to valuation.
Sunday, November 18, 2007
Financial News Update
The shares of FIRST INLAND BANK PLC were placed on
technical suspension today following the receipt of their
application for a public offering of 5.4 billion ordinary
shares at N10.50 per share.
GUINNESS NIGERIA PLC released its 3 months result for
period ended September 30, 2007. The Company’s Turnover
went up by 14% while Profit after Tax went down by 21%.
The decline was as a result of the earlier timing of
advertising and promotions expenditure. It is not expected
to re-occur barring any unforeseen circumstances. Full
details of the released result are in the attached report.
FIDELITY BANK PLC released its result for year ended June
30, 2007. The bank’s Gross Earnings and Profit after Tax
went up by 108% and 47% respectively. The bank has declared
a dividend of 11 kobo. Closure of register will be on
January 9, 2008. Full details of the released result are in
the attached report.
RT BRISCOE NIGERIA PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover and
Profit after Tax went up by 31% and 38% respectively. Full
details of the released result are in the attached report.
NIGERIAN ENAMELWARE PLC released its 9 months result for
period ended June 30, 2007. The Company’s Turnover and
Profit after Tax went up by 1% and 6% respectively. Full
details of the released result are in the attached report.
technical suspension today following the receipt of their
application for a public offering of 5.4 billion ordinary
shares at N10.50 per share.
GUINNESS NIGERIA PLC released its 3 months result for
period ended September 30, 2007. The Company’s Turnover
went up by 14% while Profit after Tax went down by 21%.
The decline was as a result of the earlier timing of
advertising and promotions expenditure. It is not expected
to re-occur barring any unforeseen circumstances. Full
details of the released result are in the attached report.
FIDELITY BANK PLC released its result for year ended June
30, 2007. The bank’s Gross Earnings and Profit after Tax
went up by 108% and 47% respectively. The bank has declared
a dividend of 11 kobo. Closure of register will be on
January 9, 2008. Full details of the released result are in
the attached report.
RT BRISCOE NIGERIA PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover and
Profit after Tax went up by 31% and 38% respectively. Full
details of the released result are in the attached report.
NIGERIAN ENAMELWARE PLC released its 9 months result for
period ended June 30, 2007. The Company’s Turnover and
Profit after Tax went up by 1% and 6% respectively. Full
details of the released result are in the attached report.
Saturday, November 17, 2007
Financial News
The shares of AIICO INSURANCE PLC were placed on technical
suspension today following receipt of their application for
a public offering of 2.5 billion ordinary shares at N2.20
per share.
EVANS MEDICAL PLC. released its results for Year ended
December 31, 2006. The company’s Turnover and Profit after
Tax went up by 15% and 67% respectively when compared to
the previous year. The company has declared a bonus of 1
for 10. Closure of register will be on November 23, 2007.
Full details of the released result are in the attached
report.
UNIC INSURANCE PLC. released its results for Year ended
December 31, 2006. The company’s Gross Premium went up by
39% while Profit after Tax went down by 11% when compared
to the previous year. The company has declared a dividend
of 5 kobo per share. Closure of register will be on
November 19, 2007 while payment will be from December 17,
2007. Full details of the released result are in the
attached report.
UNION HOMES PLC released its 6 months result for period
ended September 30, 2007. The Company’s Turnover and Profit
after Tax went up by 3% and 38% respectively. Full details
of the released result are in the attached report.
CHEVRON OIL NIGERIA PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover
and Profit after Tax went up by 6% and 24% respectively.
Full details of the released result are in the attached
report.
ASSOCIATED BUS COMPANY PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover
went up by 20% while Profit after Tax went down by 10% when
compared to the previous period. Full details of the
released result are in the attached report.
suspension today following receipt of their application for
a public offering of 2.5 billion ordinary shares at N2.20
per share.
EVANS MEDICAL PLC. released its results for Year ended
December 31, 2006. The company’s Turnover and Profit after
Tax went up by 15% and 67% respectively when compared to
the previous year. The company has declared a bonus of 1
for 10. Closure of register will be on November 23, 2007.
