BusinessDay 28 Feb 2018

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Wednesday 28 February 2018 12 BUSINESS DAY C002D5556 EDITORIAL PUBLISHER/CEO Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North) Bashir Ibrahim Hassan GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Wole Obayomi Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo Dapchi girls’ abduction Last week, over 100 girls from the Government Girls Science and Technical College, Dapchi, Yobe state were again abducted by members of the Boko Haram terrorist organisation. Media reports have it that the terrorists, armed with sophisticated weapons, invaded Dapchi unleashing terror on residents before making for the college where they stole food items and kidnapped the girls. This is coming exactly four years after the terrorist sect invaded and murdered scores of male students of the Government Secondary School, Buni Yadi, still in Yobe state. The Dapchi abduction mirrors that of Chibok, Borno state, also over four years ago where over 276 girls were kidnapped from their school by the terrorists. While some of the girls managed to escape their captors, 100 or so of them have only recently been freed in exchange for Boko Haram militants, in negotiations brokered by the International Committee of the Red Cross. Currently, over 100 of the abducted girls are still being held in captivity despite repeated promises by the government to secure their release. Sadly, like it happened in Chibok, the security operatives stationed in the town were said to have left the area shortly before the terrorists invaded the school and made away with the girls. Instead of providing explanations as to how the terrorists, whom the government and the army claimed to have defeated, were able to drive unchallenged for tens or even hundreds of kilometres with hilux and big trucks to abduct innocent schoolgirls and then vanish, the state government and the leadership of the army were more preoccupied with feeding Nigerians false information. First, they insisted that no girl was missing only for them to later claim that the Nigerian military had rescued over 50 of the abducted schoolgirls. The state government was however forced to retract that statement the next day clarifying that no rescue has been made. Then came the unhelpful comments by the minister of information, Lai Mohammed, alleging that the terrorists carried out the attack to embarrass the Buhari administration. He basically sought to cast the president as the real victim of the attack rather than the abducted girls and their helpless parents and relatives. We are still in shock that the government could allow this to happen. It was well aware of the tactics of the terrorists and could not claim to be caught off-guard by the Dapchi abduction like the Jonathan government claimed with the Chibok abduction. The fall-out from the Chibok kidnapping and the unusual focus on young girls and women by the terrorist sect, the government should never have left schools (especially girls’ schools) unsecured and unguarded. Besides, the government must explain how a defeated sect could carry out such a high profile abduction driving across hundreds of kilometres to abduct and disappear with the schoolgirls without any trace? The government, of all people, should have known that after paying huge sums of money in ransoms to secure the release of some of the Chibok girls and university lecturers and policewomen kidnapped by the sect, the sect will naturally be seeking to kidnap more girls to bolster their revenues. We urge the government to greatly improve its security strategy to be able to prevent such needless embarrassments in the future. Besides, it needs to overhaul its information management mechanism to avoid the many claims and counter claims emanating from its agencies with regards to a particular event. This only leads to confusion. The government must also ensure that it prioritises the immediate rescue of the abducted girls and not let the issue drag on for too long like that of the Chibok girls. Finally, we urge the government to make a stronger commitment to not just containing the sect, but obliterating them entirely. The penchant by the government to declare victory at every turn while the sect continues to grow stronger does not inspire confidence that the government is capable of tackling the sect. ENQUIRIES NEWS ROOM 08022238495 08034009034}Lagos 08033160837 Abuja ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union MISSION STATEMENT To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world. OUR CORE VALUES BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessdayonline.com
Wednesday 28 February 2018 COMPANIES & MARKETS Company news analysis and insight BUSINESS DAY 13 Banks credit to private sector to grow in 2018- FSDH Pg. 14 Consolidated Hallmark Insurance sustains investor confidence despite market lull Modestus Anaesoronye Following the recent removal of the price cap by the Nigerian Stock Exchange (NSE), and the consequent fall in the share price of some stocks, especially in the Insurance industry, it is expected that some shareholders may begin to dump their shares for fear of losing value; but this has not been so for Consolidated Hallmark Insurance (CHI) Plc. The reason is not farfetched. The company has demonstrated consistent ability to deliver returns to its shareholders over the years, and an analysis of its financials shows strong positive fundamentals. Majority of the shareholders of company, have therefore continued to hold on tightly to their stocks, not willing to sell, while others are beginning to take positions now that the cap has been lifted, thereby providing more liquidity for the stocks. The confidence of CHI’s shareholders in the company’s performance was further reaffirmed during the first phase of its capital raising exercise, in which it offered N500million in the form of one new share for every six held by its existing shareholders in a 1,000,000,000 unit’s rights issue, which was oversubscribed. An analysis of the deals on the trading floor of the Nigerian Stock Exchange in the past few weeks indicates improved activities on the stock of the company, with increasing transaction volumes, but only 32 million units (a paltry 1%), out of the 7billion shares outstanding have been made available for purchase on the floor of the Exchange, showing a low unwillingness by investors to sell off their stock. A quick glance at the company’s fundamentals, show why investors may want to hold on to CHI stocks, or why new investors may want to take position. Firstly, the company is trading at a 12-month price to earnings (PE) ratio of 8.9X, price to book ratio of 0.39x and a dividend yield of 6.9 percent. In addition, the company’s 9-month financials as at 2017 shows a profitable insurance business, with an underwriting profit of N836million and Eddie Efekoha, managing director, CHI Plc retained earnings of N114million. The company has also grown its total assets value to N8.14 billion from N4.6 billion