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NB Plc Records Slight Profit in Full Year 2017

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Nigerian Breweries PLC
  • NB Plc Records Slight Profit in Full Year 2017

Nigerian Breweries Plc has recorded a minimal increase in its profits in its audited results for the year ended December 31, 2017. Specifically, the brewing firm’s profit before tax rose marginally from N39.7 billion to N46.6 billion, just as profit after tax was slightly from N28.4 million in 2016 to N33 million.

A company release weekend, showed that the firm recorded a mere 6.6 per cent rise in revenue to N334.6 billion, from N313.7 billion posted in 2016, while gross profit fell to N133.5 billion, from N135.5 billion in 2016.

However, other income jumped by 266 per cent to N2.2 billion from N600 million, while net finance cost fell by 21 per cent from N13.2 billion to N10.5 billion.

Based on the performance, the directors have recommended a total dividend of N33 billion that translates to N4.13 per share. The recommended dividend is inclusive of interim dividend of N8 billion, which is N1.00 per share earlier paid by the company in November 2017.

The Company Secretary/Legal Adviser, Nigerian Breweries Plc, Mr. Uaboi Agbebaku, said in the statement that “whilst the foreign exchange situation improved in the course of the year, double digit inflation continued to impact both businesses and consumers.

“Nevertheless, the company was able to end the year with improved results through continuous focus and execution of the twin agenda of cost leadership and market leadership supported by innovation. Whilst there are some early signs of improvement in the macro-economic condition, this is yet to be reflected in consumer confidence. The Board remains confident that the company has a clear strategy to deliver good return on investment to shareholders as part of its commitment to winning with Nigeria,” Agbebaku said.

Nigerian Breweries Plc reported a 27.3 per cent fall in its profit before tax for the 2016 financial year. Its 2016 group profit before tax tumbled to N39.62billion from N54.51billion recorded in the previous year.

The firm’s group revenue for the 2016 financial year stood at N313.74bn compared to N293.91bn posted in 2015. In its audited financial statements for the year ended December 31, 2015 filed with the NSE, the brewing company had noted that its pre-tax profit fell then by 11.3 per cent to N54.51billion at the end of 2015.

Its revenue, however, rose to N293.91bn from N266bn at the end of the 2014 financial year.

Analysts at the FBNQuest had stated then that the decline in the PBT in the Q4 marked the sixth consecutive quarter of year-on-year decline for the company.

The analysts added: “Further down the profit and loss account, PAT declined by a slimmer margin of six per cent mainly because the tax expense fell by 18 per cent y-o-y, driven by a lower effective tax rate of 29.9 per cent versus 32.8 per cent in the Q4 2014.”

The brewing firm recently appointed Mr. Jordi Borrut Bel as the substantive managing director/chief executive officer to replace Mr. Johan Doyer, who served as MD/CEO on an interim basis since June 16, 2017.

The company had explained that Borrut Bel joined Heineken Spain in 1997 as Sales Representative and subsequently held increasingly senior management positions in different countries, first as Distribution Project Manager in Slovakia, Brand Manager in France and Trade Marketing Manager at the Head Office in The Netherlands. In 2006, he returned to Heineken Spain where he evolved in the organisation and eventually became the On-Premise and Distribution Director and a member of the Management Team.

“Mr. Borrut Bel was appointed the MD of Brarudi S.A. in 2015 and has successfully led the company through a very turbulent period, strengthening the company’s route-to-market and launching successful innovations. The Board is confident that Mr. Borrut Bel’s track record and broad experience stand him in a very good position to drive Nigerian Breweries Plc’ strategy and consolidate its leadership position in the Nigerian market,” the company said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

GTBank Takes 60 Bank Executives to Court Over N17bn Loan Dispute

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GTBank -Investors King

Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks in Nigeria.

The action stems from an ongoing dispute involving a N17 billion Anchor Borrowers Programme loan granted to AFEX Commodity Exchange.

The executives, including chairmen, chief executive officers, directors, and company secretaries, are facing contempt of court charges for allegedly failing to enforce a No-Debit-Order on AFEX Commodity Exchange’s accounts. The legal battle, which has drawn significant attention in the financial sector, is being closely monitored by industry stakeholders.

Details of the Case

The Federal High Court in Lagos, presided over by Justice CJ Aneke, signed an order to hold the executives accountable for disobeying its ruling dated May 27, 2024.

The court’s decision mandates the executives, including those from prominent banks such as Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, and First Bank of Nigeria Plc, to comply with the directive or face jail time.

The case, registered as FHC/L/CS/911/2024, involves GTBank and AFEX Commodity Exchange. The court had previously ordered 20 banks to transfer funds from AFEX’s accounts to GTBank until the outstanding N17.81 billion loan is repaid.

This sum includes the principal amount of N15.77 billion and additional recovery costs and expenses totaling N2.04 billion.

Contempt Proceedings

The legal notice, titled ‘Order to Serve Notice of Disobedience to Order of Court via Newspaper Publication,’ was published in national dailies, signaling the gravity of the situation.

The notice serves as a warning to the bank executives about the consequences of failing to adhere to the court’s order.

In addition to the commercial banks, the Nigerian Deposit Insurance Corporation (NDIC), acting as the liquidator for Heritage Bank, has also been cited for contempt.

The matter is set for further hearing next Thursday, where the court will decide the fate of the implicated executives.

Background and Implications

The dispute originates from a loan facility extended to AFEX Commodity Exchange under the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme.