Full details of the released result are in the attached
report.
UNIC INSURANCE PLC. released its results for Year ended
December 31, 2006. The company’s Gross Premium went up by
39% while Profit after Tax went down by 11% when compared
to the previous year. The company has declared a dividend
of 5 kobo per share. Closure of register will be on
November 19, 2007 while payment will be from December 17,
2007. Full details of the released result are in the
attached report.
UNION HOMES PLC released its 6 months result for period
ended September 30, 2007. The Company’s Turnover and Profit
after Tax went up by 3% and 38% respectively. Full details
of the released result are in the attached report.
CHEVRON OIL NIGERIA PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover
and Profit after Tax went up by 6% and 24% respectively.
Full details of the released result are in the attached
report.
ASSOCIATED BUS COMPANY PLC released its 9 months result for
period ended September 30, 2007. The Company’s Turnover
went up by 20% while Profit after Tax went down by 10% when
compared to the previous period. Full details of the
released result are in the attached report.
Friday, November 16, 2007
Understanding the stock market (1)
Stock Markets The term ‘Stock Market’ is commonly used to encompass both the physical location for buying and selling stocks as well as the overall activity of the market within a certain country.When we hear an expression such as ‘The stock market was down today’ it refers to the combined activity of many stock exchanges. ‘Stock Exchange’ is the correct term for the physical location for trading stocks. Each country may have many different stock exchanges and usually a particular company’s stocks are traded on only one exchange, although large corporations may be listed in several different locations.
Stock exchanges exist throughout the world and it is possible to buy or sell stocks on any of them. The only restriction is the opening hours of each exchange. Stock markets closely follow the economic health of a country. When the economy is doing well the market is bullish. Bull markets occur during times of high economic production, low unemployment and low inflation. Bear markets, on the other hand, follow downtrends in the economy. Inflation and unemployment are rising and stock prices are falling.
Fluctuations in stock prices are also driven by supply and demand, which in turn are determined to a large extent on investor psychology. Seeing a stock rise in price may cause investors to jump on the bandwagon and this rush to buy drives the price even faster. A falling price can have the same effect. These are short term fluctuations. Stock prices tend to normalize after such runs.
The stock exchange is only one of many opportunities to invest. Other popular markets include the Foreign Exchange Market (FOREX), the Futures Market, and the Options Market.
The FOREX is the biggest (in terms of value of trades) investment market in the world. FOREX traders buy one currency against another and can profit from small changes in value. Most FOREX trades are entered and exited in one 24 hour span, and traders have to keep a close watch on the market in order to make profitable trades.
The Futures Market is a market of contracts to buy and sell goods at specified prices and times.
It exists because buyers and sellers of goods wish to lock in prices for future delivery, but market conditions can make the actual futures contract fluctuate considerably in value. Most investors in the futures market are not interested in the actual goods – only in the profit that can be realized in trading the contracts.
The Options Market is similar to the Futures Market in that an option is a contract that gives you the right (but not the obligation) to trade a stock at a certain price before a specified date. They can be traded on their own or purchased as a form of insurance against price fluctuations within a certain time frame.
All three of these markets are quite risky and require considerable knowledge and experience to prevent substantial losses. They also require close attention to market movements. Stocks, on the other hand, are less risky because movements of the market are usually gradual. Although short term investment strategies are possible, most view stocks as long term investments.
Stock exchanges exist throughout the world and it is possible to buy or sell stocks on any of them. The only restriction is the opening hours of each exchange. Stock markets closely follow the economic health of a country. When the economy is doing well the market is bullish. Bull markets occur during times of high economic production, low unemployment and low inflation. Bear markets, on the other hand, follow downtrends in the economy. Inflation and unemployment are rising and stock prices are falling.
Fluctuations in stock prices are also driven by supply and demand, which in turn are determined to a large extent on investor psychology. Seeing a stock rise in price may cause investors to jump on the bandwagon and this rush to buy drives the price even faster. A falling price can have the same effect. These are short term fluctuations. Stock prices tend to normalize after such runs.