in 2007.CHI is one of the few insurance businesses that delivers value to its shareholders in the Nigerian insurance market. Commenting on the recent developments at the NSE, Eddie Efekoha, managing director/CEO of the company who is also the Chairman of the Nigerian Insurers Association, expressed confidence that discerning investors would rather scramble to take position on the stock, at a bargain price now rather than sell their valuable stock that has consistently made returns for them via growth in assets and dividend payments over the years. He said the intrinsic book value of the stock is presently over 70 kobo, and with its current liquidity levels in the market, more market players are now gearing up to take position while expecting an upside in price especially against the backdrop of the expected 2017 Year End Financials. Efekoha therefore assured shareholders of the company to expect more returns in the nearest future as recent capacity expansion and growth initiatives such as the establishment of new subsidiaries such as its Health Management Organisation (HMO), to focus on identified growth markets, launching of a revamped website with retail customer and broker interphase, reinvigoration of the retail network and deployment of latest technology will help to further grow revenue. Efekoha explained further that strategies have been put in place to improve on the bottom line through costcutting initiatives in management expenses. Consolidated Hallmark Insurance (CHI Plc) has consistently grown revenue since the 2007 merger of three legacy companies – from N1.506 billion in 2007 to N5billion and has paid dividends to shareholders 7 out of 10 years post-merger. The company is known for very high professional and ethical standards, with excellent customer service and prompt claims settlement as its key selling points. Claims incurred rose from N197 million during the 2007 Financial Year to N1.185 billion for the nine months ended September, 2017 an attestation that the company is “a financial institution with satisfactory financial condition and adequate capacity to meet its obligations as and when they fall due“, as stated by foremost rating agency Agusto & Company, during its rating of the company in 2016. Low investor response: SEC moves to extend free e-dividend registration Naira in UK pre-approved currencies will enhance financial position of SMEs Strong indications emerged on Monday that the Securities and Exchange Commission (SEC) would likely extend its free e-dividend registration for the third time. This is due to low investor response as the Feb. 28 deadline draws close. A source who pleaded anonymity told the News Agency of the Nigeria (NAN) in Lagos that the commission would likely extend the free registration deadline to give room for enrolment of more investors. The source said that all indication points to extension due to low response of investors going by the available statistics. NAN reports that e- dividend simply refers to an online system of paying dividends to investors when companies declare dividends. The dividends, which are the profits meant for investors, are wired to the investor’s bank account, instead of sending it by post as was the old practice. The advantage of the e- dividend is not only to enable investors collect subsequent dividends electronically but it allows all accrued dividends to be credited to investors’ bank accounts. This will stem the rising unclaimed dividends in the capital market. The source said that the free registration may be extended for about three months, noting that the decision underscores SEC’s strong focus on market development and enhancement of investor confidence. NAN reports that SEC in June 2017, extended the underwriting cost of investors’ e-dividend registration to Dec. 31, 2017, against the earlier underwriting deadline of June 30, 2017. It also on Jan. 18, extended the period for the free e- dividend registration to Feb. 28, 2018, to encourage more shareholders participation in the initiative. SEC said in a statement that the extension became necessary to encourage more shareholders mandate their bank accounts. The statement said that in reviewing the progress of the e-dividend registration after the Dec. 31, 2017 deadline, there was still a great influx of shareholders desirous of mandating their bank accounts for payment of dividends electronically. “In light of the foregoing, the SEC, as part of its developmental role, has extended the period for the free e- dividend registration till Feb. 28, 2018, to encourage more shareholders mandate their bank accounts. Accordingly, shareholders that are yet to register should continue to approach their banks or registrars to mandate their bank accounts for the collection of their dividends electronically, including unclaimed dividends, not exceeding 12 years of issue. NAN recalls that the SEC had announced that the e- dividend registration would continue seamlessly in spite of the expiration of the initial Dec. 31, 2017 free registration deadline. The UK Export Finance Agency preapproved status for the naira as a medium of exchange will enhance the financial position of small and medium enterprises, a financial expert has said. Uche Uwaleke, the Head of Banking and Finance Department, Nasarawa State University Keffi, expressed the view in an interview with the News Agency of Nigeria (NAN) in Abuja on Monday. Uwaleke said that with such development, the naira had joined other 62 pre-approved currencies directly accepted for trade by the UK Government. The UK Export Finance Agency (UKEF) recently stated that it had concluded plans to include the naira in its list of “pre-approved currencies”. The granting of a ‘’preapproved currency’’ status by UKEF gives exporters from the UK the opportunity to offer their overseas customers UKEF-backed finance in local currency of the importers. ‘‘It will enhance the financial position of small and medium enterprises as foreign exchange risk associated with international trade is minimised thus eliminating a major source of uncertainty over debt servicing cost of credit facilities. ‘‘Therefore, business enterprises are in a stronger position to negotiate better terms with their banks in Nigeria and avoid variable debt service costs linked to fluctuations in exchange rate,’’ Uwaleke said. According to him, the bank in Nigeria will receive a guarantee for full repayment of the loan, it will help to improve the quality of risk assets of Nigerian banks and enhance financial systems stability. Uwaleke said that the expected increase in Foreign Direct Investments could bring about transfer of technology to small businesses in Nigeria. ‘‘The UKEF flexible financing solutions have been described as the “next best thing to concessionary financing’’ due to their relatively cheap and flexible nature which is particularly healthy for small business enterprises,’’ he said.
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BusinessDay 28 Feb 2018

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