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FG Implements New Template for Operating Surplus

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  • FG Implements New Template for Operating Surplus

The Federal Government is set to inaugurate the use of a new template for calculating the operating surplus payable by government agencies and departments deemed as revenue generating organisations.

The Fiscal Responsibility Act, 2007 requires listed agencies to pay 80 per cent of their operating surpluses into the Consolidated Revenue Fund, while retaining 20 per cent.

The operating surplus is made up of revenues accruing to government agencies above what they are approved to spend at the beginning of the budget year.

Thirty agencies were originally listed in the Act. However, the addition of 92 agencies by the Ministry of Finance in an effort to shore up the revenues accruing to the government had brought the number of organisations required to pay operating surpluses to 122.

Among the 92 new agencies now included in the list are the National Drug Law Enforcement Agency, Nigerian Investment Promotion Council, Nigerian Railway Corporation, Small and Medium Enterprise Development Agency of Nigeria and the Federal Radio Corporation of Nigeria.

Following a new thinking about how to calculate the operating surplus, the FRC had prepared a new template for determining what agencies should pay.

Although the new template has already been circulated to concerned agencies, our correspondent learnt that the inauguration of the template scheduled for the early days of August would mark the formal implementation of the template.

In the document titled ‘Operating Surplus Calculation Template’, the Federal Government claimed that the mopping up of unspent funds from the Ministries, Departments and Agencies at the end of a financial year by the Office of the Accountant-General of the Federation was not scientific and thus the need for the adoption of payment of operating surpluses by agencies.

The document stated, “The Federal Government has the statutory responsibility of setting up bodies to perform certain specialised functions for smooth running and growth of the economy. It has consequently invested resources and efforts to set up such entities.

“Akin to a private sector investor, the Federal Government expects to reap some level of reward out of the surplus made by these entities from their operations by way of independent revenue.

“Over time, the OAGF has been mopping all balances liquid funds at the end of each financial year. The practice is, however, not based on a scientific assessment of the surplus earned by the entities nor does it encourage them to retain a portion of that surplus.”

The new template on calculating operating surplus stipulate expenses, which agencies are not allowed to deduct before calculating what they are to pay into the Consolidated Revenue Fund as operating surpluses.

These are salaries in excess of scales approved by the National Salaries, Incomes and Wages Commission; monetisation of medical and other allowances; business class travel for officers other than chairman and chief executive officer; and personal loans to staff in excess of approved limits including unapproved mortgages.

Others are expenditure in excess of approved mandates; donations to individuals, including those to political and charitable organisations; and expenses in respect of conference meeting in excess of approved circular on frequency of meetings.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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Banking Sector

Dennis Olisa Invests N53.6 Million in Zenith Bank

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Executive Director of Zenith Bank Plc Buys 2 Million Shares of Zenith Bank at N53.6 Million

Executive Director of Zenith Bank Plc, Dennis Olisa, has invested a combined N53.58 million in shares of Zenith Bank.

The leading financial institution stated in a disclosure statement filed with the Nigerian Stock Exchange (NSE) on Monday.

Olisa carried out the purchase in two different transactions on February 24, 2021 at the Nigerian Stock Exchange in Lagos, Nigeria.

He purchased 1 million units of Zenith Bank at N26.60 each and another 1 million shares at N26.50 per share.

On aggregate, Olisa purchased 2 million shares of Zenith Bank at N26.79 per share or N53.58 million. See the details below.

Dennis Olisa was appointed as Zenith Bank’s executive director three years ago.

Prior to his appointment, Mr. Olisa was the Chief Inspector at Zenith Bank Plc and served as its Director from March 3, 2017 until March 16, 2017.

He also served as General Manager and Heads of the Energy Oil & Gas Group at Zenith Bank Plc and served as its Deputy General Manager. He served as Head of Internal Control & Audit Group at Zenith Bank Plc

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