The stock exchange is only one of many opportunities to invest. Other popular markets include the Foreign Exchange Market (FOREX), the Futures Market, and the Options Market.
The FOREX is the biggest (in terms of value of trades) investment market in the world. FOREX traders buy one currency against another and can profit from small changes in value. Most FOREX trades are entered and exited in one 24 hour span, and traders have to keep a close watch on the market in order to make profitable trades.
The Futures Market is a market of contracts to buy and sell goods at specified prices and times.
It exists because buyers and sellers of goods wish to lock in prices for future delivery, but market conditions can make the actual futures contract fluctuate considerably in value. Most investors in the futures market are not interested in the actual goods – only in the profit that can be realized in trading the contracts.
The Options Market is similar to the Futures Market in that an option is a contract that gives you the right (but not the obligation) to trade a stock at a certain price before a specified date. They can be traded on their own or purchased as a form of insurance against price fluctuations within a certain time frame.
All three of these markets are quite risky and require considerable knowledge and experience to prevent substantial losses. They also require close attention to market movements. Stocks, on the other hand, are less risky because movements of the market are usually gradual. Although short term investment strategies are possible, most view stocks as long term investments.
Japaul triples net earnings
Japaul Oil & Maritime Services Plc tripled most key performance indicators in the third quarter, raising expectations that the company might increase cash payouts, a trend that it has maintained since listing on the Nigerian Stock Exchange (NSE).Interim report and accounts of the oil and maritime services company for the third quarter ended September 30, 2007 showed that turnover rose by 188 per cent while net earnings tripled by 222 per cent.The report showed a turnover of N1.79 billion by third quarter of 2007 as against N621.21 million in the comparable period of 2006.
The company tripled net earnings from N98.77 million in third quarter of 2006 to N315.57 million in 2007.Analysts said the current report shows strong dividend outlook for Japaul, which had increased cash payouts by 10 per cent for the 2006 business year in spite of a 25 per cent increase in outstanding shares due to a bonus issue of one for four declared for the 2005 business year.Japaul distributed 11 kobo dividend per share for the 2006 business year as against 10 kobo per share in 2005. Shareholders' funds of the company rose by 66 per cent from N693.21 million in 2005 to N1.15 billion in 2006 while total assets doubled to N2.17 billion in 2006 as against N1.07 billion in 2005.
Audited report and accounts of the company for the year ended December 31, 2006 showed significant growths across performance indicators with turnover rising by 163 per cent from N533.15 million in 2005 to N1.40 billion in 2006. Gross profit rose from N238 million in 2005 to N437 million, an increase of 84 per cent while pre and post tax profits rose by 94 per cent and 83 per cent to N241 million and N190 million in 2006 respectively compared with N124 million and N104 million in pre and post tax profits in 2005.Japaul recently closed application lists for a combined public offer and rights issue. Japaul offered 1.01 billion ordinary shares of 50 kobo each at N3.95 per share through public offer for subscription and 291.55 million ordinary shares of 50 kobo each at N3.50 per share to existing shareholders. The two offers, which opened Monday September 24, 2007, closed on October 31, 2007.Japaul is the first and only maritime company quoted on the Nigerian Stock Exchange (NSE). The hybrid supplementary issue was its second public offering of shares following its initial public offering (IPO). Mr Paul Jegede, managing director, Japaul Oil & Maritime Services Plc, has said the company was committed to continuously enhance returns to shareholders adding that the company would surpass its profit targets.
He said net proceeds of the new issues would be invested in new expansion programme aimed at acquiring new equipments and facilities to strengthen its position as a major Nigerian operator in the lucrative oil and gas sector.He outlined that the company would use the net proceeds of the offers to acquire more vessels, build facilities for maintenance of vessels and enhance working capital for its business expansion.He noted that the existing operating environment in the oil services industry favours development of Nigerian operators citing various policies such as Cabotage law and local content policy aimed at improving Nigerian participation in the industry.He estimated yearly earnings in the oil services industry at a minimum of $5 billion lamenting that Nigerian companies account for mere five per cent of the industry due to low capitalisation.He said the company has secured many contracts that should provide enough earnings cover for the increase in number of shares and ensure sustained growth in dividends.