The loan was intended to finance smallholder farmers, with repayment expected through the sale of agricultural produce. However, AFEX reportedly defaulted on the loan, prompting GTBank to seek legal recourse.

AFEX has countered by stating that it has repaid 90% of the loan and is in ongoing discussions with the CBN regarding the remaining balance. The commodities exchange has cited economic challenges and macroeconomic policies, such as the naira redesign, which adversely affected the farmers’ ability to repay the loans.

The court has also permitted GTBank to take control of AFEX’s 16 warehouses across seven states, allowing the bank to sell the stored commodities to recover the outstanding loan.

Industry Reaction

The case has sparked concerns about the efficiency and integrity of Nigeria’s banking and financial sectors.

Charles Akinbobola, a senior energy analyst at Sofidam Capital, said, “The challenge of the power sector has not entirely been the scarcity of funds. Several trillions of naira have been pumped into that industry. The sector has been plagued by the shortcomings of its managers.”

Experts like Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasize the need for addressing fundamental issues in the electricity value chain, such as technical and commercial losses, which continue to burden consumers with inefficiency costs.

As the legal proceedings unfold, the financial community will be watching closely to see how this high-stakes battle impacts the involved parties and the broader financial sector in Nigeria.

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Banking Sector

Guaranty Trust Holding Plans N500 Billion Share Offering

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Guaranty Trust Holding Company Plc (GTCOPLC) has announced plans to raise up to N500 billion through a new share offering, according to a preliminary prospectus filed with the Securities and Exchange Commission (SEC).

This move aims to support the company’s ambitious growth and expansion strategy.

GTCOPLC’s proposed offering will involve the subscription of ordinary shares of 50 kobo each, although the exact number of shares and the price range are yet to be determined.

The offering includes a concurrent filing of a preliminary universal shelf registration statement, allowing the company to issue various types of securities, potentially raising up to $750 million in multiple currencies.

Purpose of the Offering

The funds raised from this offering will primarily be allocated towards:

  1. Business Growth and Expansion: GTCOPLC plans to invest significantly in technology infrastructure to enhance its current operations. Additionally, the company intends to establish new subsidiaries and make selective acquisitions of non-banking businesses.
  2. Recapitalization of Guaranty Trust Bank Limited: Part of the proceeds will be used to strengthen the capital base of its banking subsidiary.

Target Investors and Structure

The offering is structured to attract both institutional and retail investors. It will be divided into two main tranches:

  • Nigerian Tranche: An institutional and retail offering aimed at eligible investors within Nigeria.
  • International Tranche: A private placement targeting qualified institutional buyers outside Nigeria.

Listing and Trading

GTCOPLC has also filed an application with the Nigerian Exchange Limited (NGX) to list and admit the new ordinary shares for trading on the NGX Official List.

The company anticipates opening the offering by July 2024.

Financial Strategy

The universal shelf registration will enable GTCOPLC to issue a variety of securities over time, with a total value of up to $750 million (or its equivalent in Nigerian Naira).

This approach provides the company with flexibility to raise capital in different markets during the programme’s validity period. The current proposed offering will be the first issuance under this new programme.

Regulatory Compliance

GTCOPLC emphasized that this notice does not constitute an offer of securities for sale in the United States or to U.S. persons, as defined under Regulation S of the U.S. Securities Act of 1933.

The offered shares have not been, and will not be, registered under the U.S. Securities Act or any state securities laws, and cannot be sold in the United States without proper registration or an applicable exemption.

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Loans

China Maintains One-Year Policy Loan Rate at 2.5%, Avoids Excessive Liquidity

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growth

China’s central bank, the People’s Bank of China (PBOC), has decided to keep the key interest rate steady for the tenth consecutive month.

On Monday, the PBOC announced that the rate on one-year policy loans, known as the medium-term lending facility (MLF), will remain at 2.5%.

This decision aligns with the forecasts of a Bloomberg survey, reflecting the bank’s priority to maintain financial stability amid a fragile economic recovery.

The central bank also took measures to manage liquidity, withdrawing a net 55 billion yuan ($7.6 billion) from the banking system.

This action aims to prevent excessive liquidity, which could lead to further depreciation of the yuan. By maintaining a cautious stance on monetary easing, the PBOC underscores its focus on currency stability over lowering borrowing costs.

This move comes as China grapples with mixed economic signals. While exports exceeded expectations in May, inflation rose less than anticipated, and factory activity saw an unexpected contraction according to an official survey.

Despite these challenges, the PBOC’s restraint reflects a strategic choice to prioritize the strength of the yuan, even as calls for a rate cut grow louder.

Last week, the onshore yuan weakened to its lowest level since November, driven by a wide interest rate gap between the US and China.

The PBOC’s decision to hold rates steady is seen as an effort to prevent further devaluation of the yuan, which remains a “powerful currency” according to financial authorities.

Sufficient market liquidity has also influenced the central bank’s decision to refrain from outright rate cuts.

This is evidenced by the declining borrowing costs of popular debt instruments, such as one-year AAA-rated negotiable certificates of deposits, which have dropped to around 2%, compared to the MLF’s 2.5%.

The influx of funds from savings to wealth management products and other higher-yielding assets has bolstered the financial system’s liquidity, allowing the PBOC to adopt a more conservative stance.

China’s economy has experienced a patchy recovery, with government bond sales accelerating to boost infrastructure spending amidst a prolonged property slump.

Despite these efforts, the central bank remains cautious, opting for stability over aggressive monetary easing.

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