The company tripled net earnings from N98.77 million in third quarter of 2006 to N315.57 million in 2007.Analysts said the current report shows strong dividend outlook for Japaul, which had increased cash payouts by 10 per cent for the 2006 business year in spite of a 25 per cent increase in outstanding shares due to a bonus issue of one for four declared for the 2005 business year.Japaul distributed 11 kobo dividend per share for the 2006 business year as against 10 kobo per share in 2005. Shareholders' funds of the company rose by 66 per cent from N693.21 million in 2005 to N1.15 billion in 2006 while total assets doubled to N2.17 billion in 2006 as against N1.07 billion in 2005.
Audited report and accounts of the company for the year ended December 31, 2006 showed significant growths across performance indicators with turnover rising by 163 per cent from N533.15 million in 2005 to N1.40 billion in 2006. Gross profit rose from N238 million in 2005 to N437 million, an increase of 84 per cent while pre and post tax profits rose by 94 per cent and 83 per cent to N241 million and N190 million in 2006 respectively compared with N124 million and N104 million in pre and post tax profits in 2005.Japaul recently closed application lists for a combined public offer and rights issue. Japaul offered 1.01 billion ordinary shares of 50 kobo each at N3.95 per share through public offer for subscription and 291.55 million ordinary shares of 50 kobo each at N3.50 per share to existing shareholders. The two offers, which opened Monday September 24, 2007, closed on October 31, 2007.Japaul is the first and only maritime company quoted on the Nigerian Stock Exchange (NSE). The hybrid supplementary issue was its second public offering of shares following its initial public offering (IPO). Mr Paul Jegede, managing director, Japaul Oil & Maritime Services Plc, has said the company was committed to continuously enhance returns to shareholders adding that the company would surpass its profit targets.
He said net proceeds of the new issues would be invested in new expansion programme aimed at acquiring new equipments and facilities to strengthen its position as a major Nigerian operator in the lucrative oil and gas sector.He outlined that the company would use the net proceeds of the offers to acquire more vessels, build facilities for maintenance of vessels and enhance working capital for its business expansion.He noted that the existing operating environment in the oil services industry favours development of Nigerian operators citing various policies such as Cabotage law and local content policy aimed at improving Nigerian participation in the industry.He estimated yearly earnings in the oil services industry at a minimum of $5 billion lamenting that Nigerian companies account for mere five per cent of the industry due to low capitalisation.He said the company has secured many contracts that should provide enough earnings cover for the increase in number of shares and ensure sustained growth in dividends.
Thursday, November 15, 2007
The Initial Public Offer route to going public
There can be no better lesson on the advantages of public ownership of companies than the ease with which banks and other publicly quoted companies raise new and cheap capital, Ambrose writes .
While some large and successful companies are still privately-owned, many companies aspire towards becoming a publicly-owned company with the intent to gain another source of raising funds for operations. An Initial Public Offering (IPO) represents a private company’s first offering of its equity to public investors. This process is generally considered to be very intensive with many regulatory hurdles to jump over. While the formal process to produce the IPO is well documented and as a result, is a fairly well-structured process.
The transformation of a company from a private to a public firm is a much more difficult process.
Transformation phases of an IPO
Henry Lariyetan, vice president, BGL Securities, a leading investment company, said a company goes through a three-part IPO transformation process: a pre-IPO transformation phase, an IPO transaction phase and a post-IPO transaction phase.
The pre-IPO transformation phase
This can be considered to be a restructuring phase where a company starts the groundwork toward becoming a publicly-traded company. For example, since the main focus of public companies is to maximize shareholder value, the company should acquire management that has experience in doing so. Furthermore, companies should re-examine their organizational processes and policies and make necessary changes to enhance the company’s corporate governance and transparency. Most importantly, the company needs to develop an effective growth and business strategy that can persuade potential investors that the company is profitable and can become even more profitable. On average, this phase usually takes around two years to complete."
The IPO transaction phase
This stage usually takes place right before the shares are sold and involves achieving goals that would enhance the optimal initial valuation of the firm. The key issue with this step is to maximize investor confidence and credibility to ensure that the issue will be successful.
For example, companies can choose to have reputable accounting and law firms handle the formal paperwork associated with the filing. The intent of these actions is to prove to potential investors that the company is willing to spend a little extra in order to have the IPO handled promptly and correctly.
The post-IPO transaction phase
The post transaction phase involves the execution of the promises and business strategies which the company is committed to in the preceding stages. The companies should not strive to meet expectations, but rather, beat their expectations. Companies that frequently beat earnings estimates or guidance are usually financially rewarded for their efforts. This phase is typically a very long phase, because this is the point in time where companies have to go and prove to the market that they are a strong performer that will last.
Dy, an investment banker, said the IPO process begins with contacting an investment bank and making certain decisions, such as the number and price of the shares that will be issued. Investment banks take on the task of underwriting, or becoming owners of the shares and assuming legal responsibility for them. The goal of the underwriter is to sell the shares to the public for more than what was paid to the original owners of the company.
Going public does have positive and negative effects, which companies must consider.
Advantages
Strengthens capital base, makes acquisitions easier, diversifies ownership, and increases prestige. Going public helps companies raise cash, and usually a lot of it. Being publicly traded also opens many financial doors:
Because of the increased scrutiny, public companies can usually get better rates when they issue debt. As long as there is market demand, a public company can always issue more stocks. Thus, mergers and acquisitions are easier to do because stocks can be issued as part of the deal.
Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent.
Being on a major stock exchange carries a considerable amount of prestige. In the past, only private companies with strong fundamentals and reasonable track record of performance could qualify for an IPO and it wasn’t easy to get listed.
Small companies looking to further the growth of their company often use an IPO as a way to generate the capital needed to expand.
The financial benefit in the form of raising capital is the most distinct advantage. Capital can be used to fund research and development, fund capital expenditure or even used to pay off existing debt. Another advantage is an increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers.
Subsequently this may lead to an increase in market share for the company. An IPO also may be used by founding individuals as an exit strategy. Many venture capitalists have used IPOs to cash in on successful companies that they helped start-up.
Disadvantages
Even with the benefits of an IPO, public companies often face many new challenges as well. One of the most important changes is the need for added disclosure for investors. Public companies are regulated by the Securities and Exchange Commission (SEC) in regard to periodic financial reporting, which may be difficult for newer public companies. They must also meet other rules and regulations that are monitored by the Commission. More importantly, especially for smaller companies, is the cost of complying with regulatory requirements can be very high. Some of the additional costs include the generation of financial reporting documents, audit fees, investor relation departments and accounting oversight committees.
Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth. The actions of the company’s management also become increasingly scrutinized as investors constantly look for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings.
Before deciding whether or not to go public, companies must evaluate all of the potential advantages and disadvantages that will arise. This usually will happen during the underwriting process as the company works with an investment bank or issuing house to weigh the pros and cons of a public offering and determine if it is in the best interest of the company.
It puts pressure on short-term growth, increases costs, imposes more restrictions on management and on trading, forces disclosure to the public, and makes former business owners lose control of decision making.
For some entrepreneurs, making a company to go public is the ultimate dream and mark of success, usually because there is a large payout. However, before an IPO can even be discussed, a company must meet requirements laid out by the underwriters. Here are some characteristics that may qualify a company for an IPO:
In packaging an IPO, the Issuing House first of all looks at the salability of the of the offer using such characteristics as the issuer’s (the company’s) high growth prospects, innovative product or service, competitive strength in the industry, as well as its ability to meet financial and audit requirements.
While some large and successful companies are still privately-owned, many companies aspire towards becoming a publicly-owned company with the intent to gain another source of raising funds for operations. An Initial Public Offering (IPO) represents a private company’s first offering of its equity to public investors. This process is generally considered to be very intensive with many regulatory hurdles to jump over. While the formal process to produce the IPO is well documented and as a result, is a fairly well-structured process.
The transformation of a company from a private to a public firm is a much more difficult process.
Transformation phases of an IPO
Henry Lariyetan, vice president, BGL Securities, a leading investment company, said a company goes through a three-part IPO transformation process: a pre-IPO transformation phase, an IPO transaction phase and a post-IPO transaction phase.
The pre-IPO transformation phase
This can be considered to be a restructuring phase where a company starts the groundwork toward becoming a publicly-traded company. For example, since the main focus of public companies is to maximize shareholder value, the company should acquire management that has experience in doing so. Furthermore, companies should re-examine their organizational processes and policies and make necessary changes to enhance the company’s corporate governance and transparency. Most importantly, the company needs to develop an effective growth and business strategy that can persuade potential investors that the company is profitable and can become even more profitable. On average, this phase usually takes around two years to complete."
The IPO transaction phase
This stage usually takes place right before the shares are sold and involves achieving goals that would enhance the optimal initial valuation of the firm. The key issue with this step is to maximize investor confidence and credibility to ensure that the issue will be successful.
For example, companies can choose to have reputable accounting and law firms handle the formal paperwork associated with the filing. The intent of these actions is to prove to potential investors that the company is willing to spend a little extra in order to have the IPO handled promptly and correctly.
The post-IPO transaction phase
The post transaction phase involves the execution of the promises and business strategies which the company is committed to in the preceding stages. The companies should not strive to meet expectations, but rather, beat their expectations. Companies that frequently beat earnings estimates or guidance are usually financially rewarded for their efforts. This phase is typically a very long phase, because this is the point in time where companies have to go and prove to the market that they are a strong performer that will last.
Dy, an investment banker, said the IPO process begins with contacting an investment bank and making certain decisions, such as the number and price of the shares that will be issued. Investment banks take on the task of underwriting, or becoming owners of the shares and assuming legal responsibility for them. The goal of the underwriter is to sell the shares to the public for more than what was paid to the original owners of the company.
Going public does have positive and negative effects, which companies must consider.
Advantages
Strengthens capital base, makes acquisitions easier, diversifies ownership, and increases prestige. Going public helps companies raise cash, and usually a lot of it. Being publicly traded also opens many financial doors:
Because of the increased scrutiny, public companies can usually get better rates when they issue debt. As long as there is market demand, a public company can always issue more stocks. Thus, mergers and acquisitions are easier to do because stocks can be issued as part of the deal.
Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent.
Being on a major stock exchange carries a considerable amount of prestige. In the past, only private companies with strong fundamentals and reasonable track record of performance could qualify for an IPO and it wasn’t easy to get listed.
Small companies looking to further the growth of their company often use an IPO as a way to generate the capital needed to expand.
The financial benefit in the form of raising capital is the most distinct advantage. Capital can be used to fund research and development, fund capital expenditure or even used to pay off existing debt. Another advantage is an increased public awareness of the company because IPOs often generate publicity by making their products known to a new group of potential customers.
Subsequently this may lead to an increase in market share for the company. An IPO also may be used by founding individuals as an exit strategy. Many venture capitalists have used IPOs to cash in on successful companies that they helped start-up.
Disadvantages
Even with the benefits of an IPO, public companies often face many new challenges as well. One of the most important changes is the need for added disclosure for investors. Public companies are regulated by the Securities and Exchange Commission (SEC) in regard to periodic financial reporting, which may be difficult for newer public companies. They must also meet other rules and regulations that are monitored by the Commission. More importantly, especially for smaller companies, is the cost of complying with regulatory requirements can be very high. Some of the additional costs include the generation of financial reporting documents, audit fees, investor relation departments and accounting oversight committees.
Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth. The actions of the company’s management also become increasingly scrutinized as investors constantly look for rising profits. This may lead management to perform somewhat questionable practices in order to boost earnings.
Before deciding whether or not to go public, companies must evaluate all of the potential advantages and disadvantages that will arise. This usually will happen during the underwriting process as the company works with an investment bank or issuing house to weigh the pros and cons of a public offering and determine if it is in the best interest of the company.
It puts pressure on short-term growth, increases costs, imposes more restrictions on management and on trading, forces disclosure to the public, and makes former business owners lose control of decision making.
For some entrepreneurs, making a company to go public is the ultimate dream and mark of success, usually because there is a large payout. However, before an IPO can even be discussed, a company must meet requirements laid out by the underwriters. Here are some characteristics that may qualify a company for an IPO:
In packaging an IPO, the Issuing House first of all looks at the salability of the of the offer using such characteristics as the issuer’s (the company’s) high growth prospects, innovative product or service, competitive strength in the industry, as well as its ability to meet financial and audit requirements.
How to guide against stock brokers’ sharp practices
If you give an order to your broker to buy a particular stock and he claims to buy at a price higher than 5 percent the previous day’s closing price, then you need to be curious because no stock is allowed to rise above or fall below 5 percent. On a daily basis, stocks oscillate within 10 percent range (5 percent upper and 5 percent lower bound), according to the Nigerian Stock Exchange trading rule.
The trouble with investors is that many do not take the pains to confirm his broker‘s transaction price. Really, there are mid prices between the opening and closing prices. And it is possible that the price at which your stock broker traded your stock is different from the day’s closing price. Therefore, it is important to ascertain this.
Avoid depositing cash with your broker to buy shares for you. It could be an opportunity for a fraudulent stock broker to misuse the money. A good and sincere broker would advise you to pay your money for stock investment into a dedicated account and require you to present the bank deposit teller.
The investment house should open an account for you with the Central Securities and Clearing System (CSCS) if you are investing through them for the first time. This normally should not take more than 5 days. In completing the relevant account opening form, ensure you clearly state your contact especially your mobile telephone number. The account opening automatically links you to the trading engine and trade alert facility such that once any transaction takes place in your stock; your mobile telephone triggers you. If the transaction is unauthorized , you can abort the transaction.
It is also very important to clearly indicate your next of kins as this allows him or her to effect share transmission in the event of death. The crisis that rocks families after the demise of the investor underscores the need for specification of the next of kin.
After giving order to your investment adviser, ensure that your instruction is on record. This is important because it enables you to monitor if your order was executed on the agreed date.
There are instances of staff of stock broking firms using the money entrusted with the firm to speculate on stocks for short term capital gains.
You should insist that your broker print your CSCS statement of account and your stock position. Beside the trade alert system, there is telephone service at the CSCS which gives you independent opportunity to get correct stock position.
The trouble with investors is that many do not take the pains to confirm his broker‘s transaction price. Really, there are mid prices between the opening and closing prices. And it is possible that the price at which your stock broker traded your stock is different from the day’s closing price. Therefore, it is important to ascertain this.
Avoid depositing cash with your broker to buy shares for you. It could be an opportunity for a fraudulent stock broker to misuse the money. A good and sincere broker would advise you to pay your money for stock investment into a dedicated account and require you to present the bank deposit teller.
The investment house should open an account for you with the Central Securities and Clearing System (CSCS) if you are investing through them for the first time. This normally should not take more than 5 days. In completing the relevant account opening form, ensure you clearly state your contact especially your mobile telephone number. The account opening automatically links you to the trading engine and trade alert facility such that once any transaction takes place in your stock; your mobile telephone triggers you. If the transaction is unauthorized , you can abort the transaction.
It is also very important to clearly indicate your next of kins as this allows him or her to effect share transmission in the event of death. The crisis that rocks families after the demise of the investor underscores the need for specification of the next of kin.
After giving order to your investment adviser, ensure that your instruction is on record. This is important because it enables you to monitor if your order was executed on the agreed date.
There are instances of staff of stock broking firms using the money entrusted with the firm to speculate on stocks for short term capital gains.
You should insist that your broker print your CSCS statement of account and your stock position. Beside the trade alert system, there is telephone service at the CSCS which gives you independent opportunity to get correct stock position.
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